Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050426e.jpg" width="353">
The latest monthly data and results of the most recent quarterly survey of industrial trends were released today by the CBI (Confederation of British Industries). Britain&#39;s manufacturing sector has been depressed for some time, as evidence by the first chart showing the monthly percent balances of increases less decreases in new orders. Rarely have increases in orders outweighed decreases and then only by a very small margin.
There is little comfort in the monthly data for the sector. The percent balance of decreases over increases in new orders in April of 24% is the largest since November, 2003.
Nor is the survey encouraging. While the survey revealed that the respondents were slightly less pessimistic in the current quarter compared to the first quarter, they were generally more pessimistic concerning the current status and outlook for new orders, output, prices and unit costs. The percent balances for new orders and output over the past three months are shown in the second chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050426d.jpg" width="353">
Although the manufacturing share of gross value added has declined from 24% in 1985 to 16% in 2004, a slowdown in manufacturing activity should have a significant impact on growth of the total economy.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Balance*</th>
<th scope="col">Q2 05</th>
<th scope="col">Q1 05</th>
<th scope="col">Q2 04</th>
<th scope="col">Q/Q Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Optimism re business conditions</td>
<td>-15</td>
<td>-22</td>
<td>12</td>
<td>7</td>
<td>-27</td>
<td>7</td>
<td>-17</td>
<td>-6</td>
</tr>
<tr>
<td class="firstcol">New orders past 3 months</td>
<td>-18</td>
<td>-4</td>
<td>18</td>
<td>-14</td>
<td>-36</td>
<td>9</td>
<td>-16</td>
<td>-14</td>
</tr>
<tr class="odd">
<td class="firstcol">New orders next 3 months</td>
<td>-17</td>
<td>-4</td>
<td>12</td>
<td>-13</td>
<td>-29</td>
<td>5</td>
<td>-21</td>
<td>-14</td>
</tr>
<tr>
<td class="firstcol">Output past 3 months</td>
<td>-10</td>
<td>2</td>
<td>15</td>
<td>-12</td>
<td>-25</td>
<td>11</td>
<td>-12</td>
<td>-13</td>
</tr>
<tr class="odd">
<td class="firstcol">Output next 3 months</td>
<td>5</td>
<td>10</td>
<td>12</td>
<td>-5</td>
<td>-7</td>
<td>13</td>
<td>4</td>
<td>5</td>
</tr>
<tr>
<td class="firstcol">Unit costs past 3 months</td>
<td>32</td>
<td>23</td>
<td>6</td>
<td>9</td>
<td>26</td>
<td>9</td>
<td>3</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit costs next 3 months</td>
<td>18</td>
<td>19</td>
<td>5</td>
<td>-1</td>
<td>13</td>
<td>7</td>
<td>-1</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">Prices past 3 months</td>
<td>12</td>
<td>11</td>
<td>-3</td>
<td>1</td>
<td>15</td>
<td>-4</td>
<td>-16</td>
<td>-26</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices past 3 months</td>
<td>5</td>
<td>19</td>
<td>2</td>
<td>-14</td>
<td>3</td>
<td>3</td>
<td>-10-13</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Apr 05</td>
<td>Mar 05</td>
<td>Apr 04</td>
<td>M/M Dif</td>
<td>Y/Y Dif</td>
<td>&nbsp;2004&nbsp;&nbsp;</td>
<td>&nbsp;2003</td>
<td>&nbsp;2002</td>
</tr>
<tr class="odd">
<td class="firstcol">Total orders</td>
<td>-24</td>
<td>-13</td>
<td>14</td>
<td>-11</td>
<td>-10</td>
<td>-9</td>
<td>-29</td>
<td>-27</td>
</tr>
<tr>
<td class="firstcol">Stock of finished goods</td>
<td>18</td>
<td>13</td>
<td>17</td>
<td>5</td>
<td>1</td>
<td>11</td>
<td>17</td>
<td>16</td>
</tr>
<tr class="odd">
<td class="firstcol">Vol. of output next 3 months</td>
<td>5</td>
<td>9</td>
<td>12</td>
<td>-4</td>
<td>-7</td>
<td>12</td>
<td>-3</td>
<td>5</td>
</tr>
<tr>
<td class="firstcol">Ave prices of domestic orders next 3 months</td>
<td>5</td>
<td>9</td>
<td>2</td>
<td>-4</td>
<td>3</td>
<td>4</td>
<td>-12</td>
<td>-13</td>
</tr>
</tbody>
</table>
</body>
</html>

The latest monthly data and results of the most recent quarterly survey of industrial trends were released today by the CBI (Confederation of British Industries). Britain's manufacturing sector has been depressed for some time, as [...]

Confederation of British Industries (CBI) Point to Slowdown in British Manufacturing Sector

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

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


Privacy Policy

Disclaimer

Contact us

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

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Tom Moeller

250123A1.jpg

250123B1.jpg

Initial claims for unemployment insurance rose to 223,000 in the third week of January from an unrevised 217,000 during the prior week. A 215,000 increase in initial claims had been expected in the Action Economics Forecast Survey. Initial claims have risen from a 203,000 low in the first week of January. During the last four weeks, initial claims averaged 213,500, down from 226,750 four weeks earlier.

Continuing claims for jobless insurance increased 46,000 (7.8% y/y) to 1.899 million in the week ended January 11 from 1.853 million in the prior week. Ongoing claims have risen from a low of 1.834 million in the third week of December. The four week moving average of continuing jobless insurance claims eased to 1.866 million, down from a 1.888 million high in the third week of November.

The insured rate of unemployment was 1.2% for the fourth straight week. This level was increased from a 2022 low of 0.9% and compares to the rise in the overall unemployment rate to 4.1% from 3.4% over the same period.

Unemployment rates vary widely across states. The Labor Department reports that for the week ended January 4, the insured unemployment rate was highest in Rhode Island (3.22%), New Jersey (3.07%), Minnesota (2.73%), Washington (2.52%) and Massachusetts (2.41%). The insured unemployment rates were lowest in Florida (0.33%), Virginia (0.43%), Tennessee (0.58%) and Alabama (0.52%) and the Virgin Islands (0.67%). Rates in other notable states include California (2.32%), Pennsylvania (2.24%), New York (2.08%) and Texas (1.13%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250123C1.jpg

250123D1.jpg

- Initial jobless claims increase to highest level in six weeks. 
- Continuing claims approach four-week high.
- The insured unemployment rate remains low.

U.S. Unemployment Insurance Claims Rise in Latest Week

Robert Brusca

250123E.jpg

EU order trends ‘improved’ slightly in January as the net diffusion reading rose from -40 to -34. Still, that improvement leaves orders below their 3-month, 6-month, or 12-month averages. The queue standard of January orders is in the lower 14th percentile of its historic queue of data. Obviously, it remains a historically weak reading. The order series is volatile as the chart shows. But it is still in a clear downtrend even with the uptick this month.

Export orders have approximately the same profile as for orders overall. But export orders weaken slightly in January compared to December. Export orders overall have a slightly weaker queue standing than total orders at a 13.4 percentile level.

The diffusion readings for stocks of finished goods weakened in January but even with its weaker January assessment, stocks have a firm-to-strong 72.5 percentile standing.

Looking ahead, the outlook for output volume over the next three months improved sharply from its stunning weak reading of -31 in December. However, the rise to -19 in January represents only a 4.8 percentile standing.

Unfortunately, average output prices for three months ahead has reading of +27 in January, up from +23 in December and +11 in November; the backtracking in prices expected, has brought the expectation level for the current reading to a high, 90-percentile standing. These rising inflation expectations are going to be a real problem for the Bank of England.

IP data lag the CBI survey responses. The manufacturing IP growth rate, year-on-year, has a 17.4 percentile standing as of its most recent observation in November 2024. That is also very weak. The CBI results are not giving a different message from the industrial production data, but they are timelier.

The ramp up in inflation expectation is not good new with CPI-H inflation at 3.5% year-over-year and with the core pace at 4.2%. Core inflation, sequentially, is looking stable around the 4.2% pace; for the headline, the pace has accelerated from 3.5% over 12 months to a pace of 5.4% over three months. These results, coupled with the rise in CBI expectations, are not good news for the U.K. or for the BOE.

250123.jpg

United Kingdom

U.K. Order Trends Are Still Eroding

Andrew Cates

**Energy and labour markets**
Chart 1 below highlights two key trends: the real consumer price of energy in the OECD economies (indexed to 1970) has shown significant volatility, with sharp spikes during periods of energy crises (e.g., 1970s oil shocks, 2008, and post-pandemic supply constraints) and declines following market adjustments or advances in energy production. Meanwhile, the US labour share of business output has experienced a steady decline since the 1980s, reflecting structural changes in the economy such as globalization, technological advances, a shift in bargaining power away from labour toward capital as well as higher real energy prices. These trends and the interplay between them will arguably form the basis of several policy choices that will be made (or already are being made) by a new US administration.

250123Z1.jpg

**Electricity prices**
Energy prices, their level and their volatility, arguably play a much bigger role in broader macroeconomic fluctuations than they are given credit for. Chart 2 below shows electricity prices (a 2-year average) across six major developed economies. It shows that the US has faced the cheapest electricity at around $44/MWh. The UK and Germany, in contrast, have faced the most expensive electricity at respectively $106/MWh and $94/MWh. This disparity reflects a mix of factors: European countries, particularly the UK and Germany, face elevated prices due to heavy reliance on natural gas imports, exacerbated by geopolitical tensions (e.g., reduced Russian supply), higher renewable energy integration costs, and carbon pricing mechanisms. The US, in contrast, enjoys lower electricity costs due to more abundant domestic energy resources, particularly natural gas, and less exposure to international energy markets. Against this backdrop it is hardly a surprise that the US economy has flourished (relative to other advanced economies) while the UK and Germany have floundered.

250123Z2.jpg

**The UK labour market**
This week’s labour market data additionally suggest that the UK will probably struggle to keep pace with the US economy in the period immediately ahead. The data specifically revealed that employment growth is slowing on all measures, and the PAYE measure of payrolls in particular (see chart 3 below). And while private sector pay growth has also slowed, the 6-month annualised rates of growth still stood at a relatively lofty 5.8% in December. Weaker employment growth will encourage the BoE to cut rates again before too long (probably in February) but weaker wage growth could also be necessary for a much looser policy stance to be enacted over the next few months.

250123Z3.jpg

**Household savings and labour market activity**
At a broader global level, a key risk to the economic outlook at present concerns restrictive monetary policy and its impact on labour market activity and household spending. Chart 4 below shows that household saving rates in the world’s major economies have – on the whole – been rebounding over the past two years. Simultaneously, the unemployment rate in advanced economies has begun to climb. These trends align with the tightening of monetary policy that’s been enacted in recent years and economic uncertainty. But if that combination persists, it could place a bigger brake on the world economy this year than many analysts are anticipating.

250123Z4.jpg

**China’s credit impulse**
Another big source of uncertainty, at present, concerns China. Chart 5 below compares the Citigroup Economic Surprise Index for emerging markets (EM) and Haver’s calculations for China’s credit impulse (the change in new credit as a percentage of GDP). The chart suggests that China's credit growth influences broader EM economic fluctuations. During periods of robust credit growth (e.g., 2020-2021), driven by stimulus measures, EM economies benefited from improved liquidity and demand from China. Conversely, periods of credit tightening (e.g., 2017 and 2023-2024) weighed on economic surprises, reflecting weaker support for growth. These dynamics underline China’s outsized role in shaping sentiment and economic conditions in emerging markets. That its credit impulse, moreover, remained negative in Q4 (of 2024) underscores how China might continue to exert downward pressure on the world economy in the period immediately ahead.

250123Z5.jpg

**South Korean trade**
Another source of uncertainty for the world economy, at present, is the optimism surrounding AI. While proponents highlight its transformative potential to boost productivity, efficiency, and innovation across industries, sceptics question the timeline for a meaningful economic impact. With that in mind it would be inappropriate to draw strong conclusions from chart 6 below but it is certainly of note that South Korea – which has been heavily reliant on AI-fuelled trade – saw a big slowdown in export growth in the first 20 days of January. Much of that slowdown, moreover, could be traced to a big drop in semiconductor trade.

250123Z6.jpg

Financial markets have enjoyed a notable lift in sentiment over recent days, driven by renewed optimism about the domestic economic policies of a new US administration. Investors have certainly been cheered by early signals of a pro-growth strategy, with the energy sector taking centre stage following a ceasefire between Israel and Gaza and the announcement of measures aimed at reducing US energy costs (see charts 1 and 2). Meanwhile, China’s stronger-than-expected growth figures last week and softer-than-expected inflation readings from both the US and the UK have fuelled gains across equity and bond markets, bolstering risk appetite in other markets. However, despite the prevailing optimism, several factors warrant caution. Chief among them is the global uncertainty that surrounds the policy choices of a new US administration. The policy choices of central banks will also be critical, particularly as labour market strength could keep inflation risks alive (charts 3 and 4). Questions also linger about China’s ability to sustain its growth momentum, especially as its property sector and consumer demand face ongoing challenges (chart 5). Finally, while artificial intelligence is increasingly seen as a driver of future growth and productivity, doubts persist over its near-term potential to meaningfully transform the world economy (chart 6). For now, investors appear content to ride the wave of positive sentiment, but vigilance over these risks will be critical as the economic landscape continues to evolve.

Charts of the Week: Trump Cards

250122F11.jpg

250122G11.jpg

The Conference Board's Leading Economic Index fell 0.1% (-3.0% y/y) during December, following a 0.4% November rise, revised from 0.3%, and a 0.3% October decline, revised from -0.4%. A 0.1% easing in the December index had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity. The index has been trending lower since January 2022, contrasting with positive real economic growth.

During December, component changes amongst the leaders diverged. Series which contributed positively to the index change included a longer factory sector workweek, improved factory orders for consumer goods, an increase in orders for nondefense capital goods excluding aircraft, higher stock prices in the S&P 500 index and the leading credit index. Series contributing negatively were higher initial unemployment insurance claims, a lower ISM new orders index, falling building permits, the interest rate yield curve and consumer expectations for business/economic conditions.

The Coincident Economic Index rose 0.4% last month (1.6% y/y) after rising 0.2% in November and holding steady in October. Movement amongst the four components was uniformly positive in December. Industrial production jumped by the largest amount since February, real personal income strengthened steadily, payroll employment improved on prior two months’ increases while real manufacturing & trade sales rose steadily.

The Lagging Economic Index improved 0.1% last month (0.3% y/y) after rising 0.2% in November and remaining unchanged in October. The 6-month change in the services CPI, the 6-month change in unit labor costs and the ratio of consumer installment credit-to-personal income contributed positively to the index change. The business inventory-to-sales ratio contributed nothing to the index change. The duration of unemployment, the prime interest rate charged by banks and commercial & industrial loans outstanding contributed negatively to the index change.

The ratio of coincident-to-lagging indicators, considered another leading indicator, rose 0.3% last month after holding steady for two straight months.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [website](https://www.conference-board.org/us/) for coverage of leading indicator series from around the world.

250122H11.jpg

250122I11.jpg

- Movement in leading indicator components remains mixed.
- Coincident indicators strengthen.
- Lagging indicators edge higher.

Confederation of British Industries (CBI) Point to Slowdown in British Manufacturing Sector

Summary

Louise Curley

More Economy in Brief

U.S. Unemployment Insurance Claims Rise in Latest Week

U.K. Order Trends Are Still Eroding

Charts of the Week: Trump Cards

U.S. Leading Indicators Ease

% Balance*	Q2 05	Q1 05	Q2 04	Q/Q Dif	Y/Y Dif	2004	2003	2002
Optimism re business conditions	-15	-22	12	7	-27	7	-17	-6
New orders past 3 months	-18	-4	18	-14	-36	9	-16	-14
New orders next 3 months	-17	-4	12	-13	-29	5	-21	-14
Output past 3 months	-10	2	15	-12	-25	11	-12	-13
Output next 3 months	5	10	12	-5	-7	13	4	5
Unit costs past 3 months	32	23	6	9	26	9	3	-4
Unit costs next 3 months	18	19	5	-1	13	7	-1	-7
Prices past 3 months	12	11	-3	1	15	-4	-16	-26
Prices past 3 months	5	19	2	-14	3	3	-10-13
	Apr 05	Mar 05	Apr 04	M/M Dif	Y/Y Dif	2004	2003	2002
Total orders	-24	-13	14	-11	-10	-9	-29	-27
Stock of finished goods	18	13	17	5	1	11	17	16
Vol. of output next 3 months	5	9	12	-4	-7	12	-3	5
Ave prices of domestic orders next 3 months	5	9	2	-4	3	4	-12	-13