Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331g.jpg" width="353">
Factory inventories added 0.5% in February to the prior month&#39;s 1.5% spurt. Less petroleum inventories which fell 0.4% (16.7% y/y) the total increased 0.6% (8.3% y/y).
Factory shipments fell 0.9% in part reflecting a 2.9% drop in transportation equipment (-5.1% y/y). Less transportation shipments fell 0.6% (+13.3% y/y).
Orders to the factory sector rose 0.2%. The advance report of a 0.3% rise in durable goods was revised to 0.5% (+7.8% y/y). Nondefense capital goods orders less aircraft fell 1.7% (14.2% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331f.jpg" width="353">
Unfilled orders jumped 0.6%. The ratio of unfilled orders to shipments for durables recovered most of the prior two months&#39; declines. 

<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/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5%</td>
<td>1.5%</td>
<td>8.6%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.2%</td>
<td>-0.0%</td>
<td>10.0%</td>
<td>10.9%</td>
<td>3.7%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>10.4%</td>
<td>10.5%</td>
<td>2.6%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.6%</td>
<td>-0.0%</td>
<td>8.8%</td>
<td>9.1%</td>
<td>4.2%</td>
<td>-6.1%</td>
</tr>
</tbody>
</table>
</body>
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Factory inventories added 0.5% in February to the prior month's 1.5% spurt. Less petroleum inventories which fell 0.4% (16.7% y/y) the total increased 0.6% (8.3% y/y). Factory shipments fell 0.9% in part reflecting a 2.9% drop in [...]

U.S. Factory Inventories Up Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for March jumped 6.5 points to 69.2 and easily surpassed Consensus expectations for a decline to 60.3. The surge was to the highest level since 1988.
The gain suggests improvement in tomorrow&#39;s ISM composite manufacturing index. During the last thirty years the correlation between the two indexes has exceeded 90% and there has been a 67% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331b.jpg" width="353">
The employment index surged another 8.3 points to a near record 66.0. During the last ten years there has been a 78% correlation between the level of the employment index and the three month change in factory sector employment. The new orders and the production indexes also surged.
The index of prices paid fell again to the lowest level in a year. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">&nbsp;Mar &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>69.2</td>
<td>62.7</td>
<td>60.4</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>76.7</td>
<td>68.5</td>
<td>61.6</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>68.2</td>
<td>70.1</td>
<td>75.3</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
</body>
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The Chicago Purchasing Managers Business Barometer for March jumped 6.5 points to 69.2 and easily surpassed Consensus expectations for a decline to 60.3. The surge was to the highest level since 1988. The gain suggests improvement in [...]

Chicago Purchasing Agents' Index Highest Since 1988

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331c.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising in February held onto the improvement during the prior month and was unchanged at 41.
During the last ten years there has been an 68% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume slipped to 51% from 69% in January but remained up versus last year.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>41</td>
<td>41</td>
<td>40</td>
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The Conference Board's National Index of Help-Wanted Advertising in February held onto the improvement during the prior month and was unchanged at 41. During the last ten years there has been an 68% correlation between the level of [...]

Help-Wanted Advertising Held A Higher Level

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331d.jpg" width="353">
Personal income rose 0.3% in February. The modest gain followed a 2.5% January decline in the wake of Microsoft&#39;s dividend payment. Consensus expectations had been for a 0.4% rise for February.
Disposable personal income rose 0.3% (5.6% y/y) but adjusted for price inflation rose just 0.1% (3.3% y/y).
Wage &amp; salary income edged up just 0.2% (5.5% y/y) in February, one of the weaker gains of the last year. Wages in service producing industries rose 0.1% 6.0% y/y) and factory sector wages rose 0.2% (5.5% y/y).
Personal consumption rose an expected 0.5%. Durable goods spending rose 0.9% (3.7% y/y) and spending on nondurables rose 0.6%, lifted by a 4.3% jump in gasoline prices. Services spending rose 0.5% (5.2% y/y).
The PCE chain price index rose 0.3% in February but less food &amp; energy inflation eased slightly to 0.2%

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>-2.5%</td>
<td>5.8%</td>
<td>5.6%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.5%</td>
<td>0.1%</td>
<td>5.8%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.6%</td>
<td>0.8%</td>
<td>0.9%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
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</tbody>
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Personal income rose 0.3% in February. The modest gain followed a 2.5% January decline in the wake of Microsoft's dividend payment. Consensus expectations had been for a 0.4% rise for February. Disposable personal income rose 0.3% [...]

U.S. Personal Income Gain Light

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331d.jpg" width="353">
Personal income rose 0.3% in February. The modest gain followed a 2.5% January decline in the wake of Microsoft&#39;s dividend payment. Consensus expectations had been for a 0.4% rise for February.
Disposable personal income rose 0.3% (5.6% y/y) but adjusted for price inflation rose just 0.1% (3.3% y/y).
Wage &amp; salary income edged up just 0.2% (5.5% y/y) in February, one of the weaker gains of the last year. Wages in service producing industries rose 0.1% 6.0% y/y) and factory sector wages rose 0.2% (5.5% y/y).
Personal consumption rose an expected 0.5%. Durable goods spending rose 0.9% (3.7% y/y) and spending on nondurables rose 0.6%, lifted by a 4.3% jump in gasoline prices. Services spending rose 0.5% (5.2% y/y).
The PCE chain price index rose 0.3% in February but less food &amp; energy inflation eased slightly to 0.2%

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>-2.5%</td>
<td>5.8%</td>
<td>5.6%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.5%</td>
<td>0.1%</td>
<td>5.8%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.6%</td>
<td>0.8%</td>
<td>0.9%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.3%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Held A Higher Level 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331c.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising in February held onto the improvement during the prior month and was unchanged at 41.
During the last ten years there has been an 68% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume slipped to 51% from 69% in January but remained up versus last year.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>41</td>
<td>41</td>
<td>40</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Highest Since 1988 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for March jumped 6.5 points to 69.2 and easily surpassed Consensus expectations for a decline to 60.3. The surge was to the highest level since 1988.
The gain suggests improvement in tomorrow&#39;s ISM composite manufacturing index. During the last thirty years the correlation between the two indexes has exceeded 90% and there has been a 67% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331b.jpg" width="353">
The employment index surged another 8.3 points to a near record 66.0. During the last ten years there has been a 78% correlation between the level of the employment index and the three month change in factory sector employment. The new orders and the production indexes also surged.
The index of prices paid fell again to the lowest level in a year. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<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/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">&nbsp;Mar &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>69.2</td>
<td>62.7</td>
<td>60.4</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>76.7</td>
<td>68.5</td>
<td>61.6</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>68.2</td>
<td>70.1</td>
<td>75.3</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331g.jpg" width="353">
Factory inventories added 0.5% in February to the prior month&#39;s 1.5% spurt. Less petroleum inventories which fell 0.4% (16.7% y/y) the total increased 0.6% (8.3% y/y).
Factory shipments fell 0.9% in part reflecting a 2.9% drop in transportation equipment (-5.1% y/y). Less transportation shipments fell 0.6% (+13.3% y/y).
Orders to the factory sector rose 0.2%. The advance report of a 0.3% rise in durable goods was revised to 0.5% (+7.8% y/y). Nondefense capital goods orders less aircraft fell 1.7% (14.2% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331f.jpg" width="353">
Unfilled orders jumped 0.6%. The ratio of unfilled orders to shipments for durables recovered most of the prior two months&#39; declines. 

<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/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5%</td>
<td>1.5%</td>
<td>8.6%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.2%</td>
<td>-0.0%</td>
<td>10.0%</td>
<td>10.9%</td>
<td>3.7%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.9%</td>
<td>1.1%</td>
<td>10.4%</td>
<td>10.5%</td>
<td>2.6%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.6%</td>
<td>-0.0%</td>
<td>8.8%</td>
<td>9.1%</td>
<td>4.2%</td>
<td>-6.1%</td>
</tr>
</tbody>
</table>
Initial Claims For Unemployment Insurance Rose Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331e.jpg" width="353">
Initial claims for unemployment insurance rose 20,000 to 350,000 last week versus an upwardly revised level the prior week. Consensus expectations had been for 321,000 claims.
During the last ten years there has been a (negative) 74% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 66% correlation with the level of continuing claims.
The four week moving average of initial claims rose to 336,000 (-1.2% y/y).
Continuing claims for unemployment insurance dropped 66,000 from the prior week and the insured rate of unemployment remained at 2.1%.

<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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">03/26/05</th>
<th scope="col">03/19/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>350</td>
<td>330</td>
<td>1.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,608</td>
<td>-11.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Italian CPI Keeps Low Inflation Despite Higher Energy Costs 
by <a href="/comment/Stone.html">Carol Stone </a> March 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331h.jpg" width="353">
The Italian statistical agency Istat today reported that the March CPI was up 1.9% from March 2004. This result means that inflation in Italy has held at or below a 2% yearly pace for the last six months. The persistent decline to such a low rate in recent months seems impressive in light of the strong uptrend in world energy prices.
As seen in the table below, energy components of the Italian CPI array have indeed been strong, with transport-related fuel up 10% during 2004 and 7.7% in February from a year earlier (latest available for this line-item). The behavior of some other basic consumer price items suggests reasons for the moderate overall inflation: food prices in Italy are falling and clothing prices are rising very slowly. Food had seen outsized increases from 2001 through 2003, but steep declines in fruit and vegetables have led that segment down since early last year. Clothing prices are actually falling in a number of countries, and while they are rising in Italy, these increases have been progressively slower since the spring of 2003. Also, surprisingly -- at least to an American commentator -- health care prices are declining. The cost of medicine and pharmaceuticals fell at about a 6% pace in January and February. Notably, over the last couple of years, inflation rates for medications in the US have eased as well, but in Italy, these prices have been falling outright.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050331i.jpg" width="353">
Thus, there are some cushions in the Italian price system against the impact of surging energy costs. So inflation may not automatically ratchet higher with every &#128;1 increase in the price of a barrel of oil.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ITALY/ITALY.HTM">Italy: Consumer Price Index</a> Yr/Yr % Change</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Jan 2005</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Total CPI</td>
<td>1.9</td>
<td>1.9</td>
<td>1.9</td>
<td>2.0</td>
<td>2.5</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>-0.2</td>
<td>-0.4</td>
<td>-0.7</td>
<td>-0.3</td>
<td>3.9</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Apparel</td>
<td>1.7</td>
<td>1.8</td>
<td>1.8</td>
<td>1.8</td>
<td>2.6</td>
<td>3.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Transport Fuel</td>
<td>--</td>
<td>7.7</td>
<td>6.8</td>
<td>10.0</td>
<td>0.2</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">Housing Electricity &amp; Fuel</td>
<td>--</td>
<td>4.5</td>
<td>3.8</td>
<td>2.5</td>
<td>3.0</td>
<td>-1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: Euro-Zone &quot;Flash Estimate&quot;</td>
<td>2.1</td>
<td>2.1</td>
<td>1.9</td>
<td>2.4</td>
<td>2.0</td>
<td>2.3</td>
</tr>
<tr>
<td class="firstcol">US CPI</td>
<td>--</td>
<td>3.0</td>
<td>3.0</td>
<td>3.3</td>
<td>1.9</td>
<td>2.4</td>
</tr>
</tbody>
</table>
</body>
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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/050330d.jpg" width="353">
Back at the turn of the year, business prospects were looking up in Germany. December and January saw an improvement in the Ifo Business Climate Index to the highest values in almost a year; this was reflected in production, the assessment of demand and orders. However, February and March have reversed this encouraging pattern, with some gauges falling rather precipitously.
The Business Climate Index has slumped 2.4 points in the two months to 94.0 (2000=100), with the corresponding diffusion index retreating to -12.9% from -8.1% in January. The &quot;business situation&quot;, the measure of current conditions, fell to -18.2%, a 5-percentage-pointing deterioration since December. Expectations also decreased, reaching down to -7.4% in March from -1.5% in January. Orders are a source of the worsening outlook, led by the domestic sector.
Most industry groups have participated in the renewed downturn. Among better readings, food processing increased to -6.2% from -7.0%; construction rose 3 percentage points, but, at -39.8%, this move can hardly be seen as an indication of better health in that sector. Other basic industries saw relative deteriorations: March values were generally less positive or more negative.
We can guess that rising energy prices have contributed to the erosion in business conditions; producer prices for energy were up 8.2% in the year to February, compared with a drop of 0.7% in the comparable year-ago period. Total producer prices rose 4.2% from February 2004; they had been basically unchanged in the 12-months ended in February 2004. The euro, after a pause last spring and summer, has been rising again. By contrast, other exogenous forces seem fairly supportive: German stock prices are firm or rising, some quite notably; interest rates are low. Perhaps, with this financial backstop, the current downtick in the Ifo survey will turn out to be short-lived or at least quite moderate.

<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/GERMANY/GERMANY.HTM">Germany: Ifo Survey</a></th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Jan 2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Climate Index, 2000=100</td>
<td>94.0</td>
<td>95.4</td>
<td>96.4</td>
<td>95.7</td>
<td>91.7</td>
<td>89.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Balance</td>
<td>-12.9</td>
<td>-10.0</td>
<td>-8.1</td>
<td>-9.6</td>
<td>-17.5</td>
<td>-22.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Situation</td>
<td>-18.2</td>
<td>-16.0</td>
<td>-14.4</td>
<td>-16.9</td>
<td>-27.9</td>
<td>-33.9</td>
</tr>
<tr>
<td class="firstcol">Business Expectations</td>
<td>-7.4</td>
<td>-3.9</td>
<td>-1.5</td>
<td>-1.8</td>
<td>-6.5</td>
<td>-9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Orders on Hand, Manufacturing</td>
<td>-20.8</td>
<td>-19.0</td>
<td>-13.4</td>
<td>-21.1</td>
<td>-33.2</td>
<td>-35.2</td>
</tr>
<tr>
<td class="firstcol">Foreign Orders on Hand, Manufacturing</td>
<td>-13.5</td>
<td>-10.1</td>
<td>-11.2</td>
<td>-16.2</td>
<td>-28.2</td>
<td>-26.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Back at the turn of the year, business prospects were looking up in Germany. December and January saw an improvement in the Ifo Business Climate Index to the highest values in almost a year; this was reflected in production, the [...]

Marked Erosion in German Business Climate, March Ifo Survey Says

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050330c.jpg" width="353">
The Mortgage Bankers Association reported that mortgage applications recovered 2.4% last week following the 9.4% drop during the prior period. The average level in March 4.8% below February.
Purchase applications rose 5.5% to the highest level of the year. Purchase applications in March are 6.2% higher than in February.
Applications to refinance added 2.0% to the 16.5% decline the prior week. The decline pulled the March average down 16.1% versus February.
The effective interest rate on a conventional 30-year mortgage rose further to 6.34% from 6.19% the prior week and from 5.85% averaged in February. The effective rate on a 15-year mortgage also rose to 5.96%.
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 <a href="http://www.mbaa.org">here</a>.

<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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/25/05</th>
<th scope="col">03/18/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>674.3</td>
<td>658.8</td>
<td>-38.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>470.9</td>
<td>446.4</td>
<td>6.1%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,857.2</td>
<td>1,894.2</td>
<td>-61.8%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The Mortgage Bankers Association reported that mortgage applications recovered 2.4% last week following the 9.4% drop during the prior period. The average level in March 4.8% below February. Purchase applications rose 5.5% to the [...]

Mortgage Applications Up A Bit

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050330b.jpg" width="353">
US real GDP growth in 4Q04 was unrevised at 3.8% (AR). The Consensus expectation had been for a slight upward revision to 4.0% growth.
Reported for the first time, total U.S. operating corporate profits surged 13.5% (12.4% y/y) and the gain was held back by no change in profits earned abroad. Domestic profits grew 16.2% (18.3% y/y) and reflected a 30.1% rebound in financial sector profits which were depressed by hurricanes in 3Q.
Profits earned in the nonfinancial corporate sector grew 10.3% (24.2% y/y), the strongest gain since 2Q03 and were aided by continued profit margin expansion. Labor costs per unit of output fell for the first time in over a year as productivity remained strong. Non-labor costs continued the decline in place for nearly three years. Pricing power improved and real gross value added (output) grew a strong 1.6% (5.3% y/y).
Domestic demand growth was unrevised at 4.5% as growth in business fixed investment in equipment &amp; software held firm at 18.4% (14.5% y/y). Consumer spending growth also held solid at 4.2% (3.8% y/y). Less computers real GDP grew 3.3% (3.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050330a.jpg" width="353">
Price inflation was revised up slightly to 2.3%. The price index for domestic demand was revised higher to 2.9% (2.9% y/y) and continued to reflect a strong 5.3% (4.8% y/y) rise at the state &amp; local government level.
Perspectives on Monetary Policy and Central Banking from New York Federal Reserve Bank President Timothy F. Geithner can be found <a href="http://www.newyorkfed.org/newsevents/speeches/2005/gei050329.html"> 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"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">4Q &#39;04 (Final)</th>
<th scope="col">4Q &#39;04 (Prelim.</th>
<th scope="col">3Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.8%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.5%</td>
<td>0.6%</td>
<td>-1.0%</td>
<td>0.3%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.4%</td>
<td>3.2%</td>
<td>5.0%</td>
<td>3.6%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.4%</td>
<td>-1.4%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>4.5%</td>
<td>4.5%</td>
<td>4.9%</td>
<td>4.2%</td>
<td>4.4%</td>
<td>3.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.3%</td>
<td>2.1%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

US real GDP growth in 4Q04 was unrevised at 3.8% (AR). The Consensus expectation had been for a slight upward revision to 4.0% growth. Reported for the first time, total U.S. operating corporate profits surged 13.5% (12.4% y/y) and [...]

US GDP Growth Unrevised, Corporate Profits Firm

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, rose 3.3% m/m to 79.2 in November after increases of 2.4% in October (+1.9% initially) and 0.1% in September (unrevised), according to the National Association of Realtors (NAR). The November reading registered the fourth consecutive m/m gain after declining in July and June. The year-on-year growth rate accelerated to 2.6% in November, the highest since August, from 0.1% in October, though still below +6.0% y/y in November 2024. Despite recent gains, the PHSI had fallen 36.7% since its October 2021 high of 125.1.

The m/m rise in November pending home sales coincided with a decline in the average 30-year mortgage rate to 6.24% in November, the lowest since September 2024, down from 6.25% in October and 6.35% in September. These rates, while below a peak of 7.62% in October 2023, had remained higher than a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales rose m/m in November across all four major regions. Sales in the West recovered 9.2% (2.4% y/y) in November, the first m/m increase since August, following a 1.4% decline in October. Sales in the South rose 2.4% (3.3% y/y), the fourth straight m/m rise, on top of a 2.7% October advance. Sales in the Northeast grew 1.8% (1.8% y/y), the third successive m/m increase, after a 2.3% October gain. Sales in the Midwest rose 1.3% (2.2% y/y), up for the third time in four months, after a 5.3% November rebound.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- PHSI +3.3% (+2.6% y/y) in Nov., driven by lower mortgage rates.
- Home sales m/m up in all four major regions, w/ the highest rate in the West (+9.2%).
- Home sales y/y up across all regions, w/ the highest rate in the South (+3.3%).

U.S. Pending Home Sales Rise for the Fourth Straight Month in November

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance dropped 10,000 to 214,000 in the week of December 20, from 224,000 during the week of December 13. The four-week moving average of initial claims was 216,750, a decrease of 750 from the prior week’s unrevised 217,500.

Federal government employees initially filed 805 (NSA) jobless insurance claims in the week ended December 13, after filing 1091 claims in the week ended December 6.

Continuing claims for unemployment insurance rose 38,000 to 1.923 million in the week ending December 13, after rising 55,000 to 1.885 million, revised from 1.897 million in the week ending December 6. The four-week moving average was 1.894 million in the week ending December 13, down 5,250 from 1.899 million, revised from 1,902,000 in the week ending December 6. The insured unemployment rate stood at 1.3% in the week of December 13, up from 1.2% in the week of December 6.

Federal government employees’ continuing benefits claims were 12,887 (NSA) in the week ending December 6, from 14,077 (NSA) in the week of November 29. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 6, the highest unemployment rates were in New Jersey and Washington (both 2.40%), Massachusetts and Minnesota (both 2.10%), California and Rhode Island (both 2.00%). The lowest rates were in Florida (0.30%), and Alabama, Louisiana, North Carolina (all 0.40%). Rates in other notable states include New York (1.80%), Illinois and Pennsylvania (both 1.70%), and Texas (1.10%). 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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- Initial claims declined from the prior week.
- Continuing claims rose from the prior week.
- The insured unemployment rate edged up.


U.S. Initial Claims for Unemployment Insurance Dropped in Latest Week

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Mortgage applications dropped 5.0% w/w (+49.8% y/y) in the week of December 19, after a drop of 3.8% w/w (+40.9% y/y) in the week of December 12, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house fell 3.7% w/w (+15.9% y/y) in the latest week, the third consecutive weekly decline, following a drop of 2.8% w/w (+12.3% y/y) in the December 12 week. Applications for loan refinancing dropped 5.6% w/w (+110.1% y/y) in the December 19 week after a decline of 3.6% w/w (+86.0% y/y) in the week of December 12. 

The effective interest rate on a 30-year fixed-rate loan fell 8bps to 6.48% in the week ending December 19 from 6.56% in the week ending December 12. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.86% in the latest week from 5.91% in the prior week. The 30-year Jumbo rate rose 8bps to 6.63% in the December 19 week from 6.55% in the December 12 week. The rate on a 5-year ARM jumped 20bps to 5.96% in the latest week from 5.76% in the December 12 week.

The share of applications for refinancing an existing loan edged up to 59.1% of total applications in the December19 week from 59.0% in the week ending December 12. The adjustable-rate mortgage (ARM) share of activity rose to 8.1% in the latest week from 7.2% in the December 12 week.

The average size of a mortgage loan edged down 0.1% w/w (+7.8% y/y) to $399,700 in the week ending December 19, following a rise of 1.5% w/w (6.4% y/y) to $400,000 in the December 12 week. The average size of a purchase loan rose 1.0% w/w (1.1% y/y) to $428,600 in the latest week, after rising 0.6% w/w (-0.3% y/y) to $424,200 in the prior week. The average size of a loan to refinance a mortgage declined 0.9% w/w (+24.9% y/y) to $379,700 in the December 19 week, following a rise of 2.3% w/w (19.8% y/y) to $383,300 in the week ending December 12.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.


- Both purchase applications and refinancing loan applications fell in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.48%.
- Average loan size edged down.


U.S. Mortgage Applications Dropped in the Week of December 19

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Real GDP grew 4.3% (SAAR) during the third quarter following a 3.8% Q2 gain, revised from 3.3% reported initially. These increases followed a minimally revised 0.6% decline in Q1. A 3.0% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.3% compared to 2.1% y/y in Q2 and remained below its most recent high of 3.4% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment surged 7.0% (4.2% y/y) last quarter after edging 0.6% higher in Q2. Before-tax earnings with IVA & CCA rose 4.2% (9.1% y/y) after improving 0.2% in Q2. Financial sector earnings rose 6.2% (21.1% y/y) after rising 1.1% in Q2. Nonfinancial corporate profits rose 2.5% (3.3% y/y) after edging 0.5% higher in Q2. Earnings from abroad jumped 10.6% (26.3% y/y) following a 2.9% Q2  decline.

Foreign trade balance improvement added 1.59 percentage points to growth last quarter after adding 4.83 percentage points in Q2. Real exports increased 2.1% (1.5% y/y) after falling 0.5% in Q2. Real imports declined 1.2% (-1.8% y/y) after declining 8.3% in Q2. Inventories subtracted 0.22 percentage points from growth after subtracting 3.44 percentage point from Q2 growth.

Real final sales to private domestic purchasers grew 3.0% (2.6% y/y) last quartter after rising 2.9% in Q2, revised from 1.6%. Personal consumption expenditures rose 3.5% (2.6% y/y) after a 2.5% rise, revised from 1.6%. Durable goods spending rose 1.6% (3.2% y/y) after increasing 2.3% in Q2. Motor vehicle purchases declined 6.7% (+1.6% y/y) after strengthening 9.7% in Q2. Spending on home furnishings & appliances weakened 4.2% (+0.7% y/y) following a 2.0% fall. Recreational goods & vehicle buying surged 15.7% (7.0% y/y) last quarter after falling 2.5% in Q2.

Nondurable goods outlays in constant dollars rose 3.9% (3.0% y/y) last quarter following 2.2% growth in Q2. Apparel spending strengthened 6.7% (7.0% y/y) following a 5.8% rise. Food & beverage buying gained 2.0% (1.3% y/y) after edging 0.2% higher. Gasoline & fuel oil purchases improved 1.3% (-0.2% y/y) after falling 2.8% in Q2.



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Real spending on services increased 3.7% (2.4% y/y) in Q3 after a 2.6% Q2 gain. Outlays on housing & utilities edged 0.3% higher (1.0% y/y) after easing 0.2% in Q2. Health care expenditures surged 6.8% (4.5% y/y) after a 4.8% increase. Transportation outlays gained 3.1% both  q/q and y/y after a 7.0% rise, while recreation spending jumped 6.6% (2.4% y/y) following a 3.9% rise. Restaurant & hotel expenditures increased 1.2% (2.0% y/y) after strengthening 5.9% in Q2. Financial services expenditures rose 2.6% both q/q and y/y following a 4.8% Q2 increase.

Business fixed investment in constant dollars increased 2.8% (3.9% y/y) last  quarter following a 7.3% Q2 rise, revised from 5.7%. Expenditures on structures declined 6.3% both q/q and y/y, after falling for six consecutive quarters. Expenditures on producers’ durable equipment increased 5.4% (7.4% y/y), after strengthening 8.5% in Q2. Outlays on information processing equipment rose 8.4% (18.6% y/y), after strengthening 11.7% during Q2. Industrial equipment investment rose 2.0% (3.4% y/y) after a 6.5% rise. Transportation equipment investment fell  2.7% (+3.0% y/y) after strengthening 25.2%. Intellectual property product spending rose 5.4% last quarter (6.4% y/y), after surging 15.0% in Q2.

Residential structures investment in real terms declined 5.1% (-1.8% y/y), the same as in Q2. It was the third consecutive quartly decline.

Government spending rose 2.2% (1.1% y/y) during the third quarter after an unrevised 0.1% easing in Q2. Federal government expenditures rose 2.9% (-1.0% y/y) after falling 5.3% in Q2. National defense expenditures increased 5.8% (1.0% y/y) after rising 0.9% in Q2. State & local government spending rose 1.8% (2.4% y/y) following a 3.1% rise.

The GDP chain price index rose 3.8% (3.0% y/y) last quarter vs. 2.1% in Q2. The PCE chain price index increased 2.8% (2.7% y/y) following a 2.1% rise. The PCE price index excluding food and energy rose 2.9% (2.9% y/y) after increasing 2.6% in Q2. The business fixed investment price index rose 5.2% (1.5% y/y) in Q3 after a 0.4% decline. The residential price index rose 4.5% (3.3% y/y) last quarter after a 2.2% rise, while the government price index increased 4.4% (3.5% y/y) following a 3.3% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.



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- Consumer spending strengthens; growth in business investment decelerates.
- Corporate profit growth led by earnings abroad.
- Rise in chain price index accelerates.


U.S. GDP Growth is Strong in Q3; Profits Jump

Sandy Batten

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Industrial production fell 0.1% m/m in October but rose 0.2% m/m (2.5% y/y) in November. The Action Economics Forecast Survey expected 0.1% monthly gains in both months. Manufacturing activity was tepid with manufacturing production falling 0.4% m/m in October and unchanged in November. Manufacturing output has not posted a monthly gain since July. Mining output fell 0.8% m/m in October but rebounded 1.7% m/m in November. Utilities output surged 2.6% m/m in October but fell 0.4% m/m in November. Compared to a year ago, manufacturing production is up 1.9%; mining output is up 3.9%; and utilities output is up 4.8%.

By market group, output of durable consumer goods plunged 2.6% m/m in October and fell another 0.2% in November. Production of durable consumer goods has declined in five of the previous six months. Production of nondurable consumer goods rose 0.5% m/m in both October and November. Compared to a year ago, durable consumer goods production has fallen 5.9% while nondurable consumer goods output has risen 2.7%. Business equipment production fell 0.3% m/m in October but rebounded 0.3% m/m in November and is up 11.2% y/y. Production of nonindustrial supplies fell 0.3% m/m in both October and November.

By industry group, output of durable goods fell 0.5% m/m in October and declined 0.1% m/m in November but were up 3.2% from a year ago. Motor vehicle and parts production slumped 5.1% m/m in October and declined 1.0% m/m in November to be down 5.6% from a year ago. Monthly motor vehicle output has declined in five of the previous six months. In contrast, production of computers and electronic products increased 1.5% m/m in October and rose 0.8% m/m in November. Aerospace production continued to rise, increasing 2.0% m/m in October and 1.1% m/m in November to be up 25.2% from a year ago. Output of nondurable goods fell 0.2% m/m in October and edged up 0.1% m/m in November. Their output is up 0.9% from a year ago. Apparel output fell 1.3% m/m in October but recovered in November, rising 2.3% m/m. Food and beverage output rose 0.3% m/m in October and another 1.2% in November.

Output of selected high-technology industries rebounded in October and November. After having declined 1.0% m/m in both August and September, production jumped 1.9% m/m in October and 1.1% m/m in November to stand 11.8% higher than a year ago. Manufacturing output excluding selected high-tech industries fell 0.4% m/m in October and was unchanged in November. It has risen only 1.6% over the past year. Manufacturing excluding motor vehicle production was unchanged in October and edged up 0.1% m/m in November; it is up 2.6% y/y.

Total industry capacity utilization edged down to 75.9% in October from 76.0% in September and then recovered the decline in November, edging up to 76.0%. In the manufacturing sector, the utilization rate slumped to 75.4% in October from 75.8% in September and remained at 75.4% in November. The October/November reading is the lowest since January.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Today’s release contained figures for both October and November that had been delayed by the federal government shutdown.
- IP fell in October but recovered in November.
- Manufacturing output was tepid, falling in October and unchanged in November.
- A surge in utilities output in October prevented a larger decline in total production.
- A jump in mining output in November accounted for all of the increase in total production.


Economy in Brief: 2005

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U.S. Factory Inventories Up Again

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