Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041202b.jpg" width="353">
Unit sales of light vehicles fell another 3.4% m/m last month on top of the 3.1% decline in October to a 16.39M selling rate. Consensus expectations had been for sales of 16.6M.
Sales of light trucks again were notably weak, falling 4.1% to the lowest sales rate since June. Domestic light truck sales fell 3.8% m/m (-2.1% y/y) and imported light truck sales were off 5.9% (+1.7% y/y).
Lower sales of imported autos, down 9.7% (+5.4% y/y), led total auto sales 2.5% m/m lower following two months of gain. Sales of domestic autos rose 1.0% (-9.2% y/y).
Imports&#39; share of the US market for new vehicles slipped to 21.0%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.39</td>
<td>16.96</td>
<td>-3.3%</td>
<td>16.69</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.34</td>
<td>7.53</td>
<td>-5.3%</td>
<td>7.63</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.05</td>
<td>9.43</td>
<td>-1.6%</td>
<td>9.06</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
Initial Unemployment Insurance Claims Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 2, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041202a.jpg" width="353">
Initial claims for unemployment insurance unexpectedly jumped 25,000 to 349,000 during Thanksgiving week. Holiday periods are notable for seasonal adjustment difficulties. Not seasonally adjusted, claims fell by 36,300. The Consensus expectation had been for 330,000 claims.
The four week moving average of initial claims rose moderately to 336,500 (-8.9% y/y).
During the last ten years there has been a (negative) 82% correlation between the level of initial claims and the y/y change in payroll employment.
Continuing claims for unemployment insurance slumped 20,000 following a downwardly revised 38,000 decline the prior week. The latest is the lowest level since April 2001.
The insured rate of unemployment remained at 2.2% for the eighth week.
The latest Beige Book on regional economic conditions from The Federal Reserve Board is available <a href="http://www.federalreserve.gov/FOMC/BeigeBook/2004/20041201/Default.htm"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/27/04</th>
<th scope="col">11/20/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
<tbody>
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<td class="firstcol">Initial Claims</td>
<td>349</td>
<td>324</td>
<td>-6.2%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,723</td>
<td>-18.9%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
US Factory Orders & Shipments Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 2, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041202c.jpg" width="353">
Factory orders rose 0.5% last month following an upwardly revised unchanged reading for September. The recovery was due to a 2.4% gain in nondurable orders (which equal shipments) that primarily reflected an 8.3% jump in shipments from petroleum refineries.
Durable goods orders fell 1.1%, revised from the advance report of a 0.4% drop. The advance report of a 3.3% decline in nondefense capital goods orders was revised to show a 3.9% decline and less aircraft, the decline was revised to -4.2% from -3.6%.
Total shipments out of the US manufacturing sector reversed the prior month&#39;s decline with a 1.2% surge, but less petroleum &amp; coal shipments recovered just half of the prior months 1.2% drop (+7.7% y/y). Shipments of computers &amp; electronic products rose 2.8% (+9.4% y/y) after the 2.7% September decline but electrical equipment shipments only gained back 0.4% (4.6% y/y) of a 3.0% September skid.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041202d.jpg" width="353">
Factory inventory accumulation picked up to 0.5% following a downwardly revised 0.1% September up tick, however the inventory to sales ratio in the factory sector scaled back to 1.24 due to the surge in shipments. Inventories of consumer durables fell 0.1% (+9.7% y/y) after two months of strong accumulation.
Unfilled orders rose 0.5% and the ratio of unfilled orders to shipments for durables added to the sharp gain in September. Supply bottlenecks also are indicated by the ISM&#39;s index of vendor delivery speed.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Inventories</td>
<td>0.5%</td>
<td>0.1%</td>
<td>5.9%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.5%</td>
<td>0.0%</td>
<td>8.7%</td>
<td>3.7%</td>
<td>-1.9%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.2%</td>
<td>-1.1%</td>
<td>10.6%</td>
<td>2.6%</td>
<td>-2.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.5%</td>
<td>0.9%</td>
<td>8.5%</td>
<td>4.2%</td>
<td>-6.1%</td>
<td>-5.9%</td>
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Unit sales of light vehicles fell another 3.4% m/m last month on top of the 3.1% decline in October to a 16.39M selling rate. Consensus expectations had been for sales of 16.6M. Sales of light trucks again were notably weak, falling [...]

U.S. Light Vehicle Sales Lower

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/041201f.jpg" width="353">
The PMI Index for Euro-Zone manufacturing edged down almost 2 points in November and at 50.42, is barely above the 50% expansion threshold. Output and new orders both weakened. The PMI surveys in Europe and a number of other countries are published by NTC Research, a London firm, in conjunction with Reuters.
Among countries, the index in Germany actually fell below 50, to 49.85, indicating outright contraction, albeit not widely spread. Besides output and new orders, employment also decreased, with the weakest reading since November last year. Results for Italy were also in the contractionary zone. France&#39;s index decreased but remained above 50%, while that for Spain edged upward, with a level just above 51%.
The general slowing is attributed by analysts to the recent strengthening of the euro. In the two years ended last February, the euro gained 45% against the dollar. It then lost some ground during the spring before flattening and then heading higher again in mid-October to a record $1.3288 on November 26, up another 5% over February&#39;s already high average.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201g.jpg" width="353">
The strong euro tends, of course, to make European products less competitive in world markets. But it also has a benefit: it takes some of the sting away from surging energy costs, which are priced mostly in dollars. In the second graph alongside, we illustrate the price of Brent crude, which hit a near-term bottom in May 2003 at $22.94 and &#128;20.62 per barrel. Since then, it has risen 92% in dollar terms, but &quot;only&quot; 59% in euro prices. This is obviously still a significant input price burden for European manufacturers, but far less harsh than what US producers face.

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The PMI Index for Euro-Zone manufacturing edged down almost 2 points in November and at 50.42, is barely above the 50% expansion threshold. Output and new orders both weakened. The PMI surveys in Europe and a number of other countries [...]

European Manufacturing Slows; Oil Price & Strong Euro Blamed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201c.jpg" width="353">
Mortgage applications dropped another 5.8% last week, the third sharp w/w decline in November. The decline lowered the average level of activity in November to just 1.0% above October according to the Mortgage Bankers Association (MBA).
Applications to refinance plunged 12.3% w/w, pulling the November average 1.3% below October.
Purchase applications slipped 0.6% after a 3.5% decline the prior week. The November average was up versus 2.8% versus October. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The effective interest rate on a conventional 30-year mortgage rose to 6.03% and averaged 5.97% last month versus 5.92% in October. The effective rate on a 15-year mortgage rose to 5.49%, the highest level since early October.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/26/04</th>
<th scope="col">11/19/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>673.3</td>
<td>715.0</td>
<td>-1.7%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>460.3</td>
<td>463.3</td>
<td>4.2%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,912.3</td>
<td>2,179.3</td>
<td>-8.9%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
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Mortgage applications dropped another 5.8% last week, the third sharp w/w decline in November. The decline lowered the average level of activity in November to just 1.0% above October according to the Mortgage Bankers Association [...]

Mortgage Applications Down Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201e.jpg" width="353">
The total value of construction put in place remained stalled in October for the third straight month versus the Consensus expectation for a 0.7% rise.
Private residential building activity fell 0.3% for the second consecutive month as new single family building slipped (+14.4% y/y).
&quot;Housing and the Business Cycle&quot; from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2004/200411/200411abs.html"> here</a>.
Nonresidential building also slipped 0.4% (+2.5% y/y) but so far this year has risen 3.8% due to huge gains in lodging (+42.8%) and retail 29.2%).
Public construction jumped 1.2% as spending on highways &amp; streets, nearly one third of the value of public construction spending, recovered 6.4% (4.9% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Total</td>
<td>0.0%</td>
<td>0.1%</td>
<td>7.1%</td>
<td>5.1%</td>
<td>1.5%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>8.3%</td>
<td>6.0%</td>
<td>-0.2%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-0.3%</td>
<td>-0.3%</td>
<td>10.9%</td>
<td>13.1%</td>
<td>8.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>-7.1%</td>
<td>-12.8%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>1.2%</td>
<td>0.9%</td>
<td>3.5%</td>
<td>2.6%</td>
<td>7.0%</td>
<td>10.7%</td>
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The total value of construction put in place remained stalled in October for the third straight month versus the Consensus expectation for a 0.7% rise. Private residential building activity fell 0.3% for the second consecutive month [...]

U.S. Construction Spending Flat Again in October

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201a.jpg" width="353">
Personal income rebounded 0.6% in October from a light 0.2% gain the month prior. Proprietors&#39; income surged 1.9% (6.5%y/y) after declines during the three prior months. Consensus expectations had been for a 0.5% October rise in total income.
Wages &amp; salaries rose 0.6% (+5.1% y/y), the most for any one month since July. Strength reflected a 0.7% (6.0% y/y) gain in private service producing industry wages while manufacturing wages fell 0.2% (+2.4% y/y).
Personal disposable income rose 0.6% (5.2% y/y). Adjusted for inflation disposable income gained 0.2% (2.7% y/y).
&quot;US Consumers and Electronic Banking, 1995-2003&quot; from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/bulletin/2004/winter04_ca.pdf"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201b.jpg" width="353">
Personal consumption again was strong, up 0.7% following a 0.6% September rise. A 1.5% jump in non-durable goods spending reflected higher prices for gasoline.Adjusted for price inflation, total PCE rose 0.3% (4.1% y/y). 
The PCE chain price index rose 0.4%, the strongest monthly increase since May. Less food &amp; energy, prices edged up another 0.1% (1.5% y/y).

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<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
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<td class="firstcol">Personal Income</td>
<td>0.6%</td>
<td>0.2%</td>
<td>5.2%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.7%</td>
<td>0.6%</td>
<td>6.6%</td>
<td>5.2%</td>
<td>4.6%</td>
<td>4.7%</td>
</tr>
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<td class="firstcol">Savings Rate</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.5%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.1%</td>
<td>2.4%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.1%</td>
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Personal income rebounded 0.6% in October from a light 0.2% gain the month prior. Proprietors' income surged 1.9% (6.5%y/y) after declines during the three prior months. Consensus expectations had been for a 0.5% October rise in total [...]

U.S. Personal Income Rebounded

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201d.jpg" width="353">
The Composite Index of activity in the manufacturing sector from the Institute of Supply Management rose a point last month to 57.8 versus Consensus expectations for little change at 57.0.
During the last twenty years there has been a 70% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
The Composite Index reflected gains in the new orders (61.5), employment (57.6) and inventory (50.7) components.
The separate index of export orders fell and reversed nearly half of the prior month&#39;s rise.
The prices paid index fell, and at 74.0 was well off the year&#39;s high of 88.0.
&quot;Using Manufacturing Surveys to Access Economic Conditions&quot; from the Federal Reserve Bank of Richmond is available <a href="http://www.rich.frb.org/pubs/economic_quarterly/pdfs/fall2004/harrisowenssarte.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
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<td class="firstcol">Composite Index</td>
<td>57.8</td>
<td>56.8</td>
<td>61.3</td>
<td>53.3</td>
<td>52.4</td>
<td>43.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>61.5</td>
<td>58.3</td>
<td>71.4</td>
<td>58.1</td>
<td>56.6</td>
<td>46.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>74.0</td>
<td>78.5</td>
<td>64.0</td>
<td>59.6</td>
<td>57.6</td>
<td>42.9</td>
</tr>
</tbody>
</table>
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The Composite Index of activity in the manufacturing sector from the Institute of Supply Management rose a point last month to 57.8 versus Consensus expectations for little change at 57.0. During the last twenty years there has been a [...]

ISM Factory Index Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201d.jpg" width="353">
The Composite Index of activity in the manufacturing sector from the Institute of Supply Management rose a point last month to 57.8 versus Consensus expectations for little change at 57.0.
During the last twenty years there has been a 70% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
The Composite Index reflected gains in the new orders (61.5), employment (57.6) and inventory (50.7) components.
The separate index of export orders fell and reversed nearly half of the prior month&#39;s rise.
The prices paid index fell, and at 74.0 was well off the year&#39;s high of 88.0.
&quot;Using Manufacturing Surveys to Access Economic Conditions&quot; from the Federal Reserve Bank of Richmond is available <a href="http://www.rich.frb.org/pubs/economic_quarterly/pdfs/fall2004/harrisowenssarte.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>57.8</td>
<td>56.8</td>
<td>61.3</td>
<td>53.3</td>
<td>52.4</td>
<td>43.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>61.5</td>
<td>58.3</td>
<td>71.4</td>
<td>58.1</td>
<td>56.6</td>
<td>46.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>74.0</td>
<td>78.5</td>
<td>64.0</td>
<td>59.6</td>
<td>57.6</td>
<td>42.9</td>
</tr>
</tbody>
</table>
U.S. Personal Income Rebounded 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 1, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201a.jpg" width="353">
Personal income rebounded 0.6% in October from a light 0.2% gain the month prior. Proprietors&#39; income surged 1.9% (6.5%y/y) after declines during the three prior months. Consensus expectations had been for a 0.5% October rise in total income.
Wages &amp; salaries rose 0.6% (+5.1% y/y), the most for any one month since July. Strength reflected a 0.7% (6.0% y/y) gain in private service producing industry wages while manufacturing wages fell 0.2% (+2.4% y/y).
Personal disposable income rose 0.6% (5.2% y/y). Adjusted for inflation disposable income gained 0.2% (2.7% y/y).
&quot;US Consumers and Electronic Banking, 1995-2003&quot; from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/bulletin/2004/winter04_ca.pdf"> here</a>.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201b.jpg" width="353">
Personal consumption again was strong, up 0.7% following a 0.6% September rise. A 1.5% jump in non-durable goods spending reflected higher prices for gasoline.Adjusted for price inflation, total PCE rose 0.3% (4.1% y/y). 
The PCE chain price index rose 0.4%, the strongest monthly increase since May. Less food &amp; energy, prices edged up another 0.1% (1.5% y/y).

<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.6%</td>
<td>0.2%</td>
<td>5.2%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.7%</td>
<td>0.6%</td>
<td>6.6%</td>
<td>5.2%</td>
<td>4.6%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.5%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.1%</td>
<td>2.4%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Flat Again in October 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 1, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201e.jpg" width="353">
The total value of construction put in place remained stalled in October for the third straight month versus the Consensus expectation for a 0.7% rise.
Private residential building activity fell 0.3% for the second consecutive month as new single family building slipped (+14.4% y/y).
&quot;Housing and the Business Cycle&quot; from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2004/200411/200411abs.html"> here</a>.
Nonresidential building also slipped 0.4% (+2.5% y/y) but so far this year has risen 3.8% due to huge gains in lodging (+42.8%) and retail 29.2%).
Public construction jumped 1.2% as spending on highways &amp; streets, nearly one third of the value of public construction spending, recovered 6.4% (4.9% y/y).
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.0%</td>
<td>0.1%</td>
<td>7.1%</td>
<td>5.1%</td>
<td>1.5%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>8.3%</td>
<td>6.0%</td>
<td>-0.2%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-0.3%</td>
<td>-0.3%</td>
<td>10.9%</td>
<td>13.1%</td>
<td>8.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.4%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>-7.1%</td>
<td>-12.8%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>1.2%</td>
<td>0.9%</td>
<td>3.5%</td>
<td>2.6%</td>
<td>7.0%</td>
<td>10.7%</td>
</tr>
</tbody>
</table>
Mortgage Applications Down Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 1, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201c.jpg" width="353">
Mortgage applications dropped another 5.8% last week, the third sharp w/w decline in November. The decline lowered the average level of activity in November to just 1.0% above October according to the Mortgage Bankers Association (MBA).
Applications to refinance plunged 12.3% w/w, pulling the November average 1.3% below October.
Purchase applications slipped 0.6% after a 3.5% decline the prior week. The November average was up versus 2.8% versus October. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The effective interest rate on a conventional 30-year mortgage rose to 6.03% and averaged 5.97% last month versus 5.92% in October. The effective rate on a 15-year mortgage rose to 5.49%, the highest level since early October.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/26/04</th>
<th scope="col">11/19/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>673.3</td>
<td>715.0</td>
<td>-1.7%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>460.3</td>
<td>463.3</td>
<td>4.2%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,912.3</td>
<td>2,179.3</td>
<td>-8.9%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</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/041130f.jpg" width="353">
With the Japanese economy having increased a mere 0.1% in the third quarter, October data will be scrutinized for signs indicating whether the economy has merely paused or it has entered a down trend. Today, data on industrial production, incomes and expenditures of families of household workers, the unemployment rate, exports and imports have been released by the Japanese government. In additionNTC Research has released its PMI for manufacturing in Japan in November. Most of the data are disappointing.
Industrial Production fell 1.59% in October from September. The NTC Research Purchasing Managers Survey declined in November to 51.27 from, 52.95 in October--not a good omen for future production.
With declines in real pre tax and after tax incomes of, 2.74% and 2.61%, respectively and with a one percentage point rise in the unemployment rate, families of household workers cut back on their real spending by 1.21% in November from October. Their spending, moreover, was even below, if only slightly, the corresponding month of last year. (Industrial production and the expenditures of families of workers are shown in the attached chart.
The one bright spot was an increase in exports of 3.12%. However, imports on a year-over-year basis continue to rise sharply, largely as a result of imports of petroleum and related products, including coal, Liquid Petroleum Gas (LPG) and Liquid Natural Gas (LNG). 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Oct 04</th>
<th scope="col">Sep 04</th>
<th scope="col">Oct 03</th>
<th scope="col">M/M &nbsp;%&nbsp;</th>
<th scope="col">Y/Y &nbsp;%&nbsp;</th>
<th scope="col">&nbsp;2003&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2002&nbsp;</th>
<th scope="col">&nbsp; 2001&nbsp; &nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Worker Households, Real Indexes&nbsp; (2000=100)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Income</td>
<td>95.8</td>
<td>98.5</td>
<td>96.4</td>
<td>-2.74</td>
<td>-0.62</td>
<td>95.6</td>
<td>98.1</td>
<td>99.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Disposable income</td>
<td>97.0</td>
<td>99.6</td>
<td>97.4</td>
<td>-2.61</td>
<td>-0.41</td>
<td>95.6</td>
<td>97.8</td>
<td>99.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Living expenditures</td>
<td>98.0</td>
<td>99.2</td>
<td>98.1</td>
<td>-1.21</td>
<td>-0.10</td>
<td>97.9</td>
<td>99.0</td>
<td>99.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate %</td>
<td>4.7</td>
<td>4.6</td>
<td>5.2</td>
<td>0.1*</td>
<td>-0.5*</td>
<td>5.3</td>
<td>5.4</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">Industrial Production (2000=100)</td>
<td>98.8</td>
<td>100.4</td>
<td>97.5</td>
<td>-1.59</td>
<td>1.33</td>
<td>95.1</td>
<td>92.0</td>
<td>93.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports (Tril. Yen)</td>
<td>5283.9</td>
<td>5124.1</td>
<td>4653.4</td>
<td>3.12</td>
<td>13.55</td>
<td>54548.1</td>
<td>52141.9</td>
<td>49086.3</td>
</tr>
<tr>
<td class="firstcol">Imports (Tril. Yen)</td>
<td>4431.7</td>
<td>4312.8</td>
<td>3684.0</td>
<td>2.76</td>
<td>20.30</td>
<td>44349.7</td>
<td>42229.4</td>
<td>42346.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Mineral Fuels&nbsp;</td>
<td>975.5</td>
<td>932.3</td>
<td>678.1</td>
<td>4.64</td>
<td>43.85</td>
<td>9349.9</td>
<td>8173.9</td>
<td>8523.7</td>
</tr>
<tr>
<td class="firstcol">Balance (Tril. Yen)</td>
<td>852.2</td>
<td>811.3</td>
<td>969.41</td>
<td>5.04</td>
<td>-12.10</td>
<td>10198.4</td>
<td>9912.5</td>
<td>6740.1</td>
</tr>
</tbody>
</table>
</body>
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With the Japanese economy having increased a mere 0.1% in the third quarter, October data will be scrutinized for signs indicating whether the economy has merely paused or it has entered a down trend. Today, data on industrial [...]

A Spate of New Data from Japan: Most of It Disappointing

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

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Andrew Cates

**Global shipping costs**
The Baltic Dirty Tanker Index has surged to multi-year highs, reflecting a sharp tightening in global oil shipping markets. The primary driver is the escalation in Middle East tensions, particularly the effective disruption to flows through the Strait of Hormuz—a critical artery for roughly a fifth of global oil trade. Heightened security risks, including missile and drone attacks on vessels and port infrastructure, have forced rerouting, increased insurance premia and reduced effective tanker supply. At the same time, longer voyage distances—especially for Gulf exports diverted around the Cape—are tying up capacity and amplifying rate pressures. The result is a classic squeeze: constrained supply of available ships meeting elevated demand for transport, pushing freight costs sharply higher.

260401Z1.jpg

**Supply Chain Bottlenecks**
Flash PMI data point to a renewed build-up of supply chain pressures across the major economies. Supplier delivery times—where readings below 50 indicate slower deliveries—have deteriorated in both the US and UK, with the latter showing a particularly sharp decline. The euro area, while more stable, is also drifting in the same direction. This broad-based softening suggests that the disruptions visible in energy and shipping markets are now feeding into the real economy. Longer delivery times are typically an early indicator of tightening supply conditions, rising input costs and, ultimately, renewed pipeline inflation pressures. While not yet at the extremes seen during the pandemic, the direction of travel is clear: supply chains are becoming less efficient just as geopolitical risks intensify.

260401Z2.jpg

**Policy Uncertainty Versus Market Volatility**
A striking divergence is emerging between policy uncertainty and financial market volatility. The US Economic Policy Uncertainty Index has risen sharply, reflecting the intensifying geopolitical backdrop, trade disruptions and an increasingly complex policy environment. By contrast, the VIX—while off its lows—remains relatively contained by historical standards. This gap suggests that financial markets may be underpricing the scale and persistence of current risks. Either uncertainty begins to recede, or market volatility has further to rise. For now, the message is clear: policymakers are operating in a far more uncertain world than markets appear to be discounting.

260401Z3.jpg

**Oil Prices and Monetary Policy** 
The sharp rise in oil prices is once again feeding directly into short-term interest rate expectations, with a strong positive correlation evident between WTI and US 2-year Treasury yields. As energy prices surge, markets are reassessing the near-term inflation outlook and the likely policy response, pushing yields higher. This reflects a familiar dynamic: energy shocks tighten financial conditions not just directly, but via expectations of more restrictive monetary policy. That said, there are important caveats. Medium-term market-based inflation expectations remain relatively well contained, suggesting credibility in central banks’ ability to anchor inflation over time. Moreover, recent communication from Fed Chair Powell indicates that the Federal Reserve is in no immediate hurry to raise rates, pointing instead to a more cautious, data-dependent approach in the face of heightened uncertainty.

260401Z4.jpg

**Loose Labour Markets**
Wage growth across the US, UK and euro area continues to moderate, pointing to a gradual loosening in labour market conditions. The sharp post-pandemic surge in wage pressures—particularly pronounced in the US—has clearly faded, with all three regions now on a downward trajectory. This matters in the current context: while the oil shock is pushing headline inflation higher and complicating the near-term outlook, easing wage dynamics reduce the risk of persistent second-round effects. In turn, this lessens the urgency for central banks to respond aggressively with tighter policy. The result is a more nuanced policy backdrop—one where energy-driven inflation pressures are rising, but underlying domestic cost pressures are moving in the opposite direction.

260401Z5.jpg

**Headline Inflation in Advanced Economies**
Despite the recent energy shock, broader inflation dynamics across advanced economies remain relatively well behaved. The euro area HICP flash estimate rose from 1.9% in February to 2.5% in March, driven largely by higher energy prices. However, core inflation edged down to 2.3% from 2.4%, suggesting that pass-through into underlying price pressures remains limited for now. More generally, inflation across many advanced economies continues to hover close to central bank targets—a marked contrast to the peaks seen in 2022. While higher oil prices will almost certainly continue to lift headline inflation in the near term, and the risk is clearly tilted toward further upside, the broader picture for now remains one of relatively contained underlying pressures. This suggests the current shock is more likely to complicate the disinflation process—potentially slowing or interrupting it—rather than decisively reversing it, though the balance of risks has become less favourable.

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Amid tentative signs of de-escalation from the US administration over the past 48 hours—including suggestions that the conflict with Iran could conclude relatively quickly—financial markets have begun to retrace some of last week’s sharp repricing of Middle East risk. Oil prices have come off their highs, while equities and bonds have rallied as risk premia ease. That said, the earlier phase of the week saw a decisive adjustment: oil surged, front-end yields moved higher, and uncertainty rose as investors grappled with the implications of disrupted energy flows. Even now, the overall adjustment has been uneven—volatility has picked up, but not to levels typically associated with sustained geopolitical stress—raising questions about how fully markets are internalising both the risks and the rapidly shifting outlook. Our charts this week capture these cross-currents. Tanker rates have spiked as shipping routes are disrupted and capacity tightens (chart 1), while PMI delivery times point to early signs of supply chain strain feeding into the real economy (chart 2). At the same time, the divergence between elevated policy uncertainty and relatively contained market volatility suggests there could have been a degree of complacency (chart 3). The rise in oil prices is already feeding into higher short-term yields, though this is being tempered by cooling labour markets, anchored inflation expectations and more cautious central bank signalling (charts 4 and 5). Meanwhile, euro area flash CPI has picked up, but core inflation remains relatively benign, suggesting underlying price pressures are still contained for now (chart 6).

Charts of the Week: Strait Stress

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 9,000 to 202,000 in the week ending March 28, from 211,000 in the week ending March 21, revised from 210,000. The four-week average declined 3,000 to 207,750 in the week ending March 28, from 210,750 the March 21 week, revised from 210,500. The Forecast Survey looked for 212,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 25,000 to 1.841 million in the week ending March 21, from 1.816 million in the week ending March 14. The four-week moving average declined to 1.839 million in the latest week from 1.846 million in the March 14 week. This is the lowest level for this average since September 28, 2024 when it was 1.834 million. The insured unemployment rate remained at 1.2% in the week of March 21. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending March 14, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.73%), Massachusetts (2.66%), Washington (2.39%), Minnesota (2.31%), California (2.17%), and New York (2.01%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas (0.36%), Alabama (0.38%), and North Carolina (0.40%). Rates in other notable states include Illinois (1.99%), Connecticut (1.82%), Pennsylvania (1.72%), and Texas (1.07%). These state data are not seasonally adjusted.

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

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- New claims declined by 9,000 to 202,000.
- Continuing claims rose by 25,000 to 1.841 million.
- The insured unemployment rate remained at 1.2%.

U.S. Initial Unemployment Claims Edged Down in the Week of March 28

Sandy Batten

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Total retail sales rebounded in February, rising a larger-than-expected 0.6% m/m (+3.7% y/y) following an upwardly revised 0.1% monthly decline in January (previously -0.2% m/m), according to data from the U.S. Census Bureau. The Action Economics Forecast Survey expected a 0.4% monthly increase. Excluding autos, other sales were up 0.5% m/m (+3.6% y/y), the first monthly increase in three months. The Action Economics Forecast Survey looked for a 0.3% m/m increase.

The control group of sales (those categories that the BEA uses to construct PCE in the national accounts) increased 0.5% m/m in February following a 0.2% increase in January. The January/February average for this variable is 2.1% annualized above the Q4 average. In Q4, the control group rose 2.8% saar from Q3. So, today’s figures point to a slight slowdown in PCE growth in the first quarter. Note, however, that the data released today predates the escalation of the conflict between the US/Israel and Iran which has led to a marked rise in gasoline/energy prices. The increase in energy prices to date, if maintained, could stress household finances and thereby significantly slow consumer spending ahead.

Sales of motor vehicles and parts jumped 1.2% m/m in February, their first monthly gain in three months and their largest monthly increase since last July. Furniture sales declined 1.0% m/m in February while sales of electronics and appliances rose 0.5% m/m. Sales of building materials increased 0.4% m/m, their fourth consecutive monthly gain. Sales at health and personal care stores jumped 2.3% m/m, their first monthly gain in five months. Sales at gasoline stations rose 0.9% m/m in February, their third monthly gain in the past four months, ahead of the sharp price increases that occurred in March. Clothing store sales jumped 2.0% m/m, their first monthly increase in three months. Department store sales gained 3.0% m/m, their first monthly increase in four months. Food sales slumped 1.0% m/m in February, their first monthly decline in three months. Sales of nonstore retailers increased 0.7% m/m in February on top of a 1.4% m/m jump in January. Eating out sales rose 0.4% m/m, their first monthly gain in three months.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Total sales increased 0.6% m/m after a 0.1% m/m decline in January
- Excluding autos, sales increase 0.5% m/m in February after having been unchanged in January.
- Sales of the retail control group that is used to construct PCE rose 0.5% m/m in February.

U.S. Retail Sales Rebounded in February

Winnie Tapasanun

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U.S. nonfarm private sector payrolls rose a larger-than-expected 62,000 (0.3% y/y) in March after increases of 66,000 in February (+63,000 initially) and 11,000 in January (unrevised), according to the ADP National Employment Report. The three-month average change was +46,000 in March, up from +38,000 in February and +41,000 in January. The Action Economics Forecast Survey expected a 40,000 increase in March.

Small business hiring (less than 50 employees) climbed a solid 85,000 (0.7% y/y) in March—the ninth straight m/m increase and the largest since August—after a 61,000 gain in February (+60,000 initially), with employment in very small firms (1-19 employees) surging 112,000, the strongest m/m rise since February 2024, and employment in small firms (20-49 employees) down 27,000. Employment at medium-sized firms (50-499 employees) fell 20,000 (-0.4% y/y) in March following a 6,000 decline in February (-7,000 initially) and two consecutive m/m increases. Large business hiring (500+ employees) slipped 4,000 (+1.0% y/y) after an 11,000 February rebound (+10,000 initially).

Service-producing jobs rose 32,000 (0.5% y/y) in March, the 10th straight m/m gain, on top of a 50,000 advance in February (+47,000 initially). March’s rise was led by education & health services (+58,000), followed by information (+16,000), leisure & hospitality (+7,000), financial activities (+4,000), other services (+4,000), and professional & business services (+1,000). To the downside, m/m employment fell in trade, transportation & utilities (-58,000).

Goods-producing employment advanced 30,000 (-0.4% y/y) in March, the biggest m/m increase since October 2022, after a 16,000 rise in February (unrevised). March’s gain was led by construction (+30,000) and natural resources & mining (+11,000), while manufacturing (-11,000) continued to decline.

By region, nonfarm private payroll employment rose m/m in March in the South (+101,000; +0.5% y/y) and West (+16,000; +0.4% y/y). In contrast, employment fell m/m in the Northeast (-29,000; +0.4% y/y) and Midwest (-26,000; -0.1% y/y).

Wage growth for job changers accelerated to a three-month-high 6.6% y/y in March from 6.3% y/y in February, remaining well below a high of 16.1% in April 2022. Wage growth for job stayers held steady at 4.5% y/y for the third consecutive month in March, holding in a narrow 4.4%-4.5% range since April 2025. Pay growth also remained steady in major industries, including financial activities (5.2% y/y), manufacturing (4.9% y/y), construction (4.7% y/y), leisure & hospitality (4.6% y/y), education & health services (4.3% y/y), and professional & business services (4.3% y/y).

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Private payrolls +62K in March, ninth straight m/m gain.
- Hiring increase driven by small businesses (+85K), strongest since August.
- Service-sector jobs up (+32K), led by education & health svs. (+58K) and information (+16K), partly offset by trade, transp. & utilities (-58K).
- Goods-producing jobs up (+30K), driven by construction (+30K).
- Wage growth accelerates y/y for job changers (6.6%, a three-month high) but steady for job stayers (4.5%).

U.S. ADP Private Employment Growth in March Above Forecasts

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Mortgage applications dropped 10.4% w/w (+14.2% y/y) in the week ending March 27, after declining 10.5% w/w (+25.5% y/y) in the week ending March 20, and by 10.9% w/w in the week ending March 13, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house declined 2.6% w/w (+0.8% y/y) in the latest week, after dropping 5.4% w/w (+5.0% y/y) in the week ending March 20.  Applications for loan refinancing plunged 17.3% w/w (+33.2% y/y) in the March 27 week, following a drop of 14.6% w/w (+52.2% y/y) in the week ending March 20, and a decline of 18.5% w/w in the week ending March 13.

The effective interest rate on a 30-year fixed-rate loan rose 14bps to 6.76% in the week ending March 27 from 6.62% in the week ending March 20. The rate on the 30-year fixed-rate loan has risen 52bps since the February 27 week. The rate on 15-year fixed-rate mortgages rose 5bps to 6.08% in the latest week from 6.03% in the prior week. The 30-year Jumbo rate rose 10bps to 6.71% in the March 27 week from 6.61% in the week ending March 20. The rate on a 5-year ARM dropped 12bps to 5.88% in the latest week from 6.00% in the week ending March 20.

The share of applications for refinancing an existing loan dropped to 45.3% of total applications in the week of March 27 from 49.6% in the March 20 week. The adjustable-rate mortgage (ARM) share of activity eased to 8.0% in the week ending March 27 from 8.1% in the week ending March 20.

The average size of a mortgage loan declined 1.3% w/w (-1.9% y/y) to $389,200 in the week ending March 27, after declining 2.4% w/w (-0.9% y/y) to $394,500 in the week ending March 20. The average size of a purchase loan edged down 0.8% w/w (+0.4% y/y) to $449,400 in the latest week, after declining 0.5% w/w (+2.3% y/y) to $453,200 in the March 20 week. The average size of a loan to refinance a mortgage declined 5.5% w/w (+0.3% y/y) to $316,600 in the March 27 week following a drop of 6.3% w/w (+1.0% y/y) to $334,900 in the March 20 week. Since the week of February 27, the average size of a loan to refinance a mortgage has declined 21.8%.

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.

- Both applications for loans to purchase and for loan refinancing dropped in the latest week.
- Interest rate on 30-year fixed-rate loans rose 14bps to 6.76% 
- Average loan size declined.

Economy in Brief

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U.S. Light Vehicle Sales Lower

European Manufacturing Slows; Oil Price & Strong Euro Blamed

Mortgage Applications Down Further

U.S. Construction Spending Flat Again in October

U.S. Personal Income Rebounded

ISM Factory Index Up

ISM Factory Index Up

A Spate of New Data from Japan: Most of It Disappointing