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Economy in Brief

U.S. Industrial Production Edged Up
by Tom Moeller January 16, 2004

Industrial production edged up 0.1% in December, quite a bit less than Consensus expectations for a 0.7% rise.

Utility output fell 1.3% (-0.7% y/y).

The factory sector faired better last month and added 0.3% to the upwardly revised 1.1% surge in November (2.9% y/y).

Output in selected high-technology industries again led output higher in December and jumped 1.9% (24.5% y/y). Prior months' gains were revised lower. Output of computers and peripheral equipment rose 2.6%, about the average monthly gain during the last six months (15.5% y/y). Output of semiconductors & related equipment jumped 3.6% (41.8% y/y) though prior months' strength was lessened. Output of communications equipment fell 2.2% (+4.2% y/y).

Excluding high-tech, factory output inched 0.1% higher (1.6% y/y) but the 0.7% increase originally reported for November was revised to a 1.1% jump. The revision stemmed from a raised estimate of motor vehicle output (+5.1% y/y). Electrical equipment & appliance outputrose 0.8% (0.4% y/y) but the originally reported 1.1% November increase was revised to 0.1%. Furniture output fell 0.1% (-1.1% y/y) and November was revised to 0.7% from 1.7%.

Total capacity utilization held steady at 75.8%.

Production & Capacity Dec Nov Y/Y 2003 2002 2001
Industrial Production 0.1% 1.1% 2.4% 0.4% -0.6% -3.4%
Capacity Utilization 75.8% 75.8% 74.9%(12/02) 74.9% 75.6% 77.4%
U.S. Business Inventories Accumulate
by Tom Moeller January 16, 2004

Total business inventories, up 0.3% in November, rose for the third consecutive month. The rise was in line with Consensus expectations for a 0.2% increase.

Retail inventories rose 0.7% in November for the second consecutive month. Higher inventories of motor vehicles & parts, up 1.2%, again led the gain.

Excluding autos, retail inventories rose 0.5%, the third firm increase in as many months. Inventories of furniture again rose strongly, up 0.9% (7.9% y/y). In addition, inventories of apparel rose for only the second month in the last eight (+3.0% y/y). Inventories at general merchandise stores fell 0.3% (+0.9% y/y).

Overall business sales rose 0.5% (5.4% y/y). Factory shipments and wholesale sales were modest in both months.

The inventory-to-sales ratio was stable at the record low 1.35.

"Has Inventory Volatility Returned? A Look at the Current Cycle" from the Federal Reserve Bank of New York can be found here.

Business Inventories Nov Oct Y/Y 2002 2001 2000
Total 0.3% 0.4% 2.1% 2.1% -4.7% 5.1%
  Retail 0.7% 0.7% 5.1% 7.6% -2.9% 6.0%
    Retail excl. Autos 0.5% 0.3% 3.5% 2.5% -1.2% 3.7%
  Wholesale 0.5% 0.5% 2.2% 0.4% -4.9% 6.1%
  Manufacturing -0.2% 0.1% -1.0% -1.8% -6.1% 3.8%
U.S. Consumer Sentiment Spiked Higher
by Tom Moeller January 16, 2004

The University of Michigan’s consumer sentiment index spiked 11.4% higher m/m to 103.2, the highest level since December 2000. That was considerably better than Consensus expectations for a slight rise to 94.0.

During the last ten years there has been an 75% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 84% during the last five years.

The current conditions index jumped 12.3% m/m to 108.9 and the expectations index added 10.8% m/m to 99.5.

The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

University of Michigan Mid-Jan Dec Y/Y 2003 2002 2001
Consumer Sentiment 103.2 92.6 25.2% 87.6 89.6 89.2
   Current Conditions 108.9 97.0 12.0% 97.2 97.5 100.1
   Consumer Expectations 99.5 89.8 36.7% 81.4 84.6 82.3
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