Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041217a.jpg" width="353">
Consumer Prices (CPI-U) were tame last month, rose just 0.2% following the 0.6% spurt in October and were in line with Consensus expectations for a 0.2% rise. Prices less food &amp; energy also were in line with a 0.2% gain that matched the prior months increase.
Services prices less energy rose the same modest 0.2% as in October. Shelter prices rose .05% (2.7% y/y), the weakest for any month in over a year. The rental equivalence price measure was unchanged m/m (2.3% y/y) and prices for lodging away from home fell (+6.1% y/y). Health care services rose 0.3% (5.0% y/y) but tuition &amp; child care costs jumped 0.6% (6.8% y/y). Public transportation prices were strong for the second consecutive month and rose 2.4% (0.3% y/y).
&quot;Core&quot; commodities price inflation eased to 0.1% from the 0.4% strength of October. Household furnishings &amp; operation prices fell (+0.7% y/y) as did prices for used cars &amp; trucks (+3.6% y/y). New motor vehicle prices rose 0.7% (0.3% y/y) and apparel prices ticked 0.1% higher (-0.2% y/y).
Gasoline prices fell 1.8% (+31.0% y/y) but fuel oil prices were strong for seventh consecutive month, up 3.5% (38.3% y/y). Natural gas prices rebounded 2.4% (+6.8% y/y) after two months of decline.
The chained CPI, which adjusts for shifts in the mix of consumer purchases, was unchanged. Similar to the PCE price deflator, core chain prices also were unchanged.
&quot;Are Home Prices the Next Bubble?&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/epr/04v10n3/0412mcca.pdf">here</a>.

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</table>
<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/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</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&nbsp;</td>
<td>0.2%</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>-2.0%</td>
<td>-1.1%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>0.2%</td>
<td>4.2%</td>
<td>19.0%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.2%</td>
<td>0.6%</td>
<td>3.2%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</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>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.0%</td>
<td>0.5%</td>
<td>3.1%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
</table>
</body>
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Consumer Prices (CPI-U) were tame last month, rose just 0.2% following the 0.6% spurt in October and were in line with Consensus expectations for a 0.2% rise. Prices less food & energy also were in line with a 0.2% gain that matched [...]

Consumer Prices Tame, As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041217a.jpg" width="353">
Consumer Prices (CPI-U) were tame last month, rose just 0.2% following the 0.6% spurt in October and were in line with Consensus expectations for a 0.2% rise. Prices less food &amp; energy also were in line with a 0.2% gain that matched the prior months increase.
Services prices less energy rose the same modest 0.2% as in October. Shelter prices rose .05% (2.7% y/y), the weakest for any month in over a year. The rental equivalence price measure was unchanged m/m (2.3% y/y) and prices for lodging away from home fell (+6.1% y/y). Health care services rose 0.3% (5.0% y/y) but tuition &amp; child care costs jumped 0.6% (6.8% y/y). Public transportation prices were strong for the second consecutive month and rose 2.4% (0.3% y/y).
&quot;Core&quot; commodities price inflation eased to 0.1% from the 0.4% strength of October. Household furnishings &amp; operation prices fell (+0.7% y/y) as did prices for used cars &amp; trucks (+3.6% y/y). New motor vehicle prices rose 0.7% (0.3% y/y) and apparel prices ticked 0.1% higher (-0.2% y/y).
Gasoline prices fell 1.8% (+31.0% y/y) but fuel oil prices were strong for seventh consecutive month, up 3.5% (38.3% y/y). Natural gas prices rebounded 2.4% (+6.8% y/y) after two months of decline.
The chained CPI, which adjusts for shifts in the mix of consumer purchases, was unchanged. Similar to the PCE price deflator, core chain prices also were unchanged.
&quot;Are Home Prices the Next Bubble?&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/epr/04v10n3/0412mcca.pdf">here</a>.

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<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/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</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>
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<td class="firstcol">Total&nbsp;</td>
<td>0.2%</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>-2.0%</td>
<td>-1.1%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>0.2%</td>
<td>4.2%</td>
<td>19.0%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.2%</td>
<td>0.6%</td>
<td>3.2%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</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>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.0%</td>
<td>0.5%</td>
<td>3.1%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
</table>
Gasoline Prices, Down in November, Fell Further in December 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041217b.jpg" width="353">
The average price for unleaded regular gasoline fell to $1.85 per gallon last week, putting it 6.7% below the November average.
At $41.83 per barrel, the price of West Texas Intermediate crude oil last week was 13.2% below the $48.20 averaged in November and was down 24.2% from the weekly high of $55.18 in late October.
Wholesale natural gas prices have been volatile, but relatively firm at $6.07/mmbtu last week.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.
&quot;Do Energy Price Price Spikes Cause Inflation?&quot; is 2003 research from the Federal Reserve Bank of Cleveland and is available <a href="http://www.clevelandfed.org/Research/Com2003/0401.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">12/13/04</th>
<th scope="col">12/31/03</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">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$1.85</td>
<td>$1.48</td>
<td>26.1%</td>
<td>$1.56</td>
<td>$1.35</td>
<td>$1.42</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$41.02</td>
<td>$32.55</td>
<td>23.6%</td>
<td>$32.78</td>
<td>$31.23</td>
<td>$19.38</td>
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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/041216f.jpg" width="353">
The Bank of Japan today reported third quarter flow-of-funds for the Japanese economy. These data, as other recent Japanese statistics, showed some positive economic tendencies. Use of credit is trending higher.
A turnaround in financing activity began about the third quarter of last year as seen in the chart alongside, when the year-to-year change in the nonfinancial sector&#39;s use of funds turned positive after a three-year contraction. The decrease in those liabilities in the third quarter need not indicate a reversion to weakness. As also evident in the graph, in most years of these data&#39;s short history, the third quarter has been the weakest. The year-to-year gain remains on a generally firming trend. The same is true for private corporate business in Japan, which experienced a substantial decline in debt usage from 2000 through 2002.
The details of the flow-of-funds also highlight developments in the foreign sector. These data are a mirror image of the balance-of-payments; the BOP data use a domestic perspective, so Japanese investment abroad is viewed as an asset of Japanese investors. But in the flow-of-funds, the &quot;overseas sector&quot; is seen from its point-of-view. Thus, Japanese investment abroad is treated as the overseas economy&#39;s liabilities. In the third quarter, these liabilities continued to grow vigorously. The other side, overseas investment in Japan, that is, the overseas sector&#39;s &quot;assets&quot; in Japan, decreased in Q3, although this followed an outsized rise in Q2. This made the year-on-year expansion a quite substantial 15.7% and extended the strong 9.1% growth during 2003. These significant gains in capital holdings in both directions highlight the globalization of capital resources and once again call attention to the fact that capital flows are not just a passive response to a nation&#39;s current account position.

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<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Change, Not Seasonally Adjusted</th>
<th scope="col">Q3 2004</th>
<th scope="col">Q2 2004</th>
<th scope="col">Year/ Year</th>
Year-End/Year-End
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">Total Liabilities: Domestic Nonfinancial Sector </td>
<td>-1.4</td>
<td>-0.2</td>
<td>3.4</td>
<td>2.8</td>
<td>-2.3</td>
<td>-2.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Nonfinancial Corporations</td>
<td>-3.0</td>
<td>-0.1</td>
<td>3.0</td>
<td>2.8</td>
<td>-8.1</td>
<td>-10.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Overseas Assets in Japan</td>
<td>-1.9</td>
<td>5.0</td>
<td>15.7</td>
<td>9.1</td>
<td>-4.0</td>
<td>-3.4</td>
</tr>
<tr>
<td class="firstcol">Overseas Liabilities to Japan</td>
<td>1.7</td>
<td>3.6</td>
<td>9.6</td>
<td>4.1</td>
<td>-3.3</td>
<td>11.2</td>
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The Bank of Japan today reported third quarter flow-of-funds for the Japanese economy. These data, as other recent Japanese statistics, showed some positive economic tendencies. Use of credit is trending higher. A turnaround in [...]

Japan Financing Trends Remain Favorable, Despite Q3 Decline

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216d.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions in the manufacturing sector improved in December to 29.6 from 20.7 the prior month. Only a slight rise to 21.1 had been the Consensus expectation.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 53% correlation with q/q growth in real GDP.
Each of the sub indexes improved m/m with the exception of the index for inventories as well as for the number of employees.
The business conditions index reflects a separate survey question, not the sub indexes.
The separate index of expected business conditions in six months reversed about half of the sharp improvement in November and fell to 41.2.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216e.jpg" width="353">
The prices paid index fell for the second month, to 52.2, although expectations for prices surged. During the last ten years there has been a 76% correlation between the prices paid index and the three month growth in the PPI for intermediate goods. The correlation with the finished goods PPI has been 41% and with the CPI it&#39;s been 45%.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos1204.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;03</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>29.6</td>
<td>20.7</td>
<td>30.3</td>
<td>27.5</td>
<td>10.6</td>
<td>7.7</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>52.2</td>
<td>53.9</td>
<td>30.9</td>
<td>51.2</td>
<td>16.7</td>
<td>12.2</td>
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The Philadelphia Feds index of general business conditions in the manufacturing sector improved in December to 29.6 from 20.7 the prior month. Only a slight rise to 21.1 had been the Consensus expectation. During the last ten years [...]

Philadelphia Fed Activity Index Improved

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216b.jpg" width="353">
Initial unemployment insurance claims dropped a sharp 43,000 to 317,000 and more than reversed all of the gains during the prior two weeks. The latest was the lowest claims level since early July and the prior week was revised up slightly. The Consensus expectation had been for 345,000 claims.
The four week moving average of initial claims fell to 337,750 (-8.2% 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 dropped 50,000 following a downwardly revised 69,000 rise the prior week.
The insured rate of unemployment remained at 2.2%, where it&#39;s been since early October.

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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">12/11/04</th>
<th scope="col">12/04/04</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>
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<td class="firstcol">Initial Claims</td>
<td>317</td>
<td>360</td>
<td>-12.4%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,737</td>
<td>-17.8%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
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</tbody>
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</body>
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Initial unemployment insurance claims dropped a sharp 43,000 to 317,000 and more than reversed all of the gains during the prior two weeks. The latest was the lowest claims level since early July and the prior week was revised up [...]

Initial Claims for Unemployment Insurance Dropped Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216c.jpg" width="353">
The US current account deficit deepened slightly in 3Q04 to a record $164.7B versus $164.4B the prior quarter, originally reported at $166.2B. Consensus expectations had been for a 3Q deficit of $171.0B. 
The deficit in merchandise trade deteriorated to $166.7B from an unrevised $163.6B in 2Q. A 14.8% y/y gain in exports lagged an 18.7% rise in imports.
The surplus on services fell to $11.4B from a downwardly revised to $12.5B in 2Q. Exports of services rose 9.7% y/y while imports rose 13.1%.
From the capital account, US foreign direct investment abroad fell to $43.5B (-3.8% y/y) and foreign direct investment in the US surged to $53.1B, the highest level since 2Q01. The balance of $9.6B was the first positive balance since 2Q01.

<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/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">3Q &#39;04</th>
<th scope="col">2Q &#39;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">Current Account Deficit</td>
<td>$164.7B</td>
<td>$164.4B</td>
<td>$133.9B</td>
<td>$530.7B</td>
<td>$473.9B</td>
<td>$385.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$150.1B</td>
<td>$146.0B</td>
<td>$115.0B</td>
<td>$463.2B</td>
<td>$414.6B</td>
<td>$339.1B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.7%</td>
<td>3.6%</td>
<td>16.1%</td>
<td>5.8%</td>
<td>-3.9%</td>
<td>-9.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>2.7%</td>
<td>6.7%</td>
<td>19.8%</td>
<td>7.3%</td>
<td>1.5%</td>
<td>-8.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$14.6B</td>
<td>$18.3B</td>
<td>$16.6B</td>
<td>$67.4</td>
<td>$59.4B</td>
<td>$46.6B</td>
</tr>
</tbody>
</table>
</body>
</html>

The US current account deficit deepened slightly in 3Q04 to a record $164.7B versus $164.4B the prior quarter, originally reported at $166.2B. Consensus expectations had been for a 3Q deficit of $171.0B. The deficit in merchandise [...]

U.S. Current Account Deficit Deepened

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216a.jpg" width="353">
Housing starts in November fell a sharp 13.1% m/m to 1.771M, reversing all of a 7.0% rise in October.Consensus expectations had been for 1.98M starts. The latest was the lowest level of starts since May 2003.
Single-family starts fell 11.7% to 1.448M, also the lowest since May 2003, and multi-family starts dropped 19.0%.
Building permits fell 1.5% m/m to 1.988M after an upwardly revised gain October.
The Composite Housing Market Index from the National Association of Home Builders (NAHB) rose to 71 in December from a downwardly revised November level of 70.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
The index of current single family home sales was stable at its highest in over a year and the index of expected sales in six months rose.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</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>1,771</td>
<td>2,039</td>
<td>-13.8%</td>
<td>1,8 53</td>
<td>1,7 10</td>
<td>1,601</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,448</td>
<td>1,640</td>
<td>-13.3%</td>
<td>1,505</td>
<td>1,3 63</td>
<td>1,272</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>3 23</td>
<td>399</td>
<td>-15.9%</td>
<td>348</td>
<td>347</td>
<td>330</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,988</td>
<td>2,018</td>
<td>3.5%</td>
<td>1,8 89</td>
<td>1,749</td>
<td>1,637</td>
</tr>
</tbody>
</table>
</body>
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Housing starts in November fell a sharp 13.1% m/m to 1.771M, reversing all of a 7.0% rise in October.Consensus expectations had been for 1.98M starts. The latest was the lowest level of starts since May 2003. Single-family starts fell [...]

Housing Starts Fell Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216a.jpg" width="353">
Housing starts in November fell a sharp 13.1% m/m to 1.771M, reversing all of a 7.0% rise in October.Consensus expectations had been for 1.98M starts. The latest was the lowest level of starts since May 2003.
Single-family starts fell 11.7% to 1.448M, also the lowest since May 2003, and multi-family starts dropped 19.0%.
Building permits fell 1.5% m/m to 1.988M after an upwardly revised gain October.
The Composite Housing Market Index from the National Association of Home Builders (NAHB) rose to 71 in December from a downwardly revised November level of 70.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
The index of current single family home sales was stable at its highest in over a year and the index of expected sales in six months rose.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</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>1,771</td>
<td>2,039</td>
<td>-13.8%</td>
<td>1,8 53</td>
<td>1,7 10</td>
<td>1,601</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,448</td>
<td>1,640</td>
<td>-13.3%</td>
<td>1,505</td>
<td>1,3 63</td>
<td>1,272</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>3 23</td>
<td>399</td>
<td>-15.9%</td>
<td>348</td>
<td>347</td>
<td>330</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,988</td>
<td>2,018</td>
<td>3.5%</td>
<td>1,8 89</td>
<td>1,749</td>
<td>1,637</td>
</tr>
</tbody>
</table>
U.S. Current Account Deficit Deepened 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216c.jpg" width="353">
The US current account deficit deepened slightly in 3Q04 to a record $164.7B versus $164.4B the prior quarter, originally reported at $166.2B. Consensus expectations had been for a 3Q deficit of $171.0B. 
The deficit in merchandise trade deteriorated to $166.7B from an unrevised $163.6B in 2Q. A 14.8% y/y gain in exports lagged an 18.7% rise in imports.
The surplus on services fell to $11.4B from a downwardly revised to $12.5B in 2Q. Exports of services rose 9.7% y/y while imports rose 13.1%.
From the capital account, US foreign direct investment abroad fell to $43.5B (-3.8% y/y) and foreign direct investment in the US surged to $53.1B, the highest level since 2Q01. The balance of $9.6B was the first positive balance since 2Q01.

<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/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">3Q &#39;04</th>
<th scope="col">2Q &#39;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">Current Account Deficit</td>
<td>$164.7B</td>
<td>$164.4B</td>
<td>$133.9B</td>
<td>$530.7B</td>
<td>$473.9B</td>
<td>$385.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$150.1B</td>
<td>$146.0B</td>
<td>$115.0B</td>
<td>$463.2B</td>
<td>$414.6B</td>
<td>$339.1B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.7%</td>
<td>3.6%</td>
<td>16.1%</td>
<td>5.8%</td>
<td>-3.9%</td>
<td>-9.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>2.7%</td>
<td>6.7%</td>
<td>19.8%</td>
<td>7.3%</td>
<td>1.5%</td>
<td>-8.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$14.6B</td>
<td>$18.3B</td>
<td>$16.6B</td>
<td>$67.4</td>
<td>$59.4B</td>
<td>$46.6B</td>
</tr>
</tbody>
</table>
Initial Claims for Unemployment Insurance Dropped Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216b.jpg" width="353">
Initial unemployment insurance claims dropped a sharp 43,000 to 317,000 and more than reversed all of the gains during the prior two weeks. The latest was the lowest claims level since early July and the prior week was revised up slightly. The Consensus expectation had been for 345,000 claims.
The four week moving average of initial claims fell to 337,750 (-8.2% 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 dropped 50,000 following a downwardly revised 69,000 rise the prior week.
The insured rate of unemployment remained at 2.2%, where it&#39;s been since early October.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/11/04</th>
<th scope="col">12/04/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>317</td>
<td>360</td>
<td>-12.4%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,737</td>
<td>-17.8%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
Philadelphia Fed Activity Index Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216d.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions in the manufacturing sector improved in December to 29.6 from 20.7 the prior month. Only a slight rise to 21.1 had been the Consensus expectation.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 53% correlation with q/q growth in real GDP.
Each of the sub indexes improved m/m with the exception of the index for inventories as well as for the number of employees.
The business conditions index reflects a separate survey question, not the sub indexes.
The separate index of expected business conditions in six months reversed about half of the sharp improvement in November and fell to 41.2.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041216e.jpg" width="353">
The prices paid index fell for the second month, to 52.2, although expectations for prices surged. During the last ten years there has been a 76% correlation between the prices paid index and the three month growth in the PPI for intermediate goods. The correlation with the finished goods PPI has been 41% and with the CPI it&#39;s been 45%.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos1204.html">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/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;03</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>29.6</td>
<td>20.7</td>
<td>30.3</td>
<td>27.5</td>
<td>10.6</td>
<td>7.7</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>52.2</td>
<td>53.9</td>
<td>30.9</td>
<td>51.2</td>
<td>16.7</td>
<td>12.2</td>
</tr>
</tbody>
</table>
</body>
</html>

PMIs showing widespread revival of global economy

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

Surging orders for computers and electronics propelling durable goods orders

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

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

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Winnie Tapasanun

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Existing home sales unexpectedly fell 2.4% m/m (+2.8% y/y) to 4.09 million units (SAAR) in June, the first monthly decline since March, following an upwardly revised 3.7% increase to 4.19 million in May (previously +3.2%; 4.17 mil.), according to the National Association of Realtors (NAR). The Action Economics Forecast Survey had expected June sales of 4.20 million units. Sales remained 36.4% below a high of 6.43 million in January 2022 and 38.0% below a peak of 6.60 million in January 2021. The June decline coincided with a rise in the average 30-year fixed mortgage rate to 6.49% in June, the highest since August 2025, after increasing to 6.44% in May, according to Freddie Mac. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales fell 2.4% (+3.3% y/y) to 3.73 million units in June, the first m/m fall in three months, following a 4.1% gain to 3.82 million in May, remaining 34.6% below a high of 5.70 million in January 2022. Sales of condos and co-ops decreased 2.7% (-2.7% y/y) to 360,000 in June, the lowest level since May 2025, after being unchanged m/m for the third successive month at 370,000, remaining 50.7% below a high of 730,000 in January 2022.

Regionally, June existing home sales declined m/m in all regions except the Northeast. Sales in the South dropped 3.6% (+3.8% y/y) to 1.89 million in June, a three-month low, after a 3.2% rise in May, and sales in the Midwest slid 3.0% (+2.1% y/y) to 980,000 following a 7.4% May advance; both posted the first m/m decrease in three months. Sales in the West fell 1.3% (+2.8% y/y) to 740,000, the lowest level since January, after being flat m/m at 750,000 in May. In contrast, sales in the Northeast increased 2.1% (0.0% y/y) to 480,000 after a 4.4% May gain. Notably, the South remained the dominant region, accounting for 46.2% of total U.S. existing home sales.

The median price of all existing homes (NSA) rose 2.2% (1.8% y/y) to $440,600 in June, the fifth consecutive m/m rise, on top of an upwardly revised 3.3% increase to $431,200 in May ($429,300 previously). Prices were 22.1% above a low of $360,800 in January 2023. The median price of an existing single-family home climbed 2.3% (1.8% y/y) to $446,400 in June, the fifth straight m/m increase, after a 3.4% advance to $436,400 in May. The median price of condos and co-ops, up for the sixth time in seven months, grew 0.6% (1.6% y/y) to $380,000 following a 1.0% May gain to $377,800. Regionally, overall prices rose m/m and y/y in June in the Northeast (+5.6%; +3.9% y/y), Midwest (+2.1%; +2.7% y/y), South (+1.0%; +0.9% y/y), and West (+0.8%; +0.9% y/y). All these price series were at their record highs.

Inventories of homes for sale fell m/m in June for the first time since December. The number of existing homes for sale (NSA) declined 0.6% (+1.3% y/y) to 1.56 million units following an upwardly revised 4.7% May rise to 1.57 million (the highest level since November 2019). The supply of homes on the market at the current selling rate (NSA) increased to 4.6 months in June from 4.5 months in May and April, matching the highest level since August 2025. A record low in supply of 1.6 months was in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

260709H57.jpg

260709I57.jpg

- June sales -2.4% m/m to 4.09 mil., first drop in three mths.; +2.8% y/y, third straight y/y rise.
- Sales m/m down in the South (-3.6%), Midwest (-3.0%), and West (-1.3%); up in the Northeast (+2.1%).
- Sales y/y up in all regions except the Northeast w/ a flat reading.
- Median sales price +2.2% (+1.8% y/y) to $440,600, a record high.
- Unsold inventory -0.6% (+1.3% y/y) to 1.56 mil. units, first m/m decline since Dec.; 4.6 months' supply, highest since Aug. ’25.

U.S. Existing Home Sales Unexpectedly Fall in June from a Five-Month High

Kathleen Stephansen, CBE

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260709B1.jpg

Initial claims for unemployment insurance declined 2,000 to 215,000 in the week ending July 4, from 217,000 in the week ending June 27, revised from 215,000. The four-week average was 218,750 in the July 4 week, down from 222,500 in the week ending June 27. The Action Economics/Haver Analytics Survey looked for 218,000 claims to have been filed. 

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 8,000 to 1.814 million in the week ending June 27, from 1.806 million in the week ending June 20, revised from 1.814 million. The four-week moving average rose to 1.808 million in the June 27 week from 1.801 million in the June 20 week. The insured unemployment rate was unchanged at 1.2% in the week of June 27. Except for a one-week dip to 1.1% in the week of April 25, the insured unemployment rate has been at 1.2% since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending June 20, the highest unemployment rates were in Washington (2.03%), New Jersey (2.11%), Minnesota (2.15%), and Puerto Rico (2.45%). The lowest rates were in South Dakota (0.28%), Florida (0.35%), Alabama and North Carolina (both 0.41%), Louisiana (0.42%), and Arkansas (0.49%). Rates in other notable states include California (1.88%), Pennsylvania (1.63%), Illinois (1.58%), New York (1.52%), and Texas (1.12%). 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 2,000 to 215,000 in the week ending July 4.
- Continuing claims rose by 8,000 to 1.814 million in the week ending June 27.
- The insured unemployment rate was unchanged at 1.2% in the week of June 27.

U.S. Initial Unemployment Claims Declined in the Week of July 4

Robert Brusca

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The German trade surplus surged in May to €19.1 billion from €14.7 billion in April. Exports rose by 0.9% in May while imports fell by 2.5%, creating a jump in the surplus month-to-month. In April, exports increased by 0.8% while imports rose by 1.1%.

Details on exports and imports lag by one month. In April, exports for motor vehicles and consumer goods declined, while exports of capital goods and other exports rose. On the import side, there were increases in imports ranging from 2.8% to 4.3% month-to-month across capital goods, motor vehicles, and consumer goods, but for the catch-all category ‘other’ imports fell by 2.7% month-to-month.

Flows adjusted for inflation showed an increase in exports of 0.4% in May while real imports fell by 3.3%. In April, real exports were flat while real imports fell by 0.2%.

The sequential behavior of real exports and real imports show independent activity. Imports log a clear weakening, rising 0.1% over 12 months, falling at a 5% annual rate over six months, and then falling at a 10.3% annual rate over three months. On the export side, real exports rose by 2.6% over 12 months, accelerated to a 7.2% annual rate over six months, but over three months have pulled back and fallen at a 1.6% annual rate. However, export growth still exceeds import growth over each of these horizons: 12 months, six months, and three months.

Trade trends paint a darkening picture of the German economy, with imports weak in real terms and trending even weaker, while activity on the export side of the equation pops over 12 months and six months but takes a hit over three months.

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The situation in the Strait of Hormuz continues to muddy the waters for the future. Passage through the strait has been sharply stopped, stabilized, revived, and now is back to being destabilized. That makes the strait a major uncertainty zone; it's hard to tell how these effects are going to play out over the coming months for German trade results and everyone else's. The deterioration of conditions in the Strait of Hormuz is now unknowable because Iran has decided to start shooting at ships, further destabilizing the outlook.

Germany

German Trades Surplus Balloons

Andrew Cates

**Growth Surprises Continue to Underpin Equity Resilience**
Global equity markets have proved remarkably resilient in recent weeks, shrugging off intermittent bouts of geopolitical and policy uncertainty to grind higher. Chart 1 below helps explain why: it tracks the relationship between global growth-versus-inflation surprises and world equity markets, and on that measure the recent run of global growth data has continued to surprise on the upside relative to inflation outturns — a combination that has historically been supportive for risk assets. Whether that resilience persists will depend on whether the growth-surprise advantage evident in the chart below can be sustained in the face of the inflationary pressures explored below.

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**PMIs Confirm a Broadly Solid Global Expansion**
This week's final composite PMI readings for June reinforced the broader impression of resilient global growth. As chart 2 below shows, most major economies posted readings comfortably in expansionary territory, with India continuing to lead the pack and the US not far behind. Even the laggards in the sample are hovering close to the expansion threshold rather than falling decisively below it, suggesting stabilisation rather than outright contraction (and with the UK a notable exception).

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**Inflation Surprises Are Creeping Back, and Bond Yields Are Taking Notice**
The US growth picture painted by Haver's surprise indices broadly echoes the message from the global PMI data. Chart 3 below shows the combined growth-and-inflation surprise index drifting higher this week, and closer inspection suggests growth is doing most of that work, with activity data continuing to outperform expectations. That is, on the face of it, good news. But it has not stopped bond markets from taking notice: short-dated Treasury yields have remained elevated in recent weeks, as stronger growth keeps alive the possibility that the Federal Reserve holds rates higher for longer or even lifts them in coming weeks.

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**Supply Chains Are Tightening** 
Latest data show that global supply chain pressures tightened by less in June than they had the month before, likely reflecting the easing of Middle East tensions through much of the period. Chart 4 below shows that pressures troughed in the middle of last year and have been building gradually since, though June's slower pace of tightening suggests that easing had started to feed through. Still, today's flare-up threatens to undo that improvement, particularly if it affects shipping routes or energy flows through the region once again.

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**Extreme Weather: An Old Supply-Side Risk Returns**
Geopolitics is not the only source of supply-side risk currently in play. Large parts of Europe have been gripped this week by another intense and prolonged heatwave, with temperatures in several major cities running well above seasonal norms. Extreme heat of this kind carries real economic costs: it depresses labour productivity, particularly in outdoor and manufacturing-adjacent sectors, strains electricity grids as air-conditioning demand spikes, and can disrupt agricultural output and river-based transport when water levels fall. Episodes like this have become more frequent in recent years, and while any single heatwave rarely shifts the macro picture on its own, the cumulative effect of more frequent and more severe weather events could start showing up in productivity and inflation data across the advanced economies. It is a reminder that the supply side of the global economy faces structural as well as cyclical challenges, and that climate-related disruption deserves a permanent place alongside geopolitics and demographics in any assessment of medium-term inflation risk.

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**AI Investment: The Other Side of the Supply Equation**
Set against these supply-side headwinds is a genuinely positive structural development: the extraordinary scale of private investment now flowing into artificial intelligence. Chart 6 below shows just how sharply that investment has grown in recent years, reaching a fresh high last year. If even a fraction of that investment translates into genuine productivity gains, it could provide a meaningful long-run offset to the energy, climate and geopolitical constraints highlighted elsewhere in this week's charts. The scale of the bet now being placed on AI is large enough that it is beginning to show up in aggregate investment and capital expenditure data across the advanced economies, and it is likely to remain one of the defining structural themes shaping the global growth outlook over the remainder of this decade.

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Global markets head into this week’s closing stages digesting a mixed set of signals. Last week's US non-farm payrolls report undershot expectations, adding to questions about the durability of the US labour market even as broader activity data have continued to hold up well. Compounding that picture, news broke today of renewed instability in the Middle East, reintroducing a geopolitical risk premium into markets just as investors had begun to look past it. Global equity markets have nonetheless remained resilient, continuing to track the broadly encouraging tone of incoming activity data (chart 1). That resilience was reinforced by a solid set of global PMIs across most major economies over the past few days (chart 2). Haver's surprise indices tell a similar story of positive growth momentum in the US, but with an important caveat: incoming inflation data have also been surprising to the upside, driven largely by higher oil prices (chart 3). These inflation risks could persist moreover, as global supply chain pressures have picked up in recent months and today's flare-up in the Middle East threatens to add further strain (chart 4). The world economy remains vulnerable to other supply-side shocks too, such as the extreme heat gripping much of Europe this week (chart 5). Still, on the other side of the ledger the enormous scale of investment now flowing into artificial intelligence could be a genuine source of supply-side potential (chart 6).

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Charts of the Week: Growth Holds Firm

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Mortgage applications dropped 2.2% w/w (-5.4% y/y) in the week ending July 3, following no change in the week ending June 26, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house edged down 0.6% w/w (-6.3% y/y) in the latest week, after rising 0.5% w/w (3.2% y/y) in the June 26 week.  Applications for loan refinancing dropped 4.1% w/w (-4.2% y/y) in the week ending July 3, after declining 0.7% w/w (+9.1% y/y) in the June 26 week.

The effective interest rate on a 30-year fixed-rate loan rose 1bp to 6.77% in the week ending July 3 from 6.76% in the week ending June 26. The rate on 15-year fixed-rate mortgages edged down 2bps to 6.17% in the July 3 week from 6.19% in the June 26 week. The 30-year Jumbo rate edged down 1bp to 6.62% in the latest week from 6.63% in the June 26 week. The rate on a 5-year ARM rose 5bps to 6.19% in the July 3 week from 6.14% in the June 26 week.

The share of applications for refinancing an existing loan declined to 40.6% of total applications in the week of July 3 from 41.4% in the June 26 week. The adjustable-rate mortgage (ARM) share of activity edged up to 7.8% in the July 3 week from 7.6% in the June 26 week.

The average size of a mortgage declined 0.4% w/w (+1.3% y/y) to $391,500 in the week ending July 3, after rising 1.1% w/w (0.4% y/y) to $393,200 in the week ending June 26. The average size of a purchase loan declined 1.0% w/w (+4.3% y/y) to $451,000 in the latest week, after rising 1.2% w/w (2.7% y/y) to $455,600 in the June 26 week. The average size of a loan to refinance a mortgage edged down 0.1% w/w (-3.9% y/y) to $304,600 in the week ending July 3, after rising 0.5% w/w (-2.8% y/y) to $304,900 in the June 26 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.

- Both applications for loans to purchase and applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans rose 1bp to 6.77%. 
- Average loan size edged down.

Economy in Brief

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Consumer Prices Tame, As Expected

Consumer Prices Tame, As Expected

Japan Financing Trends Remain Favorable, Despite Q3 Decline

Philadelphia Fed Activity Index Improved

Initial Claims for Unemployment Insurance Dropped Sharply

U.S. Current Account Deficit Deepened

Housing Starts Fell Sharply

Housing Starts Fell Sharply