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/050225c.jpg" width="353">
Labor markets in disparate countries presently face disparate employment conditions. In data reported today, France, for instance, saw its January unemployment rate touch 10%, following more than a year hovering around 9.9%. Rates rose for both men and women and for adults both over and under age 50. Obviously, a one-decimal move is not much, but it still signals that the French economy struggles, along with most of its neighbors, to find improvement for its labor force.
Hungary has a similar concern, as its unemployment rate rose to 6.6% in January, the highest since these data started monthly publication in 2001 (they are reported as 3-month moving averages, however, and are contiguous with the separate quarterly series also maintained in Haver&#39;s EMERGECW database). While some of this latest monthly change is seasonal, weakness in Hungarian employment is clearly the major source of the unemployment problem. A brief spurt in employment occurred in 2003 and kept the unemployment rate steady, but that played out last year, as seen in the table below.
Norway has somewhat the opposite situation, as a modest recovery in employment last year helped to keep the unemployment rate low and steady. In December, it remained at 4.4%, the same as the average for 2004 overall and off a mid-2003 peak of 4.7%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225d.jpg" width="353">
Brazil calculates its unemployment rate based on both the total working-age population and the &quot;economically active&quot; population. With a large segment not involved in commercial activity, the participation rate is about 57%, so there is considerable difference in the two unemployment measures. The unemployment count in 2004 was 2.49 million; this is 6.6% of the total working-age population and 11.5% of the &quot;economically active&quot; population. &quot;Working age&quot; in Brazil begins at age 10, and last year was 38.06 million people. Data for Brazil are shown in Haver&#39;s EMERGELA database.
Whichever unemployment rate base is used, the unemployment rate in Brazil has come down substantially in the last nine months or so. Following some weakness in 2003 and early last year, employment has rebounded and unemployment has fallen sharply. Thus, the unemployment rate relative to the economically active population (what we&#39;d call the &quot;labor force&quot;) has fallen from a recent peak of 13.1% in April 2004 to 10.2% in January 2005. Brazil&#39;s hesitant recovery continues.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Unemployment Rates &amp; Related Data</th>
<th scope="col">Jan 2005</th>
<th scope="col">Dec 2004</th>
<th scope="col">Nov 2004</th>
<th scope="col">Year Ago</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">France (seas adj)</td>
<td>10.0</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.7</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">Hungary*</td>
<td>6.6</td>
<td>6.3</td>
<td>6.3</td>
<td>5.8</td>
<td>6.1</td>
<td>5.8</td>
<td>5.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (12-mo&nbsp; % change)</td>
<td>-0.7</td>
<td>-1.1</td>
<td>-1.4</td>
<td>--</td>
<td>-0.6</td>
<td>-1.3</td>
<td>0.1</td>
</tr>
<tr>
<td class="firstcol">Norway (seas adj)</td>
<td>--</td>
<td>4.4</td>
<td>4.4</td>
<td>4.6</td>
<td>4.4</td>
<td>4.5</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (12-mo&nbsp; % change)</td>
<td>--</td>
<td>0.8</td>
<td>0.7</td>
<td>--</td>
<td>0.3</td>
<td>-0.7</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">Brazil: % of Working Age Population**</td>
<td>5.7</td>
<td>5.4</td>
<td>6.1</td>
<td>6.6</td>
<td>6.6</td>
<td>7.0</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % of Economically Active Population</td>
<td>10.2</td>
<td>9.6</td>
<td>10.6</td>
<td>11.7</td>
<td>11.5</td>
<td>12.3</td>
<td>11.7</td>
</tr>
</tbody>
</table>
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Labor markets in disparate countries presently face disparate employment conditions. In data reported today, France, for instance, saw its January unemployment rate touch 10%, following more than a year hovering around 9.9%. Rates [...]

January Unemployment Rates Up in France and Hungary, Down in Norway and Brazil

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225b.jpg" width="353">
Sales of existing single family homes fell for the second month and earlier sales estimates were revised down. January sales of 5.94M fell 0.5% from December which fell 2.8% from November. Consensus expectations had been for December sales of 6.75M.
Improved methodology and better modeling led to monthly revisions back through 1999. The figures reflect closings of home sales in earlier months.
Sales were mixed m/m across the country&#39;s regions. In the Northeast sales fell 3.7% (+6.8% y/y) and in the Midwest sales fell 5.8% (+9.2% y/y). In the South sales rose 3.0% (+13.3% y/y) and in the West sales ticked 0.7% higher (+17.7% y/y).
The median price of an existing home single family home fell m/m to $186,900 (+9.8% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/EHSJan05?OpenDocument"> 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/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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</thead>
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<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;5,940</td>
<td>&nbsp;5,970</td>
<td>12.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
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</tbody>
</table>
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Sales of existing single family homes fell for the second month and earlier sales estimates were revised down. January sales of 5.94M fell 0.5% from December which fell 2.8% from November. Consensus expectations had been for December [...]

U.S. Existing Home Sales Fell Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225a.jpg" width="353">
US real GDP growth in 4Q04 was revised up to 3.8% (AR), about the same rate of growth as in the prior quarter. The Consensus expectation had been for 3.6% growth in 4Q.
Trade sector deterioration is now estimated to have subtracted less from GDP growth; 1.43 percentage points versus 1.73 points estimated earlier. Statistics Canada corrected a $1.4B underestimation of U.S. exports to Canada during November. The correction contributed to a revision in total US goods exports to a 1.9% rate of growth (6.6% y/y) from -6.8% estimated in the advance report. Imports of goods rose 15.3% (11.4% y/y), revised from 12.2%.
An upward revision to inventory accumulation indicated that production increases to raise inventories added 0.6 percentage points to GDP growth versus 0.4 percentage points estimated earlier.
Domestic demand growth also was revised up slightly to 4.5% as growth in business fixed investment in equipment &amp; software was raised to 18.0% (14.4% y/y) from 14.9%. Residential investment growth also was raised to 2.1% (6.2% y/y) from 0.3% but growth in PCE was lowered to 4.2% (3.7% y/y) from 4.6%.
Price inflation was revised up slightly to 2.1%. The price index for domestic demand grew 2.7% (2.9% y/y) driven by an upwardly revised 5.4% (4.9% y/y) increase in the state &amp; local government price index.
Corporate profits for 4Q will be released on March 30th and will incorporate the effects of thespecial dividend paid to shareholders by Microsoft Corporation.
<a href="http://www.federalreserve.gov/pubs/feds/2005/200502/200502pap.pdf">The Reform of 1979: How It Happened and Why</a> is from the Research &amp; Statistics and Monetary Affairs Division of the US Federal Reserve Board.

<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 (Prelim.</th>
<th scope="col">4Q &#39;04 (Advance)</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>3.1%</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>0.6%</td>
<td>0.4%</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.2%</td>
<td>2.7%</td>
<td>5.0%</td>
<td>3.5%</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>-1.7%</td>
<td>-0.1%</td>
<td>-0.7%</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>4.3%</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>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
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US real GDP growth in 4Q04 was revised up to 3.8% (AR), about the same rate of growth as in the prior quarter. The Consensus expectation had been for 3.6% growth in 4Q. Trade sector deterioration is now estimated to have subtracted [...]

US GDP Growth Revised Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225a.jpg" width="353">
US real GDP growth in 4Q04 was revised up to 3.8% (AR), about the same rate of growth as in the prior quarter. The Consensus expectation had been for 3.6% growth in 4Q.
Trade sector deterioration is now estimated to have subtracted less from GDP growth; 1.43 percentage points versus 1.73 points estimated earlier. Statistics Canada corrected a $1.4B underestimation of U.S. exports to Canada during November. The correction contributed to a revision in total US goods exports to a 1.9% rate of growth (6.6% y/y) from -6.8% estimated in the advance report. Imports of goods rose 15.3% (11.4% y/y), revised from 12.2%.
An upward revision to inventory accumulation indicated that production increases to raise inventories added 0.6 percentage points to GDP growth versus 0.4 percentage points estimated earlier.
Domestic demand growth also was revised up slightly to 4.5% as growth in business fixed investment in equipment &amp; software was raised to 18.0% (14.4% y/y) from 14.9%. Residential investment growth also was raised to 2.1% (6.2% y/y) from 0.3% but growth in PCE was lowered to 4.2% (3.7% y/y) from 4.6%.
Price inflation was revised up slightly to 2.1%. The price index for domestic demand grew 2.7% (2.9% y/y) driven by an upwardly revised 5.4% (4.9% y/y) increase in the state &amp; local government price index.
The release of corporate profits for 4Q was delayed until March 30th to incorporate the effects of thespecial dividend paid to shareholders by Microsoft Corporation.
<a href="http://www.federalreserve.gov/pubs/feds/2005/200502/200502pap.pdf">The Reform of 1979: How It Happened and Why</a> is from the Research &amp; Statistics and Monetary Affairs Division of the US Federal Reserve Board.

<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 (Prelim.</th>
<th scope="col">4Q &#39;04 (Advance)</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>3.1%</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>0.6%</td>
<td>0.4%</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.2%</td>
<td>2.7%</td>
<td>5.0%</td>
<td>3.5%</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>-1.7%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.7%</td>
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<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>4.5%</td>
<td>4.3%</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>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 25, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225b.jpg" width="353">
Sales of existing single family homes fell for the second month and earlier sales estimates were revised down. January sales of 5.94M fell 0.5% from December which fell 2.8% from November. Consensus expectations had been for December sales of 6.75M.
Improved methodology and better modeling led to monthly revisions back through 1999. The figures reflect closings of home sales in earlier months.
Sales were mixed m/m across the country&#39;s regions. In the Northeast sales fell 3.7% (+6.8% y/y) and in the Midwest sales fell 5.8% (+9.2% y/y). In the South sales rose 3.0% (+13.3% y/y) and in the West sales ticked 0.7% higher (+17.7% y/y).
The median price of an existing home single family home fell m/m to $186,900 (+9.8% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/EHSJan05?OpenDocument"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</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">Existing Single-Family</td>
<td>&nbsp;5,940</td>
<td>&nbsp;5,970</td>
<td>12.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224g.jpg" width="353">
After a pause in Q3, capital spending in Australia rebounded in Q4, in data released this morning by the Australian Statistics Bureau in Canberra.* New capital expenditures of private business grew 5.7% (seasonally adjusted quarterly rate) compared with a minimal 0.6% gain the prior period. The data are reported in chained Australian dollars referenced in the 2002-2003 fiscal year.
By type of expenditure, growth in the latest quarter was stronger in purchases of equipment, up 6.5%. Outlays for buildings and structures gained 3.5%. At the same time, this construction work remains firm relative to total capital expenditures. Structures had ratcheted lower as a portion of the total from the mid-1987 inception of these data to mid-2002. Since then, they have risen modestly, as seen in the second graph. This doesn&#39;t necessarily mean that construction activity was &quot;weak&quot; in an absolute sense, but that equipment and machinery tended to grow more rapidly.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224h.jpg" width="353">
Further, the shift between structures and equipment outlays represents a shift in the structure of Australian industry. Mining and manufacturing were much more significant in 1987 when the Australian Bureau of Statistics began to collect these data. The mining sector did falter and carried down with it the construction of mine shafts and other associated structures. By contrast, &quot;other selected industries&quot; -- mostly business services, trade and travel -- expanded markedly, with a consequent spur to demand for business equipment. Once the adjustment in mining moderated, structures began to strengthen in both growth rate and share of total capital outlays.
[These data cover business-oriented industries; they exclude public services such as education, health and all government. For the relevant sectors, these capital expenditures are source data for fixed capital formation in GDP, but those national accounts data include more industries and types of outlays, such as net purchases of used assets.]

<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/ANZ/@A1/@A1.HTM">Australia Business Capital Spending</a></th>
<th scope="col">Q4 2004</th>
<th scope="col">Q3 2004</th>
<th scope="col">Q4 2004/ Q4 2003</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 Capital Expenditures</td>
<td>5.7</td>
<td>0.6</td>
<td>9.9</td>
<td>6.6</td>
<td>12.4</td>
<td>15.5</td>
</tr>
<tr>
<td class="firstcol">Buildings &amp; Structures</td>
<td>3.5</td>
<td>0.5</td>
<td>10.3</td>
<td>11.6</td>
<td>17.8</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Equipment, Plant and Machinery</td>
<td>6.5</td>
<td>0.6</td>
<td>9.7</td>
<td>4.9</td>
<td>10.6</td>
<td>17.6</td>
</tr>
</tbody>
</table>
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After a pause in Q3, capital spending in Australia rebounded in Q4, in data released this morning by the Australian Statistics Bureau in Canberra.* New capital expenditures of private business grew 5.7% (seasonally adjusted quarterly [...]

Renewed Strength in Australian Business Capital Spending

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The average price for unleaded regular gasoline rose to $1.91 per gallon last week and the average price this month of $1.90 is up versus the low of $1.83 in January.
The price of oil firmed even more with the price of West Texas Intermediate crude rising over $50.00 per barrel.
Wholesale natural gas prices moderated last week to $6.02/mmbtu (+11.1% y/y).
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224e.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224f.jpg" width="353">

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">02/21/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$1.91</td>
<td>$1.79</td>
<td>12.9%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
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<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$51.16</td>
<td>$41.78</td>
<td>41.8%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
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The average price for unleaded regular gasoline rose to $1.91 per gallon last week and the average price this month of $1.90 is up versus the low of $1.83 in January. The price of oil firmed even more with the price of West Texas [...]

Energy Prices Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224d.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising rose to 41 in January, the highest level in nearly two years.
During the last ten years there has been an 88% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume held at a high 71%, indicative of broad based gains.
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>.
Help-Wanted Advertising and Job Vacancies from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-02.pdf">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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan&nbsp; &#39;04</th>
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<td class="firstcol">National Help Wanted Index</td>
<td>41</td>
<td>38</td>
<td>38</td>
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The Conference Board's National Index of Help-Wanted Advertising rose to 41 in January, the highest level in nearly two years. During the last ten years there has been an 88% correlation between the level of help-wanted advertising [...]

Help-Wanted Advertising: An Upside Breakout

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224c.jpg" width="353">
Initial claims for unemployment insurance 9,000 to 312,000 last week following three weeks of sharp decline. The prior week&#39;s level was little revised and Consensus expectations had been for 309,000 claims.
Despite the increase, claims in February are 7.8% below the January average. The four week moving average of initial claims fell to 308,750 (-14.6% y/y).
Continuing claims for unemployment insurance fell 62,000 following a deepened 19,000 decline the prior week.
During the last ten years there has been a (negative) 75% 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 insured rate of unemployment was stable at a low 2.1%.
The February 2005 Minutes of the Federal Open Market Committee meeting are available <a href="http://www.federalreserve.gov/fomc/minutes/20050202.htm"> here</a>.
Expectations and the Monetary Policy Transmission Mechanism from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/Publicat/econrev/Pdf/4Q04sell.pdf"> here</a>.

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<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">02/19/05</th>
<th scope="col">02/12/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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<td class="firstcol">Initial Claims</td>
<td>312</td>
<td>303</td>
<td>-11.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,650</td>
<td>-15.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
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Initial claims for unemployment insurance 9,000 to 312,000 last week following three weeks of sharp decline. The prior week's level was little revised and Consensus expectations had been for 309,000 claims. Despite the increase, [...]

Initial Jobless Insurance Claims Up Modestly

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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Winnie Tapasanun

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U.S. house prices rose 0.4% m/m in October following a 0.1% dip in September (0.0% initially) and a 0.4% rise in August (unrevised), according to the Federal Housing Finance Agency (FHFA) House Price Index. October marked the second m/m increase in three months after no change in July. The HPI reached a record high of 436.75 in October, up 13.4% from its August 2022 low of 384.98. The year-on-year rate of increase eased to 1.7% in October from 1.8% in September—the slowest pace since March 2012—down from 4.7% in October 2024 and well below a high of 18.6% in February 2022.

House prices increased m/m in October (vs. September) across seven of the nine census divisions. Gains were led by West South Central (+1.0% vs. -1.6%), followed by New England (+0.9% vs. -0.3%), East North Central (+0.6% vs. +0.7%), Mountain (+0.6% vs. -0.8%), West North Central (+0.6% vs. +0.6%), Middle Atlantic (+0.4% vs. +0.2%), and Pacific (+0.2% vs. +0.3%). In contrast, house prices fell m/m in two census divisions in October (vs. September): East South Central (-0.4% vs. +0.7%) and South Atlantic (-0.2% vs. -0.2%).

Year-on-year house prices continued to rise in October across most regions, except West South Central and South Atlantic. The y/y pace accelerated in October (vs. September) in four of the nine census divisions: West North Central (+3.8% vs. +3.2%), New England (+3.7% vs. +3.2%), Mountain (+0.3% vs. -0.8%), and Pacific (+0.2% vs. -0.6%). Meanwhile, house price growth decelerated y/y in October (vs. September) in East South Central (+1.5% vs. +2.7%), East North Central (+5.1% vs. +5.4%), and Middle Atlantic (+5.3% vs. +5.4%). To the downside, West South Central (-0.7% vs. -1.0%) and South Atlantic (-0.5% vs. +0.4%) were the only regions posting y/y declines in October (vs. September).

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

The minutes to the December 9–10 **FOMC** meeting can be found [here](https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20251210.pdf).

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- FHFA HPI +0.4% m/m (+1.7% y/y) in Oct.; second m/m gain in three months.
- House prices up m/m in seven of nine census divisions but down in East South Central (-0.4%) and South Atlantic (-0.2%).
- House prices up y/y in seven of nine regions, led by Middle Atlantic (+5.3%), but down in West South Central (-0.7%) and South Atlantic (-0.5%).

U.S. FHFA House Prices Rebound in October Following September’s Easing

Robert Brusca

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When inflation numbers come hot off the griddle, some part of them might stick to the pan. That's the case this month with Spain’s release of inflation in December. It provides us with the headline for the HICP measure, a headline to the domestic measure, and the domestic measure excluding energy. But it does not release the sector detail for the rest of the report.

However, based upon what's been released, it’s clear that inflation in Spain has picked up. The part of the core that we have in-hand, which is just the portion excluding energy, still appears to be fairly well behaved; however, its gain is still slightly excessive.

**HICP trend**
Spain’s HICP measure in December rose 0.4% after rising by 0.5% in both October and November; those are hot numbers. That translates into a 5.7% annual rate over three months which is hotter than its pace of 4.5% over six months which in turn is hotter than the 12-month increase of 3%. The HCP headline for Spain has clearly been accelerating, the year-over-year rise is too-hot, and the shorter-term metrics are hotter still. This is not good news, and this is not a welcome progression.

**Domestic inflation**
Looking at Spain’s domestic CPI conditions, we find that they are still on the hot side with December showing a headline gain of 0.3% but gains in October and November of 0.5% each, producing a three-month annual rate of 5.4%, which is hotter than its 4.2% over six months, which, in turn, is hotter than the year-over-year gain at 2.9%. And these patterns/results are very similar to the pattern and the readings for the HICP. The domestic inflation picture is too hot over 12 months and accelerating over the shorter periods.

**Domestic inflation ex-energy:** The CPI excluding energy is not as bloated as the HICP or the domestic headline, but it is still a reading on rough terrain. Over 12 months, inflation excluding energy rises at a 2.6% annual rate; that's above the 2% pace sought by the ECB for the community as a whole. Over six months, the reading ramps up to a 3.1% annual rate, again moving the wrong direction and a reading at 3.1% is simply too hot. Over three months, there's a slight deceleration compared to six months but still a rate that is too hot, at 2.9%, and stronger than the 12-month pace. Core inflation is better behaved than headline inflation and both the domestic and the HICP frameworks, but inflation is unruly overall and, for the most part, showing either acceleration or at least a 3-month pace stronger than its 12-month pace. None of this is what the ECB is looking for or trying to achieve.

**Beyond the missing details**
The details of the Spanish report are missing for December because the data are too preliminary for the authorities to post. However, if we look at the sequential pace of inflation over 12 months, six months, and three months on a lagged basis, it is looking at data that are up-to-date through November rather than through December what's the numbers that are generally excessive and they show too much acceleration moving from 12-months to 6-months to 3-months. Over 12 months compared to a year ago, five of nine categories show inflation accelerating. Over 6 months compared to 12 months, four categories are accelerating. Over 3 months compared to 6 months, six of the nine categories are accelerating. These acceleration tendencies are worrisome.

In addition, over 12 months, six of nine categories have a pace above 2%. Over 6 months, six of nine categories have annualized gains above 2%, and over 3 months, the lagged data show six of nine categories with gains above 2%. Only apparel shows inflation tempered on all horizons (at or below 2%). Food, housing, transport, education and other all show above 2% inflation on all horizons.

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**Summing up-challenging times ahead?**
Is Spain past its best inflation performance? Is the inflation worm going to begin to turn more broadly? These are trends we will need to watch. Inflation broadly has slowed or stopped its declines and largely done that in Europe as well as in the United States. Inflation is now hovering at a pace that is too strong- maybe tolerable or maybe not. Central banks need to decide and tell us what a 2% target means. Then, the question of what’s next hangs in the air. U.K. inflation remains excessive but has stepped down as the economy has begun to experience some significantly weaker economic data. Is that the future? Is it stagflation? Is it recovering from a slowdown and higher rates of interest and inflation? Or will there be continued inflation progress? Open the door on 2026…the envelope… please.

Spain

Spanish Inflation Flares at Year-End

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General business activity in Texas declined further in December, according to the Texas Manufacturing Outlook Survey conducted by the Federal Reserve Bank of Dallas. The overall measure, the general business activity index, fell to -10.9 in December, the lowest level since June, from -10.4 in November and -5.0 in October. The index, while above a low of -35.8 in April, was well below a high of +14.1 in January and +4.5 in December 2024. The index had been in negative territory from February through December 2025, except for a one-month positive reading of +0.9 in July. In December, 12.7% of respondents reported improved business activity, down from 18.9% in November, while 23.6% of respondents reported worsened business conditions, down from November's 29.3%. The company outlook index dropped to -11.9 in December, the fourth consecutive negative reading and the lowest since April, from -6.3 in November. Just 10.8% of respondents expected improved company outlook this month while 22.7% expected deterioration. Data were collected between December 15 and 23 from 74 Texas manufacturers.

The production index, a key measure of state manufacturing conditions, plunged to -3.2 in December after a 15.3-point jump to 20.5 in November, indicating production contracted for the first time since February. A lessened 17.2% of respondents reported higher production this month while an increased 20.4% reported a decline. The capacity utilization index plummeted to -4.5 in December, the lowest reading since February, following a four-year-high 19.4 in November; it was up from a low of -15.0 in January 2024 but well below a record-high 46.3 in March 2021.

The growth rate of orders index declined steeply to -16.0 in December from -1.3 in November, marking the weakest of four successive negative readings and the lowest level since June. The index was above a low of -22.0 in April and a low of -24.3 in November 2023 but significantly below a peak of 29.6 in April 2021. The new orders index fell to -6.4 this month after rising to 4.8 in November, indicating a decline in demand for the third time in four months and the lowest level since June. The index was above a low of -20.0 in April and a low of -21.8 in November 2022 but well below a high of 22.6 in February 2022 and a record-high 38.6 in April 2021. The shipments index plunged to -10.6 this month after jumping to 15.1 in November, marking its first negative reading since June and the lowest since July 2024. The unfilled orders index dropped to -13.5 in December from -6.6 in November, registering the 16th straight negative reading and the lowest since November 2024. The index was below a high of 1.4 in August 2024 but above a low of -26.3 in July 2024. Meanwhile, the delivery time index increased to 3.3 this month, the highest reading since March, from -8.4 in November.

Labor market indexes showed flat employment conditions and shorter workweeks in December. The employment index slipped to -1.1 this month from 1.2 in November, marking its first negative reading since September, with the near-zero level indicating little change in employment. The latest reading, while up from a low of -9.7 in January 2024, was far below a high of 17.9 in January 2023 and a record-high 31.8 in April 2021. A lessened 12.3% of respondents reported net hiring in December while 13.4% reported net layoffs. The hours worked index fell sharply to -7.5 this month, the lowest reading since June, after rising to 9.9 in November. Meanwhile, the wages & benefits index climbed to 21.8 in December, the highest level since October 2024 and near its series average of 21.0, up from 15.4 in November; nevertheless, having been trending downward since a peak of 55.0 in March 2022.

Inflationary pressures were little changed this month. The index for prices received for finished goods declined to 8.2 in December following a 3.1-point rise to 10.8 in November; it was up from a low of -7.0 in November 2023 but meaningfully below a high of 47.4 in March 2022 and a peak of 51.4 in October 2021. In December, 13.1% of respondents reported raising prices while only 4.9% reported lowering prices. The index of prices paid for raw materials rose to 36.0 this month, the highest reading since September, after a 1.9-point increase to 35.3 in November. The index was well above a low of 1.0 in June 2023 but significantly below 73.2 in March 2022 and a record-high 83.8 in November 2021.

Expectations on future manufacturing activity remained positive this month. The future general business activity index dipped to 10.8 in December after rising to 11.0 in November, registering the eighth straight positive reading. The future production index rose to a four-month-high 34.2 from November’s 33.7. Other indexes of future manufacturing activity also rose in December (vs. November), signaling increased activity six months ahead: company outlook (16.5 vs. 16.2), shipments (33.9 vs. 27.0), wages & benefits (42.5 vs. 39.1), and capital expenditures (17.7 vs. 12.9). Meanwhile, future indexes for capacity utilization (28.9 vs. 34.0), new orders (30.5 vs. 39.2), growth rate of new orders (24.9 vs. 27.8), and employment (20.9 vs. 22.3) declined in December (vs. November), but they remained in positive territory.

Each index is calculated by subtracting the percentage reporting a decrease in activity from the percentage reporting an increase. When all firms report rising activity, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase equals the number reporting a decrease. Data for the Texas Manufacturing Outlook, conducted by the Federal Reserve Bank of Dallas, can be found in Haver's **SURVEYS** database.

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- General Business Activity down in Dec. to -10.9, lowest level since June.
- Company Outlook (-11.9) negative for the fourth straight mth. and at an eight-month low; Production (-3.2) negative for the first time since Feb.
- New Orders Growth (-16.0) and New Orders (-6.4) at a six-month low.
- Employment (-1.1) negative for the first time since Sept.
- Prices Received down 2.6 pts. to 8.2; Prices Paid up 0.7 pts. to a three-month-high 36.0.
- Future General Business Activity down to 10.8, still positive for the eighth consecutive mth.

Texas General Business Activity Still Negative in December, But Expectations Remain Positive

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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

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Swedish exports advanced month-to-month for the second month in a row while imports continued on a losing streak declining by 0.9% in November.

Exports have gradually been firming with exports falling by 6.1% over 12 months, rising at an annual rate of 4.8% over six months, and then rising at a 3.9% annual rate over three months. Exports are not on a steady acceleration path, but they have transitioned from a year-over-year growth rate that's negative to moderate positive short-term rates of growth.

Swedish imports, on the other hand, are weakening relatively sharply. Imports were down 4.4% over 12 months, down at a 1.2% annual rate over six months, and falling at a 17% annual rate over three months.

The global trade picture remains somewhat mixed. The Baltic Dry goods index, which is an indicator of global trade volume, has backed off of its highs but continues to post relatively steady volume indications. However, the S&P global manufacturing survey has been showing weakness; when manufacturing is weak, typically international trade is weak as well. Swedish trade may be picking up some of that weakness as well.

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On balance, Sweden's trade surplus has continued to recover and hold to a relatively high level over recent months as exports have maintained momentum better than imports.

Swedish domestic barometers of economic growth have remained relatively upbeat including orders and industrial production as well as employment growth and GDP. There is no reason there to expect weak imports based on the recent data we have seen. But then sometimes trade data show economic weakness first.   

At this time, the yearend weakness in Sweden’s imports is without a specific cause. Year-end flows can be surprising. Domestic demand, however, does not appear to be weak. But there is a good deal of weakness in Europe and the Ukraine-Russia war is still a nagging factor – a cloud that hangs over all of Europe with no certain end date or result in sight.

Economy in Brief: 2005

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January Unemployment Rates Up in France and Hungary, Down in Norway and Brazil

U.S. Existing Home Sales Fell Again

US GDP Growth Revised Up

US GDP Growth Revised Up

Renewed Strength in Australian Business Capital Spending

Energy Prices Firm

Help-Wanted Advertising: An Upside Breakout

Initial Jobless Insurance Claims Up Modestly