Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061128c.jpg" width="353">
An 8.3% decline in new orders for durable goods last month more than reversed an upwardly revised 8.7% surge during September. The volatility largely reflected first the near-tripling of civilian aircraft &amp; parts orders during September then a 37.4% decline last month. Consensus expectations had been for a 5.0% in total orders during October.
Additional weakness last month was provided by a 10.2% (+3.3% y/y) decline in orders for computers &amp; electronic products that very much reflected a 25.6% (-24.6% y/y) drop in computers.
During the last ten years there has been a 69% correlation between the y/y change in durable goods orders and the change in output of durable goods..<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061128b.jpg" width="353">
Orders for nondefense capital goods dropped 15.6% and less aircraft they were off 5.1%. Offsetting the slide in computer orders was a 1.4% (13.4% y/y) increase in new orders for machinery and a 5.1% (8.4% y/y) rise in electrical equipment &amp; appliances. During the last ten years there has been an 86% correlation between the y/y change in capital goods orders less aircraft and the y/y change in business fixed investment in equipment &amp; software from the GDP accounts.
Orders for motor vehicles &amp; parts rose 1.4% (-9.5% y/y) while primary metals orders increased 1.1% (7.4% y/y).
Durable goods orders less transportation fell 1.7% after an upwardly revised 0.5% October increase. Consensus expectations had been for a 0.1% rise in total orders less transportation.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061128a.jpg" width="353">
Shipments of durable goods increased a slight 0.6% (3.3% y/y) after a little revised 2.7% October tumble. Less the transportation sector shipments rose a similar 0.5% (5.8% y/y) after a 2.2% slide the prior month. During the last ten years there has been an 82% correlation between the y/y change in durable goods shipments and the change in industrial production of durable goods.
Order backlogs rose another 1.2% (21.8% y/y) and less transportation rose 0.9% (13.2% y/y). Unfilled orders for nondefense aircraft &amp; parts surged by 2.4% (53.9% y/y).
Durable inventories rose 0.8% (8.2% y/y). Less the transportation sector inventories rose 0.6% (9.1% y/y) and the inventory to shipments ratio outside of transportation added to its September surge.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-8.3%</td>
<td>8.7%</td>
<td>2.3%</td>
<td>9.0%</td>
<td>6.4%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>-1.7%</td>
<td>0.5%</td>
<td>4.9%</td>
<td>9.4%</td>
<td>7.6%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>-15.6%</td>
<td>24.7%</td>
<td>8.5%</td>
<td>21.4%</td>
<td>5.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-5.1%</td>
<td>3.2%</td>
<td>6.2%</td>
<td>12.3%</td>
<td>2.8%</td>
<td>-2.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

An 8.3% decline in new orders for durable goods last month more than reversed an upwardly revised 8.7% surge during September. The volatility largely reflected first the near-tripling of civilian aircraft & parts orders during [...]

Air Came Out of U.S. Durable Orders, Tech Off As Well

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127f.jpg" width="353">
Although we generally comment on the current day&#39;s data releases, occasionally we comment on previously released data if that data were released on a U. S. holiday. Such is the case this year when data on the German Gross Domestic Product for the third quarter and the IFO release for November were released on the U. S. Thanksgiving Day holiday, last Thursday.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127e.jpg" width="353">
The German Gross Domestic Product increased at an annual rate of 2.6% in the third quarter. Although this was less than the second quarter advance of 4.4%, the year over year increases show an increasing trend during the year. So far this year, GDP has averaged 2.5% above the average of the first three quarters of 2005 With the year over year growth rate increasing it is likely that growth in all of 2006 could be 2.5% or better, well above the poor growth of the last five years, as shown in the first chart Growth has been generated more by activity in the domestic economy than in the foreign sector. The second chart compares the year to year increase in domestic demand with the increase in net exports. So far this year the increases in domestic demand have been well above those in net exports. Consumer demand has probably been influenced recently by purchases in anticipation of the increased in VAT scheduled to come into effect on January 1, 2007, but expenditures on fixed investment have also been strong.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127g.jpg" width="353">
The 7000 manufacturing, construction, wholesale and retail trade firms that participate in the IFO survey of business conditions have become more optimistic regarding their current condition and their outlook for six months ahead. The overall appraisal or headline series rose 1.4% in November and was 9.3% above November, 2005. Confidence in conditions six months ahead began to decline early this year and continued to do so until October when it rose 0.3%. It has risen a further 0.9% in November. Confidence in current conditions faltered in August and September, but has improved in October and again in November.The indexes of confidence in current and expected conditions are shown in the third chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/@D2/@D2.HTM">GERMANY</a> &nbsp;</th>
<th scope="col">Q3 06 &nbsp;Y/Y %</th>
<th scope="col">Q2 06 &nbsp;Y/Y %</th>
<th scope="col">Q1 06 &nbsp;Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;GDP (Bil 2000 Chained Euros)</td>
<td>2.81</td>
<td>2.68</td>
<td>1.86</td>
<td>1.09</td>
<td>0.77</td>
<td>-0.25</td>
<td>0.01</td>
<td>1.36</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Increase in Domestic Demand (Bil 2000 Chained Euros)</td>
<td>11.25</td>
<td>10.69</td>
<td>8.88</td>
<td>0.64</td>
<td>-0.42</td>
<td>0.66</td>
<td>-2.01</td>
<td>-0.40</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Increase in Net Exports (Bil 2000 Chained Euros)</td>
<td>3.55</td>
<td>3.35</td>
<td>0.46</td>
<td>9.43</td>
<td>24.55</td>
<td>-18.33</td>
<td>41.58</td>
<td>36.28</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol"> IFO Index (2000=100)</td>
<td>Nov 06&nbsp;</td>
<td>Oct 06&nbsp;</td>
<td>Nov 05</td>
<td>M/M % chg</td>
<td>Y/Y % &nbsp;chg&nbsp;</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol"> Headline</td>
<td>106.8</td>
<td>105.3</td>
<td>97.7</td>
<td>1.42</td>
<td>9.31</td>
<td>95.5</td>
<td>95.5</td>
<td>91.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>113.9</td>
<td>111.9</td>
<td>97.0</td>
<td>1.79</td>
<td>17.42</td>
<td>94.7</td>
<td>93.1</td>
<td>88.1</td>
</tr>
<tr>
<td class="firstcol">Conditions Next 6 Mos.</td>
<td>100.1</td>
<td>99.2</td>
<td>98.4</td>
<td>0.91</td>
<td>1.73</td>
<td>96.3</td>
<td>97.8</td>
<td>95.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Although we generally comment on the current day's data releases, occasionally we comment on previously released data if that data were released on a U. S. holiday. Such is the case this year when data on the German Gross Domestic [...]

Germany Shows Solid GDP Growth and Improved Confidence

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Though a very recent slowdown in industrial output growth in the United States has garnered attention, compared to last year the nation&#39;s factories still are humming. That continued growth compares to an advance in factory sector activity elsewhere in the industrial world which has been firm.
Add to the mix the growth in China and the demand for raw materials has been firm, though the falloff in petroleum prices recently has dominated the headlines. Since 1980, there has been a 60% correlation between the y/y change in prices for industrial materials prices and the change in OECD Big 7 factory production. 
Even with oil, the JoC-ECRIindex of industrial commodity prices has registered a volatile sideways drift during since mid-year. That&#39;s an impressive performance given the nearly one quarter decline in the price of petroleum products.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127b.jpg" width="353">
Higher industrial metal prices reflect the world&#39;s resilient factory sector (see table above). The JoC-ECRI Industrial Metals Prices Index is up by more than one third from last year on the strength of a 70% y/y advance in copper scrap prices which are roughly double what they were in 2005 and firmness in zinc prices which have roughly tripled since 2005. Additional strength stems from spot aluminum ingot prices (27% y/y) though prices for stainless steel scrap have been flat to down (-15 y/y) with the weakness in auto production which is off by roughly one quarter since early 2002.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127c.jpg" width="353">
Textile prices certainly are lower than the peak levels of earlier this year. Much of that decline reflects a recent weakness in cotton prices (-6% y/y) though both the JoC index of textile prices and cotton prices in particular have shown recent gain.
Natural gas prices have ranged widely since last winter&#39;s spike. A recent lift has taken gas up sharply from the recent low (-33.2% y/y) early this past October. While weather forecasts account for the bulk of the short term movement in gas prices, industrial demand is estimated to account for 37.6% of natural gas demand which is the highest of any sector. A report from the Natural Gas Supply Association is available <a href="http://www.naturalgas.org/business/demand.asp#industrydemand"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127d.jpg" width="353">
Gold prices as well have shown some lift to $645 per ounce, a rise of roughly one quarter since last year. The Unreliability of Inflation Indicators is a 2000 article from the Federal Reserve Bank of New York and it can be found <a href="http://www.newyorkfed.org/research/current_issues/ci6-4.pdf"> here</a>.
Inflation, Inflation Expectations, and Monetary Policy, a speech by Sandra Pianalto, President &amp; CEO of the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2006/0915.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production (Y/Y %)</th>
<th scope="col">2005</th>
<th scope="col">2006 (YTD)</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Major 7 Countries</td>
<td>1.9%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>3.2%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Germany</td>
<td>3.4%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Japan</td>
<td>1.6%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>-0.3%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/17/06</th>
<th scope="col">12/27/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">JoC Industrial Price Index - All Items</td>
<td>126.34</td>
<td>117.73</td>
<td>8.4%</td>
<td>114.19</td>
<td>112.78</td>
<td>91.97</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Metals</td>
<td>174.62</td>
<td>132.45</td>
<td>39.8%</td>
<td>121.30</td>
<td>118.15</td>
<td>84.56</td>
</tr>
</tbody>
</table>
</body>
</html>

Though a very recent slowdown in industrial output growth in the United States has garnered attention, compared to last year the nation's factories still are humming. That continued growth compares to an advance in factory sector [...]

World's Output Gains Lift Commodity Prices

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Though a very recent slowdown in industrial output growth in the United States has garnered attention, compared to last year the nation&#39;s factories still are humming. That continued growth compares to an advance in factory sector activity elsewhere in the industrial world which has been firm.
Add to the mix the growth in China and the demand for raw materials has been firm, though the falloff in petroleum prices recently has dominated the headlines. Since 1980, there has been a 60% correlation between the y/y change in prices for industrial materials prices and the change in OECD Big 7 factory production. 
Even with oil, the JoC-ECRIindex of industrial commodity prices has registered a volatile sideways drift during since mid-year. That&#39;s an impressive performance given the nearly one quarter decline in the price of petroleum products.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127b.jpg" width="353">
Higher industrial metal prices reflect the world&#39;s resilient factory sector (see table above). The JoC-ECRI Industrial Metals Prices Index is up by more than one third from last year on the strength of a 70% y/y advance in copper scrap prices which are roughly double what they were in 2005 and firmness in zinc prices which have roughly tripled since 2005. Additional strength stems from spot aluminum ingot prices (27% y/y) though prices for stainless steel scrap have been flat to down (-15 y/y) with the weakness in auto production which is off by roughly one quarter since early 2002.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127c.jpg" width="353">
Textile prices certainly are lower than the peak levels of earlier this year. Much of that decline reflects a recent weakness in cotton prices (-6% y/y) though both the JoC index of textile prices and cotton prices in particular have shown recent gain.
Natural gas prices have ranged widely since last winter&#39;s spike. A recent lift has taken gas up sharply from the recent low (-33.2% y/y) early this past October. While weather forecasts account for the bulk of the short term movement in gas prices, industrial demand is estimated to account for 37.6% of natural gas demand which is the highest of any sector. A report from the Natural Gas Supply Association is available <a href="http://www.naturalgas.org/business/demand.asp#industrydemand"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127d.jpg" width="353">
Gold prices as well have shown some lift to $645 per ounce, a rise of roughly one quarter since last year. The Unreliability of Inflation Indicators is a 2000 article from the Federal Reserve Bank of New York and it can be found <a href="http://www.newyorkfed.org/research/current_issues/ci6-4.pdf"> here</a>.
Inflation, Inflation Expectations, and Monetary Policy, a speech by Sandra Pianalto, President &amp; CEO of the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/Research/Com2006/0915.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production (Y/Y %)</th>
<th scope="col">2005</th>
<th scope="col">2006 (YTD)</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Major 7 Countries</td>
<td>1.9%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>3.2%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Germany</td>
<td>3.4%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Japan</td>
<td>1.6%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>-0.3%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/17/06</th>
<th scope="col">12/27/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">JoC Industrial Price Index - All Items</td>
<td>126.34</td>
<td>117.73</td>
<td>8.4%</td>
<td>114.19</td>
<td>112.78</td>
<td>91.97</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Metals</td>
<td>174.62</td>
<td>132.45</td>
<td>39.8%</td>
<td>121.30</td>
<td>118.15</td>
<td>84.56</td>
</tr>
</tbody>
</table>
 Germany Shows Solid GDP Growth  and Improved Confidence  
by <a href="/comment/Curley.html">Louise Curley</a> November 27, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127f.jpg" width="353">
Although we generally comment on the current day&#39;s data releases, occasionally we comment on previously released data if that data were released on a U. S. holiday. Such is the case this year when data on the German Gross Domestic Product for the third quarter and the IFO release for November were released on the U. S. Thanksgiving Day holiday, last Thursday.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127e.jpg" width="353">
The German Gross Domestic Product increased at an annual rate of 2.6% in the third quarter. Although this was less than the second quarter advance of 4.4%, the year over year increases show an increasing trend during the year. So far this year, GDP has averaged 2.5% above the average of the first three quarters of 2005 With the year over year growth rate increasing it is likely that growth in all of 2006 could be 2.5% or better, well above the poor growth of the last five years, as shown in the first chart Growth has been generated more by activity in the domestic economy than in the foreign sector. The second chart compares the year to year increase in domestic demand with the increase in net exports. So far this year the increases in domestic demand have been well above those in net exports. Consumer demand has probably been influenced recently by purchases in anticipation of the increased in VAT scheduled to come into effect on January 1, 2007, but expenditures on fixed investment have also been strong.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061127g.jpg" width="353">
The 7000 manufacturing, construction, wholesale and retail trade firms that participate in the IFO survey of business conditions have become more optimistic regarding their current condition and their outlook for six months ahead. The overall appraisal or headline series rose 1.4% in November and was 9.3% above November, 2005. Confidence in conditions six months ahead began to decline early this year and continued to do so until October when it rose 0.3%. It has risen a further 0.9% in November. Confidence in current conditions faltered in August and September, but has improved in October and again in November.The indexes of confidence in current and expected conditions are shown in the third chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/@D2/@D2.HTM">GERMANY</a> &nbsp;</th>
<th scope="col">Q3 06 &nbsp; Y/Y %</th>
<th scope="col">Q2 06 &nbsp; Y/Y %</th>
<th scope="col">Q 1 06 &nbsp; Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;GDP (Bil 2000 Chained Euros)</td>
<td>2.81</td>
<td>2.68</td>
<td>1.86</td>
<td>1.09</td>
<td>0.77</td>
<td>-0.25</td>
<td>0.01</td>
<td>1.36</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Increase in Domestic Demand (Bil 2000 Chained Euros)</td>
<td>11.25</td>
<td>10.69</td>
<td>8.88</td>
<td>0.64</td>
<td>-0.42</td>
<td>0.66</td>
<td>-2.01</td>
<td>-0.40</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Increase in Net Exports (Bil 2000 Chained Euros)</td>
<td>3.55</td>
<td>3.35</td>
<td>0.46</td>
<td>9.43</td>
<td>24.55</td>
<td>-18.33</td>
<td>41.58</td>
<td>36.28</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol"> IFO Index (2000=100)</td>
<td>Nov 06&nbsp;</td>
<td>Oct 06&nbsp;</td>
<td>Nov 05</td>
<td>M/M % chg</td>
<td>Y/Y % &nbsp; chg&nbsp;</td>
<td>2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol"> Headline</td>
<td>106.8</td>
<td>105.3</td>
<td>97.7</td>
<td>1.42</td>
<td>9.31</td>
<td>95.5</td>
<td>95.5</td>
<td>91.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td>113.9</td>
<td>111.9</td>
<td>97.0</td>
<td>1.79</td>
<td>17.42</td>
<td>94.7</td>
<td>93.1</td>
<td>88.1</td>
</tr>
<tr>
<td class="firstcol">Conditions Next 6 Mos.</td>
<td>100.1</td>
<td>99.2</td>
<td>98.4</td>
<td>0.91</td>
<td>1.73</td>
<td>96.3</td>
<td>97.8</td>
<td>95.6</td>
</tr>
</tbody>
</table>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061124j.jpg" width="353">
Sweden&#39;s trade balance widened in October from a year ago to SKr10.6 billion from SKr10.2 billion. Exports expanded SKr11.4 billion, or 13.0%, while imports gained SKr11.0 billion, a 14.2% increase.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061124k.jpg" width="353">
Statistics Sweden reported these totals for October this morning, and they published the details by type of product through September. The largest Swedish export category is machinery and transport equipment; these were SKr42.6 billion in September, constituting 45.2% of total exports. These products include cars, construction machinery and office equipment, among others. &quot;Other manufactured goods&quot; exports totaled SKr19.1 billion in September and were 20.3% of the total. Both of these large segments have diminished somewhat in importance over the last couple of years, as mineral fuel shipments have expanded. For growth comparisons, we use the average of 2004, the period just prior to the recent explosion in energy prices. A mere SKr4.6 billion in September, Sweden&#39;s refined petroleum product shipments were, nonetheless, almost 47% larger than in 2004, compared with 23% increases over that period for the other manufactured goods and capital goods.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061124l.jpg" width="353">
On the import side, machinery purchases were SKr31.2 billion in September, up 25% from the 2004 average. Other manufactured goods were SKr13.1 billion, compared with SKr9.3 billion in 2004. Mineral fuel imports increased a great deal more, some 70% on a base of SKr6.0 billion, bringing them to SKr10.2 billion.
Sweden&#39;s strength in manufacturing, particularly of capital goods, has enabled it to weather the energy price surge fairly well. The base for this performance was actually set in the early 1990s when its exports grew rapidly, lifting its trade accounts to a substantial surplus following years of little or no positive balance, a critical position for this very open economy. Exports have been vigorous again since 2003.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SWEDEN, NSA, Bil.Kr Selected Item</th>
<th scope="col">Oct 2006</th>
<th scope="col">Sept 2006</th>
<th scope="col">Aug 2006</th>
<th scope="col">Oct 2005</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">Trade Balance</td>
<td>+10.6</td>
<td>+11.4</td>
<td>+8.2</td>
<td>+10.2</td>
<td>+11.7</td>
<td>+13.8</td>
<td>+12.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>99.0</td>
<td>94.3</td>
<td>83.1</td>
<td>87.6</td>
<td>81.0</td>
<td>75.4</td>
<td>68.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mineral Fuels</td>
<td>--</td>
<td>4.6</td>
<td>5.9</td>
<td>5.4</td>
<td>4.4</td>
<td>3.1</td>
<td>2.4</td>
</tr>
<tr>
<td class="firstcol">Machinery &amp; Transport Equip</td>
<td>--</td>
<td>42.6</td>
<td>35.0</td>
<td>39.6</td>
<td>36.4</td>
<td>34.6</td>
<td>31.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Imports</td>
<td>88.4</td>
<td>82.9</td>
<td>74.9</td>
<td>77.4</td>
<td>69.3</td>
<td>61.6</td>
<td>56.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mineral Fuels</td>
<td>--</td>
<td>10.2</td>
<td>10.1</td>
<td>10.6</td>
<td>8.1</td>
<td>6.0</td>
<td>5.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Machinery &amp; Transport Equip</td>
<td>--</td>
<td>31.2</td>
<td>26.3</td>
<td>25.1</td>
<td>27.3</td>
<td>24.9</td>
<td>22.9</td>
</tr>
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Sweden's trade balance widened in October from a year ago to SKr10.6 billion from SKr10.2 billion. Exports expanded SKr11.4 billion, or 13.0%, while imports gained SKr11.0 billion, a 14.2% increase. Statistics Sweden reported these [...]

Sweden's Strong Exports Limit Harm from Energy Price Surge

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061122j.jpg" width="353">
Is a turkey dinner cheaper this year than last? Maybe so. The BLS&#39;s CPI Detail includes some actual prices for a number of basic commodities and foodstuffs in consumers&#39; budgets. Haver carries these in the CPIDATA database. We don&#39;t have all the ingredients in a turkey dinner, but there&#39;s enough for an idea of the turkey and stuffing along with some potatoes. We&#39;ve used the CPI for October compared with October a year ago.
The turkey is NOT cheaper, but it&#39;s not up very much. The price is $1.149/pound, up a mere 1.2 cents or 1.1%. A 15-pound bird thus costs about 20 cents more. (Since the BLS price is for frozen turkey, we might well have bought it toward the end of October and paid this price.) Potatoes are also up, $0.04 a pound to $0.545; that&#39;s 7.9%, and if we use 5 pounds, the increase also amounts to just 20 cents over last year. Prices of bread and flour are also higher, bread by 5.2% and flour by 3.2%.
But all the other ingredients have lower prices. Eggs are off marginally, about a penny a dozen and milk is down 11 cents a gallon. Butter, used widely in this meal to baste the turkey, help mash the potatoes and as an ingredient in the stuffing, is down more noticeably: 20 cents a pound, a 6.4% decrease. We assume we&#39;ll use a whole pound. Coffee has declined 9% to $3.14, saving us 15 cents on a half-pound. Finally, we have to have some nice wine with this feast and a typical liter bottle is off 56 cents, saving us $1.12 if we consume two bottles.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/061122k.jpg" width="353">
So the main course of our Thanksgiving dinner costs $43.50, down from $44.60 in 2005. The BLS data also include apples and sugar, so we could have made an apple pie for dessert. Apples have had a hard season and their cost is 21% ahead of a year ago. Ice cream, for the &quot;a la mode&quot;, is up 4%. So if we had too much dessert, we might have eaten up the savings on the main meal. In any event, we probably wouldn&#39;t have done any worse than break even on our Thanksgiving dinner expenses compared with 2005. Does that mean we can spend more for Christmas?
[This little section of the CPI data is used frequently for its gas and utility prices, but the food portion is an extensive collection, particularly of various cuts of beef and a number of fruits. The energy data are also available for select metropolitan areas and both the food and energy products are given for the four major Census regions, although not all foods are published for all four regions.]

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Amount</th>
<th scope="col">Oct 2006 Price</th>
<th scope="col">Value</th>
<th scope="col">Oct 2005 Price</th>
<th scope="col">Value</th>
<th scope="col">Change</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Turkey, Frozen, Whole ($/lb)</td>
<td>15</td>
<td>1.149</td>
<td>17.24</td>
<td>1.137</td>
<td>17.06</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">Potatoes, White ($/lb)</td>
<td>5</td>
<td>0.545</td>
<td>2.72</td>
<td>0.505</td>
<td>2.52</td>
<td>7.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Bread, White, Pan ($/lb)</td>
<td>1</td>
<td>1.097</td>
<td>1.10</td>
<td>1.043</td>
<td>1.04</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">Flour, White, All Purpose ($/lb)</td>
<td>1 1/2 C.</td>
<td>0.321</td>
<td>0.12</td>
<td>0.311</td>
<td>0.12</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Eggs, Grade A, Large ($/dozen)</td>
<td>2 eggs</td>
<td>1.257</td>
<td>0.21</td>
<td>1.264</td>
<td>0.21</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">Milk, Fresh, Whole, Fortified ($/gal)</td>
<td>1/2 gal.</td>
<td>3.064</td>
<td>1.53</td>
<td>3.171</td>
<td>1.59</td>
<td>-3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Butter, Salted, Grade AA, Stick ($/lb)</td>
<td>1</td>
<td>2.981</td>
<td>2.98</td>
<td>3.186</td>
<td>3.19</td>
<td>-6.4%</td>
</tr>
<tr>
<td class="firstcol">Coffee, 100%, Ground Roast ($/lb)</td>
<td>1</td>
<td>3.138</td>
<td>1.57</td>
<td>3.447</td>
<td>1.72</td>
<td>-9.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Table Wine ($/liter)</td>
<td>2</td>
<td>8.013</td>
<td>16.03</td>
<td>8.575</td>
<td>17.15</td>
<td>-6.6%</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
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Is a turkey dinner cheaper this year than last? Maybe so. The BLS's CPI Detail includes some actual prices for a number of basic commodities and foodstuffs in consumers' budgets. Haver carries these in the CPIDATA database. We don't [...]

Prices Down a Little for Home-Cooked Thanksgiving Dinner

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

260205Z4.jpg

**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

260205Z5.jpg

**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

260205Z6.jpg

Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

Robert Brusca

260206E.jpg

With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

260206.jpg

**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data 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.

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.

Economy in Brief

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