Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109a.jpg" align="right" border="0" height="265" width="353">Consumers
continue to deleverage as the prospects for employment remain
uncertain. The Federal Reserve reported late Friday that consumer
credit outstanding fell for the eighth consecutive month during
September. It also was the twelfth monthly decline since summer, 2008.
The $14.9B drop from August followed declines during the prior two
months which were revised shallower, but the y/y change amounted to a
record 4.8% drop.&nbsp; With these declines, consumers have reduced
credit outstanding as a percentage of disposable income to 22.6% from
its 2005 high of 24.4%. This compares to the low near 16% in the
early-1990s.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109b.jpg" align="right" border="0" height="265" width="353">Usage of
non-revolving credit (autos &amp;
other consumer durables), which accounts for nearly two-thirds of the
total, fell $4.9B after a slight August increase. The 2.3% y/y decline
was a record. Consumers continued also to cut back on revolving credit
usage. During September it fell a near-record $9.9B for the twelfth
consecutive monthly drop. Year-to-year the 8.8% decline is by far the
record as consumers continued to shy away from liberal spending.
Finance companies (-12.3% y/y), savings institutions (-9.8%
y/y),
nonfinancial businesses (-6.4%) and commercial banks (-1.5% y/y have
seen the largest pullbacks in credit extension while credit unions
continue to see positive growth (1.9% y/y). <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109c.jpg" align="right" border="0" height="265" width="353">
The Federal government and
Sallie Mae also continued to lend during September and raised credit
outstanding by 23.9% y/y which was the strongest growth rate since
early-2001.· These figures are the major input to the Fed's quarterly
Flow of Funds accounts for the household sector.
 Credit data are
available in Haver's USECON database. The Flow of
Funds data are in Haver's FFUNDS database.
Monetary
Policy Stance: The View From Consumption Spending from the
Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/es/09/ES0941.pdf">
here</a>&nbsp;
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Consumer
Credit Outstanding (m/m Chg, SAAR)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>$-14.8B</td>
<td>&nbsp;$-9.9B</td>
<td>-4.8%</td>
<td>1.6%</td>
<td>5.6%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$-9.9B</td>
<td>$-10.1B</td>
<td>-8.8%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-revolving</td>
<td>$-4.9B</td>
<td>$0.2B</td>
<td>-2.3%</td>
<td>1.4%</td>
<td>4.4%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>

 Improved Business Sentiment In
France,Industrial Production Increases In Germany,
Romania And Slovakia Falters In Turkey
 
by <a href="/comment/Curley.html">Louise
Curley</a> November 09, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109d.jpg" align="right" border="0" height="265" width="353">In the news
today are reports of French business sentiment and industrial
production in Germany, Romania, Slovakia and Turkey.
 French business
sentiment continues to improve.&nbsp;&nbsp; From the low point
of 66.96 reached in December of last year, the Bank of France's
Business Sentiment Indicator has risen in each subsequent month and in
October was up to 94.80, just 5.20 points below 100, its long term
average.&nbsp; An important factor in the improvement in sentiment
has been the increase in new orders--the total and foreign.&nbsp;
The first chart shows the percent balances between those experiencing
an increase in total and foreign new orders over those experiencing a
decline.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109e.jpg" align="right" border="0" height="265" width="353">
In October, the excess of those experiencing an
increase in foreign new orders over those experiencing a decline was
4.85%, while the excess for total orders was 10.9% as shown in the
first chart.
The most
important report on industrial production
released today is that for Germany and it is encouraging.&nbsp;
Industrial production in Germany is up for the second month. While
developments in Germany, as the largest economy in Europe, overshadow
those in the smaller and less developed economies of Eastern Europe and
the Middle East, it is encouraging to see that the representatives of
the latter groups in today's news are making strong percentage gains in
industrial production.&nbsp; <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091109f.jpg" align="right" border="0" height="265" width="353">
The month to month changes in
production in the emerging countries tend to be volatile even on a
seasonally adjusted basis.&nbsp; The&nbsp; picture becomes
clearer when we aggregate the date on a quarterly basis as can be seen
in a comparison of the second and third
charts.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 09</th>
<th scope="col">Sep 09</th>
<th scope="col">Oct 08</th>
<th scope="col">M/M CHG</th>
<th scope="col">Y/Y CHG</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">French Business Sentiment
Indicator&nbsp; (LTA=100)</td>
<td>94.8</td>
<td>90.2</td>
<td>78.0</td>
<td>2.1</td>
<td>26.6</td>
<td>90.6</td>
<td>107</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Total New Orders % balance</td>
<td>10.90</td>
<td>-1.54</td>
<td>-35.51</td>
<td>12.44</td>
<td>46.41</td>
<td>-9.18</td>
<td>10.84</td>
<td>12.28</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign New Order % balance</td>
<td>4.78</td>
<td>1.21</td>
<td>-33.48</td>
<td>3.57</td>
<td>38.26</td>
<td>-10.04</td>
<td>11.15</td>
<td>12.59</td>
</tr>
<tr>
<td class="firstcol">Industrial Production (2005=100)</td>
<td>Sep 09</td>
<td>Aug 09</td>
<td>Sep 08</td>
<td>M/M CHG</td>
<td>Y/Y CHG</td>
<td>2008&nbsp;</td>
<td>2007 </td>
<td> 2006 </td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>97.0</td>
<td>-4.6</td>
<td>111.5</td>
<td>2.75</td>
<td>-12.83</td>
<td>111.5</td>
<td>111.6</td>
<td>105.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Romania</td>
<td>118.4</td>
<td>116.8</td>
<td>123.3</td>
<td>1.37</td>
<td>-3.97</td>
<td>123.5</td>
<td>120.6</td>
<td>109.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia</td>
<td>127.7</td>
<td>121.1</td>
<td>135.3</td>
<td>5.15</td>
<td>-5.62</td>
<td>134.1</td>
<td>130.4</td>
<td>112.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey</td>
<td>101.2</td>
<td>106.3</td>
<td>110.3</td>
<td>-4.80</td>
<td>-8.25</td>
<td>114.3</td>
<td>115.3</td>
<td>107.8</td>
</tr>
</tbody>
</table>

</body></html>

Consumers continue to deleverage as the prospects for employment remain uncertain. The Federal Reserve reported late Friday that consumer credit outstanding fell for the eighth consecutive month during September. It also was the [...]

U.S. Consumer Credit OutstandingContinues To Fall

Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106e.jpg" align="left" border="0" height="265" width="353">
In the OECD area everything is coming up roses. Some are more
in bloom than others and some have more thorns than others but the OECD
gave a very upbeat assessment to activity in the OECD areas. 
 

OECD leading indicators ... &#8220;point strongly to growth in
Italy, France, the United Kingdom and China, while tentative signals of
expansion have emerged in Canada and Germany," the OECD said. "A
recovery is clearly visible in the United States, Japan and all other
OECD economies and major non-OECD economies," it added. 
 

The OECD indicators selected in the table above all show
strong (double digit) increases over the recent six months expressed as
annual rates of growth. Simple three-, six- and twelve-month growth
rates are positive across all these countries/groups with the exception
of 12 month growth in Japan (see top panel of the table above). The
OECD data are up-to-date though September. 
 

Echoing this sentiment are the new industrial orders for
September released today by Germany that find orders on the growth path
for the seventh month in row. The problem for Germany is that now
domestic orders have dropped for the second month in a row. The two
month drop which amounts to a bit more than a 3% set back comes on the
heels of a 9.5% monthly rate super spike in domestic orders for July.
Still foreign orders continue to expand and Germany&#8217;s domestic orders
are not along for the ride. 
 

The OECD data show us why German export orders are rising:
that export oriented economy exports goods globally and the whole OECD
area is having a nice snap back. But Germany is still an important
country in EMU, the largest economy there. Having the German domestic
factory sector so weak on top of previously-reported weakness in German
retail sales, is a clear warning sign to not get too carried away by
optimism. 
 

The OECD area is snapping back from a very ugly recession. But
the recession was so ugly that the snap back can look strong but still
fail to bring growth to a strong enough point to spur a drop in
unemployment. That&#8217;s exactly what we seeing in the US. Despite a US MFG
sector that has been posting good results, increases in industrial
production and a rise to strong level for the MFG ISM, the US is not
seeing job growth. Europe is finding some growth deficiencies as well.
Today the UK got an unexpected visit from a higher PPI. The OECD area
is not strong enough to be abele to cope with any inflation signals
just yet. Let&#8217;s hope the UK PPI is just a rogue signal. Meanwhile, we
need enough economy strengthening to create job, income and spending
growth while allowing savings to make some headway as well. It&#8217;s a tall
order that we are falling short on despite the growth path endorsed by
the OECD. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="5">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5" class="firstcol">Growth progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>15.8%</td>
<td>14.9%</td>
<td>1.5%</td>
<td>-6.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>16.8%</td>
<td>15.3%</td>
<td>0.5%</td>
<td>-6.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Ezone</td>
<td>16.9%</td>
<td>16.6%</td>
<td>4.0%</td>
<td>-7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>13.1%</td>
<td>10.9%</td>
<td>-4.7%</td>
<td>-4.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>16.8%</td>
<td>15.0%</td>
<td>-0.6%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Six month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>14.9%</td>
<td>-10.3%</td>
<td>-10.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>15.3%</td>
<td>-12.3%</td>
<td>-10.7%</td>
<td>-3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Eur</td>
<td>16.6%</td>
<td>-7.3%</td>
<td>-12.3%</td>
<td>-3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>10.9%</td>
<td>-18.1%</td>
<td>-9.2%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>15.0%</td>
<td>-14.2%</td>
<td>-9.8%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns indicated by BOLD
RED</td>
</tr>
</tbody>
</table>
</body></html>

In the OECD area everything is coming up roses. Some are more in bloom than others and some have more thorns than others but the OECD gave a very upbeat assessment to activity in the OECD areas. OECD leading indicators ... “point [...]

Everybody Is Turning Higher Say OECD LEIs

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106a.jpg" align="right" border="0" height="265" width="353">
The October employment report from the Bureau of Labor
Statistics contained no good news on labor market conditions. That
especially was true of the unemployment rate. It rose to 10.2%, the
highest since early-1983 just following the severe recession of
1981-82. A 9.9% rate had been expected. Continued declines in
employment were evident from the payroll survey where the total number
of jobs fell 190,000 which was about as expected. Revisions indicated
that September and August payrolls fell less than reported initially.
All in all, the best that can be said about the job market is that
employment is falling more slowly than earlier this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106b.jpg" align="right" border="0" height="265" width="353">
The increase in the jobless rate to 10.2% was due to a 589,000
(-4.4% y/y) decline in household employment which followed a 785,000
September drop. These declines were shallower than the worst monthly
declines of this past winter, but not by much. The contraction in the
labor force, reflecting more discouraged workers, similarly was reduced
m/m from September and from earlier this year. However, the y/y decline
of 0.6% was the worst since 1952.
The official unemployment rate continues to pale in comparison
to the rate which includes "marginally attached workers" and those who
are working part-time for economic reasons. It rose to a record 17.5%.
Another tally of joblessness indicates that with "discouraged workers"
the unemployment rate rose last month to 10.7%. Not only are more
individuals unemployed or have stopped looking for work, but the median
duration of unemployment jumped last month to a record high of 18.7
weeks. The ranks of those unemployed for 27 weeks or more rose to 5.594
million (145.9% y/y), also an historic high. By educational attainment,
those with a high school diploma but no college saw employment fall
6.3% y/y while employment of those with a bachelor's degree or higher
rose 0.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106c.jpg" align="right" border="0" height="265" width="353">

Nonfarm payrolls fell 190,000 which roughly equaled
expectations for a 175,000 worker decline. So far during this recession
employment has fallen by a total of 7.4 million, by far the record for
a 22-month period. In percentage terms, jobs are down 5.3% since the
2007 peak, also a record. If there is good news, it's that the decline
in payroll declines moderated to an average 188,000 over the last three
months versus the hefty rate of 701,000 this past winter.
Just 14.9% of industries raised employment levels during the
last twelve months (a new low), compared with 65.5% during 2006.
However, over the last three months, the percentage of firms lifting
employment has more-than-doubled to 31.0%.
By industry last month declines in payrolls were broad-based,
but they are easing from earlier this year. In private service
industries they fell 61,000 (-2.9% y/y). Payrolls fell in retail trade
(-3.8% y/y), financial (-4.8% y/y), professional &amp; tech
services (-3.4% y/y), but they rose in education (+0.8% y/y) and in the
health sector (2.3% y/y). Employment in the government sector also has
been weak as budgets shrank with lower tax revenues. Last month the
number of jobs overall were unchanged (-0.4% y/y) as were the number of
local gov't jobs (-0.9% y/y). Factory sector jobs fell 61,000 (-1.6%
y/y) last month, continuing a decline which began in 1998. The decline
totals roughly six million jobs, or one-third of the workforce.
Construction jobs fell 62,000, after declining an average 88,000 each
month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106d.jpg" align="right" border="0" height="265" width="353">

Average hourly earnings increased just 0.3% during October.
That slim gain was enough to pull the y/y increase down to 2.4% which
was its weakest since late-2004, off from 4.2% reached during 2007.
Earnings in the factory sector were unchanged for the second month in
the last three (+2.6% y/y). The durable sector's earnings rose 0.3%
(3.7%) after a 0.4% September increase. Earnings in the private service
sector rose just 0.2% (2.7% y/y) while construction sector earnings
recovered 1.5% (2.9% y/y) after a September decline.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Housing's Great Fall: Putting Household Balance
Sheets Together Again from the Federal Reserve Bank of St.
Lois can be found <a href="http://www.stlouisfed.org/publications/pub_assets/pdf/re/2009/d/housings_fall.pdf">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">Employment:
000s</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">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-190</td>
<td>-219</td>
<td>-154</td>
<td>-4.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-263</td>
<td>-201</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-61</td>
<td>-45</td>
<td>-55</td>
<td>-11.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-62</td>
<td>-68</td>
<td>-66</td>
<td>-15.6%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-61</td>
<td>-105</td>
<td>-24</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.0</td>
<td>33.1</td>
<td>33.5 (Oct. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.2%</td>
<td>9.8%</td>
<td>9.7%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
</body></html>

The October employment report from the Bureau of Labor Statistics contained no good news on labor market conditions. That especially was true of the unemployment rate. It rose to 10.2%, the highest since early-1983 just following the [...]

U.S. Jobless Rate Exceeds 10% While Payrolls Decline

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106a.jpg" align="right" border="0" height="265" width="353">
The October employment report from the Bureau of Labor
Statistics contained no good news on labor market conditions. That
especially was true of the unemployment rate. It rose to 10.2%, the
highest since early-1983 just following the severe recession of
1981-82. A 9.9% rate had been expected. Continued declines in
employment were evident from the payroll survey where the total number
of jobs fell 190,000 which was about as expected. Revisions indicated
that September and August payrolls fell less than reported initially.
All in all, the best that can be said about the job market is that
employment is falling more slowly than earlier this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106b.jpg" align="right" border="0" height="265" width="353">
The increase in the jobless rate to 10.2% was due to a 589,000
(-4.4% y/y) decline in household employment which followed a 785,000
September drop. These declines were shallower than the worst monthly
declines of this past winter, but not by much. The contraction in the
labor force, reflecting more discouraged workers, similarly was reduced
m/m from September and from earlier this year. However, the y/y decline
of 0.6% was the worst since 1952.
The official unemployment rate continues to pale in comparison
to the rate which includes "marginally attached workers" and those who
are working part-time for economic reasons. It rose to a record 17.5%.
Another tally of joblessness indicates that with "discouraged workers"
the unemployment rate rose last month to 10.7%. Not only are more
individuals unemployed or have stopped looking for work, but the median
duration of unemployment jumped last month to a record high of 18.7
weeks. The ranks of those unemployed for 27 weeks or more rose to 5.594
million (145.9% y/y), also an historic high. By educational attainment,
those with a high school diploma but no college saw employment fall
6.3% y/y while employment of those with a bachelor's degree or higher
rose 0.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106c.jpg" align="right" border="0" height="265" width="353">

Nonfarm payrolls fell 190,000 which roughly equaled
expectations for a 175,000 worker decline. So far during this recession
employment has fallen by a total of 7.4 million, by far the record for
a 22-month period. In percentage terms, jobs are down 5.3% since the
2007 peak, also a record. If there is good news, it's that the decline
in payroll declines moderated to an average 188,000 over the last three
months versus the hefty rate of 701,000 this past winter.
Just 14.9% of industries raised employment levels during the
last twelve months (a new low), compared with 65.5% during 2006.
However, over the last three months, the percentage of firms lifting
employment has more-than-doubled to 31.0%.
By industry last month declines in payrolls were broad-based,
but they are easing from earlier this year. In private service
industries they fell 61,000 (-2.9% y/y). Payrolls fell in retail trade
(-3.8% y/y), financial (-4.8% y/y), professional &amp; tech
services (-3.4% y/y), but they rose in education (+0.8% y/y) and in the
health sector (2.3% y/y). Employment in the government sector also has
been weak as budgets shrank with lower tax revenues. Last month the
number of jobs overall were unchanged (-0.4% y/y) as were the number of
local gov't jobs (-0.9% y/y). Factory sector jobs fell 61,000 (-1.6%
y/y) last month, continuing a decline which began in 1998. The decline
totals roughly six million jobs, or one-third of the workforce.
Construction jobs fell 62,000, after declining an average 88,000 each
month this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106d.jpg" align="right" border="0" height="265" width="353">

Average hourly earnings increased just 0.3% during October.
That slim gain was enough to pull the y/y increase down to 2.4% which
was its weakest since late-2004, off from 4.2% reached during 2007.
Earnings in the factory sector were unchanged for the second month in
the last three (+2.6% y/y). The durable sector's earnings rose 0.3%
(3.7%) after a 0.4% September increase. Earnings in the private service
sector rose just 0.2% (2.7% y/y) while construction sector earnings
recovered 1.5% (2.9% y/y) after a September decline.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.
Housing's Great Fall: Putting Household Balance
Sheets Together Again from the Federal Reserve Bank of St.
Lois can be found <a href="http://www.stlouisfed.org/publications/pub_assets/pdf/re/2009/d/housings_fall.pdf">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">Employment:
000s</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">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-190</td>
<td>-219</td>
<td>-154</td>
<td>-4.0%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-263</td>
<td>-201</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-61</td>
<td>-45</td>
<td>-55</td>
<td>-11.6%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-62</td>
<td>-68</td>
<td>-66</td>
<td>-15.6%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-61</td>
<td>-105</td>
<td>-24</td>
<td>-2.4%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.0</td>
<td>33.0</td>
<td>33.1</td>
<td>33.5 (Oct. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>10.2%</td>
<td>9.8%</td>
<td>9.7%</td>
<td>6.2% (Sept. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 Everybody Is Turning Higher Say
OECD LEIs 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> November 6, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091106e.jpg" align="left" border="0" height="265" width="353">
In the OECD area everything is coming up roses. Some are more
in bloom than others and some have more thorns than others but the OECD
gave a very upbeat assessment to activity in the OECD areas. 
 

OECD leading indicators ... &#8220;point strongly to growth in
Italy, France, the United Kingdom and China, while tentative signals of
expansion have emerged in Canada and Germany," the OECD said. "A
recovery is clearly visible in the United States, Japan and all other
OECD economies and major non-OECD economies," it added. 
 

The OECD indicators selected in the table above all show
strong (double digit) increases over the recent six months expressed as
annual rates of growth. Simple three-, six- and twelve-month growth
rates are positive across all these countries/groups with the exception
of 12 month growth in Japan (see top panel of the table above). The
OECD data are up-to-date though September. 
 

Echoing this sentiment are the new industrial orders for
September released today by Germany that find orders on the growth path
for the seventh month in row. The problem for Germany is that now
domestic orders have dropped for the second month in a row. The two
month drop which amounts to a bit more than a 3% set back comes on the
heels of a 9.5% monthly rate super spike in domestic orders for July.
Still foreign orders continue to expand and Germany&#8217;s domestic orders
are not along for the ride. 
 

The OECD data show us why German export orders are rising:
that export oriented economy exports goods globally and the whole OECD
area is having a nice snap back. But Germany is still an important
country in EMU, the largest economy there. Having the German domestic
factory sector so weak on top of previously-reported weakness in German
retail sales, is a clear warning sign to not get too carried away by
optimism. 
 

The OECD area is snapping back from a very ugly recession. But
the recession was so ugly that the snap back can look strong but still
fail to bring growth to a strong enough point to spur a drop in
unemployment. That&#8217;s exactly what we seeing in the US. Despite a US MFG
sector that has been posting good results, increases in industrial
production and a rise to strong level for the MFG ISM, the US is not
seeing job growth. Europe is finding some growth deficiencies as well.
Today the UK got an unexpected visit from a higher PPI. The OECD area
is not strong enough to be abele to cope with any inflation signals
just yet. Let&#8217;s hope the UK PPI is just a rogue signal. Meanwhile, we
need enough economy strengthening to create job, income and spending
growth while allowing savings to make some headway as well. It&#8217;s a tall
order that we are falling short on despite the growth path endorsed by
the OECD. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th scope="col" colspan="5">OECD
Trend-restored leading Indicators</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="5" class="firstcol">Growth
progression-SAAR</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>15.8%</td>
<td>14.9%</td>
<td>1.5%</td>
<td>-6.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>16.8%</td>
<td>15.3%</td>
<td>0.5%</td>
<td>-6.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Ezone</td>
<td>16.9%</td>
<td>16.6%</td>
<td>4.0%</td>
<td>-7.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>13.1%</td>
<td>10.9%</td>
<td>-4.7%</td>
<td>-4.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>16.8%</td>
<td>15.0%</td>
<td>-0.6%</td>
<td>-6.7%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Six
month readings at 6-Mo
Intervals:</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD</td>
<td>14.9%</td>
<td>-10.3%</td>
<td>-10.5%</td>
<td>-2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD7</td>
<td>15.3%</td>
<td>-12.3%</td>
<td>-10.7%</td>
<td>-3.0%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Eur</td>
<td>16.6%</td>
<td>-7.3%</td>
<td>-12.3%</td>
<td>-3.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD.Japan</td>
<td>10.9%</td>
<td>-18.1%</td>
<td>-9.2%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">OECD US</td>
<td>15.0%</td>
<td>-14.2%</td>
<td>-9.8%</td>
<td>-3.5%</td>
</tr>
<tr class="grey1">
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD
RED</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Jobless Rate Exceeds 10%While Payrolls Decline

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105g.jpg" align="left" border="0" height="265" width="353">
Retail sales fell again in September in the e-Zone. Retail
sales and vehicle registrations are on nearly opposite paths. Sales are
still falling while vehicle registrations bolstered by an assortment of
government programs have been spurred higher. All this stirs the pot of
controversy since in the EU Commission indices that describe the
various EMU sectors, consumer confidence and retailing tend to show the
highest relative scores. Based on the EU surveys it would seem that
consumer attitudes and retailing are leading EMU ahead, yet in terms of
the hard data on spending that matter most that does not seem to be
true. 
 

Partly this divergence is a question of looking at levels of
Vs changes. The levels of satisfaction assessed for the consumer and
retailing sector surveys by the EU Commission are high relative to
other sectors (though still low in absolute terms). For MFG and even
services the relative levels of the indices compared to normal times
are extremely low, but theses sectors had fallen hard in recession and
are now rising, or rising strongly as is the case with MFG and despite
their low ratings they are boosting growth the most. 
 

So far European recovery seems to have come on the back of the
industrial sector with rising output and orders but from an extremely
low level. But with the euro currency also rising in value Vs other
currencies, much of this demand seems to have been foreign-sourced thus
questioning how far Europe can go without participation from its own
consumers. The string of declines in retail sales raises that question
again. It may be that the auto incentive schemes have diverted some
spending from retail sales. But the European recovery cannot be based
simply on selling autos and exporting. We continue to look for life in
retailing to give optimism to the view of a sustained euro-recovery. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M</td>
<td colspan="3">SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Zone Total Value</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-3.0%</td>
<td>-3.3%</td>
<td>-4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food,Beverages,Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Registrations:</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicle
Registration</td>
<td>6.7%</td>
<td>-6.8%</td>
<td>0.2%</td>
<td>-1.5%</td>
<td>33.3%</td>
<td>9.7%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Nonfood Country detail:
Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany Value</td>
<td>-0.5%</td>
<td>-1.8%</td>
<td>1.5%</td>
<td>-3.4%</td>
<td>-3.9%</td>
<td>-4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU) Volume</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.3%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The
EA 13 countries
are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia.</td>
</tr>
</tbody>
</table>
</body></html>

Retail sales fell again in September in the e-Zone. Retail sales and vehicle registrations are on nearly opposite paths. Sales are still falling while vehicle registrations bolstered by an assortment of government programs have been [...]

Retail Sales Continue to Sag as Auto Registrations See Stimulus

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105d.jpg" align="right" border="0" height="265" width="353">
The Labor
Department indicated that initial claims for unemployment insurance
fell moderately to 512,000 last week from a little-revised 532,000. The
latest figure represented material labor market improvement since it
was the lowest since the first week of January. Moreover, claims have
fallen sharply from the peak reached in March of 674,000 claims. The
four-week moving average of claims fell to 523,750 and the latest
weekly figure was lower than Consensus expectations for 520,000
claims.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105e.jpg" align="right" border="0" height="265" width="353">
Continuing claims for unemployment insurance during the latest
week fell 68,000 to their lowest level since late-March. The decline
reflects the improved job market but may also be a function of the
exhaustion of benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell modestly to 5,886,250 and have fallen 13.0% from
their peak. This series dates back to
1966.Extended benefits for unemployment insurance
rose moderately and reversed half of the prior week's decline. Through
early-October extended benefits averaged 551,355.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105f.jpg" align="right" border="0" height="265" width="353">
The insured rate of
unemployment held steady at 4.4% and matched its lowest since
late-March. The rate reached a high of 5.2% during late-June. During
the last ten years, there has been a 93% correlation between the level
of the insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.The highest
insured unemployment rates in the week ending October 17 were in Puerto
Rico (6.4%), Nevada (5.4), Oregon (5.4), California (4.9), Pennsylvania
(4.9), Arkansas (4.8), Wisconsin (4.8), Michigan (4.7), Alaska (4.6),
North Carolina (4.6), and South Carolina (4.6). The lowest insured
unemployment rates were in North Dakota (1.0%), South Dakota (1.1),
Virginia (2.0), Wyoming (2.8), Maine (2.5), Texas (2.5), Colorado
(3.0), Maryland (3.0), Mississippi (3.6), New York (3.5), Florida
(3.7), and Georgia (3.8).The unemployment insurance claims data is
available in Haver's WEEKLY database and the state
data is in the REGIONW database.Asia
Recovering Rapidly, but Faces Challenges, says IMF from the
International Monetary Fund can be found <a href="http://www.imf.org/external/index.htm"> here</a>&nbsp;
<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">10/30/09</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>512</td>
<td>532</td>
<td>531</td>
<td>4.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,749</td>
<td>5,817</td>
<td>49.0%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.4</td>
<td>4.4</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body></html>

The Labor Department indicated that initial claims for unemployment insurance fell moderately to 512,000 last week from a little-revised 532,000. The latest figure represented material labor market improvement since it was the lowest [...]

U.S. Weekly Initial Claims For Unemployment Insurance Lowest Since January

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105a.jpg" align="right" border="0" height="265" width="353">
The U.S. labor market is clearly signaling that the recession
is over. The magnitude of the 9.5% jump in nonfarm worker productivity
during 3Q'09 wasn't unprecedented for this early in a recovery. Its
size is noteworthy because the rise in output was moderate. The 3Q gain
in productivity followed a similarly firm 6.9% 2Q rise which was
little-revised. It was the strongest since 3Q'03 and outpaced Consensus
expectations for a 6.4% increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105b.jpg" align="right" border="0" height="265" width="353">
The gain in productivity occurred as output posted its first
increase in over a year. The moderate 4.0% rise was accompanied by a
continuation of the sharp decline in hours-worked (employment times
hours), which has been so much a part of this recession. The 5.0%
(-7.5% y/y) decline in hours-worked followed a 7.5% 2Q drop.
Compensation costs, however, improved with the gain in output
per hour. The 3.8% quarterly increase was the first gain in a year
though it left costs up just 0.5% y/y. That gain was nearly the weakest
since 1949.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105c.jpg" align="right" border="0" height="265" width="353">
The surge in productivity combined with a moderate increase in
compensation combined to further drop unit labor costs. The 5.2% q/q
decline was the third consecutive quarterly fall and it lowered the y/y
change to -3.6%, the sharpest since early-1950.
Surging worker productivity growth in the factory sector led
the overall gain in output-per-hour. The 13.6% (AR) quarterly increase
was a record and it lifted y/y growth to 3.1%, the highest since early
last year. The increase came as output rose at a 7.7% rate (-10.8% y/y)
and hours worked fell at a 5.2% rate (-13.5% y/y). Compensation rose
5.5% (5.5% y/y), therefore unit labor costs in the factory sector fell
at a 7.1% annual rate (+2.3% y/y).
The productivity &amp; cost figures are available in
Haver's USECON database.

<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/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.3</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>3.8</td>
<td>0.3</td>
<td>-4.7</td>
<td>0.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>-5.2</td>
<td>-6.1</td>
<td>-5.0</td>
<td>-3.6</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. labor market is clearly signaling that the recession is over. The magnitude of the 9.5% jump in nonfarm worker productivity during 3Q'09 wasn't unprecedented for this early in a recovery. Its size is noteworthy because the [...]

3Q U.S. Worker Productivity Surges -- Strongest Since 2003

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105a.jpg" align="right" border="0" height="265" width="353">
The U.S. labor market is clearly signaling that the recession
is over. The magnitude of the 9.5% jump in nonfarm worker productivity
during 3Q'09 wasn't unprecedented for this early in a recovery. Its
size is noteworthy because the rise in output was moderate. The 3Q gain
in productivity followed a similarly firm 6.9% 2Q rise which was
little-revised. It was the strongest since 3Q'03 and outpaced Consensus
expectations for a 6.4% increase.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105b.jpg" align="right" border="0" height="265" width="353">
The gain in productivity occurred as output posted its first
increase in over a year. The moderate 4.0% rise was accompanied by a
continuation of the sharp decline in hours-worked (employment times
hours), which has been so much a part of this recession. The 5.0%
(-7.5% y/y) decline in hours-worked followed a 7.5% 2Q drop.
Compensation costs, however, improved with the gain in output
per hour. The 3.8% quarterly increase was the first gain in a year
though it left costs up just 0.5% y/y. That gain was nearly the weakest
since 1949.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105c.jpg" align="right" border="0" height="265" width="353">
The surge in productivity combined with a moderate increase in
compensation combined to further drop unit labor costs. The 5.2% q/q
decline was the third consecutive quarterly fall and it lowered the y/y
change to -3.6%, the sharpest since early-1950.
Surging worker productivity growth in the factory sector led
the overall gain in output-per-hour. The 13.6% (AR) quarterly increase
was a record and it lifted y/y growth to 3.1%, the highest since early
last year. The increase came as output rose at a 7.7% rate (-10.8% y/y)
and hours worked fell at a 5.2% rate (-13.5% y/y). Compensation rose
5.5% (5.5% y/y), therefore unit labor costs in the factory sector fell
at a 7.1% annual rate (+2.3% y/y).
The productivity &amp; cost figures are available in
Haver's USECON database.

<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/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">3Q '09</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>9.5</td>
<td>6.9</td>
<td>0.3</td>
<td>4.3</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>3.8</td>
<td>0.3</td>
<td>-4.7</td>
<td>0.5</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>-5.2</td>
<td>-6.1</td>
<td>-5.0</td>
<td>-3.6</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
</tbody>
</table>
 U.S. Weekly Initial Claims For
Unemployment Insurance Lowest Since January 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 5, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105d.jpg" align="right" border="0" height="265" width="353">The Labor
Department indicated that initial claims for unemployment insurance
fell moderately to 512,000 last week from a little-revised 532,000. The
latest figure represented material labor market improvement since it
was the lowest since the first week of January. Moreover, claims have
fallen sharply from the peak reached in March of 674,000 claims. The
four-week moving average of claims fell to 523,750 and the latest
weekly figure was lower than Consensus expectations for 520,000
claims.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105e.jpg" align="right" border="0" height="265" width="353">Continuing
claims for unemployment insurance during the latest
week fell 68,000 to their lowest level since late-March. The decline
reflects the improved job market but may also be a function of the
exhaustion of benefits. Continuing claims provide an indication of
workers' ability to find employment. The four-week average of
continuing claims fell modestly to 5,886,250 and have fallen 13.0% from
their peak. This series dates back to
1966.
Extended benefits for unemployment insurance
rose moderately and reversed half of the prior week's decline. Through
early-October extended benefits averaged 551,355.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105f.jpg" align="right" border="0" height="265" width="353">The
insured rate of
unemployment held steady at 4.4% and matched its lowest since
late-March. The rate reached a high of 5.2% during late-June. During
the last ten years, there has been a 93% correlation between the level
of the insured unemployment rate and the overall rate of unemployment
published by the Bureau of Labor Statistics.
The highest
insured unemployment rates in the week ending October 17 were in Puerto
Rico (6.4%), Nevada (5.4), Oregon (5.4), California (4.9), Pennsylvania
(4.9), Arkansas (4.8), Wisconsin (4.8), Michigan (4.7), Alaska (4.6),
North Carolina (4.6), and South Carolina (4.6). The lowest insured
unemployment rates were in North Dakota (1.0%), South Dakota (1.1),
Virginia (2.0), Wyoming (2.8), Maine (2.5), Texas (2.5), Colorado
(3.0), Maryland (3.0), Mississippi (3.6), New York (3.5), Florida
(3.7), and Georgia (3.8).
The unemployment insurance claims data is
available in Haver's WEEKLY database and the state
data is in the REGIONW database.
Asia
Recovering Rapidly, but Faces Challenges, says IMF from the
International Monetary Fund can be found <a href="http://www.imf.org/external/index.htm"> here</a>&nbsp;
<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">10/30/09</th>
<th scope="col">10/23/09</th>
<th scope="col">10/16/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>512</td>
<td>532</td>
<td>531</td>
<td>4.9%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>5,749</td>
<td>5,817</td>
<td>49.0%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.4</td>
<td>4.4</td>
<td>2.8 (10/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>

 Retail Sales Continue to Sag as
Auto Registrations See Stimulus 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 5, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/091105g.jpg" align="left" border="0" height="265" width="353">
Retail sales fell again in September in the e-Zone. Retail
sales and vehicle registrations are on nearly opposite paths. Sales are
still falling while vehicle registrations bolstered by an assortment of
government programs have been spurred higher. All this stirs the pot of
controversy since in the EU Commission indices that describe the
various EMU sectors, consumer confidence and retailing tend to show the
highest relative scores. Based on the EU surveys it would seem that
consumer attitudes and retailing are leading EMU ahead, yet in terms of
the hard data on spending that matter most that does not seem to be
true. 
 

Partly this divergence is a question of looking at levels of
Vs changes. The levels of satisfaction assessed for the consumer and
retailing sector surveys by the EU Commission are high relative to
other sectors (though still low in absolute terms). For MFG and even
services the relative levels of the indices compared to normal times
are extremely low, but theses sectors had fallen hard in recession and
are now rising, or rising strongly as is the case with MFG and despite
their low ratings they are boosting growth the most. 
 

So far European recovery seems to have come on the back of the
industrial sector with rising output and orders but from an extremely
low level. But with the euro currency also rising in value Vs other
currencies, much of this demand seems to have been foreign-sourced thus
questioning how far Europe can go without participation from its own
consumers. The string of declines in retail sales raises that question
again. It may be that the auto incentive schemes have diverted some
spending from retail sales. But the European recovery cannot be based
simply on selling autos and exporting. We continue to look for life in
retailing to give optimism to the view of a sustained euro-recovery. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M</td>
<td colspan="3">SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Sep-09</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Zone Total Value</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-3.0%</td>
<td>-3.3%</td>
<td>-4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food,Beverages,Tobacco</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-2.1%</td>
<td>-2.1%</td>
</tr>
<tr>
<td class="firstcol" colspan="7">Registrations:</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Vehicle
Registration</td>
<td>6.7%</td>
<td>-6.8%</td>
<td>0.2%</td>
<td>-1.5%</td>
<td>33.3%</td>
<td>9.7%</td>
</tr>
<tr>
<td colspan="7" class="firstcol">Nonfood
Country detail:
Volume</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany Value</td>
<td>-0.5%</td>
<td>-1.8%</td>
<td>1.5%</td>
<td>-3.4%</td>
<td>-3.9%</td>
<td>-4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU) Volume</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>3.3%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The
EA 13 countries
are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia.</td>
</tr>
</tbody>
</table>
</body></html>

3Q U.S. Worker Productivity Surges-- Strongest Since 2003

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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250502A5.jpg

250502B5.jpg

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

250502F5.jpg

- 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 2009

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