Robert Brusca

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Car registrations weakened sharply in January ahead of any virus effect in Europe. In February, sales edged higher by 2.2%.

Still, that leaves sales/registrations falling at a 30% annual rate over three months, falling at a 32% annual rate over six months and falling by 6.6% over 12 months.

Those hyper-weak growth rates are moderated by calculating growth from three-month average data. On that basis, sales fall in February by 2.9% after falling by 4.3% in January. The smoothed three-month growth rate clocks a -10.7% annual rate of decline compared to -11.9% over six months and a small 2.2% rise over 12 months.

For the broadest smoothing the last 12-month average for sales is up by 1.3% over the previous 12-month average in sales (13 through 24 months ago). On balance, these smoothing operations seem to identify a rising trend, but it is a trend that is rising very, very, slowly. Unsmoothed data tell a much more worrisome story of momentum.

Unsmoothed country level data show declines in three of five countries in February compared to decline in five of five in January which followed expanded sales across the board in December. Unsmoothed country level data show registration declines in all five countries over all three horizons of three-months, six-months and 12-months. The pace of decline escalates consistently in Germany, Spain and Italy.

In big broad terms, the year average change over the previous year average in registrations shows declines in registrations in France, Spain and in the EU. Italy ekes out a technical gain of 0.1% and Germany logs a strong 3.6% rise on this very broad sluggish gauge.


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Table “Registrations in Perspective” ranks the current sales pace against the sales paces back to 1995 and also on a shorter timeline back to 2008. All countries show stronger sales rankings over the 2008 period when car registrations were weaker. On the longer timeline, only France has sales ranking above the 50% mark that identifies its median. Sales everywhere else are below their historic median pace; in Italy they are particularly weak with only a 21.4 percentile ranking back to 1995.

Ranked on the growth rate of sales instead of the number of sales Europe’s ranking back to 1995 is only 17.7%, much weaker than its ranking of 31.6% based on the number of sales. However, ranked on smoothed data those results reverse with the growth ranking rising sharply to 50.7% above its historic median compared to 17.7% unsmoothed. This also points out how much of the sales weakness reflects recent weakness.

The coming European scene 
On balance, European car sales/registrations are weak and have lost a great deal of momentum recently. With the coronavirus beginning to take hold, these sales are going to weaken even more. Several car makers have announced that they are shuttering production facilities for a while.

The unfolding global scene 
Globally we are seeing a sharp market reaction of heretofore unknown proportions. Despite central banks cutting rates to (and in some cases through) zero, we see bond yields now on the rise. The steepened yield curve reflects concerns that so much global fiscal stimulus with the monetary spigot wide open will become inflationary. However, there has been no inflation to speak of for many years among the major monetary center countries. Has the virus changed the facts and the paradigm? It is possible, of course. But what I see is a desperate need for the RIGHT KIND of fiscal spending to underpin demand at a time that private demand is going to be flat or contract at least in part due to actions taken to slow the spread of the virus. Some people will lose jobs and income and will have to dig into savings if they have any. Others will maintain income but will be all but confined to quarters, as so many businesses are shuttered. This is an arrangement that will push up their savings rate. Spending overall is hardly posed to accelerate and ‘strain’ systemic capabilities. That is not what is happening. There is no crowding out. But with weak growth and weak prospects companies may find rolling over maturing bonds is more difficult than they expected.

The future: Inflation or deflation? 
In the U.S. as well as in Europe municipalities are crying for more central government funding as the various business and event closings have hit the transportation sector hard and cities with large transportation networks are running massive deficits as a result of corona attenuation programs. Government funding is needed to close that gap. For the most part, it appears as though federal spending will not be in addition to private spending but will substitute for it in large part. The rise in bond yields and the yield curve steepening that we see is precautionary, but I do not see it as presaging in a higher inflation era ahead. In all likelihood even with more government spending and higher government debt-to-GDP ratios, the world’s economies are not going to be as strong in the period ahead and inflation is not going to be ignited by ‘fiscal excess.’ For one thing oil prices are now going down the rabbit hole and with demand ever weakening the Saudis are going to find it very hard to regain control of that one… The bigger worry right now, paradoxically, is probably deflation even with all this global fiscal spending.

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Car registrations weakened sharply in January ahead of any virus effect in Europe. In February, sales edged higher by 2.2%. Still, that leaves sales/registrations falling at a 30% annual rate over three months, falling at a 32% annual [...]

EU Passenger Car Registrations Tick Higher But Are Broadly Weak While Markets Remain Broadly Scared

Tom Moeller

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The Mortgage Bankers Association reported that its Mortgage
Loan Application Index weakened 8.4% (+175.3% y/y) during the week ending March
13 after a 55.4% jump in the prior week. The decline occurred as refinancings
fell 10.4% (+401.5% y/y), and purchase applications eased 0.9% (+10.6% y/y),
following the prior week's 5.6% rise.

The effective interest rate on a 15-year fixed rate mortgage
rose to 3.20% from 2.97% in the week ended March 6. The rate remained well below
its recent peak of 4.71% in early November 2018. The effective interest rate on
the 30-year fixed rate mortgage also rose to 3.85% from 3.55% the previous week.
The effective rate on a 30-year Jumbo mortgage increased to 3.87%, and the rate
on the 5-year adjustable rate mortgage rose to 3.26%.

The average mortgage loan size fell to $352,200 last week
(+9.5% y/y). The average loan size of refinancings declined to $350,700 (+12.2%
y/y). The average loan size for purchases rose to $356,800 (8.9% y/y).

Applications for fixed-rate loans were up 177.6% y/y, while
applications for adjustable rate loans moved up 145.0% y/y.

The survey covers over 75% of all U.S. retail residential
mortgage applications and has been conducted weekly since 1990. Respondents
include mortgage bankers, commercial banks and thrifts. The base period and
value for each index is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >MBA Mortgage Applications (%,
 SA)</th>
 <th>03/13/20</th>
 <th>03/06/20</th>
 <th>02/28/20</th>
 <th>Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
 <td >-8.4</td>
 <td >55.4</td>
 <td >15.1</td>
 <td >175.3</td>
 <td >32.4</td>
 <td >-10.4</td>
 <td >-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Purchase</td>
 <td >-0.9</td>
 <td >5.6</td>
 <td >-2.7</td>
 <td >10.6</td>
 <td >6.6</td>
 <td >2.1</td>
 <td >5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Refinancing</td>
 <td >-10.4</td>
 <td >78.6</td>
 <td >26.0</td>
 <td >401.5</td>
 <td >71.1</td>
 <td >-24.3</td>
 <td >-34.0</td>
 </tr>
 <tr>
 <td class="firstcol" >15-Year Effective Mortgage Interest Rate
 (%)</td>
 <td >3.20</td>
 <td >2.97</td>
 <td >3.09</td>
 <td >4.13</td>
 <td >3.71</td>
 <td >4.35</td>
 <td >3.59</td>
 </tr>
 <tr>
 <td class="firstcol" >30-Year Effective Mortgage Interest Rate
 (%)</td>
 <td >3.85</td>
 <td >3.55</td>
 <td >3.65</td>
 <td >4.77</td>
 <td >4.34</td>
 <td >4.94</td>
 <td >4.32</td>
 </tr>
 </tbody>
 </table>
 
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The Mortgage Bankers Association reported that its Mortgage Loan Application Index weakened 8.4% (+175.3% y/y) during the week ending March 13 after a 55.4% jump in the prior week. The decline occurred as refinancings fell 10.4% [...]

U.S. Mortgage Applications Edge Lower as Interest Rate Rose in Early March

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Housing starts fell 1.5% (+39.2% y/y) during February to
1.599 million units (SAAR) from 1.624 million in January, revised from 1.567
million. Starts in December were revised down to 1.601 million from 1.626
million. The Action Economics Forecast Survey expected 1.500 million starts.

Starts of single-family starts increased 6.7% (35.4% y/y) to
1.072 million, a new high for the economic expansion. This m/m strength was
offset last month, however, by a 14.9% decline (+47.6% y/y) in multi-family
starts to 527,000.

By region, last month's weakness in starts was led by a 41.4%
decline (+41.6% y/y) in the Northeast to 126,000. It reversed the prior month's
51.4% jump. Starts in the West weakened by 18.2% (+49.0% y/y) to 374,000 and
also more than reversed January's increase. Offsetting these declines was a
16.7% (32.1% y/y) to 210,000 starts in the Midwest. It made up most of the prior
month's decline. In the South, starts increased 15.2% (36.8%y/y) to 889,000, the
highest level since September 2006.

Building permits fell 5.5% (+13.8% y/y) to 1.464 million
units from 1.550 million in January. Permits to build single-family homes
increased 1.7% (+23.3% y/y) to 1.004 million, the highest level since May 2007,
but the gain was countered by an 18.3% decline (-2.7% y/y) in multi-family
permits to 460,000.

The housing starts and permits figures can be found in
Haver's USECON database. The expectations figure is contained in the AS1REPNA
database.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Housing Starts (000s, SAAR)</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total</td>
 <td>1,599</td>
 <td>1,624</td>
 <td>1,601</td>
 <td>39.2</td>
 <td>1,298</td>
 <td>1,250</td>
 <td>1,209</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Single-Family</td>
 <td>1,072</td>
 <td>1,005</td>
 <td>1,057</td>
 <td>35.4</td>
 <td>894</td>
 <td>873</td>
 <td>852</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Multi-Family</td>
 <td>527</td>
 <td>619</td>
 <td>544</td>
 <td>47.6</td>
 <td>404</td>
 <td>377</td>
 <td>357</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" >Starts By Region</td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 <td></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;Northeast</td>
 <td>126</td>
 <td>215</td>
 <td>142</td>
 <td>41.6</td>
 <td>116</td>
 <td>111</td>
 <td>111</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Midwest</td>
 <td>210</td>
 <td>180</td>
 <td>238</td>
 <td>32.1</td>
 <td>170</td>
 <td>171</td>
 <td>181</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp;South</td>
 <td>889</td>
 <td>772</td>
 <td>807</td>
 <td>36.8</td>
 <td>689</td>
 <td>631</td>
 <td>603</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;West</td>
 <td>374</td>
 <td>457</td>
 <td>414</td>
 <td>49.0</td>
 <td>323</td>
 <td>337</td>
 <td>314</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Building Permits</td>
 <td>1,464</td>
 <td>1,550</td>
 <td>1,420</td>
 <td>13.8</td>
 <td>1,464</td>
 <td>1,330</td>
 <td>1,286</td>
 </tr>
	 </tbody>
	 </table>
	 
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Housing starts fell 1.5% (+39.2% y/y) during February to 1.599 million units (SAAR) from 1.624 million in January, revised from 1.567 million. Starts in December were revised down to 1.601 million from 1.626 million. The Action [...]

U.S. Housing Starts & Building Permits Ease in February

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<title>Empire State Manufacturing Conditions Strengthen by Tom Moeller&nbsp;
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<a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;&nbsp; March 18, 2020
Housing starts fell 1.5% (+39.2% y/y) during February to
1.599 million units (SAAR) from 1.624 million in January, revised from 1.567
million. Starts in December were revised down to 1.601 million from 1.626
million. The Action Economics Forecast Survey expected 1.500 million starts.
Starts of single-family starts increased 6.7% (35.4% y/y) to
1.072 million, a new high for the economic expansion. This m/m strength was
offset last month, however, by a 14.9% decline (+47.6 y/y) in multi-family
starts to 527,000.
By region, last month's weakness in starts was led by a 41.4%
decline (+41.6% y/y) in the Northeast to 126,000. It reversed the prior month's
51.4% jump. Starts in the West weakened by 18.2% (+49.0% y/y) to 374,000 and
also more than reversed January's increase. Offsetting these declines was a
16.7% (32.1% y/y) to 210,000 starts in the Midwest. It made up most of the prior
month's decline. In the South, starts increased 15.2% (36.8%y/y) to 889,000, the
highest level since September 2006.
Building permits fell 5.5% (+13.8% y/y) to 1.464 million
units from 1.550 million in January. Permits to build single-family homes
increased 1.7% (+23.3% y/y) to 1.004 million, the highest level since May 2007,
but the gain was countered by an 18.3% decline (-2.7% y/y) in multi-family
permits to
460,000.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

The housing starts and permits figures can be found in
Haver's USECON database. The expectations figure is contained in the AS1REPNA
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="741">Housing Starts (000s, SAAR)</th>
 <th width="160">Feb</th>
 <th width="161">Jan</th>
 <th width="161">Dec</th>
 <th width="161">Feb Y/Y %</th>
 <th width="161">2019</th>
 <th width="161">2018</th>
 <th width="161">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="741">Total</td>
 <td align="center" width="160">1,599</td>
 <td align="center" width="161">1,624</td>
 <td align="center" width="161">1,601</td>
 <td align="center" width="161">39.2</td>
 <td align="center" width="161">1,298</td>
 <td align="center" width="161">1,250</td>
 <td align="center" width="161">1,209</td>
 </tr>
 <tr>
 <td class="firstcol" width="741">&nbsp;&nbsp;Single-Family</td>
 <td align="center" width="160">1,072</td>
 <td align="center" width="161">1,005</td>
 <td align="center" width="161">1,057</td>
 <td align="center" width="161">35.4</td>
 <td align="center" width="161">894</td>
 <td align="center" width="161">873</td>
 <td align="center" width="161">852</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="741">&nbsp;&nbsp;Multi-Family</td>
 <td align="center" width="160">527</td>
 <td align="center" width="161">619</td>
 <td align="center" width="161">544</td>
 <td align="center" width="161">47.6</td>
 <td align="center" width="161">404</td>
 <td align="center" width="161">377</td>
 <td align="center" width="161">357</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol" width="741">Starts By Region</td>
 <td align="center" width="160"></td>
 <td align="center" width="161"></td>
 <td align="center" width="161"></td>
 <td align="center" width="161"></td>
 <td align="center" width="161"></td>
 <td align="center" width="161"></td>
 <td align="center" width="161"></td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="741">&nbsp;&nbsp;Northeast</td>
 <td align="center" width="160">126</td>
 <td align="center" width="161">215</td>
 <td align="center" width="161">142</td>
 <td align="center" width="161">41.6</td>
 <td align="center" width="161">116</td>
 <td align="center" width="161">111</td>
 <td align="center" width="161">111</td>
 </tr>
 <tr>
 <td class="firstcol" width="741">&nbsp;&nbsp;Midwest</td>
 <td align="center" width="160">210</td>
 <td align="center" width="161">180</td>
 <td align="center" width="161">238</td>
 <td align="center" width="161">32.1</td>
 <td align="center" width="161">170</td>
 <td align="center" width="161">171</td>
 <td align="center" width="161">181</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="741">&nbsp;&nbsp;South</td>
 <td align="center" width="160">889</td>
 <td align="center" width="161">772</td>
 <td align="center" width="161">807</td>
 <td align="center" width="161">36.8</td>
 <td align="center" width="161">689</td>
 <td align="center" width="161">631</td>
 <td align="center" width="161">603</td>
 </tr>
 <tr>
 <td class="firstcol" width="741">&nbsp;&nbsp;West</td>
 <td align="center" width="160">374</td>
 <td align="center" width="161">457</td>
 <td align="center" width="161">414</td>
 <td align="center" width="161">49.0</td>
 <td align="center" width="161">323</td>
 <td align="center" width="161">337</td>
 <td align="center" width="161">314</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="741">Building Permits</td>
 <td align="center" width="160">1,464</td>
 <td align="center" width="161">1,550</td>
 <td align="center" width="161">1,420</td>
 <td align="center" width="161">13.8</td>
 <td align="center" width="161">1,464</td>
 <td align="center" width="161">1,330</td>
 <td align="center" width="161">1,286</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Mortgage Applications Surge as Interest Rates
Decline 
by <a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp;March 18, 2020
The Mortgage Bankers Association reported that its Mortgage
Loan Application Index rose 55.4% (205.2% y/y) during the week ending March 6
after a 15.1% gain in the prior week. The jump occurred as refinancings rose
78.6% (479.2% y/y). Purchase applications also were strong and posted a 5.6%
recovery (11.9% y/y) following the prior week's 2.7% decline.
The effective interest rate on a 15-year fixed rate mortgage
fell to 2.97% from 3.09% the week before. The rate remained well below its
recent peak of 4.71% in early November 2018. The effective interest rate on the
30-year fixed rate mortgage fell to 3.55% from 3.65% the previous week. The
effective rate on a 30-year Jumbo mortgage eased to 3.64%, and the rate on the
5-year adjustable rate mortgage fell to 3.17% from 3.31%.
The average mortgage loan size increased to $367,900 last
week. The average size of refinancings rose to $372,100, up nearly one-quarter
from a year ago. The average loan size for purchases was $354,200 (8.7% y/y).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Applications for fixed-rate loans rose 151.0% y/y, while
applications for adjustable rate loans were up almost 209.5%.
The survey covers over 75% of all U.S. retail residential
mortgage applications and has been conducted weekly since 1990. Respondents
include mortgage bankers, commercial banks and thrifts. The base period and
value for each index is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="877">MBA Mortgage Applications (%,
 SA)</th>
 <th width="141">03/13/20</th>
 <th width="141">03/06/20</th>
 <th width="141">02/28/20</th>
 <th width="141">Y/Y</th>
 <th width="142">2019</th>
 <th width="142">2018</th>
 <th width="142">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="877">Total Market Index</td>
 <td align="center" width="141"></td>
 <td align="center" width="141">55.4</td>
 <td align="center" width="141">15.1</td>
 <td align="center" width="141">205.2</td>
 <td align="center" width="142">32.4</td>
 <td align="center" width="142">-10.4</td>
 <td align="center" width="142">-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="877">&nbsp;&nbsp;Purchase</td>
 <td align="center" width="141"></td>
 <td align="center" width="141">5.6</td>
 <td align="center" width="141">-2.7</td>
 <td align="center" width="141">11.9</td>
 <td align="center" width="142">6.6</td>
 <td align="center" width="142">2.1</td>
 <td align="center" width="142">5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="877">&nbsp;&nbsp;Refinancing</td>
 <td align="center" width="141"></td>
 <td align="center" width="141">78.6</td>
 <td align="center" width="141">26.0</td>
 <td align="center" width="141">479.2</td>
 <td align="center" width="142">71.1</td>
 <td align="center" width="142">-24.3</td>
 <td align="center" width="142">-34.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="877">15-Year Effective Mortgage Interest Rate
 (%)</td>
 <td align="center" width="141"></td>
 <td align="center" width="141">2.97</td>
 <td align="center" width="141">3.09</td>
 <td align="center" width="141">4.05</td>
 <td align="center" width="142">3.71</td>
 <td align="center" width="142">4.35</td>
 <td align="center" width="142">3.59</td>
 </tr>
 <tr>
 <td class="firstcol" width="877">30-Year Effective Mortgage Interest Rate
 (%)</td>
 <td align="center" width="141"></td>
 <td align="center" width="141">3.55</td>
 <td align="center" width="141">3.65</td>
 <td align="center" width="141">4.66</td>
 <td align="center" width="142">4.34</td>
 <td align="center" width="142">4.94</td>
 <td align="center" width="142">4.32</td>
 </tr>
 </tbody>
</table>


</body>

</html>

Sandy Batten

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The Bureau of Labor Statistics reported that the total job
openings rate declined to 4.0% during December........



<a href="/comment/200317p.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317p.png"></a>
 <a href="/comment/200317q.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317q.png"></a>







The Job Openings &amp; Labor Turnover Survey (JOLTS) dates to
December 2000 and the figures are available in Haver's USECON database.



<a href="/comment/200317r.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317r.png"></a>
 <a href="/comment/200317s.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317s.png"></a>

 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS
 (Job Openings &amp; Labor Turnover Survey, SA)</a></th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Dec'19</th>
 <th scope="col" >Dec'18</th>
 <th scope="col" >Dec'17</th>
 </tr>
</thead>
<tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Job Openings, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>4.0</td>
 <td>4.3</td>
 <td>4.6</td>
 <td>4.7</td>
 <td>4.0</td>
 <td>3.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>6,423</td>
 <td>6,787</td>
 <td>7,361</td>
 <td>7,479</td>
 <td>6,204</td>
 <td>5,831</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Hires, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)&nbsp;</td>
 <td>3.9</td>
 <td>3.8</td>
 <td>3.8</td>
 <td>3.8</td>
 <td>3.7</td>
 <td>3.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>5,907</td>
 <td>5,827</td>
 <td>5,782</td>
 <td>5,717</td>
 <td>5,488</td>
 <td>5,408</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Layoffs &amp; Discharges,
 Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>1,895</td>
 <td>1,768</td>
 <td>1,795</td>
 <td>1,751</td>
 <td>1,787</td>
 <td>1,769</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Quits, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>2.2</td>
 <td>2.0x</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>3,488</td>
 <td>3,568</td>
 <td>3,497</td>
 <td>3,391</td>
 <td>3,189</td>
 <td>2,963</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

The Bureau of Labor Statistics reported that the total job openings rate declined to 4.0% during December........ The Job Openings & Labor Turnover Survey (JOLTS) dates to December 2000 and the figures are available in Haver's USECON [...]

TTTTT

Gerald D. Cohen

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 <a href="/comment/200317b.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317b.png"></a>

&bull;


&bull;


&bull;


&bull; Capacity utilization in the manufacturing sector down to 75.1%, well below December 2018 cycle peak of 77.3%.


Industrial production decreased 0.3% in January (-0.8% year-on-year)







Industrial production and capacity data and US Population-Weighted Heating and Cooling
Days are included in Haver's USECON database. Additional detail on production and capacity
can be found in the IP database. The expectations figures come from the AS1REPNA database.

<a href="/comment/200317c.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317c.png"></a>
 <a href="/comment/200317d.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317d.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Industrial Production (SA, %
 Change)</th>
 <th>Feb</th>
 <th>Jan</th>
 <th>Dec</th>
 <th>Feb Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Output</td>
<td >0.6</td>
<td >-0.5</td>
<td >-0.4</td>
<td >0.0</td>
<td >0.9</td>
<td >3.9</td>
<td >2.3</td>
 </tr>
 <tr>
 <td class="firstcol" >Manufacturing</td>
<td >0.1</td>
<td >-0.2</td>
<td >0.1</td>
<td >-0.4</td>
<td >-0.2</td>
<td >2.3</td>
<td >2.0</td>
</tr>
<tr class="odd">
<td class="firstcol" >&nbsp;&nbsp; Durable Goods</td>
<td >0.3</td>
<td >-0.8</td>
<td >-0.3</td>
<td >-0.4</td>
<td >0.7</td>
<td >3.4</td>
<td >2.2</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Motor Vehicles</td>
<td >3.5</td>
<td >1.3</td>
<td >-4.6</td>
<td >1.4</td>
<td >-2.4</td>
<td >4.1</td>
<td >0.0</td>
</tr>
<tr class="odd">
<td class="firstcol" >&nbsp;&nbsp;&nbsp;&nbsp; Selected High Tech</td>
<td >-0.2</td>
<td >0.6</td>
<td >1.0</td>
<td >7.0</td>
<td >5.1</td>
<td >6.4</td>
<td >2.6</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp; Nondurable Goods</td>
<td >-0.1</td>
<td >0.4</td>
<td >0.6</td>
<td >0.1</td>
<td >-0.7</td>
<td >1.9</td>
<td >1.9</td>
</tr>
<tr class="odd">
<td class="firstcol" >Utilities</td>
<td >7.1</td>
<td >-4.9</td>
<td >-5.7</td>
<td >0.4</td>
<td >-0.8</td>
<td >4.4</td>
<td >-0.8</td>
</tr>
<tr>
<td class="firstcol" >Mining</td>
<td >-1.5</td>
<td >1.0</td>
<td >0.8</td>
<td >2.1</td>
<td >7.1</td>
<td >12.4</td>
<td >7.4</td>
</tr>
<tr class="odd">
<td class="firstcol" >Capacity Utilization (%)</td>
<td >77.0</td>
<td >76.6</td>
<td >77.1</td>
<td >78.5</td>
<td >77.8</td>
<td >78.7</td>
<td >76.5</td>
</tr>
<tr>
<td class="firstcol" >&nbsp;&nbsp; Manufacturing</td>
<td >75.0</td>
<td >75.0</td>
<td >75.2</td>
<td >76.3</td>
<td >75.6</td>
<td >76.6</td>
<td >75.1</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

• • • • Capacity utilization in the manufacturing sector down to 75.1%, well below December 2018 cycle peak of 77.3%. Industrial production decreased 0.3% in January (-0.8% year-on-year) Industrial production and capacity data and US [...]

tttt

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Welcome to the wild wacky world of economic analysis during a global contagion with national policies slamming the brakes on at different speeds to head off the spread of the virus in different regions around the globe.

As you can see in the Zew report, the corona backlash is finally being captured in Western data. We already saw Chinese data register a plunge in China’s PMI index. But until the last few days, western data releases have been whistling past the grave yard. Well, no more is that the case. Not all reports are affected, but the Zew report is a survey of the opinions and perceptions of financial experts; it is on top of the breaking news.



Current conditions developments 
In February 2019, the euro area began to register a negative current macroeconomic assessment. At that time, the United Kingdom, France, and Italy were negatively assessed. And they had been negative through most of the post financial crisis period. But in February the EMU assessment turned negative in July 2019 Germany turned negative and in the current report for March 2020 the U.S. has just dropped to a negative assessment from +48.1 last month, a stunning one month drop. Still, after turning negative in February 2019 conditions deteriorated to an October/November local low then began to improve. For example the EMU reading bottomed in 2019 at -26.4 in October and improved to -9.9 in January slipping only very slightly to -10.3 in February before being crushed in this report at a reading of minus 48.5 as the impact of corona began to register.

The clear message is that the Zew experts that in the wake of the U.S.-China trade deal conditions were improving or were expected to improve. Instead, the virus came it spread for a while it was denied and now its impact is undeniable, ubiquitous, and bad.

Macroeconomic expectations 
Macroeconomic expectations changed more or less parallel with the experience of current conditions. In April 2018 macroeconomic expectations turned to negative readings across most of the countries in the table. By June the U.S., Japan and France also took on negative readings joining the rest of the pack. Macro-expectations were hard hit in December 2018 and for many that was their low reading at the time; a few countries slipped to lower readings still in January or February of 2019. There was a revival though April-May and then a worsening to new low readings for this episode around August. The movements largely followed U.S.-China trade news. By December with a U.S.-China Phase-One trade deal pending the euro area, Germany and Japan shed their negative readings. The U.S. shed its negative reading in February. And that was just in time for all of these countries to see macroeconomic expectations tank to low readings in March 2020, in the current report. The one-month change is astonishing.

Inflation 
Inflation expectations readings also have cycles to some extent, but inflation expectations now are at extremely weak readings in March across the board.

Interest rates 
Short-term interest rate expectations that eroded slightly and unevenly in February have plunged in March. There are now large negative expectations across the board. Long-term interest rate expectations are weaker across the board with negative assessments everywhere except in Germany where fiscal stimulus is expected and that has lifted rate expectations there on balance.

Stocks 
Oddly with stock markets in total pandemonium and much of the recent extreme selling probably coming AFTER these surveys were filled in, the Zew experts had become quite positive on the outlook for equities in March. Oddly they also apparently foresaw a Russia-OPEC oil deal (that did not happen) since they also have oil prices expected higher when in fact both WTI and Brent oil grades have recently traded below $30/barrel.

Percentile standings 
The table below registers percentile standings of the underlying diffusion survey data. It was the diffusion data I cited in the above paragraphs. The percentile rankings assess and rank the diffusion readings in a queue of data back to 1999 to give the current readings perspective.

The economic situation averages an unweighted 30.3 percentile reading in March. That means that the average reading in March is historically lower only about one-third of the time. That is a very weak marker. The U.S. and Japan have the ‘best’ relative current standings at a 38th percentile standing for each; France is at a 36.5 percentile standing compared to all of EMU at a 31.3 percentile mark. Italy and the U.K. have the weakest standings at 18.9% for Italy and 20.5% for the UK.

Economic expectations are so pathetically weak; there is not much point talking about who is doing better since all the rank standings are in the lower 10th percentile cohort. While the current economic index average fell by 32 points month-to-month, the macro-expectation index fell by 46.6 diffusion points to an average percentile standing of 3.1% - rarely ever lower.

The inflation expectation average fell by even more diffusion points in March shedding 53.4 points to fall to a 4.2 percentile standing average across members. Inflation is not on the radar and not even in the dictionary freeing policy to take whatever aggressive measures it may choose.

Short-term interest rate expectations fell by 41.2 diffusion points on average while long-term rates fell by 25.7 on average. Short-term rates have an average standing at their 7.6 percentile compared to long-term rates with an average standing at their 3.8 percentile.

Stocks have this odd reaction based on the dissonance between the Zew expectations and what stock markets have been doing over the last five trading sessions (falling!). However, Zew financial experts have four of seven stock markets with percentile standings above their historic medians (above a rank of 50%) with no index rated weaker than a 43.8 percentile standing.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317.png" width="660" height="270">


This will be an INDUCED recession 
The main point to bear in mind is that there is a recession coming that will be caused by these various national polices. The virus is NOT causing the recession. The recession is being caused by programs put in place by governments to mitigate the spread of the virus. This is a self-induced recessionary process. As such, it is controlled. I read some articles in which people talk of this cascading to a depression. Since this is like a controlled burn that is not likely, but a thing like this can always spin out of control. Still, policy is still in control of this modulation and so far the early imposition of these measures internationally and with different degrees in different countries makes it unlikely that a doomsday scenario would take hold. Also policy is geared to try to and mute economic knock-on effects. There are safety nets for people, for business, and medical care. Few crises ever come with such mechanisms put in place before the crisis becomes severe. All indications are that in most places governments are ahead of the curve. Italy and Iran are struggling the most internationally, but Italy’s clamp down is slowing the spread and showing progress.

The downturn may be severe, but it will be limited and reversible 
My recommendation is to view this as a temporary and ‘soon to be reversed’ policy period. It is still open-ended. No one knows how long it will take. But the more that people respect the mitigation protocols, the sooner this will end and when it does the economic fabric should be in good shape and growth should return more or less on path. When restaurants reopen, people will eat there. When sports events are on, people will attend again. When travel is allowed, people will drive, fly and take trains. But as long as those activities are closed, those actions are confined to zero or near-zero activity. That is the fact of the induced recession.

No room for conventional monetary and fiscal stimulus 
Another fact is that governments can issue policies to mitigate the adverse impact on growth. But that is all. Policies can mitigate. They cannot reverse since the medical protocol policies themselves are meant to reduce contact among economic agents; that slows growth. So governments can reduce the pain of this process on people and prepare to keep the economic fabric strong so that growth can progress back to normal once –once- that is feasible. Conventional macroeconomic monetary and fiscal policies are not useful because they work to stimulate output and spending in general and many of those activities have been purposefully shut down by policy. Fiscal actions should be targeted and calibrated not across the board. This is should be a hands-on process not a process run on the advice some now malfunctioning statistical model.





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Welcome to the wild wacky world of economic analysis during a global contagion with national policies slamming the brakes on at different speeds to head off the spread of the virus in different regions around the globe. As you can see [...]

Zew Zig Zags Toward Zilch; Zew and What to Do

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The Bureau of Labor Statistics reported that total job openings as a percent of total employment plus openings rose to 4.4% in January after having declined in both December and November, but remained below the 4.8% record of January 2019. The hiring rate slipped to 3.8% in January from 3.9% in December but remains near it expansion high of 4.0% reached last July. The layoff and discharge rate slipped to 1.1% in January, tied for the lowest on record, from 1.2% while the quit rate was unchanged at 2.3%, just 0.1%-pt below the highest of the expansion.

On the last business day of January, the job openings level totaled 6.96 million (+411,000 or 6.3% m/m). This was the largest monthly percent increase in total openings since January 2018. Over the month, the number of job openings increased for total private (+370,000) and edged up for government (+40,000). Job openings increased in finance and insurance (+65,000), federal government (+38,000), and mining and logging (+8,000). The number of job openings rose in each major region with the largest increase in the South region.

Private-sector job openings rebounded sharply in January, rising 6.3% m/m with the rate rising to 4.6% from 4.3% in December. The record rate is 5.1% reached in January 2019. Government sector job openings jumped 5.6% m/m in January with the rate rising to 3.2% from 3.1% in December. The January rate for government was just 0.1%-point off the record of 3.3% in October.


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In January, hiring slipped 1.7% m/m to 5.82 million with the hiring rate edging down to 3.8% from 3.9% in December. Private sector hiring fell 2.0% m/m while government hiring increased 3.4% m/m. Hiring was disparate across industries in January hiring weak in goods-producing sectors (led by a 24% m/m drop in mining hires) and generally a little stronger in service-producing sectors (outside of real estate where hires slumped 14.5% m/m). The number of hires decreased in the Midwest and South regions and rose in the Northeast and West regions.

Total separations fell 2.6% m/m in January but this reflects lower involuntary separations. Private-sector separations declined 2.4% m/m while government separations dropped 4.7% m/m. Total separations include both quits (which are generally voluntary initiated by the employee) and layoffs (which are not voluntary and are initiated by the employer). Quits typically serve as an indicator of workers' willingness or ability to leave jobs. Quits edged up 0.1% m/m in January and are up 3% in the past four months. Private-sector quits were up 0.7% m/m in January while government quits fell 9.1% m/m. In contrast, layoffs slumped 11.0% m/m in January and are down 14% over the past four months. Private-sector layoffs plunged 11.8% m/m while government layoffs rose 6.4% m/m.

The Job Openings and Labor Turnover Survey (JOLTS) dates to December 2000; the figures are available in Haver's USECON database.

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 <a href="/comment/200317s.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/200317s.png"></a>

 <table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS
 (Job Openings &amp; Labor Turnover Survey, SA)</a></th>
 <th scope="col" >Jan</th>
 <th scope="col" >Dec</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Jan'19</th>
 <th scope="col" >Jan'18</th>
 <th scope="col" >Jan'17</th>
 </tr>
</thead>
<tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Job Openings, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
<td >4.4</td>
<td >4.1</td>
<td >4.3</td>
<td >4.8</td>
<td >4.3</td>
<td >3.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
<td >6,963</td>
<td >6,552</td>
<td >6,793</td>
<td >7,520</td>
<td >6,645</td>
<td >5,607</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Hires, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)&nbsp;</td>
<td >3.8</td>
<td >3.9</td>
<td >3.9</td>
<td >3.9</td>
<td >3.7</td>
<td >3.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
<td >5,824</td>
<td >5,927</td>
<td >5,857</td>
<td >5,834</td>
<td >5,511</td>
<td >5,517</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Layoffs &amp; Discharges,
 Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
<td >1.1</td>
<td >1.2</td>
<td >1.2</td>
<td >1.2</td>
<td >1.3</td>
<td >1.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
<td >1,684</td>
<td >1,893</td>
<td >1,769</td>
<td >1,734</td>
<td >1,957</td>
<td >1,765</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Quits, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
<td >2.3</td>
<td >2.3</td>
<td >2.3</td>
<td >2.4</td>
<td >2.1</td>
<td >2.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
<td >3,532</td>
<td >3,528</td>
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<td >3,530</td>
<td >3,034</td>
<td >3,176</td>
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The Bureau of Labor Statistics reported that total job openings as a percent of total employment plus openings rose to 4.4% in January after having declined in both December and November, but remained below the 4.8% record of January [...]

U.S. JOLTS: Job Openings Rebound

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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Kathleen Stephansen, CBE

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

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

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

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

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 6, the highest unemployment rates were in New Jersey and Washington (both 2.40%), Massachusetts and Minnesota (both 2.10%), California and Rhode Island (both 2.00%). The lowest rates were in Florida (0.30%), and Alabama, Louisiana, North Carolina (all 0.40%). Rates in other notable states include New York (1.80%), Illinois and Pennsylvania (both 1.70%), and Texas (1.10%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.


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- Initial claims declined from the prior week.
- Continuing claims rose from the prior week.
- The insured unemployment rate edged up.


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

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

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

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

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

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


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


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

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

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

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

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

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



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

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

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

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

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

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



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


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

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

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

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

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

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

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



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


U.S. Industrial Production Fell in October and Recovered in November

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New orders for durable goods fell a more-than-expected 2.2% (+4.8% y/y) in October following an upwardly revised 0.7% m/m rise in September (previously +0.5% m/m) and a 3.0% monthly jump in August. The Action Economics Forecast Survey expected a 1.5% m/m decline. A 23.7% m/m drop in aircraft orders more than accounted for the overall decline. Orders excluding aircraft increased 0.2% m/m (4.0% y/y) in October on top of a 0.5% monthly increase in September.

More generally, transportation orders fell 6.5% m/m (+7.3% y/y) in October following a 0.6% m/m increase in September and an 8.0% monthly jump in August. In addition to the drop in aircraft orders, orders for motor vehicles and parts edged up 0.1% m/m in October, their sixth consecutive monthly increase. Across other sectors, orders for primary metals fell 0.7% m/m, their first monthly decline in ten months. Orders for electrical equipment and appliances slumped 1.5% m/m, their first monthly decline in seven months. In contrast, orders for fabricated metal products rose 0.5% m/m, their fourth consecutive monthly gain. Machinery orders increased 0.8% m/m, their eighth consecutive monthly rise. Orders for computers and electronic products increased a solid 1.0% m/m on top of a 1.2% monthly increase in September.

Shipments of core capital goods (nondefense capital goods shipments excluding aircraft) are a reliable coincident indicator of business spending on equipment in the national accounts. They rose 0.7% m/m in October following an upwardly revised 1.2% monthly gain in September (previously +0.9%). The was the second consecutive monthly increase and the fifth in the past six months. The strong end to Q3 and the continued rise in the first month of Q4 provides a solid starting point for all of Q4. The October shipments figure was 5.9% at an annual rate above the Q3 average. Core capital goods orders rose 0.5% m/m in October on top of an upwardly revised 1.1% m/m increase in September (previously +0.9%). This was the fourth consecutive monthly rise.

Total manufacturing shipments edged up 0.1% m/m (+2.8% y/y) in October after having been essentially unchanged in September. Shipments of durable goods increased 0.6% m/m (5.9% y/y), led by 1.4% monthly jump in transportation shipments. However, apart from a 0.1% m/m decline in shipments of other durable goods, all of the other major sectors posted monthly gains in October. In contrast, shipments of nondurable goods fell 0.4% m/m (-0.3% y/y) in October for their third consecutive monthly decline. The monthly decline was led by a 2.4% m/m fall in shipments of petroleum and coal products although it was relatively widely spread across major sectors. The one exception was a 2.1% m/m increase in leather product shipments, but this came after four consecutive sizeable monthly declines.

Unfilled durable goods orders increased 0.2% m/m (7.9% y/y) in October for their third consecutive monthly gain following a 0.8% m/m rise in September and a 0.7% m/m increase in August. Total factory inventories were unchanged in October (+1.4% y/y) following 0.1% monthly declines in both August and September. Durable goods inventories edged up 0.1% m/m in October while inventories of nondurable goods fell 0.2% m/m, the third consecutive monthly decline.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.



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- New orders for durable goods slumped 2.2% m/m in October following increases in both August and September
- A 24% monthly drop in aircraft orders drove the overall decline
- Orders excluding aircraft rose 0.2% m/m in October
- Core capital goods shipments and orders continued to rise in October with small upward revisions to September


Economy in Brief: 2020

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EU Passenger Car Registrations Tick Higher But Are Broadly Weak While Markets Remain Broadly Scared

U.S. Mortgage Applications Edge Lower as Interest Rate Rose in Early March

U.S. Housing Starts & Building Permits Ease in February

U.S. Housing Starts & Building Permits Ease in February

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U.S. JOLTS: Job Openings Rebound