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/051130c.jpg" width="353">
Eurostat made its first full report of Q3 GDP today. Total growth was 0.6%, the same as estimated a couple of weeks ago in the &quot;flash&quot; report for both Euro-zone12 and the EU25 . This new figures represent the routine addition of more countries, specifically Denmark and Poland. But in this report, Eurostat made important methodological changes as well, most notably shifting to chain weighting to calculate the volume measures of GDP and its components. They also changed the treatment of &quot;FISIM&quot;, the imputed value of &quot;financial services indirectly measured&quot;.
As to the performance, seen in the table below, growth picked up somewhat to 0.6% in Q3 from 0.4% in Q2. Final consumption grew 0.4%, slightly more than the 0.3% in the prior period; both public and private consumption participated. Exports were the other source of advance, surging by 3.4% after 2.2% in Q2. This put yearly expansion of exports at 5.2% from Q3 2004, largely keeping up the strong 5.9% pace set for last year as a whole. Imports gained a little more in the latest quarter. Overall capital formation looks weak, but importantly, the slowdown here is due to much smaller inventory accumulation; fixed investment advanced considerably, 1.6%, after 0.8% in Q2. This is the strongest investment gain since early 2000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130d.jpg" width="353">
Regarding the methodology, the change to FISIM involves allocating it to the specific industry sectors where it applies and removing it as an explicit adjustment between gross value added and gross domestic product. The net numerical result appears as an upward revision to nominal GDP, according to Eurostat, of about 1.0% in the Euro-zone and about 0.6% for the EU25.
Chain-linking is by now fairly well-known, and actually had remarkably little impact on total reported Euro-zone growth. History runs back only to 1995; perhaps the effect would have been greater in earlier years. Eurostat&#39;s press release shows changes in total growth of only 0.1%, up or down, in some quarters, but not in all and without trend. It&#39;s important to note that not all Euro-zone countries yet produce chain-weighted accounts. Italy and Belgium are two countries where no chaining is done; France&#39;s quarterly data is also not yet chained. So data for these three countries in particular remain in fixed-weight terms in the relevant Haver databases (ITALY, BENELUX and FRANCE, as well as EUROSTAT and G10).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U2/@U2.HTM">EuroZone12 GDP:</a> Chained 2000 Euros</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q3 2004 (yr/yr)</th>
Yearly Totals
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>0.6</td>
<td>0.4</td>
<td>1.6</td>
<td>1.8</td>
<td>0.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Consumption</td>
<td>0.4</td>
<td>0.3</td>
<td>1.5</td>
<td>1.3</td>
<td>1.2</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">Gross Capital Formation</td>
<td>0.2</td>
<td>1.2</td>
<td>1.6</td>
<td>3.5</td>
<td>1.7</td>
<td>-2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>3.4</td>
<td>2.2</td>
<td>5.2</td>
<td>5.9</td>
<td>1.3</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">-Imports</td>
<td>2.8</td>
<td>2.6</td>
<td>5.2</td>
<td>6.1</td>
<td>3.1</td>
<td>0.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Eurostat made its first full report of Q3 GDP today. Total growth was 0.6%, the same as estimated a couple of weeks ago in the "flash" report for both Euro-zone12 and the EU25 . This new figures represent the routine addition of more [...]

Euro-zone Growth Picks Up to 0.6% in Q3; Chain-Linking Introduced to Eurostat Aggregates

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer was 61.7 for November, down slightly from October&#39;s 62.7, but firmer than forecasts of about 60.0. This was the third straight reading above 60, a favorable performance after about six months of saw tooth behavior.
The new orders index, however, kept up the seesaw pattern, as it fell back 11.0 points to 61.6 after October&#39;s 9.2-point increase; the October advance, notably, was corroborated in yesterday&#39;s report of a 3.4% surge in the value of national durable goods orders in October. The Chicago production index eased 4.5 points, partially reversing its October gain. Employment fell by a point to 50.3, indicating a marginal expansion of factory jobs in the Chicago region. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130b.jpg" width="353">
While the components describing real manufacturing activity portray a fairly optimistic picture, the index of prices paid may cause some worry. It rose once again, reaching 94.1, the highest since August 1979, when inflation in general was pretty rapid. This comparison, however, calls our attention to an important distinction in the Chicago and other Purchasing Manager surveys: these surveys count the number of firms reporting moves in a specific direction, not the magnitude of the move. Thus, many firms paid higher prices and fewer firms paid lower prices, but we have no idea how much those prices changed. Also note that the run-up in the overall index in fact resulted partially from a reduction in the number of firms paying lower prices, from 6% to 3%; as recently as August, this deflationary factor was 11% and 16% in May. The number of firms paying higher prices represents 67% of the total, a high figure, but not so dramatic as in earlier inflation periods and not even as high as several readings last year in the mid-70s.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">&nbsp;Oct &#39;04</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">Business Barometer</td>
<td>61.7</td>
<td>62.9</td>
<td>67.7</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>61.6</td>
<td>72.6</td>
<td>79.7</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>94.1</td>
<td>79.6</td>
<td>84.7</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
</body>
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The Chicago Purchasing Managers Business Barometer was 61.7 for November, down slightly from October's 62.7, but firmer than forecasts of about 60.0. This was the third straight reading above 60, a favorable performance after about [...]

Chicago Purchasing Managers' "Business Barometer" Holds Up; Prices Accelerate to 26-Year High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer was 61.7 for November, down slightly from October&#39;s 62.7, but firmer than forecasts of about 60.0. This was the third straight reading above 60, a favorable performance after about six months of saw tooth behavior.
The new orders index, however, kept up the seesaw pattern, as it fell back 11.0 points to 61.6 after October&#39;s 9.2-point increase; the October advance, notably, was corroborated in yesterday&#39;s report of a 3.4% surge in the value of national durable goods orders in October. The Chicago production index eased 4.5 points, partially reversing its October gain. Employment fell by a point to 50.3, indicating a marginal expansion of factory jobs in the Chicago region. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130b.jpg" width="353">
While the components describing real manufacturing activity portray a fairly optimistic picture, the index of prices paid may cause some worry. It rose once again, reaching 94.1, the highest since August 1979, when inflation in general was pretty rapid. This comparison, however, calls our attention to an important distinction in the Chicago and other Purchasing Manager surveys: these surveys count the number of firms reporting moves in a specific direction, not the magnitude of the move. Thus, many firms paid higher prices and fewer firms paid lower prices, but we have no idea how much those prices changed. Also note that the run-up in the overall index in fact resulted partially from a reduction in the number of firms paying lower prices, from 6% to 3%; as recently as August, this deflationary factor was 11% and 16% in May. The number of firms paying higher prices represents 67% of the total, a high figure, but not so dramatic as in earlier inflation periods and not even as high as several readings last year in the mid-70s.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">&nbsp;Oct &#39;04</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">Business Barometer</td>
<td>61.7</td>
<td>62.9</td>
<td>67.7</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>61.6</td>
<td>72.6</td>
<td>79.7</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>94.1</td>
<td>79.6</td>
<td>84.7</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
Euro-zone Growth Picks Up to 0.6% in Q3; Chain-Linking Introduced to Eurostat Aggregates 
by <a href="/comment/Stone.html">Carol Stone</a> November 30, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130c.jpg" width="353">
Eurostat made its first full report of Q3 GDP today. Total growth was 0.6%, the same as estimated a couple of weeks ago in the &quot;flash&quot; report for both Euro-zone12 and the EU25 . This new figures represent the routine addition of more countries, specifically Denmark and Poland. But in this report, Eurostat made important methodological changes as well, most notably shifting to chain weighting to calculate the volume measures of GDP and its components. They also changed the treatment of &quot;FISIM&quot;, the imputed value of &quot;financial services indirectly measured&quot;.
As to the performance, seen in the table below, growth picked up somewhat to 0.6% in Q3 from 0.4% in Q2. Final consumption grew 0.4%, slightly more than the 0.3% in the prior period; both public and private consumption participated. Exports were the other source of advance, surging by 3.4% after 2.2% in Q2. This put yearly expansion of exports at 5.2% from Q3 2004, largely keeping up the strong 5.9% pace set for last year as a whole. Imports gained a little more in the latest quarter. Overall capital formation looks weak, but importantly, the slowdown here is due to much smaller inventory accumulation; fixed investment advanced considerably, 1.6%, after 0.8% in Q2. This is the strongest investment gain since early 2000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051130d.jpg" width="353">
Regarding the methodology, the change to FISIM involves allocating it to the specific industry sectors where it applies and removing it as an explicit adjustment between gross value added and gross domestic product. The net numerical result appears as an upward revision to nominal GDP, according to Eurostat, of about 1.0% in the Euro-zone and about 0.6% for the EU25.
Chain-linking is by now fairly well-known, and actually had remarkably little impact on total reported Euro-zone growth. History runs back only to 1995; perhaps the effect would have been greater in earlier years. Eurostat&#39;s press release shows changes in total growth of only 0.1%, up or down, in some quarters, but not in all and without trend. It&#39;s important to note that not all Euro-zone countries yet produce chain-weighted accounts. Italy and Belgium are two countries where no chaining is done; France&#39;s quarterly data is also not yet chained. So data for these three countries in particular remain in fixed-weight terms in the relevant Haver databases (ITALY, BENELUX and FRANCE, as well as EUROSTAT and G10).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U2/@U2.HTM">EuroZone12 GDP:</a> Chained 2000 Euros</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q3 2004 (yr/yr)</th>
Yearly Totals
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>0.6</td>
<td>0.4</td>
<td>1.6</td>
<td>1.8</td>
<td>0.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Consumption</td>
<td>0.4</td>
<td>0.3</td>
<td>1.5</td>
<td>1.3</td>
<td>1.2</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">Gross Capital Formation</td>
<td>0.2</td>
<td>1.2</td>
<td>1.6</td>
<td>3.5</td>
<td>1.7</td>
<td>-2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>3.4</td>
<td>2.2</td>
<td>5.2</td>
<td>5.9</td>
<td>1.3</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">-Imports</td>
<td>2.8</td>
<td>2.6</td>
<td>5.2</td>
<td>6.1</td>
<td>3.1</td>
<td>0.4</td>
</tr>
</tbody>
</table>
</body>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051129g.jpg" width="353">
November is probably the busiest month for the release of economic growth estimates for the third quarter in individual countries. Today Gross Domestic Product data for Hungary, Denmark and the Philippines were released. Denmark&#39;s GDP was 4.70% above the third quarter of 2005, compared with 4.46% for Hungary and 4.09% for the Philippines. In terms of developed versus developing countries we have Denmark and Hungary in Europe. In terms of the location of developing countries we have Hungary in Eastern Europe and the Philippines in Asia.
First take a look at the year-to-year growth in the developed country, Denmark, and the developing country, Hungary--both in Europe--as shown in the first chart. Over the past five years until the third quarter of this year, Hungary has grown at a significantly higher rate than that of Denmark. In the third quarter, however, Denmark&#39;s growth rate was 4.70% compared with Hungary&#39;s, 4.46%. Not only has Denmark&#39;s growth rate exceeded that of Hungary in the third quarter, but since the second quarter of 2004, growth in Denmark, a non Euro Zone country, has been greater than that of the Euro Zone as a whole. The quarter-to-quarter growth rates so far this year show some weakness in Hungary in contrast to relatively steady advances in Denmark.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051129f.jpg" width="353">
Now, contrast the year-to-year growth rates of the two developing countries in the second chart. The higher growth rate of the Philippines until this last quarter probably reflects the dynamism of the Pacific Rim economies versus the more subdued recoveries of the emerging countries of Eastern Europe. In the third quarter of this year, however, Hungary&#39;s economic grew 1% while that of the Philippines was virtually unchanged. 

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Growth in Gross Domestic Product</th>
<th scope="col">Q3 05&nbsp; %</th>
<th scope="col">Q2 05 % </th>
<th scope="col">Q1 05 %</th>
<th scope="col">2004 %</th>
<th scope="col">2003 %</th>
<th scope="col">2002 %&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;Year-to Year&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Denmark</td>
<td>4.70</td>
<td>3.06</td>
<td>2.13</td>
<td>2.07</td>
<td>0.6</td>
<td>0.46</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Hungary</td>
<td>4.46</td>
<td>4.15</td>
<td>2.88</td>
<td>4.23</td>
<td>2.94</td>
<td>3.50</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Philippines</td>
<td>4.09</td>
<td>5.15</td>
<td>4.49</td>
<td>6.02</td>
<td>4.51</td>
<td>4.45</td>
</tr>
<tr class="odd">
<td class="firstcol">Quarter-to-Quarter</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Denmark</td>
<td>1.39</td>
<td>1.60</td>
<td>0.54</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Hungary</td>
<td>0.97</td>
<td>2.08</td>
<td>-0.08</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Philippines</td>
<td>-0.02</td>
<td>2.20</td>
<td>1.27</td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</body>
</html>

November is probably the busiest month for the release of economic growth estimates for the third quarter in individual countries. Today Gross Domestic Product data for Hungary, Denmark and the Philippines were released. Denmark's GDP [...]

Denmark's Third Quarter GDP Growth Rate Tops That of Hungary and the Philippines

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051129e.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that during Thanksgiving week, chain store sales slipped 0.7% following the prior period&#39;s 1.0% jump. The latest left the average level of sales in November 1.2% above October which rose 0.1% from September.
During the last ten years there has been a 51% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC slipped 0.3% (-2.0% y/y) during the latest week following two consecutive weeks of increases.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. 
The latest decline in store sales occurred despite a further drop in gasoline prices. The retail average price of gasoline in the U.S. fell a nickel last week to $2.15 (+10.7% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/26/05</th>
<th scope="col">11/19/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>454.8</td>
<td>458.0</td>
<td>5.1%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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The International Council of Shopping Centers (ICSC)-UBS survey indicated that during Thanksgiving week, chain store sales slipped 0.7% following the prior period's 1.0% jump. The latest left the average level of sales in November [...]

Chain Store Sales Backpedaled, Gas Prices Down Again

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The Conference Board reported that it&#39;s November index of Consumer Confidence recovered to the highest level since August. The 16.1% m/m jump contrasted to Consensus expectations for a lesser gain to 90.0 and it was the strongest m/m increase since early 2003. The gain exceeded the 10.0% m/m rebound in Consumer sentiment reported last week by the University of Michigan.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
The index of consumers&#39; expectations ballooned 26.7% m/m (-1.6% y/y) as optimism rose that during the next six months business conditions would get better, more jobs would be created and that incomes would rise.
Consumers&#39; assessment of the present situation also improved and recovered some of the prior two months&#39; decline (+18.4% y/y). Though an increased percentage of respondents indicated business conditions were good, jobs were viewed as hard to get by a lesser 23.2% of survey participants.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

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<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>
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</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>98.9</td>
<td>85.2</td>
<td>6.8%</td>
<td>96.1</td>
<td>79.8</td>
<td>96.6</td>
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The Conference Board reported that it's November index of Consumer Confidence recovered to the highest level since August. The 16.1% m/m jump contrasted to Consensus expectations for a lesser gain to 90.0 and it was the strongest m/m [...]

Consumer Confidence Recovered

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New single-family home sales rose a surprising 13.0% last month to a record 1.424M, adding to upwardly revised levels in September and August. The m/m advance was the strongest since 1993 and the October level by far exceeded Consensus expectations for a decline to 1.20M.
Home sales often strengthen as buyers attempt to beat further increases in interest rates.
Sales were notably strong in the Northeast where a 43.3% (-16.5% y/y) rise recouped nearly all of the prior two months&#39; declines while sales out West recovered all of the prior two months&#39; weakness with a 46.9% (8.8% y/y) jump. Sales in the South rose a lesser 1.9% (27.5% y/y) but that followed gains during the prior two months. In the Midwest, sales reversed much the gain in September with a 9.5% decline that was the fourth decline in five months and left sales down 17.4% versus the May peak.
The median price of a new single family home rose 1.6% m/m (0.9% y/y) after a 2.4% decline in September that was shallower than originally estimated.
The figures from the Census Department reflect home sales counted at the time of sales contract or deposit.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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<td class="firstcol">New Single-Family</td>
<td>1,424</td>
<td>1,260</td>
<td>9.0%</td>
<td>1,200</td>
<td>1,091</td>
<td>976</td>
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New single-family home sales rose a surprising 13.0% last month to a record 1.424M, adding to upwardly revised levels in September and August. The m/m advance was the strongest since 1993 and the October level by far exceeded [...]

New Home Sales; There's Life Yet

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Orders for nondefense aircraft soared 50.4% m/m (100.6% y/y) in October. That combined with a more than doubling (111.1% y/y) of defense aircraft bookings, caused total durable goods orders to jump 3.4% last month and therefore recovered all of the little revised 2.0% decline in September. Consensus expectations had been for a 1.5% rise in October orders.
Less the volatile transportation sector altogether, durable goods orders rose 0.3% after a 0.2% slip in September which was shallower than the decline initially reported.
Orders for nondefense capital goods recovered about two thirds of the prior month&#39;s drop with a 6.7% spike. Less aircraft these orders rose 1.3% following a 1.7% September decline that was deeper than initially estimated. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051129a.jpg" width="353">
Falling orders for computers &amp; electronic products have been a drag on the capital goods total of late. They fell 1.3% (+5.7% y/y) in October for the third hard decline in the last four months. Computer orders fell 1.7% m/m though the y/y gain of 11.0% was respectable due to a sharp 13.5% jump back in August. Orders for electrical equipment orders also have been erratic, but the trend is up. Despite a 3.5% decline in October (+12.3% y/y) the three month average level rose to its highest since early 2001. Machinery orders, in contrast, have been consistently strong. A 2.1% (8.5% y/y) rise in October pulled the three month average of machinery orders to a record high.
Shipments of durable goods rose 1.4% (6.9% y/y) in October due to broad based industry gains. Less the transportation sector, shipments rose 1.2% (7.5% y/y) with the standout being a 10.0% y/y gain in electrical equipment.
Order backlogs rose a strong 1.5% (12.0% y/y) driven partially by a 2.0% (14.4% y/y) rise in transportation. Less transportation backlogs still were firm for the third straight month, though the ratio of backlogs to shipments did slip slightly from its recent high.
Durable inventories increased 0.4% (4.6% y/y) following an upwardly revised 0.1% Rise in September. The I/S ratio for durable goods fell to its lowest since April of last year.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>3.4%</td>
<td>-2.0%</td>
<td>11.4%</td>
<td>9.5%</td>
<td>4.1%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>8.7%</td>
<td>11.7%</td>
<td>3.1%</td>
<td>-6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>6.7%</td>
<td>-8.6%</td>
<td>19.4%</td>
<td>11.0%</td>
<td>4.2%</td>
<td>-9.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>1.3%</td>
<td>-1.7%</td>
<td>10.7%</td>
<td>9.5%</td>
<td>4.8%</td>
<td>-10.5%</td>
</tr>
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Orders for nondefense aircraft soared 50.4% m/m (100.6% y/y) in October. That combined with a more than doubling (111.1% y/y) of defense aircraft bookings, caused total durable goods orders to jump 3.4% last month and therefore [...]

U.S. Durable Goods Rebound; Aircraft Orders Soared

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

Announcement of snap French election is causing concern across Europe

The UK economy’s post-pandemic under-performance relative to its pre-pandemic trend

US Beveridge Curve back to near pre-pandemic levels

Negative economic surprises in the US but positive in Europe, especially the UK

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

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241014A.jpg

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 3.2% (3.7% y/y) during the four weeks ended October 11, 2024, the same as it did four weeks earlier.

Prices in the Metals group led the rise and increased 8.0% (15.8% y/y) over the most recent four weeks. Zinc prices gained 13.4% (25.5% y/y) in four weeks and aluminum prices rose 10.2% (18.2% y/y). Copper scrap prices rose 7.1% in four weeks (21.5% y/y), while tin prices gained 6.7% (35.6% y/y) in four weeks. Also, lead prices firmed 5.8% in four weeks (-4.2% y/y) and steel scrap prices rose 5.9% (6.0% y/y) over four weeks.

Crude Oil & Benzene group prices increased 2.7% (-9.1% y/y) in the latest four weeks. The cost of West Texas Intermediate crude oil rose 10.6	% in four weeks to $74.85 per barrel, but was 11.2% lower y/y. The cost of the petro-chemical benzene, used for making plastics & synthetic fibers, fell 5.6% (-23.1% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 2.8% (4.6% y/y) in the latest four-week period.

Textile group prices rose 1.3% (-1.3% y/y) over the same four week period. Cotton prices rose 6.3% (-18.0% y/y) in four weeks. The cost of burlap posted a 2.6% rise (18.3% y/y) during the last four weeks.

Prices in the Miscellaneous group improved 0.9% during the last four weeks and were up 4.5% y/y. The cost of natural rubber rose 5.0% in four weeks and jumped 81.0% y/y. Plywood prices improved 3.2% over the last four weeks (5.1% y/y).

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

**Thoughts on the Economy and Policy Rules at the Federal Open Market Committee** by Fed Governor Christopher J. Waller can be found [here](https://www.federalreserve.gov/newsevents/speech/waller20241014a.htm).

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- Metals prices surge for second consecutive period.	
- Increasing crude oil costs push energy price index higher.
- Textile prices continue to increase.

FIBER: Industrial Commodity Prices Strengthen Broadly in Latest Four Weeks

Tian Yong Woon

In this week’s letter, we examine the reactions of China’s equity markets following the Golden Week holidays, highlighting investors' disappointment over the latest stimulus announcements (see Chart 1). Despite this, forecasters have slightly raised their growth expectations for China (Chart 2), although pessimism lingers regarding the economy's ability to meet its 5% growth target for the year. Turning to monetary policy developments across Asia, several easing cycles have now been initiated across the region. For instance, New Zealand has begun its easing cycle with a 50 bps rate cut, driven by cooling inflation and weak domestic growth (Chart 3). In India, while the central bank kept policy rates unchanged, it made a significant move by officially shifting its stance to neutral, indicating a closer alignment with an easing approach. This comes amid a robust growth outlook, although inflation risks remain (Chart 4). In South Korea, the central bank has also commenced easing with a 25 bps cut, acknowledging cooling inflation and slower household debt growth (Chart 5), while signalling potential for further reductions ahead. Looking to the week ahead, we anticipate more rate decisions across the region, with additional easing moves seen likely (Chart 6).

**Post-Golden Week China**
Chinese equity markets resumed trading last week after the Golden Week holidays, showing a marked repricing of market expectations (Chart 1). Initial optimism over central bank easing measures faced a reality check following government announcements. Specifically, China’s National Development and Reform Commission outlined initiatives for October, including 200 billion yuan ($28.3 billion) in advance budget spending. However, despite the significance of these measures, a larger-scale stimulus package that many had anticipated was not announced. After initial market disappointment, Financial Minister Lan held a press conference last Saturday, pledging to bolster China’s economy. However, some observers were still underwhelmed by the lack of specific numerical commitments. Looking ahead, China will release its Q3 GDP figures on Friday, which are keenly awaited as indicators of the economy's health. This will be accompanied by a range of monthly data, including industrial production, retail sales, fixed asset investment, house prices, and unemployment figures. However, insights from these figures on the impact of the recent easing measures are expected to be limited.

241014T1.jpg

Against the backdrop of recently unveiled easing measures, Blue Chip panellists have slightly raised their growth projections for 2024 to 4.8%, up from 4.7% in September (Chart 2). Expectations for growth in 2025 have also improved, now at 4.4%, compared to the previous forecast of 4.3%. Meanwhile, inflation expectations remain stable at 0.5% for 2024 and 1.4% for 2025. However, the economic situation in China remains uncertain, with recent data indicating an uneven recovery and the impact of newly announced policy easing initiatives yet to materialize. Amidst a concerning trend of disappointing economic data, doubts persist about the country’s ability to achieve its 5% growth target for the year.

241014T2.jpg

**The week in rate decisions**
The past week revealed some noteworthy rate decisions across the region. In New Zealand, the Reserve Bank (RBNZ) cut its policy rate by 50 bps as widely expected (Chart 3), following the Fed’s lead in September. This substantial easing decision comes as the RBNZ assessed inflation to be within its 1-3% target range and “converging” on the 2% midpoint. The backdrop of soft economic growth in New Zealand also justified the RBNZ’s action, as the economy struggles to avoid a technical recession following a contraction in real GDP in Q2. Furthermore, the RBNZ noted that the New Zealand economy “is now in a state of excess capacity,” which is expected to dampen inflation on the supply side. While consumer sentiment remains weak compared to historical levels, some recent upticks have been observed.

241014T3.jpg

Monetary policy developments in India were also notable, as the Reserve Bank of India (RBI) opted to maintain its policy rates last week, as expected. However, the central bank shifted its policy stance from one focusing on a withdrawal of accommodation to “neutral.” This change has led observers to speculate that it could signal potential interest rate cuts in the near term. However, there are currently few strong justifications for the RBI to begin a rate cut cycle soon. For one, India’s economic growth remains robust (Chart 4) and is expected to remain robust in the coming quarters. Additionally, while inflation has eased in recent months, the RBI cautions that it may rise significantly in the near future due to base effects and other factors.

241014T4.jpg

Last Friday, South Korea's central bank (BoK) initiated its easing cycle by cutting the Base Rate by 25 bps to 3.25%, as widely anticipated. The bank justified this decision by citing recent easing inflation trends (Chart 5), as well as slowing growth in household debt and reduced foreign exchange risks. Looking ahead, the BoK appears open to further easing, with Governor Rhee indicating that there is room for additional rate cuts since the policy rate remains above the neutral interest rate. Observers will likely continue to monitor three key factors—inflation, household debt, and financial market stability—as they assess South Korea's future monetary policy trajectory.

241014T5.jpg

**The week ahead in rate decisions**
The week ahead will see several important rate decisions in Southeast Asia. Central banks in Indonesia, Thailand, and the Philippines are scheduled to announce their policy rate decisions on Wednesday. In Indonesia, while multi-year lows for CPI inflation could support further rate cuts, recent currency fluctuations—particularly the weakness of the rupiah—may prompt the central bank to hesitate, as maintaining currency stability is part of its mandate. In Thailand, the central bank has not signaled an intention to cut rates following its October meeting, but it continues to face pressure from the government and business groups. Meanwhile, in the Philippines, the possibility of additional rate cuts remains open, aligning with the Fed's adjustments.

241014T6.jpg

Asia

Economic Letter From Asia: Reality Check

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The Producer Price Index for final demand was unchanged (1.8% y/y) during September after rising 0.2% in August and holding steady in July, according to the Bureau of Labor Statistics. The reading compared to expectations for a 0.1% rise in the Action Economics Forecast Survey. Producer prices excluding food, energy & trade services edged 0.1% higher (3.2% y/y) in September after rising 0.2% in August, revised from 0.3%. The PPI excluding food & energy rose an expected 0.2% (2.8% (y/y) after increasing an unrevised 0.3% in August.

Final demand goods prices excluding food & energy rose 0.2% (2.0% y/y) for the third straight month. Core finished consumer goods prices increased 0.2% (2.2% y/y) after rising 0.4%. The increase in core nondurable goods prices moderated to 0.3% in last month (3.0% y/y), half the August increase. Durable consumer goods prices improved 0.1% (1.1% y/y) after rising 0.2% in August. Capital equipment prices rose 0.2% in September (2.6% y/y), the same as in August, after four straight months of 0.1% increase. Government-purchased goods prices increased	 0.3% (2.1% y/y) following a 0.1% uptick.

Final demand services prices rose 0.2% (3.1% y/y) in September, after increasing 0.4% in August. Trade services prices rose 0.2% (1.5% y/y) after strengthening 0.7%. Trade of finished goods prices improved 0.3% (0.9% y/y) following a 0.7% increase. Prices for final demand transportation and warehousing services gained 0.3% last month (0.4% y/y) after a 0.9% decline. Services prices less these costs edged 0.1% higher in September (4.1% y/y) following a 0.4% August rise.

Food prices strengthened 1.0% (3.2% y/y) during September after moving up 0.2% in August. Fruit & melon prices rose 8.3% (4.6% y/y) following a 2.9% decline. Grain prices rose 4.8% (-18.4% y/y) and processed fruit & vegetable costs improved 0.6% (2.3% y/y). Beef & veal prices rose 1.5% (-0.1% y/y) after falling 7.6% in August. Fresh egg prices fell 6.2% (+121.3% y/y) following a 55.1% jump. Fresh vegetable costs declined by 2.5% (+7.7% y/y) and reversed the August increase.

Final demand energy prices declined 2.7% last month (-13.8% y/y) after falling 1.0% in August. Gasoline prices weakened 5.6% (-25.7% y/y) after a 0.5% rise in August. Home heating oil prices fell 11.1% (-35.1% y/y) following a 3.0% decline. Electric power prices rose 2.0% (2.5% y/y) in September after falling 1.2% in August. Natural gas prices rose 1.6% (1.3% y/y) and reversed a 1.4% August decline.

Construction costs edged 0.1% higher in September (1.3% y/y) after holding steady in August.

Prices for intermediate demand of processed goods eased 0.8% (-2.7% y/y) in September after slipping 0.2% in August. Processed energy goods prices fell 4.7% following a 0.9% fall, while food prices rose 0.9% after a 0.2% decline.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Core goods prices increase moderately for third straight month.
- Gain in services prices slows.
- Food prices surge while energy costs continue to decline.

U.S. Producer Price Index Holds Steady in September; Core Prices Edge Higher

Robert Brusca

241011E.jpg

Money growth has turned positive and the main money center areas show net money growth. Money growth is at 1.9% year-over-year in the European Monetary Union, up by 2% in the U.S., up by 1.8% in the U.K., and by 1.3% in Japan. Comparing the 12-month growth rate to the three- and six-month growth rates in all these countries, we see a progression with money growth becoming stronger. The exception to this observation is Japan, where the M2 plus CDs measure grows 1.3% over 12 months and then reduces its pace over three and six months to 0.3% and 0.4% annualized.

In the European Monetary Union, credit growth is consistently positive and accelerating.

The monetary financial side of the ledger is starting to look very positive from the standpoint of creating growth, however, to the extent that it does that it is also being much less of a factor in terms of restraining inflation.

**Real money balances**
Real money balances over 12 months are still declining in the EMU, in the U.S., in the U.K., and in Japan. However, the situation is in flux; over three months, real money balances are growing in the monetary union- and growing fairly strongly in the U.S.; it is advancing in the U.K. Over three months only Japan shows declines in real money balances.

**EMU credit growth**
The European Monetary Union shows real credit growth contracting over 12 months but at growth rates of 1% or less. These negative growth rates are diminishing over three months. Credit to residents and private credit growth are declining at growth rates less than one-half of 1% as real credit in the monetary union begins to head for inflation-adjusted positive growth.

**A tailwind for growth—at last?**
With these changes in the provision of liquidity and the impact on credit growth, nominal and real GDP growth are going to find more of a tailwind… and so will inflation… 


241011.jpg

**The inflation worm is turning**
The overview for some of the key economic variables in these countries is in the table below. It shows inflation above target and all these major money centers to a greater or lesser extent. The table provides the headline inflation figures, although in most cases core inflation looks much higher than these since oil prices have been weak and falling. The bottom panel of the inflation chart shows changes in the year-over-year inflation rates over six months. There you can see the tendency for inflation to decline is diminishing. Japan is already looking at inflation increasing on balance in each of the last three months when we compare current year-over-year growth and inflation to its result six months ago.

**Industry remains weak but that weakness may be transitioning**
Our statistics are such that we are inundated with data on the industrial side of the economy. The table presents data for industrial production growth year-over-year and on that we have a sea of red figures indicating declines across all these countries and areas for at least the last six months. However, the rate of decline in industrial production has been diminishing.

**Changes in activity broadly**
The second lower panel looks at changes in composite PMI levels year-over-year. There, the story changes significantly, with year-over-year gains reported in the composite activity surveys. The EMU, the U.K., and Japan show increases. The U.S. is the outlier with weaker PMI values compared to a year ago-and in each of the last three months. However, these indicators aren't always the final word. All these countries and areas are continuing to show GDP growth. In the U.S., a popular statistic for tracking GDP known as GDP-Now updated by the Atlanta Fed has been consistently looking for a third quarter growth in the U.S. to be between 2.5% and 3%. That's not too shabby despite the U.S. PMI signals.

241011 2.jpg

**Are the easing campaigns still in force?**
Meanwhile, central banks have been on easing campaigns but have backed off or slowed the progress of these campaigns as the progress on inflation has slowed as the table above suggests. In the U.S., at least, job growth has come back strongly after a period of some weakness and some downward revisions to past growth rates. In Europe, unemployment rates are still broadly low and for the EMU as a unit, the rate is at an all-time low. Right now, central bankers in the U.S. aren't quite sure what to do with the most recent strong U.S. job growth report and the recent inflation report that has shown more strength than what the Fed had been expecting. Globally the move to less inflation progress is clear in this table and the notion that progress may stay slow, or stop is embedded in the trends for money growth and credit growth in the monetary union.

**Is the inflation turn decisive; will central bank policy change soon?**
All of this raises questions about what happens next and whether this period of inflation deceleration has been brought to an end as money growth turns positive, accelerates, and as real money balances and real credit balances begin to advance. A simple tracking of the inflation data is enough to give inflation-fearing central banker pause. Policy needs are rarely clear cut with unanimous support. U.S. leadership in monetary policy could become more important going forward since the Federal Reserve has just embarked on an easing campaign and launched it with a large rate reduction and - not exactly promises - but with very strong hints of many more cuts to come soon. However, economic data seem to be painting a different picture of the future than the one the Fed expected. Could the Fed easing program start and finish at the same time? That is unlikely but the exuberant expectation for rate cuts will be trimmed. One thing to be aware of is the massive increase in expectations for 5-year ahead and the rise in the expectations for one-year ahead inflation in the U. of Michigan inflation survey. The median rate in that survey (that the Fed prefers) is steady at 3% but the survey mean has shot up over 7% for five-year ahead inflation in the wake of the large Fed rate cut- something I do not think the Fed can continue to ignore.

**A very muddled outlook**
It may be that some of the weaknesses that the Fed thought it saw in economic and job growth was created by hurricane Beryl that hit Houston, Texas. This is significant because the U.S. is currently being blasted by or is cleaning up after two hurricanes: Hurricane Helene and Hurricane Milton. Helene, swept through North Carolina and has done terrible damage and raised a significant death toll. Milton is currently sweeping through Florida; it ripped the roof off the football stadium in Tampa, Florida and it is creating havoc on its own. These hurricanes are going to affect economic data; they're going to affect jobless claims data (already have), job growth data, and they may affect wage and price data as well. This will leave the Federal Reserve with some quandary about what to do with policy. I think it's fair to say in this environment where the Fed has had a bias to cut rates, it gives the Fed a freer hand to ignore economic data that might be strong or on the other hand to embrace weak economic data that are weak even if the reports come out of the distortion of a hurricane. U.S. data may be stepping into a data Twilight Zone; be on guard!

Europe

World Money Growth Is Back on Track...Is Inflation Too?

Andrew Cates

**US growth surprises and Fed policy**
Expectations of upcoming Fed rate cuts have been scaled back markedly over the past two weeks. On September 27, for example, the fed funds futures market looked for US policy rates to fall to 4.275% by the end of this year (the current target is 4.875%). That is, it expected another 60bps of FFR cuts at the remaining two FOMC meetings this year. Now, this market is anticipating only 38 bps of rate cuts at these two meetings. That repricing has been triggered by a bout of stronger-than-expected US dataflow and last week’s employment report for September in particular (see chart 1 below).

241010Z1.jpg

**Supply chain pressures**
Global equity markets have, on the whole, tended to respond favourably to these positive US surprises largely because inflation has remained in check and most central banks are still on course to ease monetary policy in the coming months. There are several risks to this narrative, however, one of which concerns geopolitical tensions in the Middle East and their impact on global supply chains. An index calculated by the New York Fed suggests that global supply chain pressures have lately risen and are now above historical averages. As chart 3 below also suggests, that index has served as a useful leading indicator of upstream price pressures in recent years and certainly points to more elevated rates of producer price inflation in coming months, albeit from relatively depressed levels at present.

241010Z2.jpg

**The consensus for China’s economic outlook**
Against the backdrop of recently announced policy easing measures, the latest Blue Chip survey of economic forecasters reveals some heightened optimism about China’s economic outlook. That survey, for example, yielded a small increase to the consensus growth projection for 2024, to 4.8% in October, up from 4.7% in September. Expectations for growth in 2025 also improved, and now stand at 4.4%, compared to the previous forecast of 4.3%. All that said, the economic situation in China remains uncertain, with recent data indicating an uneven recovery and the impact of newly announced policy easing initiatives yet to materialize. There are certainly many doubts, at present, about the country’s ability to achieve its 5% growth target for this year.

241010Z3.jpg

**Electricity prices in the US versus Germany**
A sluggish Chinese economy tends to generate ripple effects for other economies that have high underlying trade and/or financial exposures. Germany is a good example because China is a major export market. But Germany’s economy has been struggling for other reasons as well, including its high dependence on Russian energy. It is certainly of note that Germany’s electricity prices remain highly elevated at present compared with most major European economies as well as compared with the US (see chart 4 below). Given Germany's large manufacturing sector, which is highly energy-intensive, this has led to substantial cost pressures, reduced profitability, and a broader impact on economic activity.

241010Z4.jpg

**The global economic cycle**
On a brighter note this week’s sentix surveys revealed greater confidence from investors about the global economic outlook. Both the current situation balance and the more forward looking expectations balance improved in October to four month highs (chart 5). This improvement can likely be attributed to the easing cycles that have been initiated by several central banks, and most notably the US Fed, in recent weeks.

241010Z5.jpg

**The Blue Chip growth consensus for 2025**
That aforementioned Blue Chip survey for October also reveals high confidence among economic forecasters that the world economy will experience a soft landing in the months ahead. Although GDP forecasts for 2025 for the euro area were downgraded by a fraction, the outlook for other big economies, was either left unchanged or, in the case of the US, improved. As noted above, moreover, the consensus GDP forecast for China was also increased a little. While the anticipated levels of GDP growth are subdued in many cases, they remain respectable, and are inconsistent with a hard landing scenario for the global economy.

241010Z6.jpg

Last week’s stronger-than-expected US employment report have combined with some comments from FOMC members suggesting the Fed may be in no great hurry to reduce interest rates next year to generate a big repricing in financial markets over the past few days (see chart 1). Geopolitical uncertainty in the Middle East and its impact on supply chains have additionally been a key focus for many investors (chart 2). The outlook for China is also being more actively debated in light of recent policy initiatives designed to shore up the economy (chart 3). The plight of the euro area, and Germany in particular, is equally causing some concern (chart 4). All that said, the incoming survey data this week have offered some reassurance to those that are anticipating a soft landing for the world economy in the coming months (chart 5). That message was implicit too from the latest Blue Chip Survey of Economic Forecasters (chart 6).

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Economy in Brief: November 2005

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Euro-zone Growth Picks Up to 0.6% in Q3; Chain-Linking Introduced to Eurostat Aggregates

Chicago Purchasing Managers' "Business Barometer" Holds Up; Prices Accelerate to 26-Year High

Chicago Purchasing Managers' "Business Barometer" Holds Up; Prices Accelerate to 26-Year High

Denmark's Third Quarter GDP Growth Rate Tops That of Hungary and the Philippines

Chain Store Sales Backpedaled, Gas Prices Down Again

Consumer Confidence Recovered

New Home Sales; There's Life Yet

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