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/040331d.jpg" width="353">
The Canadian economy paused in January after four successive gains in monthly GDP. The decrease was a modest -0.1%, including a similar slip in industrial production and a minuscule easing in service-producing industries. Manufacturing and mining were both off markedly, although it is not really possible to tell if their contractions were simply reactions to December increases, or whether they might have been related to the very cold weather in January or to some fundamental slowing in demand. The role of the cold weather is evident, however, in a counter move in utilities, where output was up 4.1% as people and business needed more heat.
Other industries showed increases as well. Retail trade was up 1.0%, and information and communications were up 1.1%. Among service industries, these were offset by sharp falls in wholesale trade, 3.4%, and transportation and warehousing, 0.8%. Weather was possibly responsible for the reduced volume of transportation, although, as with other sectors, it had been strong at the end of 2003, so this might be no more than a pause after a long climb. If either of these conditions is the primary source of the January slowdown both in this specific sector and in total GDP, an early spring bounce might be in the offing.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Chg except where noted</th>
<th scope="col">Jan 2004: Bil.Chn. 1997C$</th>
<th scope="col">Jan 2004</th>
<th scope="col">Dec 2003</th>
<th scope="col">Jan 04/ Jan 03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total GDP</td>
<td>1,025.4</td>
<td>-0.1</td>
<td>0.5</td>
<td>1.6</td>
<td>1.9</td>
<td>3.4</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">Industrial Production</td>
<td>243.3</td>
<td>-0.1</td>
<td>0.5</td>
<td>0.5</td>
<td>0.1</td>
<td>2.4</td>
<td>-2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing</td>
<td>177.6</td>
<td>-0.7</td>
<td>1.2</td>
<td>-0.7</td>
<td>-0.4</td>
<td>2.9</td>
<td>-3.6</td>
</tr>
<tr>
<td class="firstcol">Mining; Oil &amp; Gas</td>
<td>37.3</td>
<td>-1.4</td>
<td>1.5</td>
<td>3.9</td>
<td>3.1</td>
<td>0.8</td>
<td>1.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Utilities</td>
<td>27.1</td>
<td>4.1</td>
<td>0.2</td>
<td>0.5</td>
<td>-2.3</td>
<td>2.2</td>
<td>-2.3</td>
</tr>
<tr>
<td class="firstcol">Service Producing</td>
<td>703.4</td>
<td>-0.0</td>
<td>0.3</td>
<td>1.7</td>
<td>2.2</td>
<td>4.2</td>
<td>3.5</td>
</tr>
</tbody>
</table>
</body>
</html>

The Canadian economy paused in January after four successive gains in monthly GDP. The decrease was a modest -0.1%, including a similar slip in industrial production and a minuscule easing in service-producing industries. [...]

Canada GDP Slowed in January

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/040331a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association eased another 2.1% last week. That followed a 0.2% dip the prior period. Despite these recent backpedals, mortgage applications are up 25.1% in March versus February.
The effective interest rate on a conventional 30-Year mortgage rose to 5.75% from 5.62% during the prior two weeks. The effective rate on a 15-year mortgage rose to 5.08%.
Purchase applications fell 1.1% w/w (+21.7% y/y) for the second weekly decline. March purchase applications are 6.7% ahead of the February average.
During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance fell 2.6% (-25.1% y/y) following six weeks of gain.
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>.

<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">03/26/04</th>
<th scope="col">03/19/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>1,091.3</td>
<td>1,114.9</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>443.8</td>
<td>449.9</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>4,857.6</td>
<td>4,988.7</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 31, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040331b.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for March fell to 57.6 from 63.6 in February. A lesser decline to 61.0 had been the Consensus expectation.
During the last twenty years there has been a 75% correlation between the level of the Chicago Business Barometer and quarterly growth in factory sector industrial output. There has been a 49% correlation with quarterly growth in real GDP.
The new orders index fell sharply to 60.4, the lowest level since September, and production fell to 59.1, also the lowest level since September. Still, the 1Q averages for orders and production are up versus 4Q03.
Employment fell to 49.2 but the 1Q average is up versus 4Q. During the last twenty years there has been a 71% correlation between the level of the employment index and the y/y change in factory sector payroll employment.
The index of prices paid jumped to 75.7, the highest level since May 1995.

<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">Mar &#39;04</th>
<th scope="col">Feb &#39;04</th>
<th scope="col">Mar&nbsp; &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>57.6</td>
<td>63.6</td>
<td>49.9</td>
<td>54.7</td>
<td>52.7</td>
<td>41.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>60.4</td>
<td>67.5</td>
<td>53.9</td>
<td>58.0</td>
<td>56.2</td>
<td>42.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>75.7</td>
<td>66.9</td>
<td>63.7</td>
<td>55.8</td>
<td>56.9</td>
<td>50.4</td>
</tr>
</tbody>
</table>
Factory Orders & Inventories Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 31, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040331c.jpg" width="353">
Factory orders rose 0.3% m/m in February but the gain was dominated by a surge in aircraft. Orders for commercial aircraft jumped 33.8% (29.8% y/y) and defense aircraft orders ballooned 61.4% (30.3% y/y). Excluding the transportation sector altogether orders fell 1.2% (7.4% y/y) following several months of strong gain.
Non-durable goods orders which equal shipments fell 2.0% (+4.9% y/y) due to declines in virtually all industries. The advance report of a 2.5% rise in orders for durable goods was unrevised.
Factory inventories rose 0.5% in February and that was the strongest monthly gain since January 2001. The swing to inventory accumulation from decumulation has been scattered across industries with the notable exceptions of the information technology and furniture industries.
Factory shipments fell 0.5% but the January gain was revised away.

<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/@ED01016/@ED01016.HTM"> Factory Survey</a> (NAICS)</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.5%</td>
<td>0.3%</td>
<td>-0.8%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>-1.9%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.5%</td>
<td>-0.0%</td>
<td>6.5%</td>
<td>2.6%</td>
<td>-2.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.6%</td>
<td>-0.0%</td>
<td>5.0%</td>
<td>4.2%</td>
<td>-6.1%</td>
<td>-5.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of mortgage applications compiled by the Mortgage Bankers Association eased another 2.1% last week. That followed a 0.2% dip the prior period. Despite these recent backpedals, mortgage applications are up 25.1% in March [...]

Mortgage Applications Eased As Rates Ticked 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/040330a.jpg" width="353">
Chain store sales dropped 1.9% last week according to the International Council of Shopping Centers (ICSC)-UBS survey.The decline reversed all of the weekly gains during the prior two months.
The latest decline left sales so far in March 0.1% below the February average.
The ICSC-UBS 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.
During the last ten years there has been a 51% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and consumer sentiment.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">03/27/04</th>
<th scope="col">03/20/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>431.0</td>
<td>439.5</td>
<td>6.6%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Consumer Confidence Remained Depressed 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040330b.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence for March slipped 0.2% to 88.3 versus February&#39;s level, revised up slightly to 88.5 from 87.3 .
In contrast, the March reading of Consumer Sentiment from the University of Michigan rose 1.5% from February. The drop in Confidence was more moderate than Consensus expectations for a decline to 86.0.
During the last ten years there has been a 67% correlation between the level of consumer confidence and the y/y % change in real PCE.
The present situation reading rose 1.0% to 84.1 (+37.0% y/y) and prior month&#39;s levels were revised up sharply. The index of consumer expectations fell by 1.0% (+48.2% y/y), the third consecutive monthly decline, and prior month&#39;s levels were revised down.
Jobs were viewed as hard to get by 30.0% of respondents, an increase from prior month&#39;s levels which were revised down. The low for this series was in 2000 when 11.2% of respondents viewed jobs as hard to get.
Expectations for business conditions in six months held steady in March but only 19.3% of respondents expected conditions to improve, the lowest since last April.
The Conference Board&#146;s survey isconducted 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">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>88.3</td>
<td>88.5</td>
<td>43.8%</td>
<td>79.8</td>
<td>96.6</td>
<td>106.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales dropped 1.9% last week according to the International Council of Shopping Centers (ICSC)-UBS survey.The decline reversed all of the weekly gains during the prior two months. The latest decline left sales so far in [...]

Chain Store Sales Flop

<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/040329a.jpg" width="353">
Home prices as tallied by the Office of Federal Housing Enterprise Oversight (OFHEO) surged in 4Q 2003 by the most for any one period since 1Q 1979. The 3.7% jump last quarter pulled home price appreciation for the year to 6.9%.
The acceleration in home prices was notable versus the prior two years when prices rose an average of 1.6% each quarter. It was attributed to the economy&#39;s emergence from recession combined with the continued low level of interest rates. 
Home price appreciation accelerated across the country&#39;s regions. The greatest accelerations occurred in Vermont, New York and the District of Columbia.
The OFHEO house price index is a geometric weighted average based on more than 26.5 million repeat transactions over 29 years and 12,000 transactions annually.
View the latest OFHEO release <a href="http://www.ofheo.gov/media/pdf/4q03hpi.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/@E9/@E911/@E91101/@E91101.HTM"> OFHEO</a></th>
<th scope="col">4Q03</th>
<th scope="col">3Q03</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">House Price Index</td>
<td>3.7%</td>
<td>1.6%</td>
<td>8.0%</td>
<td>6.9%</td>
<td>7.1%</td>
<td>8.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Home prices as tallied by the Office of Federal Housing Enterprise Oversight (OFHEO) surged in 4Q 2003 by the most for any one period since 1Q 1979. The 3.7% jump last quarter pulled home price appreciation for the year to 6.9%. The [...]

Home Prices Surged in 4Q03

<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/040326a.jpg" width="353">
Consumer spending rose just 0.2% in February following an upwardly revised 0.5% January increase. A 0.5% gain in total PCE had been the Consensus expectation.
Despite a modest increase in light vehicle sales last month, durable goods spending fell 0.2%. Spending on non-durables rose a slight 0.1% (6.5% y/y). After accounting for a 0.4% rise in the price deflator for non-durables, real non-durables spending fell 0.4% (+5.0% y/y). Services spending rose 0.4% (5.3% y/y).
Personal income rose 0.4% (+4.6% y/y) in February versus Consensus expectations for a 0.3% gain.
Wages &amp; salaries were strong with a 0.5% (+3.6% y/y) rise after an upwardly revised 0.7% January pop. Strength in wages was again spread evenly across industries.
Personal disposable income rose 0.4% (5.6% y/y) following an upwardly revised 0.9% January jump. Tax payments rose slightly (-3.6% y/y) after the 4.8% January skid. 
The PCE chain price index rose 0.2%. Less food &amp; energy prices rose 0.1% (1.1% y/y) last month after a like gain in January, but earlier figures were revised up slightly. 
The savings rate ticked up to 1.9%. 

<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">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4%</td>
<td>0.3%</td>
<td>4.6%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.2%</td>
<td>0.5%</td>
<td>5.8%</td>
<td>5.0%</td>
<td>4.8%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>1.9%</td>
<td>1.8%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>
Surprise Gain in U.S. Consumer Sentiment 
by <a href="/comment/Stone.html">Carol Stone</a> March 26, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040326d.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index rebounded unexpectedly in the latter part of March to give a 95.8 reading for the month as a whole. The mid- month index was 94.1, and Consensus expectations had called for further erosion to 93.2. Instead, the late March results put the month at the best level since mid-2002, apart from the unusual and unsustainable spurt in January.
The gain in sentiment may be related to the reduced number of claims for unemployment insurance. That recently favorable trend is probably the most positive sign about the labor market in many months. A comparison of the Michigan Index with monthly claims data shows 71%-83% correlation over various parts of the last 25 years. So if there are fewer layoffs, people &quot;feel better&quot; enough to push up the Michigan results. In turn, over the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 84% during the last five years. While it might go without saying that better labor market conditions should lead to more spending, what we have in the latest jobless claims data and the Michigan Survey is a very early indication that labor markets are getting better and that people may be noticing that. Moreover, the higher sentiment readings are somewhat surprising in light of the sharp nationwide surge in gasoline prices, the recent lackluster stock market, and the renewed terrorist concerns.
Perceptions of both current economic conditions and expectations shared in the more positive economic picture. The assessment of current conditions improved by more than a point from the mid-month result, and expectations reversed their earlier decline to show a net gain for the month, albeit a small one.
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">March</th>
<th scope="col">Mid- March</th>
<th scope="col">Feb</th>
<th scope="col">March 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>95.8</td>
<td>94.1</td>
<td>94.4</td>
<td>77.6</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>106.8</td>
<td>105.7</td>
<td>103.6</td>
<td>90.0</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Expectations</td>
<td>88.8</td>
<td>86.6</td>
<td>88.5</td>
<td>69.6</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer spending rose just 0.2% in February following an upwardly revised 0.5% January increase. A 0.5% gain in total PCE had been the Consensus expectation. Despite a modest increase in light vehicle sales last month, durable goods [...]

U.S. Personal Spending Growth Slowed

<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/040325a.jpg" width="353">
The &quot;final&quot; release of U.S. GDP for Q4-2003 showed virtually no revision from the &quot;preliminary&quot; 4.1% growth. Upward revisions to PCE-services and nonresidential structures were offset by downward shifts in inventories and state and local government outlays.
This report brought the first reading on Q4 corporate profits; these had their third strong quarterly gain in a row, when measured to include inventory valuation and capital consumption adjustments. The resulting &quot;operating profits&quot; were up at quarterly rates of 10.3%, 9.9% and 7.2% in Q2, Q3 and Q4, respectively. Without the accounting adjustments, profits were also strong in Q3 and Q4, but had been soft in Q2, when a tax law change sharply increased depreciation charges calculated for tax purposes.
Whichever way profits are measured, they benefited from both volume gains and cost constraints in the second half of last year. As seen in the table below, value added by domestic non-financial corporations was even stronger than GDP in both Q3 and Q4. Prices increased modestly. But labor costs fell in both periods, and non-labor costs, especially &quot;interest and miscellaneous payments&quot;, were down in Q3 and flat in Q4. Unit profits, that is, profit &quot;margins&quot;, thus widened significantly. Indeed, at $0.122 per unit value added, operating profit margins were the largest since Q4 of 1997.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">SAAR, % Changes&nbsp;&nbsp;(except as noted)</th>
<th scope="col">Q4-2003</th>
<th scope="col">Q3-2003</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">Real GDP</td>
<td>4.1</td>
<td>8.2</td>
<td>3.1</td>
<td>2.2</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Real Value Added:&nbsp; Domestic Non-financial Corporations</td>
<td>5.0</td>
<td>9.3</td>
<td>5.4</td>
<td>3.5</td>
<td>-1.4</td>
</tr>
<tr>
<td class="firstcol">Price per Unit:&nbsp;&nbsp; Dollars</td>
<td>$1.019</td>
<td>$1.016</td>
<td>$1.015</td>
<td>$1.013</td>
<td>$1.012</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; % Change</td>
<td>1.2</td>
<td>0.8</td>
<td>0.5</td>
<td>-0.2</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">Compensation/Unit</td>
<td>-0.6</td>
<td>-4.2</td>
<td>-1.8</td>
<td>-2.8</td>
<td>0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Non-labor Cost/Unit</td>
<td>0.0</td>
<td>-3.2</td>
<td>-3.6</td>
<td>0.0</td>
<td>4.1</td>
</tr>
<tr>
<td class="firstcol">Profits*/Unit (Qtrly % Chg)</td>
<td>2.5</td>
<td>10.2</td>
<td>27.1</td>
<td>20.0</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Profits After Tax** (Qtrly % Chg)</td>
<td>12.4</td>
<td>9.4</td>
<td>20.7</td>
<td>24.1</td>
<td>-5.3</td>
</tr>
</tbody>
</table>
Jobless Claims Edge Upward, But Remain in 3-Year Low Ranges 
by <a href="/comment/Stone.html">Carol Stone</a> March 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040325b.jpg" width="353">
Initial claims for jobless insurance edged upward last week, interrupting a 3-week- long decline. Even so, the rise was only 1,000 and despite a 2,000 upward revision to the prior week, still allowed the 4-week moving average to decrease to 341,500, its lowest since the end of January 2001.
Continuing claims for unemployment insurance fell 46,000 in the March 13 week from a downwardly revised level in the the prior week, which now shows a 36,000 increase. The latest figure of 3.004 million continuing claims is the lowest since July 27, 2001, i.e., as the economy was experiencing that year&#39;s recessionary contraction.
The insured rate of unemployment was unchanged at 2.4% for a fifth consecutive week.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">3/20/04</th>
<th scope="col">3/13/04</th>
<th scope="col">3/06/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 339</td>
<td>338</td>
<td>342</td>
<td>-15.9%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>3,004</td>
<td>3,050</td>
<td>-13.5%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
</body>
</html>

The "final" release of U.S. GDP for Q4-2003 showed virtually no revision from the "preliminary" 4.1% growth. Upward revisions to PCE-services and nonresidential structures were offset by downward shifts in inventories and state and [...]

Volume Gains & Cost Cutting Lift Q4 Corporate Profits

<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/040324e.jpg" width="353">
The South Korean economy ended 2003 on a firm note as GDP grew 2.7% (seasonally adjusted) in the fourth quarter, that is, 11.3% annualized. It stood 3.9% above the fourth quarter of 2002 and for the year as a whole, GDP was 3.1% above 2002.
The Q4 performance is an encouraging sign after outright contraction early in 2003 and a modest increase in Q3. Private consumption remained weak throughout, but investment and net exports made important positive contributions. In particular, investment in machinery and equipment turned upward distinctly after three negative quarters, yielding its best outturn since early in 2000.
The upturn in growth toward year-end is reassuring for Korea, as 2003 otherwise had a lackluster performance by recent historical standards. Only 1998, in the aftermath of the Asian-wide currency crises, saw more weakness. In the absence of such cataclysmic events, 2003 was indeed sluggish, so the fourth quarter improvement is beneficial. It gives a firmer base now that the nation is beset with political uncertainty in the face of the impeachment of its president. [N.B. The Bank of Korea is revising these national accounts data, including rebasing them to 2000 prices from 1995. Not all the detail is available to us from this source yet, and the data in real terms presently begin only in 1995.]

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GDP &amp; Selected Components</th>
Seasonally&nbsp; Adjusted &nbsp;Quarterly % Chg
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Q4-2003</td>
<td>Q3-2003 </td>
<td>Q2-2003</td>
<td>2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">GDP&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>2.7</td>
<td>1.6</td>
<td>-0.1</td>
<td>3.9</td>
<td>7.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Year/Year</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>3.1</td>
<td>7.0</td>
<td>3.8</td>
</tr>
<tr>
<td class="firstcol">Private Consumption</td>
<td>-0.5</td>
<td>0.3</td>
<td>-0.8</td>
<td>-2.2</td>
<td>5.5</td>
<td>7.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Fixed Investment</td>
<td>3.2</td>
<td>-0.7</td>
<td>0.0</td>
<td>3.6</td>
<td>9.1</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>2.6</td>
<td>1.7</td>
<td>0.7</td>
<td>7.4</td>
<td>8.4</td>
<td>10.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Machinery &amp; Equipment</td>
<td>4.3</td>
<td>-4.9</td>
<td>-1.0</td>
<td>-2.4</td>
<td>9.6</td>
<td>-1.3</td>
</tr>
<tr>
<td class="firstcol">Net Exports (Bil.won)</td>
<td>SKW14.1</td>
<td>SKW9.3</td>
<td>SKW7.3</td>
<td>SKW37.3</td>
<td>SKW19.4</td>
<td>SKW21.1</td>
</tr>
</tbody>
</table>
</body>
</html>

The South Korean economy ended 2003 on a firm note as GDP grew 2.7% (seasonally adjusted) in the fourth quarter, that is, 11.3% annualized. It stood 3.9% above the fourth quarter of 2002 and for the year as a whole, GDP was 3.1% above [...]

Q4 Pick-Up in Investment Helps South Korean Economy

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

US consumers much more optimistic than those in the Euro area and the UK

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

There are still 1.4 job openings for every unemployed person in the US

US PCE inflation over the past six months has slowed to the Fed's 2% target

FOMC think rate hikes are done and looks for 75bps of decline in 2024

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

Blue Chip forecasters think Fed will be tighter for longer

Systemic stress on rise in Europe, less so in US

Recent increase in longer-term US market interest rates not due to inflation

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

Andrew Cates

**Global growth momentum**
Global economic activity has shown some signs of improvement over the past three months according to the latest raft of flash PMI surveys. Comparing the latest composite PMI for April with its level from January reveals that most major economies are registering both positive growth (i.e. a PMI above 50) and a quickening pace of growth compared with three months ago (i.e. an April PMI that is higher than where it stood in January). The notable exception to this is the United States, where the pace of expansion that is being signaled by these surveys has slowed. Compared with the major advanced economies, India also stands out as registering a relatively rapid pace of economic growth as well (see chart 1).

240424Z1.jpg

**Copper prices**
Copper is closely monitored as a key commodity due to its extensive use in the industrial sector and its growing importance, in particular, in renewable energy and electric vehicle production. That copper prices have risen strongly over the past few months will therefore likely be viewed as a positive signal about the underlying health of the world economy (see chart 2). To be sure, supply disruptions have also contributed to the rise in prices in recent weeks, but it is surely no coincidence that other key barometers of growth (e.g. PMI surveys) have been signaling an improving global economic environment at the same time.

240424Z2.jpg

**Semiconductor trade**
Copper is a component used in producing semiconductors, particularly in the manufacture of integrated circuits. And that’s surely a key reason why the recent relative buoyancy of South Korea’s semiconductor exports, evidenced in chart 3 below, also aligns with the messages from charts 1 and 2 above. Haver’s calculations specifically suggest that South Korea’s semiconductor exports climbed by around 43% y/y in the first 20 working days of April on a seasonally adjusted and working day adjusted basis. That’s down a little from around 47%y/y in March but nonetheless still a punchy growth rate compared with longer-term trends.

240424Z3.jpg

**Monetary policy transmission**
Calibrating monetary policy in recent years has been particularly challenging thanks to significant supply-side shocks to the global economy and considerable uncertainty regarding the demand-side implications. Whether or not monetary policy settings are now sufficiently restrictive in the world’s major economies is now being actively debated not least given recent indications that inflationary pressures have been building again. One point of contention is the seemingly blunt impact of monetary policy in both exacerbating, and then mitigating, inflation. This effect can be indirectly observed across advanced economies through the apparent breakdown of the Phillips curve relationship, which traditionally links unemployment and inflation. Over the past 20 years, as shown in Chart 4 below, this relationship typically yielded a negative correlation, in line with textbook theory. However, the post-COVID period has witnessed a significant divergence from this, a substantial disinflationary process has unfolded even as labor markets have remained very tight over the past two years.

240424Z4.jpg

**US fiscal policy support**
An analysis of financial balances can be insightful in understanding these dynamics. Chart 5 below illustrates those balances for the three sectors that constitute the US economy: the private sector, the government sector, and the foreign sector. Each sector's financial balance is determined by subtracting its total expenditure from its income. A financial surplus means the sector is accumulating financial assets, whereas a deficit indicates it is depleting assets (or increasing its borrowing) to fund its activity. Because these three sectors encompass all US economic activity, both domestic and international, their combined financial balances must equal zero.

A key point to note with respect to the US is the dramatic deterioration in the government’s financial balance in the post-COVID phase, initially prompted by private sector retrenchment (which subsequently reversed). Subsequently, however, COVID relief packages – which allowed the private sector to accumulate big saving reservoirs - coupled with large infrastructure investment programmes, have still left the government sector with an historically large deficit (amounting to 9.3% of GDP in Q3 2023). Against that backdrop, and partly thanks to that hefty fiscal policy support, the private sector has, on the whole, accumulated financial surpluses. These were depleted in the post-COVID recovery phase – which allowed the economy to maintain strong momentum - but were still sizeable, at around 4% of GDP, in Q3 2023. It is equally notable, however, that this private sector surplus has been climbing over the past 18 months. That could signal that monetary policy is restrictive not least as it has been accompanied by a smaller deficit on the foreign sector’s account as well.

240424Z5.jpg

**Euro area financial balances**
An analysis of euro area financial balances is not as dramatic. The regional oscillations in each sector’s financial position have, in particular, not been as large as in the US (see chart 6). The government sector’s deficit position, for example, at 2.7% of GDP in Q3 2023, is little-changed compared with its pre-COVID level (of 3.1% of GDP) in Q1 2020. The private sector surplus, in the meantime, notwithstanding some initial post-COVID shocks, stood at 5.8% of GDP in Q4 2023, which compares with 2.5% in Q1 2020. This implies that the euro area economy as a whole has been in balance largely thanks to an offsetting increase in the foreign sector’s deficit, or putting that another way, in a higher current account surplus. The bottom line is that, at least on a regional basis, fiscal policy has been much less accommodative, and through a much higher private sector surplus, monetary policy is placing a big brake on the region’s economies as well.

240424Z6.jpg

Following a week in which the risks to the global economic outlook suddenly skewed to the downside, the pendulum has swung back again over the past few days. Confidence in a soft landing for the world economy has instead now re-surfaced partly thanks to firmer-than-expected global economic data, together with some solid corporate earnings reports from the United States. Additionally - and at the root of last week’s concerns - geopolitical tensions between Israel and Iran have eased, further bolstering investors' risk appetite. In our charts this week we delve into key insights from April's flash purchasing managers' (PMI) surveys (see chart 1). We also examine the recent rise in copper prices—often a reliable indicator of global economic activity—and now echoing the messages from those PMI surveys (chart 2). An additional echo (and indeed reason for) both improving global growth momentum and higher copper prices can also be found in the impressive growth in South Korea’s exports of semiconductors (see chart 3). Next, we explore monetary policy issues, particularly how traditional Phillips curve models have struggled to accurately predict the relationship between inflation and unemployment in recent years (chart 4). We conclude with an analysis of financial balances in the US and euro area, which offers some reasons for those struggles (charts 5 and 6).

Charts of the Week: Flash Dance

240424V4.jpg

240424W4.jpg

New orders for durable goods increased 2.6% (1.3% y/y) during March after rising 0.7% in February, revised from 1.4%. The Action Economics Forecast Survey called for a 3.0% rise.

The March gain in new orders reflected a 23.7% rise in aircraft orders after they increased 13.9% in February. Transportation sector orders overall increased 7.7% (1.9% y/y) after rising 1.8% in February as motor vehicle orders gained 2.1% (2.9% y/y, about as they did in February.

Most other durable goods categories posted minimal orders changes last month. Machinery orders rose 0.1% (1.0% y/y), after increasing 1.5% in February. Orders for primary metals slipped 0.5% (-1.6% y/y) and orders for fabricated metals products rose 0.2% (2.7% y/y). Orders for computers & electronic equipment improved 0.8% (1.8% y/y) while orders for electrical equipment edged 0.1% higher (-0.3% y/y) following a 2.8% February decline.

These industry changes in orders accompanied a 6.0% rise (1.4% y/y) in capital goods orders after a 0.3% February gain. Nondefense capital goods orders rose 5.4% (2.7% y/y) while nondefense capital goods excluding aircraft rose 0.2% (1.1% y/y) in March after a modest increase of 0.4% in February. Defense capital goods orders surged 10.6% (-6.2% y/y) following a 13.9% decline in February.

Shipments of all manufactured goods rose 0.4% (1.6% y/y) in March after increasing 1.5% in February. Shipments of durable goods held steady (+1.0% y/y) in March after rising 1.2% in February. Nondurable goods shipments improved 0.7% in March (2.3% y/y) after increasing 1.8% in February.

Unfilled orders of durable goods rose 0.4% (9.1% y/y) after easing 0.1% in February. Excluding transportation, unfilled orders edged down 0.1% (-1.0% y/y) in March as they did in February. They’ve been edging lower since late-2022.

Manufacturers’ inventories increased 0.1% (0.6% y/y) in March after gaining 0.2% in the prior month. Durable goods inventories held steady (+2.2% y/y) following a 0.2% February increase. Nondurable goods inventories rose 0.2% (-1.7%) in March after a 0.3% February increase.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

240424X4.jpg

240424Y4.jpg

- Aircraft orders continue to fuel order levels.
- Excluding transportation, orders remain little changed.
- Durable goods shipments & inventories hold steady; backlogs rise.

U.S. Durable Goods Orders Rise Moderately in March as Expected

240424A5.jpg

240424B5.jpg

Mortgage applications fell 2.7% (-9.3% y/y) in the week ended April 19 after a 3.3% rise in the prior week. Home purchase loans declined 1.0% (-14.7% y/y) following a 5.0% rise in the prior week. Applications to refinance a loan declined 5.6% (+3.3% y/y) after improving 0.5% one week earlier. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
	
The effective interest rate on a 30-year fixed-rate loan rose to 7.43% last week after rising to 7.32% in the prior week. It compared to a high of 8.12% in mid-October of last year and a low of 6.87% in the fourth week of December. The rate on 15-year fixed-rate mortgages rose to 6.91% in the latest week from 6.80% the prior week. The rate on 30-year Jumbo loans increased to 7.62% last week from 7.54% in the week prior, while the rate on the 5-year ARM rose to 6.96% from 6.74%. These rates remain below the 7.31% high in the last week of October but above the recent low of 5.93% in the last week of December.

The share of applications for refinancing an existing loan declined to 30.8% in the week ended April 19 from 32.1% in the prior week. That compared to a high of 39.7% in mid-December. The percentage of applications that were ARMs rose to 7.60% from 7.3%. The recent low of 5.4% was reached in early-January.

The average loan size fell 1.1% (-0.7% y/y) to $381,900 in the week ended April 19 from $386,200 in the prior week. The average size of a purchase loan declined 2.2% (+1.5% y/y) to $437,900 in the latest week from $447,900 in the prior week. The average loan size to refinance a mortgage edged up 0.2% (-0.4% y/y) to $255,800 last week from $255,300 in the prior week.

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

- Last week’s decline in applications reverses prior week’s gain.
- Purchase applications & refinancing applications both fall.
- Interest rates continue to rise.

U.S. Mortgage Applications Decline as Interest Rates Increase

Robert Brusca

240424E.jpg

**The April IFO improves but is a mash-up-** The IFO survey in April exhibits broad-based improvement in climate, current conditions, and expectations. However, among the three categories, the least-broad improvement is in current conditions module. Current conditions show a monthly worsening for manufacturing, construction, and wholesaling. But the all-sector reading is boosted to a value of_+2.6 in April from +0.6 in March on the back of improved conditions in retail and a strong month-to-month gain in services conditions. Manufacturing still slips by five points month-to-month as wholesaling slips by 3-points, and construction drops by about a point more in April than in March. But retailing improves month-to-month by five points and services improve by nearly six points, driving the overall all-sector current-index higher. The current situation is still clearly in flux with so much weakening and improving going on at the same time in different sectors and industries.

**Changes are one thing; the level of assessment is another-** We are speaking here (so far) only of changes since the absolute levels of these readings remains weak or no better than middling across the board. The all-sector queue rankings in April find climate at a 23.2 percentile standing, the current index at a 15.9 percentile standing, and a 15.1 percentile standing for expectations. The standing data leave no doubt about the continuing impacted state of the German economy. The monthly gains are still good news. But this news is still not enough to buoy spirits or enough output to make a significant mark in the outlook. Moreover, the bifurcated nature of the current readings, with some improving sharply and some still back-tracking sharply, leaves a quizzical ‘buzz’ in the air.

**The current survey-** In the current survey, construction (54.1 percentile) and retailing (66th percentile) are the only current queue standings above 50, a level that marks each entries’ historic median. Manufacturing, wholesaling, and services all still reside in the lower one fifth or one fourth of their historic queue of data- weaker-than- ‘this’ only one fourth or one fifth of the time.

**The climate and expectations surveys-** All the climate readings are below their 50th percentiles with retailing’s 46.9 percentile standing, the closest to breaking through to an above-median reading. But the all-sector climate standings are otherwise bottom quartile readings or worse. Despite gains (and broad gains!) this month, expectations are marked by an all-sector standing in its 15.9 percentile. Ominously, the services category that shows such a jump in its current reading makes the smallest possible one-tick improvement in expectations for April. That is not a resounding endorsement of the month’s jump as a future trend.

240424.jpg

**Summing up**
Despite the clear improvements in the IFO across sectors and its temporal and functional assessment gains, the improvement this month is little more than a tempest in a teapot. It is not an indication of ‘something brewing’ that seems ready to spring out into a continued improving or accelerating trend. If you go to the beer-garden on this report, it will be to soothe your nerves rather than to drink to economic success. Instead, it is a ‘good month’ with still a lot of flaws present and lingering problems. We can cheer the IFO reading in April, but it is too early to celebrate it.

Germany

IFO Improves in Most Gears, But the Speed-limit Remains Very Low

240423A8.jpg

240423B8.jpg

New single-family home sales strengthened 8.8% (8.3% y/y) to 693,000 (SAAR) after falling 5.1% to 637,000 in February, revised from 662,000, according to the U.S. Census Bureau. The March reading was the highest in six months, up from the November low of 609,000. The Action Economics Forecast Survey expected sales of 670,000 new homes. Sales remained 32.7% below their peak of 1.029 million in August 2020.

By region, new home sales in the Northeast rebounded 27.8% in March (-13.2% y/y) to 46,000 after falling 25.0% in February. Sales in the Midwest rose 5.3% (23.4% y/y) to 79,000 after falling 10.7% in February. Sales in the South rose 7.7% (4.5% y/y) to 391,000 after falling 1.9% in February. New home sales in the West improved 8.6% (18.8% y/y) to 177,000 after weakening 3.6% in February.
		
The median sales price of a new home increased 6.0% (-1.9% y/y) to $430,700 in March following a 3.5% February decline. The median sales price remained 13.3% below its October 2022 peak of $496,800. The average sales price of a new home improved 7.4% (1.0% y/y) to $524,800 in March, the highest price since August of 2023. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market rose 2.6% (10.2% y/y) to 477,000 in March, the eighth consecutive rise. It was the highest level since February 2008. The latest figure was well above a low of 281,000 in October 2020. The seasonally adjusted months' supply of new homes for sale eased to 8.3 months in March. The months' supply remained down from a high of 10.1 months in July 2022.

The median number of months a new home stayed on the market edged up to 2.8 months in March, the highest since May 2023 and increased from 2.7 months in March of last year. The reading remained up from the record low of 1.5 months in both September and October of 2022 but down from a high of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

240423C8.jpg

240423D8.jpg

- Sales rise to highest level in six months.
- Regional sales gain is broad-based.
- Median sales price increases sharply.

Economy in Brief: March 2004

Jump to:

Canada GDP Slowed in January

Mortgage Applications Eased As Rates Ticked Up

Chain Store Sales Flop

Home Prices Surged in 4Q03

Home Prices Surged in 4Q03

U.S. Personal Spending Growth Slowed

Volume Gains & Cost Cutting Lift Q4 Corporate Profits

Q4 Pick-Up in Investment Helps South Korean Economy