Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230b.jpg" width="353">
On this last business day of 2005, the French statistics compilers, the National Institute for Statistics and Economic Studies (INSEE) reported unemployment data for November. The rate fell to 9.6% from 9.7% in October, the fifth decrease in the last six months. This ought to be good news and is especially impressive as it indicates that unemployment at least did not suffer immediately from the widespread riots that took place in the nation in late October and early November. 
At the same time, among the major world events of this past year, perhaps these riots were the most directly connected to economic conditions. As we have described here before -- in fact, on September 30, less than a month before the riots began -- unemployment is especially severe for French youth and their relative job market status has worsened. The first two rows of the table below show this easily. The overall unemployment rate is now at the lowest since March 2003, but the rate for would-be workers under age 25 is 22.8%, 2.6 percentage points higher its March 2003 value of 20.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230c.jpg" width="353"> 
Part of the problem is that jobs are not increasing in France. A quick look at our table and the second graph shows that employment has been basically stagnant since the middle of 2001; over these last several years, the ratio of youth unemployment to the overall rate has climbed steeply, suggesting that older workers are holding jobs better than young people. 
We wondered about the economic impact of the riots themselves, but much French data for these months is not yet available. Business and consumer surveys, however, hint at a differential influence. INSEE&#39;s household confidence survey &quot;confidence indicator&quot; dropped 3 points to -33 in November, its worst since November 1996, nine years ago. People seem most concerned about their finances, and actually less worried about unemployment, so this deterioration could result from energy prices more than social unrest. Even so, the response is pronounced. December data are due for release Thursday, January 5. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230d.jpg" width="353">
Business confidence has held up recently, though. The &quot;Business Climate Indicator&quot; is not at a high level, but it rose noticeably throughout the second half of 2005. French stock prices have also increased, including a rise this month to the highest monthly close since early 2001. Thus, business leaders and investors feel differently than consumers have about the present state of the French economy, and as shown in the chart of confidence indicators, such divergences are rare. The nation seems to face an uncertain course as 2006 begins.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">France: Selected Data</th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>&nbsp;</td>
<td>9.6</td>
<td>9.7</td>
<td>9.8</td>
<td>10.0</td>
<td>9.8</td>
<td>9.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Under 25 Yrs</td>
<td>&nbsp;</td>
<td>22.8</td>
<td>22.9</td>
<td>23.0</td>
<td>22.4</td>
<td>20.7</td>
<td>19.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (000s)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>15,444</td>
<td>15,404</td>
<td>15,403</td>
<td>15,466</td>
</tr>
<tr>
<td class="firstcol">Household Confidence Survey</td>
<td>&nbsp;</td>
<td>-33</td>
<td>-30</td>
<td>-29</td>
<td>-22</td>
<td>-27</td>
<td>-16</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Condition Past 12 Months</td>
<td>&nbsp;</td>
<td>-26</td>
<td>-25</td>
<td>-22</td>
<td>-16</td>
<td>-15</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">Business Climate</td>
<td>102</td>
<td>103</td>
<td>102</td>
<td>100</td>
<td>105</td>
<td>95</td>
<td>97</td>
</tr>
<tr class="odd">
<td class="firstcol">Stock Price CAC 40, EOP</td>
<td>4716.62</td>
<td>4567.41</td>
<td>4436.45</td>
<td>4600.02</td>
<td>3821.16</td>
<td>3557.90</td>
<td>3063.91</td>
</tr>
</tbody>
</table>
</body>
</html>

On this last business day of 2005, the French statistics compilers, the National Institute for Statistics and Economic Studies (INSEE) reported unemployment data for November. The rate fell to 9.6% from 9.7% in October, the fifth [...]

French Unemployment Decreases in November, Even in the Midst of Social Unrest

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer held at 61.5 in December versus an unrevised 61.7 in November. Consensus expectations had been for an easing to 60. For the year, the reading of 60.6 was slightly below the 2004 level and consistent with the moderate slowdown in factory sector production to 3.5% growth through November and 4.8% during all of 2004.
During the last ten years there has been a 63% correlation between the level of the Chicago Business Barometer and y/y growth in factory production.
The new orders index surged at yearend and recovered about half the prior month&#39;s steep decline. The production index dipped slightly, offset by a modest gain in employment. During the last ten years there has been a 62% correlation between the level of the employment index and year to year growth in factory sector employment nationally.
Pricing power eased in December but just moderately from the near-record high in November. During the last ten years there has been a 79% correlation between the prices index and the y/y change in the core PPI for intermediate goods.

<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">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;04</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>61.5</td>
<td>61.7</td>
<td>61.9</td>
<td>60.6</td>
<td>62.9</td>
<td>54.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>66.7</td>
<td>61.6</td>
<td>64.9</td>
<td>64.7</td>
<td>67.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>83.8</td>
<td>94.1</td>
<td>84.4</td>
<td>71.1</td>
<td>80.1</td>
<td>55.8</td>
</tr>
</tbody>
</table>
</body>
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The Chicago Purchasing Managers Business Barometer held at 61.5 in December versus an unrevised 61.7 in November. Consensus expectations had been for an easing to 60. For the year, the reading of 60.6 was slightly below the 2004 level [...]

Chicago PMI Steady

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer held at 61.5 in December versus an unrevised 61.7 in November. Consensus expectations had been for an easing to 60. For the year, the reading of 60.6 was slightly below the 2004 level and consistent with the moderate slowdown in factory sector production to 3.5% growth through November and 4.8% during all of 2004.
During the last ten years there has been a 63% correlation between the level of the Chicago Business Barometer and y/y growth in factory production.
The new orders index surged at yearend and recovered about half the prior month&#39;s steep decline. The production index dipped slightly, offset by a modest gain in employment. During the last ten years there has been a 62% correlation between the level of the employment index and year to year growth in factory sector employment nationally.
Pricing power eased in December but just moderately from the near-record high in November. During the last ten years there has been a 79% correlation between the prices index and the y/y change in the core PPI for intermediate goods.

<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">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;04</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>61.5</td>
<td>61.7</td>
<td>61.9</td>
<td>60.6</td>
<td>62.9</td>
<td>54.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>66.7</td>
<td>61.6</td>
<td>64.9</td>
<td>64.7</td>
<td>67.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>83.8</td>
<td>94.1</td>
<td>84.4</td>
<td>71.1</td>
<td>80.1</td>
<td>55.8</td>
</tr>
</tbody>
</table>
French Unemployment Decreases in November, Even in the Midst of Social Unrest 
by <a href="/comment/Stone.html">Carol Stone</a> December 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230b.jpg" width="353">
On this last business day of 2005, the French statistics compilers, the National Institute for Statistics and Economic Studies (INSEE) reported unemployment data for November. The rate fell to 9.6% from 9.7% in October, the fifth decrease in the last six months. This ought to be good news and is especially impressive as it indicates that unemployment at least did not suffer immediately from the widespread riots that took place in the nation in late October and early November. 
At the same time, among the major world events of this past year, perhaps these riots were the most directly connected to economic conditions. As we have described here before -- in fact, on September 30, less than a month before the riots began -- unemployment is especially severe for French youth and their relative job market status has worsened. The first two rows of the table below show this easily. The overall unemployment rate is now at the lowest since March 2003, but the rate for would-be workers under age 25 is 22.8%, 2.6 percentage points higher its March 2003 value of 20.2%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230c.jpg" width="353"> 
Part of the problem is that jobs are not increasing in France. A quick look at our table and the second graph shows that employment has been basically stagnant since the middle of 2001; over these last several years, the ratio of youth unemployment to the overall rate has climbed steeply, suggesting that older workers are holding jobs better than young people. 
We wondered about the economic impact of the riots themselves, but much French data for these months is not yet available. Business and consumer surveys, however, hint at a differential influence. INSEE&#39;s household confidence survey &quot;confidence indicator&quot; dropped 3 points to -33 in November, its worst since November 1996, nine years ago. People seem most concerned about their finances, and actually less worried about unemployment, so this deterioration could result from energy prices more than social unrest. Even so, the response is pronounced. December data are due for release Thursday, January 5. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051230d.jpg" width="353">
Business confidence has held up recently, though. The &quot;Business Climate Indicator&quot; is not at a high level, but it rose noticeably throughout the second half of 2005. French stock prices have also increased, including a rise this month to the highest monthly close since early 2001. Thus, business leaders and investors feel differently than consumers have about the present state of the French economy, and as shown in the chart of confidence indicators, such divergences are rare. The nation seems to face an uncertain course as 2006 begins.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">France: Selected Data</th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>&nbsp;</td>
<td>9.6</td>
<td>9.7</td>
<td>9.8</td>
<td>10.0</td>
<td>9.8</td>
<td>9.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Under 25 Yrs</td>
<td>&nbsp;</td>
<td>22.8</td>
<td>22.9</td>
<td>23.0</td>
<td>22.4</td>
<td>20.7</td>
<td>19.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (000s)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>15,444</td>
<td>15,404</td>
<td>15,403</td>
<td>15,466</td>
</tr>
<tr>
<td class="firstcol">Household Confidence Survey</td>
<td>&nbsp;</td>
<td>-33</td>
<td>-30</td>
<td>-29</td>
<td>-22</td>
<td>-27</td>
<td>-16</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Condition Past 12 Months</td>
<td>&nbsp;</td>
<td>-26</td>
<td>-25</td>
<td>-22</td>
<td>-16</td>
<td>-15</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">Business Climate</td>
<td>102</td>
<td>103</td>
<td>102</td>
<td>100</td>
<td>105</td>
<td>95</td>
<td>97</td>
</tr>
<tr class="odd">
<td class="firstcol">Stock Price CAC 40, EOP</td>
<td>4716.62</td>
<td>4567.41</td>
<td>4436.45</td>
<td>4600.02</td>
<td>3821.16</td>
<td>3557.90</td>
<td>3063.91</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229d.jpg" width="353">
The active sectors of the Chilean economy seem to have moderated a bit in the last couple of months, but are still keeping up favorable comparisons with a year ago. Total employment decreased 34,000 in November and 30,000 in October, but stands 1.7% ahead of November 2004, the same as the growth for 2004 as a whole. These data are reported as 3-month moving averages and seasonally adjusted by Haver Analytics. Within the National Statistics Bureau industry breakdown is a public service-type category &quot;communal, social and personal services&quot;. If we subtract this group from the total, the remainder might be seen as a proxy for the overall private sector; it shows somewhat more slowing, with decreases for the last three months and only a 0.7% gain over the last year. The unemployment rate ticked higher in November, rising to 7.8% from 7.6% in October. However, this latter was the lowest figure since late 1998, as the world financial crisis was pushing it steeply higher, and it is down from a peak of 10.4% in late 1999.
One often thinks of mining when considering the Chilean economy, but mining and quarrying represents only 1.3% of its employment. Even so, this modest workforce generates about 7.3% of Chile&#39;s GDP. Otherwise, the mix of employment has, as in many other western countries, shifted over the last few years toward service industries, with growth in finance and transportation and communication, as well as the aforementioned &quot;communal, social and personal services&quot;. Agriculture, while diminishing in recent years, still holds a sizable share of total jobs, about one in eight.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229e.jpg" width="353">
At the outset, we noted that these data refer to the &quot;active&quot; sectors of the Chilean economy; that distinction is notable, because there is a substantial &quot;inactive&quot; sector. Labor force participation is only about 53% of the population over age 15 and the employment/population ratio was just under 49% last month. These figures contrast with the US, where the labor force is 66% and employment 62.7% of the relevant population age range. Perhaps this is an unfair comparison and we should assess economic participation with Chile&#39;s neighbors: in Argentina, the urban population had a 45% participation rate in Q3 and a 40% employment rate and in Brazil, 56.8% and 51.3% for the relevant population segments. While the Brazilian numbers look favorable compared with Chile&#39;s, they refer to a sampling of metropolitan area populations which represent only about 22% of Brazil&#39;s total population of about 176,000,000. So from a broader perspective, Chile&#39;s population can be seen as the most economically active of these three major Latin American nations.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Chile: 3-mo Moving Avg*</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Nov 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>5.815</td>
<td>5.849</td>
<td>5.879</td>
<td>5.178</td>
<td>5.632</td>
<td>5.537</td>
<td>5.381</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change (000)</td>
<td>-34</td>
<td>-30</td>
<td>+11</td>
<td>1.7%</td>
<td>1.7%</td>
<td>2.9%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&quot;Private&quot; Sector**</td>
<td>4.151</td>
<td>4.173</td>
<td>4.205</td>
<td>4.121</td>
<td>4.069</td>
<td>4.024</td>
<td>3.903</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change (000)</td>
<td>-23</td>
<td>-32</td>
<td>-3</td>
<td>0.7%</td>
<td>1.1%</td>
<td>3.1%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>7.8</td>
<td>7.6</td>
<td>7.7</td>
<td>8.8</td>
<td>8.8</td>
<td>8.5</td>
<td>8.9</td>
</tr>
</tbody>
</table>
</body>
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The active sectors of the Chilean economy seem to have moderated a bit in the last couple of months, but are still keeping up favorable comparisons with a year ago. Total employment decreased 34,000 in November and 30,000 in October, [...]

Chilean Employment Down in November, but Yearly Growth Trend Maintained

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229b.jpg" width="353">
Total existing home sales fell for the second consecutive month, according to the National Association of Realtors The 1.7% decline to 6.970M (AR) in November followed an unrevised 2.7% October drop that left sales 5.2% below the record level set in June. Consensus expectations for sales last month had been for less of a decline to 7.00M. 
Sales of single-family homes fell another 1.9% on top of the 2.5% October fall to 6.110M. The latest level was down 4.4% from the June peak. Though sales of condos &amp; co-ops were flat m/m, they are off 10.4% from the peak in June.
The data cover sales closed in the latest and previous months, and contrast to the new home sales data which count sales at the signing of a contract. 
Single family home sales fell hardest m/m in the West where a 4.0% drop left sales 8.9% below the June peak. In the Northeast sales fell 1.2% after the 8.0% drop in October and in the South sales dipped just 0.4%.In the Midwest single family sales fell 2.8% (0.0% y/y), off 7.4% from the August peak.
The median price of an existing single-family home fell 1.5% m/m to $213,500 (+13.5% y/y). Prices are not seasonally adjusted.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.
The Baby Boom: Predictability in House Prices and Interest Rates from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/ifdp/2005/847/default.htm"> 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/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>6,970</td>
<td>7,090</td>
<td>-0.1%</td>
<td>6,723</td>
<td>6,170</td>
<td>5,653</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>6,110</td>
<td>6,230</td>
<td>-0.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price ($,000) </td>
<td>$213.5 </td>
<td>$21 6.7 </td>
<td>13.5% </td>
<td>$182.8 </td>
<td>$169.1 </td>
<td>$157.6 </td>
</tr>
</tbody>
</table>


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Total existing home sales fell for the second consecutive month, according to the National Association of Realtors The 1.7% decline to 6.970M (AR) in November followed an unrevised 2.7% October drop that left sales 5.2% below the [...]

U.S. Existing Home Sales Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229c.jpg" width="353">
The Conference Board&#39;s November Index of Help-Wanted Advertising rose to 39 from an unrevised level of 38 in October. A pattern of improvement in the labor market has emerged this year as the index&#39;s level has averaged 39 versus 38 for all of 2004.
During the last ten years there has been a 62% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume ran counter to that improvement and fell in November to 47% from 65% in October which was near the year&#39;s high.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>38</td>
<td>36</td>
</tr>
</tbody>
</table>
</body>
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The Conference Board's November Index of Help-Wanted Advertising rose to 39 from an unrevised level of 38 in October. A pattern of improvement in the labor market has emerged this year as the index's level has averaged 39 versus 38 [...]

Help-Wanted Advertising Improved

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229a.jpg" width="353">
Initial claims for unemployment insurance fell 3,000 to 322,000 last week following a little revised 12,000 decline the prior week. Consensus expectations had been for 325,000 claims.
During the last ten year there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims was little changed at 325,000 (-1.7% y/y).
Continuing unemployment insurance claims increased a sharp 85,000 following a 36,000 rise the prior week which was little different than initially reported.
The insured rate of unemployment remained at 2.1%.
International Capital Flows and U.S. Interest Rates from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/pubs/ifdp/2005/840/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/24/05</th>
<th scope="col">12/17/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>322</td>
<td>319</td>
<td>-0.6%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,715</td>
<td>-1.2%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance fell 3,000 to 322,000 last week following a little revised 12,000 decline the prior week. Consensus expectations had been for 325,000 claims. During the last ten year there has been a [...]

Initial Claims for Jobless Insurance Inched Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229a.jpg" width="353">
Initial claims for unemployment insurance fell 3,000 to 322,000 last week following a little revised 12,000 decline the prior week. Consensus expectations had been for 325,000 claims.
During the last ten year there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims was little changed at 325,000 (-1.7% y/y).
Continuing unemployment insurance claims increased a sharp 85,000 following a 36,000 rise the prior week which was little different than initially reported.
The insured rate of unemployment remained at 2.1%.
International Capital Flows and U.S. Interest Rates from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/pubs/ifdp/2005/840/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/24/05</th>
<th scope="col">12/17/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>322</td>
<td>319</td>
<td>-0.6%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,715</td>
<td>-1.2%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 29, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229c.jpg" width="353">
The Conference Board&#39;s November Index of Help-Wanted Advertising rose to 39 from an unrevised level of 38 in October. A pattern of improvement in the labor market has emerged this year as the index&#39;s level has averaged 39 versus 38 for all of 2004.
During the last ten years there has been a 62% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume ran counter to that improvement and fell in November to 47% from 65% in October which was near the year&#39;s high.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>38</td>
<td>36</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 29, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229b.jpg" width="353">
Total existing home sales fell for the second consecutive month, according to the National Association of Realtors. The 1.7% decline to 6.970M (AR) in November followed an unrevised 2.7% October drop that left sales 5.2% below the record level set in June. Consensus expectations for sales last month had been for less of a decline to 7.00M. 
Sales of single-family homes fell another 1.9% on top of the 2.5% October fall to 6.110M. The latest level was down 4.4% from the June peak. Though sales of condos &amp; co-ops were flat m/m, they are off 10.4% from the peak in June.
The data cover sales closed in the latest and previous months, and contrast to the new home sales data which count sales at the signing of a contract. 
Single family home sales fell hardest m/m in the West where a 4.0% drop left sales 8.9% below the June peak. In the Northeast sales fell 1.2% after the 8.0% drop in October and in the South sales dipped just 0.4%.In the Midwest single family sales fell 2.8% (0.0% y/y), off 7.4% from the August peak.
The median price of an existing single-family home fell 1.5% m/m to $213,500 (+13.5% y/y). Prices are not seasonally adjusted.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.
The Baby Boom: Predictability in House Prices and Interest Rates from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/ifdp/2005/847/default.htm"> 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/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>6,970</td>
<td>7,090</td>
<td>-0.1%</td>
<td>6,723</td>
<td>6,170</td>
<td>5,653</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>6,110</td>
<td>6,230</td>
<td>-0.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price ($,000) </td>
<td>$213.5 </td>
<td>$21 6.7 </td>
<td>13.5% </td>
<td>$182.8 </td>
<td>$169.1 </td>
<td>$157.6 </td>
</tr>
</tbody>
</table>
Chilean Employment Down in November, but Yearly Growth Trend Maintained 
by <a href="/comment/Stone.html">Carol Stone</a> December 29, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229d.jpg" width="353">
The active sectors of the Chilean economy seem to have moderated a bit in the last couple of months, but are still keeping up favorable comparisons with a year ago. Total employment decreased 34,000 in November and 30,000 in October, but stands 1.7% ahead of November 2004, the same as the growth for 2004 as a whole. These data are reported as 3-month moving averages and seasonally adjusted by Haver Analytics. Within the National Statistics Bureau industry breakdown is a public service-type category &quot;communal, social and personal services&quot;. If we subtract this group from the total, the remainder might be seen as a proxy for the overall private sector; it shows somewhat more slowing, with decreases for the last three months and only a 0.7% gain over the last year. The unemployment rate ticked higher in November, rising to 7.8% from 7.6% in October. However, this latter was the lowest figure since late 1998, as the world financial crisis was pushing it steeply higher, and it is down from a peak of 10.4% in late 1999.
One often thinks of mining when considering the Chilean economy, but mining and quarrying represents only 1.3% of its employment. Even so, this modest workforce generates about 7.3% of Chile&#39;s GDP. Otherwise, the mix of employment has, as in many other western countries, shifted over the last few years toward service industries, with growth in finance and transportation and communication, as well as the aforementioned &quot;communal, social and personal services&quot;. Agriculture, while diminishing in recent years, still holds a sizable share of total jobs, about one in eight.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051229e.jpg" width="353">
At the outset, we noted that these data refer to the &quot;active&quot; sectors of the Chilean economy; that distinction is notable, because there is a substantial &quot;inactive&quot; sector. Labor force participation is only about 53% of the population over age 15 and the employment/population ratio was just under 49% last month. These figures contrast with the US, where the labor force is 66% and employment 62.7% of the relevant population age range. Perhaps this is an unfair comparison and we should assess economic participation with Chile&#39;s neighbors: in Argentina, the urban population had a 45% participation rate in Q3 and a 40% employment rate and in Brazil, 56.8% and 51.3% for the relevant population segments. While the Brazilian numbers look favorable compared with Chile&#39;s, they refer to a sampling of metropolitan area populations which represent only about 22% of Brazil&#39;s total population of about 176,000,000. So from a broader perspective, Chile&#39;s population can be seen as the most economically active of these three major Latin American nations.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Chile: 3-mo Moving Avg*</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Nov 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment</td>
<td>5.815</td>
<td>5.849</td>
<td>5.879</td>
<td>5.178</td>
<td>5.632</td>
<td>5.537</td>
<td>5.381</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change (000)</td>
<td>-34</td>
<td>-30</td>
<td>+11</td>
<td>1.7%</td>
<td>1.7%</td>
<td>2.9%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&quot;Private&quot; Sector**</td>
<td>4.151</td>
<td>4.173</td>
<td>4.205</td>
<td>4.121</td>
<td>4.069</td>
<td>4.024</td>
<td>3.903</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change (000)</td>
<td>-23</td>
<td>-32</td>
<td>-3</td>
<td>0.7%</td>
<td>1.1%</td>
<td>3.1%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>7.8</td>
<td>7.6</td>
<td>7.7</td>
<td>8.8</td>
<td>8.8</td>
<td>8.5</td>
<td>8.9</td>
</tr>
</tbody>
</table>


</html>

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

Flash PMIs show good start to Q3 in US; loss of momentum in the euro area

Chinese economy on downtrend could threaten global economy

Working age population labor force participation near all-time high as retirements increase

Blue Chip forecasters look for widespread policy rate cuts just ahead

Flash June PMIs point to a widespread slowdown apart from the US

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The Consumer Price Index increased 0.3% during November, up from four consecutive months of 0.2% gain. Expectations had been for a 0.2% rise in the Action Economics Forecast Survey. The y/y increase picked up to 2.7% from 2.6% in October and was the quickest rise in four months. The three-month increase rose to 3.0% (AR) from 2.5% but remained below the 4.6% high in April of this year. Prices excluding food & energy rose an expected 0.3% for the fourth consecutive month. Core consumer prices increased 3.7% (AR) during the last three months, up from 1.6% in July, and 3.3% y/y. Food prices rose 0.4% last month (2.4% y/y) after a 0.2% gain while energy prices rose 0.2% (-3.2% y/y) after holding steady in October.

The CPI less food, energy and shelter, another measure of core pricing power, rose 0.3% after a 0.2% gain. The 2.2% y/y rise was increased from a July low of 1.7% but remained below the 7.6% y/y peak in February 2022. It compared to a low of 0.3% y/y in May 2020.

Services costs less energy rose a steady 0.3% in November (4.6% y/y). Shelter costs rose 0.3% following a 0.4% rise in October. Its 4.7% y/y rise compares to an 8.2% peak in March 2023. Owners’ equivalent rent of primary residences increased 0.2% (4.9% y/y), following a 0.4% rise and was the weakest increase since April 2021. Rents of primary residences rose a similarly depressed 0.2% (4.4% y/y) after two consecutive months of 0.3% rise, but the cost of lodging away from home surged 3.2% (3.7% y/y) following a 0.4% October gain. Transportation service prices held steady last month (+7.1% y/y) after rising 0.4% in October, as public transportation prices also were unchanged (2.9% y/y) after a 2.4% October surge. Medical care service costs rose 0.4% (3.7% y/y) the same as in October. Education & communication prices eased 0.2% (+1.8% y/y) for the second straight month. Recreation services prices rose 0.7% (3.5% y/y), the same as in October.

During November, the CPI for goods less food & energy increased 0.3% (-0.6% y/y) after holding steady in October. Home furnishings prices rose 0.7% (-1.0% y/y), as appliance costs also rose 0.7% (-1.0% y/y).  Apparel costs rose 0.2% (1.1% y/y) after a 1.5% decline. Education & communication product costs fell 1.1% (-5.4% y/y) the same as in October while medical care product prices declined 0.1% (NSA, +0.4% y/y) in November. Prices for recreation products weakened 0.5% (-1.5% y/y), the fourth decline in five months. Transportation product prices rose 0.9% (-1.4% y/y) after improving 0.8%. New vehicle prices rose 0.6% (-0.7% y/y) after holding steady while used car & truck prices strengthened 2.0% (-3.4% y/y) after a 2.7% rise.

Food prices rose 0.4% (2.4% y/y) in November following a 0.2% October increase. Egg prices rebounded 8.2% (37.5% y/y) after a 6.4% decline. Meat, poultry & fish prices rebounded 1.1% (1.5% y/y) after falling 0.8% while cereal & bakery product prices weakened 1.1% (-0.5% y/y) after a 1.0% rise. Fruit & vegetable prices rose 0.2% (1.1	% y/y) after increasing 0.4%, while dairy prices eased 0.1% (+1.2% y/y) after rising 1.0% in October. Nonalcoholic beverage prices rose 1.5% (2.8% y/y) after a 0.4% October rise.

Energy prices rose 0.2% (-3.2% y/y) in November after holding steady in October. Gasoline prices rose 0.6	% (-8.1% y/y) after three straight monthly declines. Amongst other energy products, fuel oil & propane prices rose 0.4% (-10.7% y/y) after declining 2.2%. Electricity prices eased 0.4% (3.1% y/y) after a 1.2% gain, while natural gas prices jumped 1.0% (1.8% y/y) following a 0.3% October gain.

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

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- Food prices pick up.
- Services price gains remain steady.
- Core goods prices pick up.

U.S. CPI Picks Up Modestly in November; Core Prices Rise Steadily

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The U.S. Treasury Department reported a U.S. government budget deficit of $624.2 billion budget deficit for the first two months of FY 2025 after a $380.6 billion deficit for the first two months of FY’24. For November alone, the government ran a budget deficit of $366.8 billion, which compared to a deficit of $314.0 billion twelve months earlier. The Action Economics Forecast Survey expected a $356.5 billion deficit in November.

Overall revenues this fiscal year so far declined 7.3% y/y as individual income tax receipts fell 11.6% y/y. The level of corporate tax receipts nearly halved y/y. Social insurance revenues increased 7.4% y/y and excise taxes increased 34.0% y/y in FY’25. Customs duties rose 6.1% y/y in the first two months of FY’15.

Federal government outlays increased 18.3% y/y in early FY’25 after a 16.7% rise early in FY’24. Defense spending rose 13.7% y/y, as it did early in FY’24. Social Security outlays rose 6.9% y/y after rising 12.0% y/y in FY’24. Interest payments rose 8.0% y/y in FY’25 after a 63.7% rise a year earlier. Health program spending rose 12.0% y/y after holding steady early in FY’24 while Medicare payments doubled y/y. Income security outlays rose 31.8% y/y compared to a 15.1% y/y decline in the first two months of FY’24.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.


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- Personal income tax receipts weaken.
- Corporate tax payments roughly halve y/y.
- Social Security spending fuels outlay growth.

U.S. Government Budget Deficit Deepens So Far in FY 2025

Kathleen Stephansen, CBE

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Mortgage applications in the week ended December 6 increased 5.4% (15.9% y/y) after rising 2.8% (18.1% y/y) in the week ended November 29. Applications for loans to purchase a house dropped 4.1% (+3.5% y/y) in the December 6 week, after a rise of 5.6% (11.8% y/y) in the November 29 week, while applications to refinance a loan surged 27.2% (42.2% y/y) in the latest week after declining 0.6% (+33.5% y/y) the week before. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey and the amounts quoted here are seasonally adjusted.

The effective interest rate on a 30-year fixed rate loan was 6.86% in the week ended December 6, down slightly from 6.89% in the November 29 week. The rate on a 5-year ARM dropped 50bps to 5.96% in the latest week from 6.46% in the November 29 week, still higher than 5.84% in mid-September. The rate on a 30-year jumbo loan was 6.94% in the week ended December 6, down slightly from 6.96% in the November 29 week, but slightly higher than 6.90% in mid-October.

The share of applications to refinance an existing mortgage was 46.8% in the December 6 week, sharply higher than the 38.7% share in the November 29 week. The largest share in recent months was 55.7% the week of September 20. The share of applications for ARMs was 5.3% in the latest week, down from 6.0% in the November 29 week. The last time the share was 5.3% was in the week ended February 25, 2022.

The average loan size in the December 6 week was $368,200, down 2.5% from $377,600 in the November 29 week, and up 3.6% from a year ago. The average size of an application for a loan to purchase a house was $416,200 in December 6 week, down from $431,900 in the week before, while the average size of an application to refinance an existing loan increased to $313,600 in the latest week from $291,500 in the November 29 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.

- Applications to purchase a house drop, while applications to refinance surge.
- Slight decrease in rates on 30-year fixed-rate loans.
- Average loan size decreases modestly.

U.S. Mortgage Applications Rise in the December 6 Week

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U.S. nonfarm business productivity (output per hour) increased an unrevised 2.2% (SAAR) during Q3’24 after a 2.1% rise in Q2 and a 0.7% Q1 gain. The figure matched expectations in the Action Economics Survey. The 2.0% y/y increase remained below its 2.7% gain in 2023 (Q4/Q4) but was improved from a 1.4% decline in 2022. It also was greatly improved versus the 1.2% average between 2009 and 2019. Nonfarm business output increased 3.5% (2.8% y/y) after a 3.0% gain, revised from 3.5%, while hours-worked rose 1.2% (0.7% y/y) after increasing 0.9%.

Compensation growth slowed to 3.1% (4.3% y/y), revised from 4.2%, after a slightly revised 4.8% gain. As a result, unit labor costs grew 0.8% (2.2% y/y) last quarter, revised from 1.9% after a 1.1% decline, revised from a 2.4% increase. The Action Economics survey expected unit labor costs to rise 1.6% last quarter.

In the manufacturing sector, productivity in Q3 improved 0.9% (0.6% (y/y), revised from 1.0%, after rising a minimally changed 0.2% in Q2 and falling 0.7% in Q1. Compensation grew 2.6% (2.4% y/y), revised from 6.4%, following a 5.6% decline in Q2, revised from a 6.2% rise. Unit labor costs rose 1.7% (1.8% y/y), revised from 5.3%, after a 5.8% fall, revised from a 5.8% increase.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Annual increase remains below last year’s gain.
- Compensation growth dips.
- Increase in unit labor costs slows.

U.S. Productivity Growth Is Steady & Unrevised in Q3’24

Winnie Tapasanun

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The NFIB Small Business Optimism Index rose to 101.7 in November, the seventh m/m rise in eight months and the highest level since June 2021, following a 2.2-point increase to 93.7 in October, according to the November 2024 Small Business Economic Trends survey conducted by the National Federation of Independent Business. This was the first time in 35 months that the index was above the 50-year average of 98. The index was also up from its recent low of 88.5 in March 2024, 90.6 in November 2023, and a low of 89.0 in April 2023; nevertheless, having remained below a high of 102.5 in June 2021. Nine of the 10 index components rose, none fell, and one was unchanged. The NFIB Small Business Uncertainty Index fell to 98 in November, the lowest level since August, from a record-high 110 in October; however, it was well above its recent low of 65 in November 2023 and a low of 55 in June 2022.

The outlook for business conditions in the next six months turned positive in the latest survey. The net balance of respondents expecting the economy to improve jumped to 36% in November, the sixth m/m rise in seven months and the highest level since June 2020, after a seven-point increase to -5% in October; it was significantly above a record low of -61% in June 2022. Expected real sales gained to a net 14% in November following a five-point rise to -4% in October, posting the highest level since February 2020. The latest reading was up from a low of -21% in May 2023 and a low of -29% in July 2022. A net -13% of respondents reported higher nominal sales in the past three months, up from -20% reported in October and registering the highest reading since June. The latest reading, however, was down from the most recent positive reading of 1% in May 2022 and a peak of 9% in June 2021.

Plans to make capital outlays rose to 28% in November from 22% in October, up from a low of 19% in September and a low of 19% in April 2023. The November number posted the highest reading since January 2022; nevertheless, having remained below a high of 31% in October 2021. Plans to expand the business advanced to 14% in November following a two-point increase to 6% in October; the latest figure, up from a low of 2% in March 2023, registered the best reading since a high of 15% in June 2021. Meanwhile, expected credit conditions edged up to -5% in November after a two-point increase to -6% in October; the latest number was slightly above its recent high of -6% in February 2024 but below a high of -4% in May 2022 and a high of -3% in November 2021.

On the labor front, labor markets remained relatively tight. Forty-eight percent of respondents reported that qualified workers to fill job openings were hard to find in November, up from 46% in October. These numbers were below a high of 57% in September 2023, a high of 61% in May 2022, and a peak of 62% in September 2021. A net 18% planned to increase employment in November, up from 15% in October and 15% in September, but it was down from a high of 26% in May 2022 and a peak of 32% in August 2021. Notably, 36% reported positions not able to be filled in November, up from 35% in October and registering the highest since August. These figures remained below a high of 51% in May 2022.

Overall earnings trends continued to improve in November while having remained in negative territory since December 2019. The figure increased to -26% in November, still a poor reading, following a one-point uptick to -33% in October; these numbers were below a high of -18% in March 2023.

On the pricing front, inflation pressures, while trending down, remained at an inflationary level. The net percent raising their average selling prices rose to 24% in November after a one-point decline to 21% in October; these numbers, however, were slightly down from 25% in November 2023 and well below a high of 66% in March 2022. The percentage planning to raise prices rose to 28% in November following a one-point increase to 26% in October; these figures were below 34% in November 2023 and a high of 52% in March 2022.

Wage inflation was still relatively high in the November survey. A net 32% of respondents raised compensation during the last three months, slightly up from 31% reported in the October survey. However, it was down from a high of 46% in February 2023 and a peak of 50% in January 2022. A net 28% of firms planned to raise worker compensation in the next three months, up from 23% reported in October and registering the highest reading since December 2023; nevertheless, having remained below a high of 30% in November 2023 and a high of 32% in October 2022.

Inflation continued to be an issue facing small businesses, as reported by 20% of NFIB members in November as the single most important problem. Registering the lowest reading since January 2024, the November figure was down from 23% in October and a peak of 37% in July 2022. The quality of labor was the second important concern with 19% in November, slightly down from 20% in October. Other concerns (in November vs. October) included taxes (14% vs. 16%), the cost of labor (11% vs 8%), and government requirements (8% vs. 8%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- November NFIB Small Business Optimism Index up 8.0 pts. to 101.7.
- Uncertainty Index down 12 pts. to a three-month-low 98.
- Expectations for economy up 41 pts. to 36%, the highest since June ’20.
- Expected real sales up 18 pts. to 14%, the highest since February ’20.
- Inflation (20%) remains top business problem, followed by Quality of Labor (19%); both slightly down from October.

Economy in Brief: 2005

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