Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127i.jpg" width="353">
France&#146;s business climate improved to an index reading of 110 in November from 108 in October. The gain, like the rise in the German IFO index was unexpected. Still the index has moderated as the level reading has flattened out and the percentage gain reading shows a slowdown is still in effect. The climate index sits firmly at the 74th percentile mark of its range. The production trends and likely trend readings are also firm in their ranges in their 59th and 79th range percentiles, respectively. Orders are in about the same relative standing in the 74th percentile of their range and foreign orders are in the 69th percentile of their range.. 
The bounce in the French and German industrial sentiment gauges in November is curious especially as the euro moves higher and there have been concerns voiced of what a strong euro might do to growth. Still the rises in these two industrial gauges were small and they have not reversed the trends to weaker readings that had been in force. A stronger exchange rate is a good thing in many respects since it increases purchasing power and helps to fight off inflation. But so far in EMU the inflation numbers have stayed troublesome and even gotten worse, at least they have for Germany. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
INSEE Industry Survey
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Since Jan 1990</td>
<td colspan="4">Since Jan 1990</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Percentile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Climate</td>
<td>110</td>
<td>108</td>
<td>109</td>
<td>109</td>
<td>74.0</td>
<td>40</td>
<td>123</td>
<td>73</td>
<td>50</td>
<td>101</td>
</tr>
<tr class="even">
<td colspan="11">Production</td>
</tr>
<tr>
<td class="firstcol">Recent Trend</td>
<td>3</td>
<td>10</td>
<td>6</td>
<td>11</td>
<td>59.8</td>
<td>78</td>
<td>44</td>
<td>-58</td>
<td>102</td>
<td>-6</td>
</tr>
<tr>
<td class="firstcol">Likely trend</td>
<td>43</td>
<td>34</td>
<td>32</td>
<td>33</td>
<td>79.2</td>
<td>6</td>
<td>63</td>
<td>-33</td>
<td>96</td>
<td>7</td>
</tr>
<tr class="even">
<td colspan="11">Orders/Demand</td>
</tr>
<tr>
<td class="firstcol">Orders &amp; Demand</td>
<td>3</td>
<td>-1</td>
<td>1</td>
<td>1</td>
<td>74.7</td>
<td>30</td>
<td>25</td>
<td>-62</td>
<td>87</td>
<td>-15</td>
</tr>
<tr>
<td class="firstcol">Foreign Orders &amp; Demand</td>
<td>4</td>
<td>3</td>
<td>10</td>
<td>8</td>
<td>69.7</td>
<td>51</td>
<td>31</td>
<td>-58</td>
<td>89</td>
<td>-11</td>
</tr>
<tr class="even">
<td colspan="11">Prices</td>
</tr>
<tr>
<td class="firstcol">Likely Sales Prices Trend</td>
<td>9</td>
<td>9</td>
<td>13</td>
<td>11</td>
<td>68.1</td>
<td>29</td>
<td>24</td>
<td>-23</td>
<td>47</td>
<td>0</td>
</tr>
</tbody>
</table>
</body>
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Frances business climate improved to an index reading of 110 in November from 108 in October. The gain, like the rise in the German IFO index was unexpected. Still the index has moderated as the level reading has flattened out and [...]

Business Climate Perks up in France

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127h.jpg" align="left" border="0" height="265" width="353">
The overall IFO business sentiment index rose to 104.2 in
November from 103.9 in October. Current conditions improved to 110.4
from 109.6. But expectations slipped to 98.3 from 98.6. Even so the
table below shows that the growth of the various indexes is slipping
further. The Biz climate index, though higher on the month, is 2.5%
lower year/year worse off than in October. The current conditions index
has fallen more year/year as well. Business Expectations are off by 2%,
their worst year/year drop so far. 

The graph speaks to sectors. Retailing is weakening. Services
are flattening. Manufacturing actually picked up in the month, but not
by a lot. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">IFO Survey:
Germany </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="4">Index Numbers</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Nov 07</td>
<td>Oct 07</td>
<td>Sep 07</td>
<td>Aug 07</td>
<td>Jul 07</td>
<td>Current</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>%tile</td>
</tr>
<tr>
<td class="firstcol">Biz Climate</td>
<td style="color: red;">-2.5%</td>
<td style="color: red;">-1.5%</td>
<td style="color: red;">-0.9%</td>
<td>0.7%</td>
<td>0.8%</td>
<td>104.2</td>
<td>95.8</td>
<td>108.8%</td>
<td>81.0%</td>
</tr>
<tr>
<td class="firstcol">Current Situation</td>
<td style="color: red;">-3.1%</td>
<td style="color: red;">-2.1%</td>
<td style="color: red;">-1.3%</td>
<td>2.5%</td>
<td>2.4%</td>
<td>110.4</td>
<td>94.9</td>
<td>116.3%</td>
<td>84.8%</td>
</tr>
<tr>
<td class="firstcol">Biz Expectations: Next 6-Mos</td>
<td style="color: red;">-2.0%</td>
<td style="color: red;">-0.7%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-1.1%</td>
<td style="color: red;">-0.9%</td>
<td>98.3</td>
<td>96.7</td>
<td>101.6%</td>
<td>67.3%</td>
</tr>
</tbody>
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The overall IFO business sentiment index rose to 104.2 in November from 103.9 in October. Current conditions improved to 110.4 from 109.6. But expectations slipped to 98.3 from 98.6. Even so the table below shows that the growth of [...]

German Indexes Show Some Unexpected Life…but not That Much

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127f.jpg" width="353">
On average, retail gasoline prices last week held at the prior period&#39;s level of $3.10 per gallon, according to the US Department of Energy survey.
Divided by consumer prices other than energy, these gasoline prices are just below the high reached in 1981.
Yesterday, prices for spot WTI crude oil stood at $97.71 per barrel, down slightly from last week&#39;s average.
In perhaps a favorable sign for home heating bills this season, natural gas prices continued the move sideways at the high end of the recent $6.5 - $7.5 per mmbtu range (-0.3% y/y).
Gold prices continued to hover around the $800 per ounce level and the level surpassed the previous record price reached in early 1980.
Oil Shocks and Price Stability from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20071201/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">11/26/07</th>
<th scope="col">11/19/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.10</td>
<td>3.10</td>
<td>37.9%</td>
<td>2.57</td>
<td>2.27</td>
<td>1.85</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>98.83</td>
<td>91.18</td>
<td>70.3%</td>
<td>61.11</td>
<td>58.16</td>
<td>41.78</td>
</tr>
<tr class="odd">
<td class="firstcol">Gold: Handy &amp; Harmon ($ per Troy Oz.)</td>
<td>$795.50</td>
<td>$804.25</td>
<td>27.4%</td>
<td>628.70</td>
<td>$507.40</td>
<td>$443.40</td>
</tr>
</tbody>
</table>
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On average, retail gasoline prices last week held at the prior period's level of $3.10 per gallon, according to the US Department of Energy survey. Divided by consumer prices other than energy, these gasoline prices are just below the [...]

Gasoline Held Above $3.00 per Gallon

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127e.jpg" width="353">
Chain store sales dipped 0.1% last week after posing a 0.8% rise during the prior week, according to the International Council of Shopping Centers (ICSC)-UBS.
Despite the weak performance during Thanksgiving week, sales for the month of November rose 0.4% from the October average which fell 0.8% from September.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127g.jpg" width="353">
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS fell 0.1% (-1.1% y/y) for the second weekly decline.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/24/07</th>
<th scope="col">11/17/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>478.2</td>
<td>478.8</td>
<td>2.5%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


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Chain store sales dipped 0.1% last week after posing a 0.8% rise during the prior week, according to the International Council of Shopping Centers (ICSC)-UBS. Despite the weak performance during Thanksgiving week, sales for the month [...]

U.S. Chain Store Sales Dipped

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127d.jpg" align="left" border="0" height="265" width="353">
There is not much to say about Germany&#8217;s flash HICP since the
report provides no detail. But the headline says quite a lot this
month. Inflation in Germany is steadily accelerating. In prior months
core inflation had crept up above the 2% mark which is the ECB&#8217;s top
allowed rate for all of inflation for the whole of the Euro area. At
3.3% Germany&#8217;s headline rate is way over the ECB&#8217;s top allotment and
Germany has been a low inflation country. ECB members have been warning
of inflation pressures for some time. Money and credit growth in the
monetary union remain above their respective comfort marks. But the
financial turbulence has not gone away. With this report the ECB is
again on the hot seat. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">German HICP and CPI details </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr>
<td class="firstcol">HICP Total</td>
<td>0.9%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>7.1%</td>
<td>4.1%</td>
<td>3.3%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
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There is not much to say about Germany’s flash HICP since the report provides no detail. But the headline says quite a lot this month. Inflation in Germany is steadily accelerating. In prior months core inflation had crept up above [...]

German Flash HICP Soars...

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127a.jpg" width="353">
According to the Conference Board Survey consumer confidence dropped 8.3% in November to a reading of 87.3, the seventh m/m decline of 2007 and the largest since September 2005. The decline was to the lowest level in two years. A much lesser drop to 91.4 had been generally expected by economists.<div align="left"> 
The expectations index fell out of bed and posted a 14.1% m/m drop. It is off by a quarter during the last twelve months. Expectations for employment (more jobs) fell to a meager 10.8% looking for a rise, the least since the recession of 1990.Only 12.4% of respondents expected better business conditions, the least since 2000 while 18.7% expected an improvement in their income. That was down just slightly.</div><div align="left"> 
Plans to buy major appliances in the next six months improved slightly from a very depressed October level but the percentage intending to buy a home collapsed to just 2.5%, the least since 1994.<div align="left"> </div><div align="left"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127b.jpg" width="353">
Just 2.0% of respondents planned to by a new automobile within the next six months, the least since 1974.</div></div><div align="left"> </div><div align="left">
The present conditions index fell 2.2%, similar to the October m/m decline. The decline was to a level which was the lowest in about two years. Just 22.3% saw business conditions as good, the least since 2004, and 23.2% saw jobs as plentiful. A lesser 21.3% of respondents viewed jobs as hard to get.</div><div align="left"> 
The expected inflation rate in twelve months jumped to 5.7% from 5.1% in October, the highest expectation in two years. 
According to the S&amp;P/Case-Shiller home price index Composite 20, U.S. home prices fell 0.9% m/m in September. The decline pulled the y/y comparison to a negative 4.9% and since the beginning of this year house prices have fallen 3.8%.</div><div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127c.jpg" width="353">
Home prices in San Diego California were extremely weak with a 9.6% y/y decline as were prices in Miami Florida which fell 10.0% y/y. In Las Vegas home prices fell 9.0% y/y and in Los Angeles prices fell 7.0%.</div><div align="left">
More moderate, but still substantial, declines were registered in New York (-3.6% y/y), Chicago (-2.5% y/y) and Denver (-0.9%).</div><div align="left">
The index of just 20 U.S. cities and their surrounding areas is not adjusted for the quality or the size of the home. It fell five percent in August from a year ago.</div><div align="left"> </div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Conference Board &nbsp;(SA, 1985=100)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Index</td>
<td>87.3</td>
<td>95.2</td>
<td>-17.1%</td>
<td>105.9</td>
<td>100.3</td>
<td>96.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Present Conditions</td>
<td>115.4</td>
<td>118.0</td>
<td>-8.0%</td>
<td>130.2</td>
<td>116.1</td>
<td>94.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>68.7</td>
<td>80.0</td>
<td>-25.2%</td>
<td>89.7</td>
<td>89.7</td>
<td>96.9</td>
</tr>
</tbody>
</table>
</body>
</html>

According to the Conference Board Survey consumer confidence dropped 8.3% in November to a reading of 87.3, the seventh m/m decline of 2007 and the largest since September 2005. The decline was to the lowest level in two years. A much [...]

Consumer Confidence Crumbled With Lower Home Prices

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127a.jpg" align="left" border="0" height="265" width="353">
According to the Conference Board Survey consumer confidence
dropped 8.3% in November to a reading of 87.3, the seventh m/m decline
of 2007 and the largest since September 2005. The decline was to the
lowest level in two years. A much lesser drop to 91.4 had been
generally expected by economists.

<div align="left">
The expectations index fell out of bed and posted a 14.1% m/m
drop. It is off by a quarter during the last twelve months.
Expectations for employment (more jobs) fell to a meager 10.8% looking
for a rise, the least since the recession of 1990.Only 12.4% of
respondents expected better business conditions, the least since 2000
while 18.7% expected an improvement in their income. That was down just
slightly.

</div>
<div align="left">
Plans to buy major appliances in the next six months improved
slightly from a very depressed October level but the percentage
intending to buy a home collapsed to just 2.5%, the least since 1994.
<div align="left"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127b.jpg" align="right" border="0" height="265" width="353">
Just 2.0% of respondents planned to by a new automobile within
the next six months, the least since 1974.
</div>
</div>
<div align="left">
The present conditions index fell 2.2%, similar to the October
m/m decline. The decline was to a level which was the lowest in about
two years. Just 22.3% saw business conditions as good, the least since
2004, and 23.2% saw jobs as plentiful. A lesser 21.3% of respondents
viewed jobs as hard to get.

</div>
<div align="left">
The expected inflation rate in twelve months jumped to 5.7%
from 5.1% in October, the highest expectation in two years. 

According to the S&amp;P/Case-Shiller
home price index Composite 20, U.S. home prices fell
0.9% m/m in September. The decline pulled the y/y comparison to a
negative 4.9% and since the beginning of this year house prices have
fallen 3.8%.
</div>
<div align="left"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127c.jpg" align="left" border="0" height="265" width="353">
Home prices in San Diego California were extremely weak with a
9.6% y/y decline as were prices in Miami Florida which fell 10.0% y/y.
In Las Vegas home prices fell 9.0% y/y and in Los Angeles prices fell
7.0%.
</div>
<div align="left">
More moderate, but still substantial, declines were registered
in New York (-3.6% y/y), Chicago (-2.5% y/y) and Denver (-0.9%).
</div>
<div align="left">
The index of just 20 U.S. cities and their surrounding areas
is not adjusted for the quality or the size of the home. It fell five
percent in August from a year ago.
</div>


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board 
&nbsp;(SA, 1985=100)</th>
<th scope="col">November</th>
<th scope="col">October</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>87.3</td>
<td>95.2</td>
<td>-17.1%</td>
<td>105.9</td>
<td>100.3</td>
<td>96.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Conditions</td>
<td>115.4</td>
<td>118.0</td>
<td>-8.0%</td>
<td>130.2</td>
<td>116.1</td>
<td>94.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>68.7</td>
<td>80.0</td>
<td>-25.2%</td>
<td>89.7</td>
<td>89.7</td>
<td>96.9</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Dipped 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 27, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127e.jpg" align="left" border="0" height="265" width="353">
Chain store sales dipped 0.1% last week after posing a 0.8%
rise during the prior week, according to the International Council of
Shopping Centers (ICSC)-UBS.
Despite the weak performance during Thanksgiving week, sales
for the month of November rose 0.4% from the October average which fell
0.8% from September.

During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127g.jpg" align="right" border="0" height="265" width="353">

The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

The leading indicator of chain store sales from ICSC-UBS fell
0.1% (-1.1% y/y) for the second weekly decline.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">11/24/07</th>
<th scope="col">11/17/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>478.2</td>
<td>478.8</td>
<td>2.5%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
Gasoline Held Above $3.00 per
Gallon 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 27, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127f.jpg" align="left" border="0" height="265" width="353">
On average, retail gasoline prices last week held at the prior
period's level of $3.10 per gallon, according to the US Department of
Energy survey.
Divided by consumer prices other than energy, these gasoline
prices are just below the high reached in 1981.
Yesterday, prices for spot WTI crude oil stood at $97.71 per
barrel, down slightly from last week's average.
In perhaps a favorable sign for home heating bills this
season, natural gas prices continued the move sideways at the high end
of the recent $6.5 - $7.5 per mmbtu range (-0.3% y/y).
Gold prices continued to hover around the $800 per ounce level
and the level surpassed the previous record price reached in early 1980.
Oil Shocks and Price Stability from the
Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20071201/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">11/26/07</th>
<th scope="col">11/19/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.10</td>
<td>3.10</td>
<td>37.9%</td>
<td>2.57</td>
<td>2.27</td>
<td>1.85</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>98.83</td>
<td>91.18</td>
<td>70.3%</td>
<td>61.11</td>
<td>58.16</td>
<td>41.78</td>
</tr>
<tr class="odd">
<td class="firstcol">Gold: Handy &amp; Harmon ($
per Troy Oz.)</td>
<td>$795.50</td>
<td>$804.25</td>
<td>27.4%</td>
<td>628.70</td>
<td>$507.40</td>
<td>$443.40</td>
</tr>
</tbody>
</table>
German Flash HICP Soars... 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 27, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127d.jpg" align="left" border="0" height="265" width="353">
There is not much to say about Germany&#8217;s flash HICP since the
report provides no detail. But the headline says quite a lot this
month. Inflation in Germany is steadily accelerating. In prior months
core inflation had crept up above the 2% mark which is the ECB&#8217;s top
allowed rate for all of inflation for the whole of the Euro area. At
3.3% Germany&#8217;s headline rate is way over the ECB&#8217;s top allotment and
Germany has been a low inflation country. ECB members have been warning
of inflation pressures for some time. Money and credit growth in the
monetary union remain above their respective comfort marks. But the
financial turbulence has not gone away. With this report the ECB is
again on the hot seat. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">German
HICP and CPI details </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr>
<td class="firstcol">HICP Total</td>
<td>0.9%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>7.1%</td>
<td>4.1%</td>
<td>3.3%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
German Indexes Show Some
Unexpected Life&#8230;but not That Much 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 27, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071127h.jpg" align="left" border="0" height="265" width="353">
The overall IFO business sentiment index rose to 104.2 in
November from 103.9 in October. Current conditions improved to 110.4
from 109.6. But expectations slipped to 98.3 from 98.6. Even so the
table below shows that the growth of the various indexes is slipping
further. The Biz climate index, though higher on the month, is 2.5%
lower year/year worse off than in October. The current conditions index
has fallen more year/year as well. Business Expectations are off by 2%,
their worst year/year drop so far. 

The graph speaks to sectors. Retailing is weakening. Services
are flattening. Manufacturing actually picked up in the month, but not
by a lot. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">IFO
Survey:
Germany </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="4">Index Numbers</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Nov 
07</td>
<td>Oct 
07</td>
<td>Sep 
07</td>
<td>Aug 
07</td>
<td>Jul 
07</td>
<td>Current</td>
<td>Average</td>
<td>Curr/Avg</td>
<td>%tile</td>
</tr>
<tr>
<td class="firstcol">Biz Climate</td>
<td style="color: red;">-2.5%</td>
<td style="color: red;">-1.5%</td>
<td style="color: red;">-0.9%</td>
<td>0.7%</td>
<td>0.8%</td>
<td>104.2</td>
<td>95.8</td>
<td>108.8%</td>
<td>81.0%</td>
</tr>
<tr>
<td class="firstcol">Current Situation</td>
<td style="color: red;">-3.1%</td>
<td style="color: red;">-2.1%</td>
<td style="color: red;">-1.3%</td>
<td>2.5%</td>
<td>2.4%</td>
<td>110.4</td>
<td>94.9</td>
<td>116.3%</td>
<td>84.8%</td>
</tr>
<tr>
<td class="firstcol">Biz Expectations: Next 6-Mos</td>
<td style="color: red;">-2.0%</td>
<td style="color: red;">-0.7%</td>
<td style="color: red;">-0.4%</td>
<td style="color: red;">-1.1%</td>
<td style="color: red;">-0.9%</td>
<td>98.3</td>
<td>96.7</td>
<td>101.6%</td>
<td>67.3%</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
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background-color:#e2e2e2;
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</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071126e.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071126f.jpg" border="0" height="265" width="312">

Mexico and Chile released third quarter data on their balances
of payments today. Mexico's account balance continues to run between a
little below and a little above -1% of GDP while that of Chile has been
positive for the past three years and has ranged between 4-7% of GDP so
far this year. The trends in the Current account as percentage of GDP
are shown in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071126g.jpg" align="right" border="0" height="265" width="312">

In dollar terms, Mexico's current account was -$1768 million
US in the third quarter of this year, an improvement over the deficits
of $2844 and $2624 million in the second and first quarters of the
year. In Chile, the current account was $1869 in the third quarter. The
trend in the current account of each country is shown in the second
chart.
In both cases, but to a far greater degree in Mexico than in
Chile, remittances from their nationals working abroad have been
significant factors in reducing the current account balances. The third
charts shows the relative magnitudes of net transfers in the two
countries and the fourth chart shows the current account of each
country excluding net transfers.
Another striking feature of Mexico's current account is the
dominance of US trade. In the third quarter the total balance of trade
in goods was-$2,926 million, but the balance of trade in goods with the
US was a positive $20994 million as shown in the fifth chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071126h.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071126i.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Balances
of Payments (Mil. US$)&nbsp;</th>
<th scope="col">Q3 07</th>
<th scope="col">Q2&nbsp;07&nbsp;</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">CHILE</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Current Account&nbsp; (% of&nbsp;&nbsp; GDP)&nbsp;</td>
<td>4.52</td>
<td>3.67</td>
<td>7.05</td>
<td>3.59</td>
<td>1.02</td>
<td>2.16</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Current Account (Mil. US$)</td>
<td>1869</td>
<td>1497</td>
<td>2759</td>
<td>5256</td>
<td>1315</td>
<td>2074</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;
Net Transfer (Mil. US$)</td>
<td>905</td>
<td>589</td>
<td>589</td>
<td>3357</td>
<td>1791</td>
<td>1072</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Current Account ex Net Transfers&nbsp;</td>
<td>964</td>
<td>782</td>
<td>2170</td>
<td>1899</td>
<td>-476</td>
<td>1003</td>
</tr>
<tr class="odd">
<td class="firstcol">MEXICO&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Current Account (% of GDP)&nbsp;&nbsp;</td>
<td>-0.78</td>
<td>-1.30</td>
<td>-1.22</td>
<td>-0.22</td>
<td>-0.70</td>
<td>-0.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Current Account (Mil. US$)</td>
<td>-1768</td>
<td>-2844</td>
<td>-2624</td>
<td>-1928</td>
<td>-5179</td>
<td>-6576</td>
</tr>
<tr>
<td class="firstcol"> &nbsp;&nbsp;
Net Transfer (Mil. US$)</td>
<td>6091</td>
<td>5934</td>
<td>6268</td>
<td>24127</td>
<td>20736</td>
<td>17162</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;
Current Account ex Net Transfers&nbsp;</td>
<td>-8859</td>
<td>-8778</td>
<td>-8892</td>
<td>-26055</td>
<td>-25915</td>
<td>-23738</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance on
Trade in Goods&nbsp;</td>
<td>-2926</td>
<td>-3083</td>
<td>-3049</td>
<td>-6242</td>
<td>-7655</td>
<td>-8755</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance on
Trade in Goods with USA</td>
<td>20994</td>
<td>19776</td>
<td>19624</td>
<td>81466</td>
<td>65019</td>
<td>53698</td>
</tr>
</tbody>
</table>
</body></html>

Mexico and Chile released third quarter data on their balances of payments today. Mexico's account balance continues to run between a little below and a little above -1% of GDP while that of Chile has been positive for the past three [...]

Mexico and Chile: Balances of Payments

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

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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250829B1.jpg

The **PCE chain price index** increased 0.2% (2.6% y/y) after rising an unrevised 0.3% in June and an unrevised 0.2% in May. The y/y gain steadied at 2.6%. It was increased from 2.2% y/y in April. Energy prices fell 1.1% (-2.7% y/y) after rising 0.9%, while food & beverage prices eased 0.1% (+1.9% y/y) following a 0.3% rise. The price index excluding food & energy rose a steady 0.3%, after two straight 0.2% increases. The y/y gain edged up to 2.9% last month from 2.8% in June. It was increased from a low of 2.6% in April.

Durable goods prices eased 0.1% (+1.1% y/y) in July, after rising 0.5% in June. Home furnishings & appliance prices edged 0.1% higher (2.5% y/y), after increasing 1.3%. Recreational goods & vehicle costs declined 0.9% (-0.3% y/y) and reversed the 0.9% June strengthening. Motor vehicle & parts prices rose 0.2% (1.6% y/y), after a 0.4% June decline.

Prices of nondurable goods eased 0.1% (+0.2% y/y) last month after rising 0.4% in June. Clothing prices held steady both m/m and y/y after rising 0.3% in June. Food & beverage prices eased 0.1% (+1.9% y/y), following a 0.4% June increase. Gasoline & other energy prices fell 1.7% (-9.6% y/y), after rising 0.9% in June.

Services prices in July rose 0.3% (3.6% y/y), after four straight 0.2% increases. Housing & utility prices rose 0.2% (4.3% y/y), after two consecutive 0.3% increases, and services prices excluding energy & healthcare gained 0.4% (3.7% y/y) after two 0.2% gains. Healthcare prices rose 0.2% (2.7% y/y), after rising 0.4%. The cost of financial services & insurance jumped 1.2% (5.5% y/y) after rising 0.4% in June. Recreation services costs rose 0.3% (3.2% y/y) after rising 0.1%. Transportation prices gained 0.2% (4.4% y/y), following a 0.1% rise, while hotel & restaurant prices improved 0.1% (2.8% y/y) after a slight June decline.

**Personal consumption expenditures (PCE)** rose 0.5% (4.7% y/y) last month after increasing 0.4% in June, revised from 0.3%, after holding steady in May. The July rise matched expectations in the Action Economics Forecast Survey. When adjusted for price changes, PCE improved 0.3% in July (2.1% y/y) after rising 0.1% in June.

Real spending on durable goods increased 2.0% (3.2% y/y) in July, after falling for three straight months. Real spending on motor vehicles jumped 4.5% (3.5% y/y), after falling sharply in both June and May. Real outlays on furnishings & appliances improved 0.2% (0.9% y/y), after falling in each of the prior month. Real spending on recreational goods & vehicles increased 1.5% (4.9% y/y) last month, after falling 0.4% in June. Spending on “other” durable goods improved 0.4% (2.6% y/y) after rising 0.2% in June.

Nondurable goods spending in real terms rose 0.3% (2.7% y/y) in July after gaining 0.6% in June. Real clothing & footwear purchases rose 0.6% (4.9% y/y) last month, following a 0.5% rise during June. Real food & beverage purchases strengthened 0.7% (1.7% y/y) after rising 0.4%. Real outlays on gasoline & other energy products fell 1.3% (-1.5% y/y), after rising 1.5%. Real spending on “other” nondurable goods edged 0.1% higher (4.1% y/y) last month, following a 0.6% rise in June.

Real spending on services improved 0.1% (1.7% y/y) in July for the second straight month. Real spending on housing & utilities rose 0.1% (1.1% y/y) in July, for a second consecutive month, while real health care spending also rose 0.1% (3.9% y/y) after rising 0.2%. Real spending on food services & accommodations eased 0.2% (+1.7% y/y), after rising 0.4% in June. Real spending on financial services & insurance rose 0.2% (2.4% y/y) after increasing 0.4% in June. Real spending on transportation services rose 0.3% (-0.0% y/y) in July, after falling 0.6% in June. Recreation spending slipped 0.1% (+1.0% y/y), the same as in June. Spending on “other” services rose 0.3% (2.7% y/y) for the second straight month.

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**Personal income** rose 0.4% last month (5.0% y/y) after increasing 0.3% in June. A 0.5% gain was expected. Wages & salaries moved 0.6% higher (5.3% y/y), following a 0.1% increase during June. Rental income increased 0.5% (4.0% y/y) in July, after falling for three straight months. Proprietors’ income improved 0.7% (2.3% y/y), after a minimal 0.1% increase. Income from assets rose 0.1% (1.4% y/y), after holding steady in June, and current transfer receipts were unchanged (8.3% y/y) following a 1.1% June increase.

Disposable personal income increased 0.4% (4.6% y/y) during July following a 0.3% June rise. After adjusting for price changes, disposable income improved 0.2% (2.0% y/y) after holding steady in June.

The personal saving rate held steady in July at 4.4%, after falling from 5.0% in April. It still stands well above low of 3.5% in December of last year. Personal saving fell 1.7% (+5.8% y/y) in July, after declining 0.9% in June.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

**Let’s Get On with It** from Fed Governor Christopher J. Waller is available [here](https://www.federalreserve.gov/newsevents/speech/waller20250828a.htm).

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- Core price increase y/y matches highest since February.
- Real spending moderation centers on services.
- Real disposable income improves; personal savings rate steadies.

U.S. Core PCE Price Inflation Up in July; Real Spending Slows Y/Y 

Winnie Tapasanun

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The advance estimate of the U.S. international trade deficit in goods widened to a larger-than-expected $103.57 billion in July after narrowing to $84.85 billion in June, data from the U.S. Census Bureau showed. The July reading, the second widening in the goods trade deficit in three months, was slightly smaller than a $103.92 billion shortfall in July 2024. A deficit of $90.2 billion for July had been expected by the Action Economics Forecast Survey. The deficit reached a record $161.95 billion in March. In Q2'25, the goods trade deficit narrowed to $266.96 billion, the smallest since Q4'23, after ballooning to a record $465.035 billion in Q1'25; the monthly deficit averaged $88.99 billion in Q2'25, down from a record $155.01 billion in Q1'25.

Total goods exports dipped 0.1% m/m (+3.0% y/y), the third consecutive monthly decline, to $177.97 billion in July, the lowest level since January, after a 0.7% decrease to $178.08 billion in June. April registered a record high of $190.08 billion. Exports were up 9.6% from a June 2023 low but down 2.1% from a July 2022 high. The m/m decline in exports in July reflected exports m/m drops of 2.4% (+16.3% y/y) in other goods, 0.9% (+5.1% y/y) in nonfood consumer goods excluding autos, and 0.8% (-1.2% y/y) in industrial supplies & materials. To the upside, exports for the following end-use categories rose m/m in July: automotive vehicles & parts (2.2%; -4.0% y/y), capital goods excluding autos (0.7%; 7.0% y/y), and foods, feeds & beverages (0.5%; 1.4% y/y).

Total goods imports rebounded 7.1% m/m (1.7% y/y), the first monthly increase since March, to a four-month-high $281.54 billion in July following a 4.6% drop to $262.94 billion in June. March registered a record high of $344.59 billion. Imports were up 11.9% from a June 2023 low but down 2.6% from a March 2022 high. The m/m rebound in imports in July reflected m/m rises in most imports end-use categories. These included a 25.4% surge (the first m/m increase and the largest since January; 4.9% y/y) in industrial supplies & materials as well as rises of 11.5% (23.5% y/y) in other goods, 4.8% (14.7% y/y) in capital goods excluding autos, 2.4% (4.9% y/y) in foods, feeds & beverages, and 2.1% (-12.2% y/y) in nonfood consumer goods excluding autos. In contrast, imports of automotive vehicles & parts, the only end-use category with a monthly decline in July, fell 3.2% (-14.1% y/y), the third m/m fall in four months, on top of a 3.6% June decrease.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Deficit: $103.57 bil. in July, jumping 22.1% from June’s $84.85 bil.
- Exports -0.1%, down for the third straight month, led by a 2.4% decline in exports of other goods.
- Imports +7.1%, up for the first time since March, led by a 25.4% surge in imports of industrial supplies & materials.

U.S. Goods Trade Deficit Balloons in July; Largest Since March’s Record High

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Real GDP grew 3.3% (SAAR) during the second quarter of 2025, revised from a 3.0% gain reported initially. The increase followed an unrevised 0.5% decline in Q1. A 3.1% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.1% compared to 2.0% y/y in Q1, and remained below its most recent high of 3.2% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment increased 1.4% (7.0% y/y) last quarter after easing 0.8% in Q1. Before-tax earnings with IVA & CCA rose 1.7% (4.3% y/y) after falling 2.3% in Q1. Financial sector earnings rose 1.4% (15.3% y/y) after rising 2.3% in Q1. Nonfinancial corporate profits rose 2.2% (2.5% y/y) after falling 2.5% in Q1. Earnings from abroad eased 0.7% (-0.4% y/y) following a 7.3% Q1 decline.

Foreign trade balance improvement added 4.95 percentage points to growth last quarter after subtracting 4.61 percentage points in Q1. Imports fell 29.8% (+1.3% y/y) after surging 38.0% in Q1. Exports declined 1.3% (+2.0% y/y) after improving 0.4% in Q1. Inventories subtracted 3.29 percentage points from growth after adding 2.59 percentage point to Q1 growth.

Real final sales to domestic purchasers grew 1.6% (2.4% y/y), revised from 1.1%, in Q2 after rising 1.5% in Q1. Personal consumption expenditures rose 1.6% (2.4% y/y), revised from 1.4%, following a 0.5% gain. Durable goods spending rose 2.6% (4.6% y/y) after falling 3.7% in Q1. Motor vehicle purchases strengthened 11.7% (6.7% y/y) after declining 11.2% in Q1. Spending on home furnishings & appliances weakened 2.1% (+3.5% y/y) following a 1.5% rise. Recreational goods & vehicle outlays fell 3.5% (+4.3% y/y) last quarter after a 0.4% Q1 gain.

Nondurable goods outlays in constant dollars rose 2.3% (3.0% y/y) following 2.1% growth in Q1. Apparel spending increased 5.4% (4.8% y/y) following a 7.0% rise. Food & beverage buying gained 0.3% (1.5% y/y) after a 1.0% increase. Gasoline & fuel oil purchases weakened 1.4% (+0.9% y/y) after gaining 3.6% in Q1.

Real spending on services increased 1.2% (1.9% y/y) after a 0.6% gain. Outlays on housing & utilities eased 0.4% (+1.1% y/y) after rising 2.9% in Q1. Health care expenditures rose 4.2% (4.8% y/y) after a 3.1% increase. Transportation outlays declined 2.9% (-0.6% y/y) after a 1.4% rise, while recreation spending rose 3.6% (0.7% y/y) following a 5.1% decline. Restaurant & hotel expenditures increased 5.1% (1.9% y/y) after falling 1.8%. Financial services expenditures rose 1.9% (2.3% y/y) following a 0.1% Q1 increase.

Business fixed investment in constant dollars increased 5.7% last quarter (4.2% y/y), revised from 1.9%, following a 10.3% surge in Q1. Expenditures on structures declined 8.9% (-3.4% y/y), after falling 2.4% in Q1. Expenditures on producers’ durable equipment increased 7.4% (7.7% y/y), revised from 4.8%, after surging 23.7% in Q1. Outlays on information processing equipment rose 10.1% (20.1% y/y), revised from 5.5%, after soaring 72.8% during Q1. Industrial equipment investment rose 6.7% (4.0% y/y) after a 4.7% rise. Transportation equipment investment surged 20.4% (6.8% y/y) after a 6.9% gain. Intellectual property product spending rose 12.8% last quarter (5.2% y/y) following a 6.0% rise.

Residential structures investment in real terms declined a little-revised 4.7% (-1.3% y/y), the fourth decline in the last five quarters.

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Government spending eased 0.2%, revised from up 0.5% in Q2 (+1.8% y/y) after a 0.6% decline. Federal government expenditures declined 4.7% (+0.7% y/y) after falling 4.6% in Q1. National defense expenditures increased 1.4% (3.0% y/y) after declining 7.1% in Q1. State & local government spending rose 2.6% (2.5% y/y) following a 2.0% rise.

The GDP chain price index rose an unrevised and expected 2.0% last quarter (2.5% y/y) after increasing 3.8% in Q1. The PCE chain price index increased 2.0% (2.4% y/y) following a 3.7% rise. The PCE price index excluding food and energy rose 2.5% (2.7% y/y) after increasing 3.5% in Q1. The business fixed investment price index edged 0.5% lower (+1.1% y/y) after a 0.4% rise. The residential price index rose 1.1% (2.6% y/y) after a 4.1% rise while the government price index increased 3.3% (3.1% y/y) following a 4.6% 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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- Business investment strengthens & consumer spending firms.
- U.S. business earnings reverse Q1 decline.
- Increase in price index is unrevised, remaining roughly half of Q1’s gain.

U.S. GDP Q2’25 Growth Revised Up; Profits Improve

Sandy Batten

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The Kansas City Fed manufacturing composite index was unchanged at 1 in August from July. This was the second consecutive month that the index has been positive, indicating the manufacturing in the KC Fed district continue to inch up in August. Prior to the positive reading in July, the index had been negative for 22 consecutive months. The index’s most recent high was 31 reached in both April 2021 and October 2021. The durable manufacturing sector was mostly flat in August, while nondurable manufacturing activity declined slightly driven by printing activities and paper and chemical manufacturing. 

The August survey was open for a six-day period from August 20-25, 2025 and included 103 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The ISM-adjusted index calculated by Haver Analytics rose to 51.1 (NSA) in August from 50.2 in July. This was the fifth reading above the critical 50 level that separates expansion from contraction in the past six months, a further indication of expanding manufacturing activity.

For the major component indexes, the production index was 0 in August, but this was up from -3 in July. The new orders index rose to 5 in August, its highest reading since May 2022, from 2 in July. The shipments index increased to 6 in August from 3 in July. The employment index was 0 in August, but this was up from -11 in July. Also, the average workweek index rebounded to 3 in August after having been in negative territory for the previous four months. Supplier delivery times were unchanged at 7 in August. The elevation of this index since April may indicate some incipient supply-chain disruptions from higher tariffs. In contrast, raw materials inventories fell to -7 in August from 8 in July.

On the inflation front, the prices paid for raw materials index remained elevated but fell to 43 in August from 47 in July and a local high of 51 in June. Forty-four percent of respondents reported an increase in raw materials prices in August, down from 48% in July and 53% in June, while only 4% reported a decrease, down from 5% in July and 6% in June. The prices received for finished products index increased to 21 in August from 18 in July. This index has fluctuated in a range between 17 and 21 for the past four months.

Expectations for future activity remained positive, with the composite index rising to 11 from 8, as firms anticipate an improvement in production and new orders. While expectations have been trending up over the past several months, they remain depressed relative to the recent high reading of 17 last December. Capital expenditures expectations remained in negative territory in August for the second consecutive month but edged up to -3 from -4 in July.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

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- Index remained (though barely) in positive territory for the second consecutive month, indicating that manufacturing activity was inching up.
- Prior to last month, the index had been negative for 22 consecutive months.
- Positive readings across most key components.

FRB Kansas City Manufacturing Index Unchanged in August

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The Pending Home Sales Index weakened 0.4% in July (+0.7% y/y) to 71.7 after falling an unrevised 0.8% in June and rising an unrevised 1.8% in May, according to the National Association of Realtors (NAR). The Index remained 42.7% below its most recent peak of 125.1 in October 2021. The index is a forward-looking measure of home sales based on contract signings.

The fall in pending home sales occurred as the average rate on a 30-year mortgage rose to 6.72% in July after holding steady m/m at 6.82% in June. These rates remained well above a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales were mixed last month in the four major regions of the country. Sales in the Midwest declined 4.0% (+1.3% y/y) in July after easing 0.8% in June. Sales in the Northeast fell 0.6% both m/m and y/y, after holding steady in June. In the South, sales eased 0.1% (+1.8% y/y) following a 0.6% June decline, but sales in the West increased 3.7% (-1.9% y/y), reversing a 3.9% June drop.

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.

- Decline adds to June weakness.
- Regional changes are mixed.


Economy in Brief: 2007

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