Louise Curley

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209i.jpg" style="width: 353px; height: 265px;" align="right">The
budget
crises in Greece, Spain and Portugal have left their mark on the
Euro.&nbsp; The first chart shows the dramatic rise over the past
year or so in the budget deficits of the three countries on a twelve
months moving average basis. By yesterday, the euro had declined
against the dollar by more than 10% from its peak of $1.512 on December
3 of last year.&nbsp; the decline in the euro is shown in the
second chart.&nbsp;</p>
<p>The euro gained some ground today as&nbsp;
the talk of possible ways to resolve the budget problems has begun to
drown out the talk of doomsday.&nbsp;&nbsp; Nevertheless, the
euro is likely to remain under pressure until an accommodation to the
problem can be seen.&nbsp;.Pressure on the euro could prove to be
not such a bad thing.&nbsp; Europeans have been complaining that
the strong euro has affected the demand for their exports
adversely.&nbsp; A lower euro could stimulate demand and increase
production, which would provide a better background for working out the
budget problems.&nbsp;&nbsp;</p>
<p>The day to day progress of the
euro can be found in The Haver Data Base, <b>INTDAILY.&nbsp;
</b>The narrow and broad trade weighted indexes of exchange
rates for the Euro Area are also found in this data base.&nbsp; The
narrow trade weighted index for the Euro Area is shown in the third
chart.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209k.jpg" style="width: 312px; height: 265px;"></span>
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The budget crises in Greece, Spain and Portugal have left their mark on the Euro. The first chart shows the dramatic rise over the past year or so in the budget deficits of the three countries on a twelve months moving average basis. [...]

Euro Area Budget Crises And The Euro

Robert Brusca

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<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Germany&#8217;s HICP and domestic CPI show modest inflation in
Germany but headline inflation is still in a steady upward progression.
Since the headline rate for the HICP is only 0.7% that is not
disturbing at all. The HICP core is not yet available but the domestic
German CPI measure shows core inflation at 0.8% Yr/Yr and yet dropping
at a pace of 0.8% over the most recent three months. Domestic inflation
shows modest diffusion. Inflation is accelerating over six months in
only 54% of the categories and inflation is accelerating over
three-months in only a bit more than one-quarter of the categories.</p>
<p>Germany, a big part of the e-zone and its inflation measure,
shows inflation pressures are still contained but not entirely dormant.
At this point that is good news since we want inflation to stay under
control but we do not want it so docile that the economy appears to
lack any life. The economy needs to make a recovery so the existence of
some price pressure is a good signal, too.</p>
<p>Germany has a mixed mission. It is to keep inflation under
wraps and still to generate recovery. The German CPI and HICP seem
consistent with those goals.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup><thead><tr>
<th scope="col" colspan="8"><b>German
HICP and CPI details</b></th>
</tr>
</thead><tbody>
<tr class="" odd="">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>Nov-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr
Ago</td>
</tr>
<tr>
<td class="firstcol">HICP
Total</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">Core</td>
<td>#N/A</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>1.2%</td>
</tr>
<tr ="">
</tr>
<tr class="grey2">
<td colspan="8" class="firstcol">CPI
</td>
</tr>
<tr>
<td class="firstcol">All</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>0.7%</td>
<td>1.1%</td>
<td>0.8%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;
CPIxF&amp;E</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-0.8%</td>
<td>0.0%</td>
<td>0.8%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">Food</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>2.9%</td>
<td>-0.5%</td>
<td>-1.3%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Alcohol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>1.1%</td>
<td>3.6%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">Clothing
&amp; Shoes</td>
<td>-1.9%</td>
<td>2.2%</td>
<td>-1.3%</td>
<td>-4.2%</td>
<td>2.8%</td>
<td>0.3%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Rent
&amp;Util</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.7%</td>
<td>0.7%</td>
<td>-0.3%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Health
Care</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>0.9%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">Transport</td>
<td>0.5%</td>
<td>0.2%</td>
<td>1.4%</td>
<td>8.7%</td>
<td>10.0%</td>
<td>4.6%</td>
<td>-2.7%</td>
</tr>
<tr>
<td class="firstcol">Communication</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>-0.3%</td>
<td>-3.5%</td>
<td>-2.0%</td>
<td>-1.9%</td>
<td>-3.0%</td>
</tr>
<tr>
<td class="firstcol">Rec
&amp;Culture</td>
<td>-0.5%</td>
<td>0.0%</td>
<td>-0.5%</td>
<td>-3.9%</td>
<td>-1.8%</td>
<td>0.1%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">Education</td>
<td>0.1%</td>
<td>0.5%</td>
<td>0.8%</td>
<td>5.9%</td>
<td>4.6%</td>
<td>-1.5%</td>
<td>-4.3%</td>
</tr>
<tr>
<td class="firstcol">Restaurant&amp; Hotel</td>
<td>0.1%</td>
<td>0.5%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>2.0%</td>
<td>1.5%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol"><Other =""></Other>Others</td>
<td>-0.7%</td>
<td>0.3%</td>
<td>-0.3%</td>
<td>-2.9%</td>
<td>0.7%</td>
<td>1.3%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">Diffusion</td>
<td colspan="3">&nbsp;</td>
<td>27.3%</td>
<td>54.5%</td>
<td>36.4%</td>
<td>&nbsp;--</td>
</tr>
<tr class="grey2">
<td class="firstcol">Type:</td>
<td colspan="3">Diffusion: Current Compared to</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
<td>--</td>
</tr>
</tbody>
</table>
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Germany’s HICP and domestic CPI show modest inflation in Germany but headline inflation is still in a steady upward progression. Since the headline rate for the HICP is only 0.7% that is not disturbing at all. The HICP core is not yet [...]

German: HICP Moderate But Accelerating

Tom Moeller

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209e.jpg" style="width: 353px; height: 265px;" align="right">The
Bureau
of Labor Statistics indicated that job market conditions changed little
during December. The latest Job Openings &amp; Labor Turnover
Survey (JOLTS) indicated that though the <b>job openings rate </b>ticked
up to 1.9%, it remained off sharply from the 3.1% rate when the current
recession began. <i>The job openings rate is the number of job
openings on the last business day of the month as a percent of total
employment plus job openings.</i><i> </i>Job
availability rose 2.6% from November after two months of decline, and
remained off 22.5% year-to-year. The series dates back to December
2000.&nbsp;</p>
<p>Earlier weakness in the service sector stabilized last
month. Leisure &amp; hospitality job openings ticked up 2.2%
(-25.7% y/y), and educational &amp; health service jobs rose 1.3%
(-19.7% y/y). Finally, the number of government sector job openings
ticked up 0.6% (-0.6% y/y). Offsetting these gains was a 3.7% (-26.2%
y/y) decline in the number of professional &amp; business service
jobs. That was down for the third straight month. Though the number of
retail job openings rose 24.9% (-27% y/y) that just made up a November
decline. Countering weakness in service sector hiring was the factory
sector where job openings rose for the fifth consecutive month<span style="color: black;"> and were off a lessened 6.9% y/y. </span>Construction
sector job openings posted a sharp 29.3% decline (-19.7% y/y) which
reversed most of the prior four months' increases.</p>
<p>The <b>hires
rate</b> remained stable for the fifth straight month at 3.1% but
was slightly improved from the series' low of 3.0% last
spring.&nbsp;<i>The hires rate is the number of hires during
the month divided by employment.&nbsp;</i>The actual number
of hires fell 1.3% m/m but was down 9.6% year-to-year. Professional
&amp; business service sector hires fell to the lowest level since
June with an 18.2% decline (-15.9% y/y) while leisure &amp;
hospitality hires fell 2.7% (-3.8% y/y). Factory sector hiring fell
6.0% and was off a diminished 6.0% y/y however construction sector
hiring rose 10.5% m/m (-2.2% y/y).</p>
<p>The <b>job separations rate </b>fell
back to the series' low of 3.2% with the actual number of separations
off 14.5% year-to-year.<i> Separations include quits, layoffs,
discharges, and other separations as well as retirements. </i>The
layoff rate alone ticked up to 1.6% but was down sharply from the
January high of 1.9%.</p>
<p>The JOLTS survey dates only to December 2000 but
has followed the movement in nonfarm payrolls, though the actual
correlation between the two series is low.· A description of the Jolts
survey and the latest release from the U.S. Department of Labor is
available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>
and the figures are available in Haver's <b>USECON</b>
database.&nbsp;&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209f.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209g.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS (Job Openings &amp; Labor
&nbsp;Turnover Survey)</a></b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>October</b></th>
<th scope="col"><b>Dec. '08</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="8"><b>Job Openings, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.9</td>
<td>1.8</td>
<td>1.9</td>
<td>2.3</td>
<td>1.9</td>
<td>2.3</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,497</td>
<td>2,434</td>
<td>2,571</td>
<td>3,224</td>
<td>2,497</td>
<td>3,224</td>
<td>4,382</td>
</tr>
<tr class="odd">
<td colspan="8"><b>Hires, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.1</td>
<td>3.1</td>
<td>3.1</td>
<td>3.3</td>
<td>37.4</td>
<td>41.1</td>
<td>46.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,073</td>
<td>4,125</td>
<td>4,045</td>
<td>4,508</td>
<td>49,448</td>
<td>56,486</td>
<td>63,666</td>
</tr>
<tr class="odd">
<td colspan="8"><b>Layoffs &amp;
Discharges, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.6</td>
<td>1.5</td>
<td>1.6</td>
<td>1.7</td>
<td>20.7</td>
<td>17.7</td>
<td>16.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>2,079</td>
<td>2,011</td>
<td>2,128</td>
<td>2,360</td>
<td>27,594</td>
<td>24,362</td>
<td>22,613</td>
</tr>
</tbody>
</table>
</span>
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The Bureau of Labor Statistics indicated that job market conditions changed little during December. The latest Job Openings & Labor Turnover Survey (JOLTS) indicated that though the job openings rate ticked up to 1.9%, it remained off [...]

JOLTS: U.S. Job Openings Improve Slightly

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<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209d.jpg" align="left" border="0" height="265" width="353"></p>
<p>Consumer spending has recovered from its post-holiday slump,
but real life is not yet apparent. Weekly chain store sales improved
last week although the 1.4% w/w rise left purchases up just slightly
from the January average. That average had been boosted by price
discounting early in the month.<span></span></p>
<p><span style="color: black;">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.</span></p>
</span> During the last ten years there has been a 69%
correlation between the year-to-year growth in chain store sales and
the growth in general merchandise retail sales.<span> The weekly
figures are available in Haver's <b>SURVEYW </b>database.</span>
<p></p>
<p>Also suffering from post-Holiday blues was the leading
indicator of chain store sales. It's been roughly unchanged during the
last two weeks following four weeks of sharp decline. This composite
leading economic indicator is compiled from four series: (1) the MBA's
volume index of mortgage applications for home purchase (2) the ABC
News/Money magazine's survey of consumer buying conditions (3) new
filings for jobless benefits and (4) the 30-year government bond yield.</p>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM" style="color: rgb(0, 0, 0);"><span>ICSC-UBS (SA,
1977=100)</span></a></b></th>
<th scope="col"><b>02/06/10</b></th>
<th scope="col"><b>01/30/10</b></th>
<th scope="col"><b>01/23/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>487.1</td>
<td>480.4</td>
<td>479.8</td>
<td>1.8%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</body></html>

Consumer spending has recovered from its post-holiday slump, but real life is not yet apparent. Weekly chain store sales improved last week although the 1.4% w/w rise left purchases up just slightly from the January average. That [...]

Weekly Chain Store Sales Improve Yet Remain Off From Earlier Highs

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<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209a.jpg" style="width: 353px; height: 265px;" align="right">
A sense of
modest improvement returned to small business. The National Federation
of Independent Business (NFIB) reported their January small business
optimism index made up the prior two months' declines with an increase
to 88.0. 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.</p><p>Two factors drove the overall improvement -- sales expectations
&amp; credit. The percentage of firms expecting higher real sales
in six months increased to its highest level in two years. Also, the
rate of inventory decumulation was slowed to meet those sales and the
inventory index rose to the highest since last February. Finally,
credit loosened. The percentage of firms reporting that credit was
harder to get eased m/m to a net -13 but that still was near the
series' low. That credit may have been used to finance higher capital
expenditures.</p><p>Offsetting these gains was the percentage of small
businesses expecting the overall economy to improve dipped slightly m/m
to 1 after a sharp November decline. The latest was down from the May
high of 12 but well improved from last year's recession low. The
percentage which thought that now was a good time to expand the
business fell to its lowest level since August. Also, hiring intentions
remained weak. The percentage of firms planning to raise employment
remained in net-layoff, though it has improved from the March low. For
now, the percentage of firms with one or more job openings remained
stable m/m at 10% during January. During the last ten years there has
been a 74% correlation between the NFIB employment percentage and the
six-month change in nonfarm payrolls.</p><p>On the pricing front, weakness
continued. The percentage of firms <i>actually</i> raising
prices stood at -18% (indicating deflation). It's improved slightly
from the prior several months but remains near the record low. During
the last ten years there has been a 60% correlation between the
six-month change in the producer price index and the level of the NFIB
price index.&nbsp;The percentage of firms <i>planning</i>
to raise prices also improved to its highest level since late-2008.
Finally, the percentage planning to raise worker compensation fell to
1.</p><p>The most important problems seen by business were poor sales (31%),
taxes (22%, close to its highest level since 2007), government
requirements (13%), insurance cost &amp; availability (8%),
competition from large businesses (7%) and inflation
(3%).</p><p>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 <b>SURVEYS</b>
database.&nbsp;<span style="font-weight: bold;"></span></p><p><span style="font-weight: bold;"></span><b>Controlling Risk in a lightening speed
trading environment</b> from the Federal Reserve Bank of Chicago
is available <a href="http://www.chicagofed.org/digital_assets/publications/chicago_fed_letter/2010/cflmarch2010_272.pdf">here</a>.</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209b.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100209c.jpg" style="width: 312px; height: 265px;">
<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/SURVEYS/@S7/@S7.HTM"><b>Nat'l
Federation of Independent Business</b></a></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</b></th>
<th scope="col"><b>November</b></th>
<th scope="col"><b>Jan.'09</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Small Business Optimism Index
(SA, 1986=100)</td>
<td>89.3</td>
<td>88.0</td>
<td>88.3</td>
<td>84.1</td>
<td>86.7</td>
<td>89.8</td>
<td>96.7</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Expecting
Economy To Improve</td>
<td>1</td>
<td>2</td>
<td>3</td>
<td>-12</td>
<td>-0</td>
<td>-10</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms With One or
More Job Openings</td>
<td>10</td>
<td>10</td>
<td>8</td>
<td>11</td>
<td>9</td>
<td>18</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Percent of Firms Reporting That
Credit Was Harder To Get</td>
<td>14</td>
<td>15</td>
<td>15</td>
<td>13</td>
<td>14</td>
<td>9</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Percent of Firms Raising Avg.
Selling Pric1es (Net)</td>
<td>-18</td>
<td>-22</td>
<td>-17</td>
<td>-15</td>
<td>-20</td>
<td>17</td>
<td>15</td>
</tr>
</tbody>
</table>
<p></p>
</span>
</body></html>

A sense of modest improvement returned to small business. The National Federation of Independent Business (NFIB) reported their January small business optimism index made up the prior two months' declines with an increase to 88.0. [...]

U.S. Small Business Optimism Improves Modestly

U.S. Small Business OptimismImproves Modestly

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<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100208d.jpg" align="left" border="0" height="265" width="353"></p>
<p>The Bank of France and France's INSEE (Institute National des
Statistiques et Etudes Economiques) publish measures of business
sentiment in industry. The Bank of France measure canvasses about 6000
managers on various business conditions. The responses are based on the
difference between those who view conditions optimistically and those
who views them pessimistically. The resulting balances of opinion are
expressed in terms of their long term average which is set to 100. Thus
the January value of 103.89, released today, indicates that business
sentiment is about 4% above its long term average. It has improved, if
somewhat erratically, since December 2008 when the indicator was 67.40
or about 33% below the long term average but it is still below 109.69,
the peak reached in October 2007, before the current downturn started.</p>
<p>INSEE's measure, which was released last week, is based on the
responses of 4000 companies engaged in manufacturing, food processing
industries and petroleum refining. It also collects balances of opinion
on various business conditions, but expresses the data such that its
average is 100 with a standard deviation of 10. The INSEE measure at 92
for January indicates that sentiment is below average--8%--but it has
been improving since March 2009 when it was 69 or 31%, or more than
three standard deviations, below average.</p>
<p>The two measures are shown in the attached chart. As can be
seen, there is a high degree of correlation between the two. Although
both show that much of the loss in sentiment suffered during the
current downturn has been recovered both show that business sentiment
is well below the peaks reached in <i>2000.</i></p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><b>Business
Sentiment in Industry</b></th>
<th scope="col"><b>Jan 10&nbsp;</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Jan 09</b></th>
<th scope="col"><b>M/M % Chg</b></th>
<th scope="col"><b>Y/Y % Chg</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Bank of France</td>
<td>103.89</td>
<td>102.19</td>
<td>70.47</td>
<td>1.66</td>
<td>47.42</td>
<td>85.89</td>
<td>90.62</td>
<td>107.18</td>
</tr>
<tr>
<td class="firstcol">INSEE</td>
<td>92</td>
<td>88</td>
<td>75</td>
<td>4.55</td>
<td>26.67</td>
<td>79</td>
<td>97</td>
<td>109</td>
</tr>
</tbody>
</table>
</body></html>

The Bank of France and France's INSEE (Institute National des Statistiques et Etudes Economiques) publish measures of business sentiment in industry. The Bank of France measure canvasses about 6000 managers on various business [...]

Two French Authorities Point To Improving Business Sentiment

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100208c.jpg" style="width: 353px; height: 265px;" align="right">Canada&#8217;s
housing starts are in a dig-out phase. The sharp-seeming 5.8% rise this
month only takes starts back toward their recent local peak. Starts are
sharply up from their financial crisis low point but are still well
short of being back at what has passed as normal activity levels in
recent years.</p>
<p>Building permits, which lag housing starts are up on
strong growth over the past 3- 6- and 12-months&nbsp;</p>
<p>House price data that
are current only through November, show a rise in November. House
prices are up over three-months as well as the last six months. Over
12-months prices still are lower by 1.1%.&nbsp;</p>
<p>Canada&#8217;s housing market is
still obviously struggling to recover. It has moved up strongly from
the financial crisis lows. But momentum has become suspect. But suspect
momentum is not the same as backsliding. Building permits continue to
pile up albeit at a slower pace. Canada&#8217;s housing market seems to be
suffering the same fate as recovery in many of the worlds leading
markets. It has had a vigorous rebound but is flattening out or slowing
its paces of increase well short of restoring its former level of
activity.</p>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="4" scope="col"><b>Canada's
Housing
Starts</b>
</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Starts</td>
<td>Permit</td>
<td>House Prices</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Month-to-Month</td>
</tr>
<tr>
<td class="firstcol">Jan-2010</td>
<td>5.8%</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Dec-2009</td>
<td>0.2%</td>
<td>2.4%</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Nov-2009</td>
<td>-6.5%</td>
<td>11.5%</td>
<td>0.5%</td>
</tr>
<tr class="odd">
<td colspan="4" class="firstcol">Sequential Growth</td>
</tr>
<tr>
<td class="firstcol">3-Mo</td>
<td>-0.9%</td>
<td>17.1%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">6-Mo</td>
<td>34.2%</td>
<td>42.5%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">12-Mo</td>
<td>37.4%</td>
<td>33.5%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">From</td>
<td>Jan-2010</td>
<td>Dec-2009</td>
<td>Nov-2009</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Canada’s housing starts are in a dig-out phase. The sharp-seeming 5.8% rise this month only takes starts back toward their recent local peak. Starts are sharply up from their financial crisis low point but are still well short of [...]

Canada Housing Starts Rise Still It Is Stalked By The Threat Of A Stalled Rebound

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

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

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.6% (-3.6% y/y) during the four weeks ended May 9, 2025. The improvement followed sharp declines in April.

Miscellaneous group prices increased 2.4% (5.9% y/y) over the last four weeks. Natural rubber price soared 13.9% (11.7% y/y). The price of tallow (used in the soap industry) rose 10.6% (41.3% y/y) in four weeks but the cost of framing lumber declined 5.6%, but rose 7.3% y/y.

Prices in the Metals group edged 0.2% higher (-7.3% y/y) over the most recent four weeks. Variation in pricing was wide. Copper scrap prices rose 7.4% (-3.3% y/y) while lead costs rose 4.0% in four weeks (-11.1% y/y). The cost of aluminum increased 2.3% in four weeks, off 4.4% y/y. Working lower, the cost of steel scrap declined 8.1% (-11.6% y/) in four weeks while tin prices followed with a 4.9% decline (-2.9% y/y). Zinc prices eased 0.7% in four weeks and declined 10.3% y/y.

Crude Oil & Benzene group prices edged 0.1% higher (-19.4% y/y) in four weeks. The cost of West Texas Intermediate crude oil weakened 4.0% to $58.50 per barrel and was 25.6% lower y/y. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 8.5% (-41.8% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 0.9% (-2.1% y/y) during the last four weeks.

Textile group prices edged 0.9% lower (-0.5% y/y) during the last four weeks. Burlap costs declined 14.3% (+7.4% y/y) but the cost of cotton rose 4.5% (-7.7% y/y) over four weeks.

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

250509D1.jpg

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- Metals prices are mixed.
- Crude oil prices fall sharply.
- Textile prices ease.

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

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Wholesale trade inventories increased 0.4% (2.2% y/y) during March after rising 0.5% in February, revised from 0.3% after a 0.8% January rise. The increase compared to expectations for a 0.5% rise in the Informa Global Markets Survey and compared to a 0.6% gain in the advance report issued two weeks ago.

Durable goods inventories rose 0.6% in March (1.5% y/y) after rising 0.5% in February. Machinery inventories, the largest sector, increased 0.6% (1.7% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 1.2% (0.8% y/y). Furniture inventories strengthened 2.7% (6.8% y/y) while electrical equipment inventories declined 1.0% (-3.1% y/y). Inventories of nondurable goods edged 0.1% higher (3.4% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 1.0% (4.6% y/y). Grocery inventories, the second largest category, rose 0.4% (8.3% y/y). Apparel inventories fell 0.8% (-6.5% y/y) and chemical inventories rose 2.1% both m/m and y/y. Petroleum inventories increased 0.7% (0.3% y/y).

Sales at the wholesale level rose 0.6% (6.1% y/y) in March after rising 2.0% in February and falling 0.9% in January. A 0.9% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales rose 1.0% (8.5% y/y) in March after strengthening 3.2% in February. Sales of electrical equipment & electronic goods, the largest sector, rose 2.5% (20.9% y/y), after a 2.3% rise. Professional and commercial equipment sales, which includes computers, rose 1.2% (11.9% y/y), while vehicle sales declined 1.0% (1.1% y/y). Sales of machinery improved 0.7% (4.2% y/y). Nondurable product sales rose 0.3% (3.9% y/y) in March after gaining 0.9% in February. Drug store sales, the largest category, increased 2.8% (13.4% y/y), while grocery store sales eased 0.2% (+4.3% y/y). Sales of apparel weakened 0.8% (+3.5% y/y) while paper sales declined 1.7% (0.5% y/y). Petroleum product sales fell 4.6% both m/m and y/y.

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.30 in March and has been moving lower for the last two years.

The wholesale I/S ratio for durable goods eased to 1.69 in March and also has been trending lower. The machinery ratio fell to 2.92 while motor vehicles rose to 1.78. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.02 early in 2023. The drug industry ratio eased to 0.94. Apparel's I/S ratio held at 2.06, but remained below its 2.28 level one year earlier, and has been declining since early 2023. The petroleum industry I/S ratio rose to 0.33.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

**Assessing Maximum Employment** from Federal Reserve Governor Adriana D. Kugler is available [here](https://www.federalreserve.gov/newsevents/speech/kugler20250509a.htm).

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- Inventories trend higher y/y.
- Sales increase broadly.
- Inventory-to-sales ratio steadies.

U.S. Wholesale Inventories & Sales Increase in March

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Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24, revised from 1.5%. A 0.6% decline had been expected in the Action Economics Forecast Survey. It was the first productivity decline since Q2’22. The y/y increase during Q1 fell to 1.4% from 2.1% in Q4. It was below a 3.3% high in the first quarter of last year. Productivity fell as real value-added output dropped 0.3% last quarter (+2.2% y/y) after increasing 2.5% in Q4, and hours worked lengthened 0.6% (0.8% y/y) following a 0.8% gain.

Compensation per hour increased 4.8% last quarter following a 3.7% Q4 rise. Despite the strength of these last two increases, y/y growth decelerated to 2.7% from a 6.8% high one year earlier. Nevertheless, the productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. It followed a 2.0% gain during Q4 and was the strongest quarterly increase in a year.

Factory sector productivity surged 4.5% (1.5% y/y) during Q1’25 following three consecutive increases of roughly 0.5%. This strength was accompanied by a 6.2% rise (2.2% y/y) in hourly compensation which came after two consecutive increases of approximately 4.1%. The strength in productivity lowered the rise in unit labor costs to 1.6% from 3.8% in Q4. The y/y gain fell to 0.7% from 2.0% in Q4 and stood below the 6.2% y/y increase in Q1’24.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Productivity declines with lower output.
- Compensation surge exacerbates labor market stress.
- Factory sector productivity surge lessens cost pressure.

U.S. Productivity Declines in Q1’25; Unit Labor Costs Surge

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) rose 0.6% (3.2% y/y) in March to 103.2 after rising 0.9% to 102.6 in February and rising 0.8% in January to 101.7. The level of home affordability has risen 14.8% from its low of 89.9 in October 2023. It remains 42.4% below the high of 179.2 in April 2020.

The rise in affordability in March occurred as the median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 which was offset by a decline in mortgage rates to 6.73% from 6.92% in February. The price compared to the record $432,900 in June 2024. The decline in mortgage rates compared to a recent low of 6.26% in September of last year and a 7.70% high during October of 2023. It remained well above a December 2020 low of 2.73%. These changes lowered the principal & interest payment by 0.2% (+1.1% y/y) to $2,113 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 24.2% of income during March. They remained up from a low of 14.0% of income in April 2020.

The rise in housing costs in March was accompanied by improvement in median family income. It increased 0.4% (4.4% y/y) to a record $104,705 after rising 0.4% in February and 0.7% in January.

Housing affordability improved m/m across the country in March. The index edged 0.1% higher (2.8% y/y) to 134.5 in the Midwest. It remains the most affordable region of the country. In the South, the index 0.9% (5.4% y/y) to 106.6 and the affordability index in the Northeast increased 2.1% (-2.6% y/y) to 95.7. In the West, where homes are the least affordable, the index rose 0.8% (3.3% y/y) to 71.8 in March.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices rise but mortgage rates decline.
- Median income improves.
- Affordability increases across the country.

U.S. Housing Affordability Improves Slightly in March

Carol Stone, CBE

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Initial claims for unemployment insurance were 228,000 seasonally adjusted in the week ended May 3, down from 241,000 in the previous week, which was unrevised. For the latest week, the Action Economics Forecast Survey had expected a smaller decline to 233,000.

In the week ended April 26, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – was 1.879 million, down from 1.908 million in the April 19 week.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, returned to its longstanding rate of 1.2% in the April 26 week; this rate has held that amount since continuously since the week of January 6, 2024, except for the prior week’s 1.3%.

As we do highlight in every week’s discussion, economic conditions vary widely across individual states and territories. In the week ended April 19, the highest unemployment rates were in New Jersey and Rhode Island (both at 2.48%), California (2.26%), Washington (2.14%) and New York (1.85%). The lowest were in Florida (0.36%), South Dakota (0.37%), Alabama (0.41%), Virginia (0.45%) and Nebraska (0.47%). Rates in other notable states include Illinois (1.78%), Pennsylvania (1.53%) and Texas (1.14%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Continued claims for unemployment insurance decreased 29, 000 in the week ended April 26.
- Insured unemployment rate returns to longstanding 1.2%.
- Across the states, the insured unemployment rate ranges from 0.36% to 2.48%.

Economy in Brief: February 2010

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