Tom Moeller

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<td><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014a.jpg" width="353"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014b.jpg" width="353"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014c.jpg" width="353"></td>
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<th scope="col" class="firstcol">&middot; Without the healthy incentive to buy a new motor vehicle, retail sales last month gave back their August gain. Retail Sales fell 1.5% during September after a 2.2% August increase that was slightly less than reported initially. The retail sales data are available in Haver&#39;s USECON database.&middot; The end of the &quot;Cash-For-Clunkers&quot; auto sales program led to a 10.4% drop in retail sales of motor vehicles last month which more than reversed the 7.8% August jump. These dollar figures accompanied the 34.6% m/m drop in unit vehicle sales reported earlier this month which followed a 25.4% August increase.&middot; After accounting for this extreme volatility, sales during the last two months posted fairly steady increases. Without the auto sector, retail sales rose 0.5% after a 1.0% increase during August. Moreover, these gains have suffered little from the recent jump in gasoline prices. Without autos and gasoline, retail sales rose 0.4% (-1.6% y/y) after a 0.6% August increase. These were the first two consecutive monthly increase since January/February &#39;09. The y/y change of -1.5% compares to -4.5% y/y during July.&nbsp;&middot; Discretionary spending firmed last month as sales at general merchandise stores rose 0.9% (1.1% y/y) after a firm 1.2% August increase. In the soft goods area, apparel store sales increased 0.5% (-1.3% y/y) following even firmer increases during the prior two months. Finally, furniture, electronics &amp; appliance store sales rose 0.7% (-8.2% y/y). Furniture store sales alone more-than-reversed an August drop with a 1.4% (-6.5% y/y) jump while sales of electronics &amp; appliances were unchanged (-9.7% y/y).&middot; Internet and catalogue purchases slipped 0.1% (-2.3% y/y) following a 0.1% August uptick. Finally, restaurant sales gained 0.2% (0.6% y/y) after a 0.6% August gain.&middot; Building materials sales continued their slump and fell 0.2% (-13.0% y/y) after larger declines during the prior three months.&middot; Yesterday&#39;s speech by Fed Vice chairman Donald L. Kohn on The Economic Outlook can be found <a href="http://www.federalreserve.gov/newsevents/speech/kohn20091013a.htm">here</a>.&nbsp;</th>
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<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
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<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a> (%)</td>
<td>-1.5</td>
<td>2.2</td>
<td>-0.1</td>
<td>-5.7</td>
<td>-0.7</td>
<td>3.3</td>
<td>5.3</td>
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<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.5</td>
<td>1.0</td>
<td>-0.5</td>
<td>-8.5</td>
<td>2.5</td>
<td>3.9</td>
<td>6.3</td>
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<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>0.4</td>
<td>0.6</td>
<td>-0.3</td>
<td>-1.6</td>
<td>1.6</td>
<td>3.6</td>
<td>5.7</td>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014d.jpg" width="353">
The DIHK survey, a poling of over 25000 firms by the German chambers of industry and commerce, is not conducted in Q3. So the fourth quarter&#146;s -10 reading compares to the -17 reading from Q2. It is a net balance of opinion diffusion index. A strong improvement in existing conditions is indicated, but declines persist. DIHK itself pointed to the role in temporary government stimulus in boosting the survey and muted its optimism with expectations for more modest improvements in the index for the quarter ahead 
The index has climbed up from the 14th percentile of its range in 2009-Q2 to stand in the 25th percentile in Q4. Business expectations are sharply higher at a raw reading of zero up from -27 in Q2. The range standing for that reading is up to a respectable 58th percent of the range from a low 13th percentile in Q2. Export expectations are up even more strongly to a raw reading of +7 from a Q2 reading of -37, pushing the percentile standing up to its 55th percentile from 1.3% in 2009 Q2. These sorts of progressions are in line with much of the data that have been reported that have showed foreign orders to be picking up, although some recent German export figures were more disappointing; that slowdown is not corroborated here. 
As to investment, the Q2 percentile standing was the worst in the history of the survey, a history that extends back to Q4 1991. The improved standing to a still-weak 27th percentile on a raw reading of -17 nonetheless is sharply up from -30 in Q2. Still we can see that investment demands are lagging. Hiring intentions occupy a sort of middle ground at a raw reading of -15; conditions are much improved from Q2&#146;s reading at -25. Still more cutting is indicated. The percentile standing has been boosted to its 38th percentile, but that is still weak. Clearly much more improvement will bee needed to stoke job growth and just to keep the prospect of more cuts at bay. 

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DIHK-Balance of Economic Opinion
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<td class="firstcol">&nbsp;</td>
<td colspan="3">Net Balance Readings</td>
<td colspan="3">Change</td>
<td>Range Q4&#39;91</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Q4-09</td>
<td>Q2-09</td>
<td>Q1-09</td>
<td>Yr Ago</td>
<td>2-Yr</td>
<td>3-Yr</td>
<td>Q4-09</td>
<td>Q2-09</td>
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<td class="firstcol">Economic Conditions</td>
<td>-10</td>
<td>-17</td>
<td>2</td>
<td>-27</td>
<td>-41</td>
<td>-34</td>
<td>25.8</td>
<td>14.5</td>
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<td class="firstcol">Business Expectations</td>
<td>0</td>
<td>-27</td>
<td>-35</td>
<td>7</td>
<td>-15</td>
<td>-10</td>
<td>58.3</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Export Expectations</td>
<td>7</td>
<td>-34</td>
<td>-35</td>
<td>-6</td>
<td>-30</td>
<td>-27</td>
<td>55.3</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Investment Intentions</td>
<td>-17</td>
<td>-30</td>
<td>-23</td>
<td>-15</td>
<td>-31</td>
<td>-23</td>
<td>27.7</td>
<td>0.0</td>
</tr>
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<td class="firstcol">Hiring Intentions</td>
<td>-15</td>
<td>-25</td>
<td>-20</td>
<td>-13</td>
<td>-24</td>
<td>-15</td>
<td>38.3</td>
<td>17.0</td>
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<thead>
<tr>
DIHK-Balance of Economic Opinion
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Net Balance Readings</td>
<td colspan="3">Change</td>
<td>Range Q4&#39;91</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Q4-09</td>
<td>Q2-09</td>
<td>Q1-09</td>
<td>Yr Ago</td>
<td>2-Yr</td>
<td>3-Yr</td>
<td>Q4-09</td>
<td>Q2-09</td>
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<td class="firstcol">Economic Conditions</td>
<td>-10</td>
<td>-17</td>
<td>2</td>
<td>-27</td>
<td>-41</td>
<td>-34</td>
<td>25.8</td>
<td>14.5</td>
</tr>
<tr>
<td class="firstcol">Business Expectations</td>
<td>0</td>
<td>-27</td>
<td>-35</td>
<td>7</td>
<td>-15</td>
<td>-10</td>
<td>58.3</td>
<td>13.3</td>
</tr>
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<td class="firstcol">Export Expectations</td>
<td>7</td>
<td>-34</td>
<td>-35</td>
<td>-6</td>
<td>-30</td>
<td>-27</td>
<td>55.3</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Investment Intentions</td>
<td>-17</td>
<td>-30</td>
<td>-23</td>
<td>-15</td>
<td>-31</td>
<td>-23</td>
<td>27.7</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Hiring Intentions</td>
<td>-15</td>
<td>-25</td>
<td>-20</td>
<td>-13</td>
<td>-24</td>
<td>-15</td>
<td>38.3</td>
<td>17.0</td>
</tr>
</tbody>
</table>
DIHK Survey Points to Continued Improvement in German Economy 
by <a href="/comment/Brusca.html">Bob Brusca</a> October 14, 2009


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014e.jpg">
Weakness in the U.S. dollar is pushing up non-oil import prices. Following the strength in oil prices earlier this year, now non-oil prices have firmed. U.S. import prices last month ticked up the expected 0.1% after jumps between 1.0% and 3.0% during three of the prior four months.
The latest report showed that non-oil import prices rose 0.4%, which was the strongest monthly increase since July of last year. On a three-month basis, these prices have risen at a 1.9% annual rate after declining at a 13.6% rate as of last December. (During the last ten years, there has been a negative 81% correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non-oil import prices.)<img align="right" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014f.jpg">
Import prices break down as follows: Food prices added 0.4% to a 1.3% August increase (-5.0% y/y). Capital goods prices broke from weakness with a 0.1% uptick which raised the three-month change to 0.4% following a 3.4% rate of decline in June. Prices for nonauto consumer goods also rose 0.1% (-1.0% y/y) and brought the three-month change to -1.1% from its weakest reading of -2.6% in January. Durable consumer goods prices were unchanged (-1.4% y/y) after two months of slight decline. Household goods rose slightly (-1.6% y/y) and furniture prices jumped 0.9% (-1.0% y/y). Apparel prices were unchanged for the second month (-1.1% y/y) but the three-month change improved to -0.4% from -4.3% six months ago.
The recent gain in petroleum prices took a breather last month and fell 1.1% after sharp increases during six of the prior seven months. This month, however, crude oil prices have found renewed strength and were up to $74.15 per barrel yesterday from a September average of $69.46.
Total export prices reversed some of their earlier strengthening with a fall of 0.3%. The drop was led by a 2.8% (-16.6% y/y) decline in agricultural prices. Nonagricultural export prices were unchanged and down 4.4% y/y.
The import and export price series can be found in Haver&#39;s USECON database. Detailed figures are available in the USINT database.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA, %)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
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<td class="firstcol">Import - All Commodities</td>
<td>0.1</td>
<td>1.6</td>
<td>-0.7</td>
<td>-12.0</td>
<td>11.5</td>
<td>4.2</td>
<td>4.9</td>
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<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-1.1</td>
<td>7.7</td>
<td>-2.5</td>
<td>-32.5</td>
<td>37.7</td>
<td>11.6</td>
<td>20.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.4</td>
<td>0.3</td>
<td>-0.2</td>
<td>-5.4</td>
<td>5.3</td>
<td>2.7</td>
<td>1.7</td>
</tr>
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<td class="firstcol">Export - All Commodities</td>
<td>-0.3</td>
<td>0.7</td>
<td>-0.3</td>
<td>-5.6</td>
<td>6.0</td>
<td>4.9</td>
<td>3.6</td>
</tr>
</tbody>
</table>
U.S. Import Prices Tick Higher As Non-Oil Prices Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> October, 14, 2009


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014h.jpg" width="353">
Why hold inventories if they&#39;re loosing value and the demand outlook is uncertain? These two questions are behind the decumulation which continued through August. Business inventories fell another 1.5% which exceeded expectations for a 0.9% drop. The drop was pervasive amongst businesses and the 14.9% three-month rate of decline is a record.
Retail inventories fell a hefty 2.3% during August. That was led by a 7.9% (-31.1% y/y) drop in auto inventories followed by a 0.3% (-6.4% y/y) shrinkage in nonauto inventories. Furniture inventories (-12.3% y/y) continued down as did clothing inventories (-8.7% y/y). General merchandise inventories posted an uptick but they still were off 4.1% y/y and building materials stores shed 0.6% of inventories (-9.0% y/y. Factory inventories fell 0.8% and at an accelerated 11.5% y/y. Wholesale inventories were off 1.3% and, excluding oil, wholesale inventories fell 1.5% (-15.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014g.jpg" width="353">
Businesses&#39; success in slashing inventories has kept up with recent weakness in sales. As a result, the inventory-to-sales ratio for total business fell to its cycle low of 1.33 versus a high of 1.46 in January. The latest was the lowest since last September.
The business sales and inventory data are available in Haver&#39;s USECON database.
Disagreement About The Inflation Outlook from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-31.html">here</a>

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<th scope="col" class="firstcol">Business Inventories (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
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<td class="firstcol">Total</td>
<td>-1.5</td>
<td>-1.1</td>
<td>-1.4</td>
<td>-13.3</td>
<td>0.6</td>
<td>4.0</td>
<td>6.4</td>
</tr>
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<td class="firstcol">&nbsp; Retail</td>
<td>-2.3</td>
<td>-1.0</td>
<td>-1.2</td>
<td>-14.1</td>
<td>-3.1</td>
<td>2.5</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Auto</td>
<td>-0.3</td>
<td>-0.5</td>
<td>-0.5</td>
<td>-6.4</td>
<td>-1.8</td>
<td>2.7</td>
<td>4.7</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Wholesale</td>
<td>-1.3</td>
<td>-1.6</td>
<td>-2.1</td>
<td>-14.7</td>
<td>3.1</td>
<td>6.2</td>
<td>8.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.8</td>
<td>-0.9</td>
<td>-1.1</td>
<td>-11.5</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2</td>
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The DIHK survey, a poling of over 25000 firms by the German chambers of industry and commerce, is not conducted in Q3. So the fourth quarters -10 reading compares to the -17 reading from Q2. It is a net balance of opinion diffusion [...]

U.S. Retail Sales Decline In September After Auto-Led August Gain; Underlying Trend Firms

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014h.jpg" width="353">
Why hold inventories if they&#39;re loosing value and the demand outlook is uncertain? These two questions are behind the decumulation which continued through August. Business inventories fell another 1.5% which exceeded expectations for a 0.9% drop. The drop was pervasive amongst businesses and the 14.9% three-month rate of decline is a record.
Retail inventories fell a hefty 2.3% during August. That was led by a 7.9% (-31.1% y/y) drop in auto inventories followed by a 0.3% (-6.4% y/y) shrinkage in nonauto inventories. Furniture inventories (-12.3% y/y) continued down as did clothing inventories (-8.7% y/y). General merchandise inventories posted an uptick but they still were off 4.1% y/y and building materials stores shed 0.6% of inventories (-9.0% y/y. Factory inventories fell 0.8% and at an accelerated 11.5% y/y. Wholesale inventories were off 1.3% and, excluding oil, wholesale inventories fell 1.5% (-15.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014g.jpg" width="353">
Businesses&#39; success in slashing inventories has kept up with recent weakness in sales. As a result, the inventory-to-sales ratio for total business fell to its cycle low of 1.33 versus a high of 1.46 in January. The latest was the lowest since last September.
The business sales and inventory data are available in Haver&#39;s USECON database.
Disagreement About The Inflation Outlook from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-31.html">here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">Business Inventories (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
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</thead>
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<td class="firstcol">Total</td>
<td>-1.5</td>
<td>-1.1</td>
<td>-1.4</td>
<td>-13.3</td>
<td>0.6</td>
<td>4.0</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail</td>
<td>-2.3</td>
<td>-1.0</td>
<td>-1.2</td>
<td>-14.1</td>
<td>-3.1</td>
<td>2.5</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Auto</td>
<td>-0.3</td>
<td>-0.5</td>
<td>-0.5</td>
<td>-6.4</td>
<td>-1.8</td>
<td>2.7</td>
<td>4.7</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Wholesale</td>
<td>-1.3</td>
<td>-1.6</td>
<td>-2.1</td>
<td>-14.7</td>
<td>3.1</td>
<td>6.2</td>
<td>8.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.8</td>
<td>-0.9</td>
<td>-1.1</td>
<td>-11.5</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2</td>
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Why hold inventories if they're loosing value and the demand outlook is uncertain? These two questions are behind the decumulation which continued through August. Business inventories fell another 1.5% which exceeded expectations for [...]

U.S. Business Inventory Decumulation Continues At A Record Rate

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014e.jpg" align="left" border="0">
Weakness in the U.S. dollar is pushing up non-oil import prices.
Following the strength in oil prices earlier this year, now non-oil
prices have firmed. U.S. import prices last month ticked up the
expected 0.1% after jumps between 1.0% and 3.0% during three of the
prior four months.
The latest report showed that non-oil import prices rose 0.4%, which
was the strongest monthly increase since July of last year. On a
three-month basis, these prices have risen at a 1.9% annual rate after
declining at a 13.6% rate as of last December. (During the last ten
years, there has been a negative 81% correlation between the nominal
trade-weighted exchange value of the US dollar vs. major currencies and
the y/y change in non-oil import prices.)<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014f.jpg" align="right" border="0">
Import prices break down as follows: Food prices added 0.4% to a
1.3% August increase (-5.0% y/y). Capital goods prices broke from
weakness with a 0.1% uptick which raised the three-month change to 0.4%
following a 3.4% rate of decline in June. Prices for nonauto consumer
goods also rose 0.1% (-1.0% y/y) and brought the three-month change to
-1.1% from its weakest reading of -2.6% in January. Durable consumer
goods prices were unchanged (-1.4% y/y) after two months of slight
decline. Household goods rose slightly (-1.6% y/y) and furniture prices
jumped 0.9% (-1.0% y/y). Apparel prices were unchanged for the second
month (-1.1% y/y) but the three-month change improved to -0.4% from
-4.3% six months ago.
The recent gain in petroleum prices took a breather last month and
fell 1.1% after sharp increases during six of the prior seven months.
This month, however, crude oil prices have found renewed strength and
were up to $74.15 per barrel yesterday from a September average of
$69.46.
Total export prices reversed some of their earlier strengthening
with a fall of 0.3%. The drop was led by a 2.8% (-16.6% y/y) decline in
agricultural prices. Nonagricultural export prices were unchanged and
down 4.4% y/y.
The import and export price series can be found in Haver's USECON database. Detailed figures are available in the USINT database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA, %)</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.1</td>
<td>1.6</td>
<td>-0.7</td>
<td>-12.0</td>
<td>11.5</td>
<td>4.2</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-1.1</td>
<td>7.7</td>
<td>-2.5</td>
<td>-32.5</td>
<td>37.7</td>
<td>11.6</td>
<td>20.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.4</td>
<td>0.3</td>
<td>-0.2</td>
<td>-5.4</td>
<td>5.3</td>
<td>2.7</td>
<td>1.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Export - All Commodities</td>
<td>-0.3</td>
<td>0.7</td>
<td>-0.3</td>
<td>-5.6</td>
<td>6.0</td>
<td>4.9</td>
<td>3.6</td>
</tr>
</tbody>
</table>
</body></html>

Weakness in the U.S. dollar is pushing up non-oil import prices. Following the strength in oil prices earlier this year, now non-oil prices have firmed. U.S. import prices last month ticked up the expected 0.1% after jumps between [...]

U.S. Import Prices Tick Higher As Non-Oil Prices Firm

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091014d.jpg" align="left" border="0" height="265" width="353">
The DIHK survey, a poling of over 25000 firms by the German
chambers of industry and commerce, is not conducted in Q3. So the
fourth quarter&#8217;s -10 reading compares to the -17 reading from Q2. It is
a net balance of opinion diffusion index. A strong improvement in
existing conditions is indicated, but declines persist. DIHK itself
pointed to the role in temporary government stimulus in boosting the
survey and muted its optimism with expectations for more modest
improvements in the index for the quarter ahead 
 

The index has climbed up from the 14th percentile of its range
in 2009-Q2 to stand in the 25th percentile in Q4. Business expectations
are sharply higher at a raw reading of zero up from -27 in Q2. The
range standing for that reading is up to a respectable 58th percent of
the range from a low 13th percentile in Q2. Export expectations are up
even more strongly to a raw reading of +7 from a Q2 reading of -37,
pushing the percentile standing up to its 55th percentile from 1.3% in
2009 Q2. These sorts of progressions are in line with much of the data
that have been reported that have showed foreign orders to be picking
up, although some recent German export figures were more disappointing;
that slowdown is not corroborated here. 
 

As to investment, the Q2 percentile standing was the worst in
the history of the survey, a history that extends back to Q4 1991. The
improved standing to a still-weak 27th percentile on a raw reading of
-17 nonetheless is sharply up from -30 in Q2. Still we can see that
investment demands are lagging. Hiring intentions occupy a sort of
middle ground at a raw reading of -15; conditions are much improved
from Q2&#8217;s reading at -25. Still more cutting is indicated. The
percentile standing has been boosted to its 38th percentile, but that
is still weak. Clearly much more improvement will bee needed to stoke
job growth and just to keep the prospect of more cuts at bay. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th scope="col" colspan="9">DIHK-Balance of Economic Opinion</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Net Balance Readings</td>
<td colspan="3">Change</td>
<td>Range Q4'91</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Q4-09</td>
<td>Q2-09</td>
<td>Q1-09</td>
<td>Yr Ago</td>
<td>2-Yr</td>
<td>3-Yr</td>
<td>Q4-09</td>
<td>Q2-09</td>
</tr>
<tr>
<td class="firstcol">Economic Conditions</td>
<td>-10</td>
<td>-17</td>
<td>2</td>
<td>-27</td>
<td>-41</td>
<td>-34</td>
<td>25.8</td>
<td>14.5</td>
</tr>
<tr>
<td class="firstcol">Business Expectations</td>
<td>0</td>
<td>-27</td>
<td>-35</td>
<td>7</td>
<td>-15</td>
<td>-10</td>
<td>58.3</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Export Expectations</td>
<td>7</td>
<td>-34</td>
<td>-35</td>
<td>-6</td>
<td>-30</td>
<td>-27</td>
<td>55.3</td>
<td>1.3</td>
</tr>
<tr>
<td class="firstcol">Investment Intentions</td>
<td>-17</td>
<td>-30</td>
<td>-23</td>
<td>-15</td>
<td>-31</td>
<td>-23</td>
<td>27.7</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Hiring Intentions</td>
<td>-15</td>
<td>-25</td>
<td>-20</td>
<td>-13</td>
<td>-24</td>
<td>-15</td>
<td>38.3</td>
<td>17.0</td>
</tr>
</tbody>
</table>
</body></html>

The DIHK survey, a poling of over 25000 firms by the German chambers of industry and commerce, is not conducted in Q3. So the fourth quarter’s -10 reading compares to the -17 reading from Q2. It is a net balance of opinion diffusion [...]

DIHK Survey Points to Continued Improvement in German Economy

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013f.jpg" align="right" border="0" height="265" width="353">The German financial
community lowered slightly its expectations for
the economic outlook.&nbsp; The ZEW indicator of economic
expectations declined slightly in October to 56.0% from 57.7% in
September.&nbsp; This is still well above the long term average of
26.7%.&nbsp; Their assessment of current conditions was, however,
slightly less pessimistic in October, -72.2%, than it was in September
-74.0%. The decline in optimism was the second decline this
year.&nbsp; In July, the excess of optimists in regard to the
outlook declined to 39.5% from 44.5% in June, a more substantial
decline than the present one.&nbsp; The indicators of current
conditions and expectations are shown in the first chart. There survey
was conducted between September 28 and October 12.&nbsp; 288
institutional investors and analysts
participated.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013e.jpg" align="right" border="0" height="265" width="353">A number
of factors could
account for the caution about the outlook expressed by the participants
in the survey.&nbsp; The economic news from Germany in recent weeks
has been mixed.&nbsp; Industrial Production and New Orders
continued to be positive, but exports declined in August and retail
trade has shown little strength as seen in the second chart. (Exports
have been expressed as an index for comparability.)
The
Press has highlighted the decline in expectations, but ZEW's President,
Wolfgang Franz, down played the decline. According to him,&nbsp;
"The assessment of the financial market experts reflects the prevalent
view.&nbsp; The economy will improve only gradually."&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
ZEW INDICATORS (Percent Balance) </th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Current Conditions</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>91.6</td>
<td>-89.4</td>
</tr>
<tr class="odd">
<td class="firstcol"> Expectations</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports&nbsp;
(2005=100)</td>
<td>--</td>
<td>--</td>
<td>102.9</td>
<td>104.5</td>
<td>102.8</td>
<td>96.6</td>
<td>96.2</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade&nbsp;
(2005=100)&nbsp;</td>
<td>--</td>
<td>--</td>
<td>98.2</td>
<td>100.0</td>
<td>99.3</td>
<td>100.1</td>
<td>101.2</td>
<td>99.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing New
Orders&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>91.3</td>
<td>89.7</td>
<td>87.9</td>
<td>84.4</td>
<td>81.3</td>
<td>91.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>64.3</td>
<td>92.7</td>
<td>93.7</td>
<td>92.8</td>
<td>88.7</td>
<td>91.3</td>
</tr>
</tbody>
</table>


</body></html>

The German financial community lowered slightly its expectations for the economic outlook. The ZEW indicator of economic expectations declined slightly in October to 56.0% from 57.7% in September. This is still well above the long [...]

German Financial Experts A Little Less Optimistic

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013c.jpg" width="353">
The pump price for regular gasoline fell again last week to $2.47 per gallon, the lowest level since mid-July. However, these prices remain up from the December low of $1.61. Recently, prices reversed the trend and the wholesale gasoline price rose to $1.82 per gallon, up eight cents from the September low. Prices had reached a high in early-August of $2.03. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Running counter to gasoline prices, crude oil prices recently firmed and light sweet crude oil prices (WTI) rose to $70.86 per barrel last week, up from the December low of $32.37. Yesterday, the spot market price for light sweet crude oil rose even further to $73.27 per barrel.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013d.jpg" width="353">
The demand for gasoline shot up last week and posted a 3.2% rise versus one year ago. The gain was the strongest since the Fall of 2006. Demand for residual fuel oil eased, however and fell 7.3% y/y while distillate demand fell 11.0% y/y. Finally, oil remains plentiful as evidenced by a 15.0% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline have surged and are up 14.8% versus last year. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Natural gas prices increased again last week, ahead of the Winter heating season, to an average of $3.63 per mmbtu (-45.8% y/y) but they remained down by three-quarters from the high reached in early-July of last year of $13.19/mmbtu. Yesterday prices increased further to $4.00/mmbtu.
The Effects of Recessions Across Demographic Groups from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/community_development/assets/pdf/recessiondemog.pdf"> here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">10/5/09</th>
<th scope="col">09/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.47</td>
<td>2.50</td>
<td>-29.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>70.86</td>
<td>68.99</td>
<td>-17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
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The pump price for regular gasoline fell again last week to $2.47 per gallon, the lowest level since mid-July. However, these prices remain up from the December low of $1.61. Recently, prices reversed the trend and the wholesale [...]

Weekly Gasoline Prices Slip While Crude Oil Prices Strengthen

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013a.jpg" width="353">
During September, small business&#39; optimism inched higher for the second month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated their small business optimism index rose to 88.8 during September after an August uptick. The index remained improved from the lows of this past winter but were down from last year.During the last ten years, there has been an 85% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage of small businesses expecting the economy to improve slipped back to just 8. However, despite this negativism the percentage which thought that now was a good time to expand the business rose sharply to 9 which was the highest level in twelve months. Moreover, the percent reporting higher net-earnings this quarter versus last year held at -40 m/m, meaning fewer were reporting negative earnings versus last year. It was the highest level since December.
The recent improvement in business&#39; sentiment has done little, if anything, to improve hiring intentions. The percentage of firms planning to raise employment fell back into the net-layoff region. Moreover, the percentage of firms with one or more job openings held at just 8% during September, the lowest level since 1982. During the last ten years there has been a 74% correlation between the NFIB employment percentage and the six-month change in nonfarm payrolls. Also to the downside, the percentage expecting credit conditions to ease slipped to the lowest level since May.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013b.jpg" width="353">
On the pricing front conditions eased. The percentage of firms actually raising prices slipped to -21 (indicating deflation) and remained near the record low. During the last ten years there has been a 69% correlation between the six-month change in the producer price index and the level of the NFIB price index.The percentage of firms planning to raise prices also slipped a net 6 though that remained up from the March low of zero. Worker compensation improved modestly.
The largest, single most important problems seen by business were poor sales (32%), taxes (24%, its highest level since 2007), government requirements (11%), insurance cost &amp; availability (8%), competition from large businesses (6%) and inflation (4%).
About 24 million small businesses exist in the United States. Small business creates 80% of all new jobs in America and the NFIB figures can be found in Haver&#39;s SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index (SA, 1986=100)</td>
<td>88.8</td>
<td>86.6</td>
<td>-4.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>18</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms Raising Avg. Selling Pric1es (Net)</td>
<td>-21</td>
<td>-19</td>
<td>20</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
</body>
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During September, small business' optimism inched higher for the second month as the severe economic weakness of early this year passed. The National Federation of Independent Business (NFIB) indicated their small business optimism [...]

U.S. Small Business Optimism Improves Slightly Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013a.jpg" align="left" border="0" height="265" width="353">
During September, small business' optimism inched higher for
the second month as the severe economic weakness of early this year
passed. The National Federation of Independent Business (NFIB)
indicated their small business optimism index rose to 88.8 during
September after an August uptick. The index remained improved from the
lows of this past winter but were down from last year.During the last
ten years, there has been an 85% correlation between the level of the
NFIB index and the two-quarter change in real GDP.
The percentage of small businesses expecting the economy to
improve slipped back to just 8. However, despite this negativism the
percentage which thought that now was a good time to expand the
business rose sharply to 9 which was the highest level in twelve
months. Moreover, the percent reporting higher net-earnings this
quarter versus last year held at -40 m/m, meaning fewer were reporting
negative earnings versus last year. It was the highest level since
December.
The recent improvement in business' sentiment has done little,
if anything, to improve hiring intentions. The percentage of firms
planning to raise employment fell back into the net-layoff region.
Moreover, the percentage of firms with one or more job openings held at
just 8% during September, the lowest level since 1982. During the last
ten years there has been a 74% correlation between the NFIB employment
percentage and the six-month change in nonfarm payrolls. Also to the
downside, the percentage expecting credit conditions to ease slipped to
the lowest level since May.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013b.jpg" align="right" border="0" height="265" width="353">
On the pricing front conditions eased. The percentage of firms
actually raising prices slipped to -21 (indicating
deflation) and remained near the record low. During the last ten years
there has been a 69% correlation between the six-month change in the
producer price index and the level of the NFIB price index.The
percentage of firms planning to raise prices also
slipped a net 6 though that remained up from the March low of zero.
Worker compensation improved modestly.
The largest, single most important problems seen by business
were poor sales (32%), taxes (24%, its highest level since 2007),
government requirements (11%), insurance cost &amp; availability
(8%), competition from large businesses (6%) and inflation (4%).
About 24 million small businesses exist in the United States.
Small business creates 80% of all new jobs in America and the NFIB
figures can be found in Haver's SURVEYS database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>88.8</td>
<td>86.6</td>
<td>-4.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percent of Firms
With One or More Job Openings</td>
<td>8</td>
<td>8</td>
<td>18</td>
<td>18</td>
<td>24</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percent of Firms
Raising Avg. Selling Pric1es (Net)</td>
<td>-21</td>
<td>-19</td>
<td>20</td>
<td>17</td>
<td>15</td>
<td>20</td>
</tr>
</tbody>
</table>
 Weekly Gasoline Prices Slip While
Crude Oil Prices Strengthen 
by <a href="/comment/Moeller.html">Tom
Moeller</a> October 13, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013c.jpg" align="left" border="0" height="265" width="353">
The pump price for regular gasoline fell
again last week to $2.47 per gallon, the lowest level since mid-July.
However, these prices remain up from the December low of $1.61.
Recently, prices reversed the trend and the wholesale gasoline price
rose to $1.82 per gallon, up eight cents from the September low. Prices
had reached a high in early-August of $2.03. The figures are reported
by the U.S. Department of Energy and can be found in Haver's WEEKLY
&amp; DAILY databases.
Running counter to gasoline prices, crude oil
prices recently firmed and light sweet crude oil prices (WTI) rose to
$70.86 per barrel last week, up from the December low of $32.37.
Yesterday, the spot market price for light sweet crude oil rose even
further to $73.27 per barrel.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013d.jpg" align="right" border="0" height="265" width="353">
The demand for gasoline shot up last week and posted a 3.2%
rise versus one year ago. The gain was the strongest since the Fall of
2006. Demand for residual fuel oil eased, however and fell 7.3% y/y
while distillate demand fell 11.0% y/y. Finally, oil remains plentiful
as evidenced by a 15.0% y/y rise in inventories of crude oil &amp;
petroleum products. Inventories of gasoline have surged and are up
14.8% versus last year. The figures on crude oil production and
inventories are available in Haver's OILWKLY database.
Natural gas prices increased again last week, ahead of the
Winter heating season, to an average of $3.63 per mmbtu (-45.8% y/y)
but they remained down by three-quarters from the high reached in
early-July of last year of $13.19/mmbtu. Yesterday prices increased
further to $4.00/mmbtu.
The Effects of Recessions Across Demographic Groups
from the Federal Reserve Bank of St. Louis can be found <a href="http://www.stlouisfed.org/community_development/assets/pdf/recessiondemog.pdf">
here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">10/5/09</th>
<th scope="col">09/28/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.47</td>
<td>2.50</td>
<td>-29.2%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>70.86</td>
<td>68.99</td>
<td>-17.8%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
 German Financial Experts A Little
Less Optimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> October 13, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013f.jpg" align="right" border="0" height="265" width="353">The German financial
community lowered slightly its expectations for
the economic outlook.&nbsp; The ZEW indicator of economic
expectations declined slightly in October to 56.0% from 57.7% in
September.&nbsp; This is still well above the long term average of
26.7%.&nbsp; Their assessment of current conditions was, however,
slightly less pessimistic in October, -72.2%, than it was in September
-74.0%. The decline in optimism was the second decline this
year.&nbsp; In July, the excess of optimists in regard to the
outlook declined to 39.5% from 44.5% in June, a more substantial
decline than the present one.&nbsp; The indicators of current
conditions and expectations are shown in the first chart. There survey
was conducted between September 28 and October 12.&nbsp; 288
institutional investors and analysts
participated.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091013e.jpg" align="right" border="0" height="265" width="353">A number
of factors could
account for the caution about the outlook expressed by the participants
in the survey.&nbsp; The economic news from Germany in recent weeks
has been mixed.&nbsp; Industrial Production and New Orders
continued to be positive, but exports declined in August and retail
trade has shown little strength as seen in the second chart. (Exports
have been expressed as an index for comparability.)
The
Press has highlighted the decline in expectations, but ZEW's President,
Wolfgang Franz, down played the decline. According to him,&nbsp;
"The assessment of the financial market experts reflects the prevalent
view.&nbsp; The economy will improve only gradually."&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
ZEW INDICATORS (Percent Balance) </th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul&nbsp; 09</th>
<th scope="col">Jun 09</th>
<th scope="col">May 09&nbsp;</th>
<th scope="col">APR 09&nbsp;</th>
<th scope="col">Mar 09&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> Current Conditions</td>
<td>-72.2</td>
<td>-74.0</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-89.7</td>
<td>-92.8</td>
<td>91.6</td>
<td>-89.4</td>
</tr>
<tr class="odd">
<td class="firstcol"> Expectations</td>
<td>56.0</td>
<td>57.7</td>
<td>56.1</td>
<td>39.5</td>
<td>44.8</td>
<td>31.1</td>
<td>13.0</td>
<td>-3.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports&nbsp;
(2005=100)</td>
<td>--</td>
<td>--</td>
<td>102.9</td>
<td>104.5</td>
<td>102.8</td>
<td>96.6</td>
<td>96.2</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Trade&nbsp;
(2005=100)&nbsp;</td>
<td>--</td>
<td>--</td>
<td>98.2</td>
<td>100.0</td>
<td>99.3</td>
<td>100.1</td>
<td>101.2</td>
<td>99.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing New
Orders&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>91.3</td>
<td>89.7</td>
<td>87.9</td>
<td>84.4</td>
<td>81.3</td>
<td>91.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial
Production&nbsp; (2005=100)</td>
<td>--</td>
<td>--</td>
<td>64.3</td>
<td>92.7</td>
<td>93.7</td>
<td>92.8</td>
<td>88.7</td>
<td>91.3</td>
</tr>
</tbody>
</table>


</body></html>

U.S. Small Business OptimismImproves Slightly Again

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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250502A5.jpg

250502B5.jpg

Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

250502C5.jpg

250502D5.jpg

The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250502X5.jpg

250502F5.jpg

- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

250502F32.jpg

250502G32.jpg

Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

250502H32.jpg

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

250502E.jpg

The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

250502.jpg

Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

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**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

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Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

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Charts of the Week: Tariff Truce, Tenuous Trust

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

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- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: October 2009

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