Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604h.jpg" align="left" border="0" height="265" width="353">
The ADP National Employment Report, from the payroll
processor, reported that private nonfarm payrolls rose 40,000 last
month after a slightly revised increase 13,000 during April.
&gt;The U.S. Bureau of Labor Statistics May employment figure
will be published this Friday.For
April, a 13,000 worker rise in ADP's measure of private nonfarm
payrolls was accompanied by a 29,000 worker decline in private sector
payrolls as reported by BLS.

According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90.
The ADP sub-index for large payrolls fell 18,000 (-1.0% y/y)
after a 15,000 worker decline during April.
A 61,000 worker increase (1.3% y/y) in small sized payrolls
during May followed a 43,000 April rise.
Medium sized payrolls fell 3,000 (-0.0% y/y).

Employment in the goods producing industries fell another
37,000 (-2.1% y/y) and the rate of decline has intensified as this year
has progressed. Services payrolls rose 77,000 (1.3% y/y).
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's pUSECONp database;
historical data go back to December 2000. The figures in this report
cover only private sector jobs and exclude employment in the public
sector, which rose an average 11,083 during the last twelve months.The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_Report_May_08.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>40,000</td>
<td>13,000</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
</body></html>

The ADP National Employment Report, from the payroll processor, reported that private nonfarm payrolls rose 40,000 last month after a slightly revised increase 13,000 during April. >The U.S. Bureau of Labor Statistics May employment [...]

ADP Report: May Private Sector Payrolls Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604g.jpg" width="353">
The May Composite Index for the non-manufacturing sector, from the Institute for Supply Management, held about steady with April at 51.7; an improvement from 49.6 in March and well up from the recent low of 44.6 in January. Consensus expectations had been for a lower May reading of 51.0.
Beginning with the January 2008 Non-Manufacturing <cite>Report On Business</cite>&reg;, a composite index is now calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indexes for four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
The non-manufacturing business activity sub-index also improved to 53.6 from 50.9 in April. So far in 2008 the index has averaged a beak-even 49.9, down from 56.0 during all of last year. Since the series&#39; inception in 1997 there has been a 48% correlation between the level of the business activity index for the non-manufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.
The new orders sub-index improved to 53.6 from 50.1 in April but the employment index gave back half of its April improvement and fell to 48.7. The series remained below last year&#39;s level of 52.0. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power rose further as the prices paid index rose to 77.0. The latest was the highest level since last November and it was well up from the 2007 average of 63.8. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>51.7</td>
<td>52.0</td>
<td>54.5</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>77.0</td>
<td>72.1</td>
<td>64.3</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>


</html>

The May Composite Index for the non-manufacturing sector, from the Institute for Supply Management, held about steady with April at 51.7; an improvement from 49.6 in March and well up from the recent low of 44.6 in January. Consensus [...]

U.S. ISM Non-Manufacturing Index Fell in May; Prices Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604e.jpg" width="353">
During May, job cut announcements continued to rise according to the Challenger, Grey &amp; Christmas survey. A 15% increase from April to 103,522 pulled the level to its highest since December 2005. Since December announcements have more than doubled and the three-month average of announcements were at the highest level since 2006.
A rise in the three-month average of job cut announcements in services, financial and automotive sectors led the recent rise.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604f.jpg" width="353">
During the last ten years there has been a 76% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell by more than one-third and reversed an April gain.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>103,522</td>
<td>90,015</td>
<td>45.6%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
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During May, job cut announcements continued to rise according to the Challenger, Grey & Christmas survey. A 15% increase from April to 103,522 pulled the level to its highest since December 2005. Since December announcements have more [...]

Challenger Layoffs Highest Since 2005

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604d.jpg" align="left" border="0" height="265" width="353">
Labor productivity in the nonfarm business sector rose a
revised 2.6% last quarter, as expected. That increase was stronger than
the 2.2% growth estimated last month and was up from 1.8% growth during
4Q07.
The upward revision was due to an upward revision to output
growth to a still low 0.7% from 0.4%. That was accompanied by an
unrevised 1.8% decline in total hours worked.
Growth in compensation per hour rose was revised up to 4.9%
from 4.4%. The increase, nevertheless, lowered the year-to-year rise to
4.0%, down from 5.8% as of 3Q '07.
Unit labor cost growth was left unrevised at 2.2% after a
revised 4.7% surge during 4Q '07. Year-to- year, the growth in costs
fell to a modest 0.7%, the slowest rate of growth since a slight
decline early in 2004.
In the nonfinancial corporate sector, productivity rose a firm
4.6% (3.0% y/y). That annual increase was the quickest since the end of
2004 while quarterly strength reflected a 3.2% rise in output but a
1.4% decline in hours worked.
Compensation in the corporate sector again was firm and
increased 5.9%, a rise which left unit labor costs to increase 1.2%
(1.1% y/y).
In the factory sector, productivity rose a somewhat lessened
3.6% (4.0% y/y). Unit labor cost growth was revised up to 4.2% on a
quarterly basis but earlier quarterly declines reduced the year-to-year
change to -0.2%.
Productivity, Energy Prices, and the Great
Moderation: a New Link is from the Federal Reserve Bank of
Atlanta and it can be found <a href="http://www.frbatlanta.org/filelegacydocs/wp0811.pdf">here</a>
. 


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<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">Q1 '08
(Revised)</th>
<th scope="col">Q1 '08</th>
<th scope="col">Q4 '07</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per
Hour</td>
<td>2.6</td>
<td>2.2</td>
<td>1.8</td>
<td>3.3</td>
<td>1.8</td>
<td>1.0</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">Compensation
per Hour</td>
<td>4.9</td>
<td>4.4</td>
<td>6.6</td>
<td>4.0</td>
<td>5.1</td>
<td>3.9</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor
Costs</td>
<td>2.2</td>
<td>2.2</td>
<td>4.7</td>
<td>0.7</td>
<td>3.2</td>
<td>2.9</td>
<td>2.0</td>
</tr>
</tbody>
</table>
</body></html>

Labor productivity in the nonfarm business sector rose a revised 2.6% last quarter, as expected. That increase was stronger than the 2.2% growth estimated last month and was up from 1.8% growth during 4Q07. The upward revision was due [...]

U.S. Productivity Growth Revised Up; Unit Labor Costs Rose Moderately

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604a.jpg" align="left" border="0" height="265" width="353">
U.S. sales of light vehicles in May fell another 1.1% m/m to a
14.30M unit annual selling rate, according to the Autodata Corporation.
It was the fourth m/m decline this year and so far in 2008 vehicle
sales have fallen 11.7%. The level of vehicle sales also was lower than
Consensus expectations for sales of 14.6M.
Overall, sales of domestically made light vehicles
fell 1.3% last month and were off 14.5% YTD, at the lowest level since
early 1992.
Higher gasoline prices continued to hit sales of relatively
fuel inefficient domestically made light trucks.
Sales fell 9.8% m/m during May and that brought the decline
this year to 25.6%. Sales of U.S. made cars have held up relatively
well and posted an 8.8% increase last month and are roughly unchanged
since yearend. 
Sales of imported light vehicles slipped
just 0.7% m/m to 3.97M units after a 2.1% April decline. Sales of
imported autos rose 3.8% after a 0.4% April slip and so far this year
sales of imported cars are up 5.8%. Sales of imported light trucks,
however, felt some of the effect from higher gas prices and fell 9.7%;
off 19.6% so far this year.
Import's share of the U.S. light vehicle
market rose slightly to another record level of 27.9%. (Imported
vehicles are those produced outside the U.S. and does not include
vehicles with the nameplate of a foreign manufacturer produced within
the U.S.) Imports' share of the U.S. car market rose to 34.6% and the
share of the light truck market was 19.2%; both records and more than
double the shares ten years ago.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604b.jpg" border="0" height="265" width="312">
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080604c.jpg" border="0" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>14.30</td>
<td>&nbsp;14.46</td>
<td>-12.5%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.98</td>
<td>7.46</td>
<td>-0.3%</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>5.22</td>
<td>4.80</td>
<td>-2.9%</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>2.76</td>
<td>2.66</td>
<td>5.0%</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>6.32</td>
<td>7.00</td>
<td>-24.1%</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>5.11</td>
<td>5.66</td>
<td>-26.4%</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.21</td>
<td>1.34</td>
<td>-13.2%</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
</body></html>

U.S. sales of light vehicles in May fell another 1.1% m/m to a 14.30M unit annual selling rate, according to the Autodata Corporation. It was the fourth m/m decline this year and so far in 2008 vehicle sales have fallen 11.7%. The [...]

U.S. Light Vehicle Sales Down in May; Truck Sales Lowest Since 1996

U.S. Light Vehicle Sales Down inMay; Truck Sales Lowest Since 1996

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080603g.jpg" align="left" border="0" height="265" width="353">
Revised figures for growth in Gross Domestic Product in the
Euro Area in the first quarter of this year, published today, were
better than the flash estimates reported earlier--an increase of 0.8%
instead of 0.7%. Growth in Germany was 1.5%, in part the result of
unusually high activity in the construction field due to mild winter
weather. The quarterly rates of growth in Germany, France, Italy and
the entire Euro Area are shown in the first chart. Germany's
performance is a clear stand out.
The performance of the area and of Germany in particular was
in stark contrast to that of the United States, where real GDP
increased at an annual rate of 0.22% in the first quarter of 2008. At
annual rates, the Euro Area grew 3.2% and Germany grew 6.3%.
Most forecasters expect growth in the Euro Area and in Germany
to slow in the remaining quarters of 2008, but some have begun to raise
their forecasts for the whole year as a result of the strong first
quarter. The IMF has recently raised its 2008 forecast for the Euro
Area from 1.4 % to 1.75%

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">REAL
GDP (Billions of Chained 2000Euros)&nbsp;</th>
<th scope="col">Q1 08</th>
<th scope="col">Q4&nbsp; 07&nbsp;</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q/Q %&nbsp;&nbsp;</th>
<th scope="col">Y/Y % &nbsp;</th>
<th scope="col">2007%</th>
<th scope="col">2006%</th>
<th scope="col">2005%</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro Area</td>
<td>1946.9</td>
<td>1931.5</td>
<td>1905.8</td>
<td>0.80</td>
<td>2.16</td>
<td>2.65</td>
<td>2.92</td>
<td>1.75</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>572.1</td>
<td>563.5</td>
<td>557.4</td>
<td>1.53</td>
<td>2.64</td>
<td>2.62</td>
<td>3.08</td>
<td>0.97</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>414.1</td>
<td>411.5</td>
<td>405.0</td>
<td>0.64</td>
<td>2.25</td>
<td>2.11</td>
<td>2.36</td>
<td>1.92</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>321.8</td>
<td>320.5</td>
<td>321.2</td>
<td>0.41</td>
<td>0.18</td>
<td>1.36</td>
<td>1.90</td>
<td>0.68</td>
</tr>
</tbody>
</table>
</body></html>

Revised figures for growth in Gross Domestic Product in the Euro Area in the first quarter of this year, published today, were better than the flash estimates reported earlier--an increase of 0.8% instead of 0.7%. Growth in Germany [...]

Strong First Quarter Growth In The Euro Area, Particularly In Germany

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080603e.jpg" width="353">
Factory inventories slipped slightly during April after increases near 1.0% during the prior several months. The three-month growth rate, as a result, eased to 6.2% which was half the recent rates of growth.
Inventories of nondefense aircraft and light trucks posted strong increases over the last three months of 14.1% and 31.1%, respectively. Automobile inventories, conversely, are down at a 47.7% rate. Less the transportation sector altogether inventories fell 0.2% in April and three-month growth totaled 4.6%.
Inventory accumulation in the machinery sector was firm at 9.0% over the last three months after a 5.4% 2007 increase while the rate of accumulation in the computer area surged to 10.7% after slight decumulation last year. Working the other way, nondurable inventories fell 1.0% during April and three-month growth eased to 2.8% after double digit growth rates earlier this year. Petroleum inventories fell 6.4% in April and that pulled three-month negative after double digit growth last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080603f.jpg" width="353">
Factory shipments surged 2.2% during April, double the March jump. Higher prices lifted shipments of petroleum by 6.3% after a 10.7% March jump. Less petroleum shipments still surged by 1.6% following declines during the prior several months. Shipments of textiles and apparel have been falling hard but machinery shipments rose at an 8.7% rate during the last three months. Computer shipments and of electrical equipment &amp; appliances also have fallen.
Total factory orders rose another firm 1.1% although that reflected the 6.3% jump in petroleum orders (which equal shipments). Less petroleum, shipments rose 0.4% and three- month growth picked up to 2.8%. Durable orders overall fell 0.6% which was little different than reported in the advance report.
Overall unfilled orders rose 0.9% in April and the three-month growth rate remained firm at 14.4%. Much of that strength has been due to higher backlogs of civilian aircraft which have been rising at a 28.3% rate. Excluding the transportation sector altogether unfilled orders still rose 1.5% in April. Accelerated growth in backlogs of machinery and electrical equipment accounts for that strength.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-0.0</td>
<td>0.9</td>
<td>6.0</td>
<td>3.7</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.2</td>
<td>0.8</td>
<td>5.0</td>
<td>2.7</td>
<td>7.9</td>
<td>8.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.1</td>
<td>1.5</td>
<td>3.8</td>
<td>1.9</td>
<td>6.2</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>2.6</td>
<td>2.6</td>
<td>7.9</td>
<td>1.2</td>
<td>7.4</td>
<td>11.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>2.2</td>
<td>1.1</td>
<td>5.0</td>
<td>1.2</td>
<td>5.9</td>
<td>10.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>2.3</td>
<td>1.9</td>
<td>6.7</td>
<td>1.5</td>
<td>6.7</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.9</td>
<td>1.3</td>
<td>16.0</td>
<td>17.1</td>
<td>15.3</td>
<td>15.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>1.5</td>
<td>0.8</td>
<td>9.0</td>
<td>8.2</td>
<td>16.0</td>
<td>9.2</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventories slipped slightly during April after increases near 1.0% during the prior several months. The three-month growth rate, as a result, eased to 6.2% which was half the recent rates of growth. Inventories of nondefense [...]

U.S. Factory Inventories Slipped in April

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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

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

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

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

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

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

U.S. Consumer Credit Strengthens in September

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

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

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

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

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

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

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

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

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

Robert Brusca

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

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

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

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

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

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

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Germany

German Trade Surplus Shrinks Despite Strong Exports

Andrew Cates

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

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

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

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

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

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

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

Charts of the Week: Uneven But Unbroken

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

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

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

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

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

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

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

Economy in Brief: 2008

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