Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110b.jpg" width="353">
The National Association of Realtors reported that September pending sales of existing homes fell 4.6% from the prior month. Sales had risen 7.5% during August. Consensus expectations were for a slightly more moderate m/m drop.
Despite the latest decline, the level of sales on a three-month basis was up 6.6% from its March low.
The 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.
The Mortgage Meltdown, Financial Markets, and the Economy is adapted from a speech by San Francisco Federal Reserve Bank President Janet Yellen and it can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-35-36.pdf">here</a>.
Across the country&#39;s regions the pattern of recent sales movements has been very erratic. Sales in the West led the September increase with a 3.7% m/m rise on the heels of an 18.4% spurt upward in August. The latest was the highest level of sales since early 2006. But that was all of the good news in the latest home sales report. Sales in the Northeast slumped 16.8% m/m to a new low for the series. Sales in the South fell 7.9% and the decline reversed most of the modest firming of sales during the prior three months. Home sales in the Midwest ticked down 0.7% though sales still were a moderate 12.4% higher than the March low.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110a.jpg" width="353">
Weak home sales are encouraging potential sellers to keep their homes off the market. The Realtors Association indicated in an earlier report that the number of homes on the market and available for sale fell a not seasonally adjusted 1.6% (-2.4% y/y) after a 5.2% August decline. That was the second y/y decline since early 2005.
At the current sales rate there was a 9.9 months&#39; supply of homes on the market, the lowest since February but still higher than 8.9 months last year and 6.5 months during 2006. For single family homes the months&#39; supply fell to 9.4, the lowest since March but still well above the 8.7 average of last year.
The median sales price of an existing single family home fell 5.7% (-9.0% y/y) during September. Prices were down 16.3% from their peak during June of last year. For single family homes, prices fell 5.6% (-8.6% y/y) and they were off 16.8% from last year&#39;s June peak.
The pending home sales data are available in Haver&#39;s PREALTOR database and the number of homes on the market and prices are in the REALTOR database.
The Federal Reserve Board and the U.S. Treasury announced the restructuring of the government&#39;s financial support to the American International Group (AIG) and the text of the announcement can be found <a href="http://www.federalreserve.gov/newsevents/press/other/20081110a.htm">here</a>
What Is Liquidity Risk? also is from the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-33.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/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>89.2</td>
<td>&nbsp;93.5</td>
<td>&nbsp;&nbsp; 1.6%</td>
<td>95.7</td>
<td>112.1&nbsp;</td>
<td>124.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>66.4</td>
<td>79.8</td>
<td>-9.4</td>
<td>85.6</td>
<td>98.5</td>
<td>108.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>83.3</td>
<td>83.9</td>
<td>-3.1</td>
<td>89.6</td>
<td>102.0</td>
<td>116.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>89.0</td>
<td>96.6</td>
<td>-11.3</td>
<td>107.3</td>
<td>127.3</td>
<td>134.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>113.6</td>
<td>109.5</td>
<td>39.6</td>
<td>92.1</td>
<td>109.5</td>
<td>128.6</td>
</tr>
</tbody>
</table>
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The National Association of Realtors reported that September pending sales of existing homes fell 4.6% from the prior month. Sales had risen 7.5% during August. Consensus expectations were for a slightly more moderate m/m drop. [...]

U.S. Pending Home Sales Retraced Most of August Rise; Trend Still Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110b.jpg" align="left" border="0" height="265" width="353">
The National Association of Realtors reported that September
pending sales of existing homes fell 4.6% from the prior month. Sales
had risen 7.5% during August. Consensus expectations were for a
slightly more moderate m/m drop.
Despite the latest decline, the level of sales on a
three-month basis was up 6.6% from its March low.
The 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.
The Mortgage Meltdown, Financial Markets, and
the Economy is adapted from a speech by San Francisco
Federal Reserve Bank President Janet Yellen and it can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-35-36.pdf">here</a>.
Across the country's regions the pattern of recent sales
movements has been very erratic. Sales in the West led the September
increase with a 3.7% m/m rise on the heels of an 18.4% spurt upward in
August. The latest was the highest level of sales since early 2006. But
that was all of the good news in the latest home sales report. Sales in
the Northeast slumped 16.8% m/m to a new low for the series. Sales in
the South fell 7.9% and the decline reversed most of the modest firming
of sales during the prior three months. Home sales in the Midwest
ticked down 0.7% though sales still were a moderate 12.4% higher than
the March low.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110a.jpg" align="right" border="0" height="265" width="353">
Weak home sales are encouraging potential sellers to keep
their homes off the market. The Realtors Association indicated in an
earlier report that the number of homes on the market and available for
sale fell a not seasonally adjusted 1.6% (-2.4% y/y) after a 5.2%
August decline. That was the second y/y decline since early 2005.
At the current sales rate there was a 9.9 months' supply of
homes on the market, the lowest since February but still higher than
8.9 months last year and 6.5 months during 2006. For single family
homes the months' supply fell to 9.4, the lowest since March but still
well above the 8.7 average of last year.
The median sales price of an existing single family home fell
5.7% (-9.0% y/y) during September. Prices were down 16.3% from their
peak during June of last year. For single family homes, prices fell
5.6% (-8.6% y/y) and they were off 16.8% from last year's June peak.
The pending home sales data are available in Haver's PREALTOR
database and the number of homes on the market and prices are
in the REALTOR database.
The Federal Reserve Board and the U.S. Treasury
announced the restructuring of the government's financial support to
the American International Group (AIG) and the text of the
announcement can be found <a href="http://www.federalreserve.gov/newsevents/press/other/20081110a.htm">here</a>
What Is Liquidity Risk? also is
from the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-33.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/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>89.2</td>
<td>&nbsp;93.5</td>
<td>&nbsp;&nbsp; 1.6%</td>
<td>95.7</td>
<td>112.1&nbsp;</td>
<td>124.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>66.4</td>
<td>79.8</td>
<td>-9.4</td>
<td>85.6</td>
<td>98.5</td>
<td>108.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>83.3</td>
<td>83.9</td>
<td>-3.1</td>
<td>89.6</td>
<td>102.0</td>
<td>116.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>89.0</td>
<td>96.6</td>
<td>-11.3</td>
<td>107.3</td>
<td>127.3</td>
<td>134.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>113.6</td>
<td>109.5</td>
<td>39.6</td>
<td>92.1</td>
<td>109.5</td>
<td>128.6</td>
</tr>
</tbody>
</table>
OECD Slowdown is Broad-Based andMore Severe 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 10, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110d.jpg" align="left" border="0" height="265" width="353">
The OECD trend-adjusted cyclical leading indicators showed a
clear pattern of growth deteriorating in the OECD region. The downturn
is of increasing severity. Even Japan after a brief flirtation with
improving is getting weaker again. Over 3, 6 and 12 months it is Europe
that is now declining the most rapidly.
The OECD prefers to look at these indicators over six months.
On that basis the weakness is just as present. As we prepare for the
G-20 meeting the OECD area is shrinking rapidly.
Over six months the pace of decline for the OECD is at a rate
of 6.5%. Six months ago the six month pace for that index was -2%. One
year ago the pace was just -0.8%. And 18n months ago that pace was an
increase of 2.5%. All that
amounts to a pretty fast drop off. That is the sort of thing that is
typical, not of a slowdown, but of a recession.

<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="even">
<td colspan="5" class="firstcol">Growth
Progression-SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">OECD</td>
<td>-9.8%</td>
<td>-6.5%</td>
<td>-4.3%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">OECD 7</td>
<td>-11.1%</td>
<td>-6.7%</td>
<td>-5.0%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">OECD Europe</td>
<td>-12.1%</td>
<td>-9.2%</td>
<td>-5.8%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">OECD Japan</td>
<td>-6.8%</td>
<td>-2.3%</td>
<td>0.0%</td>
<td>-4.0%</td>
</tr>
<tr>
<td class="firstcol">OECD US</td>
<td>-10.6%</td>
<td>-5.6%</td>
<td>-5.3%</td>
<td>1.3%</td>
</tr>
<tr class="even">
<td colspan="5" class="firstcol">Six
month readings at 6-Mo
Intervals</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr>
<td class="firstcol">OECD</td>
<td>-6.5%</td>
<td>-2.0%</td>
<td>-0.8%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">OECD 7</td>
<td>-6.7%</td>
<td>-3.2%</td>
<td>-1.2%</td>
<td>1.3%</td>
</tr>
<tr>
<td class="firstcol">OECD Europe</td>
<td>-9.2%</td>
<td>-2.3%</td>
<td>-1.0%</td>
<td>1.3%</td>
</tr>
<tr>
<td class="firstcol">OECD Japan</td>
<td>-2.3%</td>
<td>2.2%</td>
<td>-7.8%</td>
<td>-0.1%</td>
</tr>
<tr>
<td class="firstcol">OECD US</td>
<td>-5.6%</td>
<td>-5.0%</td>
<td>0.8%</td>
<td>1.9%</td>
</tr>
<tr>
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD RED.</td>
</tr>
</tbody>
</table>
IP Dropping Fast in Key
EMUCountries 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 10, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110c.jpg" align="left" border="0" height="265" width="353">
EMU IP is sinking fast. Add Italy and France to the list of
large EMU countries with industrial output dropping like a stone. The
Q3 growth rates for IP in France and in Italy each are negative,
Italy&#8217;s drop is at a huge -8.4% pace while France&#8217;s drop is a still
weak at -2.7%. In Italy
consumer goods, capital goods and intermediate goods output each is
falling. Transportation is twice as weak in Italy as it is in France
for the quarter. In France intermediate goods output is even a bit
weaker than it is in Italy in Q3 but the drop in output of capital
goods is quite a bit less severe and consumer goods output in France
continued to rise strongly in Q3. French consumer goods output, in
fact, has risen in each month of the third quarter as well.
On balance, as the accompanying chart shows, IP is falling
rapidly in Germany, Italy and France. The drop in France shows some
signs of leveling off in its pace of decline over the past few months
while Italy and Germany are still plunging at what seem to be
accelerating rates of decline. Italy &#8217;s pattern of decline is a bit
more complicated than that for Germany and France. But Germany has the
most severe weakness. While it has so far the smallest Yr/Yr drop, its
output has decelerated more sharply since German output was growing so
much more strongly until early 2008 when the pace of increase suddenly
and sharply moved lower and into a state of decline.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">French IP
Excluding Construction </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Quarter-to-date</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>-4.2%</td>
<td>-1.9%</td>
<td>-2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>0.4%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>8.2%</td>
<td>2.8%</td>
<td>-0.4%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.7%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>4.2%</td>
<td>0.5%</td>
<td>1.7%</td>
<td>-3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-1.5%</td>
<td>-0.8%</td>
<td>1.3%</td>
<td>-4.1%</td>
<td>-7.2%</td>
<td>-4.4%</td>
<td>-5.0%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Auto</td>
<td>-3.1%</td>
<td>-1.2%</td>
<td>4.2%</td>
<td>-1.3%</td>
<td>-14.8%</td>
<td>-8.3%</td>
<td>-9.3%</td>
</tr>
<tr class="even">
<td colspan="8" class="firstcol">Italy
IP Excluding
Construction</td>
</tr>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Quarter-to-date</td>
</tr>
<tr class="odd">
<td class="firstcol">IP-MFG</td>
<td>-2.3%</td>
<td>0.4%</td>
<td>-1.3%</td>
<td>-12.1%</td>
<td>-8.0%</td>
<td>-5.7%</td>
<td>-8.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-3.3%</td>
<td>0.8%</td>
<td>-2.3%</td>
<td>-18.0%</td>
<td>-6.5%</td>
<td>-5.4%</td>
<td>-10.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>-2.5%</td>
<td>-0.9%</td>
<td>-0.5%</td>
<td>-14.9%</td>
<td>-11.1%</td>
<td>-8.2%</td>
<td>-13.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-2.6%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-7.2%</td>
<td>-5.9%</td>
<td>-5.4%</td>
<td>-3.5%</td>
</tr>
<tr>
<td colspan="8" class="firstcol">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Transportation</td>
<td>-5.7%</td>
<td>1.9%</td>
<td>-3.9%</td>
<td>-27.2%</td>
<td>-21.1%</td>
<td>-13.1%</td>
<td>-22.4%</td>
</tr>
</tbody>
</table>
Declines in Commodity Prices
Leading to Lower Inflation Rates Worldwide 
by <a href="/comment/Curley.html">Louise
Curley</a> November 10, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110e.jpg" align="left" border="0" height="265" width="353">
Inflation is beginning to take a back seat in the
deliberations of Central Bankers. The financial crisis, rising
unemployment and declining production are overshadowing inflation fears
at the same time that these fears are lessening. No matter the actual
level of inflation, incoming data are showing that inflation rates are
declining worldwide.
Today Egypt, Greece, Latvia and the Czech Republic reported
their Consumer Price Indexes for October. The inflation rate as
measured by the year-to-year increase in the CPI has recently been
declining at varying degrees of speed in each country. Egypt, with
inflation over 20%, has seen its inflation rate decline in the last two
months from 23.8% in August to 20.1% in October. Another high inflation
rate country, Latvia, has experienced declines in its inflation rate in
the last five months, from 17.7% in June to 13.8% in October. Greece
and the Czech Republic with relatively low inflation rates have
nevertheless also witnessed declines in their inflation rates.
Inflation in Greece has come down to 3.9% in October from 4.8% in June,
and to 6.0% from 6.7%, respectively, in the Czech republic. The "core"
inflation rate in the Czech Republic has declined to 1.65 % in October
from 2.64 % in June. Inflation rates for the four countries are shown
in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081110f.jpg" align="right" border="0" height="265" width="353">
Dramatic declines in commodity prices over the past year are
responsible for much of the improved inflation outlook worldwide. The
second chart shows the prices of wheat, copper and oil over the past
year.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">INFLATION
RATES&nbsp;</th>
<th scope="col">Oct 08</th>
<th scope="col">Sep&nbsp;&nbsp;
08&nbsp;</th>
<th scope="col">Aug 08&nbsp;</th>
<th scope="col">Jul&nbsp; 08&nbsp;</th>
<th scope="col">Jun 08&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Czech Republic:
Total</td>
<td>6.0</td>
<td>6.6</td>
<td>6.5</td>
<td>6.9</td>
<td>6.7</td>
</tr>
<tr>
<td class="firstcol">Czech Republic: Core</td>
<td>1.65</td>
<td>2.54</td>
<td>2.54</td>
<td>2.64</td>
<td>2.64</td>
</tr>
<tr class="odd">
<td class="firstcol">Greece: Total</td>
<td>3.90</td>
<td>4.58</td>
<td>4.68</td>
<td>4.83</td>
<td>4.89</td>
</tr>
<tr>
<td class="firstcol">Egypt: Total</td>
<td>20.13</td>
<td>21.52</td>
<td>23.79</td>
<td>22.15</td>
<td>20.22</td>
</tr>
<tr class="odd">
<td class="firstcol">Latvia: Total</td>
<td>13.73</td>
<td>14.88</td>
<td>15.72</td>
<td>16.61</td>
<td>17.74</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081107a.jpg" width="353">
October Nonfarm payrolls declined 240,000, according to the Bureau of Labor Statistics. The decline, which exceeded Consensus expectations for a 198,000 drop, followed a revised 284,000 September decline that was much deeper than reported initially. So far in 2008, nonfarm payrolls are down 1.179 mil., or 0.9%.
During the last three months, payrolls fell at a 1.9% annual rate. That is the quickest rate of decline during this cycle and it now matches the rate of decline at the end of the 2001 recession.
The unemployment rate jumped to 6.5% last month, the highest level since March 1994. The increase also exceeded Consensus expectations for a rise to 6.3%. The jump owed to a 297,000 drop in employment (-0.7% y/y), as measured in the household survey. The latest decline in household sector employment was the eighth, and second largest, monthly decline this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081107b.jpg" width="353">
The number of those who were unemployed last month rose 603,000 (38.3% y/y) and the number is up 2.425 mil. so far this year. The labor force rose 306,000 (+1.1% y/y) during October and that rate of increase has been steady. The labor force participation rate increased slightly to 66.1%. The number of people of who want a job but are not in the labor force fell last month but the figure is up 16.4% y/y, the most in over ten years.
The average duration of unemployment increased by more than one full week to 19.7 and the median duration of unemployment rose to a lesser 10.6 weeks, up from 8.5 weeks during all of last year. The number of those unemployed for more than 27 weeks increased 12.4% and that figure is up by three quarters over the last twelve months, the most since 2002.
From the establishment survey the number of private sector jobs fell 263,000 (-1.1% y/y) after a 243,000 September decline, initially reported down by 168,000. Private service sector industries shed 131,000 jobs (-0.4% y/y) and that was the ninth decline in the last ten months. Employment in trade, transportation &amp; utilities accounted for roughly half of that October decrease while retail sector jobs fell another 38,100 (-1.8% y/y) with motor vehicle dealerships (-4.8% y/y) accounting for most of the decline. Jobs in the information sector were unchanged last month (-1.5% y/y) but financial sector jobs fell 24,000 (-1.5% y/y). The professional &amp; business service industry shed 45,000 (-1.7% y/y) jobs after a 39,000 September decline (Here was where half of the big downward revision for September occurred). Temporary help services jobs which often are a leading indicator of employment growth, fell 36,600 (-11.6% y/y), the largest y/y decline since 2002. These declines were somewhat offset by a gain in education &amp; health industries jobs of 21,000 (2.8% y/y) but here again, revisions were big. The previously reported September gain of 25,000 now shows a 16,000 decline.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081107d.jpg" width="353">
Construction sector employment fell by 49,000 during October, the largest decline since June.
Factory sector jobs fell 90,000 (-3.7% y/y) after a little revised 56,000 worker decline during September. Motor vehicle &amp; parts jobs fell 9,100 (-13.5% y/y) and furniture &amp; parts jobs fell by 10,400 (-10.8% y/y. In the nondurables sector employment fell 15,000 (-2.4% y/y).
Government sector jobs moved higher by 23,000 (1.1% y/y). The gain followed a decline of 41,000 during September which initially was reported as a slight increase. (This was the source of the other half of the downward September revision in total nonfarm jobs.) Local governments added 21,000 (1.0% y/y) workers while the federal government added 6,000 (1.2% y/y) workers.
Comparing Current Payroll Employment Changes with Past Recessions from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/research/trends/2008/1108/04ecoact.cfm">here</a>.
The length of the average workweek held steady m/m at 33.6 hours, down slightly from the 3Q average.
Suggesting continued declines in employment was the one month diffusion index, which measures the breadth of job gain or loss (50 is the break-even level). It fell to its lowest level of this cycle (37.6%). The three-month index also was near its cycle low at 37.0% and the three-month figure for the factory sector was even weaker at 25.0%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081107c.jpg" width="353">
Average hourly earnings rose a modest 0.2%, as they did in September. A weaker employment market cooled wage increases in the factory sector where earnings fell 0.1% (+2.8% y/y). A 0.1% increase in the private services wages also indicated softness. The y/y gain eased to 3.5%, down from a 5.0% high during 2006.
The Promise and Peril of the New Financial Architecture is yesterday&#39;s speech by Fed Governor Kevin Warsh and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/warsh20081106a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment: 000s</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</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">Payroll Employment</td>
<td>-240</td>
<td>-284</td>
<td>-127</td>
<td>-0.8%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>-159</td>
<td>-73</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-90</td>
<td>-56</td>
<td>-40</td>
<td>-3.7%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-49</td>
<td>-35</td>
<td>-20</td>
<td>-6.7%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-108</td>
<td>-201</td>
<td>-57</td>
<td>-0.1%</td>
<td>1.6%</td>
<td>1.8%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.6</td>
<td>33.6</td>
<td>33.7</td>
<td>33.8 (Oct. &#39;07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>6.5%</td>
<td>6.1%</td>
<td>6.1%</td>
<td>4.8% (Oct. &#39;07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

October Nonfarm payrolls declined 240,000, according to the Bureau of Labor Statistics. The decline, which exceeded Consensus expectations for a 198,000 drop, followed a revised 284,000 September decline that was much deeper than [...]

U.S. Payrolls Off 240,000 in October; 6.5% Jobless Rate Highest Since 1994

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080904i.jpg" width="353">
Labor productivity in the nonfarm business sector rose 1.1% last quarter. That gain was down by two-thirds from the 2Q increase and by half from 1Q. Nonetheless, the y/y gain of 2.0% remained nearly the quickest since 2004. The latest increase about matched Consensus expectations for 3Q.
Output growth fell to a negative 1.7% (+0.3% y/y) which was its weakest since the 2001 recession. Productivity, however, still rose as hours worked were reduced by an even greater degree. They declined 2.7% (-1.7% y/y).
Growth in compensation per hour nevertheless accelerated to 4.7% and that raised the y/y growth to 4.3%.
As a result of weaker productivity and quicker compensation, unit labor cost growth jumped to 3.6%. That was off the recent highs near 4.0% but the trend is one of acceleration.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106e.jpg" width="353">
In the factory sector productivity declined at a 1.0% (+1.1% y/y) rate and that was the second consecutive quarterly decline following a 3.4% increase last year. Output declined 2.6% y/y and hours worked were reduced by an even greater 3.7% y/y. Compensation growth quickened to 5.1%, the fastest since 2006. As a result, unit labor cost growth 6.1% last quarter and by 3.9% y/y, the fastest since late-2006.
The Current State of the U.S. Economy and the Fed&#146;s Response (With Reference to Irrational Exuberance and Virgil&#146;s Aeneid) from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/news/speeches/fisher/2008/fs081104.cfm">here</a>.
Multinationals Make the Most of IT from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20080601/cover.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/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR, %)</th>
<th scope="col">3Q &#39;08</th>
<th scope="col">2Q &#39;08</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">Output per Hour</td>
<td>1.1</td>
<td>3.6</td>
<td>2.0</td>
<td>1.4</td>
<td>1.0</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>4.7</td>
<td>3.5</td>
<td>4.3</td>
<td>4.1</td>
<td>3.8</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.6</td>
<td>-0.1</td>
<td>2.3</td>
<td>2.7</td>
<td>2.8</td>
<td>2.2</td>
</tr>
</tbody>
</table>
</body>
</html>

Labor productivity in the nonfarm business sector rose 1.1% last quarter. That gain was down by two-thirds from the 2Q increase and by half from 1Q. Nonetheless, the y/y gain of 2.0% remained nearly the quickest since 2004. The latest [...]

U.S. Productivity Growth Weakened and Unit Labor Costs Surged

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106c.jpg" align="left" border="0">
German officials have officially ended their excursion trip
with optimism. During their journey through fantasy land, they did take
their turns in showing how wrong they can be. From the start of the US
slowing, they thought Europe had decoupled and that the euro could
continue to rise with little ill effect on the Zone. When the other
e-Zone countries were affected they said Germany was different. When
the banking crisis hit the US they said German banks were strong and
did not have these sorts of problems. Recently they had believed
Germany was going to be so much less affected by the growing recession
in Europe as policymakers announced that Germany was better prepared to
meet the crisis. And so it may be. And we shall find out because ready
or not here it comes. 
 

The pop in orders in August may have errantly encouraged the
belief that Germany was wearing some sort of special recession-proof
vest. But now Super-Germany has met its Kryptonite. The Sept plunge in
orders of -8% is the largest drop since German unification and has
swept optimism aside. Germany is now, after all, just another European
country with an economy under pressure, not a special case 
 

Moreover a perusal of the trends makes is crystal clear that
this downturn has been building for some time. Optimism in retrospect
looks a bit like whistling past the graveyard. August&#8217;s orders gain was
a rogue rise of 3.5% sandwiched in between drops of 1.7% in July and
now 8% in September. The sequential growth rates get progressively more
negative from -9% over 12 months to -12% over six months to -23% over
three months. Similarly the foreign and domestic orders show the same
progressions. 
 

Germany is getting pulled down more by weakness from the
outside. So, in some sense, it is true that Germany has been faring
better. But in good times German export orders boomed beyond the reach
of domestic orders as well. Germany is simply a lower growth more
stable economy than the world in which it trades. Yet weakness abroad
will weigh on Germany just as a global boom will boost it. Because
Germany is plugged into that trading system, it shares the good and bad
times with the world it exports to. There is nothing unusual about that
or about the effect of that on Germany in this cycle. 
 

The German industrial sales figures underline the issues.
German sales are showing the same sort of progressive declines. For a
while Germany was growing better than its trading partners because it
deals a lot in capital goods. One year ago German capital goods growth
rates rose 8% Yr/Yr while overall German sales rose by just 5.8%. But
in September German capital goods orders are being crushed. They are
falling by 5.2% in Sept alone. Their three-month pace of contraction is
-14.4% rivaling the 15.5% drop in the usually volatile sales of
consumer durable goods. 
 

Germany has been caught in the same web of weakness that all
of Europe is in. Today&#8217;s industrial orders report combines with the
week&#8217;s earlier reports from the MFG and Services sector purchasers data
from Markit to show that weakness is spreading in Germany as well as
across the e-Zone. 
 

Germany is in the soup along with the rest of Europe although
it may be submerging at a slightly slower rate. There can be little
doubt that Germany, like the rest of Europe is submerging. Down
periscope. 
 


<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="grey4">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Orders</td>
<td>-8.0%</td>
<td>3.5%</td>
<td>-1.7%</td>
<td>-23.0%</td>
<td>-12.2%</td>
<td>-9.0%</td>
<td>6.4%</td>
<td>-14.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign</td>
<td>-11.4%</td>
<td>4.3%</td>
<td>-1.2%</td>
<td>-30.7%</td>
<td>-16.7%</td>
<td>-13.6%</td>
<td>12.1%</td>
<td>-17.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Domestic</td>
<td>-4.3%</td>
<td>2.8%</td>
<td>-2.1%</td>
<td>-14.2%</td>
<td>-7.4%</td>
<td>-3.9%</td>
<td>0.8%</td>
<td>-11.4%</td>
</tr>
<tr class="grey1">
<td colspan="9" class="firstcol">Real Sector Sales</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG/Mining</td>
<td>-4.0%</td>
<td>4.5%</td>
<td>-2.4%</td>
<td>-8.2%</td>
<td>-4.2%</td>
<td>-1.9%</td>
<td>5.8%</td>
<td>-5.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer</td>
<td>-0.6%</td>
<td>2.0%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>2.0%</td>
<td>-2.6%</td>
<td>1.3%</td>
<td>-0.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Durables</td>
<td>-6.3%</td>
<td>6.8%</td>
<td>-4.2%</td>
<td>-15.5%</td>
<td>-8.1%</td>
<td>-5.8%</td>
<td>2.4%</td>
<td>-7.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Non-Durable</td>
<td>0.6%</td>
<td>1.2%</td>
<td>0.3%</td>
<td>8.5%</td>
<td>4.2%</td>
<td>-1.9%</td>
<td>1.0%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital Goods</td>
<td>-5.2%</td>
<td>5.7%</td>
<td>-4.0%</td>
<td>-14.4%</td>
<td>-7.5%</td>
<td>-1.2%</td>
<td>8.0%</td>
<td>-9.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Intermediate Goods</td>
<td>-4.3%</td>
<td>4.2%</td>
<td>-1.7%</td>
<td>-7.5%</td>
<td>-3.8%</td>
<td>-2.6%</td>
<td>6.0%</td>
<td>-2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">All MFG-Sales</td>
<td>-3.9%</td>
<td>4.4%</td>
<td>-2.2%</td>
<td>-7.4%</td>
<td>-3.8%</td>
<td>-1.9%</td>
<td>5.3%</td>
<td>-4.5%</td>
</tr>
</tbody>
</table>
</body></html>

German officials have officially ended their excursion trip with optimism. During their journey through fantasy land, they did take their turns in showing how wrong they can be. From the start of the US slowing, they thought Europe [...]

Germany's Flirtation with Rebound Is Smashed by a Stunning September Order Drop

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106a.jpg" width="353">
The job market remains weak.That&#39;s the message from the figures covering initial claims for jobless insurance. Last week, they held roughly steady at 481,000 with an upwardly revised reading of 485,000 during the prior week. Expectations had been for 476,000 claims. The latest figures were down slightly from the cycle&#39;s high, which was boosted after Hurricane Ike, but they were up by half from the year ago level. The four-week moving average of initial claims fell slightly to 477,000 (43.8% y/y).
The largest increases in initial claims for the week ending October 25 were in Pennsylvania (+5,579), California (+4,617), Illinois (+4,314), Ohio (+3,949), and North Carolina (+3,179), while the largest decreases were in Texas (-5,898), Tennessee (-2,078), Kansas (-1,067), Arkansas (-1,003), and Florida (-661).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106b.jpg" width="353">
Continuing claims for unemployment insurance during the week of October 25 rose a sharp 122,000 after the prior week&#39;s 6,000 decline. The four-week average of continuing claims rose to 3,754,000 it is this cycle&#39;s high and the highest (just barely) since 1983. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment was stable for the third week at 2.8%, this cycle&#39;s high and the highest since mid-2003. The peak rate in that recessionary period was 3.0% reached in late June 2003. The Commerce Department indicated that the highest insured unemployment rates in the week ending October 18 were in Oregon (3.6 percent), the Virgin Islands (3.6), Michigan (3.5), Nevada (3.5), California (3.4), Puerto Rico (3.4), South Carolina (3.3), Arkansas (3.2), New Jersey (3.2), and Pennsylvania (3.2).
Understanding inflation and the implications for monetary policy: a Phillips curve retrospective from the Federal Reserve Bank of New England is available <a href="http://www.bos.frb.org/economic/conf/conf53/index.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/01/08</th>
<th scope="col">10/25/08</th>
<th scope="col">10/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>481</td>
<td>&nbsp;485</td>
<td>479</td>
<td>48.5%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,843</td>
<td>3,721</td>
<td>48.4</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
</body>
</html>

The job market remains weak.That's the message from the figures covering initial claims for jobless insurance. Last week, they held roughly steady at 481,000 with an upwardly revised reading of 485,000 during the prior week. [...]

U.S. Jobless Insurance Claims Remained Elevated

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</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106a.jpg" align="left" border="0" height="265" width="353">
The job market remains weak.That's the message from the
figures covering initial claims for jobless insurance. Last week, they
held roughly steady at 481,000 with an upwardly revised reading of
485,000 during the prior week. Expectations had been for 476,000
claims. The latest figures were down slightly from the cycle's high,
which was boosted after Hurricane Ike, but they were up by half from
the year ago level. The four-week moving average of initial claims fell
slightly to 477,000 (43.8% y/y).
The largest increases in initial claims for the week ending
October 25 were in Pennsylvania (+5,579), California (+4,617), Illinois
(+4,314), Ohio (+3,949), and North Carolina (+3,179), while the largest
decreases were in Texas (-5,898), Tennessee (-2,078), Kansas (-1,067),
Arkansas (-1,003), and Florida (-661).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106b.jpg" align="right" border="0" height="265" width="353">
Continuing claims for unemployment insurance during the week
of October 25 rose a sharp 122,000 after the prior week's 6,000
decline. The four-week average of continuing claims rose to 3,754,000
it is this cycle's high and the highest (just barely) since 1983.
Continuing claims provide some indication of workers' ability to find
employment and they lag the initial claims figures by one week.
The insured rate of unemployment was stable for the third week
at 2.8%, this cycle's high and the highest since mid-2003. The peak
rate in that recessionary period was 3.0% reached in late June 2003.
The Commerce Department indicated that the highest insured unemployment
rates in the week ending October 18 were in Oregon (3.6 percent), the
Virgin Islands (3.6), Michigan (3.5), Nevada (3.5), California (3.4),
Puerto Rico (3.4), South Carolina (3.3), Arkansas (3.2), New Jersey
(3.2), and Pennsylvania (3.2).
Understanding inflation and the implications for
monetary policy: a Phillips curve retrospective from the
Federal Reserve Bank of New England is available <a href="http://www.bos.frb.org/economic/conf/conf53/index.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">11/01/08</th>
<th scope="col">10/25/08</th>
<th scope="col">10/18/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>481</td>
<td>&nbsp;485</td>
<td>479</td>
<td>48.5%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,843</td>
<td>3,721</td>
<td>48.4</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
U.S. Productivity Growth Weakened
and Unit Labor Costs Surged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080904i.jpg" align="left" border="0" height="265" width="353">
Labor productivity in the nonfarm business sector rose 1.1%
last quarter. That gain was down by two-thirds from the 2Q increase and
by half from 1Q. Nonetheless, the y/y gain of 2.0% remained nearly the
quickest since 2004. The latest increase about matched Consensus
expectations for 3Q.
Output growth fell to a negative 1.7% (+0.3% y/y) which was
its weakest since the 2001 recession. Productivity, however, still rose
as hours worked were reduced by an even greater degree. They declined
2.7% (-1.7% y/y).
Growth in compensation per hour nevertheless accelerated to
4.7% and that raised the y/y growth to 4.3%.
As a result of weaker productivity and quicker compensation,
unit labor cost growth jumped to 3.6%. That was off the recent highs
near 4.0% but the trend is one of acceleration.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106e.jpg" align="right" border="0" height="265" width="353">
In the factory sector productivity declined at a 1.0% (+1.1%
y/y) rate and that was the second consecutive quarterly decline
following a 3.4% increase last year. Output declined 2.6% y/y and hours
worked were reduced by an even greater 3.7% y/y. Compensation growth
quickened to 5.1%, the fastest since 2006. As a result, unit labor cost
growth 6.1% last quarter and by 3.9% y/y, the fastest since late-2006.
The Current State
of the U.S. Economy and the Fed&#8217;s Response (With Reference to
Irrational Exuberance and Virgil&#8217;s Aeneid) from the Federal
Reserve Bank of Dallas is available <a href="http://dallasfed.org/news/speeches/fisher/2008/fs081104.cfm">here</a>.
Multinationals Make the Most of IT
from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20080601/cover.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/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">3Q '08</th>
<th scope="col">2Q '08</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">Output per Hour</td>
<td>1.1</td>
<td>3.6</td>
<td>2.0</td>
<td>1.4</td>
<td>1.0</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>4.7</td>
<td>3.5</td>
<td>4.3</td>
<td>4.1</td>
<td>3.8</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.6</td>
<td>-0.1</td>
<td>2.3</td>
<td>2.7</td>
<td>2.8</td>
<td>2.2</td>
</tr>
</tbody>
</table>
Germany's Flirtation with ReboundIs Smashed by a Stunning September Order Drop 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 6, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081106c.jpg" align="left" border="0">
German officials have officially ended their excursion trip
with optimism. During their journey through fantasy land, they did take
their turns in showing how wrong they can be. From the start of the US
slowing, they thought Europe had decoupled and that the euro could
continue to rise with little ill effect on the Zone. When the other
e-Zone countries were affected they said Germany was different. When
the banking crisis hit the US they said German banks were strong and
did not have these sorts of problems. Recently they had believed
Germany was going to be so much less affected by the growing recession
in Europe as policymakers announced that Germany was better prepared to
meet the crisis. And so it may be. And we shall find out because ready
or not here it comes. 
 

The pop in orders in August may have errantly encouraged the
belief that Germany was wearing some sort of special recession-proof
vest. But now Super-Germany has met its Kryptonite. The Sept plunge in
orders of -8% is the largest drop since German unification and has
swept optimism aside. Germany is now, after all, just another European
country with an economy under pressure, not a special case 
 

Moreover a perusal of the trends makes is crystal clear that
this downturn has been building for some time. Optimism in retrospect
looks a bit like whistling past the graveyard. August&#8217;s orders gain was
a rogue rise of 3.5% sandwiched in between drops of 1.7% in July and
now 8% in September. The sequential growth rates get progressively more
negative from -9% over 12 months to -12% over six months to -23% over
three months. Similarly the foreign and domestic orders show the same
progressions. 
 

Germany is getting pulled down more by weakness from the
outside. So, in some sense, it is true that Germany has been faring
better. But in good times German export orders boomed beyond the reach
of domestic orders as well. Germany is simply a lower growth more
stable economy than the world in which it trades. Yet weakness abroad
will weigh on Germany just as a global boom will boost it. Because
Germany is plugged into that trading system, it shares the good and bad
times with the world it exports to. There is nothing unusual about that
or about the effect of that on Germany in this cycle. 
 

The German industrial sales figures underline the issues.
German sales are showing the same sort of progressive declines. For a
while Germany was growing better than its trading partners because it
deals a lot in capital goods. One year ago German capital goods growth
rates rose 8% Yr/Yr while overall German sales rose by just 5.8%. But
in September German capital goods orders are being crushed. They are
falling by 5.2% in Sept alone. Their three-month pace of contraction is
-14.4% rivaling the 15.5% drop in the usually volatile sales of
consumer durable goods. 
 

Germany has been caught in the same web of weakness that all
of Europe is in. Today&#8217;s industrial orders report combines with the
week&#8217;s earlier reports from the MFG and Services sector purchasers data
from Markit to show that weakness is spreading in Germany as well as
across the e-Zone. 
 

Germany is in the soup along with the rest of Europe although
it may be submerging at a slightly slower rate. There can be little
doubt that Germany, like the rest of Europe is submerging. Down
periscope. 
 


<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="grey4">
<td class="firstcol">Real and SA</td>
<td colspan="3">% M/M</td>
<td colspan="5">% Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Sep-08</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>QTR-2-Date</td>
</tr>
<tr class="grey2">
<td class="firstcol">Total Orders</td>
<td>-8.0%</td>
<td>3.5%</td>
<td>-1.7%</td>
<td>-23.0%</td>
<td>-12.2%</td>
<td>-9.0%</td>
<td>6.4%</td>
<td>-14.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Foreign</td>
<td>-11.4%</td>
<td>4.3%</td>
<td>-1.2%</td>
<td>-30.7%</td>
<td>-16.7%</td>
<td>-13.6%</td>
<td>12.1%</td>
<td>-17.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Domestic</td>
<td>-4.3%</td>
<td>2.8%</td>
<td>-2.1%</td>
<td>-14.2%</td>
<td>-7.4%</td>
<td>-3.9%</td>
<td>0.8%</td>
<td>-11.4%</td>
</tr>
<tr class="grey1">
<td colspan="9" class="firstcol">Real
Sector Sales</td>
</tr>
<tr class="grey2">
<td class="firstcol">MFG/Mining</td>
<td>-4.0%</td>
<td>4.5%</td>
<td>-2.4%</td>
<td>-8.2%</td>
<td>-4.2%</td>
<td>-1.9%</td>
<td>5.8%</td>
<td>-5.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer</td>
<td>-0.6%</td>
<td>2.0%</td>
<td>-0.4%</td>
<td>4.0%</td>
<td>2.0%</td>
<td>-2.6%</td>
<td>1.3%</td>
<td>-0.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Durables</td>
<td>-6.3%</td>
<td>6.8%</td>
<td>-4.2%</td>
<td>-15.5%</td>
<td>-8.1%</td>
<td>-5.8%</td>
<td>2.4%</td>
<td>-7.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Consumer Non-Durable</td>
<td>0.6%</td>
<td>1.2%</td>
<td>0.3%</td>
<td>8.5%</td>
<td>4.2%</td>
<td>-1.9%</td>
<td>1.0%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capital Goods</td>
<td>-5.2%</td>
<td>5.7%</td>
<td>-4.0%</td>
<td>-14.4%</td>
<td>-7.5%</td>
<td>-1.2%</td>
<td>8.0%</td>
<td>-9.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Intermediate Goods</td>
<td>-4.3%</td>
<td>4.2%</td>
<td>-1.7%</td>
<td>-7.5%</td>
<td>-3.8%</td>
<td>-2.6%</td>
<td>6.0%</td>
<td>-2.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">All MFG-Sales</td>
<td>-3.9%</td>
<td>4.4%</td>
<td>-2.2%</td>
<td>-7.4%</td>
<td>-3.8%</td>
<td>-1.9%</td>
<td>5.3%</td>
<td>-4.5%</td>
</tr>
</tbody>
</table>
</body></html>

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

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

250502C5.jpg

250502D5.jpg

The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250502X5.jpg

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- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

250502F32.jpg

250502G32.jpg

Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

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The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

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Globally Manufacturing Weakens

Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

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**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

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**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

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**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

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**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

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**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

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Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

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Charts of the Week: Tariff Truce, Tenuous Trust

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U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

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- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

Economy in Brief: November 2008

Jump to:

U.S. Pending Home Sales Retraced Most of August Rise; Trend Still Up

U.S. Pending Home Sales Retraced Most of August Rise; Trend Still Up

U.S. Payrolls Off 240,000 in October; 6.5% Jobless Rate Highest Since 1994

U.S. Payrolls Off 240,000 in October; 6.5% Jobless Rate Highest Since 1994

U.S. Productivity Growth Weakened and Unit Labor Costs Surged

Germany's Flirtation with Rebound Is Smashed by a Stunning September Order Drop

U.S. Jobless Insurance Claims Remained Elevated

U.S. Jobless Insurance Claims Remained Elevated