Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117b.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) Composite Housing Market Index fell a hard 11.8% in November to 60, the lowest level since May 2003.
During the last twenty years the y/y change in the annual composite index has had an 85% correlation with the change in single family housing starts and there has been a 75% correlation between the current sales index and new single family home sales.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117d.jpg" width="353">
The m/m drop reflected sharp declines throughout the country.
The index for current sales of single family homes in November fell sharply to the lowest level since May 2003. The index for sales in six months also fell hard the lowest in over two years.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org">National Association of Home Builders</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a> </th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>60</td>
<td>68</td>
<td>70</td>
<td>68</td>
<td>64</td>
<td>61</td>
</tr>
</tbody>
</table>
</body>
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The National Association of Home Builders' (NAHB) Composite Housing Market Index fell a hard 11.8% in November to 60, the lowest level since May 2003. During the last twenty years the y/y change in the annual composite index has had [...]

NAHB Housing Market Index Fell Hard

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117a.jpg" width="353">
Housing starts in October fell 5.6% m/m to 2.014M units following an upwardly revised gain in September.The drop was to the lowest level since March and compared to Consensus expectations for a lesser decline to 2.06M starts.
The 3.7% decline in single-family starts reversed all of an upwardly revised 3.0% increase in September. Single family starts fell hard throughout the country. A 6.7% decline (-7.1% y/y) in the West was accompanied by a 7.2% drop (-6.6% y/y) in the Midwest. In the Northeast, single family starts were notably weak and fell 8.5% (+3.2% y/y) to the lowest level since April. Only an unchanged reading (11.6% y/y) in the South tempered the declines..
Multi family starts cratered 14.8% m/m after a downwardly revised 0.6% increase in September.
Building permits fell a hard 6.7% m/m to the lowest level since April as single family permits fell 4.9% (+4.9% y/y).
China: An Evolving Housing Market from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/banking/asiafocus/2005/AsiaFocus-Jun05.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,014</td>
<td>2,134</td>
<td>-2.3%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,704</td>
<td>1,770</td>
<td>2.3%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>310</td>
<td>364</td>
<td>-21.7%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,071</td>
<td>2,219</td>
<td>-1.1%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
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</tbody>
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Housing starts in October fell 5.6% m/m to 2.014M units following an upwardly revised gain in September.The drop was to the lowest level since March and compared to Consensus expectations for a lesser decline to 2.06M starts. The 3.7% [...]

Housing Starts Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117e.jpg" width="353">
Industrial output last month rebounded 0.9% following the effects of Hurricane&#39;s Katrina &amp; Rita which lowered September output by a revised 1.5%. The increase about matched Consensus expectations for a 1.0% gain.
Another sharp decline of 1.9% in utility output (+1.3% y/y) which followed two consecutive months of 0.9% drop held back the gain in total output. Mining output (-0.6%) also fell for the fourth consecutive month (-8.1% y/y). These declines were offset by a 1.5% spurt in factory sector production (3.3% y/y) which more than recovered the prior month&#39;s 0.7% shortfall.
A huge 6.5% (8.5% y/y) gain in output of business equipment led the strength in factory output last month. The strength was paced by a 36.8% rise in transit equipment which was recovering from a 25.5% plunge in September. Output of computers, peripheral equipment &amp; semiconductors also were strong and rose 1.7% (24.8% y/y) led by a 2.8% jump in communications equipment (23.2% y/y). Excluding the high tech sector altogether, factory output gained 1.3% (1.8% y/y).
Output of appliances, furniture &amp; carpeting fell 0.6% (+3.5% y/y) but output of nonenergy, nondurables rose 0.2% (1.6% y/y) led by a 0.6% (0.8% y/y) increase in chemical production. Clothing output fell 2.5% (-2.2% y/y).
Total capacity utilization rose to 79.5% and capacity grew 1.6% y/y. Factory sector utilization rose to 79.0% while capacity rose 2.0% y/y. Figures for both output and capacity were upwardly revised

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Industrial Production</td>
<td>0.9%</td>
<td>-1.5%</td>
<td>2.0%</td>
<td>4.1%</td>
<td>0.6%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>1.0%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Business Equipment</td>
<td>6.5%</td>
<td>-4.6%</td>
<td>8.5%</td>
<td>9.3%</td>
<td>0.0%</td>
<td>-7.8%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>79.5%</td>
<td>78.9%</td>
<td>79.2% (10/04)</td>
<td>78.6%</td>
<td>75.7%</td>
<td>75.2%</td>
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</tbody>
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Industrial output last month rebounded 0.9% following the effects of Hurricane's Katrina & Rita which lowered September output by a revised 1.5%. The increase about matched Consensus expectations for a 1.0% gain. Another sharp decline [...]

Industrial Output Rebounded in October

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117e.jpg" width="353">
Industrial output last month rebounded 0.9% following the effects of Hurricane&#39;s Katrina &amp; Rita which lowered September output by a revised 1.5%. The increase about matched Consensus expectations for a 1.0% gain.
Another sharp decline of 1.9% in utility output (+1.3% y/y) which followed two consecutive months of 0.9% drop held back the gain in total output. Mining output (-0.6%) also fell for the fourth consecutive month (-8.1% y/y). These declines were offset by a 1.5% spurt in factory sector production (3.3% y/y) which more than recovered the prior month&#39;s 0.7% shortfall.
A huge 6.5% (8.5% y/y) gain in output of business equipment led the strength in factory output last month. The strength was paced by a 36.8% rise in transit equipment which was recovering from a 25.5% plunge in September. Output of computers, peripheral equipment &amp; semiconductors also were strong and rose 1.7% (24.8% y/y) led by a 2.8% jump in communications equipment (23.2% y/y). Excluding the high tech sector altogether, factory output gained 1.3% (1.8% y/y).
Output of appliances, furniture &amp; carpeting fell 0.6% (+3.5% y/y) but output of nonenergy, nondurables rose 0.2% (1.6% y/y) led by a 0.6% (0.8% y/y) increase in chemical production. Clothing output fell 2.5% (-2.2% y/y).
Total capacity utilization rose to 79.5% and capacity grew 1.6% y/y. Factory sector utilization rose to 79.0% while capacity rose 2.0% y/y. Figures for both output and capacity were upwardly revised

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>0.9%</td>
<td>-1.5%</td>
<td>2.0%</td>
<td>4.1%</td>
<td>0.6%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>1.0%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Business Equipment</td>
<td>6.5%</td>
<td>-4.6%</td>
<td>8.5%</td>
<td>9.3%</td>
<td>0.0%</td>
<td>-7.8%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>79.5%</td>
<td>78.9%</td>
<td>79.2% (10/04)</td>
<td>78.6%</td>
<td>75.7%</td>
<td>75.2%</td>
</tr>
</tbody>
</table>
Housing Starts Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117a.jpg" width="353">
Housing starts in October fell 5.6% m/m to 2.014M units following an upwardly revised gain in September.The drop was to the lowest level since March and compared to Consensus expectations for a lesser decline to 2.06M starts.
The 3.7% decline in single-family starts reversed all of an upwardly revised 3.0% increase in September. Single family starts fell hard throughout the country. A 6.7% decline (-7.1% y/y) in the West was accompanied by a 7.2% drop (-6.6% y/y) in the Midwest. In the Northeast, single family starts were notably weak and fell 8.5% (+3.2% y/y) to the lowest level since April. Only an unchanged reading (11.6% y/y) in the South tempered the declines..
Multi family starts cratered 14.8% m/m after a downwardly revised 0.6% increase in September.
Building permits fell a hard 6.7% m/m to the lowest level since April as single family permits fell 4.9% (+4.9% y/y).
China: An Evolving Housing Market from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/banking/asiafocus/2005/AsiaFocus-Jun05.pdf"> here</a>.

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</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,014</td>
<td>2,134</td>
<td>-2.3%</td>
<td>1,950</td>
<td>1,854</td>
<td>1,7 10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,704</td>
<td>1,770</td>
<td>2.3%</td>
<td>1,604</td>
<td>1,505</td>
<td>1,363</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>310</td>
<td>364</td>
<td>-21.7%</td>
<td>345</td>
<td>349</td>
<td>347</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,071</td>
<td>2,219</td>
<td>-1.1%</td>
<td>2,058</td>
<td>1,8 88</td>
<td>1,749</td>
</tr>
</tbody>
</table>
NAHB Housing Market Index Fell Hard 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117b.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) Composite Housing Market Index fell a hard 11.8% in November to 60, the lowest level since May 2003.
During the last twenty years the y/y change in the annual composite index has had an 85% correlation with the change in single family housing starts and there has been a 75% correlation between the current sales index and new single family home sales.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117d.jpg" width="353">
The m/m drop reflected sharp declines throughout the country.
The index for current sales of single family homes in November fell sharply to the lowest level since May 2003. The index for sales in six months also fell hard the lowest in over two years.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the <a href="http://www.nahb.org">National Association of Home Builders</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/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a> </th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>60</td>
<td>68</td>
<td>70</td>
<td>68</td>
<td>64</td>
<td>61</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Lowest Since April 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117c.jpg" width="353">
A 25,000 decline last week in initial claims for unemployment insurance to 303,000 followed a little revised 3,000 increase the prior week and dropped claims to the lowest level since mid-April. Consensus expectations had been for a lesser decline 320,000 claims.
The latest figure covers the survey period for November nonfarm payrolls and claims were down 54,000 (15.1%) from the October period.
The Labor Department indicated that roughly 10,000 new claims last week were related to hurricanes Katrina and Rita, bringing the total since Sept. 3 linked to the Gulf Coast storms to an unadjusted 545,000 claims. Hurricane Wilma, which struck Florida late last month, led to roughly 9,000 claims bringing the total to 16,400 related claims since that storm hit.
The four-week moving average of initial claims fell sharply to 321,500 (-4.2% y/y), the lowest level since early September.
Continuing claims for unemployment insurance rose 3,000 following a downwardly revised 5,000 drop during the prior week.
The insured rate of unemployment remained at 2.2% for the eighth week.
Spendthrift Nation from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-30.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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/12/05</th>
<th scope="col">11/05/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>303</td>
<td>328</td>
<td>-9.8%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,793</td>
<td>0.3%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Mexico's GDP Expands 3.3% in Q3: Is This Good or Bad? 
by <a href="/comment/Stone.html">Carol Stone</a> November 17, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117f.jpg" width="353">
Mexico&#39;s GDP was either strong or weak in Q3, according to who you listen to and which comparisons you make. The data were reported yesterday afternoon by INEGI, Mexico&#39;s statistical agency. The year-on-year gain of 3.3% was less than a government forecast, Reuters explained, but slightly larger than private market forecasts. Seasonally adjusted, the quarter saw a 2.1% increase (quarterly rate) after a basically flat performance in Q1 (+0.2%) and Q2 (-0.3%). It was this pattern that Dow Jones highlighted, with a headline in the Wall Street Journal that read &quot;Mexico Growth Picks Up...&quot;. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051117g.jpg" width="353">
A further divergence of interpretation concerns manufacturing. This important sector has experienced considerable variability in recent years. From Q3 2004, this latest period&#39;s value added rose a mere 0.2%, less than Q2&#39;s 2.6% yearly increase. The retreat was led by metals and metal products. Based on seasonal adjustment of the industry data by Haver Analytics, these, along with &quot;other manufacturing&quot;, showed considerable quarter-to-quarter declines. Some attribute this to weakness in the US motor vehicle industry, although collateral data, such as unit vehicle imports into the US as published by the US Commerce Department, don&#39;t indicate any decline. At the same time, for the entire factory sector, some analysts apparently feared a decrease from a year earlier, so the 0.2% rise, modest as it is, was of some comfort.
Other notable sectors of the Mexican economy contributed to the mixed reading on its health. Agriculture, constituting a relatively small proportion of total GDP, had a substantial increase in Q3, 10.6% year-to-year after outright declines in the first half of 2005. Finance also strengthened, with a 6.2% increase; this industry group has been expanding consistently over the last couple of years. The largest sector of the Mexican economy is domestic trade and tourism, contributing just under 20% of GDP last year. This year, it continues to expand, but more slowly, with a 3.1% yearly increase in Q3, notably less than the 4.9% in 2004. As we face Q4, cross-currents will continue to raise questions for the nation: the storms in October, continuing uncertainty in the big US vehicle market, and volatile energy markets. Stay tuned.

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Mexico GDP &amp; Select Industries, &nbsp; % Changes, NSA unless noted</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q1 2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Real GDP, SA (100%*)</td>
<td>2.1</td>
<td>-0.3</td>
<td>0.2</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr, NSA</td>
<td>3.3</td>
<td>3.1</td>
<td>2.4</td>
<td>4.4</td>
<td>1.4</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Agriculture (5.3%*)</td>
<td>10.6</td>
<td>-3.3</td>
<td>-1.5</td>
<td>4.0</td>
<td>3.5</td>
<td>0.1</td>
</tr>
<tr>
<td class="firstcol">Manufacturing (18.2%*)</td>
<td>0.2</td>
<td>2.6</td>
<td>-0.2</td>
<td>3.8</td>
<td>-1.3</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Wholesale &amp; Retail Trade/Restaurants &amp; Hotels &nbsp; (19.8%*)</td>
<td>3.1</td>
<td>3.5</td>
<td>3.3</td>
<td>4.9</td>
<td>1.6</td>
<td>0.0</td>
</tr>
<tr>
<td class="firstcol">Finance/Insurance/ Banking &nbsp; (15.9%*)</td>
<td>6.2</td>
<td>5.5</td>
<td>5.1</td>
<td>4.6</td>
<td>3.9</td>
<td>4.2</td>
</tr>
</tbody>
</table>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051116e.jpg" width="353">
Foreign investors continued to increase their participation in US securities markets in September, according to the US Treasury&#39;s monthly Treasury International Capital (&quot;TIC&quot;) data reported this morning. For the first time, net purchases of major marketable securities surpassed $100 billion, reaching $101.9 billion. As evident in the table below, just two years ago, monthly average purchases were only about half this amount.
The TIC data, carried in Haver&#39;s USINT database, constitute a sizable body of information about interest in US markets from investors in many countries around the world. Many observers look to these data as a way of gauging the ease with which foreign capital flows &quot;finance&quot; the now enormous US current account deficit. Indeed, as we have pointed out here before, there is a high correlation of these investment flows with the size of that deficit.
However, one aspect that strikes us this month is the variety contained in the transactions. While the volume in US Treasuries look fairly steady in our table, in individual months they have ranged from a net liquidation of $3.2 billion (February 2003) to net purchases in excess of $50 billion (each March and April 2004). Other securities categories show even more variability. Perhaps the only repeated pattern is a consistent liquidation of foreign stocks that trade in US markets.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051116f.jpg" width="353">
There is also great variability among the nations represented. A quick glance at a list of the countries and their purchases of various instruments shows much up and down movement in most any combination. Such wide-ranging changes highlight the fact that these transactions are generated by thousands of individual investment decisions. For example, total net purchases of US corporate stocks surged from $3.8 billion in August to $24.6 billion in September. Canadian investors bought about the same amount in each of these months: $6.6 billion in August and $5.4 billion in September. So other investors were obviously net sellers in the former month, but switched to making sizable purchases in the latter. Canadians, in the meantime, had bought $1.7 billion on net of US corporate bonds in August, but reduced their activity in these bonds to nearly zero in September. Thus, multiple investment motivations must be at work among these diverse financial market participants. Further, we&#39;d hazard a guess that any &quot;financing&quot; of the current account is more likely to be reflected in short-term financial instruments, such as flows of bank deposits, commercial paper and trade credit. Some of these data are also contained in the USINT database as &quot;banking liabilities to foreigners&quot; and &quot;nonbanking liabilities to foreigners. Those liabilities, some of which are published only quarterly and available only through Q2, have grown rapidly over the past year, as one might expect, but more examination of these relationships is needed to form firmer conclusions on the origins of these flows.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USINT/@U3/@U3.HTM">Net Foreign Purchases of Securities in US Markets</a> (Billions US$)</th>
<th scope="col">Sept 2005</th>
<th scope="col">Aug 2005 </th>
<th scope="col">July 2005 </th>
<th scope="col">Last 12 Months&#39; Average </th>
Monthly Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004 </td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Total </td>
<td>101.9</td>
<td>89.0</td>
<td>87.3</td>
<td>71.5</td>
<td>63.6</td>
<td>55.3</td>
<td>47.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Treasuries </td>
<td>21.8</td>
<td>28.2</td>
<td>28.5</td>
<td>25.7</td>
<td>29.3</td>
<td>22.0</td>
<td>10.0</td>
</tr>
<tr>
<td class="firstcol">Federal Agencies (mostly &quot;GSEs&quot;) </td>
<td>20.6</td>
<td>15.7</td>
<td>37.8</td>
<td>20.8</td>
<td>18.9</td>
<td>13.0</td>
<td>16.3</td>
</tr>
<tr class="odd">
<td class="firstcol">US Corporate Bonds </td>
<td>51.1</td>
<td>40.2</td>
<td>24.7</td>
<td>30.3</td>
<td>25.8</td>
<td>22.1</td>
<td>15.2</td>
</tr>
<tr>
<td class="firstcol">US Corporate Stocks </td>
<td>24.6</td>
<td>3.8</td>
<td>10.0</td>
<td>7.4</td>
<td>2.4</td>
<td>2.9</td>
<td>4.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign Bonds </td>
<td>-9.1</td>
<td>17.1</td>
<td>-5.1</td>
<td>-2.9</td>
<td>-5.7</td>
<td>2.7</td>
<td>2.4</td>
</tr>
<tr>
<td class="firstcol">Foreign Stocks </td>
<td>-7.0</td>
<td>-13.5</td>
<td>-8.7</td>
<td>-9.8</td>
<td>-7.1</td>
<td>-7.4</td>
<td>-0.1</td>
</tr>
</tbody>
</table>
</body>
</html>

Foreign investors continued to increase their participation in US securities markets in September, according to the US Treasury's monthly Treasury International Capital ("TIC") data reported this morning. For the first time, net [...]

Foreign Investors Increase Net Securities Purchases in US Markets Again in September

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051116d.jpg" width="353">
The total number of mortgage applications fell 0.6% last week after a 2.3% gain the prior period, according to the Mortgage Bankers Association. The decline left the average level in November 4.4% below October.
Applications to refinance fell sharply for the fourth consecutive week. The 5.4% drop lowered the November average 11.1% versus October&#39;s.
Purchase applications rose 2.6% for the second consecutive weekly gain and the rise lifted applications in November 0.5% above October. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage was about stable at 6.59% but that was up versus June low of 5.81%. The effective rate on a 15-year mortgage was 6.18%. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
Bubbling (or Just Frothy) House Prices? from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20051101/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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/11/05</th>
<th scope="col">11/04/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>657.6</td>
<td>661.3</td>
<td>-13.3%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>477.9</td>
<td>465.7</td>
<td>-0.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,702.4</td>
<td>1,798.8</td>
<td>-28.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications fell 0.6% last week after a 2.3% gain the prior period, according to the Mortgage Bankers Association. The decline left the average level in November 4.4% below October. Applications to [...]

Mortgage Applications Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051116c.jpg" width="353">
Total business inventories in September added 0.5% to the prior month&#39;s 0.4% rise. The gains marked the strongest consecutive monthly increases since February &amp; March yet they failed to reverse the decline in the ratio of inventories-to-sales which fell to a new record low. The I/S ratio fell to 1.25 as business sales increased 0.6% (7.8% y/y).
The 0.9% rise in retail inventories repeated its August increase due to a 2.1% jump in motor vehicle inventories. Excluding autos, inventories rose 0.4% as clothing inventories rose 0.5% (5.7% y/y) and general merchandise increased 0.4% (6.9% y/y). Furniture inventories fell 0.3% (+5.7% y/y) for the third consecutive down month.
Factory sector inventories fell for the second consecutive month.
Wholesale inventories increased 0.6%. During the last ten years there has been a 64% correlation between the y/y change in wholesale inventories and the change in imports of merchandise.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.5%</td>
<td>0.4%</td>
<td>4.3%</td>
<td>7.7%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.9%</td>
<td>0.9%</td>
<td>1.1%</td>
<td>5.7%</td>
<td>3.9%</td>
<td>5.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.4%</td>
<td>0.6%</td>
<td>6.0%</td>
<td>5.9%</td>
<td>2.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.6%</td>
<td>0.5%</td>
<td>8.0%</td>
<td>10.8%</td>
<td>2.0%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>4.9%</td>
<td>7.7%</td>
<td>-1.1%</td>
<td>-5.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Total business inventories in September added 0.5% to the prior month's 0.4% rise. The gains marked the strongest consecutive monthly increases since February & March yet they failed to reverse the decline in the ratio of inventories- [...]

U.S. Business Inventories Higher Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051116b.jpg" width="353">
The 0.2% rise in the consumer price index (CPI-U) last month was stronger than Consensus expectations for no change in prices following the huge 1.2% spurt in September.
Though energy prices declined, the fall was limited to 0.2% due to a 14.0% (45.3% y/y) surge in natural gas prices and a 0.9% (35.9% y/y) gain in fuel oil prices. These gains were offset by gasoline prices which moved lower by 4.5% (+37.0% y/y) and in November have declined roughly another 15% m/m to $2.30 per gallon in the latest week. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051116a.jpg" width="353">
Prices less food &amp; energy rose 0.2%, twice the September increase, but the increase matched Consensus expectations. Core goods prices were unchanged as 0.5% increases in prices for medical commodities (2.6% y/y) and new vehicles (0.9% y/y) were offset by m/m declines in prices for appliances (+2.5% y/y), carpets (-3.5% y/y) and other household equipment (-6.5% y/y). Apparel prices also fell for the sixth month this year (-0.4% m/m, -1.1% y/y) and tobacco prices dropped 0.1% (5.6% y/y).
Core services prices rose 0.3% as shelter prices jumped 0.5% (2.3% y/y) and medical care services prices also rose 0.5% (4.6% y/y). Public transportation prices ballooned 1.4% (7.8% y/y) while school tuition costs rose 0.2% (6.2% y/y).
The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.3% and less food &amp; energy chain prices rose 0.4%.
Understanding the Inflation Targeting Debate from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20051201/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/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> </th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.2%</td>
<td>1.2%</td>
<td>4.3%</td>
<td>2.7%</td>
<td>2.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>-0.9%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.7%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-0.2%</td>
<td>12.0%</td>
<td>29.6%</td>
<td>10.9%</td>
<td>12.2%</td>
<td>-5.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a> </td>
<td>0.3%</td>
<td>0.8%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>2.0%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.4%</td>
<td>0.2%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

The 0.2% rise in the consumer price index (CPI-U) last month was stronger than Consensus expectations for no change in prices following the huge 1.2% spurt in September. Though energy prices declined, the fall was limited to 0.2% due [...]

Home Heating Costs Lifted CPI

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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The Consumer Price Index increased 2.7% y/y during November, down from 2.8% in October. The 0.2% m/m increase fell short of the 0.3% gain expected in the Action Economics Forecast Survey. The y/y gain in the headline CPI was the weakest since April. It was down from September’s high of 3.0% and compared to 2.9% during 2024. The CPI excluding food & energy increased 0.1% (2.6% y/y) in November. Its y/y rise compared to 2.8% y/y in October and was the weakest rise since March 2021.	

Energy prices rose 1.6% (4.1% y/y in November. Gasoline prices strengthened 3.0% (0.9% y/y). Fuel oil prices increased 3.1% (11.3% y/y). Natural gas prices fell 2.1% (+9.1% y/y), and electricity prices strengthened 1.1% (6.9% y/y). 
Food prices rose 0.1% (2.6% y/y) during November. Egg prices declined 6.4% (-13.2% y/y). Meat, poultry & fish prices strengthened 0.8% (6.8% y/y), while dairy product prices fell 0.9% (-1.6% y/y). Cereal & bakery product costs held steady (+1.9% y/y). Fruit & vegetable prices fell 0.4% and were little changed y/y. Nonalcoholic beverage prices increased 0.9% and 4.3% y/y in November.

Goods prices less food and energy rose 0.2% and rose a steady 1.4% y/y during November. Prices of used cars and trucks increased 0.3% (3.6% y/y), and new vehicle costs rose 0.2% (0.6% y/y). Appliance prices fell 0.6% (+0.5% y/y) while home furnishings prices rose 0.4% (2.6% y/y). Recreation product costs fell 0.3% but increased 0.7% y/y in November. Apparel prices increased 0.6% (0.1% y/y) in November. Education & communication product costs declined 0.3% (-3.1% y/y). Medical care goods prices rose 0.1% (1.1% y/y) in November. 

Services prices less energy edged 0.1% higher but increased 3.0% y/y in November, down from 7.0% y/y in 2022. Shelter prices (35.5% of the CPI) rose 0.1% (3.0% y/y), as owners’ equivalent rent of primary residences also rose 0.1% (3.4% y/y). Transportation service prices fell 0.3% (1.7% y/y). The cost of medical services edged 0.1% and rose 3.3% y/y, and the cost of recreation services fell 0.3% (+2.4% y/y). Education & communication services prices increased 0.4% m/m and 2.2% y/y.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

For the release of CPI on December 18, 2025, the BLS was able to retroactively acquire most nonsurvey data for October and will publish October 2025 values where possible. However, the majority of the CPI series rely on survey data which was not collected for October 2025 due to the government shutdown. Accordingly, the BLS will not publish October values for those series. Haver Analytics has created a second set of CPI indexes and relative importance series in **USECON**. These series will contain any published BLS values for October and interpolated values for unpublished detailed indexes. We will then calculate higher aggregate series such as the All Items index and All Items less food and energy using any published indexes along with our interpolated indexes and relative importance. 


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- Year-to-year comparison is slowest in four months.
- Core price gain exhibits weakest y/y increase since 2021. 
- Services price inflation tumbles y/y; core goods price gain is stable.


U.S. Consumer Price Inflation Moderates in November

Sandy Batten

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Existing home sales rose 0.5% m/m (-1.0% y/y) in November to 4.13 million homes (SAAR) following a 1.5% monthly gain in October and a 1.3% monthly rise in September, according to the National Association of Realtors (NAR). It was the highest level of sales since February and matched expectations in the Action Economics Forecast Survey. The average effective 30-year mortgage interest rate was unchanged at 6.54% last month, but this is down markedly from 7.10% in May and accounts for some of the revival in home sales over the past several months. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales rose 0.8% m/m (-0.8% y/y) in November to 3.75 million units after a 1.1% m/m rise in October and a 1.4% monthly gain in September. Sales of condos and co-ops slumped 2.6% m/m (-2.6% y/y) to 380,000 in November following a 5.4% monthly jump in October.

Compared to a month ago, sales rose 4.1% m/m in the Northeast, increased 1.1% m/m in the South, were unchanged in the West and fell 2.0% m/m in the Midwest. Compared to a year ago, sales were unchanged in both the Northeast and the South, fell 3.0% y/y in the Midwest and declined 1.3% y/y in the West.

The median price of all existing homes (NSA) declined 1.4% m/m (+1.2% y/y) to $409,200 in November. The median price of an existing single-family home fell 1.4% m/m (+1.2% y/y) to $414,300 in November. Prices of single-family homes in the Northeast edged up 0.9% from a year ago. Prices in the Midwest jumped 5.8% y/y; prices in the South rose 1.0% y/y. In contrast, prices in the West declined 0.8% from a year ago.

Inventories of homes for sale continued to weaken in November. The number of existing homes for sale (NSA) slumped 5.9% m/m (+7.5% y/y) to 1.43 million units in November. The supply of homes on the market at the current selling rate (NSA) slid to 4.2 months, its lowest reading since March.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.


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- Existing home sales increased 0.5% m/m in November, the third consecutive monthly gain.
- Month-over-month sales increased in the Northeast and South, were unchanged in the West, and fell in the Midwest.
- Year-over-year sales were unchanged in the Northeast and South and decreased in the Midwest and West.


U.S. Existing Home Sales Edged Up in November

Robert Brusca

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The new UK Confederation of British Industry (CBI) survey on the distributive trades sector shows a sharp weakening of an already weak survey for December and for the outlook into January of 2026. 

The month-to-month deterioration from November was widespread across metrics for retailing as well as for wholesaling for the current month as well as for the outlook. The monthly degradation is without exception across the board - omitting the inventory metric which is a different animal in any event since inventory building is sometimes involuntary. 

**The Retail survey**
Current conditions: In December, the retail survey for sales compared to a year ago, orders compared to year ago, and sales for the time of year (a seasonal adjustment metric), all worsened month-to-month. The November readings were weak and in December sales compared to a year-ago worsened by 12 points, Orders compared to a year ago worsened by 17 points month-to-month and sales for the time of year worsened by 11 points. These metrics for December are below their respective 12-month average by 6 to 13 points, as well for these categories. The rankings tell a stark story, year-on-year sales have been lower only 5.3% of the time, Year-on-year orders have been weaker only 5.6% of the time, while time of the year sales have been lower only 13% of the time. These are all extremely low-ranking metrics.

Expected Conditions: In January expected conditions have weakened month-to-month by amounts ranging from 33 points to 16 points depending on the metric. And sales and orders compared to a year ago as well as sales for the time of year each are weaker than their respective 12-month average readings by amounts ranging from 4 points to 23 points. The rankings on expectations are even worse than for the current metrics. Expected sales compared to a year ago rank lower less than 1% of the time, the same is true of orders. While sales for the time of year have been weaker 7.7 percent of the time. 
 
**Wholesale survey** 
The rankings for wholesaling are even lower than for retailing across the current and expected metrics. The month-to-month degradation for the current readings ranges from 7 points to 17 points weaker while the reading degradation monthly ranges from 5 points to 16 points. Wholesale sales and orders compared to a year ago and sales for the time of year each rank below the 5% mark. The expectations for January shows expectations for the three categories each are at a 2.5 percentile standing or lower. 

**Summing up**
The distributive trades survey has all but crashed and burned in December. Over the last 26 years the average of the three current metrics’ rankings has been lower only 18 times. The average outlook ranking for the month ahead has been weaker only 5 times in the last 26 years (over 313 months). On a relative basis the expected sales/orders performance is more depressed than the Current results for January. The pooled rankings show current ranking over the past 26-years weaker only 5.8 percent of the time with expectations lower only 1.6 percent of the time. These are very weak metrics. It is surprising that the BOE is walking on eggshells to cut rates with mixed support for rate cuts amid such weakness. There is already a GDP decline in the monthly data for October. UK and inflation is still too high, but it is breaking lower at a relatively fast pace. Will the UK be the first economy down after Covid? 




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United Kingdom

CBI’s Distributive Trades Survey Weakens Sharply in December

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Belgian consumer confidence has been on the rise since early this year, however, in December the index has taken a step backwards with a reading of -1 compared to a November reading of +2 and then an October reading of zero. The confidence indicator, on data back to 1991 has a ranking in its 78.5 percentile, marking it as a reasonably strong reading on confidence compared to its values over that period. On the whole the trend is still solid, the month’s step-back is small. 

**The Economic Situation** 
Economic situation for the next 12 months is weaker in December on a reading of -28 compared to -26 in November. The assessment of the previous 12-months is weaker in December at -42 compared to a reading of -38 in November. The outlook is weaker and the recent legacy is assessed as being slightly weaker as well, than it was in November. The assessment of the economic situation for the next 12 months is weak at a 9.7 percentile standing and the assessment of the previous 12 months is also weak at a 23.4 percentile standing.

**Price Trends**
Price trends are seen as higher over the next 12-months at a reading of 38 compared to 27 in November. The backward-looking assessment of price trends also has them stronger in December than 
in November at a reading of 58 compared to 56 in November. Both of these price trend assessments 
are high with the outlook reading at its 94th percentile and the backward-looking assessment in its 81st percentile. Price expectations hit their low mid 2023-late 2023 and have been on the rise steadily ever since. The price metric of ‘12-months ahead’ was at zero in April of 2024 but climbed to +19 by February 2025 and currently sits at a level of 38. Price expectations are well in gear to the upside in Belgium despite relative price stability in the Euro-Area. 

**Unemployment**
Concerns about unemployment elevated slightly in December to -9 from -10 in November but these are significant readings compared to, say, the 12-month-ago reading which is at a level of +32. The sense of backtracking here is extremely weak. The sense of progress on the part of survey respondents becoming more confident about the future is clearly the prevalent feature here. The December reading for unemployment in fact has only a 2.5 percentile standing, indicating extremely weak concerns about the prospects of unemployment ahead despite the minor month-to-month step-back.

**Major Household purchase environment**
The environment for making major household purchases deteriorates slightly in December at -15 compared to -13 in November. This only puts the index back to where it was in October. The response to the question, ‘is it favorable to buy at present’ is unchanged from its November value at -19 and it has been stuck there for three months in a row. The outlook to make major household purchases in the next 12-months logs a weaker reading at -15 than its 12-month value of -13but is stronger than its 12-month level of -18. The reading for the ‘favorable to buy at present’ question, however, is weaker at a -19 compared to -14, logged 12-months ago. The environment for making a household purchase over the next 12-months has a 55.6 percentile ranking which is above its median, however, the assessment of ‘favorable to buy at present’ has only a 20th percentile standing significantly below its median reading (median readings occur at a ranking of 50%)..

**The Financial situation**
The financial situation for the next 12-months is assessed weaker at -3 in December, compared to zero in November; it compares to a - 2 in October. The assessment 12-months ago was also -2 so this is a very minor deterioration comparing the financial situation of households with the last 12-months produces another deterioration at -8 in December compared to -6 in November and that compares to 12-months ago at -5 another deterioration. However, the backward-looking assessment has a 52-percentile standing which is above its median while the outlook reading of -3 has a 23-percentile standing which puts it in the lower quarter of all expectations on data back to 1991. The current situation is appraised at 20 a step-back from November and October levels as well as from 12-months ago. But the current appraisal also has a queue standing in its 65.7 percentile which has a comfortable margin above its median reading. Households clearly have concerns about their financial situation even though their outlook for making household purchases is above median and their concerns about unemployment are low. Currently, conditions appear to be construed as solid.

**Savings**
Household savings over the next 12-months are weaker in December at a reading of 20 compared to 26 in November; they are closer to their 12-month ago reading of 21. December is still a relatively high reading, in any event, with a 91-percentile standing. The question, ‘is it favorable to save at present’ is unchanged in November compared to December at a reading of -28 although it is weaker than it was 12-months ago and the percentile standing at its 78th percentile, again, a firm reading for this metric.

**Summing up - assessment** 
The consumer confidence reading from the Belgian National Bank this month shows a slight set back month-to-month, however, there is a significant an improvement that has been underway that is quite clear from the chart. The concerns that consumers have seemed to be about their financial situation haven't translated into concerns about unemployment or their willingness to make major household purchases, with unemployment concerns very low and their willingness to make household purchases for the period ahead at essentially normal levels. Still, there is more concern about inflation that is percolating, which is interesting considering that overall inflation has been relatively stable and muted in the European monetary area. 




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Belgium

Belgian Consumer Confidence - On the Rise, but Weaker Month-to-Month

Andrew Cates

**Faster-than-Expected Monetary Easing**
Our first potential upside risk for 2026 is that monetary policy across most major advanced economies is loosened further and by more than markets and forecasters currently anticipate. Monetary policy cycles have a history of being underestimated in both length and magnitude—in large part because of the powerful feedback loops between interest rates, inflation, and economic behaviour. On the way up, higher policy rates feed into mortgage costs, debt-service burdens, rents, and the general cost of doing business, reinforcing wage pressures and inflation persistence. But these same channels work in reverse on the way down. As rates fall, debt servicing eases, housing and rental inflation softens, and cost pressures across the economy unwind more rapidly than expected—allowing inflation to decelerate faster and creating scope for further easing. A risk, therefore, is that if disinflation becomes self-reinforcing, central banks find themselves cutting rates more aggressively than currently priced, not because of economic distress, but because restrictive policy proves increasingly unnecessary.

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**Energy Supply Dynamics Prove More Supportive**
The second chart reinforces the message from the first: easing monetary policy may be accompanied—and amplified—by a more benign energy backdrop. Recent projections from the EIA point to a renewed build-up in OECD crude oil and liquids inventories over the year ahead, a dynamic that has historically been associated with downward pressure on oil prices. If inventories continue to rise as supply growth outpaces demand, spot prices for crude could undershoot current forecasts, keeping energy inflation subdued. That, in turn, would reinforce disinflationary forces already in play—lowering headline CPI, easing cost pressures for firms and households, and giving central banks greater confidence to loosen policy further. In that sense, softer oil prices would not just be a standalone positive shock, but part of a reinforcing feedback loop alongside rate cuts, supporting real incomes, financial conditions, and global growth into 2026.


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**AI-Driven Productivity Gains Materialise More Quickly** 
The third chart shows a clear pickup in US nonfinancial productivity growth, reviving the debate around whether AI-driven efficiency gains may arrive sooner than many forecasters expect. While the longer-term productivity potential of AI remains uncertain and uneven across sectors, there are reasons to think that at least some near-term gains could prove more tangible than currently assumed. Rather than transformative breakthroughs, early benefits are likely to come from incremental improvements—automation of routine processes, better scheduling and logistics, more efficient use of capital and labour, and modest reductions in overhead costs—areas where US firms are already well positioned to implement new technologies quickly. If these gains accumulate and diffuse more broadly, the implications would still be meaningful. Even a modest, sustained uplift in productivity would help contain unit labour costs, support real income growth, and raise the economy’s speed limit without generating renewed inflation pressure. In that scenario, productivity would not need to “revolutionise” the economy to matter: incremental efficiency gains could nonetheless provide a supportive backdrop for growth, earnings, and policy easing into 2026—representing a genuine upside risk to the outlook.


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**The US Economy Proves Resilient Again**
The next chart highlights a further upside risk to the 2026 outlook: the possibility that the US economy once again outperforms its peers. Unlike the typical pre-recession backdrop, there is little evidence of meaningful financial stress in the US private sector. After a prolonged period of balance-sheet repair, private-sector debt ratios have been trending lower in recent years, while the sector as a whole is running a healthy financial surplus. This stands in stark contrast to previous late-cycle episodes, which were characterised by rising leverage, widening deficits, and growing dependence on credit expansion. The absence of private-sector excesses reduces the economy’s vulnerability to higher rates and external shocks, and helps explain why growth has remained more durable than expected. If households and firms continue to prioritise balance-sheet strength rather than forced deleveraging, the usual mechanisms that tip the economy into recession may fail to materialise. In that environment, even modest easing in financial conditions could translate into renewed spending and investment, allowing the US to sustain above-trend growth into 2026—representing another upside risk to the global outlook.


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**India’s Growth Engine Accelerates Further** 
Chart 5 points to another potential upside risk for 2026 emanating from India’s economy. After a period of relative pessimism earlier in the year, consensus growth forecasts for 2026 have been revised modestly higher, even as inflation projections have continued to drift lower. This combination—firmer growth expectations alongside easing inflation pressures—creates scope for a more supportive policy backdrop than markets currently assume. With real interest rates no longer rising and financial conditions stabilising, India’s investment cycle, already underpinned by public infrastructure spending and improving corporate balance sheets, could prove more durable than forecast. If these trends persist, India may deliver growth that is both stronger and more internally driven than expected, providing a meaningful demand impulse to the broader global economy. Given India’s increasing weight in global growth, even small upside surprises would have outsized effects on trade, commodity demand, and regional activity—reinforcing the case that the global outlook for 2026 may be skewed to the upside.


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**The Global South Becomes a More Independent Source of Demand** 
The final chart points to a broader upside risk for the global economy in 2026: that economies across the so-called Global South generate more durable momentum than currently assumed. With a few notable exceptions—such as China and Thailand—many emerging economies continue to benefit from stronger growth in their working-age populations and/or faster real GDP per capita growth than their advanced-economy counterparts. These demographic and income dynamics are helping to underpin domestic consumption, support labour-force expansion, and attract capital inflows, as reflected in the pattern of net FDI across countries. In contrast, much of the advanced world faces binding demographic constraints and lower steady-state growth rates, limiting the scope for demand to re-accelerate organically. If growth in the Global South proves more resilient and internally driven—rather than overly dependent on exports to advanced economies—it could provide a more stable and geographically diversified source of global demand. In that scenario, global growth in 2026 would be less reliant on a narrow set of advanced economies, reinforcing the case that risks to the outlook may be skewed to the upside.


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_This marks our final Charts of the Week publication for 2025 The next edition will be released on Thursday 8 January._

Last week’s Charts of the Week focused on the darker tail risks hanging over the 2026 outlook: the possibility of monetary policy mis-calibration, that geopolitics and trade fragmentation further disrupt supply chains, and that elevated debt levels—particularly in the public sector—reassert themselves as a drag on growth. This week’s charts take a deliberately different tack. Taken together, they highlight a set of upside risks that are possibly underappreciated in current forecasts. For example, policy easing across advanced economies may extend further than expected as disinflation feeds on itself (chart 1); oil prices could surprise on the downside as inventories rebuild (chart 2); US productivity may deliver incremental but meaningful gains sooner than assumed (chart 3); the US economy itself could continue to benefit from an absence of private-sector financial stress (chart 4); India’s growth momentum might firm again as inflation pressures recede (chart 5); and, more broadly, parts of the Global South appear increasingly capable of generating their own demand impulse, supported by favourable demographics and income growth (chart 6). None of these forces is guaranteed, and each carries its own caveats—but together they suggest that, having spent much of the past year fixated on downside risks, the risks to global growth in 2026 may be more evenly balanced than is widely assumed.

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Economy in Brief: 2005

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NAHB Housing Market Index Fell Hard

Housing Starts Down

Industrial Output Rebounded in October

Industrial Output Rebounded in October

Foreign Investors Increase Net Securities Purchases in US Markets Again in September

Mortgage Applications Fell

U.S. Business Inventories Higher Again

Home Heating Costs Lifted CPI