Tom Moeller

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100305a.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100305b.jpg" style="width: 312px; height: 265px;"></p>
<p>Stabilization of labor market conditions was again evident in
the latest report from the Bureau of Labor Statistics. From the
household survey, the unemployment rate held steady for the second
month at 9.7%, down from the October high of 10.1%. In addition, the
payroll survey indicated that a modest 36,000 jobs were lost. Consensus
expectations had been for a slight uptick in the unemployment rate to
9.8% and a deeper payroll decline of 50,000.</p>
<p>The steady unemployment rate owed to a 308,000 increase (-2.1%
y/y) in household employment following a 541,000 January gain. These
increases follow monthly declines of as much as 967,000 during the
recession. Moreover, the labor force started to expand, last month by
342,000, after a lesser January increase. Throughout 2009 the labor
force contracted slightly. The labor force participation rate also rose
slightly; for adult men, it ticked up to 74.0% and for adult women, it
gained to 60.6%.</p>
<p>The 36,000 decline in February payrolls followed a 26,000
January slip that roughly equaled the initial estimate. However, the
December decline of 109,000 was revised from a much deeper 150,000
estimated last month. The decline in payrolls in 2009 now totals 2.5%,
half the recession peak. The three-month change is -0.1%.</p>
<p>The lessened decline in February payrolls stemmed from a 1,000
worker increase in factory sector jobs which was just the second
monthly gain in three years. Private-services payrolls also posted
their third increase in the last four months while severe winter
weather weighed on construction employment. The government indicated
that most other employment categories were negatively affected by the
mid-month blizzard that coincided with the employment survey week.
Bucking this downward pressure was temporary employment which rose
47,500 (3.9% y/y) for the fifth straight monthly gain and the heath
care sector (1.6% y/y). Government employment was notably weak in the
local sector. It fell 31,000 while federal and state hiring both rose.</p>
<p>The diffusion index for employment, which measures the breath
of hiring across industries, rose to 48.0%. That was up from the
recession low of just 16.5% and was the highest in nearly two years. In
the factory sector alone, the index showed net-hiring at 54.9%, the
highest level in three years.</p>
<p>The total workweek suffered from the storm and fell to 33.1
hours which was its least since October. The length of the construction
workweek fell most sharply. The factory workweek unwound three months
of increase but, at 40.3 hours, was nevertheless up sharply from the
recession low. The length of the private services workweek also held
onto its improvement since the June low.</p>
<p>So far in the first quarter, aggregate hours worked
(employment times hours) have risen at a 0.8% annual rate from 4Q after
that quarter's 1.2% decline.</p>
<p>The figures referenced above are available in Haver's <b>USECON</b>
database. Additional detail can be found in the <b>LABOR </b>and
in the <b>EMPL</b> databases.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100305c.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100305d.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>Employment:
000s</b></th>
<th scope="col"><b>February</b></th>
<th scope="col"><b>January</b></th>
<th scope="col"><b>December</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 class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-36</td>
<td>-26</td>
<td>-109</td>
<td>-2.5%</td>
<td>-4.3%</td>
<td>-0.6%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Previous</td>
<td>--</td>
<td>-20</td>
<td>-150</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Manufacturing</td>
<td>1</td>
<td>20</td>
<td>-18</td>
<td>-6.6%</td>
<td>-11.3%</td>
<td>-3.4%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Construction</td>
<td>-64</td>
<td>-77</td>
<td>-36</td>
<td>-13.7%</td>
<td>-15.7%</td>
<td>-6.1%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Private Service Producing</td>
<td>42</td>
<td>20</td>
<td>-29</td>
<td>-1.6%</td>
<td>-3.4%</td>
<td>-0.2%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Government</td>
<td>-18</td>
<td>7</td>
<td>-26</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.1</td>
<td>33.3</td>
<td>33.2</td>
<td>33.2 (Feb. '09)</td>
<td>33.1</td>
<td>33.6</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>3.0%</td>
<td>3.8%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>9.7%</td>
<td>9.7%</td>
<td>10.0%</td>
<td>8.2% (Feb. '09)</td>
<td>9.3%</td>
<td>5.8%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
<span id="articletitle">Has Germany Found The Missing Link?</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> March 5, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100305e.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>After dropping in December and raising eyebrows German orders
have raised their game in January jumping by 4.3% month-to-month. Total
orders are now accelerating steadily from twelve-months to six-months
and from six-months to three-months.</p>
<p>Foreign orders rose by 1.9% month to month just offsetting the
drop of 1.7% in December. But domestic orders surged by 7.1% a rise
substantially more than offsetting the 1.3% drop in December. Does this
means that the German domestic economy is now awakened and back in the
game? A weak domestic economy has been the missing link to German
improvement and to sustained EMU growth, which so far has been export
led and therefore a bit uncertain. The German domestic economy still
lags the foreign sector in terms of Yr/Yr order growth but it has now
begun to surpass it over terms of 3-months and 6- months.</p>
<p>Real sector sales trends still show consumer demand dropping
but that is all due to nondurables weakness. In January as consumer
durables sales jumped by 3.5% that spurt added to growth in sales from
capital goods at 2.3%, intermediate goods at 2.2%, and mining/MFG at
1.1%.</p>
<p>Getting Germany on a stronger growth track particularly
because its domestic economy is heating up would be a very positive
development for the Euro-Area where growth has been sputtering and
problems on the financial side have been plaguing the outlook. One good
German number does not seal the deal for a better outlook but it is a
big step in the right direction and one that has been long in coming.
This is not the first spurt in domestic orders we have seen in this
cycle. In July of 2009 they surged by 9.3% only to fall and sputter
over the next three months. It may be that the domestic order series is
just lumpy, so we should hold our praise. But this is a good a sign and
we should watch to see if the trend has legs.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> German
Orders and Sales By Sector and Origin</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">Real
and SA</td>
<td style="font-weight: bold;" colspan="3">%
M/M</td>
<td style="font-weight: bold;" colspan="5">%
Saar</td>
</tr>
<tr>
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">Nov-09</td>
<td style="font-weight: bold;">3-MO</td>
<td style="font-weight: bold;">6-Mo</td>
<td style="font-weight: bold;">12-Mo</td>
<td style="font-weight: bold;">YrAgo</td>
<td style="font-weight: bold;">QTR-2-Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Orders</td>
<td>4.3%</td>
<td>-1.6%</td>
<td>2.7%</td>
<td>23.7%</td>
<td style="color: red;">11.2%</td>
<td>19.7%</td>
<td style="color: red;">-34.0%</td>
<td>8.7%</td>
</tr>
<tr>
<td class="firstcol">Foreign</td>
<td>1.9%</td>
<td>-1.7%</td>
<td>3.6%</td>
<td>16.2%</td>
<td style="color: red;">7.8%</td>
<td>24.2%</td>
<td style="color: red;">-39.6%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic</td>
<td>7.1%</td>
<td>-1.3%</td>
<td>1.6%</td>
<td>33.2%</td>
<td>15.4%</td>
<td>15.2%</td>
<td style="color: red;">-27.2%</td>
<td>17.5%</td>
</tr>
<tr style="font-weight: bold;">
<td colspan="9" class="firstcol">Real Sector
Sales</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG/Mining</td>
<td>1.1%</td>
<td>-0.9%</td>
<td>0.1%</td>
<td>0.8%</td>
<td style="color: red;">0.4%</td>
<td>2.6%</td>
<td style="color: red;">-20.1%</td>
<td>-2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Consumer</td>
<td>-4.6%</td>
<td>2.1%</td>
<td>1.8%</td>
<td style="color: red;">-3.4%</td>
<td>-1.7%</td>
<td>-3.0%</td>
<td style="color: red;">-9.9%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Cons
Durables</td>
<td>3.5%</td>
<td>-1.4%</td>
<td>2.3%</td>
<td>18.4%</td>
<td>8.8%</td>
<td>-0.8%</td>
<td style="color: red;">-15.9%</td>
<td>12.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Cons
Non-Durable</td>
<td>-5.8%</td>
<td>2.6%</td>
<td>1.8%</td>
<td style="color: red;">-6.6%</td>
<td>-3.3%</td>
<td>-3.4%</td>
<td style="color: red;">-8.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Captial Gds</td>
<td>2.4%</td>
<td>-1.3%</td>
<td>0.4%</td>
<td>6.2%</td>
<td>3.0%</td>
<td>3.0%</td>
<td style="color: red;">-25.4%</td>
<td>-4.5%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Gds</td>
<td>2.2%</td>
<td>-2.0%</td>
<td>-0.5%</td>
<td style="color: red;">-1.2%</td>
<td style="color: red;">-0.6%</td>
<td>8.3%</td>
<td style="color: red;">-21.4%</td>
<td>-1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">All MFG-Sales</td>
<td>1.0%</td>
<td>-0.8%</td>
<td>0.1%</td>
<td>0.8%</td>
<td style="color: red;">0.4%</td>
<td>2.6%</td>
<td style="color: red;">-20.3%</td>
<td>-2.1%</td>
</tr>
</tbody>
</table>
</body></html>

Stabilization of labor market conditions was again evident in the latest report from the Bureau of Labor Statistics. From the household survey, the unemployment rate held steady for the second month at 9.7%, down from the October high [...]

U.S. Unemployment Rate Steadies;Payrolls Fall Modestly

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<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304i.jpg" style="width: 353px; height: 265px;" align="right">
Bad weather
had a noticeable effect on January housing activity. However, the
National Association of Realtors (NAR) reported an outsized effect on
pending home sales which fell 7.6% m/m from December to their lowest
level since March of last year. Nevertheless, home sales remained up
12.3% from the January low. The latest decline compares with Consensus
expectations for a modest increase. The data were revised starting in
2008.</p>
<p> Sharp monthly gains in home sales were recorded across the
country but the largest was out West.</p>
<p>These home sales figures are
analogous to the new home sales data from the Commerce Department in
that they measure existing home sales when the sales contract is
signed, not at the time the sale is closed. The series dates back to
2001 and the data is available in Haver's <b>PREALTOR </b>database.</p>
<p>The Fed's latest <b>Beige Book </b>covering
regional
economic conditions can be found&nbsp; <a href="http://www.federalreserve.gov/fomc/beigebook/2010/20100303/default.htm">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304k.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/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</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>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 class="odd">
<td class="firstcol">Total</td>
<td>90.4</td>
<td>97.8</td>
<td>97.0</td>
<td>&nbsp;&nbsp;12.3%</td>
<td>95.1</td>
<td>86.9</td>
<td>95.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>71.3</td>
<td>78.1</td>
<td>77.4</td>
<td>20.4</td>
<td>76.7</td>
<td>73.0</td>
<td>86.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>81.2</td>
<td>89.2</td>
<td>84.8</td>
<td>11.8</td>
<td>88.8</td>
<td>80.7</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>98.1</td>
<td>100.2</td>
<td>98.5</td>
<td>18.1</td>
<td>98.9</td>
<td>90.3</td>
<td>107.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>102.9</td>
<td>118.5</td>
<td>122.8</td>
<td>1.5</td>
<td>109.9</td>
<td>99.2</td>
<td>92.1</td>
</tr>
</tbody>
</table>
</span>
</body></html>

Bad weather had a noticeable effect on January housing activity. However, the National Association of Realtors (NAR) reported an outsized effect on pending home sales which fell 7.6% m/m from December to their lowest level since March [...]

U.S. Pending Home Sales Decline Sharply

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304e.jpg" style="width: 312px; height: 265px;">p<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304f.jpg" style="width: 312px; height: 265px;"></p>
<p>Improved demand has changed attitudes about holding inventory.
Factory inventories increased 0.2% during January and have risen during
three of the last four months. That compares with sharp declines during
the twelve months through September which lowered inventory levels by
11.9%. Even accounting for higher oil prices there has been a turn.
Without oil refineries factory inventories were roughly unchanged
during the last four months and the -0.6% three-month change compares
to -3.8% at its depth early last year.</p>
<p>Primary metals inventories during the last three months rose
3.1% after a 10.2% decline one-year ago. Electrical equipment
inventories fell 0.8% after a 7.2% decline at its deepest last March
and machinery inventories fell 1.8% versus at a 5.2% decline at the
deepest last Spring. Even furniture inventories went down at a slower
2.5% three-month rate. In the nondurable area apparel inventories fell
at a lessened 1.3% rate while paper products fell 1.7% versus -6.1% one
year ago.</p>
<p>Higher factory shipments have encouraged the turn. Shipments
rose 0.3% during January following four months of strength. Here again
rising oil prices played a role. But even excluding oil, an unchanged
January reading followed four months of strength. The three-month
change has shifted to positive 2.4% from -9.4% one year ago. Shipments
of machinery, electrical and transportation equipment have led the turn.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304g.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304h.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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM" ="">Factory Survey</a>
(NAICS, %)</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>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 class="odd">
<td class="firstcol">Inventories</td>
<td>0.2</td>
<td>-0.2</td>
<td>0.2</td>
<td>-7.5</td>
<td>-8.7</td>
<td>2.2</td>
<td>3.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.3</td>
<td>-8.1</td>
<td>-9.2</td>
<td>-0.5</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.7</td>
<td>1.5</td>
<td>1.0</td>
<td>9.5</td>
<td>-17.2</td>
<td>0.0</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.1</td>
<td>1.5</td>
<td>2.1</td>
<td>8.9</td>
<td>-15.8</td>
<td>3.0</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.3</td>
<td>1.8</td>
<td>1.6</td>
<td>5.5</td>
<td>-15.2</td>
<td>1.6</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.8</td>
<td>1.3</td>
<td>1.7</td>
<td>6.2</td>
<td>-15.3</td>
<td>3.5</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.0</td>
<td>-0.9</td>
<td>-0.7</td>
<td>-8.5</td>
<td>-10.2</td>
<td>3.4</td>
<td>17.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>-0.0</td>
<td>0.4</td>
<td>0.2</td>
<td>-6.0</td>
<td>-8.4</td>
<td>-1.4</td>
<td>8.2</td>
</tr>
</tbody>
</table>
</body></html>

p Improved demand has changed attitudes about holding inventory. Factory inventories increased 0.2% during January and have risen during three of the last four months. That compares with sharp declines during the twelve months through [...]

U.S. Factory Inventories Turn Toward Accumulation

Robert Brusca

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304c.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>EMU GDP rose by 0.5% Saar in 2009-Q4. Private consumption in
the Zone fell at a -0.1% annual rate. Meanwhile exports and imports
surged at growth rates of 6% and 7%, respectively. Public consumption
also fell in Q4 at a -0.5% annual rate. Capital formation after rising
in Q3 retracted again in Q4. Domestic demand was a weak -0.8%.</p>
<p>France is closing in on positive GDP growth and is closer than
either Germany or EMU as of Q4. But Germany with a much deeper hole
that its GDP fell into is rising faster from its extreme depths.</p>
<p>Portugal&#8217;s numbers still aren&#8217;t in for Q4. But among those
countries we list in the table that have reported, Greece, Italy and
Spain are the only ones with falling GDP in Q4. These are the countries
with debt problems of various sorts in EMU. It is interesting that the
indebtedness seems to hold them back from recovery at the same pace as
fellow EU/EMU members.</p>
</span><span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">EMU GDP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Consumption</td>
<td>Capital Formation</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Domestic<br>
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Total</td>
<td>Exports</td>
<td>Imports</td>
<td></td>
</tr>
<tr class="even">
<td colspan="8" class="firstcol">% Change Q/Q
(saar) ;
X-M is Q/Q change in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q4-09</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>-3.1%</td>
<td>6.2</td>
<td>7.0%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q3-09</td>
<td>1.7%</td>
<td>-0.7%</td>
<td>3.1%</td>
<td>7.1%</td>
<td>0.7</td>
<td>11.9%</td>
<td>1.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q2-09</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>2.4%</td>
<td>-17.7%</td>
<td>13.1</td>
<td>-4.5%</td>
<td>-3.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q1-09</td>
<td>-9.6%</td>
<td>-1.9%</td>
<td>2.2%</td>
<td>-33.1%</td>
<td>-6.2</td>
<td>-29.3%</td>
<td>-8.7%</td>
</tr>
<tr class="even">
<td colspan="8" class="firstcol">% Change
Yr/Yr; X-M is
Yr/Yr change in Gap in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q4-09</td>
<td>-2.1%</td>
<td>-0.6%</td>
<td>1.8%</td>
<td>-13.1%</td>
<td>13.8</td>
<td>-5.2%</td>
<td>-2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q3-09</td>
<td>-4.1%</td>
<td>-1.1%</td>
<td>2.5%</td>
<td>-14.9%</td>
<td>-15.1</td>
<td>-13.5%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q2-09</td>
<td>-4.9%</td>
<td>-1.0%</td>
<td>2.2%</td>
<td>-16.2%</td>
<td>-27.1</td>
<td>-17.0%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q1-09</td>
<td>-5.1%</td>
<td>-1.4%</td>
<td>2.4%</td>
<td>-14.1%</td>
<td>-34.5</td>
<td>-16.4%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; 5-Yrs</td>
<td>0.7%</td>
<td>0.8%</td>
<td>2.1%</td>
<td>-1.0%</td>
<td>0.5</td>
<td>1.4%</td>
<td>0.7%</td>
</tr>
</tbody>
</table>
<p>As of Q4 only Greece is seeing its Yr/Yr GDP growth continue
to slip at a faster pace than in earlier quarters. The UK has a larger
Yr/Yr drop in Q4 but it has improved its Yr/Yr growth rate from -5.3%
in Q3 to -3.3% in Q4. Only the US has a positive Yr/Yr rate of growth
in Q4; Switzerland is at zero.</p>
<p>The quarterly growth rates are already turning positive and
have been doing so for two quarters in a row in most countries. Clearly
recovery is afoot. But we are reminded that domestic demand is lagging
in the Zone and that it is a sector that is very important to recovery.
Every nation cannot recover with export-led growth; that defies the
rules of GDP and balance of payments accounting. At some point the
recovery has to become home-grown. With the US economy looking like its
recovery may not shift into overdrive it is even more important than
ever for each country to elevate its own domestic demand.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area Retail
Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">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>Nov-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">Zone Total Value</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">Food,Bev Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle Reg</td>
<td>-0.4%</td>
<td>-3.1%</td>
<td>1.1%</td>
<td>-9.4%</td>
<td>-0.8%</td>
<td>20.8%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">NonFood
Country detail:
Volume</td>
</tr>
<tr>
<td class="firstcol">Germany Value</td>
<td>0.0%</td>
<td>0.9%</td>
<td>-1.2%</td>
<td>-1.2%</td>
<td>-0.6%</td>
<td>-0.2%</td>
</tr>
<tr>
<td class="firstcol">UK(EU) Volume</td>
<td>-1.8%</td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>-9.3%</td>
<td>-3.4%</td>
<td>0.8%</td>
</tr>
</tbody>
</table>
</body></html>

EMU GDP rose by 0.5% Saar in 2009-Q4. Private consumption in the Zone fell at a -0.1% annual rate. Meanwhile exports and imports surged at growth rates of 6% and 7%, respectively. Public consumption also fell in Q4 at a -0.5% annual [...]

EMU GDP Stays Put – No Revision

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304a.jpg" style="width: 353px; height: 265px;" align="right">Today's
Labor Department report indicated that initial claims for jobless
insurance fell 29,000 last week to 469,000 from an upwardly revised
498,000 during the prior week. Claims rose slightly for the full month
but remained down from the recession peak of 674,000 hit last March.
Moreover, claims remained near the lowest level since January 2009. The
weekly decline in claims slightly exceeded Consensus expectations for a
drop to 475,000. The four-week moving average of initial claims slipped
to 470,750.</p><p> Continuing claims for unemployment insurance during the
latest week fell to a new cycle-low and were down by one-third since
late-June. The overall decline is a function of the improved job market
but also reflects the exhaustion of 26 weeks of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims fell to a cycle
low of 4,575,750. This series dates back to
1966.&nbsp;</p><p>&nbsp;Extended benefits for unemployment insurance
dropped sharply to another cycle low of 178,469. They were down by
two-thirds from a peak of 597,688 reached in November.&nbsp;</p><p> The
insured rate of unemployment slipped to 3.5% from an upwardly revised
3.6% during the prior week. The rate reached a high of 5.2% during
late-June. During the last ten years, there has been a 93% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.&nbsp;</p><p>The highest insured unemployment rates in the week ending February 14
were in Alaska (7.4% percent), Oregon (6.4), Idaho (6.3), Montana
(6.3), Wisconsin (6.2), Michigan (5.8), Nevada (5.7), Pennsylvania
(6.4), and North Carolina (5.4). The lowest insured unemployment rates
were in Virginia (2.3), Texas (2.4), Florida (3.2), Georgia (3.4),
Mississippi (3.6), Wyoming (3.7), Ohio (3.8), Maryland (3.9), Indiana
(4.0), New York (4.1) and Maine (4.4). These data are not seasonally
adjusted but the overall insured unemployment rate is.</p><p>The
unemployment insurance claims data is available in Haver's <b>WEEKLY</b>
database and the state data is in the <b>REGIONW</b>
database.</p><p><b>Changes in the Aggregate Labor Force Participation
Rate</b> from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/documents/pubs/economicreview/er09no4_Hotchkiss.pdf">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304c.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/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>2/27/10</b></th>
<th scope="col"><b>2/20/10</b></th>
<th scope="col"><b>2/13/10</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 class="odd">
<td class="firstcol">Initial Claims</td>
<td>469</td>
<td>498</td>
<td>474</td>
<td>-27.1%</td>
<td>573</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,500</td>
<td>4,634</td>
<td>-11.3%</td>
<td>5,835</td>
<td>3,345</td>
<td>2,552</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.5</td>
<td>3.6</td>
<td>4.3 (3/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</span></body></html>

Today's Labor Department report indicated that initial claims for jobless insurance fell 29,000 last week to 469,000 from an upwardly revised 498,000 during the prior week. Claims rose slightly for the full month but remained down [...]

U.S. Initial Claims For Insurance Fall Back

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<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304a.jpg" style="width: 353px; height: 265px;" align="right">Today's
Labor Department report indicated that initial claims for jobless
insurance fell 29,000 last week to 469,000 from an upwardly revised
498,000 during the prior week. Claims rose slightly for the full month
but remained down from the recession peak of 674,000 hit last March.
Moreover, claims remained near the lowest level since January 2009. The
weekly decline in claims slightly exceeded Consensus expectations for a
drop to 475,000. The four-week moving average of initial claims slipped
to 470,750.</p>
<p> Continuing claims for unemployment insurance during the
latest week fell to a new cycle-low and were down by one-third since
late-June. The overall decline is a function of the improved job market
but also reflects the exhaustion of 26 weeks of unemployment benefits.
Continuing claims provide an indication of workers' ability to find
employment. The four-week average of continuing claims fell to a cycle
low of 4,575,750. This series dates back to
1966.&nbsp;</p>
<p>&nbsp;Extended benefits for unemployment insurance
dropped sharply to another cycle low of 178,469. They were down by
two-thirds from a peak of 597,688 reached in November.&nbsp;</p>
<p> The
insured rate of unemployment slipped to 3.5% from an upwardly revised
3.6% during the prior week. The rate reached a high of 5.2% during
late-June. During the last ten years, there has been a 93% correlation
between the level of the insured unemployment rate and the overall rate
of unemployment published by the Bureau of Labor Statistics.&nbsp;</p>
<p>The highest insured unemployment rates in the week ending
February 14
were in Alaska (7.4% percent), Oregon (6.4), Idaho (6.3), Montana
(6.3), Wisconsin (6.2), Michigan (5.8), Nevada (5.7), Pennsylvania
(6.4), and North Carolina (5.4). The lowest insured unemployment rates
were in Virginia (2.3), Texas (2.4), Florida (3.2), Georgia (3.4),
Mississippi (3.6), Wyoming (3.7), Ohio (3.8), Maryland (3.9), Indiana
(4.0), New York (4.1) and Maine (4.4). These data are not seasonally
adjusted but the overall insured unemployment rate is.</p>
<p>The
unemployment insurance claims data is available in Haver's <b>WEEKLY</b>
database and the state data is in the <b>REGIONW</b>
database.</p>
<p><b>Changes in the Aggregate Labor Force Participation
Rate</b> from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/documents/pubs/economicreview/er09no4_Hotchkiss.pdf">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304b.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304c.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/WEEKLY/@W5/@W507/@W507.HTM" style="color: black;">Unemployment Insurance (000s)</a></b></th>
<th scope="col"><b>2/27/10</b></th>
<th scope="col"><b>2/20/10</b></th>
<th scope="col"><b>2/13/10</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 class="odd">
<td class="firstcol">Initial Claims</td>
<td>469</td>
<td>498</td>
<td>474</td>
<td>-27.1%</td>
<td>573</td>
<td>419</td>
<td>321</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>4,500</td>
<td>4,634</td>
<td>-11.3%</td>
<td>5,835</td>
<td>3,345</td>
<td>2,552</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>3.5</td>
<td>3.6</td>
<td>4.3 (3/2009)</td>
<td>4.4</td>
<td>2.5</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</span>
<span id="articletitle">EMU GDP Stays Put &#8211; No Revision</span><br>
<span id="byline">by <a href="/comment/Brusca.html">Robert
Brusca</a> March 4, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304c.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>EMU GDP rose by 0.5% Saar in 2009-Q4. Private consumption in
the Zone fell at a -0.1% annual rate. Meanwhile exports and imports
surged at growth rates of 6% and 7%, respectively. Public consumption
also fell in Q4 at a -0.5% annual rate. Capital formation after rising
in Q3 retracted again in Q4. Domestic demand was a weak -0.8%.</p>
<p>France is closing in on positive GDP growth and is closer than
either Germany or EMU as of Q4. But Germany with a much deeper hole
that its GDP fell into is rising faster from its extreme depths.</p>
<p>Portugal&#8217;s numbers still aren&#8217;t in for Q4. But among those
countries we list in the table that have reported, Greece, Italy and
Spain are the only ones with falling GDP in Q4. These are the countries
with debt problems of various sorts in EMU. It is interesting that the
indebtedness seems to hold them back from recovery at the same pace as
fellow EU/EMU members.</p>
</span><span>
<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">EMU GDP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Consumption</td>
<td>Capital Formation</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Domestic<br>
Demand</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Total</td>
<td>Exports</td>
<td>Imports</td>
<td></td>
</tr>
<tr class="even">
<td colspan="8" class="firstcol">% Change Q/Q
(saar) ;
X-M is Q/Q change in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q4-09</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>-3.1%</td>
<td>6.2</td>
<td>7.0%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q3-09</td>
<td>1.7%</td>
<td>-0.7%</td>
<td>3.1%</td>
<td>7.1%</td>
<td>0.7</td>
<td>11.9%</td>
<td>1.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q2-09</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>2.4%</td>
<td>-17.7%</td>
<td>13.1</td>
<td>-4.5%</td>
<td>-3.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q1-09</td>
<td>-9.6%</td>
<td>-1.9%</td>
<td>2.2%</td>
<td>-33.1%</td>
<td>-6.2</td>
<td>-29.3%</td>
<td>-8.7%</td>
</tr>
<tr class="even">
<td colspan="8" class="firstcol">% Change
Yr/Yr; X-M is
Yr/Yr change in Gap in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q4-09</td>
<td>-2.1%</td>
<td>-0.6%</td>
<td>1.8%</td>
<td>-13.1%</td>
<td>13.8</td>
<td>-5.2%</td>
<td>-2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q3-09</td>
<td>-4.1%</td>
<td>-1.1%</td>
<td>2.5%</td>
<td>-14.9%</td>
<td>-15.1</td>
<td>-13.5%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; Q2-09</td>
<td>-4.9%</td>
<td>-1.0%</td>
<td>2.2%</td>
<td>-16.2%</td>
<td>-27.1</td>
<td>-17.0%</td>
<td>-3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Q1-09</td>
<td>-5.1%</td>
<td>-1.4%</td>
<td>2.4%</td>
<td>-14.1%</td>
<td>-34.5</td>
<td>-16.4%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">&nbsp; 5-Yrs</td>
<td>0.7%</td>
<td>0.8%</td>
<td>2.1%</td>
<td>-1.0%</td>
<td>0.5</td>
<td>1.4%</td>
<td>0.7%</td>
</tr>
</tbody>
</table>
<p>As of Q4 only Greece is seeing its Yr/Yr GDP growth continue
to slip at a faster pace than in earlier quarters. The UK has a larger
Yr/Yr drop in Q4 but it has improved its Yr/Yr growth rate from -5.3%
in Q3 to -3.3% in Q4. Only the US has a positive Yr/Yr rate of growth
in Q4; Switzerland is at zero.</p>
<p>The quarterly growth rates are already turning positive and
have been doing so for two quarters in a row in most countries. Clearly
recovery is afoot. But we are reminded that domestic demand is lagging
in the Zone and that it is a sector that is very important to recovery.
Every nation cannot recover with export-led growth; that defies the
rules of GDP and balance of payments accounting. At some point the
recovery has to become home-grown. With the US economy looking like its
recovery may not shift into overdrive it is even more important than
ever for each country to elevate its own domestic demand.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area Retail
Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">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>Nov-09</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">Zone Total Value</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">Food,Bev Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle Reg</td>
<td>-0.4%</td>
<td>-3.1%</td>
<td>1.1%</td>
<td>-9.4%</td>
<td>-0.8%</td>
<td>20.8%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">NonFood
Country detail:
Volume</td>
</tr>
<tr>
<td class="firstcol">Germany Value</td>
<td>0.0%</td>
<td>0.9%</td>
<td>-1.2%</td>
<td>-1.2%</td>
<td>-0.6%</td>
<td>-0.2%</td>
</tr>
<tr>
<td class="firstcol">UK(EU) Volume</td>
<td>-1.8%</td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>-9.3%</td>
<td>-3.4%</td>
<td>0.8%</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Factory Inventories Turn
Toward Accumulation</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> March 4, 2010</span>
<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304e.jpg" style="width: 312px; height: 265px;">p<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304f.jpg" style="width: 312px; height: 265px;"></p>
<p>Improved demand has changed attitudes about holding inventory.
Factory inventories increased 0.2% during January and have risen during
three of the last four months. That compares with sharp declines during
the twelve months through September which lowered inventory levels by
11.9%. Even accounting for higher oil prices there has been a turn.
Without oil refineries factory inventories were roughly unchanged
during the last four months and the -0.6% three-month change compares
to -3.8% at its depth early last year.</p>
<p>Primary metals inventories during the last three months rose
3.1% after a 10.2% decline one-year ago. Electrical equipment
inventories fell 0.8% after a 7.2% decline at its deepest last March
and machinery inventories fell 1.8% versus at a 5.2% decline at the
deepest last Spring. Even furniture inventories went down at a slower
2.5% three-month rate. In the nondurable area apparel inventories fell
at a lessened 1.3% rate while paper products fell 1.7% versus -6.1% one
year ago.</p>
<p>Higher factory shipments have encouraged the turn. Shipments
rose 0.3% during January following four months of strength. Here again
rising oil prices played a role. But even excluding oil, an unchanged
January reading followed four months of strength. The three-month
change has shifted to positive 2.4% from -9.4% one year ago. Shipments
of machinery, electrical and transportation equipment have led the turn.</p>
</span>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304g.jpg" style="width: 312px; height: 265px;"><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304h.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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM" ="">Factory Survey</a>
(NAICS, %)</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>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 class="odd">
<td class="firstcol">Inventories</td>
<td>0.2</td>
<td>-0.2</td>
<td>0.2</td>
<td>-7.5</td>
<td>-8.7</td>
<td>2.2</td>
<td>3.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.3</td>
<td>-8.1</td>
<td>-9.2</td>
<td>-0.5</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.7</td>
<td>1.5</td>
<td>1.0</td>
<td>9.5</td>
<td>-17.2</td>
<td>0.0</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.1</td>
<td>1.5</td>
<td>2.1</td>
<td>8.9</td>
<td>-15.8</td>
<td>3.0</td>
<td>1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.3</td>
<td>1.8</td>
<td>1.6</td>
<td>5.5</td>
<td>-15.2</td>
<td>1.6</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>0.8</td>
<td>1.3</td>
<td>1.7</td>
<td>6.2</td>
<td>-15.3</td>
<td>3.5</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.0</td>
<td>-0.9</td>
<td>-0.7</td>
<td>-8.5</td>
<td>-10.2</td>
<td>3.4</td>
<td>17.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>-0.0</td>
<td>0.4</td>
<td>0.2</td>
<td>-6.0</td>
<td>-8.4</td>
<td>-1.4</td>
<td>8.2</td>
</tr>
</tbody>
</table>
<span id="articletitle">U.S. Pending Home Sales Decline
Sharply</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom
Moeller</a> March 4, 2010</span>
<span id="articletext">
<p></p>
<p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304i.jpg" style="width: 353px; height: 265px;" align="right">Bad
weather
had a noticeable effect on January housing activity. However, the
National Association of Realtors (NAR) reported an outsized effect on
pending home sales which fell 7.6% m/m from December to their lowest
level since March of last year. Nevertheless, home sales remained up
12.3% from the January low. The latest decline compares with Consensus
expectations for a modest increase. The data were revised starting in
2008.</p>
<p> Sharp monthly gains in home sales were recorded across the
country but the largest was out West.</p>
<p>These home sales figures are
analogous to the new home sales data from the Commerce Department in
that they measure existing home sales when the sales contract is
signed, not at the time the sale is closed. The series dates back to
2001 and the data is available in Haver's <b>PREALTOR </b>database.</p>
<p>The Fed's latest <b>Beige Book </b>covering
regional
economic conditions can be found&nbsp; <a href="http://www.federalreserve.gov/fomc/beigebook/2010/20100303/default.htm">here</a>.&nbsp;</p>
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304j.jpg" style="width: 312px; height: 265px;">
<img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100304k.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/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</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>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 class="odd">
<td class="firstcol">Total</td>
<td>90.4</td>
<td>97.8</td>
<td>97.0</td>
<td>&nbsp;&nbsp;12.3%</td>
<td>95.1</td>
<td>86.9</td>
<td>95.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>71.3</td>
<td>78.1</td>
<td>77.4</td>
<td>20.4</td>
<td>76.7</td>
<td>73.0</td>
<td>86.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>81.2</td>
<td>89.2</td>
<td>84.8</td>
<td>11.8</td>
<td>88.8</td>
<td>80.7</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>98.1</td>
<td>100.2</td>
<td>98.5</td>
<td>18.1</td>
<td>98.9</td>
<td>90.3</td>
<td>107.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>102.9</td>
<td>118.5</td>
<td>122.8</td>
<td>1.5</td>
<td>109.9</td>
<td>99.2</td>
<td>92.1</td>
</tr>
</tbody>
</table>
</span>
</body></html>

U.S. Initial Claims For InsuranceFall Back

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<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100303d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>Retail Sales in the Zone edged higher in January at the same
pace as in December and November. The growth rate for e-Zone retail
sales is improving Yr/Yr but it is still falling. The sequential growth
rates show steady if snail&#8217;s pace improvement.</p>
<p>Auto registrations bolstered by some government incentive
programs made a strong recovery from crisis lows but have fallen over
the past two months. Still the level of sales remains strongly higher
Yr/Yr.</p>
<p>Europe&#8217;s consumer is improving but doing so at a very slow
pace. The consumer sector is not leading but following the trade block
into recovery. Two of the larger EU countries that have reported sales
at this point, Germany and the UK, are laggards when it comes to retail
sales improvement.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro-Area Retail
Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="3">M/M</td>
<td style="font-weight: bold;" colspan="3">Saar</td>
</tr>
<tr class="odd">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">Nov-09</td>
<td style="font-weight: bold;">3-Mo</td>
<td style="font-weight: bold;">6-MO</td>
<td style="font-weight: bold;">12-Mo</td>
</tr>
<tr>
<td class="firstcol">Zone Total Value</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">Food,Bev Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="7" class="firstcol">Registrations:</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle Reg</td>
<td>-0.4%</td>
<td>-3.1%</td>
<td>1.1%</td>
<td>-9.4%</td>
<td>-0.8%</td>
<td>20.8%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="7" class="firstcol">NonFood
Country detail:
Volume</td>
</tr>
<tr>
<td class="firstcol">Germany Value</td>
<td>0.0%</td>
<td>0.9%</td>
<td>-1.2%</td>
<td>-1.2%</td>
<td>-0.6%</td>
<td>-0.2%</td>
</tr>
<tr>
<td class="firstcol">UK(EU) Volume</td>
<td>-1.8%</td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>-9.3%</td>
<td>-3.4%</td>
<td>0.8%</td>
</tr>
</tbody>
</table>
</body></html>

Retail Sales in the Zone edged higher in January at the same pace as in December and November. The growth rate for e-Zone retail sales is improving Yr/Yr but it is still falling. The sequential growth rates show steady if snail’s pace [...]

EMU Retail Sales And Car Registrations Show Some Gains

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<span id="articletext">
<p></p>
<p><img alt src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/100302d.jpg" style="border: 0px solid ; width: 353px; height: 265px; float: left;" align="left"></p>
<p>The EMU inflation chart tells a quick and dirty story of this
business cycle without all the embellishments over banks lending,
not-lending and financial crisis.</p>
<p>Once upon a time, inflation was steady. Then prices
overheated. Economic activity subsequently plunged bringing inflation
down sharply &#8211; it even negative turned Yr/Yr. All was not well. But
then, weakness subsided and inflation crept back up. Now prices show
signs of stabilizing with inflation around the 1% mark, well below the
2%-plus level where it had resided in the pre-crisis period. So is the
inflation scare over? Will they all now live happily ever after?</p>
<p>Inflation fighting is no fairy tale. The recent urging of the
IMF staff sho9uld make that clear; it said a higher inflation target
might be &#8216;good for&#8217; the US and Europe. It&#8217;s a stunning piece of work
from an organization that has stepped on its own tail more than once
too often. Fortunately Europe has been indignant about the suggestion
and the US seems simply to have ignored it.</p>
<p>Inflation is very much like toothpaste out of the tube. It
becomes a mess that cannot be controlled and leads to waste. Only the
waste caused by excess inflation is much worse than a little excess
toothpaste down the drain. In this financial crisis, however, we may
have learned something that is a bit dangerous: that is that very low
inflation leaves an economy less room for maneuver.</p>
<p>Under the leadership of former Fed Chairman Alan Greenspan all
we heard was how price stability and zero inflation should be our goal
and how the prices indices were biased up and so on. The lesson once
again is, be careful what you wish for. Europe may fare better under
lower inflation because of the breadth of its social welfare system.
The US has had a harder, more stressful, time. But admitting that is
not to say that US inflation should be higher or that the Fed should
notch up its idea of its inflation target. It is simply to face the
facts.</p>
<p>The ECB continues to be fixated on low inflation and, of
course, has its inflation ceiling mandate. The Bank of England is
similarly positioned but it has admitted to an inflation overshoot in
the post crisis period that it says is not serious or lasting and
contends it will ignore the temporary overshoot. The policy angle on
inflation no one has really gotten their arms around is the impact of
commodity prices - especially oil - on headline inflation. The ECB&#8217;s
headline inflation ceiling put it in difficult straights when oil
prices surged and drove headline inflation higher as the economy was
weakening. The Fed&#8217;s focus on core inflation left it more flexibility
to act.</p>
<p>Inflation is one of those peculiar things that we can all
agree upon yet we find reasons to divert our attention and policy from
the task at hand. It&#8217;s a bit like agreeing on what is a healthy diet
yet periodically finding we are overweight and having to do something
about it. The EU inflation situation appears to coming into a soft
landing of sorts. That, of course, is aided and abetted by what looks
like a poor growth result in the recovery. The US is in the same boat.
So while the inflation situation seems in hand for now there will
probably be no happily ever after here. Inflation fighting always
involves pain, vigilance and sacrifice.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col"><b>Trends in EMU HICP; Flash Index</b> </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;" colspan="3">% Mo/Mo</td>
<td style="font-weight: bold;" colspan="4">SAAR</td>
</tr>
<tr class="even">
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td style="font-weight: bold;">Feb-10</td>
<td style="font-weight: bold;">Jan-10</td>
<td style="font-weight: bold;">Dec-09</td>
<td style="font-weight: bold;">3-Mo</td>
<td style="font-weight: bold;">6-Mo</td>
<td style="font-weight: bold;">12-Mo</td>
<td style="font-weight: bold;">Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-13</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>0.9%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Core</td>
<td>#N/A</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>0.9%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>#N/A</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>-2.4%</td>
<td>1.4%</td>
<td>0.7%</td>
<td>0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>#N/A</td>
<td>-0.5%</td>
<td>0.8%</td>
<td>0.3%</td>
<td>-0.7%</td>
<td>1.4%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">HICP</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>2.5%</td>
<td>1.2%</td>
<td>0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>0.7%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>1.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>#N/A</td>
<td>0.9%</td>
<td>0.4%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>#N/A</td>
<td>0.0%</td>
<td>0.2%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>0.8%</td>
</tr>
<tr style="font-weight: bold;" class="odd">
<td colspan="8" class="firstcol">Core:xFE&amp;A</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>#N/A</td>
<td>-0.3%</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>0.9%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>0.9%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>#N/A</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>#N/A</td>
<td>0.4%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>3.1%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>#N/A</td>
<td>-0.3%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.9%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Blue shaded area data
trail by one month</td>
</tr>
</tbody>
</table>
</body></html>

The EMU inflation chart tells a quick and dirty story of this business cycle without all the embellishments over banks lending, not-lending and financial crisis. Once upon a time, inflation was steady. Then prices overheated. Economic [...]

Progress- No Happily Ever After Euro-Area Inflation In February Stays Under Wraps

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

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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.

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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

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