Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113c.jpg" width="353">
Chain store sales last week eased 0.5% and reversed half of the gain earlier in November, according to the International Council of Shopping Centers (ICSC)-UBS.
For both weeks this month, sales were up a small 0.2% from the October average which fell 0.8% from September.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose 0.2% (-0.1% y/y) reversing a price of the prior week&#39;s rise.
The October 2007 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/default.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/10/07</th>
<th scope="col">11/03/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>475.2</td>
<td>477.8</td>
<td>2.7%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


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Chain store sales last week eased 0.5% and reversed half of the gain earlier in November, according to the International Council of Shopping Centers (ICSC)-UBS. For both weeks this month, sales were up a small 0.2% from the October [...]

U.S. Chain Store Sales Eased

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113a.jpg" align="left" border="0" height="265" width="353">
Small business optimism rose by 1.1% last month and reversed all of
its September increase. Nevertheless, the level remained near the lows
of this past Summer, according to the National Federation of
Independent Business (NFIB).
During the last ten years there has been a 70% correlation between
the level of the NFIB index and the two quarter change in real GDP.
The percentage of firms indicating that credit was more difficult
to get reversed all of the September increase, though it remained in an
uptrend.
Respondents expecting the economy to improve fell and remained in
the low range of the last year. During the last ten years there has
been a 72% correlation between the NFIB percentage and the y/y change
in nonfarm payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113b.jpg" align="right" border="0" height="265" width="353">
The percent planning to raise capital expenditures fell to near the
lows of this cycle and the percentage planning to raise employment fell
sharply m/m to the lowest level since last December.
The percentage of firms indicating that inventories were too low fell to the current cycle's low..The percentage of firms planning to raise average selling prices remained low as did the percentage of firms actually
raising prices, though the latter rose m/m. During the last ten years
there has been a 60% correlation between the change in the producer
price index and the level of the NFIB price index.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat'l Federation of Independent Business</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>96.2</td>
<td>97.3</td>
<td>-4.5%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
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Small business optimism rose by 1.1% last month and reversed all of its September increase. Nevertheless, the level remained near the lows of this past Summer, according to the National Federation of Independent Business (NFIB). [...]

Small Business Optimism Held Low, Credit Problems Eased

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113a.jpg" align="left" border="0" height="265" width="353">
Small business optimism rose by 1.1% last month and reversed
all of its September increase. Nevertheless, the level remained near
the lows of this past Summer, according to the National Federation of
Independent Business (NFIB).
During the last ten years there has been a 70% correlation
between the level of the NFIB index and the two quarter change in real
GDP.
The percentage of firms indicating that credit was
more difficult to get reversed all of the September increase, though it
remained in an uptrend.
Respondents expecting the economy to improve fell and remained
in the low range of the last year. During the last ten years there has
been a 72% correlation between the NFIB percentage and the y/y change
in nonfarm payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113b.jpg" align="right" border="0" height="265" width="353">
The percent planning to raise capital expenditures fell to
near the lows of this cycle and the percentage planning to raise
employment fell sharply m/m to the lowest level since last December.
The percentage of firms indicating that inventories were too
low fell to the current cycle's low..The percentage of firms planning
to raise average selling prices remained low as did the percentage of
firms actually raising prices, though the latter
rose m/m. During the last ten years there has been a 60% correlation
between the change in the producer price index and the level of the
NFIB price index.
About 24 million businesses exist in the United States. Small
business creates 80% of all new jobs in America.

<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/SURVEYS/@S7/@S7.HTM">Nat'l
Federation of Independent Business</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index
(1986=100)</td>
<td>96.2</td>
<td>97.3</td>
<td>-4.5%</td>
<td>98.9</td>
<td>101.6</td>
<td>104.6</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Eased 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113c.jpg" align="left" border="0" height="265" width="353">
Chain store sales last week eased 0.5% and reversed half of
the gain earlier in November, according to the International Council of
Shopping Centers (ICSC)-UBS.
For both weeks this month, sales were up a small 0.2% from the
October average which fell 0.8% from September.



During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.


The leading indicator of chain store sales from ICSC-UBS rose
0.2% (-0.1% y/y) reversing a price of the prior week's rise.
The October 2007 Senior Loan Officer Opinion Survey
on Bank Lending Practices from the Federal Reserve Board is
available <a href="http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/default.htm">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/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/10/07</th>
<th scope="col">11/03/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total
Weekly Chain Store Sales</td>
<td>475.2</td>
<td>477.8</td>
<td>2.7%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
Economic Sentiment Among theGerman
Financial Community Takes a Tumble in November 
by <a href="/comment/Curley.html">Louise
Curley</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113d.jpg" align="left" border="0" height="265" width="353">
After remaining steady in October at -18.1%, the ZEW indicator
of economic sentiment among institutional investors and analysts for
the next 6 months took a tumble in November, falling sharply to -32.5%.
The decline brought the indicator to its lowest value since February
1993. (The history of this indicator is shown in the first chart.)
The indicator is a percent balance measure, that is, it
measures the difference between those participants who are optimistic
and those who are pessimistic. In October, the pessimists outweighed
the optimists by 32.5%. The indicator is based on the qualitative
assessments of the participants regarding the macro economic outlook,
the inflation rate, short and long term interest rates, the stock
market and exchange rates. The decline in sentiment reflects the
deterioration that has been taking place in most of these components.
The continuing uncertainty
regarding the magnitude and spread of the sub prime mortgage collapse
in the U. S. has been a major depressant, but other factors have also
contributed to the decline in sentiment. Inflation has been rising and
in October was 2.45% compared with 1.65% in January. During the time
that the survey took place--October 29 to November 12, the Euro rose
7.23% from $1.3596 to $1.4579. The Frankfurt Xetra Dax (12/31/87=1000)
stock market index declined 2.5% during this same time. The second
chart shows the year over year changes in the daily figures for the
Euro and the Dax stock market index from late October to date, roughly
the time during which the survey took place.
In contrast to their pessimistic views about the next six
months, investors and analysts continue to view current conditions very
favorably with the optimists outweighing the pessimists by 70%, one of
the highest balances on record. The third chart shows the history of
the indicator of current conditions. 

 <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113e.jpg" height="265" width="314"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113f.jpg" height="265" width="314">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;ZEW
INDICATOR OF ECONOMIC SENTIMENT&nbsp; (% Balance)&nbsp;</th>
<th scope="col">Nov 07</th>
<th scope="col">Oct 07&nbsp;</th>
<th scope="col">Nov 06&nbsp;</th>
<th scope="col">M/M&nbsp; Dif&nbsp;</th>
<th scope="col">Y/Y&nbsp;&nbsp;&nbsp;&nbsp;
Dif&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">
Macro Expectation (Next 6 Months)
</td>
<td>-32.5</td>
<td>-18.1</td>
<td>-28.5</td>
<td>-14.4</td>
<td>-4.0</td>
<td>22.3</td>
<td>34.8</td>
<td>44.6</td>
</tr>
<tr>
<td class="firstcol">Current
Economic Conditions&nbsp;</td>
<td>70.0</td>
<td>70.2</td>
<td>53.0</td>
<td>-0.2</td>
<td>17.0</td>
<td>18.3</td>
<td>-61.8</td>
<td>-67.7</td>
</tr>
</tbody>
</table>
German Sales Trends Improving; But
Still a Moderate Quarter 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113g.jpg" align="left" border="0" height="265" width="353">
Spending patterns improved in September from August despite
their downward revision. Sequential rates of growth find 3-month and
6-month rates of growth are generally improved form their respective
year ago pace. Nominal auto sales were especially strong in the quarter
expanding at a growth rate of better than 20%. But excluding autos
consumer spending is still very restrained. For the quarter real German
retail sales excluding autos are up by just a rate of 0.7%. Nominal
retail sales are up at a 1.6% pace in the quarter. Nominal food and
tobacco sales are off by 0.9% in the quarter. Clothing and shoe sales
are up by just 2.3%. The sequential growth rates show more pop than the
quarterly growth rates do. Time will tell if the rebound is authentic
or not.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Real and Nominal Retail Sales New QTR </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
<td>New Qtr Saar</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>2.0%</td>
<td>-1.1%</td>
<td>0.6%</td>
<td>6.3%</td>
<td>3.7%</td>
<td>1.9%</td>
<td>5.6%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">MV and Parts</td>
<td>-2.4%</td>
<td>4.3%</td>
<td>0.8%</td>
<td>10.7%</td>
<td>12.8%</td>
<td>-2.5%</td>
<td>15.2%</td>
<td>21.8%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>2.9%</td>
<td>-0.8%</td>
<td>-0.2%</td>
<td>7.7%</td>
<td>4.4%</td>
<td>1.7%</td>
<td>5.1%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.8%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>18.3%</td>
<td>8.2%</td>
<td>14.5%</td>
<td>3.4%</td>
<td>2.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Real</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>1.6%</td>
<td>-1.5%</td>
<td>0.8%</td>
<td>3.7%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>5.1%</td>
<td>0.7%</td>
</tr>
</tbody>
</table>
Inflation Trends Turn Bleak in the
Euro Area&#8230; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 13, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071113h.jpg" align="left" border="0" height="265" width="353">
In October, as energy prices have surged again, the Euro area
is suffering inflation bulging beyond the limits of its ceiling. We
know that the ECB is not happy with this development even though most
of it is due to oil prices and core inflation seems less of a problem.
Still the ECB makes policy without an explicit reference to core prices
unlike the Federal Reserve in the US.
Despite a surging Euro that should help to combat any true
inflation forces in the Euro area economy, the ECB remains wary of this
over top inflation partly because of the ongoing strong money and
credit growth in the EMU. So Europeans find themselves in the sticky
position of seeing inflation flare, the central bank remain wary, ready
to act, even as their currency value remains quite strong and the
competitiveness pressures from that strength are squelching growth and
killing Europe&#8217;s export orders. The European policy dilemma has become
an economic oxymoron: the ECB&#8217;s own threat to hike rates is further
bolstering the euro and further exacerbating the economic problems
within the zone as the ECB does nothing and worries about inflation
pressure which worsen.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col"> Euro
area &amp; Friends: Headline Inflation Yr/Yr</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Year/year</td>
<td colspan="2">Mo/Mo</td>
<td>3Mo: AR</td>
<td>6Mo:Ar</td>
</tr>
<tr>
<td class="firstcol">Core HICP</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>May-07</td>
<td>Apr-07</td>
</tr>
<tr>
<td class="firstcol">Belgium</td>
<td style="color: red;">2.2%</td>
<td>1.5%</td>
<td>1.2%</td>
<td>0.8%</td>
<td>0.1%</td>
<td style="color: red;">3.5%</td>
<td style="color: red;">2.1%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td style="color: red;">2.1%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>0.2%</td>
<td>0.1%</td>
<td style="color: red;">2.6%</td>
<td style="color: red;">2.3%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">2.7%</td>
<td style="color: red;">2.6%</td>
<td>2.0%</td>
<td>0.2%</td>
<td>0.7%</td>
<td style="color: red;">3.1%</td>
<td style="color: red;">2.7%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td style="color: red;">3.1%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">2.7%</td>
<td>0.4%</td>
<td>0.3%</td>
<td>1.1%</td>
<td style="color: red;">4.0%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">3.0%</td>
<td style="color: red;">2.9%</td>
<td style="color: red;">2.3%</td>
<td>0.2%</td>
<td>0.3%</td>
<td style="color: red;">2.3%</td>
<td style="color: red;">2.5%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">2.3%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>0.7%</td>
<td>0.3%</td>
<td style="color: red;">4.7%</td>
<td style="color: red;">3.3%</td>
</tr>
<tr>
<td class="firstcol">Luxembourg</td>
<td style="color: red;">3.6%</td>
<td style="color: red;">2.5%</td>
<td>1.8%</td>
<td>0.6%</td>
<td>0.0%</td>
<td style="color: red;">2.8%</td>
<td style="color: red;">2.7%</td>
</tr>
<tr>
<td class="firstcol">The Netherlands</td>
<td>1.6%</td>
<td>1.3%</td>
<td>1.0%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="8">EU:
Other HICP/CPI</td>
</tr>
<tr>
<td class="firstcol">UK(HICP)</td>
<td style="color: red;">2.0%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>0.5%</td>
<td>0.1%</td>
<td style="color: red;">2.7%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112c.jpg" align="left" border="0" height="265" width="353">
Another indicator that all is not well in Japan was released today.
The seasonally unadjusted diffusion index of consumer confidence for a
two or more person household was 42.8% in October, compared with 44.1%
in September and 48.2% in October, 2006. A value below 50% means that
the majority of the participants in the survey have a negative view of
the outlook. While the decline in October is significant, it should be
noted that since June, 1982, when the series began, there have been few
times when the level of the index was above 50% as can
be seen in the first chart. Japanese consumers have not been
particularly optimistic over the past twenty-five years. Monthly data
for confidence are available only since December 2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112d.jpg" align="right" border="0" height="265" width="353">
The index is based on the average of four sentiment indexes: Overall
Livelihood, Income Growth, Employment and Willingness to Buy. The year
to year changes in each of these indexes are shown in the second chart.
As shown there, the year to year changes have been declining from their
early 2006 peak and, since early 2007, have become negative. The
declines in the Employment and Willingness to Buy indexes have been
particularly sharp.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;JAPAN:&nbsp; CONSUMER CONFIDENCE (Diffusion Indexes)&nbsp;</th>
<th scope="col">Oct 07</th>
<th scope="col">Sep 07&nbsp;</th>
<th scope="col">Oct 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total: Two or More Persons Households</td>
<td>42.8</td>
<td>44.1</td>
<td>48.2</td>
<td>-1.3</td>
<td>-5.4</td>
<td>48.3</td>
<td>47.3</td>
<td>45.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Overall Livelihood</td>
<td>41.0</td>
<td>42.2</td>
<td>45.6</td>
<td>-1.2</td>
<td>-4.6</td>
<td>45.6</td>
<td>45.8</td>
<td>44.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Income Growth</td>
<td>42.2</td>
<td>42.4</td>
<td>44.9</td>
<td>-0.3</td>
<td>-1.9</td>
<td>44.7</td>
<td>44.8</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp; Employment</td>
<td>45.3</td>
<td>46.4</td>
<td>52.4</td>
<td>-1.1</td>
<td>-7.1</td>
<td>52.8</td>
<td>48.9</td>
<td>45.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Willingness to Buy</td>
<td>42.5</td>
<td>45.5</td>
<td>49.8</td>
<td>-2.7</td>
<td>-7.0</td>
<td>50.0</td>
<td>49.5</td>
<td>48.9</td>
</tr>
</tbody>
</table>
</body></html>

Another indicator that all is not well in Japan was released today. The seasonally unadjusted diffusion index of consumer confidence for a two or more person household was 42.8% in October, compared with 44.1% in September and 48.2% [...]

Japanese Consumers Becoming More Pessimistic

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112b.jpg" align="left" border="0" height="265" width="353">
The OECD trend restored leading indicators are now indicating
an outright slowing rather than a moderating for growth. These signals
have been gradually shifting toward the more pessimistic. Japan&#8217;s
signal is now quite dour. The
US and Europe are showing almost the same degree of slowdown in the new
numbers. The table is arrayed with some six month calculations since
that is the OECD&#8217;s preferred way of assessing its data. No matter how
you slice this month the outlook is for weakening.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">OECD
Trend-Restored Leading Indicators </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td colspan="5" class="firstcol">Growth
Progression-SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD</td>
<td style="color: red;">-5.8%</td>
<td style="color: red;">-1.0%</td>
<td style="color: red;">0.4%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD7</td>
<td style="color: red;">-7.8%</td>
<td style="color: red;">-1.8%</td>
<td style="color: red;">-0.4%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Europe</td>
<td style="color: red;">-4.5%</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">-0.3%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Japan</td>
<td style="color: red;">-21.6%</td>
<td style="color: red;">-12.1%</td>
<td style="color: red;">-6.6%</td>
<td style="color: red;">1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD US</td>
<td style="color: red;">-5.3%</td>
<td style="color: red;">1.3%</td>
<td style="color: red;">1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td colspan="5" class="firstcol">Six-month
Readings at
6-Month Intervals:</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD</td>
<td style="color: red;">-1.0%</td>
<td>1.8%</td>
<td style="color: red;">0.5%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD 7</td>
<td style="color: red;">-1.8%</td>
<td>1.0%</td>
<td style="color: red;">-0.5%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Europe</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">1.1%</td>
<td style="color: red;">1.8%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Japan</td>
<td style="color: red;">-12.1%</td>
<td style="color: red;">-0.7%</td>
<td style="color: red;">-0.1%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD US</td>
<td style="color: red;">1.3%</td>
<td>1.6%</td>
<td style="color: red;">-0.9%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD RED</td>
</tr>
</tbody>
</table>
</body></html>

The OECD trend restored leading indicators are now indicating an outright slowing rather than a moderating for growth. These signals have been gradually shifting toward the more pessimistic. Japan’s signal is now quite dour. The US [...]

OECD Shifts to Slowdown Signal

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112e.jpg" width="353">
The headline commodity price worry is the rise in oil and energy prices: 57.2% for WTI and 28.7% for gasoline since the beginning of the year. And gasoline prices look to be headed higher while rubber prices have soared 62.8% this year. 
With any luck, however, that isn&#39;t the whole story. There seem to be other factors which will mitigate the effect that these gains will have on overall consumer price inflation.
The first is that factory sector pricing depends both on overall demand growth, which is easing, and the overall rise in costs of which commodity prices account for 25% or less. The other 75% is labor costs, and the employment cost index for factory workers is up 1.2% so far this year versus a 1.8% gain last year, a 3.4% rise in 2005 and a 4.8% rise during 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112f.jpg" width="353">
The second is that for the economy overall, the dependence on oil is roughly half what it was in the early 1970s due to conservation and improved efficiencies in production techniques. And, in total, U.S. demand growth has slowed as well as the growth in the Fed&#39;s monetization of that growth. Year to year growth in the monetary base through October was 2.5% versus a 3.9% rise last year and a 4.3% 2005 increase.
Finally, other commodity prices have topped or have been declining. The housing market&#39;s weakness has dropped lumber prices 5% so far this year after a 15% decline last year, and a 4% decline in 2004. In addition, steel scrap prices have been roughly flat this year after strong gains in years prior. Zinc prices are 31% lower so far this year and have retraced most of a strong gain at the end of 2006. Similarly, aluminum prices have fallen 12% this year and have retraced the strong gains during the latter part of 2006.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112a.jpg" width="353"> 
In conclusion, inflation worries have affected the consumer&#39;s psychology greatly. The worries have been enough to drop consumer sentiment by nearly one quarter since the highs early this year. This would seem to guarantee some near term slowing in consumer spending. The mitigating factors sighted above, with that luck, will prevent a protracted decline.

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The headline commodity price worry is the rise in oil and energy prices: 57.2% for WTI and 28.7% for gasoline since the beginning of the year. And gasoline prices look to be headed higher while rubber prices have soared 62.8% this [...]

Commodity Prices: Oil Up, Most Other Inflation Forces Topped

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112e.jpg" align="left" border="0" height="265" width="353">
The headline commodity price worry is the rise in oil and
energy prices: 57.2% for WTI and 28.7% for gasoline since the beginning
of the year. And gasoline prices look to be headed higher while rubber
prices have soared 62.8% this year. 
 

With any luck, however, that isn't the whole story. There seem
to be other factors which will mitigate the effect that these gains
will have on overall consumer price inflation.
The first is that factory sector pricing depends both on
overall demand growth, which is easing, and the overall rise in costs
of which commodity prices account for 25% or less. The other 75% is
labor costs, and the employment cost index for factory workers is up
1.2% so far this year versus a 1.8% gain last year, a 3.4% rise in 2005
and a 4.8% rise during 2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112f.jpg" align="right" border="0" height="265" width="353">
The second is that for the economy overall, the dependence on
oil is roughly half what it was in the early 1970s due to conservation
and improved efficiencies in production techniques. And, in total, U.S.
demand growth has slowed as well as the growth in the Fed's
monetization of that growth. Year to year growth in the monetary base
through October was 2.5% versus a 3.9% rise last year and a 4.3% 2005
increase.
Finally, other commodity prices have topped or have been
declining. The housing market's weakness has dropped lumber prices 5%
so far this year after a 15% decline last year, and a 4% decline in
2004. In addition, steel scrap prices have been roughly flat this year
after strong gains in years prior. Zinc prices are 31% lower so far
this year and have retraced most of a strong gain at the end of 2006.
Similarly, aluminum prices have fallen 12% this year and have retraced
the strong gains during the latter part of 2006.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112a.jpg" align="left" border="0" height="265" width="353"> 
 

In conclusion, inflation worries have affected the consumer's
psychology greatly. The worries have been enough to drop consumer
sentiment by nearly one quarter since the highs early this year. This
would seem to guarantee some near term slowing in consumer spending.
The mitigating factors sighted above, with that luck, will prevent a
protracted decline.

OECD Shifts to Slowdown Signal 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 12, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112b.jpg" align="left" border="0" height="265" width="353">
The OECD trend restored leading indicators are now indicating
an outright slowing rather than a moderating for growth. These signals
have been gradually shifting toward the more pessimistic. Japan&#8217;s
signal is now quite dour. The
US and Europe are showing almost the same degree of slowdown in the new
numbers. The table is arrayed with some six month calculations since
that is the OECD&#8217;s preferred way of assessing its data. No matter how
you slice this month the outlook is for weakening.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="5" scope="col">OECD
Trend-Restored Leading Indicators </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td colspan="5" class="firstcol">Growth
Progression-SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>3Mos</td>
<td>6Mos</td>
<td>12mos</td>
<td>Yr-Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD</td>
<td style="color: red;">-5.8%</td>
<td style="color: red;">-1.0%</td>
<td style="color: red;">0.4%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD7</td>
<td style="color: red;">-7.8%</td>
<td style="color: red;">-1.8%</td>
<td style="color: red;">-0.4%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Europe</td>
<td style="color: red;">-4.5%</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">-0.3%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Japan</td>
<td style="color: red;">-21.6%</td>
<td style="color: red;">-12.1%</td>
<td style="color: red;">-6.6%</td>
<td style="color: red;">1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD US</td>
<td style="color: red;">-5.3%</td>
<td style="color: red;">1.3%</td>
<td style="color: red;">1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td colspan="5" class="firstcol">Six-month
Readings at
6-Month Intervals:</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Recent six</td>
<td>6Mo Ago</td>
<td>12Mo Ago</td>
<td>18MO Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD</td>
<td style="color: red;">-1.0%</td>
<td>1.8%</td>
<td style="color: red;">0.5%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD 7</td>
<td style="color: red;">-1.8%</td>
<td>1.0%</td>
<td style="color: red;">-0.5%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Europe</td>
<td style="color: red;">-1.6%</td>
<td style="color: red;">1.1%</td>
<td style="color: red;">1.8%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Japan</td>
<td style="color: red;">-12.1%</td>
<td style="color: red;">-0.7%</td>
<td style="color: red;">-0.1%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD US</td>
<td style="color: red;">1.3%</td>
<td>1.6%</td>
<td style="color: red;">-0.9%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td colspan="5" class="firstcol">Slowdowns
indicated by BOLD RED</td>
</tr>
</tbody>
</table>
Japanese Consumers Becoming More
Pessimistic 
by <a href="/comment/Curley.html">Louise
Curley</a> November 12, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112c.jpg" align="left" border="0" height="265" width="353">
Another indicator that all is not well in Japan was released
today. The seasonally unadjusted diffusion index of consumer confidence
for a two or more person household was 42.8% in October, compared with
44.1% in September and 48.2% in October, 2006. A value below 50% means
that the majority of the participants in the survey have a negative
view of the outlook. While the decline in October is significant, it
should be noted that since June, 1982, when the series began, there
have been few times when the level
of the index was above 50% as can be seen in the first chart. Japanese
consumers have not been particularly optimistic over the past
twenty-five years. Monthly data for confidence are available only since
December 2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071112d.jpg" align="right" border="0" height="265" width="353">
The index is based on the average of four sentiment indexes:
Overall Livelihood, Income Growth, Employment and Willingness to Buy.
The year to year changes in each of these indexes are shown in the
second chart. As shown there, the year to year changes have been
declining from their early 2006 peak and, since early 2007, have become
negative. The declines in the Employment and Willingness to Buy indexes
have been particularly sharp.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;JAPAN:&nbsp;
CONSUMER CONFIDENCE (Diffusion Indexes)&nbsp;</th>
<th scope="col">Oct 07</th>
<th scope="col">Sep 07&nbsp;</th>
<th scope="col">Oct 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total: Two or More
Persons Households</td>
<td>42.8</td>
<td>44.1</td>
<td>48.2</td>
<td>-1.3</td>
<td>-5.4</td>
<td>48.3</td>
<td>47.3</td>
<td>45.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Overall
Livelihood</td>
<td>41.0</td>
<td>42.2</td>
<td>45.6</td>
<td>-1.2</td>
<td>-4.6</td>
<td>45.6</td>
<td>45.8</td>
<td>44.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Income
Growth</td>
<td>42.2</td>
<td>42.4</td>
<td>44.9</td>
<td>-0.3</td>
<td>-1.9</td>
<td>44.7</td>
<td>44.8</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp; Employment</td>
<td>45.3</td>
<td>46.4</td>
<td>52.4</td>
<td>-1.1</td>
<td>-7.1</td>
<td>52.8</td>
<td>48.9</td>
<td>45.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;
Willingness to Buy</td>
<td>42.5</td>
<td>45.5</td>
<td>49.8</td>
<td>-2.7</td>
<td>-7.0</td>
<td>50.0</td>
<td>49.5</td>
<td>48.9</td>
</tr>
</tbody>
</table>
</body></html>

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/071109h.jpg" width="353">
The University of Michigan&#39;s consumer sentiment index fell 5.9 points in early November to 75.0 from October&#39;s 80.9. This was a 7.3% drop, almost as large as August&#39;s 7.7%, and the fourth consecutive month without an increase. Consensus expectations in the Action Economics survey called for only a slight ease to 80.0.
Both major sub-indexes were down markedly as well. Current conditions declined from October&#39;s 97.6 to 91.0, the weakest since March 2003. Expectations fell from 70.1 to 64.7, lowest since October 2005.
All the summary line items fell by significant amounts, ranging from 5.6%, for current buying conditions, to 10.3%, for business conditions in the next 12 months. Current personal finances were down 8.1% and expected personal finances by 7.6%. Five-year business expectations fell 7.1%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071109j.jpg" width="353">
Among the survey details, those related to buying conditions for houses seem particularly relevant. The overall score for &quot;buying conditions for houses&quot; is 124, compared with 131 in October. This measure was 160 during the 2004 housing market peak. The overall &quot;good time&quot; rating eased to 61 in early November from 64 last month, while the &quot;bad time&quot; rating rose to 37 from 33. Readings of these respective magnitudes have prevailed for about the last 15 to 18 months, the most adverse combination since the Gulf War in late 1990/early 1991.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071109k.jpg" width="353">
The survey lists reasons why this is a &quot;good time&quot; or a &quot;bad time&quot; to buy. Respondents who told the poll-takers that &quot;times [in general] are bad&quot; numbered 15% of the total, the highest since 1982. The number feeling that &quot;times are good; there is prosperity&quot; was zero. This reading has never been very high, with a peak of 16 in early 2000, just as the stock market was reaching a peak. But readings of zero have also been rare: early 1992 and the double-digit inflation/interest rate/recession period from 1980 to 1982. One favorable note came in the item home &quot;prices are low; there are good deals&quot;; 52% of respondents believe this is true. Perhaps there&#39;s the seed of some recovery in that.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.

<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/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Nov &nbsp; y/y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>75.0</td>
<td>80.9</td>
<td>83.4</td>
<td>-18.6% </td>
<td>87.3</td>
<td>88.5</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>91.0</td>
<td>97.6</td>
<td>97.9</td>
<td>-14.2%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>64.7</td>
<td>70.1</td>
<td>74.1</td>
<td>-22.2%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigan's consumer sentiment index fell 5.9 points in early November to 75.0 from October's 80.9. This was a 7.3% drop, almost as large as August's 7.7%, and the fourth consecutive month without an increase. [...]

Michigan Consumer Sentiment in Full Retreat

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

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The Housing Market Index, compiled by the National Association of Home Builders/Wells Fargo, fell 5.9% (-25.6% y/y) to 32 in June after declining 15.0% in May. It was well below the break-even point of 50, where it’s been since May of last year. The index remains below a July 2023 high of 56 and a November 2020 peak of 90.

The rate on a 30-year fixed rate mortgage averaged 6.85% in the first two weeks of June versus 6.82% during all of May. It remained below the high of 7.79% in the last week of October 2023, according to Freddie Mac.

The single-family sales measure declined 5.4% (-27.1% y/y) this month to 35 after falling 17.8% in May. The prospective sales index in six months declined 4.8% (-14.9% y/y) to 40 after falling 2.3% in May. It was the lowest level since November 2023. The traffic of prospective buyers’ index fell 8.7% (-25.0% y/y) to 21 in June after declining 8.0% in May.

Housing performance weakened across most of the country during June. In the South, the index dropped 6.3% (-30.2% y/y) to 30 this month, after falling 15.8% in May. The index for the Midwest declined 2.5% both m/m and y/y to 39 after falling 7.0% in May. The index in the West dove 18.5% (-42.1% y/y) to 22 after plunging 25.0% in May. Moving higher, the Northeast index rose 4.8% (-29.0% y/y) to 44, after falling 2.3% in May.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's **SURVEYS** database.

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- Overall reading stands at lowest level since December 2022.
- All component measures fall.
- Most regional indexes retreat.

U.S. Home Builders Index Declines in June

Winnie Tapasanun

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Industrial production (IP) fell 0.2% m/m in May following an upwardly revised 0.1% increase in April (0.0% initially) and an upwardly revised 0.2% decline in March (-0.3% previously), data from the Federal Reserve Board showed. A 0.0% m/m for May had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 0.6% in May, the lowest since December, from 1.5% in April; nevertheless, it was an improvement from +0.1% y/y in May 2024. The May IP index was at 103.6, slightly down from its recent high of 104.0 in February; however, having remained 2.1% above its recent low of 101.5 in January 2024.

By **industry groups**, manufacturing production edged up 0.1% (0.5% y/y) in May, the third m/m increase in four months, after a downwardly revised 0.5% drop in April (-0.4% initially). Durable goods production rose 0.4% (0.9% y/y) in May, up for the third month in four, reversing a 0.4% decline in April. This reflected m/m output rises of 4.9% (0.9% y/y) in motor vehicles & parts, 1.1% (5.7% y/y) in aerospace & miscellaneous transportation equipment, 0.9% (2.4% y/y) in electrical equipment, appliances & components, 0.9% (-1.2% y/y) in furniture & related products, 0.9% (4.1% y/y) in wood products, and 0.2% (-1.5% y/y) in primary metals. Notably, aircraft & parts production rose 2.0% (9.9% y/y) in May, the seventh straight m/m rise, on top of a 1.4% increase in April. To the downside, the following durable goods categories fell m/m in May, including output drops of 1.6% (+1.2% y/y) in nonmetallic mineral products, 1.2% (-2.2% y/y) in fabricated metal products, 1.0% (+1.0% y/y) in machinery, 0.4% (-3.9% y/y) in miscellaneous durables goods, and 0.2% (+4.8% y/y) in computer & electronic products.

Nondurable goods production fell 0.2% (+0.4% y/y) in May following a 0.6% decrease in April and two successive m/m increases. The May fall reflected m/m output declines of 1.7% (-0.9% y/y) in printing & related support activities, 1.4% (-2.7% y/y) in petroleum & coal products, and 0.3% (-0.9% y/y) in food, beverages & tobacco. To the upside, the following nondurable goods categories rose m/m in May, including output rises of 2.2% (-3.7% y/y) in apparel & leather goods, 0.8% (-1.6% y/y) in textiles & product mills, 0.6% (-0.5% y/y) in paper, 0.1% (4.1% y/y) in chemicals, and 0.1% (-2.4% y/y) in plastics & rubber products.

Utilities output declined 2.9% (-1.6% y/y) in May, the third m/m decrease in four months, following an upwardly revised 4.9% gain in April (+3.3% initially). In contrast, mining activity ticked up 0.1% (2.9% y/y), up for the third month in four, after a 0.3% April decline (unrevised).

By **market groups**, construction supplies production slid 0.7% (+1.6% y/y) in May after a 1.2% drop in April and two consecutive m/m rises. Consumer goods output fell 0.2% (-0.5% y/y) in May, the third successive m/m fall, after a 0.3% decline in April, reflecting a 2.0% rebound (-1.9% y/y) in durable consumer goods and a 0.8% drop (-0.1% y/y) in nondurable consumer goods. Materials production declined 0.2% (+0.9% y/y), down for the second month in three, following a 0.5% April gain. To the upside, business equipment output grew 0.8% (2.7% y/y) in May, the seventh straight m/m rise, on top of a 0.2% increase in April.

In **special classifications**, factory output of selected high-tech industries rose 0.4% (9.8% y/y) in May, the fifth m/m rise in six months, after an upwardly revised 2.8% gain in April (+1.4% initially). Manufacturing production excluding selected high-tech industries inched up 0.1% (0.2% y/y) in May, the third m/m increase in four months, following a 0.6% drop in April, while manufacturing production excluding selected high-tech and motor vehicles & parts fell 0.3% (+0.2% y/y) following a 0.5% April decline and two consecutive m/m gains.

Capacity utilization fell to 77.4% in May, the lowest since January, from 77.7% in both April (unrevised) and March (77.8% previously). The Action Economics Forecast Survey forecasted 77.7%. The May reading was 2.2 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization held at 76.7% in May and April (76.8% initially); the May rate was 1.5 percentage points below its long-run average.

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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- May IP -0.2% (+0.6% y/y), led by a 2.9% m/m decrease in utilities output.
- Mfg. IP +0.1%, reflecting m/m gains of 4.9% in auto production and 1.1% in aerospace & misc. transp. equipt. (w/ durable goods up 0.4% and nondurable goods down 0.2%).
- Mining activity edges up 0.1%, the third m/m increase in four months.
- Key categories in market groups mostly drop.
- Capacity utilization down 0.3%pt. to a four-month-low 77.4%; mfg. capacity utilization unchanged at 76.7%.

U.S. Industrial Production Declines in May, the Second M/M Fall in Three Months

Sandy Batten

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Total retail sales slumped 0.9% m/m (+3.3% y/y) in May following a downwardly revised 0.1% monthly decline in April (previously +0.1% m/m). The May decline was led by a 3.5% m/m (+2.5% y/y) drop in motor vehicle and parts sales and a 2.0% m/m (-6.9% y/y) price-related decline in sales at gasoline stations. This was the fourth consecutive monthly decline in gasoline sales. Sales excluding autos fell 0.3% m/m (+3.5% y/y) in May after a downwardly revised unchanged reading in April (previously +0.1% m/m). The Action Economics Forecast Survey looked for total sales to fall 0.6% m/m in May and for sales ex autos to rise 0.2% m/m. Sales excluding autos and gasoline slipped 0.1% m/m in May after a 0.1% m/m increase in April.

On a more positive note, sales in the retail control group, which excludes autos, building materials, gasoline and food services, rebounded 0.4% m/m (5.0% y/y) in May after an upwardly revised 0.1% m/m decline in April (previously -0.2% m/m). These sales are used in the construction of personal consumption expenditures in the NIPA accounts. While these sales slowed in April and May from a relatively strong February and March, the April/May average is still 2.9% at an annual rate above the Q1 average, providing a solid foundation for Q2 PCE.

By category, in addition to declines in auto and gasoline sales, building material and garden equipment sales slumped 2.7% m/m, their first monthly decline in three months. Sales at food service and drinking places declined 0.9% m/m, their first monthly decline in three months. Sales at electronics and appliance stores fell 0.6% m/m, their first decline in four months. In contrast, sales at furniture stores continued to rise, increasing 1.2% m/m, their fourth consecutive monthly gain. Sales at sporting goods, etc. stores rose 1.3% m/m but failed to offset a 3.0% m/m decline in April. Sales at nonstore retailers rose 0.9% m/m in May for their fourth consecutive monthly gain. Miscellaneous store sales jumped 2.9% m/m.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economic Forecast Survey in **AS1REPNA**.

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- Sales fell a more-than-expected 0.9% m/m, led by a 3.5% decline in motor vehicle sales and a 2.0% drop in gasoline store sales.
- Sales excluding autos unexpectedly fell 0.3% m/m.
- In contrast, sales in the control group (used to estimate PCE) rebounded 0.4% m/m.

U.S. Retail Sales Fell More than Expected in May 2025

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Import prices were unchanged during May after rising 0.1% in April, and falling 0.4% in March, according to the Bureau of Labor Statistics. A 0.3% decline had been expected in the Action Economics Forecast Survey. The year-on-year increase picked up to 0.2% but remained below the recent high of 2.2% in December. Export prices fell 0.9% during May after an unrevised 0.1% April gain. A 0.2% decline had been expected. The y/y rise eased to 1.7% from 1.9% in April and was the slowest gain since November.

The steady import price index in May included a 4.0% drop (-15.8% y/y) in imported fuel prices, the third consecutive month of sharp decline. The decline in imported fuel costs reflected a 9.0% fall (+88.4% y/y) in natural gas, a 2.7% drop (-18.8% y/y) in fuel oil costs, a 3.7% decline (-17.4% y/y) in petroleum & petroleum products and a 5.4% drop (-17.1% y/y) in crude oil prices. Nonfuel import prices fell 0.2% (+7.7% y/y) in May following a 17% April increase. Import prices for nonfuel industrial supplies & materials rose 1.3% (5.4% y/y) and capital goods rose 0.2% (1.1% y/y), but foods, feeds & beverages prices declined 0.3% (+6.9% y/y). Import prices for automotive vehicles & parts edged 0.1% higher (1.1% y/y) and consumer goods excluding autos increased 0.2% (-0.7% y/y) after rising 0.3% in April.

The May decline in export prices reflected a 1.0% (1.7% y/y) drop in nonagricultural prices following a 0.1% dip. Petroleum & petroleum product prices fell 3.8% (-11.4% y/y). Industrial supplies & materials export prices dropped 2.9% (+1.0% y/y) in May, down for the third straight month. In contrast, agricultural export prices rose 0.2% (1.8%) following a 0.4% gain in April. The cost of capital goods rose 0.4% (1.9% y/y) after two straight 0.3% increases. Prices of consumer goods excluding autos rose 0.2% (1.4% y/y) after a 0.7% rise, while automotive vehicles & parts prices rose 0.2% (2.7% y/y) following a 0.9% April gain. Foods, feeds & beverages prices rose 0.3% (3.1% y/y) after increasing 0.4% in April.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Sharp decline in imported fuel costs is offset by increases in other products.
- Export price decline reflects lower petroleum prices.

U.S. Import Prices Hold Steady in May While Export Prices Decline

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Total business inventories were unchanged in April from March (+2.2% y/y) after having inched up 0.1% m/m in March. The Action Economics Forecast Survey had anticipated an unchanged reading. Manufacturing inventories edged down 0.1% m/m (+0.9% y/y) following five consecutive monthly gains. Retail inventories were essentially unchanged (-0.03% m/m) after having declined in three of the four previous months. In contrast, wholesale inventories rose 0.2% m/m (2.3% y/y) in April for their fourth consecutive monthly gain.

Drilling down into retail inventories, auto inventories declined 0.8% m/m in April for their sixth consecutive monthly fall. Retail inventories excluding autos increased 0.3% m/m for their fourth consecutive monthly gain. General merchandise store inventories fell 0.3% m/m, their second decline in the past three months. Inventories increased in all other major retail categories, led by a 1.0% m/m increase in food and beverage store inventories. Inventories at building materials and garden equipment stores rose 0.8% m/m following two consecutive monthly declines. Furniture store inventories increased 0.4% m/m, their third monthly increase in the past four months.

Total business sales slipped 0.1% m/m (+3.8% y/y) in April, their first monthly decline in three months. Wholesale sales edged up 0.1% (6.0% y/y), their third consecutive monthly rise. Factory sales fell 0.3% m/m (+0.6% y/y) on top of a 0.2% monthly decline in March. Retail sales decreased 0.2% m/m (+4.7% y/y) in April though in a separate report also released today, retail sales slumped 0.9% m/m in May, led by declines in auto and gasoline sales.

With the little change in both sales and inventories in April, the inventory/sales (I/S) ratio was unchanged after having fallen in four of the five previous months. The 1.38 reading in April tied the reading in the previous month as the lowest one since September 2023. The I/S ratios for retailers and wholesalers were also unchanged in April from March while the manufacturing I/S ratio increased 0.6% m/m.

The manufacturing and trade data are in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Total inventories were unchanged in April from March.
- Wholesale inventories rose for the fourth consecutive month while retail and factory inventories slipped.
- Sales edged down 0.1% m/m, the first monthly decline in three months, with declines in both factory and retail sales.
- With little change in both sales and inventories, the inventories/sales ratio was unchanged in April following two consecutive monthly declines.

Economy in Brief: November 2007

Jump to:

U.S. Chain Store Sales Eased

Small Business Optimism Held Low, Credit Problems Eased

Small Business Optimism Held Low, Credit Problems Eased

Japanese Consumers Becoming More Pessimistic

OECD Shifts to Slowdown Signal

Commodity Prices: Oil Up, Most Other Inflation Forces Topped

Commodity Prices: Oil Up, Most Other Inflation Forces Topped

Michigan Consumer Sentiment in Full Retreat