Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070612d.jpg" width="353">
The Japanese Corporate Goods Prices Index (CGPI), a measure of producers&#39; prices, rose 4.5% in May from May, 2006. This was the 37th month of year to year increases in this index. So far this rise has had little effect on the Consumer Price Index (CPI). From May, 2004 when the CGPI began its year over year rises until April* of this year, the index has risen by almost 11%. In contrast, the changes in the CPI have ranged between plus and minus 1% and have resulted in a decline of 0.1% over the whole period. The year to year changes in the CGPI and the CPI are shown in the first chart.
Import prices have been the chief culprit in the rise of the CGPI as can be seen in the second chart that shows the indexes for the total index and the domestic, export and import goods components.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070612c.jpg" width="353">
The prices of imported Metals and related products, Wood, lumber and related products and Petroleum, coal and natural gas have largely accounted for the increases in the import component of the index as can be seen in the third chart. The year over year change in the price of Petroleum, coal, and natural gas has actually shown some declines this year. But these declines have been offset by big year over year increases in the prices of Wood, lumber and related products and Metals and related products as can be seen in the third chart and in the table below.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070612e.jpg" width="353">
When and to what extent the producer prices will be reflected in the consumer price index is largely up to the consumer. The 0.76% increase in the private household consumption was encouraging. But consumers are still cautious. The Survey of Consumer Confidence showed a small decline in the diffusion index to 47.3% in May from 47.4% in April. A value of the index below 50% indicates that the pessimists outweigh the optimists. However, over the course of the history of survey, the optimists rarely prevailed, as can be seen in the fourth chart. The current level of 47.3% is among the highest values recorded. This suggests that the consumer may be less pessimistic than the a literal interpretation of the data would warrant.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070612f.jpg" width="353"> *We have used April as the final month since CPI data are not available for May.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">JAPAN&nbsp; CGPI AND CPI&nbsp;</th>
<th scope="col">May 07</th>
<th scope="col">&nbsp;Apr 07&nbsp;</th>
<th scope="col">Mar 07</th>
<th scope="col">Feb 07</th>
<th scope="col">Jan 07</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td>Y/Y %</td>
<td>&nbsp;Y/Y %&nbsp;</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>Y/Y %</td>
<td>AVG</td>
<td>AVG</td>
<td>AVG</td>
</tr>
<tr>
<td class="firstcol">CPI (2005=1000</td>
<td></td>
<td>1.00</td>
<td>-0.10</td>
<td>-0.20</td>
<td>0.00</td>
<td>100.3</td>
<td>100.</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">CGPI&nbsp; (2000=100)</td>
<td>4.51</td>
<td>3.46</td>
<td>2.71</td>
<td>2.71</td>
<td>4.20</td>
<td>105.1</td>
<td>100.1</td>
<td>97.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic Prices&nbsp;</td>
<td>2.19</td>
<td>2.30</td>
<td>2.01</td>
<td>1.71</td>
<td>2.12</td>
<td>100.7</td>
<td>97.7</td>
<td>96.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Export Prices</td>
<td>7.85</td>
<td>4.62</td>
<td>3.56</td>
<td>4.53</td>
<td>6.21</td>
<td>102.8</td>
<td>98.3</td>
<td>96.4</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Import Prices </td>
<td>12.48</td>
<td>8.13</td>
<td>5.50</td>
<td>5.25</td>
<td>12.36</td>
<td>137.3</td>
<td>118.0</td>
<td>104.3</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;&nbsp; Metals and products</td>
<td>25.80</td>
<td>30.14</td>
<td>30.77</td>
<td>29.25</td>
<td>34.20</td>
<td>215.9</td>
<td>157.1</td>
<td>124.9</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;&nbsp; Wood, lumber &amp; related products</td>
<td>21.55</td>
<td>17.21</td>
<td>16.41</td>
<td>18.72</td>
<td>22.66</td>
<td>132.2</td>
<td>112.8</td>
<td>111.3</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;&nbsp; Petroleum, coal and natural gas </td>
<td>10.16</td>
<td>3.55</td>
<td>-3.77</td>
<td>-6.44</td>
<td>9.36</td>
<td>216.1</td>
<td>172.0</td>
<td>124.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The Japanese Corporate Goods Prices Index (CGPI), a measure of producers' prices, rose 4.5% in May from May, 2006. This was the 37th month of year to year increases in this index. So far this rise has had little effect on the Consumer [...]

Rises in the Japanese Corporate Goods Prices Index (CGPI) Are Yet to Be Reflected in the CPI

Robert Brusca

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070612b.jpg" width="353">
The JOLTS report quit rate is the most important reading of this varied report that has regional and industry detail as well as national readings. When people are wiling to QUIT the jobs they have it is the best sign of strength in the underlying labor market. This month the private quit rate remained steady at 2.2% while the quit rate in services industries remained high (79.8 percentile of its range) and the MFG sector saw quits drop to 1.4% from 1.5% in what has been a sector with weakening labor demands. The quit rate rose &#150; surprisingly in construction but the seasonal construction work is beginning to pick up at this time of year. And the government quit rate, while a scant 0.7%, is as high as it has ever been &#150; government workers simply don&#146;t quit; many have the job for its job security and pension. 
Sector Detail &#150; complied from report details (see table)-- Services and Government showed a high quit rate in April and, while the construction sector&#146;s quit rate rose in the month, it was still in the bottom 20Th percentile of its range. Hires were very strong for government - at the top of its range. This reading squares with recent reports that tell us that many states have seen revenues rise above their expectations. Hires are also firm in services: approximately in the top third of its range. The job openings readings are strong in their respective ranges across industries, save construction, but that reading is not matched by strength in hires everywhere. Either this is an example of worker skill shortages or job openings statistics are vague and substantially meaningless. Separations are in the top two-thirds of their range for services and MFG and they are stronger still in Government. They remain low in construction. In MFG it is probably early retirements at work or negotiated attrition since layoffs per se were not up on the month.
On balance, the JOLTS report confirms the positive trends we have seen in MFG, Services and the weakness in construction. The Government sector appears to have become a stronger source of job creation and employee retention. The private quit rate is stable and strong and is well underpinned by the service sector. Weakness in MFG jobs does not seem a threat to overall labor market strength. On balance, the detail of this report is encouraging about the economy.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
JOLTS Rankings by Main Sectors
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">As of&#133;&#133;</td>
<td colspan="4">Major Job Sectors</td>
</tr>
<tr class="grey3">
<td class="firstcol">Apr-07</td>
<td>Services</td>
<td>MFG</td>
<td>Construction</td>
<td>Gov&#39;t</td>
</tr>
<tr class="grey2">
<td class="firstcol">Job Openings</td>
<td>76.2%</td>
<td>84.6%</td>
<td>57.1%</td>
<td>87.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Hires</td>
<td>65.1%</td>
<td>42.9%</td>
<td>13.3%</td>
<td>100.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Separations</td>
<td>62.9%</td>
<td>66.7%</td>
<td>29.2%</td>
<td>75.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Quits</td>
<td>79.8%</td>
<td>66.7%</td>
<td>16.7%</td>
<td>100.0%</td>
</tr>
<tr class="grey1">
<td colspan="5">Raw readings by Industry</td>
</tr>
<tr class="grey2">
<td class="firstcol">OPENINGS</td>
<td>Services</td>
<td>MFG</td>
<td>Construction</td>
<td>Gov&#39;t</td>
</tr>
<tr class="grey2">
<td class="firstcol">Apr-07</td>
<td>2.5</td>
<td>2.3</td>
<td>2.0</td>
<td>2.1</td>
</tr>
<tr class="grey2">
<td class="firstcol">Mar-07</td>
<td>2.3</td>
<td>2.2</td>
<td>1.9</td>
<td>2.1</td>
</tr>
<tr class="grey2">
<td class="firstcol">Feb-07</td>
<td>2.6</td>
<td>2.3</td>
<td>2.9</td>
<td>2.1</td>
</tr>
<tr class="grey2">
<td class="firstcol">Jan-07</td>
<td>2.6</td>
<td>2.3</td>
<td>1.8</td>
<td>2.1</td>
</tr>
<tr class="grey2">
<td class="firstcol">Hires</td>
<td>Services</td>
<td>MFG</td>
<td>Construction</td>
<td>Gov&#39;t</td>
</tr>
<tr class="grey2">
<td class="firstcol">Apr-07</td>
<td>4.4</td>
<td>2.5</td>
<td>4.3</td>
<td>1.9</td>
</tr>
<tr class="grey2">
<td class="firstcol">Mar-07</td>
<td>4.3</td>
<td>2.3</td>
<td>4.6</td>
<td>1.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">Feb-07</td>
<td>4.5</td>
<td>2.6</td>
<td>3.9</td>
<td>1.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">Jan-07</td>
<td>4.5</td>
<td>2.6</td>
<td>3.9</td>
<td>1.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">SEPARATIONS</td>
<td>Services</td>
<td>MFG</td>
<td>Construction</td>
<td>Gov&#39;t</td>
</tr>
<tr class="grey2">
<td class="firstcol">Apr-07</td>
<td>4.0</td>
<td>2.8</td>
<td>4.9</td>
<td>1.4</td>
</tr>
<tr class="grey2">
<td class="firstcol">Mar-07</td>
<td>4.1</td>
<td>2.8</td>
<td>4.5</td>
<td>1.4</td>
</tr>
<tr class="grey2">
<td class="firstcol">Feb-07</td>
<td>4.0</td>
<td>3.0</td>
<td>4.2</td>
<td>1.3</td>
</tr>
<tr class="grey2">
<td class="firstcol">Jan-07</td>
<td>4.0</td>
<td>2.8</td>
<td>5.2</td>
<td>1.4</td>
</tr>
<tr class="grey2">
<td class="firstcol">QUITS</td>
<td>Services</td>
<td>MFG</td>
<td>Construction</td>
<td>Gov&#39;t</td>
</tr>
<tr class="grey2">
<td class="firstcol">Apr-07</td>
<td>2.5</td>
<td>1.4</td>
<td>1.8</td>
<td>0.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">Mar-07</td>
<td>2.5</td>
<td>1.5</td>
<td>1.7</td>
<td>0.7</td>
</tr>
<tr class="grey2">
<td class="firstcol">Feb-07</td>
<td>2.6</td>
<td>1.5</td>
<td>1.6</td>
<td>0.6</td>
</tr>
<tr class="grey2">
<td class="firstcol">Since 2000</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</body>
</html>

The JOLTS report quit rate is the most important reading of this varied report that has regional and industry detail as well as national readings. When people are wiling to QUIT the jobs they have it is the best sign of strength in [...]

JOLTS Headlines Weaker Than Report Itself Seems…

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070612a.jpg" width="353">
The NFIB index is depicted in the chart as being in the grip of a downtrend with a minor uptrend that remains trapped in a bear channel. It is still not close to breaking out of that channel on the upside but it is headed in that direction. At this point it is all speculation as to whether it will make it or not. 
The responses to the broader NFIB survey are in the table below. They are for the most part still on the weak side as you would expect with an overall index that looks as this one does. Still, evidence on the overall US economy shows that conditions are getting better. So this improved performance could filter down and lift small business as well. But it could also be that weakness in small business is &#145;the termites in the woodwork&#146; that will bring the big business strength down. Since much of hiring is in small businesses, the recent strength in jobs is encouraging even if not well reflected in the survey. For the moment it is a tug of war. These NFIB signals of course draw from this period of elevated energy prices and all firms are feeling that pinch. The revival of jobs growth after a period of persisting bad weather through the first four months of the year (as evidenced by work disruptions reported in the monthly jobs report) have now been set aside. In some sense we begin the process of assessing growth anew now with energy prices having moved up and the Fed no longer on a preconceived policy path and without a clear policy bias despite its stated relatively greater fear of inflation rising. 
The NFIB survey shows rebounds in trends from March onward. Still the absolute readings are poor and are very low by historic standards; the response for &quot;the economy is expected to improve&quot; is in the bottom 11 percentile of its range since 2001. The one clear element lacking is that farms are unwilling to increase inventories. Capital spending plans are a touch weaker than they have been but still reside at a strong point relative to history (in the 90-plus percentile). Firms report fairly steady and moderate selling prices obtained and worker compensation costs paid. While firms are not planning to increase inventories, they report that inventories are rising. They report that credit has become relatively harder to get. Those reporting higher sales Q/Q are fewer in number but the number of positive responses is still historically at or above average depending on the period.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
National Federation of Independent Business
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">NFIB</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">% of range</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>May-07</td>
<td>Apr-07</td>
<td>Mar-07</td>
<td>May-06</td>
<td>since 2001*</td>
<td>since 1990*</td>
</tr>
<tr class="odd">
<td class="firstcol">INDEX</td>
<td>97.2</td>
<td>96.8</td>
<td>97.3</td>
<td>98.2</td>
<td>19.2%</td>
<td>35.6%</td>
</tr>
<tr class="even">
<td class="firstcol">% saying&#133;&#133;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Firms Expecting</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Credit conditions to ease</td>
<td>-6.0</td>
<td>-7.0</td>
<td>-8.0</td>
<td>-8.0</td>
<td>42.9%</td>
<td>53.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Economy to Improve</td>
<td>-3.0</td>
<td>-8.0</td>
<td>-7.0</td>
<td>-2.0</td>
<td>11.5%</td>
<td>28.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Higher Real Sales 6-Mo</td>
<td>16.0</td>
<td>14.0</td>
<td>14.0</td>
<td>17.0</td>
<td>47.6%</td>
<td>47.6%</td>
</tr>
<tr>
<td class="firstcol">Firms Reporting</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Higher Earnings</td>
<td>-15.0</td>
<td>-19.0</td>
<td>-15.0</td>
<td>-19.0</td>
<td>60.7%</td>
<td>60.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Inventories &#39;too low&#39;</td>
<td>-6.0</td>
<td>-3.0</td>
<td>-5.0</td>
<td>-2.0</td>
<td>10.0%</td>
<td>9.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Good Time to Expand</td>
<td>12.0</td>
<td>12.0</td>
<td>12.0</td>
<td>18.0</td>
<td>22.7%</td>
<td>26.1%</td>
</tr>
<tr>
<td class="firstcol">Firms Planning</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; To Increase Employment</td>
<td>13.0</td>
<td>13.0</td>
<td>12.0</td>
<td>13.0</td>
<td>63.2%</td>
<td>57.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; To Add Inventories</td>
<td>0.0</td>
<td>3.0</td>
<td>3.0</td>
<td>3.0</td>
<td>7.7%</td>
<td>20.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Capital expenditures 3-6 mos</td>
<td>29.0</td>
<td>29.0</td>
<td>33.0</td>
<td>30.0</td>
<td>30.8%</td>
<td>25.0%</td>
</tr>
<tr class="even">
<td class="firstcol">Inflation Issues</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Firms Raising</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Avg Selling Price</td>
<td>26.0</td>
<td>18.0</td>
<td>15.0</td>
<td>13.0</td>
<td>91.7%</td>
<td>91.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Worker Compensation</td>
<td>29.0</td>
<td>26.0</td>
<td>28.0</td>
<td>30.0</td>
<td>93.3%</td>
<td>77.3%</td>
</tr>
<tr>
<td class="firstcol">Firms Plan to Raise</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Avg Selling Price</td>
<td>23.0</td>
<td>24.0</td>
<td>22.0</td>
<td>23.0</td>
<td>54.5%</td>
<td>54.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Worker Compensation</td>
<td>38.0</td>
<td>37.0</td>
<td>35.0</td>
<td>39.0</td>
<td>52.9%</td>
<td>52.9%</td>
</tr>
<tr class="even">
<td class="firstcol">Other</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Firms Reporting</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Higher sales Q/Q</td>
<td>1.0</td>
<td>4.0</td>
<td>0.0</td>
<td>-1.0</td>
<td>60.6%</td>
<td>50.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Credit Harder to Get</td>
<td>6.0</td>
<td>5.0</td>
<td>7.0</td>
<td>5.0</td>
<td>75.0%</td>
<td>46.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Raising Inventories</td>
<td>2.0</td>
<td>-2.0</td>
<td>2.0</td>
<td>5.0</td>
<td>70.6%</td>
<td>40.9%</td>
</tr>
<tr class="odd">
<td colspan="7">*100% is high, 0% is low</td>
</tr>
</tbody>
</table>
</body>
</html>

The NFIB index is depicted in the chart as being in the grip of a downtrend with a minor uptrend that remains trapped in a bear channel. It is still not close to breaking out of that channel on the upside but it is headed in that [...]

NFIB - Small Bounce but Still in Downtrend

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070611a.jpg" width="353">
France, Italy and Ireland reported industrial production data for April today. In all three countries, contrary to expectations, industrial production declined from March. France was down 0.77%; Italy, 0.81% and Ireland, 3.26%. These declines following the announcement last week of a 2.27% decline in Germany&#39;s April industrial production are beginning to raise concerns that growth in the Euro Area may be peaking. The first chart, showing industrial production in Germany, France, Italy and Ireland over the past eight years puts the April decline in perspective. It appears to be significant in Ireland and Germany, but merely a ripple in France and Italy where industrial production has varied very little during this period.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070611b.jpg" width="353">
The strength of the Euro, shown in the second chart, has dampened the demand for Euro Area exports of goods and services, and has undoubtedly affected the level of production adversely. Since exports of goods and services have amounted to 50% of Germany&#39;s GDP and roughly 30% of both France&#39;s and Italy&#39;s GDP, the rise in the euro has affected Germany&#39;s exports more than those of either France or Italy. In the first quarter national accounts, Net Exports of Goods and Services in Germany declined 1.16% while they increased 1.84% in France and 0.36% in Italy as shown in the third chart.
While exports are an important part of these economies, they are not the sole determinant of growth. It is too early, therefore, to suggest that Euro Area Growth is peaking on the basis of declines in industrial production that are largely due to a falling off in foreign demand. Domestic demand has begun to pick up and could offset some of the negative effects of a decline in exports.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070611c.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INDUSTRIAL PRODUCTION &nbsp;(SA, 2000=100)&nbsp;</th>
<th scope="col">Apr 07</th>
<th scope="col">Mar 07&nbsp;</th>
<th scope="col">Apr 06</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France</td>
<td>103.6</td>
<td>104.4</td>
<td>101.9</td>
<td>-0.77</td>
<td>1.67</td>
<td>102.9</td>
<td>101.9</td>
<td>101.7</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>98.2</td>
<td>99.0</td>
<td>97.6</td>
<td>-0.81</td>
<td>0.61</td>
<td>98.8</td>
<td>96.3</td>
<td>97.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>142.3</td>
<td>147.1</td>
<td>134.5</td>
<td>-3.26</td>
<td>5.80</td>
<td>134.2</td>
<td>127.6</td>
<td>123.9</td>
</tr>
<tr>
<td class="firstcol"> Germany </td>
<td>114.1</td>
<td>116.7</td>
<td>110.0</td>
<td>-2.27</td>
<td>3.70</td>
<td>111.7</td>
<td>105.5</td>
<td>102.6</td>
</tr>
</tbody>
</table>
</body>
</html>

France, Italy and Ireland reported industrial production data for April today. In all three countries, contrary to expectations, industrial production declined from March. France was down 0.77%; Italy, 0.81% and Ireland, 3.26%. These [...]

ĀIs Growth in the Euro AreaĀpeaking? ĀĀ Ā

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070608b.jpg" width="353">
Industrial production in Turkey has declined in the last two reported months, but those follow a very strong performance in February. In total, IP dropped 1.9% and 3.4% in April and March, respectively, while it surged 6.4% in February. Total manufacturing output fell 3.0% in April and 3.9% in March, but February was up 7.5%. These are all month-to-month figures, seasonally adjusted by Haver Analytics. Data on Turkey are included in Haver&#39;s EMERGEMA database, with the Middle Eastern and African nations.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070608c.jpg" width="353">
As is evident from just the moves in the totals, Turkish industry behavior is not very smooth. Even the mature textile sector -- from the traditional rugs to high fashion, for instance -- has been growing recently, but fell hard in 2005. Newer sectors are more erratic still. Machinery production was down 2.8% in April and 13.1% in March, but it had surged by 22% during 2006.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070608d.jpg" width="353">
This said, the economy is a diverse one, with the traditional textiles now joined by a wide array of other sectors. Metals and machinery are notable as well as automobile production. Indeed, the auto and truck output have expanded rapidly, with a pace now of about 50,000 cars monthly and 30,000 trucks. The truck figures rival Germany and France and exceed the UK. [Those countries&#39; auto and truck output volumes are in Haver&#39;s G10+ database.] The diversity, of course, helps limit the lurches in total industrial production as strength in one sector can balance weakness elsewhere. And the Turkish economy as a whole is moving ahead. Its US-dollar equivalent GDP in 2000 prices was as large last year as those of Austria, Belgium and Switzerland and it is rapidly gaining on Sweden, all much more established. Of course, the standard of living of the average Turk remains a mere fraction of Belgians, Austrians and Swiss. But the growth is encouraging. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">TURKEY Industrial Production ( % Change)</th>
<th scope="col">Apr 2007*</th>
<th scope="col">Mar 2007*</th>
<th scope="col">Feb 2007*</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2000- 2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Industry</td>
<td>-1.9</td>
<td>-3.4</td>
<td>6.4</td>
<td>5.8</td>
<td>5.4</td>
<td>9.8</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>-3.0</td>
<td>-3.9</td>
<td>7.5</td>
<td>5.5</td>
<td>4.8</td>
<td>10.4</td>
<td>3.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Textiles</td>
<td>3.0</td>
<td>2.0</td>
<td>9.4</td>
<td>-1.1</td>
<td>-11.8</td>
<td>-1.5</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">Basic Metals</td>
<td>1.6</td>
<td>-1.0</td>
<td>3.9</td>
<td>10.7</td>
<td>3.4</td>
<td>11.6</td>
<td>5.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Machinery</td>
<td>-2.8</td>
<td>-13.1</td>
<td>4.4</td>
<td>22.0</td>
<td>1.2</td>
<td>31.0</td>
<td>5.7</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>-3.0</td>
<td>-10.3</td>
<td>5.2</td>
<td>9.7</td>
<td>9.6</td>
<td>53.3</td>
<td>0.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Industrial production in Turkey has declined in the last two reported months, but those follow a very strong performance in February. In total, IP dropped 1.9% and 3.4% in April and March, respectively, while it surged 6.4% in [...]

Turkish Industrial Production Pauses after Earlier Surge; National Economy Expanding and Diversifying

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070608e.jpg" width="353">
Japan&#146;s economy watcher&#146;s survey cycled higher from late 2004 through early 2005. Then it dropped off until picking up to a minor peak in August 2006. From that mini- peak it spread out on a gradual increase until it fell sharply again in May, the figure reported today &#150; a sharp drop. 
The employment and future indexes are cycling in concert but with smaller amplitudes. 
The Teikoku indexes and NTC MFG survey echo the findings of weakness but the various surveys find weakness in differing magnitudes. See table below. 
The far right columns put the recent observations for each index or sub-reading in the context of its five year max or min. This allows us to compared intrinsically different indicators. 
Results show that the NTC MFG index is the weakest in the 30th percentile of its range for this period. Next in line comes the economy watcher index and its components with the headline index at 44.4% of its range. The Teikoku indices are the strongest with MFG relatively firm at a range reading of 75% (top 25% of its range) and with retail the relative weakest at 64% of its range. Wholesale services and construction are relatively healthy in the Teikoku scheme. Even so the Teikoku indices are dropping and all sectors dropped again in May. They made their local peak about one year and have been slipping slowly ever since.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Key Japanese Surveys
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Raw readings of each survey</td>
<td colspan="3">Percent of 5Yr range*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>May-07</td>
<td>Apr-07</td>
<td>Mar-07</td>
<td>Feb-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>Mar-07</td>
</tr>
<tr>
<td class="firstcol">Diffusion</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Economy Watchers</td>
<td>46.8</td>
<td>49.7</td>
<td>50.8</td>
<td>49.2</td>
<td>44.4%</td>
<td>59.8%</td>
<td>65.6%</td>
</tr>
<tr>
<td class="firstcol">Employment</td>
<td>50.7</td>
<td>57.1</td>
<td>56.3</td>
<td>55.9</td>
<td>35.6%</td>
<td>63.1%</td>
<td>59.7%</td>
</tr>
<tr>
<td class="firstcol">Future</td>
<td>50.0</td>
<td>51.9</td>
<td>51.3</td>
<td>52.1</td>
<td>52.9%</td>
<td>68.0%</td>
<td>70.6%</td>
</tr>
<tr>
<td class="firstcol">NTC MFG</td>
<td>51.4</td>
<td>52.3</td>
<td>--</td>
<td>--</td>
<td>30.2%</td>
<td>41.4%</td>
<td>43.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Econ Trends (Teikoku&#39;/50 neutral/weighted diffusion)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>45.2</td>
<td>47.0</td>
<td>47.2</td>
<td>46.7</td>
<td>76.2%</td>
<td>85.1%</td>
<td>86.2%</td>
</tr>
<tr>
<td class="firstcol">Retail</td>
<td>39.6</td>
<td>41.1</td>
<td>41.1</td>
<td>39.9</td>
<td>64.3%</td>
<td>74.3%</td>
<td>74.3%</td>
</tr>
<tr>
<td class="firstcol">Wholesale</td>
<td>42.8</td>
<td>44.3</td>
<td>44.6</td>
<td>43.8</td>
<td>75.6%</td>
<td>83.5%</td>
<td>85.8%</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>49.1</td>
<td>50.3</td>
<td>49.9</td>
<td>49.4</td>
<td>88.4%</td>
<td>93.6%</td>
<td>92.2%</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>37.7</td>
<td>38.4</td>
<td>38.7</td>
<td>38.7</td>
<td>84.4%</td>
<td>89.2%</td>
<td>91.2%</td>
</tr>
<tr>
<td colspan="8">100 is high; Zero is low</td>
</tr>
</tbody>
</table>
</body>
</html>

Japans economy watchers survey cycled higher from late 2004 through early 2005. Then it dropped off until picking up to a minor peak in August 2006. From that mini- peak it spread out on a gradual increase until it fell sharply [...]

Land of the Setting Sun? Japan’s Surveys Falter Again…

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

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

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

Winnie Tapasanun

260205X15.jpg

260205Y15.jpg

**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.

260205C15.jpg

260205D15.jpg

- 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

260205A2.jpg

260205B2.jpg

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.

260205C2.jpg

260205D2.jpg

- 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

260205E.jpg

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: 2007

Jump to:

Rises in the Japanese Corporate Goods Prices Index (CGPI) Are Yet to Be Reflected in the CPI

JOLTS Headlines Weaker Than Report Itself Seems…

NFIB - Small Bounce but Still in Downtrend

NFIB - Small Bounce but Still in Downtrend

ĀIs Growth in the Euro AreaĀpeaking? ĀĀ Ā

ĀIs Growth in the Euro AreaĀpeaking? ĀĀ Ā

Turkish Industrial Production Pauses after Earlier Surge; National Economy Expanding and Diversifying

Land of the Setting Sun? Japan’s Surveys Falter Again…