Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531d.jpg" width="353">
Both business and consumer confidence in the Euro Zone declined in May as shown in the first chart. Consumers have been more pessimistic than businesses since October 2002. The percent balance between those consumers who were optimistic and those who were pessimistic reached a low point of -21 in March 2003. After improving through the rest of 2003, the percent balance has ranged between -13 and -15. The percent balance was at the low end of this range in May. The high unemployment rate in the Euro zone may account for much of the pessimism of consumers. The rate has ranged narrowly between 8.8% and 8.9% for the past year and a half.
Business confidence as represented by the percent balance of respondents in the industrial sector who believe conditions will improve over those who believe conditions will worsen declined to -11 from -9 in April. Although business confidence has been stronger--in that it has been less negative--than that of consumers since October, 2002, it has since declined sharply--from -3 in November of last year to -11 in May, a level last seen in August 2003. Among the more commonly cited causes of the decline in business confidence are the high and rising oil prices and the rise in the value of the Euro that are shown in the second chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531e.jpg" width="353">
Business confidence has been affected adversely by rising oil prices and the rising value of the euro. The recent history of both of these factors are shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/EUROSTAT.htm">Euro Zone Confidence</a> (Percent Balance)</th>
<th scope="col">May 05</th>
<th scope="col">Apr 05</th>
<th scope="col">May&nbsp; 04</th>
<th scope="col">M/M dif</th>
<th scope="col">Y/Y dif</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-15</td>
<td>-13</td>
<td>-15</td>
<td>-2</td>
<td>0</td>
<td>-14</td>
<td>-18</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">Business</td>
<td>-11</td>
<td>*13</td>
<td>-5</td>
<td>-2</td>
<td>-6</td>
<td>-5</td>
<td>-10</td>
<td>-11</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Factors Affecting Business Confidence</td>
<td>Apr 05</td>
<td>Mar 05</td>
<td>Apr&nbsp; 04</td>
<td>M/M %</td>
<td>Y/Y %</td>
<td>&nbsp;2004&nbsp;&nbsp;</td>
<td>&nbsp;2003</td>
<td>&nbsp;2002</td>
</tr>
<tr class="odd">
<td class="firstcol">Brent Crude $/bbl.)</td>
<td>52.22</td>
<td>53.13</td>
<td>33.15</td>
<td>-1.71</td>
<td>57.53</td>
<td>38.22</td>
<td>28.80</td>
<td>24.89</td>
</tr>
<tr>
<td class="firstcol">Euro/US$</td>
<td>1.2957</td>
<td>1.2964</td>
<td>1.1947</td>
<td>-1.99</td>
<td>7.95</td>
<td>1.3621</td>
<td>1.263</td>
<td>1.0487</td>
</tr>
</tbody>
</table>
</body>
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Both business and consumer confidence in the Euro Zone declined in May as shown in the first chart. Consumers have been more pessimistic than businesses since October 2002. The percent balance between those consumers who were [...]

Consumer and Business Confidence in the Euro Zone Declines in May

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer fell sharply in May. The 11.5 point decline to 54.1 was the steepest drop since 1974, nearly matched the record for a one month decline and pulled the index to its lowest since June 2003. Consensus expectations had been for a more moderate drop to 62.0.
During the last ten years there has been a 65% correlation between the level of Chicago PMI and the three month change in factory sector industrial production. 
New orders and production posted the sharpest declines of the component series and the employment index fell to the lowest level since January. During the last ten years there has been a 75% correlation between the level of the employment index and the three month change in factory sector employment.
The index of prices paid fell again to the lowest level since September 2003. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<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">May</th>
<th scope="col">April</th>
<th scope="col">&nbsp;May &#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>54.1</td>
<td>65.6</td>
<td>66.1</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>57.9</td>
<td>71.0</td>
<td>72.0</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>54.3</td>
<td>66.1</td>
<td>79.5</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 fell sharply in May. The 11.5 point decline to 54.1 was the steepest drop since 1974, nearly matched the record for a one month decline and pulled the index to its lowest since June [...]

Chicago Purchasing Agents' Index Down Big

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<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531b.jpg" width="353">
The May Index of Consumer Confidence from the Conference Board rebounded much more than expected to 102.2. Confidence had fallen in each of the prior three months and Consensus expectations had been for another decline to 96.1.
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.
Consumer expectations recovered nearly all of the prior month&#39;s sharp drop as expectations for jobs and business conditions rose.
The present situation index also recovered nearly all of the prior month&#39;s decline though jobs were viewed both as more plentiful and hard to get by a greater number of survey participants.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531c.jpg" width="353">
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Consumer Confidence</td>
<td>102.2</td>
<td>97.5</td>
<td>9.8%</td>
<td>96.1</td>
<td>79.8</td>
<td>96.6</td>
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</tbody>
</table>
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The May Index of Consumer Confidence from the Conference Board rebounded much more than expected to 102.2. Confidence had fallen in each of the prior three months and Consensus expectations had been for another decline to 96.1. During [...]

Consumer Confidence Rebounded

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531b.jpg" width="353">
The May Index of Consumer Confidence from the Conference Board rebounded much more than expected to 102.2. Confidence had fallen in each of the prior three months and Consensus expectations had been for another decline to 96.1.
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.
Consumer expectations recovered nearly all of the prior month&#39;s sharp drop as expectations for jobs and business conditions rose.
The present situation index also recovered nearly all of the prior month&#39;s decline though jobs were viewed both as more plentiful and hard to get by a greater number of survey participants.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531c.jpg" width="353">
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Consumer Confidence</td>
<td>102.2</td>
<td>97.5</td>
<td>9.8%</td>
<td>96.1</td>
<td>79.8</td>
<td>96.6</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Down Big 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer fell sharply in May. The 11.5 point decline to 54.1 was the steepest drop since 1974, nearly matched the record for a one month decline and pulled the index to its lowest since June 2003. Consensus expectations had been for a more moderate drop to 62.0.
During the last ten years there has been a 65% correlation between the level of Chicago PMI and the three month change in factory sector industrial production. 
New orders and production posted the sharpest declines of the component series and the employment index fell to the lowest level since January. During the last ten years there has been a 75% correlation between the level of the employment index and the three month change in factory sector employment.
The index of prices paid fell again to the lowest level since September 2003. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<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">May</th>
<th scope="col">April</th>
<th scope="col">&nbsp;May &#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>54.1</td>
<td>65.6</td>
<td>66.1</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>57.9</td>
<td>71.0</td>
<td>72.0</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>54.3</td>
<td>66.1</td>
<td>79.5</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
Consumer and Business Confidence in the Euro Zone Declines in May 
by <a href="/comment/Curley.html">Louise Curley</a> May 31, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531d.jpg" width="353">
Both business and consumer confidence in the Euro Zone declined in May as shown in the first chart. Consumers have been more pessimistic than businesses since October 2002. The percent balance between those consumers who were optimistic and those who were pessimistic reached a low point of -21 in March 2003. After improving through the rest of 2003, the percent balance has ranged between -13 and -15. The percent balance was at the low end of this range in May. The high unemployment rate in the Euro zone may account for much of the pessimism of consumers. The rate has ranged narrowly between 8.8% and 8.9% for the past year and a half.
Business confidence as represented by the percent balance of respondents in the industrial sector who believe conditions will improve over those who believe conditions will worsen declined to -11 from -9 in April. Although business confidence has been stronger--in that it has been less negative--than that of consumers since October, 2002, it has since declined sharply--from -3 in November of last year to -11 in May, a level last seen in August 2003. Among the more commonly cited causes of the decline in business confidence are the high and rising oil prices and the rise in the value of the Euro that are shown in the second chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050531e.jpg" width="353">
Business confidence has been affected adversely by rising oil prices and the rising value of the euro. The recent history of both of these factors are shown in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/EUROSTAT.htm">Euro Zone Confidence</a> (Percent Balance)</th>
<th scope="col">May 05</th>
<th scope="col">Apr 05</th>
<th scope="col">May&nbsp; 04</th>
<th scope="col">M/M dif</th>
<th scope="col">Y/Y dif</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-15</td>
<td>-13</td>
<td>-15</td>
<td>-2</td>
<td>0</td>
<td>-14</td>
<td>-18</td>
<td>-11</td>
</tr>
<tr>
<td class="firstcol">Business</td>
<td>-11</td>
<td>*13</td>
<td>-5</td>
<td>-2</td>
<td>-6</td>
<td>-5</td>
<td>-10</td>
<td>-11</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Factors Affecting Business Confidence</td>
<td>Apr 05</td>
<td>Mar 05</td>
<td>Apr&nbsp; 04</td>
<td>M/M %</td>
<td>Y/Y %</td>
<td>&nbsp;2004&nbsp;&nbsp;</td>
<td>&nbsp;2003</td>
<td>&nbsp;2002</td>
</tr>
<tr class="odd">
<td class="firstcol">Brent Crude $/bbl.)</td>
<td>52.22</td>
<td>53.13</td>
<td>33.15</td>
<td>-1.71</td>
<td>57.53</td>
<td>38.22</td>
<td>28.80</td>
<td>24.89</td>
</tr>
<tr>
<td class="firstcol">Euro/US$</td>
<td>1.2957</td>
<td>1.2964</td>
<td>1.1947</td>
<td>-1.99</td>
<td>7.95</td>
<td>1.3621</td>
<td>1.263</td>
<td>1.0487</td>
</tr>
</tbody>
</table>
</body>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527c.jpg" width="353">
British Bankers Association data on lending to individuals have recently been added to Haver&#39;s &quot;UK&quot; database. The April figures were reported today and updated by our &quot;European shift&quot;, the manager and crew who work from roughly midnight in New York to 8:00AM.
Gross new mortgage lending gave a tentative sign of stabilizing after a period of deep weakness during the winter. New loans totaled &pound;14,120 million, up 2.9% from March, although still 12.6% below the April 2004 amount. The number of loans approved for house purchase, 69,323, was off 21.0% from a year ago, but this is the smallest 12-month decline since last August. Intervening months have seen 30%-40% rates of decline.
The average value of newly approved loans has been increasing, but more slowly in recent months. The April figures show a 10.7% rise from a year ago. This is stronger than several months of single-digit increases since last summer, but weaker than the 15%-20% gains prior to that. This general tapering trend is reflected in house prices, with the Halifax Standardised Price, for example, virtually flat for the first four months of 2005. The UK housing market appears to have cooled, and other data on the industry have turned in a mixed, basically indeterminate performance so far this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527d.jpg" width="353">
The BBA figures on consumer credit show weakness. The amount of new credit card debt was &pound;7,064 million in April, down 7.2% from a year ago. More, the total amount of credit card debt outstanding fell by a seasonally adjusted &pound;40 million in April, the first monthly decline since August 1994. The recent sluggishness coincides to a decline in UK retail sales of 2.7% in value since September.
The BBA lending data are cited in two sections of our UK database, both in &quot;Financial Data&quot; and also in &quot;Housing and Construction&quot;. They cover several &quot;major banking groups&quot;, the so-called &quot;MBBG&quot; and are styled to parallel some similar concepts reported by the Bank of England for all banks, building societies and other mortgage lenders. Those broader data are due for release on Wednesday 1 June. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">United Kingdom</a> Mil.GBP&nbsp; (NSA except where noted)</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Year Ago</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Gross New Loans</td>
<td>14,120</td>
<td>13,721</td>
<td>11,938</td>
<td>16,150</td>
<td>15,701</td>
<td>15,071</td>
<td>12,586</td>
</tr>
<tr class="odd">
<td class="firstcol">Loan Approvals- Number</td>
<td>69,323</td>
<td>65,635</td>
<td>47,365</td>
<td>87,800</td>
<td>69,244</td>
<td>76,105</td>
<td>83,915</td>
</tr>
<tr>
<td class="firstcol">- Average Value (&pound;)</td>
<td>122,700</td>
<td>121,600</td>
<td>119,000</td>
<td>110,800</td>
<td>112,083</td>
<td>97,817</td>
<td>87,367</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; - 12-mo. % change</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>10.7</td>
<td>14.6</td>
<td>12.0</td>
<td>14.3</td>
</tr>
<tr>
<td class="firstcol">Credit Card Debt- Gross</td>
<td>7,064</td>
<td>7,586</td>
<td>6,842</td>
<td>7,610</td>
<td>7,707</td>
<td>6,818</td>
<td>6,105</td>
</tr>
<tr class="odd">
<td class="firstcol">- Outstanding EOP</td>
<td>34,015</td>
<td>33,628</td>
<td>33,728</td>
<td>31,139</td>
<td>33,973</td>
<td>28,689</td>
<td>26,409</td>
</tr>
<tr>
<td class="firstcol">- Net Change SA</td>
<td>-40</td>
<td>134</td>
<td>50</td>
<td>&nbsp;</td>
<td>388</td>
<td>310</td>
<td>266</td>
</tr>
</tbody>
</table>
</body>
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British Bankers Association data on lending to individuals have recently been added to Haver's "UK" database. The April figures were reported today and updated by our "European shift", the manager and crew who work from roughly [...]

BBA Data Show Tentative Firming in UK Mortgage Lending; Consumer Credit Still Soft

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527a.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment for all of May did fall 0.9% from the prior month to 85.9 but that was better than the mid-month reading of a 2.7% decline. Consensus expectations had been for a level of 86.0.
Sentiment still is down in each of the last five months and is off 16.3% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the y/y change in real PCE, although the correlation has fallen in recent years.
The reading of current economic conditions recovered late in the month and rose for the first full month since January. Buying conditions for large household goods recovered sharply.
Consumer expectations recovered though expectations about personal finances remained depressed.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Consumer Sentiment</td>
<td>86.9</td>
<td>87.7</td>
<td>-3.7%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.9</td>
<td>104.4</td>
<td>1.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>75.3</td>
<td>77.0</td>
<td>-7.7%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
</body>
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The University of Michigan's reading of consumer sentiment for all of May did fall 0.9% from the prior month to 85.9 but that was better than the mid-month reading of a 2.7% decline. Consensus expectations had been for a level of [...]

U.S. Consumer Sentiment A Bit Better

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527b.jpg" width="353">
Personal income in April rose 0.7% following a 0.5% increase in March. Consensus expectations had been for a 0.6% rise. Disposable personal income increased 0.5% (6.0% y/y) following two months of 0.4% gain. When adjusted for price inflation take home pay rose 0.1% (3.3% y/y) following a slight decline in March.
Wages &amp; salaries were notably strong and growth during the prior year was upwardly revised. A 0.7% April increase (7.6% y/y) doubled the prior months&#39; increases and year to year growth through March was revised up to 7.6% from 5.8% y/y estimated earlier. Wages in service producing industries surged 0.9% and y/y growth rose to 9.2% versus the 6.4% pace previously estimated. Even factory sector wages showed life and rose 0.5% (6.4% y/y) in April. Year to year growth through March now stands at 7.0%, up from the 5.8% y/y gain estimated last month.
Offsetting some of this strength have been declines in rental income (-14.1% y/y).
Personal consumption increased 0.6% following an upwardly revised 0.9% increase in March. Consensus expectations had been for a 0.8% gain. Durable goods spending rose 0.7% (9.4% y/y) and spending on services rose 0.3% (5.6% y/y) following earlier gains that were revised down.
Nondurables spending surged 1.1% (8.3% y/y) as spending on gasoline &amp; oil jumped 5.5% (25.9% y/y). Spending on clothing recovered 1.5% (5.9% y/y) following the prior month&#39;s 2.1% drop.
The PCE chain price index rose 0.4% but less food &amp; energy the 0.1% m/m increase was the slimmest of the year. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">April</th>
<th scope="col">March</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">Personal Income</td>
<td>0.7%</td>
<td>0.5%</td>
<td>7.0%</td>
<td>5.8%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.4%</td>
<td>0.5%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
</body>
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Personal income in April rose 0.7% following a 0.5% increase in March. Consensus expectations had been for a 0.6% rise. Disposable personal income increased 0.5% (6.0% y/y) following two months of 0.4% gain. When adjusted for price [...]

U.S. Income & Outlays Firm, Wage Revisions Upward

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527b.jpg" width="353">
Personal income in April rose 0.7% following a 0.5% increase in March. Consensus expectations had been for a 0.6% rise. Disposable personal income increased 0.5% (6.0% y/y) following two months of 0.4% gain. When adjusted for price inflation take home pay rose 0.1% (3.3% y/y) following a slight decline in March.
Wages &amp; salaries were notably strong and growth during the prior year was upwardly revised. A 0.7% April increase (7.6% y/y) doubled the prior months&#39; increases and year to year growth through March was revised up to 7.6% from 5.8% y/y estimated earlier. Wages in service producing industries surged 0.9% and y/y growth rose to 9.2% versus the 6.4% pace previously estimated. Even factory sector wages showed life and rose 0.5% (6.4% y/y) in April. Year to year growth through March now stands at 7.0%, up from the 5.8% y/y gain estimated last month.
Offsetting some of this strength have been declines in rental income (-14.1% y/y).
Personal consumption increased 0.6% following an upwardly revised 0.9% increase in March. Consensus expectations had been for a 0.8% gain. Durable goods spending rose 0.7% (9.4% y/y) and spending on services rose 0.3% (5.6% y/y) following earlier gains that were revised down.
Nondurables spending surged 1.1% (8.3% y/y) as spending on gasoline &amp; oil jumped 5.5% (25.9% y/y). Spending on clothing recovered 1.5% (5.9% y/y) following the prior month&#39;s 2.1% drop.
The PCE chain price index rose 0.4% but less food &amp; energy the 0.1% m/m increase was the slimmest of the year. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">April</th>
<th scope="col">March</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">Personal Income</td>
<td>0.7%</td>
<td>0.5%</td>
<td>7.0%</td>
<td>5.8%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.4%</td>
<td>0.5%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment A Bit Better 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 27, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527a.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment for all of May did fall 0.9% from the prior month to 85.9 but that was better than the mid-month reading of a 2.7% decline. Consensus expectations had been for a level of 86.0.
Sentiment still is down in each of the last five months and is off 16.3% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the y/y change in real PCE, although the correlation has fallen in recent years.
The reading of current economic conditions recovered late in the month and rose for the first full month since January. Buying conditions for large household goods recovered sharply.
Consumer expectations recovered though expectations about personal finances remained depressed.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Consumer Sentiment</td>
<td>86.9</td>
<td>87.7</td>
<td>-3.7%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.9</td>
<td>104.4</td>
<td>1.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>75.3</td>
<td>77.0</td>
<td>-7.7%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
BBA Data Show Tentative Firming in UK Mortgage Lending; Consumer Credit Still Soft 
by <a href="/comment/Stone.html">Carol Stone</a> May 27, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527c.jpg" width="353">
British Bankers Association data on lending to individuals have recently been added to Haver&#39;s &quot;UK&quot; database. The April figures were reported today and updated by our &quot;European shift&quot;, the manager and crew who work from roughly midnight in New York to 8:00AM.
Gross new mortgage lending gave a tentative sign of stabilizing after a period of deep weakness during the winter. New loans totaled &pound;14,120 million, up 2.9% from March, although still 12.6% below the April 2004 amount. The number of loans approved for house purchase, 69,323, was off 21.0% from a year ago, but this is the smallest 12-month decline since last August. Intervening months have seen 30%-40% rates of decline.
The average value of newly approved loans has been increasing, but more slowly in recent months. The April figures show a 10.7% rise from a year ago. This is stronger than several months of single-digit increases since last summer, but weaker than the 15%-20% gains prior to that. This general tapering trend is reflected in house prices, with the Halifax Standardised Price, for example, virtually flat for the first four months of 2005. The UK housing market appears to have cooled, and other data on the industry have turned in a mixed, basically indeterminate performance so far this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527d.jpg" width="353">
The BBA figures on consumer credit show weakness. The amount of new credit card debt was &pound;7,064 million in April, down 7.2% from a year ago. More, the total amount of credit card debt outstanding fell by a seasonally adjusted &pound;40 million in April, the first monthly decline since August 1994. The recent sluggishness coincides to a decline in UK retail sales of 2.7% in value since September.
The BBA lending data are cited in two sections of our UK database, both in &quot;Financial Data&quot; and also in &quot;Housing and Construction&quot;. They cover several &quot;major banking groups&quot;, the so-called &quot;MBBG&quot; and are styled to parallel some similar concepts reported by the Bank of England for all banks, building societies and other mortgage lenders. Those broader data are due for release on Wednesday 1 June. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">United Kingdom</a> Mil.GBP&nbsp; (NSA except where noted)</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Year Ago</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Gross New Loans</td>
<td>14,120</td>
<td>13,721</td>
<td>11,938</td>
<td>16,150</td>
<td>15,701</td>
<td>15,071</td>
<td>12,586</td>
</tr>
<tr class="odd">
<td class="firstcol">Loan Approvals- Number</td>
<td>69,323</td>
<td>65,635</td>
<td>47,365</td>
<td>87,800</td>
<td>69,244</td>
<td>76,105</td>
<td>83,915</td>
</tr>
<tr>
<td class="firstcol">- Average Value (&pound;)</td>
<td>122,700</td>
<td>121,600</td>
<td>119,000</td>
<td>110,800</td>
<td>112,083</td>
<td>97,817</td>
<td>87,367</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; - 12-mo. % change</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>10.7</td>
<td>14.6</td>
<td>12.0</td>
<td>14.3</td>
</tr>
<tr>
<td class="firstcol">Credit Card Debt- Gross</td>
<td>7,064</td>
<td>7,586</td>
<td>6,842</td>
<td>7,610</td>
<td>7,707</td>
<td>6,818</td>
<td>6,105</td>
</tr>
<tr class="odd">
<td class="firstcol">- Outstanding EOP</td>
<td>34,015</td>
<td>33,628</td>
<td>33,728</td>
<td>31,139</td>
<td>33,973</td>
<td>28,689</td>
<td>26,409</td>
</tr>
<tr>
<td class="firstcol">- Net Change SA</td>
<td>-40</td>
<td>134</td>
<td>50</td>
<td>&nbsp;</td>
<td>388</td>
<td>310</td>
<td>266</td>
</tr>
</tbody>
</table>
</body>
</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

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

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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: May 2005

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Consumer and Business Confidence in the Euro Zone Declines in May

Chicago Purchasing Agents' Index Down Big

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Consumer Confidence Rebounded

BBA Data Show Tentative Firming in UK Mortgage Lending; Consumer Credit Still Soft

U.S. Consumer Sentiment A Bit Better

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