Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113a.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s economy watcher&#8217;s index falls sharply in December. It
is at its weakest point in five years and longer. The employment
component is very weak as is the future index. The future index is
barley higher than the very weak current index. 
 

Economic trends in the Teikoku survey are similarly weak
across sectors. Both surveys show another sharp drop off in December
compared to an already very weak November. These surveys echo the
measure from the OECD Leading indicators just released yesterday (for
November) that Japan&#8217;s slowdown is becoming more pronounced. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Key Japanese Surveys</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="4">Raw readings of each survey</td>
<td colspan="3">Percent of 5Yr range*</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Oct-08</td>
<td>Sep-08</td>
<td>Dec-08</td>
<td>Nov-08</td>
<td>Oct-08</td>
</tr>
<tr>
<td class="firstcol">Diffusion</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>-</td>
<td>-</td>
</tr>
<tr>
<td class="firstcol">Economy Watchers</td>
<td>15.9</td>
<td>21.0</td>
<td>22.6</td>
<td>28.0</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>8.5</td>
<td>15.7</td>
<td>19.6</td>
<td>25.9</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Future</td>
<td>17.6</td>
<td>24.7</td>
<td>25.2</td>
<td>32.1</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">Econ Trends (Teikoku'/50
neutral/weighted diffusion)</td>
</tr>
<tr>
<td class="firstcol">&nbsp; MFG</td>
<td>19.3</td>
<td>24.5</td>
<td>27.4</td>
<td>30.9</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>21.3</td>
<td>24.4</td>
<td>25.2</td>
<td>27.8</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>20.4</td>
<td>24.7</td>
<td>26.4</td>
<td>29.1</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services</td>
<td>24.1</td>
<td>28.4</td>
<td>29.9</td>
<td>32.4</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>19.1</td>
<td>21.4</td>
<td>22.5</td>
<td>24.3</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.0%</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s economy watcher’s index falls sharply in December. It is at its weakest point in five years and longer. The employment component is very weak as is the future index. The future index is barley higher than the very weak current [...]

Economy Watchers Index Drops Sharply

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113c.jpg" width="353">
The U.S. foreign trade deficit narrowed sharply during November as the U.S. recession and lower oil prices combined to reduce imports. The sharp drop to $40.4B from a revised $56.7B during October was much greater than Consensus expectations for a narrowing to $51.0B. So far this year the monthly trade deficit has averaged $57.4B, narrower than the $58.4B averaged during the first eleven months of 2007.
Adjusted for price inflation the trade deficit in goods narrowed to $39.5B from a revised October level of $45.6B. Year-to-date the real deficit narrowed more than $10.0B versus 2007 to an average $44.3B as real exports rose 8.0% and real imports fell 3.0%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113d.jpg" width="353">
Lower oil prices caused November petroleum imports to drop by more than one-third month-to-month and the U.S. recession lowered nonoil imports by 7.8%. In volume terms, nonoil imports fell 6.0% (-10.7% y/y) during November. The quantity of petroleum products imported dropped 10.0% (-11.6% y/y). The quantity of crude petroleum imports declined 16.6% (-12.9% y/y) to nearly the lowest level since early 2003. The average price per barrel of crude oil halved to $66.72 (-16.5% y/y) from a high of $124.7 in July.
The value of nonpetroleum imports fell by 7.8%. Measured in chained 2000 dollars, nonoil imports fell 6.0% (-10.7% y/y). Reflecting the weakness in consumer spending were real imports of nonauto consumer goods which fell 9.1% (-11.4% y/y) to their lowest level since early 2006. The chained-dollar value of imports of automotive vehicles &amp; parts fell another 6.3% (-26.9% y/y) and real imports of nonauto capital goods dropped 5.6% (-7.9% y/y).
Services imports fell 2.3% (+3.6% y/y). Travel imports fell a sharp 2.9% (-1.7% y/y) while passenger fares were off 2.8% m/m but nevertheless rose 9.4% y/y). That annual gain is less than half what it was earlier this year.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113e.jpg" width="353">
Recessions abroad lowered U.S. exports for the fourth consecutive month. Moreover, the 5.8% decline was near the largest since 2001. The decline reflected a sharp 7.2% drop in goods exports following a 2.8% shortfall during October. Adjusted for prices, chained-dollar goods exports fell 3.3% (-2.5% y/y). Real exports of capital goods declined 3.6% (-6.7% y/y) for the third consecutive monthly drop, a period during which these exports have fallen 13.5%. Exports of nonauto consumer goods slipped 0.6%, off 5.9% during the last three months and real exports of automobiles &amp; parts fell 10.9% (-18.0% y/y).
Nominal exports of services fell 2.5% (+3.0% y/y). Travel exports fell hard for the third straight month. The 3.7% decline reflected lower passenger fares which fell 4.3%. They remained up 6.0% y/y after 16.1% growth last year. Exports of &quot;other&quot; private services fell 2.1% dropping the year-to-year growth to 2.4% after an 18.2% gain during all of last year.
The U.S. trade deficit in goods with China narrowed to $23.1B, the smallest since June. Exports to China reversed all of the October gain and fell 14.0% (-10.7% y/y). Imports fell a hard 16.9% (-5.0% y/y) due to the U.S. recession. The trade deficit with Japan narrowed m/m to $5.0B which was near the shallowest since 2003. So far this year the deficit has dropped to $6.1B from an average $6.9B during the first eleven months of last year.
The Crisis and the Policy Response is today&#39;s speech by Fed Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm">here.</a>
Beyond Shocks: What Causes Business Cycles? An Overview is a 1998 study from the Federal Reserve Bank of Boston and it is available <a href="http://www.bos.frb.org/economic/conf/conf42/con42_01.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign Trade&nbsp;</a></th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">U.S. Trade Deficit</td>
<td>$40.4</td>
<td>$56.7B</td>
<td>$60.0B (11/07)</td>
<td>$700.3</td>
<td>$753.3</td>
<td>$711.6B</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp; Services</td>
<td>-5.8%</td>
<td>-2.3%</td>
<td>-1.7%</td>
<td>13.0%</td>
<td>13.5%</td>
<td>10.6%</td>
</tr>
<tr>
<td class="firstcol">Imports - Goods &amp; Services</td>
<td>-12.0%</td>
<td>-1.6%</td>
<td>-10.6%</td>
<td>6.1%</td>
<td>10.8%</td>
<td>12.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-36.5%</td>
<td>1.8%</td>
<td>-30.3%</td>
<td>9.4%</td>
<td>20.1%</td>
<td>39.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>-7.8%</td>
<td>-2.5%</td>
<td>-9.3%</td>
<td>4.8%</td>
<td>9.1%</td>
<td>10.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit narrowed sharply during November as the U.S. recession and lower oil prices combined to reduce imports. The sharp drop to $40.4B from a revised $56.7B during October was much greater than Consensus [...]

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

U.S. Trade Deficit NarrowedSharply With Recession and Lower Oil Prices

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113b.jpg" align="left" border="0" height="265" width="353">
India is the latest Asian country to report industrial
production for November of last year. Contrary to expectations,
industrial production in India, rose in November from 261.7 in October
to 267.2 (Fiscal year beginning April,1993=100). The year over year
increase was 2.4% compared with a decline of 0.3% in October. The
slight increase is, however, unlikely to reverse the downward trend
that has persisted since November 2006
Among other large manufactures in Asia, China has reported a
marked deceleration in the growth of its real gross value added
(China's surrogate for industrial production) from 8.2% in October to
5.2% in November. South Korea reported a dramatic year over year
decline in industrial production of 14.1% in November after a small
decline of 2.3% in October. The year over year percent changes in
industrial production for the three countries are shown in the attached
chart. Growth in industrial production has been decelerating all
through 2008 in the three countries, reflecting the global slowdown..

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production&nbsp;</th>
<th scope="col">&nbsp;Nov 08</th>
<th scope="col">Oct 08&nbsp;</th>
<th scope="col">Sep 08&nbsp;</th>
<th scope="col">2007&nbsp;</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">India (FY beginning
April 1993=100)</td>
<td>267.2</td>
<td>361.7</td>
<td>274.7</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change
(NSA)</td>
<td>2.38</td>
<td>-0.34</td>
<td>5.45</td>
<td>9.92</td>
<td>10.55</td>
<td>7.91</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea (2005=100)
(NSA)</td>
<td>109.5</td>
<td>125.4</td>
<td>118.2</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change
(NSA)</td>
<td>-14.12</td>
<td>-2.34</td>
<td>6.10</td>
<td>&nbsp;6.80</td>
<td>8.41</td>
<td>&nbsp;6.34</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change
in GVA (NSA)</td>
<td>5.4</td>
<td>8.2</td>
<td>5.4</td>
<td>17.1</td>
<td>16.2</td>
<td>15.9</td>
</tr>
</tbody>
</table>
</body></html>

India is the latest Asian country to report industrial production for November of last year. Contrary to expectations, industrial production in India, rose in November from 261.7 in October to 267.2 (Fiscal year beginning [...]

Industrial Production: India, China, South Korea

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090112a.jpg" align="left" border="0" height="265" width="353">
The outlook for the world's major industrialized and emerging
economies worsened markedly in November, according to the monthly OECD
Trend adjusted leading indicators. The OECD said the figures point to a
"deep slowdown" in the area. The Organization for Economic Cooperation
and Development's leading indicator for the Group of Seven advanced
industrial nations fell to 93.3 in November from a confirmed 94.8 in
October. It was a 7.7-point year-on-year drop. 
 

The OECD in characterizing these indicator movements said,
"OECD composite leading indicators for November 2008 point to deep
slowdowns in the major seven economies and in major non-OECD member
economies, particularly China, India and Russia." 
 

The sharpest monthly drop among the G7 economies was Germany's
at 2.0 points, bringing its indicator to 91.6. The smallest drop was in
Italy, which posted a fall of 0.2 points to 95.8. The fall for the G7
as a whole was 1.5 points. Japan's indicator fell 1.6 points
month-on-month to 93.7. Clearly the weakness in the OECD is spread
around. Germany, a country that has been slow to embrace the concept of
slowdown, is now beginning to experience the full brunt of one (based
on data through November). 
 

The indicators for Brazil, China, India and Russia fell at
least as sharply month-on-month as in October, with Russia posting the
largest fall among those emerging economies, a drop of 4.3 points. In
all OECD countries, the G7, and major emerging countries, except
Brazil, the growth cycle outlook was described as a "strong slowdown".
Brazil's was listed as a "downturn". 
 

Clearly previous view that held that the global slowing would
have a muted impact on the fast growing developing economies was wrong.
Indeed, the slide in commodity prices has particularly aggravated the
situation in Russia and other commodity producing countries. There are
no islands of stability. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5">Growth progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3-Mos</td>
<td>6-Mos</td>
<td>12-Mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-12.8%</td>
<td>-9.9%</td>
<td>-5.6%</td>
<td>1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD 7</td>
<td>-14.7%</td>
<td>-11.3%</td>
<td>-6.6%</td>
<td>0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Europe</td>
<td>-11.3%</td>
<td>-9.5%</td>
<td>-6.0%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Japan</td>
<td>-14.1%</td>
<td>-9.9%</td>
<td>-4.0%</td>
<td>-1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-17.4%</td>
<td>-12.8%</td>
<td>-7.6%</td>
<td>1.2%</td>
</tr>
<tr class="grey1">
<td colspan="5">Six month readings at 6-Mo
Intervals</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6-Mos Ago</td>
<td>12-Mos Ago</td>
<td>18- Mos Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-9.9%</td>
<td>-1.1%</td>
<td>-0.3%</td>
<td>3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD 7</td>
<td>-11.3%</td>
<td>-1.6%</td>
<td>-1.1%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Europe</td>
<td>-9.5%</td>
<td>-2.2%</td>
<td>0.5%</td>
<td>2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Japan</td>
<td>-9.9%</td>
<td>2.2%</td>
<td>-2.6%</td>
<td>-1.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-12.8%</td>
<td>-2.1%</td>
<td>-1.4%</td>
<td>3.8%</td>
</tr>
<tr class="grey2">
<td colspan="5" class="firstcol">Slowdowns indicated by BOLD RED</td>
</tr>
</tbody>
</table>
</body></html>

The outlook for the world's major industrialized and emerging economies worsened markedly in November, according to the monthly OECD Trend adjusted leading indicators. The OECD said the figures point to a "deep slowdown" in the area. [...]

OECD LEIS Sink and Signal a More Impressive Slowdown

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090112a.jpg" align="left" border="0" height="265" width="353">
The outlook for the world's major industrialized and emerging
economies worsened markedly in November, according to the monthly OECD
Trend adjusted leading indicators. The OECD said the figures point to a
"deep slowdown" in the area. The Organization for Economic Cooperation
and Development's leading indicator for the Group of Seven advanced
industrial nations fell to 93.3 in November from a confirmed 94.8 in
October. It was a 7.7-point year-on-year drop. 
 

The OECD in characterizing these indicator movements said,
"OECD composite leading indicators for November 2008 point to deep
slowdowns in the major seven economies and in major non-OECD member
economies, particularly China, India and Russia." 
 

The sharpest monthly drop among the G7 economies was Germany's
at 2.0 points, bringing its indicator to 91.6. The smallest drop was in
Italy, which posted a fall of 0.2 points to 95.8. The fall for the G7
as a whole was 1.5 points. Japan's indicator fell 1.6 points
month-on-month to 93.7. Clearly the weakness in the OECD is spread
around. Germany, a country that has been slow to embrace the concept of
slowdown, is now beginning to experience the full brunt of one (based
on data through November). 
 

The indicators for Brazil, China, India and Russia fell at
least as sharply month-on-month as in October, with Russia posting the
largest fall among those emerging economies, a drop of 4.3 points. In
all OECD countries, the G7, and major emerging countries, except
Brazil, the growth cycle outlook was described as a "strong slowdown".
Brazil's was listed as a "downturn". 
 

Clearly previous view that held that the global slowing would
have a muted impact on the fast growing developing economies was wrong.
Indeed, the slide in commodity prices has particularly aggravated the
situation in Russia and other commodity producing countries. There are
no islands of stability. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5">Growth progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3-Mos</td>
<td>6-Mos</td>
<td>12-Mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-12.8%</td>
<td>-9.9%</td>
<td>-5.6%</td>
<td>1.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD 7</td>
<td>-14.7%</td>
<td>-11.3%</td>
<td>-6.6%</td>
<td>0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Europe</td>
<td>-11.3%</td>
<td>-9.5%</td>
<td>-6.0%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Japan</td>
<td>-14.1%</td>
<td>-9.9%</td>
<td>-4.0%</td>
<td>-1.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-17.4%</td>
<td>-12.8%</td>
<td>-7.6%</td>
<td>1.2%</td>
</tr>
<tr class="grey1">
<td colspan="5">Six month readings at 6-Mo
Intervals</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6-Mos Ago</td>
<td>12-Mos Ago</td>
<td>18- Mos Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>-9.9%</td>
<td>-1.1%</td>
<td>-0.3%</td>
<td>3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD 7</td>
<td>-11.3%</td>
<td>-1.6%</td>
<td>-1.1%</td>
<td>2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Europe</td>
<td>-9.5%</td>
<td>-2.2%</td>
<td>0.5%</td>
<td>2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD Japan</td>
<td>-9.9%</td>
<td>2.2%</td>
<td>-2.6%</td>
<td>-1.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>-12.8%</td>
<td>-2.1%</td>
<td>-1.4%</td>
<td>3.8%</td>
</tr>
<tr class="grey2">
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD RED</td>
</tr>
</tbody>
</table>
Industrial Production: India,
China, South Korea 
by <a href="/comment/Curley.html">Louise
Curley</a> January 12, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090113b.jpg" align="left" border="0" height="265" width="353">
India is the latest Asian country to report industrial
production for November of last year. Contrary to expectations,
industrial production in India, rose in November from 261.7 in October
to 267.2 (Fiscal year beginning April,1993=100). The year over year
increase was 2.4% compared with a decline of 0.3% in October. The
slight increase is, however, unlikely to reverse the downward trend
that has persisted since November 2006
Among other large manufactures in Asia, China has reported a
marked deceleration in the growth of its real gross value added
(China's surrogate for industrial production) from 8.2% in October to
5.2% in November. South Korea reported a dramatic year over year
decline in industrial production of 14.1% in November after a small
decline of 2.3% in October. The year over year percent changes in
industrial production for the three countries are shown in the attached
chart. Growth in industrial production has been decelerating all
through 2008 in the three countries, reflecting the global slowdown..

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Industrial
Production&nbsp;</th>
<th scope="col">&nbsp;Nov 08</th>
<th scope="col">Oct 08&nbsp;</th>
<th scope="col">Sep 08&nbsp;</th>
<th scope="col">2007&nbsp;</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">India (FY beginning
April 1993=100)</td>
<td>267.2</td>
<td>361.7</td>
<td>274.7</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change
(NSA)</td>
<td>2.38</td>
<td>-0.34</td>
<td>5.45</td>
<td>9.92</td>
<td>10.55</td>
<td>7.91</td>
</tr>
<tr class="odd">
<td class="firstcol">South Korea (2005=100)
(NSA)</td>
<td>109.5</td>
<td>125.4</td>
<td>118.2</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change
(NSA)</td>
<td>-14.12</td>
<td>-2.34</td>
<td>6.10</td>
<td>&nbsp;6.80</td>
<td>8.41</td>
<td>&nbsp;6.34</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change
in GVA (NSA)</td>
<td>5.4</td>
<td>8.2</td>
<td>5.4</td>
<td>17.1</td>
<td>16.2</td>
<td>15.9</td>
</tr>
</tbody>
</table>
</body></html>

OECD LEIS Sink and Signal a MoreImpressive Slowdown

<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>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090109a.jpg" width="353">

</body>
</html>

OECD LEIS sink and signal a more impressive slowdown

<!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>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090109e.jpg" align="left" border="0" height="265" width="353">
The bad news keeps on coming for Europe. Declines in
industrial output are now reflecting the effect of what has been
ongoing weakness in industrial orders. Output is down Yr/Yr in German,
France Spain and the UK and the progression of growth rates shows that
the intensity of the drops is increasing. 
 

Even so Europe has showed a new capacity to surprise. Retail
sales in November rose in Germany and across the e-Zone. Still this
little bit of resilience is a straw in a strong wind that is blowing in
the opposite direction. Unemployment is rising across the e-Zone, the
industrial sector is dropping quickly and the services sector is
declining rapidly. The industrial and service sector weakness is real.
Financial distress is still being corralled. The rebound in retailing
is a last gasp. 
 
 
 
 
 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Main
E-zone Countries and UK IP in MFG</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>3-Mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG Only</td>
<td>Nov-08</td>
<td>Oct-08</td>
<td>Sep-08</td>
<td>Nov-08</td>
<td>Nov-08</td>
<td>Nov-08</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>-3.5%</td>
<td>-2.1%</td>
<td>-3.7%</td>
<td>-31.4%</td>
<td>-13.6%</td>
<td>-6.9%</td>
<td>-22.5%</td>
</tr>
<tr>
<td class="firstcol">France:IPxConstruct'n</td>
<td>-2.4%</td>
<td>-3.7%</td>
<td>-0.7%</td>
<td>-24.1%</td>
<td>-13.0%</td>
<td>-9.0%</td>
<td>-23.6%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>-11.5%</td>
<td>0.1%</td>
<td>2.9%</td>
<td>-30.9%</td>
<td>-23.9%</td>
<td>-17.2%</td>
<td>-30.4%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>-2.9%</td>
<td>-1.4%</td>
<td>-1.0%</td>
<td>-19.2%</td>
<td>-12.7%</td>
<td>-7.4%</td>
<td>-16.3%</td>
</tr>
<tr class="odd">
<td colspan="6">Mo/Mo are simple percent changes
others are at saars</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

The bad news keeps on coming for Europe. Declines in industrial output are now reflecting the effect of what has been ongoing weakness in industrial orders. Output is down Yr/Yr in German, France Spain and the UK and the progression [...]

Industrial Output Falls Hard Across Europe

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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The U.S. Treasury Department reported a U.S. government budget surplus of $258.4 billion during April, which compared to a surplus of $209.5 billion twelve months earlier. The Action Economics Forecast Survey expected a $264.0 billion surplus in April. During the first seven months of the current fiscal year, the government ran a budget deficit of $1.049 trillion versus a deficit of $855.2 billion it the first seven months of FY’24.

Overall revenues in the first seven months of FY’25 increased 4.9% y/y compared to a 10.3% y/y rise in the first seven months of last year. Individual income tax receipts rose 7.0% y/y compared to last year’s 11.4% y/y gain. The level of corporate tax receipts fell 9.2% y/y so far this year after a 27.5% y/y rise in the first seven months of FY’24. Social insurance revenues increased 3.5% y/y after a 6.6% y/y rise in the first seven months of FY’24, while excise taxes rose 20.0% y/y so far in FY’25 compared to a 14.0% gain in the first seven months of last fiscal year. Customs duties rose 34.4% y/y in the first seven months of FY’25 after a 7.4% y/y decline last fiscal year.

Federal government outlays grew 8.9% y/y so far in FY’25 versus a 5.8% y/y 	rise in the first seven months of FY’24. Defense spending rose 7.8% y/y versus a 7.0% y/y rise in the first seven months of last fiscal year. Social Security outlays rose 8.4% y/y in the first seven months of FY’25 versus an 8.7% increase in the first seven months of last fiscal year. Interest payments rose 12.6% y/y so far in FY’25 after a 41.4% rise in the first seven months of last fiscal year. Health program spending rose 7.1% y/y after rising 0.8% early in FY’24 while Medicare payments surged 18.4% y/y versus a 9.1% y/y rise last year. Income security outlays rose 8.0% y/y early this year compared to a 16.3% y/y decline in the first seven months of FY’24.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.

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- Federal receipt growth slows in FY 2025.
- Outlay growth surges this fiscal year.

U.S. Federal Government Runs a Budget Surplus in April; Larger Deficit ‘YTD

250509A1.jpg

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

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

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

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

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

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

250509D1.jpg

250509B1.jpg

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

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

250509L1.jpg

250509M1.jpg

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

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

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

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

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

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

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

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

250509N1.jpg

250509O1.jpg

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

U.S. Wholesale Inventories & Sales Increase in March

250508N2.jpg

250508O2.jpg

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

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

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

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

250508P2.jpg

250508Q2.jpg

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

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

250508F0.jpg

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

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

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

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

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

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

250508H0.jpg

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

Economy in Brief: January 2009

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