Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211a.jpg" width="353">
The December U.S. foreign trade deficit narrowed sharply to its shallowest since late 2003 as the global recession continued and oil prices fell further. The decline to $39.9B from an upwardly revised November deficit of $41.6B fell short, however, of Consensus expectations for a deficit of $36.0B.
For all of 2008, the trade deficit narrowed to $677.1B from the 2007 deficit of $700.3B. The latest was the lowest deficit since 2003. At 4.7%, last year&#39;s deficit as a percentage of GDP also was the lowest since 2003.
Adjusted for price inflation the trade deficit in goods narrowed last year as well. It fell more than $10.0B versus 2007 to 534.3B as real exports rose 6.5%, lifted by strength early in the year, and real imports fell 3.4%.
Lower oil prices caused December petroleum imports to drop by 6.7%. However, they rose by more than one-third for the full year due to the gains in early 2008. For December, in volume terms, petroleum imports rose a strong 23.3% (+9.6% y/y), but they were down for the full year. The quantity of crude petroleum imports made up all of their November decline with an 18.3% rise (+7.4% y/y). Moving the other way, of course, was the average price per barrel of crude oil which fell to $49.93 (-39.7% y/y) from a high of $124.7 in July.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211b.jpg" width="353">
Reflecting the U.S. recession, measured in chained-2000 dollars, nonoil imports fell 5.6% (-13.7% y/y) after a similar decline during November. Real imports of nonauto consumer goods fell 1.3% (-10.3% y/y) to their lowest level since early 2006. The chained-dollar value of imports of automotive vehicles &amp; parts fell a sharp 9.2% (-28.8% y/y) and real imports of nonauto capital goods dropped 4.1%, down 11.1% from December of 2007.
Services imports slipped 0.4% (+3.3% y/y). Travel imports made up most of a November drop with a 1.6% increase (+0.7% y/y) while passenger fares again fell hard, by 1.5% but they were up 5.7% year-to-year. That strong year-to-year was reduced from the 20.5% increase early last year.
Recessions abroad lowered U.S. exports of goods for the fifth consecutive month. The 8.5% decline (-12.9% y/y) was the fifth in row. Adjusted for prices, chained-dollar goods exports fell 6.0% (-8.5% y/y) as real exports of capital goods declined 1.4% (-9.1% y/y) for the fourth consecutive monthly drop. Exports of nonauto consumer goods fell a huge 5.8% (-4.7% y/y) and they are off 16.7% during the last five months. Real exports of automobiles &amp; parts registered another double digit decline with a 14.0% drop and they&#39;re off by more than one-third during the last five months.
Nominal exports of services slipped 0.4% (+1.8% y/y) for the fourth consecutive monthly drop. Travel exports made up 1.0% (-0.4% y/y) following three months of sharp decline. Passenger fares also rose by a slight 0.7% (0.7% y/y). <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211c.jpg" width="353">
The U.S. trade deficit in goods with China narrowed again, to $19.9B, the smallest since March. For the whole year the deficit deepened, however, to $266.3 billion. Exports to China last year declined by nearly one-quarter, December-to-December, while imports fell just 2.2% y/y. The trade deficit with Japan narrowed m/m to $5.3B and for the whole year it narrowed to $72.7B which was the shallowest since 2003. Exports to Japan rose 6.2% during all of last year while imports fell 4.3% after a 1.8% decline during 2007.
Federal Reserve programs to strengthen credit markets and the economy is yesterday&#39;s testimony by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20090210a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign Trade&nbsp;</a></th>
<th scope="col">December</th>
<th scope="col">November</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">U.S. Trade Deficit</td>
<td>$39.9</td>
<td>$41.6B</td>
<td>$57.6B (12/07)</td>
<td>$677.1</td>
<td>$700.3</td>
<td>$753.3</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp; Services</td>
<td>-6.0%</td>
<td>-6.0%</td>
<td>-8.4%</td>
<td>12.0%</td>
<td>13.0%</td>
<td>13.5%</td>
</tr>
<tr>
<td class="firstcol">Imports - Goods &amp; Services</td>
<td>-5.5%</td>
<td>-11.9%</td>
<td>-14.7%</td>
<td>7.4</td>
<td>6.1%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-6.7%</td>
<td>-36.2%</td>
<td>-36.5%</td>
<td>37.0</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>-6.4%</td>
<td>-7.6%</td>
<td>-13.1%</td>
<td>1.3%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The December U.S. foreign trade deficit narrowed sharply to its shallowest since late 2003 as the global recession continued and oil prices fell further. The decline to $39.9B from an upwardly revised November deficit of $41.6B fell [...]

U.S. Trade Deficit Narrowed Further With Global Recession and Lower Oil Prices

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211a.jpg" align="left" border="0" height="265" width="353">
The December U.S. foreign trade deficit narrowed sharply to
its shallowest since late 2003 as the global recession continued and
oil prices fell further. The decline to $39.9B from an upwardly revised
November deficit of $41.6B fell short, however, of Consensus
expectations for a deficit of $36.0B.
For all of 2008, the trade deficit narrowed to $677.1B from
the 2007 deficit of $700.3B. The latest was the lowest deficit since
2003. At 4.7%, last year's deficit as a percentage of GDP also was the
lowest since 2003.
Adjusted for price inflation the trade deficit in goods
narrowed last year as well. It fell more than $10.0B versus 2007 to
534.3B as real exports rose 6.5%, lifted by strength early in the year,
and real imports fell 3.4%.
Lower oil prices caused December petroleum imports to drop by
6.7%. However, they rose by more than one-third for the full year due
to the gains in early 2008. For December, in volume terms, petroleum
imports rose a strong 23.3% (+9.6% y/y), but they were down for the
full year. The quantity of crude petroleum imports made up all of their
November decline with an 18.3% rise (+7.4% y/y). Moving the other way,
of course, was the average price per barrel of crude oil which fell to
$49.93 (-39.7% y/y) from a high of $124.7 in July.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211b.jpg" align="right" border="0" height="265" width="353">
Reflecting the U.S. recession, measured in chained-2000
dollars, nonoil imports fell 5.6% (-13.7% y/y) after a similar decline
during November. Real imports of nonauto consumer goods fell 1.3%
(-10.3% y/y) to their lowest level since early 2006. The chained-dollar
value of imports of automotive vehicles &amp; parts fell a sharp
9.2% (-28.8% y/y) and real imports of nonauto capital goods dropped
4.1%, down 11.1% from December of 2007.
Services imports slipped 0.4% (+3.3% y/y). Travel imports made
up most of a November drop with a 1.6% increase (+0.7% y/y) while
passenger fares again fell hard, by 1.5% but they were up 5.7%
year-to-year. That strong year-to-year was reduced from the 20.5%
increase early last year.
Recessions abroad lowered U.S. exports of goods for the fifth
consecutive month. The 8.5% decline (-12.9% y/y) was the fifth in row.
Adjusted for prices, chained-dollar goods exports fell 6.0% (-8.5% y/y)
as real exports of capital goods declined 1.4% (-9.1% y/y) for the
fourth consecutive monthly drop. Exports of nonauto consumer goods fell
a huge 5.8% (-4.7% y/y) and they are off 16.7% during the last five
months. Real exports of automobiles &amp; parts registered another
double digit decline with a 14.0% drop and they're off by more than
one-third during the last five months.
Nominal exports of services slipped 0.4% (+1.8% y/y) for the
fourth consecutive monthly drop. Travel exports made up 1.0% (-0.4%
y/y) following three months of sharp decline. Passenger fares also rose
by a slight 0.7% (0.7% y/y). 
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211c.jpg" align="left" border="0" height="265" width="353">
The U.S. trade deficit in goods with China narrowed again, to
$19.9B, the smallest since March. For the whole year the deficit
deepened, however, to $266.3 billion. Exports to China last year
declined by nearly one-quarter, December-to-December, while imports
fell just 2.2% y/y. The trade deficit with Japan narrowed m/m to $5.3B
and for the whole year it narrowed to $72.7B which was the shallowest
since 2003. Exports to Japan rose 6.2% during all of last year while
imports fell 4.3% after a 1.8% decline during 2007.
Federal Reserve programs to strengthen credit markets
and the economy is yesterday's testimony by Fed Chairman Ben
S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/testimony/bernanke20090210a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">December</th>
<th scope="col">November</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">U.S. Trade Deficit</td>
<td>$39.9</td>
<td>$41.6B</td>
<td>$57.6B (12/07)</td>
<td>$677.1</td>
<td>$700.3</td>
<td>$753.3</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp;
Services</td>
<td>-6.0%</td>
<td>-6.0%</td>
<td>-8.4%</td>
<td>12.0%</td>
<td>13.0%</td>
<td>13.5%</td>
</tr>
<tr>
<td class="firstcol">Imports - Goods &amp;
Services</td>
<td>-5.5%</td>
<td>-11.9%</td>
<td>-14.7%</td>
<td>7.4</td>
<td>6.1%</td>
<td>10.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-6.7%</td>
<td>-36.2%</td>
<td>-36.5%</td>
<td>37.0</td>
<td>9.4%</td>
<td>20.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>-6.4%</td>
<td>-7.6%</td>
<td>-13.1%</td>
<td>1.3%</td>
<td>4.8%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
France: Insee Business Indicator
Stops Falling 
by <a href="/comment/Brusca.html">Robert
Brusca</a> February 10, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211d.jpg" align="left" border="0" height="265" width="353">
The Insee survey of French industry held steady at a reading
of 73, the first time the index did not fall month-to-month since March
2008. The index and its trend are on their lowest reading since 1990
The likely trend reading is in the lower 3 percent of its range Orders
and demand are a bottom 12% range reading on the month. Likely prices
are at the 34th percentile if their range. These readings remain very
weak. 
 

French Finance minister Christine Lagarde predicts 1.2-point
drop in GDP For 4Q 2008. She said that official figures would very
probably show the French economy contracted by 1.2% in the fourth
quarter of 2008. It&#8217;s obviously too soon to try to build a positive
outlook from the flattening in the INSEE index. 





<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">INSEE
Industry Survey</th>
</tr>
</thead><tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
<td colspan="4">Since Jan 1990</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan 
09</td>
<td>Dec 
08</td>
<td>Nov 
08</td>
<td>Oct 
08</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Climate</td>
<td>73</td>
<td>73</td>
<td>79</td>
<td>87</td>
<td>0.0</td>
<td>221</td>
<td>123</td>
<td>73</td>
<td>50</td>
<td>101</td>
</tr>
<tr>
<td class="firstcol" colspan="11">Production</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Recent
Trend</td>
<td>-74</td>
<td>-72</td>
<td>-68</td>
<td>-65</td>
<td>0.0</td>
<td>222</td>
<td>44</td>
<td>-74</td>
<td>118</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Likely
trend</td>
<td>-33</td>
<td>-35</td>
<td>-26</td>
<td>-19</td>
<td>3.1</td>
<td>221</td>
<td>30</td>
<td>-35</td>
<td>65</td>
<td>5</td>
</tr>
<tr>
<td class="firstcol" colspan="11">Orders/Demand</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Orders&amp;Demand</td>
<td>-51</td>
<td>-56</td>
<td>-43</td>
<td>-31</td>
<td>12.6</td>
<td>213</td>
<td>25</td>
<td>-62</td>
<td>87</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
FgnOrders&amp;Demand</td>
<td>-50</td>
<td>-55</td>
<td>-47</td>
<td>-26</td>
<td>9.0</td>
<td>212</td>
<td>31</td>
<td>-58</td>
<td>89</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol" colspan="11">Prices</td>
</tr>
<tr>
<td class="firstcol">Likely Sales Price
Trend</td>
<td>-7</td>
<td>-9</td>
<td>-1</td>
<td>9</td>
<td>34.0</td>
<td>166</td>
<td>24</td>
<td>-23</td>
<td>47</td>
<td>1</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Surges As
Revenues Collapse &amp; Spending Jumps 
by <a href="/comment/Moeller.html">Tom
Moeller</a> February 11, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211e.jpg" align="left" border="0" height="265" width="353">
The U.S. government's January budget deficit continued to
reflect the combined effects of a U.S. recession and two wars.The
monthly deficit rose to $83.8 billion. Like December's figure, however,
the relatively moderate deficit compares to a usual budget surplus for
the month. For the first four months of this fiscal year the
government's budget deficit totaled $569.0 billion. That compares to a
deficit of $89.0 billion during last fiscal year's first four months.
Consensus projections were for a January deficit of $79.0B.
Many forecasts for the budget deficit during all of this
fiscal year are near $700B. If realized, that would swell the deficit
to about 5% of GDP following last year's roughly 3.2% and FY07's
marginal 1.2%. The Congressional Budget Office's recent deficit
estimate of $1.2 trillion amounts to 8.3% of GDP. It assumes that
revenues will fall 6.6% year-to-year and that outlays will increase
19.0%.
Adjusted for cyclicality, the CBO's latest "standardized"
budget deficit estimate totaled 0.9% of GDP for 2009. The estimate was
made in December.
Net revenues during January fell 11.4% from last year and for
the first four months of FY09 they were down 10.2%. Individual income
tax receipts reflected lower employment levels and fell 7.7%
year-to-year. Corporate tax receipts were hit even harder and they fell
by more than one-third. Growth in unemployment and social insurance
taxes grew just 1.0%, the least since late 2003.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211f.jpg" align="right" border="0" height="265" width="353">
U.S. government outlays surged by forty-one percent from last
fiscal year's first four months. Defense spending (19% of total
outlays) rose 8.9%. The gain does not reflect the full cost of the
resources devoted to Iraq &amp; Afghanistan since much of the
spending would have occurred anyway. Medicare expenditures (12% of
outlays) jumped by 22.4% and "income security" spending (11% of
outlays) jumped 25.7% after 7.5% growth last year. Social security
payments rose 6.4% but net interest payments fell by more than
one-quarter with lower interest rates.
The Government's financial data are available in Haver's USECON
database, with extensive detail available in the specialized GOVFIN.
The Congressional Budget Office's Summary of
Estimated Cost of H.R. 1, The American Recovery and Reinvestment Act of
2009 as Passed by the Senate on February 10, 2009 can be
found <a href="http://www.cbo.gov/ftpdocs/99xx/doc9984/hr1senatepassed.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US
Government Finance</a> &nbsp;</th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2008</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>-$83.8B</td>
<td>$-83.6B</td>
<td>$17.8B 
(1/08)</td>
<td>-$454.8B</td>
<td>-$161.5B</td>
<td>-$248.2B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$226.1B</td>
<td>$237.8B</td>
<td>-11.4%</td>
<td>-1.7%</td>
<td>6.7%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$309.9B</td>
<td>$321.4B</td>
<td>30.6%</td>
<td>9.1%</td>
<td>2.8%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Trade Deficit NarrowedFurther With Global Recession and Lower Oil Prices

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210h.jpg" width="353">
The list of countries reporting steep declines in industrial output continues. In the quarter-to-date (a full quarter now since we have December data) the pace of decline is roughly at a 25% annual rate. And that is steep indeed. Among large economies only Spain saw a rise in IP in December, but that followed a drop of 9.4% in November. Spain&#146;s monthly gyrations are extreme. Its Yr/Yr declines are bit more consistent and consistently weak. 
But the BIG NEWS on the day may not have been these weak IP figures as much as the quote attributed to Bundesbank and ECB member Axel Weber who said that the ECB should not be worried about the long term impact of its moves since the economy in Europe was in &#145;freefall.&#146; &#145;Freefall&#146; was apparently the word that Weber himself used. He said the ECB should not worry about &#145;lowering rates aggressively.&#146; This is key statement since last week with weak economic reports all around it, with inflation having fallen more than expected, and with the BOE cutting rates, the ECB chose to standstill. Barely a week later here comes Weber with his guns blazing urging more rapid rate cuts. This is a clear shift for Europe since up to this point there has been a bit more emphasis from the Germans, who tend to be the monetary conservatives, no longer so worried about the stubbornness of inflation. That position had been essentially a reference to the core rate. That concern now seems to have been set aside in favor of concern over the economy itself.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Main Euro Area Countries and UK IP in MFG
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Only</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Oct-08</td>
<td>Dec-08</td>
<td>Dec-08</td>
<td>Dec-08</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>-5.3%</td>
<td>-3.8%</td>
<td>-2.1%</td>
<td>-36.5%</td>
<td>-23.8%</td>
<td>-13.1%</td>
<td>-26.9%</td>
</tr>
<tr>
<td class="firstcol">France: IP excl Construction</td>
<td>-1.8%</td>
<td>-2.8%</td>
<td>-3.8%</td>
<td>-28.8%</td>
<td>-15.1%</td>
<td>-11.1%</td>
<td>-24.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-2.7%</td>
<td>-3.2%</td>
<td>-2.2%</td>
<td>-28.1%</td>
<td>-22.8%</td>
<td>-13.1%</td>
<td>-26.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>2.7%</td>
<td>-9.4%</td>
<td>-2.0%</td>
<td>-30.9%</td>
<td>-10.1%</td>
<td>-15.0%</td>
<td>-29.8%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>-2.2%</td>
<td>-3.0%</td>
<td>-1.6%</td>
<td>-24.1%</td>
<td>-16.6%</td>
<td>-10.2%</td>
<td>-19.1%</td>
</tr>
<tr>
<td colspan="6">Mo/Mo are simple percent changes others are at Saars</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

The list of countries reporting steep declines in industrial output continues. In the quarter-to-date (a full quarter now since we have December data) the pace of decline is roughly at a 25% annual rate. And that is steep indeed. [...]

IP Plunges in Main EMU Countries and Beyond

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090211d.jpg" align="left" border="0" height="265" width="353">
The Insee survey of French industry held steady at a reading
of 73, the first time the index did not fall month-to-month since March
2008. The index and its trend are on their lowest reading since 1990
The likely trend reading is in the lower 3 percent of its range Orders
and demand are a bottom 12% range reading on the month. Likely prices
are at the 34th percentile if their range. These readings remain very
weak. 
 

French Finance minister Christine Lagarde predicts 1.2-point
drop in GDP For 4Q 2008. She said that official figures would very
probably show the French economy contracted by 1.2% in the fourth
quarter of 2008. It&#8217;s obviously too soon to try to build a positive
outlook from the flattening in the INSEE index. 











<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col">INSEE Industry Survey</th></tr></thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
<td colspan="4">Since Jan 1990</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan 09</td>
<td>Dec 08</td>
<td>Nov 08</td>
<td>Oct 08</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Climate</td>
<td>73</td>
<td>73</td>
<td>79</td>
<td>87</td>
<td>0.0</td>
<td>221</td>
<td>123</td>
<td>73</td>
<td>50</td>
<td>101</td>
</tr>
<tr><td class="firstcol" colspan="11">Production</td></tr>
<tr>
<td class="firstcol">&nbsp; Recent Trend</td>
<td>-74</td>
<td>-72</td>
<td>-68</td>
<td>-65</td>
<td>0.0</td>
<td>222</td>
<td>44</td>
<td>-74</td>
<td>118</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Likely trend</td>
<td>-33</td>
<td>-35</td>
<td>-26</td>
<td>-19</td>
<td>3.1</td>
<td>221</td>
<td>30</td>
<td>-35</td>
<td>65</td>
<td>5</td>
</tr>
<tr><td class="firstcol" colspan="11">Orders/Demand</td></tr>
<tr>
<td class="firstcol">&nbsp; Orders&amp;Demand</td>
<td>-51</td>
<td>-56</td>
<td>-43</td>
<td>-31</td>
<td>12.6</td>
<td>213</td>
<td>25</td>
<td>-62</td>
<td>87</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
FgnOrders&amp;Demand</td>
<td>-50</td>
<td>-55</td>
<td>-47</td>
<td>-26</td>
<td>9.0</td>
<td>212</td>
<td>31</td>
<td>-58</td>
<td>89</td>
<td>-11</td>
</tr>
<tr><td class="firstcol" colspan="11">Prices</td></tr>
<tr>
<td class="firstcol">Likely Sales Price Trend</td>
<td>-7</td>
<td>-9</td>
<td>-1</td>
<td>9</td>
<td>34.0</td>
<td>166</td>
<td>24</td>
<td>-23</td>
<td>47</td>
<td>1</td>
</tr>
</tbody>
</table>
</body></html>

The Insee survey of French industry held steady at a reading of 73, the first time the index did not fall month-to-month since March 2008. The index and its trend are on their lowest reading since 1990 The likely trend reading is in [...]

France: Insee Business Indicator Stops Falling

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210h.jpg" align="left" border="0" height="265" width="353">
The list of countries reporting steep declines in industrial
output continues. In the quarter-to-date (a full quarter now since we
have December data) the pace of decline is roughly at a 25% annual
rate. And that is steep indeed. Among large economies only Spain saw a
rise in IP in December, but that followed a drop of 9.4% in November.
Spain&#8217;s monthly gyrations are extreme. Its Yr/Yr declines are bit more
consistent and consistently weak. 
 

But the BIG NEWS on the day may not have been these weak IP
figures as much as the quote attributed to Bundesbank and ECB member
Axel Weber who said that the ECB should not be worried about the long
term impact of its moves since the economy in Europe was in &#8216;freefall.&#8217;
&#8216;Freefall&#8217; was apparently the word that Weber himself used. He said the
ECB should not worry about &#8216;lowering rates aggressively.&#8217; This is key
statement since last week with weak economic reports all around it,
with inflation having fallen more than expected, and with the BOE
cutting rates, the ECB chose to standstill. Barely a week later here
comes Weber with his guns blazing urging more rapid rate cuts. This is
a clear shift for Europe since up to this point there has been a bit
more emphasis from the Germans, who tend to be the monetary
conservatives, no longer so worried about the stubbornness of
inflation. That position had been essentially a reference to the core
rate. That concern now seems to have been set aside in favor of concern
over the economy itself.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Main Euro Area Countries and UK IP in MFG
</th></tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Only</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Oct-08</td>
<td>Dec-08</td>
<td>Dec-08</td>
<td>Dec-08</td>
<td>Q-to-Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>-5.3%</td>
<td>-3.8%</td>
<td>-2.1%</td>
<td>-36.5%</td>
<td>-23.8%</td>
<td>-13.1%</td>
<td>-26.9%</td>
</tr>
<tr>
<td class="firstcol">France: IP excl Construction</td>
<td>-1.8%</td>
<td>-2.8%</td>
<td>-3.8%</td>
<td>-28.8%</td>
<td>-15.1%</td>
<td>-11.1%</td>
<td>-24.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-2.7%</td>
<td>-3.2%</td>
<td>-2.2%</td>
<td>-28.1%</td>
<td>-22.8%</td>
<td>-13.1%</td>
<td>-26.0%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>2.7%</td>
<td>-9.4%</td>
<td>-2.0%</td>
<td>-30.9%</td>
<td>-10.1%</td>
<td>-15.0%</td>
<td>-29.8%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>-2.2%</td>
<td>-3.0%</td>
<td>-1.6%</td>
<td>-24.1%</td>
<td>-16.6%</td>
<td>-10.2%</td>
<td>-19.1%</td>
</tr>
<tr>
<td colspan="6">Mo/Mo are simple percent changes
others are at Saars</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210f.jpg" align="left" border="0" height="265" width="353">
Sweden's Activity Index, published today is a monthly
indicator of Gross Domestic Product. It is derived from a regression
based on movements in industrial production, the number of hours worked
by employees in the government sector, sales in retail trade and
imports and exports. (The index is found in the BUSINESS CYCLE
INDICATORS AND SURVEY/FORECASTS section of the NORDIC
database )<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210g.jpg" align="right" border="0" height="265" width="353">
Statistics Sweden computes three indexes: unadjusted,
seasonally adjusted and trend. The unadjusted Activity Index is
calibrated so that its quarterly values are equal to the seasonally
unadjusted GDP values indexed to 2000=100. The annual rates of changes
in the seasonally adjusted and trend activity indexes track those in
the seasonally adjusted GDP as can be seen in the first chart. These
indicators suggest that the gradual annual rates of decline that have
been taking place in Sweden's GDP in the last two quarters(-0.39% in
the second quarter and -0.38% in the third quarter) are about to be
substantially increased. The release of Sweden's fourth quarter GDP is
scheduled for February 27, 2009.
Among the larger components of the Activity Index, retail
sales have performed better that either exports or industrial
production in recent months, although they too have shown a declining
trend. It has been Exports and Industrial Production that have largely
been responsible for the recent sharp declines in the Activity Index,
as can be seen in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">SWEDEN&nbsp;</th>
<th scope="col">Dec 08</th>
<th scope="col">Nov 08&nbsp;</th>
<th scope="col">Oct 08&nbsp;</th>
<th scope="col">Sep 08&nbsp;</th>
<th scope="col">Aug 08</th>
<th scope="col">July 08</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Activity
Index&nbsp; SA (2000=100)&nbsp;</td>
<td>117.23</td>
<td>118.03</td>
<td>119.40</td>
<td>119.98</td>
<td>120.21</td>
<td>121.19</td>
</tr>
<tr class="even">
<td class="firstcol">Month to Month %
Change (SAAR)</td>
<td>-7.81</td>
<td>-12.98</td>
<td>-4.68</td>
<td>-3.49</td>
<td>-9.29</td>
<td>0.11</td>
</tr>
<tr class="odd">
<td class="firstcol">Activity
Index&nbsp; SA (2000=100)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td class="firstcol">Month to Month %
Change (SAAR)</td>
<td>118.1</td>
<td>118.7</td>
<td>119.3</td>
<td>119.9</td>
<td>120.4</td>
<td>120.4</td>
</tr>
<tr>
<td class="firstcol">Activity Index %
Change (SAAR)</td>
<td>5.40</td>
<td>3.98</td>
<td>2.11</td>
<td>0.00</td>
<td>1.93</td>
<td>2.55</td>
</tr>
</tbody>
</table>
</body></html>

Sweden's Activity Index, published today is a monthly indicator of Gross Domestic Product. It is derived from a regression based on movements in industrial production, the number of hours worked by employees in the government sector, [...]

Sweden's Activity Index Points to a 5% + Annual Rate of Decline in Fourth Quarter GDP

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210d.jpg" width="353">
According to the National Federation of Independent Business (NFIB), small business optimism fell again last month. The index level of 84.1 was down 1.3% month-to-month. The latest level was the lowest since early-1980 and was the second lowest level on record.
During the last ten years there has been a 49% correlation between the level of the NFIB index and the two-quarter change in real GDP.
The percentage of firms planning to raise prices fell further to 2%, a new record low. Price discounts were evident as the percentage of firms actually raising prices fell further into negative territory, and the reading was a record low. During the last ten years there has been a 69% correlation between the y/y change in the producer price index and the level of the NFIB price index.
The percentage expecting the economy to improve remained in negative territory. The percentage reporting that now is a good time to expand the business fell back to near the lowest since 2003. During the next 3-6 months, plans for capital spending increased slightly but was still near the lowest level since 1975.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210e.jpg" width="353">
The percentage planning to raise employment remained at last month&#39;s low of a net negative 6% while the percentage of respondents with one or more job openings dropped further to 11%, the least since 1992. During the last ten years there has been a 71% correlation between the NFIB employment percentage and the y/y change in nonfarm payrolls.
The percent expecting credit conditions to ease was about unchanged, near its lowest level since 1980. The percent expecting higher real sales in six months fell to a net negative 20%, near the lowest since 1980.
The largest, single most important problems seen by business were poor sales (28%), taxes (19%), government requirements (11%), insurance cost and availability (9%), competition from large businesses (6%) and inflation (6%).
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
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">January</th>
<th scope="col">December</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">Small Business Optimism Index (SA, 1986=100)</td>
<td>84.1</td>
<td>85.2</td>
<td>-8.4%</td>
<td>89.8</td>
<td>96.7</td>
<td>98.9</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the National Federation of Independent Business (NFIB), small business optimism fell again last month. The index level of 84.1 was down 1.3% month-to-month. The latest level was the lowest since early-1980 and was the [...]

U.S. Small Business Optimism Fell Even Further; Pricing At All-time Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090210c.jpg" width="353">
The consumer remained slumbering last week after the holiday season. Chain store sales were roughly stable from the prior week and the latest level also was roughly equal to the January average, according to the International Council of Shopping Centers-Goldman Sachs Index. The year-to year change of -1.8% continued near the weakest in the series&#39; history which extends back to 1990.
During the last ten years there has been a 64% correlation between the year-to-year growth in chain store sales and the growth in general merchandise sales.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The outlook for sales continued to worsen as the weekly leading indicator of chain store sales from ICSC-Goldman Sachs fell another 0.8%. It was the fourth straight week of decline.
The chain store sales figures are available in Haver&#39;s SURVEYW database.
 Global Liquidity and Exchange Rates from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr361.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">02/07/09</th>
<th scope="col">01/31/09</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">Total Weekly Chain Store Sales</td>
<td>478.6</td>
<td>478.5</td>
<td>-1.8%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

The consumer remained slumbering last week after the holiday season. Chain store sales were roughly stable from the prior week and the latest level also was roughly equal to the January average, according to the International Council [...]

U.S. Chain Store Sales Continued Unchanged Last Week

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

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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

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Mortgage applications fell 1.4% (+22.7% y/y) in the week ending August 15 after rising 10.9% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans edged 0.1% higher (22.7% y/y) last week, following a 1.4% gain in the prior week. Applications to refinance a home loan fell 3.1% (+22.8% y/y) last week, following a 23.0% rise in the week of August 8.

The effective interest rate on a 30-year fixed-rate loan held steady at 6.86% in the week ending August 15 after falling from 6.94% in the first week of August. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages rose to 6.13% in the latest week from 6.09% in the week of August 8. Conversely, the rate on 30-year Jumbo loans decreased to 6.82% last week from 6.86% one week earlier. The rate on a 5-year ARM rose to 6.24% in the week of August 15 and reversed the prior week’s decline to 6.05%.

The share of applications for refinancing an existing loan eased to 46.1% of total applications in the week ending August 15 after rising to 46.5% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity declined to 8.60% in the latest week after rising to 9.60% in the week of August 8.

The average size of a mortgage loan fell 2.7% (+4.1% y/y) to $387,800 in the week of August 15, following a 4.5% rise in the prior week. The average size of a purchase loan edged 0.5% higher (0.6% y/y) to $429,000 in the latest week after falling 1.2% in the week ending August 8. The average size of a loan to refinance a mortgage fell 7.3% (+9.5% y/y) to $339,800 last week, after rising 18.3% to $366,400 in the prior week. It was increased from $277,900 in the last week of May.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

**Tracking Labor Market Stress** from the Federal Reserve Bank of San Francisco is available [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/08/tracking-labor-market-stress/).

- Purchase applications edge higher while loan refinancing declines.
- Effective fixed-interest rate on 30-year loans remains at four-month low.
- Average loan size declines.

U.S. Mortgage Applications Decline Last Week as Interest Rates Steady

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

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Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

U.S. Energy Prices Are Mixed in Latest Week

Tian Yong Woon

This week, we examine recent developments in US-China trade and assess the broader implications of US trade actions for the BRIC bloc—Brazil, Russia, India, and China. Last week, the US and China extended their tariff truce by 90 days, a move welcomed by equity markets (chart 1). While this pause eased fears of renewed trade tensions, it remains temporary and fragile, with no durable resolution in sight.

As for China’s economy, July data disappointed: retail sales, industrial production, and fixed-asset investment all missed expectations (chart 2). This may signal that tariffs are beginning to bite, as earlier growth drivers—such as some front-loading of imports and one-off consumption boosts like China’s durable-goods subsidy—are fading (chart 3). Newer measures, including loan-interest subsidies, may provide some interim relief. Meanwhile, the property sector remains under heavy strain, with further price and investment declines evidenced in July (chart 4).

In the broader regional context, US trade measures may inadvertently push trading partners closer together, complicating Washington’s bilateral strategy. The BRIC bloc shows tentative signs of greater alignment, though this has yet to appear in data for trade flows (chart 5). China and India, however, are warming toward one another: Foreign Minister Wang Yi’s visit to India this week—focused on the Himalayan border among other issues—suggests an improving dialogue. Separately, discussions at the national level to restart direct flights between the two countries also signal a thaw. Full economic integration remains distant, but the scale of both economies suggests significant potential if relations continue to improve (chart 6).

**The US-China tariff truce**
Last week, the US and China announced a 90-day extension to their mutual tariff truce. Although largely expected, the move still generated further equity market gains (see chart 1). This contrasts sharply with worst-case scenarios earlier this year, when tensions peaked and Washington imposed sweeping tariffs of 145% on Chinese imports — levels that would have severely disrupted global trade and growth if sustained. Instead, both sides agreed to keep additional tariffs at 10% until November 10, allowing more time to pursue a durable trade deal. Still, this is merely a pause rather than progress. 

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**The China docket**
In the meantime, China’s latest monthly data releases were watched closely and offered valid reasons for caution despite earlier signs of resilience. More specifically, retail sales, industrial production, and fixed-asset investment (chart 2) all missed expectations, suggesting US tariff and non-tariff measures are beginning to weigh on growth alongside persistent domestic headwinds. Also, China’s unemployment rate inched higher, while property prices continued to decline. If such weakness persists, calls for additional policy support will grow, even though debt-fuelled measures risk merely trading today’s problems for tomorrow’s.

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**China retail sales**
Diving deeper into the individual releases, chart 3 highlights the gradual slowdown in China’s retail sales in recent months, with growth easing to 3.7% y/y in July. By product category, the deceleration reflects weaker automobile sales — amid authorities’ clampdown on carmaker price wars — and softer furniture sales, suggesting a one-off boost from the government’s durable-goods subsidy programme may now be fading. Clearer confirmation could come if sales growth of other subsidized goods, such as home appliances, also begin to weaken. Still, retail spending — and broader consumption activity — may gain fresh support from China’s new loan-interest subsidy programme, which covers both consumer borrowing and eligible service-sector business loans.

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**China property prices and investment**
Moving next to China’s beleaguered property market, the sector has shown no meaningful recovery for several years. Prices remain on a downtrend, and repeated investor attempts to call a bottom have proven futile. The latest data offered no relief: property prices continued to decline, while investment in the sector fell 12% y/y year-to-date in July (chart 4). That said, the pace of price declines has slowed sharply compared with last year. Even so, what was once a major engine of China’s growth continues to shrink into a shadow of its former self.

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**The BRIC bloc**
While recent trade measures appear favourable for the US, lowering partner tariffs and modestly raising Washington’s own rates, significant risks remain. Such moves could push US trading partners closer together, undermining the administration’s strategy of leveraging bilateral negotiations. One potential area of alignment is the BRIC bloc — Brazil, Russia, India, and China. Although hard data have yet to show major shifts (see chart 5), recent headlines suggest small steps toward deeper cooperation. That said, Russia remains constrained by heavy US sanctions and pressure, as reflected in trade flows with its closest partners.

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Digging a little further, China and India have recently begun to ease their decades-long frosty ties, partly in response to this year’s US trade tensions. A key sign of improving relations is China’s Foreign Minister Wang Yi’s high-profile visit to India from Monday to Wednesday this week. The visit focused on, among other topics, the disputed Himalayan border — which, if resolved, would mark a major step in restoring bilateral relations — and trade across the border. Other indicators of a warming relationship include ongoing talks to restart direct flights, suspended during the pandemic. Given the sheer size of their populations and economies, as shown in chart 6, a fully developed China-India economic partnership could unlock immense potential. However, the path to meaningful economic integration remains at an early stage, with numerous hurdles still to navigate.

Economy in Brief: February 2009

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