CPI Up Less Than Expected

December 17, 2003

· The index of mortgage applications compiled by the Mortgage Bankers Association last week recovered most of the prior week's decline with a 12.6% gain.

· Purchase applications recovered virtually all of the prior period's drop with a 9.4% (+15.1% y/y) surge. Nevertheless, purchase applications so far in December are down 1.7% from the November average. Applications to refinance also were strong, up 16.6% w/w, but in December are down 12.9% from November (-54.0% y/y).

· During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

· The effective interest rate on a conventional 30-Year mortgage fell to 6.01% and for the month so far are at the lowest since July. The effective rate on a 15-year mortgage also fell to 5.39%.

· The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

MBA Mortgage Applications (3/16/90=100)	12/12	12/05	2002	2001	2000
Total Market Index	677.2	601.6	799.7	625.6	322.7
Purchase	437.2	399.8	354.7	304.9	302.7
Refinancing	2,072.9	1,775.5	3,388.0	2,491.0	438.8

U.S. Manpower Hiring Index Improved

December 17, 2003

By Tom Moeller

· The Manpower employment survey improved for the second consecutive quarter. For 1Q04, a seasonally adjusted net 13% of 16,000 employers expect to increase hiring activity.

· The latest reading is up from 7% in 3Q03. The latest improvement, however, did not reflect an actual increase in hiring strength. Since hiring activity in 1Q is typically weak, seasonal adjustment factors accounted for all of the rise.

· Since 1980 there has been a 75% correlation between the Manpower index and the y/y change in nonfarm payrolls.

· The latest press release from Manpower Inc. covering employment prospects in 18 countries can be viewed here.

Manpower Employment Survey	1Q04	4Q03	1Q03	2003	2002	2001
All Industries - Net Higher (SA)	13	10	16	11	11	17

Chain Store Sales Recover

December 17, 2003

By Tom Moeller

· Chain store sales last week recouped 2.1% of the prior week's slump when sales were depressed by two snowstorms, according to the ICSC-UBS survey.

· Despite the rebound, sales so far in December are down 1.6% from the November average. During all of November sales rose 0.5% versus the prior month.

· During the last five years there has been a 61% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and the change in non-auto retail sales less gasoline.

· The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

· Analysis from the Federal Reserve Bank of New York exploring what chain store sales indicate about consumer spending can be found here.

ICSC-UBS (SA, 1977=100)	12/13/03	12/06/03	Y/Y	2002	2001	2000
Total Weekly Retail Chain Store Sales	420.7	412.2	5.1%	3.6%	2.1%	3.4%

Small Business Optimism Near 20 Year High

December 17, 2003

By Tom Moeller

· The Small Business Optimism Index for November published by the National Federation of Independent Business rose to highest level since early 1984. The index rose 1.2% m/m to a near-record reading of 105.3.

· The increase reflected a slight dip to 12% in the percent of small business owners planning to increase employment but a rise in plans to raise prices and capital spending.

· The percent of owners planning to raise capital expenditures in the next 3-6 months rose to 29%.

· About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

Nat'l Federation of Independent Business	Nov	Oct	Y/Y	2002	2001
Small Business Optimism Index (1986=100)	105.3	104.0	3.3%	101.2	98.4

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