Tom Moeller

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310c.jpg" style="width: 353px; height: 265px;" align="right">
As the
Federal government's February budget deficit reached a record $220.9B,
the figure pulled the Fiscal YTD deficit to $651.6B which was larger
than any past deficit for twelve months, except 2009.</p><p> Recession pulled
net revenues during the first five months of FY'10 down 7.0% y/y.
Individual income tax receipts fell 14.0% y/y through February
reflecting higher unemployment. The rate of decline, however, is half
that at the end of last year. Corporate tax receipts mirror the decline
in profitability and fell 14.1%, though that rate of decline also eased
sharply. Year-to-date, employment taxes fell a record 3.5% but
unemployment insurance tax receipts rose a surprising 3.8%. Estate
&amp; gift taxes fell by one-third after an 18.6% decline during
FY'09.</p><p> Overall outlays were boosted 16.8% during the first five months
of FY'10 as Social Security payments (21% of outlays) rose 7.8% and net
interest payments (5% of outlays) started to rise with higher rates.
Medicare expenditures (12% of outlays) fell slightly but other health
care services spending (10% of outlays) rose 21.3%. "Income security"
spending (11% of outlays) jumped by one-quarter while defense spending
(19% of total outlays) rose 2.9%.</p><p>The Government's financial data are
available in Haver's <b>USECON</b> database, with
extensive detail available in the specialized <b>GOVFIN</b>.·&nbsp;<b>Fiscal
Policy Choices </b>is the title of CBO Director Doug Elmendorf's
presentation to the National Association for Business Economics on
Monday and it can be found&nbsp;&nbsp; <a href="http://www.cbo.gov/ftpdocs/112xx/doc11277/CBOPresentation-NABE_3-8-10.pdf">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310d.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310e.jpg" style="width: 312px; height: 265px;">
<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"><b>US
Government Finance</b></a> &nbsp;</th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>FY 'YTD</b></th>
<th scope="col"><b>FY 'YTD </b></th>
<th scope="col"><b>FY 2009</b></th>
<th scope="col"><b>FY 2008</b></th>
<th scope="col"><b>FY 2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-220.9B</td>
<td>$-651.6B</td>
<td>&nbsp;$-651.6</td>
<td>$-1,417.1B</td>
<td>$-454.8B</td>
<td>$-161.5B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$107.5B</td>
<td>$800.5B</td>
<td>-7.0%</td>
<td>-16.6%</td>
<td>-1.7%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$328.4B</td>
<td>$1,452.1B</td>
<td>16.8%</td>
<td>18.2%</td>
<td>9.1%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</span></body></html>

As the Federal government's February budget deficit reached a record $220.9B, the figure pulled the Fiscal YTD deficit to $651.6B which was larger than any past deficit for twelve months, except 2009. Recession pulled net revenues [...]

U.S. Monthly Budget Deficit A Record

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310b.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p><span style="font-weight: bold;">UK IP Sinks</span>
- Industrial output in the UK was set back in January unexpectedly.
Consumer durables and intermediate goods output fell sharply in January
a month with some considerable weather disruptions. January is sharp
departure from December when output rose by 0.9% on advances in all
major sectors. The detailed industry results do not show anything
worrisome as the key detailed industries do not reveal any with
back-to-back declines. Instead we see a 5.5% drop for textile and
leather after a 3.4% gain in December- that is volatility not weakness.
Motor vehicles also saw output fall by 2% in January after surging by
5.6% in December. While the January result was unexpected, &#8216;unexpected&#8217;
does always mean the start of a new trend, sometimes it is just a spate
of volatility.</p>
<p><span style="font-weight: bold;">Unexpected
events elsewhere</span> - The month brought other unexpected
developments elsewhere as German exports fell and the German trade
surplus was chopped nearly in half, unexpectedly. We might be worried
except that this German report was preceded by a very strong orders
report that had strong foreign orders well represented. The German CPI
was up a bit more than expected as well &#8211; something the ECB will be
watching. In Asia, China&#8217;s exports were so strong they had everyone
geared for the prospect of some sort of global demand revival. Japan&#8217;s
core machinery orders, strong in a previous release, backed off in this
month&#8217;s report setting back hopes for an investment revival there. The
truth of the global economy is hidden somewhere in this tangle of
volatile monthly reports.</p>
<p><span style="font-weight: bold;"> Warning! Caveat
recovery</span> - UK Prime Minister Gordon Brown warned on the
fragility of the expansion saying data would continue to go to and fro
and that recovery was not assured. Thanks for that confidence booster&#8230;</p>
<p><span style="font-weight: bold;">Biz as usual</span>
- What you usually can depend on in recovery periods is to get mixed
signals. That much appears to still be true. One source of volatility
and concern may be lessening, however. Former EU Commission Prodi
declared the Greek crisis to be over and while that could be a bit of
good news we have to wonder if the declaration is premature given the
nature of Greece&#8217;s difficulties and past transgressions. One good bond
offering with high interest rates hardly signals that all is well.
Spain, Portugal and Italy will remain as EMU countries under the
markets&#8217; sharpest eye in the wake of the Greek problem even if Greece
remains on an upswing.</p>
<p><span style="font-weight: bold;">Caveats aside,
odds and data still favor the recovery continuing</span> - The UK
recovery has flashed hot and cold signs for some time in this cycle.
The BOE is letting an inflation overshoot go by without acting, a clear
indication that the Bank does not see any overheating. Data releases
like today&#8217;s IP report only confirm the good judgment of the Bank and
its ability to see past monthly volatility in the run of reports. The
most likely situation is that growth in the UK and elsewhere continues.
The recession was deep, there is pent up demand, in Europe; the strong
social welfare system there helps to preserve demand. Meanwhile,
recovery still seems to be afoot around the world and for the most part
trade data have been strong confirming that some sort of global revival
is in place. While German export data may seem to question the notion
of strong growth and global economic revival, strong growth in China&#8217;s
exports seems to brand the German data as anomalies (along with German
order flows). As always we will stay tuned to the various monthly
reports. But there is no basis for the belief that the recovery is
being untracked apart from a streak of pure pessimism.</p>
<p><span style="font-weight: bold;">Pessimists
unite! You have nothing to lose since nothing is invested in the
market! </span>- We know pessimism is still alive and well and
that part of that reluctance traces to the still low level interest
rates. Central banks are reluctant to boost rates even though market
rates are for the most part high above the levels banks are paying in
the interbank markets. Low official rates are contributing to money
(wealth) staying on the sidelines. We have had a very strong one-year
rally in global stock markets with low participation because so many
have been unwilling to commit funds even though he past year&#8217;s rally
was one of extraordinary scope. Money is continuing to pile up on the
sidelines and pessimism is now partly the product of a sour grapes
attitude by would-be investors who clearly have stayed on the side
lines for far too long. These sorts of considerations dog the ability
of those who have stayed out to objectively characterize the progress
of the markets and offer an unbiased the assessment of the economy and
its prospects. It will take a period of job growth being restored and
rates elevating to bring these skeptical once-burned twice-shy (and
therefore burned again by a different sort of fire) investors back to
the markets. Until then expect each monthly setback to be greeted by
the hoots and hollers of the pessimists who have sat back and largely
missed the rally to date. It&#8217;s all the fun that they can have.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"><b>UK IP and
MFG</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">UK MFG</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>Nov<br>
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1<br>
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>-0.8%</td>
<td>0.9%</td>
<td>0.1%</td>
<td>0.9%</td>
<td>4.1%</td>
<td>-0.4%</td>
<td>2.0%</td>
<td>0.2%</td>
<td>-2.0%</td>
<td>-0.9%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Consumer</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Durables</td>
<td>-1.8%</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>-7.9%</td>
<td>-4.6%</td>
<td>1.7%</td>
<td>7.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-9.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Non-durables</td>
<td>0.3%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>1.3%</td>
<td>-3.8%</td>
<td>-3.9%</td>
<td>-3.1%</td>
<td>-1.4%</td>
<td>-1.2%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-1.3%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>3.0%</td>
<td>-6.3%</td>
<td>-3.8%</td>
<td>-4.6%</td>
<td>-6.6%</td>
<td>-5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.8%</td>
<td>1.0%</td>
<td>0.7%</td>
<td>10.1%</td>
<td>16.3%</td>
<td>10.5%</td>
<td>9.1%</td>
<td>4.9%</td>
<td>-0.9%</td>
<td>10.3%</td>
</tr>
<tr>
<td class="firstcol">Memo: Detail</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1<br>
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Food
Drink&amp;tobacco</td>
<td>4.1%</td>
<td>-0.1%</td>
<td>-1.4%</td>
<td>10.5%</td>
<td>-7.7%</td>
<td>1.2%</td>
<td>-5.1%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>23.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textile&amp;Leather</td>
<td>-5.5%</td>
<td>3.4%</td>
<td>-5.2%</td>
<td>-26.6%</td>
<td>-18.4%</td>
<td>-15.6%</td>
<td>-4.4%</td>
<td>-9.1%</td>
<td>-6.7%</td>
<td>-27.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicles
&amp; trailer</td>
<td>-2.0%</td>
<td>5.6%</td>
<td>2.2%</td>
<td>24.7%</td>
<td>30.3%</td>
<td>13.5%</td>
<td>37.0%</td>
<td>26.8%</td>
<td>8.3%</td>
<td>14.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mining and Quarry</td>
<td>1.4%</td>
<td>-4.9%</td>
<td>5.1%</td>
<td>5.6%</td>
<td>4.0%</td>
<td>-10.1%</td>
<td>-13.4%</td>
<td>-8.8%</td>
<td>-12.0%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Electricity,
gas&amp;H2O</td>
<td>1.3%</td>
<td>3.9%</td>
<td>-3.3%</td>
<td>7.3%</td>
<td>-4.7%</td>
<td>-0.6%</td>
<td>-4.7%</td>
<td>-5.2%</td>
<td>-6.7%</td>
<td>17.7%</td>
</tr>
</tbody>
</table>
</body></html>

UK IP Sinks - Industrial output in the UK was set back in January unexpectedly. Consumer durables and intermediate goods output fell sharply in January a month with some considerable weather disruptions. January is sharp departure [...]

UK Industrial Production Losses Momentum – So What?

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310a.jpg" align="left" border="0" height="265" width="353"></p>
<p>The employment agency Manpower Inc. indicated roughly stable
corporate hiring intentions for the second quarter. Their seasonally
adjusted reading of 5 compared to a 1Q figure of 6, but both were
improved from the net-layoff readings late during 2009. Those recession
readings were the worst of the series' history which dates to 1976.
Since 1990 there has been a 77% correlation between the Manpower Index
and the three-month change in payroll employment.</p>
<p>Hiring intentions for 2Q improved in the relatively stable
education &amp; health, government, information, nondurable
manufacturing and professional business service sectors, but sustained
improvement in each versus last year was scattered. Intentions in the
construction and durable manufacturing sectors continued to indicate
net-layoffs though the layoffs in the latter sector diminished
considerably.</p>
<p>The Manpower Inc Employment Outlook Survey is a quarterly
measurement of hiring intentions of more than 15,000 employers in 473
cities. Employers declare their intentions to increase, decrease, or
maintain the size of their present workforce for the upcoming
three-month period. The survey was designed with the assistance of the
Survey Research Center of the University of Michigan. The current
seasonal adjustments are by Manpower, Inc. Haver calculated the
historical seasonally adjusted series.</p>
<p>The data are available in Haver's <b>SURVEYS</b>
database. Manpower indicates that seasonally-adjusted industry data are
under development.</p>
<p><b>Assessing the Impact of Education and Marriage on
Labor Market Exit Decisions of Women</b> from the Federal Reserve
Bank of Atlanta is available <a href="http://www.frbatlanta.org/documents/pubs/wp/wp1002.pdf">here</a>.</p>
</span>
<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">Manpower Inc. Employment Outlook Survey</a></b></th>
<th scope="col"><b>2Q '10</b></th>
<th scope="col"><b>1Q '10</b></th>
<th scope="col"><b>4Q '09</b></th>
<th scope="col"><b>3Q '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">All Industries Net Hiring
Strength (SA)</td>
<td>5</td>
<td>6</td>
<td>-2</td>
<td>-2</td>
<td>1</td>
<td>13</td>
<td>18</td>
</tr>
<tr>
<td class="firstcol">
Increase (NSA)</td>
<td>16</td>
<td>&nbsp;12</td>
<td>&nbsp;12</td>
<td>&nbsp;15</td>
<td>15</td>
<td>&nbsp;24</td>
<td>&nbsp;27</td>
</tr>
<tr class="odd">
<td class="firstcol">
Decrease (NSA)</td>
<td>8</td>
<td>12</td>
<td>14</td>
<td>13</td>
<td>14</td>
<td>11</td>
<td>9</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-12</td>
<td>-10</td>
<td>2</td>
<td>-4</td>
<td>-5</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Education &amp;
Health</td>
<td>4</td>
<td>2</td>
<td>-4</td>
<td>0</td>
<td>1</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Financial Activities</td>
<td>2</td>
<td>1</td>
<td>2</td>
<td>2</td>
<td>3</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Government</td>
<td>-3</td>
<td>-8</td>
<td>-4</td>
<td>-2</td>
<td>-1</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Information</td>
<td>0</td>
<td>-5</td>
<td>-4</td>
<td>-5</td>
<td>-3</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Leisure &amp;
Hospitality</td>
<td>4</td>
<td>2</td>
<td>18</td>
<td>14</td>
<td>13</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Manufacturing -
Durable</td>
<td>-3</td>
<td>-8</td>
<td>-6</td>
<td>-7</td>
<td>-5</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing -
Nondurable</td>
<td>1</td>
<td>-3</td>
<td>0</td>
<td>-4</td>
<td>-2</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Professional
Business Services</td>
<td>5</td>
<td>3</td>
<td>8</td>
<td>9</td>
<td>9</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

The employment agency Manpower Inc. indicated roughly stable corporate hiring intentions for the second quarter. Their seasonally adjusted reading of 5 compared to a 1Q figure of 6, but both were improved from the net-layoff readings [...]

Manpower Survey Indicates Positive But Limited Jobs Growth

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310a.jpg" align="left" border="0" height="265" width="353"></p>
<p>The employment agency Manpower Inc. indicated roughly stable
corporate hiring intentions for the second quarter. Their seasonally
adjusted reading of 5 compared to a 1Q figure of 6, but both were
improved from the net-layoff readings late during 2009. Those recession
readings were the worst of the series' history which dates to 1976.
Since 1990 there has been a 77% correlation between the Manpower Index
and the three-month change in payroll employment.</p>
<p>Hiring intentions for 2Q improved in the relatively stable
education &amp; health, government, information, nondurable
manufacturing and professional business service sectors, but sustained
improvement in each versus last year was scattered. Intentions in the
construction and durable manufacturing sectors continued to indicate
net-layoffs though the layoffs in the latter sector diminished
considerably.</p>
<p>The Manpower Inc Employment Outlook Survey is a quarterly
measurement of hiring intentions of more than 15,000 employers in 473
cities. Employers declare their intentions to increase, decrease, or
maintain the size of their present workforce for the upcoming
three-month period. The survey was designed with the assistance of the
Survey Research Center of the University of Michigan. The current
seasonal adjustments are by Manpower, Inc. Haver calculated the
historical seasonally adjusted series.</p>
<p>The data are available in Haver's <b>SURVEYS</b>
database. Manpower indicates that seasonally-adjusted industry data are
under development.</p>
<p><b>Assessing the Impact of Education and Marriage on
Labor Market Exit Decisions of Women</b> from the Federal Reserve
Bank of Atlanta is available <a href="http://www.frbatlanta.org/documents/pubs/wp/wp1002.pdf">here</a>.</p>
</span>
<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">Manpower
Inc. Employment Outlook Survey</a></b></th>
<th scope="col"><b>2Q '10</b></th>
<th scope="col"><b>1Q '10</b></th>
<th scope="col"><b>4Q '09</b></th>
<th scope="col"><b>3Q '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">All Industries Net Hiring
Strength (SA)</td>
<td>5</td>
<td>6</td>
<td>-2</td>
<td>-2</td>
<td>1</td>
<td>13</td>
<td>18</td>
</tr>
<tr>
<td class="firstcol">
Increase (NSA)</td>
<td>16</td>
<td>&nbsp;12</td>
<td>&nbsp;12</td>
<td>&nbsp;15</td>
<td>15</td>
<td>&nbsp;24</td>
<td>&nbsp;27</td>
</tr>
<tr class="odd">
<td class="firstcol">
Decrease (NSA)</td>
<td>8</td>
<td>12</td>
<td>14</td>
<td>13</td>
<td>14</td>
<td>11</td>
<td>9</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>-12</td>
<td>-10</td>
<td>2</td>
<td>-4</td>
<td>-5</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Education &amp;
Health</td>
<td>4</td>
<td>2</td>
<td>-4</td>
<td>0</td>
<td>1</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Financial Activities</td>
<td>2</td>
<td>1</td>
<td>2</td>
<td>2</td>
<td>3</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Government</td>
<td>-3</td>
<td>-8</td>
<td>-4</td>
<td>-2</td>
<td>-1</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Information</td>
<td>0</td>
<td>-5</td>
<td>-4</td>
<td>-5</td>
<td>-3</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Leisure &amp;
Hospitality</td>
<td>4</td>
<td>2</td>
<td>18</td>
<td>14</td>
<td>13</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Manufacturing -
Durable</td>
<td>-3</td>
<td>-8</td>
<td>-6</td>
<td>-7</td>
<td>-5</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing -
Nondurable</td>
<td>1</td>
<td>-3</td>
<td>0</td>
<td>-4</td>
<td>-2</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Professional
Business Services</td>
<td>5</td>
<td>3</td>
<td>8</td>
<td>9</td>
<td>9</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
<span id="articletitle">UK Industrial Production Losses
Momentum &#8211; So What?</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> March 10, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310b.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p><span style="font-weight: bold;">UK IP Sinks</span>
- Industrial output in the UK was set back in January unexpectedly.
Consumer durables and intermediate goods output fell sharply in January
a month with some considerable weather disruptions. January is sharp
departure from December when output rose by 0.9% on advances in all
major sectors. The detailed industry results do not show anything
worrisome as the key detailed industries do not reveal any with
back-to-back declines. Instead we see a 5.5% drop for textile and
leather after a 3.4% gain in December- that is volatility not weakness.
Motor vehicles also saw output fall by 2% in January after surging by
5.6% in December. While the January result was unexpected, &#8216;unexpected&#8217;
does always mean the start of a new trend, sometimes it is just a spate
of volatility.</p>
<p><span style="font-weight: bold;">Unexpected
events elsewhere</span> - The month brought other unexpected
developments elsewhere as German exports fell and the German trade
surplus was chopped nearly in half, unexpectedly. We might be worried
except that this German report was preceded by a very strong orders
report that had strong foreign orders well represented. The German CPI
was up a bit more than expected as well &#8211; something the ECB will be
watching. In Asia, China&#8217;s exports were so strong they had everyone
geared for the prospect of some sort of global demand revival. Japan&#8217;s
core machinery orders, strong in a previous release, backed off in this
month&#8217;s report setting back hopes for an investment revival there. The
truth of the global economy is hidden somewhere in this tangle of
volatile monthly reports.</p>
<p><span style="font-weight: bold;"> Warning! Caveat
recovery</span> - UK Prime Minister Gordon Brown warned on the
fragility of the expansion saying data would continue to go to and fro
and that recovery was not assured. Thanks for that confidence booster&#8230;</p>
<p><span style="font-weight: bold;">Biz as usual</span>
- What you usually can depend on in recovery periods is to get mixed
signals. That much appears to still be true. One source of volatility
and concern may be lessening, however. Former EU Commission Prodi
declared the Greek crisis to be over and while that could be a bit of
good news we have to wonder if the declaration is premature given the
nature of Greece&#8217;s difficulties and past transgressions. One good bond
offering with high interest rates hardly signals that all is well.
Spain, Portugal and Italy will remain as EMU countries under the
markets&#8217; sharpest eye in the wake of the Greek problem even if Greece
remains on an upswing.</p>
<p><span style="font-weight: bold;">Caveats aside,
odds and data still favor the recovery continuing</span> - The UK
recovery has flashed hot and cold signs for some time in this cycle.
The BOE is letting an inflation overshoot go by without acting, a clear
indication that the Bank does not see any overheating. Data releases
like today&#8217;s IP report only confirm the good judgment of the Bank and
its ability to see past monthly volatility in the run of reports. The
most likely situation is that growth in the UK and elsewhere continues.
The recession was deep, there is pent up demand, in Europe; the strong
social welfare system there helps to preserve demand. Meanwhile,
recovery still seems to be afoot around the world and for the most part
trade data have been strong confirming that some sort of global revival
is in place. While German export data may seem to question the notion
of strong growth and global economic revival, strong growth in China&#8217;s
exports seems to brand the German data as anomalies (along with German
order flows). As always we will stay tuned to the various monthly
reports. But there is no basis for the belief that the recovery is
being untracked apart from a streak of pure pessimism.</p>
<p><span style="font-weight: bold;">Pessimists
unite! You have nothing to lose since nothing is invested in the
market! </span>- We know pessimism is still alive and well and
that part of that reluctance traces to the still low level interest
rates. Central banks are reluctant to boost rates even though market
rates are for the most part high above the levels banks are paying in
the interbank markets. Low official rates are contributing to money
(wealth) staying on the sidelines. We have had a very strong one-year
rally in global stock markets with low participation because so many
have been unwilling to commit funds even though he past year&#8217;s rally
was one of extraordinary scope. Money is continuing to pile up on the
sidelines and pessimism is now partly the product of a sour grapes
attitude by would-be investors who clearly have stayed on the side
lines for far too long. These sorts of considerations dog the ability
of those who have stayed out to objectively characterize the progress
of the markets and offer an unbiased the assessment of the economy and
its prospects. It will take a period of job growth being restored and
rates elevating to bring these skeptical once-burned twice-shy (and
therefore burned again by a different sort of fire) investors back to
the markets. Until then expect each monthly setback to be greeted by
the hoots and hollers of the pessimists who have sat back and largely
missed the rally to date. It&#8217;s all the fun that they can have.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col"><b>UK IP and
MFG</b> </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">UK MFG</td>
<td>Jan<br>
10</td>
<td>Dec<br>
09</td>
<td>Nov<br>
09</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1<br>
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>-0.8%</td>
<td>0.9%</td>
<td>0.1%</td>
<td>0.9%</td>
<td>4.1%</td>
<td>-0.4%</td>
<td>2.0%</td>
<td>0.2%</td>
<td>-2.0%</td>
<td>-0.9%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Consumer</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Durables</td>
<td>-1.8%</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>-7.9%</td>
<td>-4.6%</td>
<td>1.7%</td>
<td>7.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-9.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">
C-Non-durables</td>
<td>0.3%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>1.3%</td>
<td>-3.8%</td>
<td>-3.9%</td>
<td>-3.1%</td>
<td>-1.4%</td>
<td>-1.2%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-1.3%</td>
<td>0.4%</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>3.0%</td>
<td>-6.3%</td>
<td>-3.8%</td>
<td>-4.6%</td>
<td>-6.6%</td>
<td>-5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.8%</td>
<td>1.0%</td>
<td>0.7%</td>
<td>10.1%</td>
<td>16.3%</td>
<td>10.5%</td>
<td>9.1%</td>
<td>4.9%</td>
<td>-0.9%</td>
<td>10.3%</td>
</tr>
<tr>
<td class="firstcol">Memo: Detail</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>1Mo%</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q1<br>
Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Food
Drink&amp;tobacco</td>
<td>4.1%</td>
<td>-0.1%</td>
<td>-1.4%</td>
<td>10.5%</td>
<td>-7.7%</td>
<td>1.2%</td>
<td>-5.1%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>23.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textile&amp;Leather</td>
<td>-5.5%</td>
<td>3.4%</td>
<td>-5.2%</td>
<td>-26.6%</td>
<td>-18.4%</td>
<td>-15.6%</td>
<td>-4.4%</td>
<td>-9.1%</td>
<td>-6.7%</td>
<td>-27.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicles
&amp; trailer</td>
<td>-2.0%</td>
<td>5.6%</td>
<td>2.2%</td>
<td>24.7%</td>
<td>30.3%</td>
<td>13.5%</td>
<td>37.0%</td>
<td>26.8%</td>
<td>8.3%</td>
<td>14.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Mining and Quarry</td>
<td>1.4%</td>
<td>-4.9%</td>
<td>5.1%</td>
<td>5.6%</td>
<td>4.0%</td>
<td>-10.1%</td>
<td>-13.4%</td>
<td>-8.8%</td>
<td>-12.0%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Electricity,
gas&amp;H2O</td>
<td>1.3%</td>
<td>3.9%</td>
<td>-3.3%</td>
<td>7.3%</td>
<td>-4.7%</td>
<td>-0.6%</td>
<td>-4.7%</td>
<td>-5.2%</td>
<td>-6.7%</td>
<td>17.7%</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Monthly Budget Deficit A
Record</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> March 10, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310c.jpg" style="width: 353px; height: 265px;" align="right">As
the
Federal government's February budget deficit reached a record $220.9B,
the figure pulled the Fiscal YTD deficit to $651.6B which was larger
than any past deficit for twelve months, except 2009.</p>
<p> Recession pulled
net revenues during the first five months of FY'10 down 7.0% y/y.
Individual income tax receipts fell 14.0% y/y through February
reflecting higher unemployment. The rate of decline, however, is half
that at the end of last year. Corporate tax receipts mirror the decline
in profitability and fell 14.1%, though that rate of decline also eased
sharply. Year-to-date, employment taxes fell a record 3.5% but
unemployment insurance tax receipts rose a surprising 3.8%. Estate
&amp; gift taxes fell by one-third after an 18.6% decline during
FY'09.</p>
<p> Overall outlays were boosted 16.8% during the first five
months
of FY'10 as Social Security payments (21% of outlays) rose 7.8% and net
interest payments (5% of outlays) started to rise with higher rates.
Medicare expenditures (12% of outlays) fell slightly but other health
care services spending (10% of outlays) rose 21.3%. "Income security"
spending (11% of outlays) jumped by one-quarter while defense spending
(19% of total outlays) rose 2.9%.</p>
<p>The Government's financial data are
available in Haver's <b>USECON</b> database, with
extensive detail available in the specialized <b>GOVFIN</b>.·&nbsp;<b>Fiscal
Policy Choices </b>is the title of CBO Director Doug Elmendorf's
presentation to the National Association for Business Economics on
Monday and it can be found&nbsp;&nbsp; <a href="http://www.cbo.gov/ftpdocs/112xx/doc11277/CBOPresentation-NABE_3-8-10.pdf">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310d.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100310e.jpg" style="width: 312px; height: 265px;">
<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"><b>US
Government Finance</b></a> &nbsp;</th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>FY 'YTD</b></th>
<th scope="col"><b>FY 'YTD </b></th>
<th scope="col"><b>FY 2009</b></th>
<th scope="col"><b>FY 2008</b></th>
<th scope="col"><b>FY 2007</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-220.9B</td>
<td>$-651.6B</td>
<td>&nbsp;$-651.6</td>
<td>$-1,417.1B</td>
<td>$-454.8B</td>
<td>$-161.5B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$107.5B</td>
<td>$800.5B</td>
<td>-7.0%</td>
<td>-16.6%</td>
<td>-1.7%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$328.4B</td>
<td>$1,452.1B</td>
<td>16.8%</td>
<td>18.2%</td>
<td>9.1%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Manpower Survey Indicates PositiveBut Limited Jobs Growth

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309i.jpg" style="width: 353px; height: 265px;" align="right">The
Bureau
of Labor Statistics indicated improvement in January's job market
conditions. The latest Job Openings &amp; Labor Turnover Survey
(JOLTS) showed that the January <b>job openings rate </b>improved
to 2.1% which was the highest level since last February. <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>Job
availability doubled its December gain with a 7.6% increase and
remained off just 2.4% year-to-year. The latest figures reflect
benchmark revisions and the series dates back to December
2000.&nbsp;</p>
<p>The service sector led the improvement last month.
Educational &amp; health service jobs rose 13.2% (-0.5% y/y) and
leisure &amp; hospitality jobs increased 11.0% (7.2 y/y). Also, the
number of professional &amp; business service openings rose 6.9%
(-15.0% y/y. Deterioration in the factory sector reversed the December
gain with a 10.5% decline but openings were up by one-third from last
year<span style="color: black;">. </span>Construction
sector job openings also fell sharply for the third month in the last
four +81.8% y/y.</p>
<p>The <b>hires rate</b> has been stable
near 3.1% since the end of 2008.&nbsp;<i>The hires rate is
the number of hires during the month divided by employment.&nbsp;</i>The
actual number of hires reversed half of the December decline with a
2.1% m/m increase (-5.8% y/y). Professional &amp; business service
sector hires recouped most of the December decline with a 13.7%
increase (+2.1% y/y) while leisure &amp; hospitality hires gained
8.2% (-1.9% y/y). Factory sector hiring increased 3.3% (18.4% y/y) but
construction sector hiring fell 2.7% (-8.9% y/y).</p>
<p>The <b>job
separations rate </b>was stable at the series' low of 3.2% where
it's been since August with the actual number of separations off 19.5%
year-to-year. The layoff rate alone fell to a fifteen-month low of
1.5%. <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</p>
<p>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/100309j.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309k.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>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 colspan="8"><b>Job Openings, Total</b></td>
</tr>
<tr>
<td class="firstcol">Rate (%)</td>
<td>2.1</td>
<td>1.9</td>
<td>1.9</td>
<td>2.0</td>
<td>1.9</td>
<td>2.2</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol"> Total (000s)</td>
<td>2,724</td>
<td>2,531</td>
<td>2,456</td>
<td>2,792</td>
<td>2,531</td>
<td>3,078</td>
<td>4,378</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol"><b>Hires, Total</b></td>
</tr>
<tr>
<td class="firstcol">Rate (%)</td>
<td>3.1</td>
<td>3.1</td>
<td>3.2</td>
<td>3.2</td>
<td>37.3</td>
<td>41.1</td>
<td>45.9</td>
</tr>
<tr>
<td class="firstcol"> Total (000s)</td>
<td>4,080</td>
<td>3,997</td>
<td>4,160</td>
<td>4,330</td>
<td>48,649</td>
<td>56,082</td>
<td>63,234</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol"><b>Layoffs &amp;
Discharges, Total</b></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>1.5</td>
<td>1.6</td>
<td>1.5</td>
<td>1.7</td>
<td>20.7</td>
<td>17.7</td>
<td>16.5</td>
</tr>
<tr>
<td class="firstcol">Total (000s)</td>
<td>1,890</td>
<td>2,049</td>
<td>1,973</td>
<td>2,641</td>
<td>27,683</td>
<td>24,589</td>
<td>22,606</td>
</tr>
</tbody>
</table>
</span>
</body></html>

The Bureau of Labor Statistics indicated improvement in January's job market conditions. The latest Job Openings & Labor Turnover Survey (JOLTS) showed that the January job openings rate improved to 2.1% which was the highest level [...]

JOLTS: U.S. Job Openings Highest Since February '09

Louise Curley

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309h.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The National Australia Bank (not to be confused with the
Reserve Bank of Australia, the central bank) publishes monthly
indicators of business confidence and current conditions in business
together with the data on business opinions of trading conditions,
profitability, employment, forward orders, inventories, labor costs,
purchases cost, prices, capacity utilization and exports.</p>
<p>Business confidence rose to a percent balance of 19.4% in
February from 15.0% in January. It has recovered from the dip in
December and is now close to the peak levels of the past as can be seen
in the attached chart. The loss of confidence in December may have been
due, in part, to the three 25 basis points rises in the central bank's
policy rate that took place in October, November and December.
Apparently, the business community has come to realize that increases
in the cash rate are appropriate given the pace of Australian economic
activity. A fourth rise 25 basis points to 4.0% in the cash rate took
place on March 2 did not weaken confidence. The favorable balance of
opinion about current conditions is up to 7.7% from 3.0% in January but
it remains well below previous peaks.</p>
<p>The Australian economy is benefitting from the rise in
activity among the emerging countries of the pacific region. China is
now the single, largest recipient of Australia's exports. Ten years ago
in 1999, China accounted for 4.7% of Australia's exports; in 2009 it
accounted for 21.6% .</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">&nbsp;</th>
<th scope="col"><b>Feb 10</b></th>
<th scope="col"><b>Jan 10&nbsp;</b></th>
<th scope="col"><b>Dec 09</b></th>
<th scope="col"><b>Nov 08</b></th>
<th scope="col"><b>Oct 09</b></th>
<th scope="col"><b>Sep 09</b></th>
<th scope="col"><b>Aug 09</b></th>
<th scope="col"><b>Jul 09</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business
Confidence (% balance)</td>
<td>19.4</td>
<td>15.0</td>
<td>7.9</td>
<td>19.2</td>
<td>15.8</td>
<td>13.7</td>
<td>18.1</td>
<td>9.7</td>
</tr>
<tr>
<td class="firstcol">Business
Conditions&nbsp; (% balance)</td>
<td>7.7</td>
<td>3.0</td>
<td>10.1</td>
<td>10.3</td>
<td>11.8</td>
<td>3.2</td>
<td>3.8</td>
<td>1.0</td>
</tr>
</tbody>
</table>
</body></html>

The National Australia Bank (not to be confused with the Reserve Bank of Australia, the central bank) publishes monthly indicators of business confidence and current conditions in business together with the data on business opinions [...]

Business Confidence In Australia Rises

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309g.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>French exports and imports show a classic impact on those two
flows
as the domestic and global recessions hit. Now that recovery is in
gear, the trade flows reflect that as well. Exports and imports plunged
at the onset of the recession, imports fell because French domestic
demand shriveled up; exports contracted because foreign demand shut
down. The impact on the balance of trade was erratic. Generally,
however, the size of the French goods trade deficit was reduced. But
late in 2009 the trade deficit began to surge again reaching a monthly
maximum (deficit) of over &#8364;6bln. But over the last two months this
bulge in the deficit has diminished.</p>
<p>Exports have outpaced imports Yr/Yr, nearly doubling the
growth rate
of imports. Over six months exports contracted as imports began to
surge. But over the last three months exports are back solidly
outperforming imports, helping to shrink the French deficit.</p>
<p>The Yr/Yr trends in the chart tell a broad-brush story of
surging
trends. Both exports and imports are on a clear and solid upswing over
that period. Over shorter periods export and import growth both are
more chaotic. But the year-over-year statics tell a clear story of an
international sector in rebound. Trade figures across the globe echo
these same trends. Trade flows tell a story of an international economy
in a clear state of rebound not a story of tentative and sputtering
domestic growth which is the story we are often fed about the various
national expansions. Why do the trade data speak clearly to the subject
of revival while various national data do not? It is because the goods
sector which dominates trade is in a clear rebound while the services
sector, the sector that dominates job growth domestically, has been
slow to catch on. To make the various national recoveries durable,
services industries have to catch on and job growth must get into gear.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="6" scope="col"> <b>French
Trade trends for goods, Excl Miliarty Equip</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan-10</td>
<td>Dec-09</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="grey2">
<td class="firstcol">Balance*</td>
<td>-&#8364; 4,863.00</td>
<td>-&#8364; 5,346.00</td>
<td>-&#8364; 5,472.67</td>
<td>-&#8364; 4,983.00</td>
<td>-&#8364; 4,756.25</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">Exports</td>
</tr>
<tr>
<td class="firstcol">All Exp</td>
<td>2.7%</td>
<td>0.4%</td>
<td style="font-weight: bold;">19.5%</td>
<td style="color: red; font-weight: bold;">-3.4%</td>
<td>7.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food,
Bev &amp;Tobacco</td>
<td>-2.6%</td>
<td>0.8%</td>
<td style="font-weight: bold;">14.5%</td>
<td style="color: red; font-weight: bold;">-4.4%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Transport Equip</td>
<td>8.4%</td>
<td>6.2%</td>
<td style="font-weight: bold;">16.2%</td>
<td style="color: red; font-weight: bold;">-8.7%</td>
<td>26.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Other
Exp</td>
<td>1.7%</td>
<td>-1.2%</td>
<td style="font-weight: bold;">21.3%</td>
<td style="color: red; font-weight: bold;">-1.4%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">IMPORTS</td>
</tr>
<tr>
<td class="firstcol">All IMP</td>
<td>0.9%</td>
<td>-2.1%</td>
<td style="font-weight: bold;">13.9%</td>
<td style="font-weight: bold;">11.1%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food,
Bev &amp;Tobacco</td>
<td>0.5%</td>
<td>-0.2%</td>
<td style="font-weight: bold;">7.8%</td>
<td style="color: red; font-weight: bold;">-4.7%</td>
<td style="font-weight: bold;">-<span style="color: red;">2.8%</span></td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Transport Equip</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>12.0%</td>
<td style="font-weight: bold;">13.1%</td>
<td>11.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Other
Imp</td>
<td>1.1%</td>
<td>-2.5%</td>
<td>14.8%</td>
<td style="font-weight: bold;">12.3%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td colspan="6" class="firstcol">All data
seasonally
adjusted *Eur mlns; mo or period average</td>
</tr>
</tbody>
</table>
</body></html>

French exports and imports show a classic impact on those two flows as the domestic and global recessions hit. Now that recovery is in gear, the trade flows reflect that as well. Exports and imports plunged at the onset of the [...]

French Deficit Shrinks

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
<br>

<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309d.jpg" style="width: 353px; height: 265px;" align="right">Gasoline
prices continued their rally. At $2.75 per gallon last week, the <b>pump
price for regular gasoline </b>was at the highest level since
January which was the highest level since September 2008. Yesterday,
the spot market price for a gallon of regular gasoline increased to
$2.18, also its highest since 2008. The figures are reported by the
U.S. Department of Energy and can be found in Haver's <b>WEEKLY
&amp; DAILY </b>databases.</p>
<p>The price for a barrel of light
sweet crude (WTI) rose last week to $80.19 though it remained down from
the early-January high of $82.59. Nevertheless, prices have risen from
$71.53 early this past December and are more than double the December
2008 low of $32.37. Yesterday, the spot price rose further to $81.87.·
Demand for gasoline fell 2.5% last week versus one year ago. That
decline compared to a 3.9% increase at the beginning of October. The
demand for residual fuel oil spiked by one-third with falling
temperatures in the Northeast &amp; Midwest. However, distillate
demand fell 7.7% y/y, a decline more moderate than the 21.6% y/y
shortfall at the beginning of last July. Inventories of crude oil and
petroleum products slipped in February but were up 1.0% from one year
ago.</p>
<p>U.S. natural gas prices fell last week to an average $4.75 per
mmbtu (+11.8% y/y) from the high of $6.50 early in January.
Nevertheless, prices remained double the September low.</p>
<p> Outside of
energy, commodity prices also have been strong. Copper has led the gain
as prices have more-than doubled since early last year. Scrap steel
prices remain strong with a doubling during the same period. Aluminum
prices have leveled off since December but remain up by two-thirds
since the 2009 low. With improved housing activity has come strength in
lumber prices which have risen more than 50% since early-2009. Cotton
prices also have nearly doubled with improvement in consumer spending.
In the agricultural area, prices of foodstuffs including wheat, corn
&amp; butter, as well as livestock have risen by one-half. Finally,
gold prices near $1,126.50/pound have risen 50% since the fall of '08
and have roughly tripled since 2001.</p>
<p>The energy &amp; commodity
price data can be found in Haver's <b>WEEKLY </b>database
while the daily figures are in <b>DAILY</b>. The gasoline
demand figures are in <b>OILWKLY</b>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309e.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100309f.jpg" style="width: 312px; height: 265px;">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a ;="" href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM"><b>Weekly Prices</b></a></th>
<th scope="col"><b>03/01/10</b></th>
<th scope="col"><b>03/01/10</b></th>
<th scope="col"><b>02/22/10</b></th>
<th scope="col"><b>Y/Y</b></th>
<th scope="col"><b>2009</b></th>
<th scope="col"><b>2008</b></th>
<th scope="col"><b>2007</b></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon, Regular)</td>
<td>2.75</td>
<td>2.70</td>
<td>2.66</td>
<td>41.7%</td>
<td>2.35</td>
<td>3.25</td>
<td>2.80</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>80.19</td>
<td>79.26</td>
<td>78.30</td>
<td>85.4%</td>
<td>61.39</td>
<td>100.16</td>
<td>72.25</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Gasoline prices continued their rally. At $2.75 per gallon last week, the pump price for regular gasoline was at the highest level since January which was the highest level since September 2008. Yesterday, the spot market price for a [...]

U.S. Gasoline Prices Are Highest Since 2008

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

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

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


Privacy Policy

Disclaimer

Contact us

Service Health

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

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Tian Yong Woon

In this week’s Letter, we cover the latest developments and implications of the Middle East conflict for Asia, while also making space for other important themes, including artificial intelligence (AI). The Middle East conflict remains in a no deal state coming out of the weekend, though some early Monday optimism emerged in Asian markets following Iran’s reported offer to reopen the Strait of Hormuz (chart 1). Nonetheless, as the Strait closure drags on, so too do the fiscal costs of domestic fossil fuel subsidies across Asia, which have been shown to move closely with crude oil prices (chart 2). While such measures offer direct relief by cushioning household energy costs, they remain difficult to sustain over the long haul.

Over the week, we also saw a further fraying in regional monetary policy trends, with the Philippines hiking its policy rate for the first time in about two years amid inflation concerns, while Indonesia stood pat on rates (chart 3). Investor attention is likely to remain fixed on monetary policy this week, with the Bank of Japan due to decide on policy. Expectations for an April hike have faded amid the persistent Middle East conflict, though yen weakness continues to present a source of concern (chart 4). The week also brings China’s latest PMI readings (chart 5), adding to the recent run of hard data accompanying the Q1 GDP release.

Beyond the Middle East conflict, the evolution of AI continues to demand close attention. Before geopolitical tensions took centre stage, AI was the dominant market narrative — and that enthusiasm has hardly faded. If anything, recent developments suggest the story is broadening: use cases are expanding, scalability is improving, and access is widening beyond large corporates to the mass market — increasingly spilling into the realm of physical AI. It may well be this persistent wave of optimism that is helping to underpin equity valuations, even as the geopolitical backdrop darkens (chart 6).

**The Middle East conflict**
About two months in, we remain stuck in the limbo of the US-Iran conflict, which has left the Strait of Hormuz largely closed and much of the world starved of the critical oil flows needed to power the global economy. The back and forth between the US and Iran has persisted in recent weeks, with both sides again failing to reach a peace deal over the weekend, though Monday’s news of Iran offering to reopen the Strait has revived some hope in markets. In truth, commodity and market valuations do not hinge so much on a peace deal itself, but rather on the resumption of oil flows through the Strait, something that could materialise even in the absence of a formal deal, though any agreement that includes and credibly delivers such a reopening would likely be warmly received by markets. Until then, market gyrations are likely to persist, with prices fluctuating in response to each new snippet of news. And until then, the world will continue both to be starved of, while gradually adapting to, the drip feed of oil flows emerging from the Strait.

260427T1.jpg

**The fiscal costs of the Middle East conflict**
As the Middle East conflict drags on, so too does the strain on fiscal resources across parts of Asia, as the costs of energy-related subsidy programmes continue to mount. While such programmes have an immediate, direct, and tangible impact in shielding households from surging energy costs, they are far from sustainable, particularly if oil prices remain well above targeted levels or stay elevated for an extended period. As chart 2 illustrates, the costs of these explicit subsidy programmes tend to rise closely with crude oil prices, as seen in India and Indonesia. Other measures adopted elsewhere, such as drawing down oil reserves, may be less fiscally costly, but are similarly difficult to sustain indefinitely. In both respects, the clock is ticking, and the world continues to hold its breath as the conflict drags on.

260427T2.jpg

**The latest central bank responses to the conflict**
Over the past week, Asia saw two central bank decisions. The Philippines’ (BSP) opted to deliver its first rate hike in about two years, while Indonesia’s (BI) chose to stand pat on policy rates and instead committed to stepped up FX intervention (chart 3). This latest round of decisions points to a further fraying of what had been a broad regional monetary policy consensus, namely that central banks would delay additional easing while maintaining a high bar for outright tightening. Domestic considerations, however, remain paramount. In the Philippines’ case, the central bank has moved to rein in inflation, which is already showing notable signs of price pass through stemming from disruptions linked to the Strait of Hormuz. That said, BSP is not the first in the region to buck the reluctance to tighten. Singapore’s central bank had already tightened policy in mid-April, albeit through its own distinct framework, given its use of the exchange rate rather than policy rates as the primary channel for monetary policy.

260427T3.jpg

**The week ahead**
Looking to the week ahead, a major central bank decision looms in Japan. Market expectations for the Bank of Japan to deliver a rate hike at its April meeting have ebbed amid the persistence of the Middle East conflict, to which Japan remains particularly vulnerable given its reliance on oil imports flowing through the Strait of Hormuz. At the same time, inflation in Japan has yet to become a major concern, with recent readings having picked up but not yet entering troubling territory. One potential source of concern, however, lies with the Japanese yen, which has remained on a weakening trend since early last year (chart 4). That depreciation has been one of the key arguments underpinning calls for further rate hikes.

260427T4.jpg

The week also brings China’s latest PMIs into focus. March saw a divergence between China’s official PMI readings, which improved, and the unofficial readings from RatingDog, which instead pulled back. Nonetheless, both official and unofficial gauges remained in expansionary territory (chart 5), with investors now watching closely to see whether that resilience can be sustained amid ongoing stresses from the Middle East, or whether offsetting drivers can continue to keep Chinese business sentiment and prospects buoyant.

260427T5.jpg

**Beyond the strait**
Moving beyond the Middle East conflict, a whole host of developments continue to unfold globally, many of which have in fact helped offset some of the pessimism wrought by the Strait’s chokehold. One such development is artificial intelligence (AI), which had dominated headlines before the outbreak of the conflict and continues to advance at breakneck pace. AI capabilities are still rapidly evolving, while practical applications, such as physical AI embodied in humanoid robots, are beginning to show broader and stronger use cases. Production of such robots is also becoming increasingly scalable and within reach not just for industrial complexes and healthcare, but for the mass market as well. It is perhaps growing optimism around these prospects that has helped keep equity valuations buoyant, even in the face of the festering conflict in the Middle East. Moreover, while concerns over AI-driven job displacement persist, new opportunities are emerging as well, particularly for AI adopters, with a growing share of job postings in Western economies increasingly referencing AI-related skills, as shown in chart 6.

260427T6.jpg

Asia

Economic Letter from Asia: Not Just About the Strait

260427E.jpg

**The Distributive Trades Survey**

The U.K. Distributive Trades Survey for April 2026 and the look-ahead expectation readings for May paint an extremely soured outlook for the U.K. economy.

**Retail ranking**: Surveys for retail sales compared to a year ago, orders compared to a year ago, and sales evaluated for the time of year all have rankings near zero, which is the worst result on this timeline. This zero distinction applies to retail sales compared to a year ago. The best ranking is 11.6%; that is for sales evaluated for the time of year. Orders compared to a year ago have a 4.2 percentile standing. The stock-to-sales ratio—which is a completely different concept—shows that the inventory-to-sales ratio has a 29.9 percentile standing.

**Retail diffusion**: The raw April diffusion readings (up minus down diffusion) show that sales compared to a year ago slipped to a reading of -68 in April from -52 in March. Orders fell to -46 in April from -26 in March. Sales evaluated for the time of year fell to -32 April from -23 in March. All three measures weakened, and all three weakened decisively, resulting in extremely weak rankings. All of the rankings are executed on data back to 2002.

**Expectations for retailing**: The expectations readings for May show slippage again across all three metrics: expected sales compared to a year ago, expected orders compared to a year ago, and expected sales for the time of year. Expected sales compared to a year ago fell to -60 in May from -49 in April. Orders compared to a year ago declined to -45 in May from -30 in April, and sales for the time of year slipped to -43 from -19. In May, these readings have rankings in a 0.4 percentile standing for sales compared to a year ago, a 1.8 percentile standing for sales evaluated relative to the time of year, and a 4.6 percentile standing for orders compared to a year ago. These two panels on current and expected retail sales volumes are just simply terrible: weak monthly, weak in ranking terms, and showing slipping momentum.

The distributor trade series also provides data on the wholesale sector. While the wholesale sector is not quite as beat up as the retail sector, it's still extremely weak. There is no cause for any kind of hope that things are getting better based on wholesaling trends.

**Wholesaling**: The wholesale survey for sales compared to a year ago edged lower to -32 in April from -31 in March. Orders compared to a year ago remained at a reading of -41 in April. Sales evaluated for the time of year improved to a reading of -20 in April from -39 in March—a significant step up, but still very weak. The percentile standings for these three categories show sales compared to a year ago at the 8.8 percentile, orders compared to a year ago at the 5.6 percentile, and sales evaluated for the time of year at the 14.8 percentile.

**Wholesale Expectations**: The look-ahead observations, which provide expectations for wholesaling in May, show a similar constellation of readings, with sales compared to a year ago falling to -37 in May from -27 in April and orders compared to a year ago falling to -42 from -38, while sales evaluated for the time of year improved to  16 from  37. That category for wholesale sales improved both in April in real time and in May for expectations; however, it continues to have a very weak percentile standing, at the 17.9 percentile in May, while sales for a year ago have a 6.7 percentile standing and orders for a year ago have a 6.0 percentile standing.

260427.jpg

While some of the global PMI data have improved, these survey data for the U.K. are particularly dour. The war in Ukraine drags on, and there's a new conflict in Iran that has shut the Strait of Hormuz, creating energy problems for much of Europe. More broadly, supply chains have been harmed. In addition, the U.K. is undergoing a bout of political instability, as its Prime Minister is under pressure and a good deal of political uncertainty is being worsened by deteriorating economic performance.

Both the U.K. and the European Monetary Union had been showing some progress on inflation until the Iran war hit. Now, as the oil prices are up so sharply, headline inflation is going to be worse everywhere and there will probably be a bit more attention directed to the core inflation rate. However, the U.K. has had inflation too hot for a while, and it has failed to settle down. At its last meeting, the Bank of England’s Monetary Policy Committee warned that if the war was still ongoing at the next meeting, there would be a risk of a rate hike. So, it would seem that a rate hike is going to be in play unless the economy falls off a cliff first, which, based on the distributive trades data, is also something that could happen. The U.K. economy appears to be on very unsound footing, and what happens next is just about anybody's guess.

United Kingdom

U.K. Retail Sales: Worse Than During Covid

260424E.jpg

The onset of the war in Iran appears to have hit the German economy extremely hard as the Ifo survey shows very substantial and broad-based decline across its survey in April. The Ifo survey features readings for five sectors as well as an aggregate reading, and it surveys them for climate, current conditions, and expectations. The decline in the Ifo survey is present for all three concepts and across all five sectors, marking the weakening in April as a highly significant and extremely disturbing development. Only manufacturing in the current conditions survey escapes a month-to-month decline.

**The Ifo sequences**: The **climate** reading fell both overall and across each of the five sectors. **Current conditions** declined for the overall and for four of the five sectors, with manufacturing the sole exception. **Expectations** declined for the overall and for all sectors. Several of the sector declines were for a very substantial magnitude, especially when compared to historic changes in these indexes.

**Monthly changes in readings—severe broad deterioration**
The month-to-month change in the climate reading has weakened more month-to-month 19% of the time. That overall result, however, is boosted by manufacturing where the monthly change has been weaker 35% of the time (on data back to 2011). However, all other sectors have seen climate weaker m/m only 2.3% to 6.3% of the time! The current situation readings weakened, with the headline weakening more m/m 11% of the time. This was boosted by manufacturing, the only sector that improved on the month; its ranking on change was in its 85th percentile—quite good and truly stand-alone good news. The other current changes by sector ranged from construction being weaker 1.7% of the time, to retailing that has been weaker about 30% of the time in terms of m/m changes. Expectation changes were uniformly terrible, with the headline drop weaker only 6.3% of the time and sector change month-to-month weaker between 9% and 1.7% of the time. The monthly weakening was uniform and substantial. I document it with these calculations, but you can also see it on the chart above.

**Climate**: The bottom line is that the all-sector index for climate fell to -20.3 in April from -18 in March, placing it at a 10.5 percentile standing on data since 1993. The sector ranking is the highest for construction with a 42.2 percentile standing and the weakness for services at a 1.1 percentile standing—weaker than the table reading nearly 99% of the time. In terms of percentile standing levels or monthly changes, conditions are closing in on grim.

**Current conditions**: Current conditions saw the all-sector index slip to -5.3 in April from -2.4 in March. The headline ranking stands at a 9.8 percentile mark, making it—like the climate reading—weaker than its current reading only about 10% of the time. The strongest reading under current conditions is for construction which has a 60.6 percentile standing; it is the only ranking in the table above its historic median. Manufacturing, the only sector in the survey that improved month-to-month, has a 22.5 percentile standing, while services record the weakest percentile standing under current conditions, at an 8.4 percentile standing.

**Expectations:** The all-sector index for expectations fell to -25.3 in April from -19.9 in March, placing it at a 6.3 percentile standing. The percentile standings across sectors range from a high of 9.5% for manufacturing to a low of 1.5% for retailing. Up until earlier this year, the Ifo was showing signs of improvement; however, all of that has simply collapsed in the last month. Weakness is across economic concepts and sectors, as documented above. For reference, the table also gives a separate set of rankings on where the various indexes stand since the invasion of Ukraine, since that was another marked event that drove the index, that had been improving after Covid, down to lower levels.  Ranked even on this reduced scale looking at conditions only since the invasion of Ukraine, when conditions have generally been weaker, the current rankings across the Ifo survey remained extremely weak. This is a very disturbing survey for the German economy.

260424.jpg

Germany

German Ifo Plunges Everywhere

Andrew Cates

**Energy shock lifts inflation, trims growth**
The IMF’s latest WEO revisions for 2026 broadly reflect the classic stagflationary impact of the recent Middle East energy shock, with growth downgraded and inflation revised higher across most major economies. Higher energy prices act as a tax on real incomes while simultaneously pushing up costs. That said, the picture is not uniform: a number of economies—notably the US, China and India—have seen growth upgrades, reflecting stronger-than-expected momentum so far in 2026. By contrast, the UK stands out at the stagflationary extreme, combining one of the largest growth downgrades with a relatively strong inflation uplift—consistent with its weaker underlying momentum, greater energy sensitivity and more persistent domestic inflation dynamics. More broadly, while the global revisions remain modest—pointing to resilience in activity—the message is that disinflation is no longer a smooth glide back to target but increasingly contingent on energy prices and geopolitical developments.

260423Z1.jpg

**Markets largely shrug off rising economic pessimism**
Notwithstanding a more downbeat assessment from economists—including the IMF’s stagflationary tilt to the outlook—there has been remarkably little follow-through into financial markets. Measures of systemic stress in both the US and UK remain low by historical standards, suggesting that investors are, for now, largely looking through the Middle East conflict. There are several possible explanations: corporate profits remain resilient, the AI-driven investment narrative continues to dominate market thinking, and markets may be assuming that any energy shock will be temporary and contained. In effect, investors appear to be pricing a benign baseline in which geopolitical risks do not materially disrupt growth, inflation expectations or policy. The UK is a partial exception, with a somewhat more visible uptick in stress, which aligns more closely with the IMF’s more challenging growth-inflation trade-off and the economy’s greater sensitivity to energy prices.

260423Z2.jpg

**Volatility falls despite deteriorating growth surprises**
Market optimism is also increasingly at odds with the incoming data flow. Typically, equity volatility declines when growth surprises are positive and inflation surprises are benign. However, the recent pattern has broken that relationship. Growth surprises across the G10 have turned increasingly negative (our series is inverted in the chart below), yet volatility has continued to fall. In other words, markets are becoming less sensitive to weakening macro data, continuing to price a benign outlook even as the data deteriorate. This divergence reinforces the broader theme: investors are, for now, looking through both geopolitical risks and softer economic momentum, placing greater weight on resilience in earnings, the AI-driven narrative and the assumption that policy will remain supportive.

260423Z3.jpg

**Inflation Nowcasts Have Jumped**
Incoming data suggest that headline inflation has moved higher in recent weeks, broadly in line with expectations given the rise in energy prices following the Middle East shock. Nowcasts for CPI across the major economies show a clear rebound in March and April from the lows seen at the start of 2026, with the move occurring in a relatively synchronised fashion. This reinforces the view that the recent pickup in inflation is being driven primarily by a common external factor—energy.

260423Z4.jpg

**Energy shock not yet feeding into underlying inflation**
However, the detailed breakdown of March inflation outcomes suggests that this remains, for now, a largely headline-driven phenomenon. While headline CPI prints were firm across most economies, core inflation—stripping out energy and food—was more subdued and in some cases weaker. This indicates that there has been very limited pass-through from higher energy prices into broader goods and services inflation at this early stage. In other words, the shock is still being absorbed rather than propagated. That distinction is critical for policy and markets alike: as long as second-round effects remain contained, central banks may be able to look through the near-term rise in inflation, even as headline rates move higher.

260423Z5.jpg

**Inflation Expectations Rising as Growth Sentiment Falters**
It remains early days, and much will hinge on how inflation expectations evolve from here. The latest ZEW survey for Germany already conveys the hallmarks of a classic stagflationary shock, with macroeconomic expectations weakening even as inflation expectations have ratcheted sharply higher. This shift is important: while the recent rise in headline inflation has so far shown limited pass-through into core, a sustained increase in expectations would raise the risk of second-round effects and make the inflation process more persistent. In that sense, the ZEW data highlight the key fault line in the current environment—whether the energy-driven shock remains contained, or begins to embed itself more broadly through expectations and pricing behaviour.

260423Z6.jpg

Financial markets have remained notably calm in recent weeks despite rising geopolitical tensions in the Middle East, a more downbeat macroeconomic narrative and elevated uncertainty. Measures of financial stress and volatility remain low, and equity markets continue to look through both the conflict and softer data. That resilience sits alongside a more nuanced macro backdrop. The IMF’s latest WEO revisions point to a classic stagflationary energy shock—growth downgraded and inflation revised higher—although the global impact remains modest and uneven, with some economies still benefiting from stronger momentum (chart 1). At the same time, market pricing appears increasingly detached from the data flow, with volatility declining even as growth surprises have turned more negative relative to inflation (charts 2 and 3). Incoming inflation data reinforce the idea of a largely headline-driven shock, with nowcasts rising in line with higher energy prices but only limited pass-through into core inflation so far (charts 4 and 5). However, it remains early days. Survey evidence, such as the latest ZEW release, suggests that inflation expectations may already be responding in a more concerning way, with a marked rise alongside weakening growth sentiment (chart 6). Taken together, the key question for markets is whether this remains a contained, energy-driven shock that can be looked through—or whether it begins to embed more persistently via expectations, forcing a reassessment of the currently benign outlook.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/44A12ktUaoJGHZG7pEVcul?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Risks Build, Markets Shrug

Sandy Batten

260423F8.jpg

260423G8.jpg

The National Activity Index published by the Federal Reserve Bank of Chicago (CFNAI) slipped to -0.20 in March from an upwardly revised +0.03 in February (previously (-0.11). This is the lowest monthly reading since last November. Smoothing out the monthly volatility, the index's three-month moving average (CFNAI-MA3) declined to -0.03 in March from an upwardly revised +0.03 in February (previously -0.01).

This index is expressed in standard deviation units from zero (with a value of zero defined as trend real GDP growth). Research at the FRB Chicago indicates that readings on the 3-month average of -0.70 or below are consistent with the economy being in a recession. Therefore, even though the March reading on the 3-month average was negative, it indicates that the US economy is still growing, just slightly slower than trend, and is well away from recessionary conditions. The 3-month average would be much deeper in negative territory if the economy was at risk of contracting.

The National Activity Index is a composite of 85 economic indicators, grouped into four major categories: production and income; employment, unemployment, and hours worked; personal consumption and housing; sales, orders, and inventories. Three of the four broad categories of indicators used to construct the index decreased from February, and three categories made negative contributions in March. Production-related indicators contributed –0.20 to the CFNAI in March, down from +0.13 in February. The sales, orders, and inventories category's contribution to the CFNAI was –0.01 in March, down from +0.05 in February. Employment-related indicators contributed +0.02 to the CFNAI in March, up from –0.15 in February. The personal consumption and housing category's contribution to the CFNAI was –0.01 in March, down from a neutral value in February.

The CFNAI Diffusion Index, which measures the breadth of the change in the component series and is also a three-month moving average, increased to –0.04 in March from –0.08 in February. This is the highest reading since February 2025. A reading of zero indicates that all of the indicators are growing at their long-term average. If all of the underlying indicators in a given month are below their long-run averages, the diffusion index will equal -1. If all of the indicators are above their long-run averages, it will equal +1. Thirty-four of the 85 individual indicators made positive contributions to the CFNAI in March, while 51 made negative contributions. Forty-three indicators improved from February to March, while 40 indicators deteriorated and two were unchanged. Of the indicators that improved, 16 made negative contributions.

These figures are available in Haver's **SURVEYS** database.

- The monthly reading fell to -0.20 in March from an upwardly revised +0.03 in February.
- The three-month average slipped from +0.03 to -0.03.
- Despite the slip in March, the index points to near-trend economic growth and is well above recession territory.

Economy in Brief: 2010

Jump to: