Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031031d.jpg" width="353">
Earlier this week, we described improving business confidence in several European countries, especially Germany and the Netherlands. Indeed, this trend seems to prevail in much of Europe, as the EC&#39;s gauge of the &quot;business climate&quot; for October sees its best reading since May 2001. Again, the &quot;improvement&quot; is relative, as the indicator remains negative, but considerably less than anytime in the last two years. Even so, every major sector of business participated in the October move. Confidence gained outright in services, to +9 from +7 in September. The other divisions all showed smaller negative values, with industry up to -8 from -9. retailing to -10 from -12 and construction to -21 from -23.
At the same time, consumer confidence looks to have stalled out. That measure fell steeply from last October through March, bottoming out at -21; it has struggled to pull up since then. For the last three months, it has been stuck at -17, which apart from the first seven months this year, is itself the worst reading since several months at -18 in 1996. The recent flat pattern results from a mildly favorable trend in people&#39;s expectations for the overall economic situation and unemployment, offset by modest deteriorations in their general financial condition and their outlook for savings.
Perhaps a link between these mixed results for business and consumer confidence can be found in similarly mixed readings for employment prospects among businesses. Retailing executives said their expectations for employment sagged in October back to -4 from an improved -1 in September. Construction looked to be a bit better, climbing to -14 from -16. Finally service industries saw current employment conditions fall to 0 from +2 and prospects drop to -7 from -3. These lackluster assessments of the job market from those doing the hiring support consumers&#39; skepticism about their own financial condition, even as they look for unemployment to become a less severe drag. 

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Euro-Zone Confidence Indicators</th>
<th scope="col">Oct 2003</th>
<th scope="col">Sept 2003</th>
<th scope="col">Oct 2002</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Euro-Zone Business Climate</td>
<td>-0.18</td>
<td>-0.42</td>
<td>-0.32</td>
<td>-0.50</td>
<td>-0.17</td>
<td>+1.37</td>
</tr>
<tr>
<td class="firstcol">Euro-Zone Consumer Confidence (% Balance)</td>
<td>-17</td>
<td>-17</td>
<td>-12</td>
<td>-11</td>
<td>-5</td>
<td>1</td>
</tr>
</tbody>
</table>
</body>
</html>

Earlier this week, we described improving business confidence in several European countries, especially Germany and the Netherlands. Indeed, this trend seems to prevail in much of Europe, as the EC's gauge of the "business climate" [...]

Business Confidence Improves in Europe, but Consumers Remain Wary

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031031a.jpg" width="353">
Personal disposable income fell 1.0% (+4.4% y/y) in September, reversing all of the 1.0% jump the prior month. The decline occurred as the mailing of rebate checks subsided and personal tax payments rose. Tax payments in September still were below the June level.
A report titled &quot;Earnings Inequality and Earnings Mobility in the U.S.&quot; from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-28.html"> here</a>.
Wages and salaries rose just 0.1% (1.8% y/y) following an upwardly revised 0.2% August gain. During the last twenty years there has been a 73% correlation between the y/y growth in wages and the growth in personal consumption expenditures.
Consumer spending fell a greater than expected 0.3% (5.8% y/y) as personal spending on durable goods slumped 5.1% (+6.1% y/y). Sales of light vehicles fell 12.0% m/m to 16.59M units. Spending on nondurable goods rose 0.3% (7.8% y/y) and services spending rose 0.4% (4.8% y/y).
The PCE price deflator gained 0.2%. Less food and energy prices rose 0.1% (1.2% y/y) for the second month. The durables&#39; price deflator fell 0.5% (-3.7% y/y) and continued a slide that began in early 1995. Nondurables prices rose 0.6% (2.3% y/y) for the second month and services prices rose 0.2% (3.0% y/y).
Research from the Federal Reserve Bank of New York &quot;On Both Sides of the Quality Bias in Price Indexes&quot; is available <a href="http://www.newyorkfed.org/research/staff_reports/sr157.pdf"> here</a>.
The savings rate fell to 2.9% as disposable income fell.

<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/@E7/@E711/@E71102/@E71102.HTM"> Disposition of Personal Income</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.2%</td>
<td>2.7%</td>
<td>3.3%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>5.8%</td>
<td>4.5%</td>
<td>4.5%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>2.9%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.7%</td>
<td>2.3%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>0.2%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 31, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031031b.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for October rose to 55.0 from 51.2 in September. The rise matched Consensus expectations for a reading of 55.0.
Most of the component indexes recovered from the declines of a month earlier. Production (62.0) and orders (59.2) were strong and employment (53.1) rose to the highest level since January 2000.
During the last twenty years there has been a 57% correlation between the level of the Chicago PMI and quarterly growth in real GDP.
The index of prices paid jumped to 61.5, the highest level since March.

<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/@EF/@EF05/@EF05.HTM"> Chicago Purchasing Managers Index, SA</a></th>
<th scope="col"> Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>55.0</td>
<td>51.2</td>
<td>46.1</td>
<td>52.7</td>
<td>41.4</td>
<td>51.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>59.2</td>
<td>53.2</td>
<td>51.3</td>
<td>56.3</td>
<td>42.3</td>
<td>53.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>61.5</td>
<td>51.8</td>
<td>63.8</td>
<td>56.9</td>
<td>50.4</td>
<td>65.6</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Up As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 31, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031031c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index rose for the full month of October to 89.6 versus 87.7 in September. That reading was marginally better than the mid-month reading of 89.4 and Consensus expectations for 89.5.
The m/m increase was comparable to the gain in the Conference Board&#39;s Index of Consumer Confidence.
During the last ten years there has been a 70% correlation between the level of consumer sentiment and the y/y change in real PCE.
The current conditions index rose to a revised 99.9 from 98.4 in September. The expectations index rose to 83.0 from 80.8. Mid month, the current conditions index was reported at 102.2, and the expectations index was reported at 81.2.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> &nbsp;Oct</th>
<th scope="col"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>89.6</td>
<td>87.7</td>
<td>89.3</td>
<td>11.2%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>99.9</td>
<td>98.4</td>
<td>99.7</td>
<td>8.1%</td>
<td>97.5</td>
<td>100.1</td>
<td>115.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>83.0</td>
<td>80.8</td>
<td>82.5</td>
<td>13.5%</td>
<td>84.6</td>
<td>82.3</td>
<td>102.7</td>
</tr>
</tbody>
</table>
</body>
</html>

Personal disposable income fell 1.0% (+4.4% y/y) in September, reversing all of the 1.0% jump the prior month. The decline occurred as the mailing of rebate checks subsided and personal tax payments rose. Tax payments in September [...]

U.S. After Tax Income Fell

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031030a.jpg" width="353">
The US economy grew at a 7.2% annual rate last quarter, the fastest since early 1984. Consensus expectations had been for 6.0% growth.
Domestic final demand jumped at a 6.6% rate, the fastest since 3Q97, led by a 15.4% (6.0% y/y) spike in business investment in equipment &amp; software. Residential investment also surged at a 20.4% rate (11.5% y/y).
Consumer spending grew at a 6.6% (3.5% y/y) rate while government spending slowed to a 1.3% (3.7% y/y) rate of gain.
Inventories and foreign trade had roughly offsetting effects on GDP growth last quarter. Continued inventory decumulation subtracted 0.7 percentage points but improvement in the net exports added 0.8 percentage points to GDP growth. Exports jumped at a 9.3% rate (0.1% y/y), outpacing imports which rose at just a 0.1% (2.3% y/y) rate.
Inflation picked up somewhat to 1.8% last quarter due to higher energy prices which boosted growth in the PCE price deflator to a 2.4% growth rate. The price index for domestic final demand grew at a 1.9% rate (1.9% y/y).
A report from the Federal Reserve Bank of St. Louis titled &quot;The Less Volatile U.S. Economy&quot; is available <a href="http://research.stlouisfed.org/publications/net/20031001/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</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/@E7/@E701/@E701.HTM"> Chained &#39;96 $, % AR</a></th>
<th scope="col"> 3Q&#39;03 (Advance)</th>
<th scope="col">2Q&#39;03</th>
<th scope="col"> Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>7.2%</td>
<td>3.3%</td>
<td>&nbsp;3.3%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-0.7%</td>
<td>-0.7%</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>-1.2%</td>
<td>0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>7.8%</td>
<td>4.0%</td>
<td>3.8%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>0.8%</td>
<td>-1.3%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-0.2%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>6.6%</td>
<td>5.1%</td>
<td>3.9%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>1.8%</td>
<td>1.0%</td>
<td>1.7%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 30, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031030b.jpg" width="353">
Initial claims for jobless insurance fell 5,000 to 386,000 last week. The modest decline reported initially for last week was revised to a slight increase. Consensus expectations had been for claims of 385,000.
The four-week moving average of initial claims fell to 388,750 (-5.9% y/y).
Continuing claims for unemployment insurance rose 57,000 but the 84,000 decline initially reported for the prior week was deepened to a decline of 116,000.
The insured rate of unemployment was stable at 2.8%.

<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">10/25/03</th>
<th scope="col">10/18/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>386.0</td>
<td>391.0</td>
<td>-7.2%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,566</td>
<td>-0.4%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Employment Cost Index Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 30, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031030c.jpg" width="353">
The employment cost index for workers in private industry rose 1.0% last quarter. That pulled the y/y rate of growth in compensation to 4.0%, a recovery from the weak 3.2% y/y growth at year end 2002.
Benefit costs again paced the gain in total compensation, up 1.4% (6.5% y/y). Growth in blue-collar benefit costs surged 1.3% q/q and were up 7.3% y/y. That was led by a 1.6% gain in factory sector benefits, up 8.6% y/y.
Wages and salaries, which account for roughly 70% of the compensation index, rose 0.9% (3.0% y/y). Wage growth in blue-collar occupations has decelerated to 2.6% y/y from 4.0% in early 2001. Wage growth in white-collar occupations was 3.3% y/y last quarter versus 4.5% in early 2001.

<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/@EB/@EB08/@EB08.HTM"> ECI- Private Industry Workers</a></th>
<th scope="col">3Q&#39;03</th>
<th scope="col">2Q&#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>1.0%</td>
<td>0.8%</td>
<td>4.0%</td>
<td>3.2%</td>
<td>4.2%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.9%</td>
<td>0.6%</td>
<td>3.0%</td>
<td>2.7%</td>
<td>3.8%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>1.4%</td>
<td>1.3%</td>
<td>6.5%</td>
<td>4.7%</td>
<td>5.1%</td>
<td>5.6%</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Still Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 30, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031030d.jpg" width="353">
The Conference Board&#146;s National Index of Help-Wanted Advertising remained at 37 last month, the midpoint of a depressed range of readings in place since March.
During the last ten years there has been a 93% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume fell to 41% from an upwardly revised August reading of 49%.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;02</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>37</td>
<td>43</td>
</tr>
</tbody>
</table>
</body>
</html>

The US economy grew at a 7.2% annual rate last quarter, the fastest since early 1984. Consensus expectations had been for 6.0% growth. Domestic final demand jumped at a 6.6% rate, the fastest since 3Q97, led by a 15.4% (6.0% y/y) [...]

3Q U.S. GDP Growth Surged To 7.2%

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031029c.jpg" width="353">
Producer price inflation is generally weak, and even weakening in some countries. Those reporting September data today, Canada and South Africa, both show outright declines year-on-year for September, that is, deflation in wholesale prices.
In Canada, this is the continuation of a trend that has run through the overall industrial price index since April and in the segment excluding petroleum and coal products since March. A pick-up in industrial price inflation that developed in the summer of 2002 has been erased as prices turned lower for electronics, transport equipment, machinery, metal products and some foods.
In South Africa, production prices accelerated rapidly throughout 2002, but have slowed progressively this year. Food and metals and metal products are the main sources of the slowdown. In addition, it appears that the South African PPI has responded to swings in the Rand currency. A nominal effective exchange rate compiled by the South African Reserve Bank had declined sharply from late 2001 through much of last year; it then turned significantly higher beginning in November 2002 and has climbed gradually but persistently since then, relieving upward pressure on import prices. 
US PPI data are shown in the table below for comparison. As noted here when the September data were released, food and energy prices lifted the total index, but the so-called &quot;core rate&quot; has changed very little. With Canada, it shares weakness in car and truck prices and machinery as restraints on wholesale price inflation.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Percent Changes *</th>
Year/Year
Dec/Dec
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sept</td>
<td>Aug</td>
<td>July</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Canada Industrial Prices, All Commodities </td>
<td>-2.6 </td>
<td>-1.9 </td>
<td>-1.6 </td>
<td>2.8</td>
<td>-2.4 </td>
<td>3.5 </td>
</tr>
<tr class="odd">
<td class="firstcol">Canada Industrial Prices, excluding Petroleum &amp; Coal Products </td>
<td>-2.9 </td>
<td>-2.4 </td>
<td>-2.0 </td>
<td>1.8 </td>
<td>-0.3 </td>
<td>1.6 </td>
</tr>
<tr>
<td class="firstcol">South Africa Production Price Index</td>
<td>-1.0 </td>
<td>0.2 </td>
<td>1.5 </td>
<td>12.4 </td>
<td>8.4 </td>
<td>10.2 </td>
</tr>
<tr class="odd">
<td class="firstcol">US Producer Price Index, Total Finished Goods </td>
<td>3.5 </td>
<td>3.4 </td>
<td>3.0 </td>
<td>1.2 </td>
<td>-1.6 </td>
<td>3.6 </td>
</tr>
<tr>
<td class="firstcol">US PPI, Finished Goods excluding Food &amp; Energy</td>
<td>0.1</td>
<td>0.4</td>
<td>0.2</td>
<td>-0.5</td>
<td>0.9</td>
<td>1.3</td>
</tr>
</tbody>
</table>


</html>

Producer price inflation is generally weak, and even weakening in some countries. Those reporting September data today, Canada and South Africa, both show outright declines year-on-year for September, that is, deflation in wholesale [...]

Producer Prices Weak and Weaker in Canada, South Africa

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031029a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell 0.5% (-28.7% y/y) last week following the slight 0.5% uptick the week prior.
Purchase applications fell a sharp 5.7% following the 7.5% rise the prior week. Purchase applications last week were up 7.5% y/y but the level so far in October is down 5.6% versus September.
During the last ten years there has been a 53% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 4.9% and gained back most of the prior week&#39;s decline. Applications to refinance are down 45.5% y/y and the level so far in October is down 3.9% versus September.
The effective interest rate on a conventional 30-Year mortgage fell sharply w/w to 6.11%. The effective rate on a 15-year mortgage also fell w/w to 5.50%.
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>.
The Federal Reserve Bank of San Francisco&#39;s Economic Letter titled &quot;Mortgage Refinancing&quot; is available <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-29.html"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<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/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">10/24/03</th>
<th scope="col">10/17/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>649.6</td>
<td>652.8</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>363.9</td>
<td>386.1</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,311.8</td>
<td>2,204.1</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Fell Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 29, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031029b.jpg" width="353">
Chain store sales fell a sharp 0.9% last week following little change during the week prior, according to the BTM-UBSW survey.
So far in October sales are down 0.6% from the September average which fell 0.8% versus August.
During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.
The BTM-UBSW retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<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">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">10/25/03</th>
<th scope="col">10/18/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>418.4</td>
<td>422.0</td>
<td>5.8%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of mortgage applications compiled by the Mortgage Bankers Association fell 0.5% (-28.7% y/y) last week following the slight 0.5% uptick the week prior. Purchase applications fell a sharp 5.7% following the 7.5% rise the [...]

Mortgage Applications Down

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028a.jpg" width="353">
Recent indicators of business confidence for three countries of the Eurozone suggest business men are becoming more optimistic.
Business confidence in West Germany rose sharply in October. The IFO index was up 2.39% from September and 7.66% from October of last year. Although the rise in confidence in East Germany was only 0.67% in October, it was 7.06% above October 2002. In both cases, the indexes of confidence were the highest since March, 2001.
In the Netherlands confidence among producers also improved in October. The balance of opinion rose from a negative 4.8% to a negative 3.0%. The balance, however, was 0.6 percentage points below a October, 2002.
In Italy, although the ISAE business confidence index (1995=100) declined slightly in September and in October, the level of confidence is only 0.74% below the high of 95 reached in August of this year and is well above the low point of 90.3 reached in March, 2003.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Confidence</th>
<th scope="col">OCT 2003</th>
<th scope="col">SEP 2003</th>
<th scope="col">OCT 2002</th>
<th scope="col"> M/M&nbsp; %</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">West Germany (1991=100)</td>
<td>94.2</td>
<td>92.0</td>
<td>87.5</td>
<td>2.39</td>
<td>7.66</td>
<td>89.0</td>
<td>89.8</td>
<td>99.3</td>
</tr>
<tr>
<td class="firstcol">East Germany (1991=100)</td>
<td>104.7</td>
<td>104.0</td>
<td>97.8</td>
<td>.067</td>
<td>7.06</td>
<td>98.6</td>
<td>101.4</td>
<td>106.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Netherlands (%balance)</td>
<td>-3.0</td>
<td>-4.8</td>
<td>-2.4</td>
<td>1.8</td>
<td>-0.6</td>
<td>-1.6</td>
<td>-1.1</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">Italy (1995=100</td>
<td>94.3</td>
<td>94.6</td>
<td>95.0</td>
<td>-0.32</td>
<td>-0.74</td>
<td>94.0</td>
<td>91.9</td>
<td>106.4</td>
</tr>
</tbody>
</table>
Japanese Retail Sales Extend Hesitant Improvement 
by <a href="/comment/Stone.html">Carol Stone</a> October 28, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028b.jpg" width="353">
Japanese retail sales continued their erratic progress in September, as reported today by the Ministry of Economy, Trade and Industry.
Total retail sales held steady in September after August&#146;s 2.8% rise. The year/year decline eroded a bit from August, but still generally extended the stabilizing trend thathas been in place for about a year.
More notably this month, some individual sectors showed clearer firming tendencies. &#147;Fabric, apparel and accessories&#148; outlets continued a rising trend that began in January; it&#146;s not strong, but those stores are at least seeing steady sales instead of the persistent erosion that had gone on for at least 10 years. Motor vehicle dealers have fared better than that all along, but in particular in the last few months, they rebounded from a sinking spell back in the spring. Household &#147;equipment&#148; sales have similarly advanced, and in September held above year ago levels for a second straight month. These are the first two months of positive year-on-year results since March 2001. 
Several days ago in this space we described an &#147;improving&#148; performance in October consumer confidence in Japan. The &#147;pessimism gap&#148;, as we termed it, is narrowing. These September sales figures suggest that people are tending to act on their better expectations by spending money on such major items as vehicles and household appliances. This would seem a good omen for further recovery, particularly if the stock market there is able to hold to its recent higher range.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;Percent Changes </th>
Month/ Month *
Year/Year **
<h2>Dec/Dec </h2>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sept</td>
<td>Aug</td>
<td>Sept</td>
<td>Aug</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Retail Sales, Total </td>
<td>0.0 </td>
<td>2.8 </td>
<td>-2.2 </td>
<td>-2.1 </td>
<td>-3.3 </td>
<td>-5.9 </td>
<td>-1.1 </td>
</tr>
<tr class="odd">
<td class="firstcol">Fabric, apparel &amp; accessories </td>
<td>1.92 </td>
<td>-2.23 </td>
<td>-7.9 </td>
<td>-4.4 </td>
<td>-13.8 </td>
<td>-3.0 </td>
<td>-6.6 </td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles </td>
<td>5.4 </td>
<td>4.4 </td>
<td>1.9 </td>
<td>-3.1 </td>
<td>1.8 </td>
<td>-7.6 </td>
<td>11.1 </td>
</tr>
<tr class="odd">
<td class="firstcol">Household machinery/equipment </td>
<td>-0.7 </td>
<td>11.4 </td>
<td>1.8 </td>
<td>0.7 </td>
<td>-5.3 </td>
<td>-9.8 </td>
<td>0.5 </td>
</tr>
</tbody>
</table>


</html>

Recent indicators of business confidence for three countries of the Eurozone suggest business men are becoming more optimistic. Business confidence in West Germany rose sharply in October. The IFO index was up 2.39% from September and [...]

Businessmen Becoming More Optimistic in Germany, the Netherlands and in Italy

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028d.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence in October rose and recovered most of the prior month&#39;s moderate decline. The index rose 5.3% from September to 81.1. That was versus Consensus estimates for a reading of 79.0.
The expectations index rose to 90.7 (11.8% y/y) from a revised 88.5 in September. The reading of the present situation rose to 66.8 (-13.5% y/y) from 59.7.
The rise in Confidence was somewhat greater than the 1.9% October gain in Consumer Sentiment reported by the University of Michigan.
Jobs were viewed as hard to get by 33.8% of respondents, down slightly from 35.1% in September but up from 27.3% last October. Expectations about job opportunities in six months improved.
The Conference Board&#146;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<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/@EF/@EF14/@EF1401/@EF1401.HTM"> Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>81.1</td>
<td>77.0</td>
<td>1.9%</td>
<td>96.6</td>
<td>106.6</td>
<td>139.0</td>
</tr>
</tbody>
</table>
U.S. Durable Goods Orders Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 28, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028c.jpg" width="353">
Durable goods orders rose 0.8% in September. The previously reported 0.9% decline in August was revised to a decline of just 0.1%. Consensus expectations had been for a 1.2% gain in September.
Excluding the volatile transportation sector, durable orders rose 1.2% (5.6% y/y) following a 0.7% gain in August, revised from a 0.3% decline reported initially.
Orders for the transportation sector as a whole dropped 2.2% as orders for both motor vehicles and aircraft fell.
Capital goods orders were quite strong, rising 3.4%. Excluding aircraft and parts, nondefense capital goods orders surged 3.9% (13.5%) and a 0.8% decline in August was lessened to -0.1%.
Orders for computers &amp; electronic products jumped another 2.6% (18.4% y/y) and orders in August were revised up substantially. Orders for computers &amp; related products fell 0.4% (9.2% y/y) but orders for communication equipment were strong. Electrical equipment orders firmed notably in three of the last four months.
Shipments of durable goods jumped 2.5%, led higher by aircraft shipments. Excluding transportation shipments rose 1.2% (2.5% y/y).
Durable inventories fell 0.7% last month (-3.7% y/y) and decumulation reported for earlier months was deepened.

<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/@ED01/@ED0101/@ED0101.HTM"> NAICS Classification</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Durable Goods Orders</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>6.2%</td>
<td>-1.7%</td>
<td>-10.5%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>3.4%</td>
<td>-1.5%</td>
<td>14.6%</td>
<td>-7.2%</td>
<td>-15.5%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
FOMC Left Fed Funds Rate Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 28, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028g.jpg" width="353">
The Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%.
The unanimous action was as expected by economists.
The press release which accompanied the Fed&#146;s action contained the following statement. &quot;The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, and the labor market appears to be stabilizing. Business pricing power and increases in core consumer prices remain muted.&quot;
The above reference to a stabilizing labor market is a change from the last FOMC statement which characterized the labor market as &quot;weakening.&quot;
The press release also indicated that &quot;The Committee judges that, on balance, the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.&quot;
The complete text of the Fed&#39;s latest press release can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2003/20031028/default.htm"> here</a> .
&quot;Monetary Policy and Learning: Some Implications for Policy &amp; Research&quot; from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=59128295-7160-46B3-B963F9A123AB9F26&amp;method=display_body#tallman">here</a> .

</body>
</html>

The Conference Boards Index of Consumer Confidence in October rose and recovered most of the prior month's moderate decline. The index rose 5.3% from September to 81.1. That was versus Consensus estimates for a reading of 79.0. The [...]

Consumer Confidence Up

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031027a.jpg" width="353">
Data on the balance of payments for the the period January through August for the Euro-zone showed a marked decline in the current account to 2,500 million Euros from 35,600 million in the corresponding period of last year. The slowdown in global demand earlier this year and the appreciation in the Euro were major factors in the decline.
Net direct investment by the Euro-zone resulted in a small capital outflow of 300 million euros in contrast to the sizeable outflow of 29,200 million in the January-August period of 2002. Net portfolio investment, however, resulted in an outflow 24,300 million so far this year in contrast to a net inflow of 40,600 million euros in the same period of 2002 and &quot;other investments,&quot; largely short-term, also resulted in substantial capital outflows.
The errors and omission item in the balance of payments is a reflection of the difficulty of measuring accurately the various accounts, particularly capital flows. The 60,600 million euro errors and omissions in the January-August period of this year reflects current or capital inflows that have not been accounted for.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Millions of Euros</th>
<th scope="col">Jan-Aug 2003</th>
<th scope="col">Jan-Aug 2002</th>
<th scope="col">Year 2002&nbsp;</th>
<th scope="col">Year 2002&nbsp;</th>
<th scope="col">Year 2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>2500</td>
<td>35600</td>
<td>67100</td>
<td>-14100</td>
<td>-78000</td>
</tr>
<tr>
<td class="firstcol">Capital Account</td>
<td>6300</td>
<td>7500</td>
<td>11000</td>
<td>6800</td>
<td>11800</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Account</td>
<td>-69200</td>
<td>-42400</td>
<td>-97200</td>
<td>-24300</td>
<td>74200</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Direct Investment</td>
<td>-300</td>
<td>-29100</td>
<td>-41400</td>
<td>-102400</td>
<td>-17180</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Portfolio Investment</td>
<td>-24300</td>
<td>40600</td>
<td>103300</td>
<td>68100</td>
<td>-102800</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Financial Derivatives</td>
<td>-10300</td>
<td>-8300</td>
<td>-10100</td>
<td>-1600</td>
<td>-3100</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Other Investments</td>
<td>-50200</td>
<td>-48400</td>
<td>-146700</td>
<td>-6600</td>
<td>18200</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Change in Reserves</td>
<td>15800</td>
<td>3000</td>
<td>-2200</td>
<td>18000</td>
<td>14700</td>
</tr>
<tr class="odd">
<td class="firstcol">Errors &amp; Omissions</td>
<td>60600</td>
<td>-700</td>
<td>19200</td>
<td>-8400</td>
<td>32200</td>
</tr>
</tbody>
</table>
</body>
</html>

Data on the balance of payments for the the period January through August for the Euro-zone showed a marked decline in the current account to 2,500 million Euros from 35,600 million in the corresponding period of last year. The [...]

A Smaller Current Account and Larger Capital Outflows in the January-August Eurozone Balance of Payments

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

Blue Chip forecasters expect US to lead aggressive policy rate cuts over coming year—apart from Japan

Ratio of job openings to the number unemployed in the US now below pre-pandemic level

U.S. layoffs not showing as much cooling in labor markets as unemployment rate

While goods prices have moderated, service price inflation remains elevated and sticky

Since Jan 2023, BCEI US outlook has improved, worsened for Japan and the euro area

Persistent negative US economic surprises leading to big rate-cut expectations

Germany is Euro area weakling

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250124J4.jpg

250124K4.jpg

Sales of existing homes increased 2.2% (9.3% y/y) to 4.24 million (SAAR) during December after rising an unrevised 4.8% to 4.15 million in November. Sales increased 3.4% during October but fell 1.3% in September. The December sales increase accompanied an easing last month in the effective 30-year mortgage interest rate to an average 6.72% from 6.81% in November. The Action Economics Forecast Survey expected December sales of 4.17 million units. The sales figures are based on closings of sales signed over the past couple of months.

The median price of all existing homes (NSA) held steady (+6.1% y/y) in December at $404,400, with November, revised from $406,100. Prices remained below the $426,900 high this past June. The median price of an existing single-family home also was unchanged (+6.1% y/y) at $409,300 in December. The median price of condos and co-ops edged 0.2% higher (4.5% y/y) to $359,000 in December from $358,200 in November.

By region, sales of existing homes in the Northeast rose 3.9% (10.4% y/y) to 530,000 after an 8.5% November gain. Sales in the South increased 3.2% (9.0% y/y) to 1.93 million after a 5.6% November rise. Sales in the West improved 2.6% (12.9% y/y) to 790,000 after holding steady in November. To the downside, sales in the Midwest eased 1.0% (+6.5% y/y) to 990,000 after a 5.3% November increase.

The number of existing homes for sale (NSA) fell 13.5% (+16.2% y/y) to 1.15 million after falling 2.9% in November. The supply of homes on the market at the current selling rate (NSA) fell to 3.3 months from 3.8 months in November. This figure rose to a high of 4.3 months in September. The record low in supply of 1.6 months was reached in January 2022. These figures date back to January 1999.

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.

**How Did U.S. Teenagers Benefit from Holiday Employment?** from the Federal Reserve Bank of St. Louis is available [here](https://www.stlouisfed.org/on-the-economy/2025/jan/how-us-teenagers-benefit-holiday-employment).

250124L4.jpg

250124M4.jpg

- Sales increase to highest level since February.
- Existing home sales rise in three of four regions of the country.
- Median price holds steady.

U.S. Existing Homes Sales Continue to Rise in December

Robert Brusca

250124E.jpg

The S&P composite PMIs in January improved across the board, with the exception of India and the United States. In the U.S., the PMI headline dropped back sharply on sharp weakness in the services sector in the month in the face of what had been resiliency and strength. 

From roughly February to July of 2024, the persistence of declines by sector especially in manufacturing diminished. However, now things have shifted, and we are again in a period when there seems to be more deterioration. The prevalence of manufacturing AND service sector deterioration together has reappeared.

The Russian invasion was a real catalyst of change for the EU, Germany, France, the United Kingdom, Japan, and the United States. Before Ukraine, the recovery from COVID was under way and both services and manufacturing sectors were running policies that left each sector with 50% or higher ranking in 60% to 100% of countries. After Russia’s aggressive action, both sectors were crushed across all these countries; the service sector rebounded first and from March 2024 to date services stood at a ranking above 50% or more in 60% to 100% of the countries. But in the post-invasion environment, the manufacturing sectors showed only about 20% of reporters above a 50% queue standing for manufacturing. Manufacturing continues to be hard hit and well short of normalcy.

Currently we are in another round of weakness looking at a broader group of early reporters that adds India and Australia into the mix. Still, six-month changes show weakness in at least two of three months or three of five months for manufacturing and service sectors. Together they are falling over the same six-months. The ‘best performance’ on this metric apart from the U.S. is Australia where manufacturing has improved on balance over six months for two months running but only after three months of deterioration on that basis.

U.S. performance is an outlier in several ways. The US service sector fell sharply in January, depressing services as well as the composite metric. But over six-months both US services and manufacturing have failed to worsen together for 16-months in a row.

The U.S. has been an anomaly in terms of international performance characteristics. U.S. manufacturing is weakening on balance over six months in six of the last seven months. But the service sector has risen on balance (over the previous six months) in 12 of the last 13 months.

The new sharp weakness in U.S. services (month-to-month) is an issue of it has any staying power.

The four-year queue standing of the manufacturing across eight countries and three sector readings (for each: two sectors plus a composite) shows only five of 24 of these rankings with standings above the 50% mark (above their respective medians) over the past four years. These readings are manufacturing in India (79.6%), services in Germany (63.3%) and services in the EMU (barely…. at 51.0%), and a 59.2 percentile standing for Japan’s service sector (the same for its composite).

250124.jpg

There is still a general trend of composite PMI readings to ease over three months compared to 12-months and generally to be in an easing profile. The U.S. is the only country showing composite progress accelerating sequentially (warning here: the sequential data lag by a month and are only executed on hard data so the sharp January U.S. weakness is not represented in this calculation).

Only eight of 24 sectors show a net rise over the last three months. Ten of 24 sectors still show net weakness over 12 months. Three composite readings are lower on balance over 12 months (India Japan, and the U.K.). Economic conditions are touch and go and, as we saw in Davos, there is some concern about the state of the European economy at a time that the U.S. is threatening to impose tariffs that will weaken their economies.

Composite PMIs Improve Except for the U.S.

250123A1.jpg

250123B1.jpg

Initial claims for unemployment insurance rose to 223,000 in the third week of January from an unrevised 217,000 during the prior week. A 215,000 increase in initial claims had been expected in the Action Economics Forecast Survey. Initial claims have risen from a 203,000 low in the first week of January. During the last four weeks, initial claims averaged 213,500, down from 226,750 four weeks earlier.

Continuing claims for jobless insurance increased 46,000 (7.8% y/y) to 1.899 million in the week ended January 11 from 1.853 million in the prior week. Ongoing claims have risen from a low of 1.834 million in the third week of December. The four week moving average of continuing jobless insurance claims eased to 1.866 million, down from a 1.888 million high in the third week of November.

The insured rate of unemployment was 1.2% for the fourth straight week. This level was increased from a 2022 low of 0.9% and compares to the rise in the overall unemployment rate to 4.1% from 3.4% over the same period.

Unemployment rates vary widely across states. The Labor Department reports that for the week ended January 4, the insured unemployment rate was highest in Rhode Island (3.22%), New Jersey (3.07%), Minnesota (2.73%), Washington (2.52%) and Massachusetts (2.41%). The insured unemployment rates were lowest in Florida (0.33%), Virginia (0.43%), Tennessee (0.58%) and Alabama (0.52%) and the Virgin Islands (0.67%). Rates in other notable states include California (2.32%), Pennsylvania (2.24%), New York (2.08%) and Texas (1.13%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250123C1.jpg

250123D1.jpg

- Initial jobless claims increase to highest level in six weeks. 
- Continuing claims approach four-week high.
- The insured unemployment rate remains low.

U.S. Unemployment Insurance Claims Rise in Latest Week

250123E.jpg

EU order trends ‘improved’ slightly in January as the net diffusion reading rose from -40 to -34. Still, that improvement leaves orders below their 3-month, 6-month, or 12-month averages. The queue standard of January orders is in the lower 14th percentile of its historic queue of data. Obviously, it remains a historically weak reading. The order series is volatile as the chart shows. But it is still in a clear downtrend even with the uptick this month.

Export orders have approximately the same profile as for orders overall. But export orders weaken slightly in January compared to December. Export orders overall have a slightly weaker queue standing than total orders at a 13.4 percentile level.

The diffusion readings for stocks of finished goods weakened in January but even with its weaker January assessment, stocks have a firm-to-strong 72.5 percentile standing.

Looking ahead, the outlook for output volume over the next three months improved sharply from its stunning weak reading of -31 in December. However, the rise to -19 in January represents only a 4.8 percentile standing.

Unfortunately, average output prices for three months ahead has reading of +27 in January, up from +23 in December and +11 in November; the backtracking in prices expected, has brought the expectation level for the current reading to a high, 90-percentile standing. These rising inflation expectations are going to be a real problem for the Bank of England.

IP data lag the CBI survey responses. The manufacturing IP growth rate, year-on-year, has a 17.4 percentile standing as of its most recent observation in November 2024. That is also very weak. The CBI results are not giving a different message from the industrial production data, but they are timelier.

The ramp up in inflation expectation is not good new with CPI-H inflation at 3.5% year-over-year and with the core pace at 4.2%. Core inflation, sequentially, is looking stable around the 4.2% pace; for the headline, the pace has accelerated from 3.5% over 12 months to a pace of 5.4% over three months. These results, coupled with the rise in CBI expectations, are not good news for the U.K. or for the BOE.

250123.jpg

United Kingdom

U.K. Order Trends Are Still Eroding

Andrew Cates

**Energy and labour markets**
Chart 1 below highlights two key trends: the real consumer price of energy in the OECD economies (indexed to 1970) has shown significant volatility, with sharp spikes during periods of energy crises (e.g., 1970s oil shocks, 2008, and post-pandemic supply constraints) and declines following market adjustments or advances in energy production. Meanwhile, the US labour share of business output has experienced a steady decline since the 1980s, reflecting structural changes in the economy such as globalization, technological advances, a shift in bargaining power away from labour toward capital as well as higher real energy prices. These trends and the interplay between them will arguably form the basis of several policy choices that will be made (or already are being made) by a new US administration.

250123Z1.jpg

**Electricity prices**
Energy prices, their level and their volatility, arguably play a much bigger role in broader macroeconomic fluctuations than they are given credit for. Chart 2 below shows electricity prices (a 2-year average) across six major developed economies. It shows that the US has faced the cheapest electricity at around $44/MWh. The UK and Germany, in contrast, have faced the most expensive electricity at respectively $106/MWh and $94/MWh. This disparity reflects a mix of factors: European countries, particularly the UK and Germany, face elevated prices due to heavy reliance on natural gas imports, exacerbated by geopolitical tensions (e.g., reduced Russian supply), higher renewable energy integration costs, and carbon pricing mechanisms. The US, in contrast, enjoys lower electricity costs due to more abundant domestic energy resources, particularly natural gas, and less exposure to international energy markets. Against this backdrop it is hardly a surprise that the US economy has flourished (relative to other advanced economies) while the UK and Germany have floundered.

250123Z2.jpg

**The UK labour market**
This week’s labour market data additionally suggest that the UK will probably struggle to keep pace with the US economy in the period immediately ahead. The data specifically revealed that employment growth is slowing on all measures, and the PAYE measure of payrolls in particular (see chart 3 below). And while private sector pay growth has also slowed, the 6-month annualised rates of growth still stood at a relatively lofty 5.8% in December. Weaker employment growth will encourage the BoE to cut rates again before too long (probably in February) but weaker wage growth could also be necessary for a much looser policy stance to be enacted over the next few months.

250123Z3.jpg

**Household savings and labour market activity**
At a broader global level, a key risk to the economic outlook at present concerns restrictive monetary policy and its impact on labour market activity and household spending. Chart 4 below shows that household saving rates in the world’s major economies have – on the whole – been rebounding over the past two years. Simultaneously, the unemployment rate in advanced economies has begun to climb. These trends align with the tightening of monetary policy that’s been enacted in recent years and economic uncertainty. But if that combination persists, it could place a bigger brake on the world economy this year than many analysts are anticipating.

250123Z4.jpg

**China’s credit impulse**
Another big source of uncertainty, at present, concerns China. Chart 5 below compares the Citigroup Economic Surprise Index for emerging markets (EM) and Haver’s calculations for China’s credit impulse (the change in new credit as a percentage of GDP). The chart suggests that China's credit growth influences broader EM economic fluctuations. During periods of robust credit growth (e.g., 2020-2021), driven by stimulus measures, EM economies benefited from improved liquidity and demand from China. Conversely, periods of credit tightening (e.g., 2017 and 2023-2024) weighed on economic surprises, reflecting weaker support for growth. These dynamics underline China’s outsized role in shaping sentiment and economic conditions in emerging markets. That its credit impulse, moreover, remained negative in Q4 (of 2024) underscores how China might continue to exert downward pressure on the world economy in the period immediately ahead.

250123Z5.jpg

**South Korean trade**
Another source of uncertainty for the world economy, at present, is the optimism surrounding AI. While proponents highlight its transformative potential to boost productivity, efficiency, and innovation across industries, sceptics question the timeline for a meaningful economic impact. With that in mind it would be inappropriate to draw strong conclusions from chart 6 below but it is certainly of note that South Korea – which has been heavily reliant on AI-fuelled trade – saw a big slowdown in export growth in the first 20 days of January. Much of that slowdown, moreover, could be traced to a big drop in semiconductor trade.

250123Z6.jpg

Financial markets have enjoyed a notable lift in sentiment over recent days, driven by renewed optimism about the domestic economic policies of a new US administration. Investors have certainly been cheered by early signals of a pro-growth strategy, with the energy sector taking centre stage following a ceasefire between Israel and Gaza and the announcement of measures aimed at reducing US energy costs (see charts 1 and 2). Meanwhile, China’s stronger-than-expected growth figures last week and softer-than-expected inflation readings from both the US and the UK have fuelled gains across equity and bond markets, bolstering risk appetite in other markets. However, despite the prevailing optimism, several factors warrant caution. Chief among them is the global uncertainty that surrounds the policy choices of a new US administration. The policy choices of central banks will also be critical, particularly as labour market strength could keep inflation risks alive (charts 3 and 4). Questions also linger about China’s ability to sustain its growth momentum, especially as its property sector and consumer demand face ongoing challenges (chart 5). Finally, while artificial intelligence is increasingly seen as a driver of future growth and productivity, doubts persist over its near-term potential to meaningfully transform the world economy (chart 6). For now, investors appear content to ride the wave of positive sentiment, but vigilance over these risks will be critical as the economic landscape continues to evolve.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3FHPiTz4Zs3YDwhsUnwg5v?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Economy in Brief: October 2003

Jump to: