Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129c.jpg" width="353">
Durable goods orders fell 0.4% in October led lower by declines in orders for motor vehicles and capital goods. A 0.5% gain in orders had been the Consensus expectation.
Nondefense capital goods orders dropped 3.3% as orders for computers &amp; electronic products were dragged 5.7% (+3.7% y/y) lower by a 10.3% (+7.0% y/y) decline in orders for computers. Electrical equipment &amp; appliance orders also were down by 3.5% (+2.2% y/y), the second consecutive monthly decline.
Transportation equipment orders rose 0.3% but the gain was wholly due to a 35.2% (-17.2% y/y) spurt in defense aircraft. Motor vehicle &amp; parts orders fell 2.8% (-3.2% y/y) and nondefense aircraft orders fell 0.4% (-1.6% y/y) following huge declines during the prior two months. Durable goods orders less transportation fell 0.7% (+9.6% y/y).
Orders for machinery were again quite strong logging a 3.7% m/m gain (+24.7% y/y). fabricated metals orders also rose by 3.1% (+13.1% Y/Y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129b.jpg" width="353">
Unfilled orders rose 0.6% (8.6% y/y) but the ratio of backlogs to shipments fell.
Inventories of durable goods 0.5% (6.5% y/y). The inventory to shipment ratio was about stable at 1.39, up from the low of 1.35 in March but well down from the highs near 1.7 in 2001.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-0.4%</td>
<td>0.9%</td>
<td>5.7%</td>
<td>2.6%</td>
<td>-1.7%</td>
<td>-10.5%</td>
</tr>
<tr>
<td class="firstcol">Nondefense Capital Goods</td>
<td>-3.3%</td>
<td>3.0%</td>
<td>5.1%</td>
<td>5.6%</td>
<td>-7.2%</td>
<td>-15.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Excluding Aircraft</td>
<td>-3.6%</td>
<td>5.2%</td>
<td>6.2%</td>
<td>6.6%</td>
<td>-7.1%</td>
<td>-12.9%</td>
</tr>
</tbody>
</table>
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Durable goods orders fell 0.4% in October led lower by declines in orders for motor vehicles and capital goods. A 0.5% gain in orders had been the Consensus expectation. Nondefense capital goods orders dropped 3.3% as orders for [...]

U.S. Durable Goods Orders Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129a.jpg" width="353">
Sales of new single-family homes edged 0.2% higher in October to 1.226M following a 7.0% September gain that was double the initial indication. Consensus estimates had been for a decline in sales to 1.200M. 
Sales were mixed m/m around the country. In the Northeast sales rose sharply for the third straight month but were down 3.4% y/y. In the West sales also rose sharply for the third consecutive month and were nearly a third higher than last October. To the downside were sales in the South by 9.1% (-4.9% Y/Y) and sales in the Midwest were off 3.6% (+8.4% y/y).
The median price of a new single family home jumped 9.1% m/m to $221,800 (14.3% y/y), near the record high.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">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">New Single-Family</td>
<td>1,226</td>
<td>1,224</td>
<td>7.4%</td>
<td>1,089</td>
<td>976</td>
<td>907</td>
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Sales of new single-family homes edged 0.2% higher in October to 1.226M following a 7.0% September gain that was double the initial indication. Consensus estimates had been for a decline in sales to 1.200M. Sales were mixed m/m around [...]

New Home Sales Higher Still

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129a.jpg" width="353">
Sales of new single-family homes edged 0.2% higher in October to 1.226M following a 7.0% September gain that was double the initial indication. Consensus estimates had been for a decline in sales to 1.200M. 
Sales were mixed m/m around the country. In the Northeast sales rose sharply for the third straight month but were down 3.4% y/y. In the West sales also rose sharply for the third consecutive month and were nearly a third higher than last October. To the downside were sales in the South by 9.1% (-4.9% Y/Y) and sales in the Midwest were off 3.6% (+8.4% y/y).
The median price of a new single family home jumped 9.1% m/m to $221,800 (14.3% y/y), near the record high.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
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<td class="firstcol">New Single-Family</td>
<td>1,226</td>
<td>1,224</td>
<td>7.4%</td>
<td>1,089</td>
<td>976</td>
<td>907</td>
</tr>
</tbody>
</table>
U.S. Durable Goods Orders Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129c.jpg" width="353">
Durable goods orders fell 0.4% in October led lower by declines in orders for motor vehicles and capital goods. A 0.5% gain in orders had been the Consensus expectation.
Nondefense capital goods orders dropped 3.3% as orders for computers &amp; electronic products were dragged 5.7% (+3.7% y/y) lower by a 10.3% (+7.0% y/y) decline in orders for computers. Electrical equipment &amp; appliance orders also were down by 3.5% (+2.2% y/y), the second consecutive monthly decline.
Transportation equipment orders rose 0.3% but the gain was wholly due to a 35.2% (-17.2% y/y) spurt in defense aircraft. Motor vehicle &amp; parts orders fell 2.8% (-3.2% y/y) and nondefense aircraft orders fell 0.4% (-1.6% y/y) following huge declines during the prior two months. Durable goods orders less transportation fell 0.7% (+9.6% y/y).
Orders for machinery were again quite strong logging a 3.7% m/m gain (+24.7% y/y). fabricated metals orders also rose by 3.1% (+13.1% Y/Y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129b.jpg" width="353">
Unfilled orders rose 0.6% (8.6% y/y) but the ratio of backlogs to shipments fell.
Inventories of durable goods 0.5% (6.5% y/y). The inventory to shipment ratio was about stable at 1.39, up from the low of 1.35 in March but well down from the highs near 1.7 in 2001.

<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>-0.4%</td>
<td>0.9%</td>
<td>5.7%</td>
<td>2.6%</td>
<td>-1.7%</td>
<td>-10.5%</td>
</tr>
<tr>
<td class="firstcol">Nondefense Capital Goods</td>
<td>-3.3%</td>
<td>3.0%</td>
<td>5.1%</td>
<td>5.6%</td>
<td>-7.2%</td>
<td>-15.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Excluding Aircraft</td>
<td>-3.6%</td>
<td>5.2%</td>
<td>6.2%</td>
<td>6.6%</td>
<td>-7.1%</td>
<td>-12.9%</td>
</tr>
</tbody>
</table>
Initial Unemployment Insurance Claims Fell Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129d.jpg" width="353">
Last week, initial claims for unemployment insurance fell 12,000 to 323,000 from a little revised 335,000 the prior week. The Consensus expectation had been for 335,000 claims.
The four week moving average of initial claims fell to 332,000 (-9.7% y/y), the lowest level since November 2000.
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 fell 29,000 following a downwardly revised 24,000 drop the prior week.
The insured rate of unemployment remained at 2.2% for the seventh week.

<table border="0" cellspacing="0" width="100%">
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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">11/20/04</th>
<th scope="col">11/13/04</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>323</td>
<td>335</td>
<td>-10.8%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,755</td>
<td>-18.1%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
Mortgage Applications Plunged 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129e.jpg" width="353">
Mortgage applications plunged 5.7% last week for the second sharp w/w decline this month, but the average level of activity so far in November still was up 3.1% from October according to the Mortgage Bankers Association (MBA).
Purchase applications again fell sharply by 3.5%. Though the November average was up versus October, the latest weekly level was the lowest in the last four. During the last ten years there has been a 60% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance skid 8.3% w/w leaving the November average up 2.4% versus October.
The effective interest rate on a conventional 30-year mortgage fell to 5.92%. It averaged 5.92% in October. The effective rate on a 15-year mortgage also fell to 5.39%.
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%">
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<thead>
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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">11/19/04</th>
<th scope="col">11/12/04</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>715.0</td>
<td>758.3</td>
<td>-7.8%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>463.3</td>
<td>480.3</td>
<td>0.7%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,179.3</td>
<td>2,375.4</td>
<td>-16.6%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129f.jpg" width="353">
The National Index of Help-Wanted Advertising published by the Conference Board rose slightly to 37 in October but has been moving sideways since 2Q 2003.
The proportion of labor markets with rising want-ad volume, however, more than recovered the prior month&#39;s plunge and jumped to 71%, the highest level since May.
During the last ten years there has been an 88% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;03</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>36</td>
<td>36</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Faded Late Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041129j.jpg" width="353">
Though the November reading of Consumer Sentiment from the University of Michigan rose to 92.8, that was lower than the mid-month reading of 95.5 and indicated that Sentiment faded as the month progressed. Consensus expectations for a reading of 96.0 were disappointed.
During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.
The consumer expectations index rose 1.7% m/m (-3.3% y/y) and the current economic conditions index rose 0.7% (2.1% y/y), both off from the mid-month pace
Consumer sentiment amongst families earning more than $50,000 per year rose m/m but was down 2.0% y/y. Sentiment amongst families earning less than $50,000 per year fell m/m and fell 1.3% y/y.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
&quot;Consumer Sentiment and the Media&quot; from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2004/el2004-29.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">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">Consumer Sentiment</td>
<td>92.8</td>
<td>91.7</td>
<td>-1.0%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.7</td>
<td>104.0</td>
<td>2.1%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>85.2</td>
<td>83.8</td>
<td>-3.3%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
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</tbody>
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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/041124a.jpg" width="353">
In the five weeks since we have written about the US energy market, prices have eased somewhat. Gasoline, at $2.03/gallon retail in mid-October, has fallen back below $2.00 the past two weeks. Crude oil peaked at $55.23/barrel on October 25, measured by West Texas Intermediate, the US benchmark, and dipped &quot;as low as&quot; $46.12 on November 16. Yesterday, November 23, it had retraced part of the drop, trading at $48.75.
Back in the spring, we wrote about some energy market fundamentals that have contributed to these extraordinary price levels. Over the past 30 years, most energy price spikes have been supply-driven. Oil-producing countries have controlled production in order to push prices higher in the contemporary demand environment. This episode seems different, we noted back in May, in that it looks to be more demand-oriented.
We illustrate this in the current situation with two graphs. In the first, the trend in demand for energy products over the last 15 years is seen to be positively correlated with the trend in crude oil prices. At 59%, the correlation is not numerically exacting, but it shows that demand and prices are moving fairly well in parallel, not in opposite directions that classical supply/demand economics would suggest.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041124b.jpg" width="353">
The second graph gives a strong reason for the push in demand and in prices. It highlights the link between light truck sales and gasoline prices. Since the mid-1990s, sales of light trucks, mostly SUVs, have grown both absolutely and in relation to conventional car sales. The resulting ratio of truck to auto sales is seen to have a 75% correlation with retail gasoline prices. This truck/car ratio actually has a 99% correlation with gasoline demand. Thus, the American &quot;love affair&quot; with the large vehicle, which was constrained by the initial energy crisis in the mid-1970s, has returned with the next generation of drivers. Energy prices, moving in more open markets in recent years, have responded to the consequent sharp rise in gasoline consumption. We see in the graph that very recently, the share of truck sales has decreased. If this move becomes a trend, some pressure on the general energy market could be relieved.

<table border="0" cellspacing="0" width="100%">
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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">11/22/04</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>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$1.948</td>
<td>$1.48</td>
<td>28.8%</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>$48.75</td>
<td>$32.55</td>
<td>64.3%</td>
<td>$32.78</td>
<td>$31.23</td>
<td>$19.38</td>
</tr>
</tbody>
</table>
</body>
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In the five weeks since we have written about the US energy market, prices have eased somewhat. Gasoline, at $2.03/gallon retail in mid-October, has fallen back below $2.00 the past two weeks. Crude oil peaked at $55.23/barrel on [...]

SUV Demand Drives Up Energy Prices?

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123f.jpg" width="353">
Chile reported today that real GDP was up 6.84% over a year ago, compared with a 5.26% rise in the second quarter and a 4.65% rise in the first quarter. Earlier this month, Mexico and Peru reported third quarter growth near 5%. Brazil and Argentina both of which showed good second quarter growth, have yet to report third quarter figures. Brazil is recovering from last year&#39;s slump while Argentina has been coming out of the steep recession that occurred in 2001-2 . The contrast between steady growth path of Chile&#39;s economy and the erratic path of Argentina is shown in the attached chart.
Chile&#39;s growth in the third quarter was broad based, with all sectors showing good growth. Fixed capital spending was up 14% while other domestic spending was up almost 7%. Although exports of good and services were 15% above those of he third quarter of 2003, imports increased even more to 20%. Nevertheless, Chile maintained a positive balance of trade in goods and services of 203.1 billion Chilean Pesos.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Year-to-Year % Change in Real GDP (Not seasonally adjusted)</th>
<th scope="col">Q3 O4</th>
<th scope="col">Q2 04&nbsp;&nbsp;&nbsp;</th>
<th scope="col">&nbsp;Q1 04&nbsp;</th>
<th scope="col">&nbsp; Q4 03&nbsp;</th>
<th scope="col">Q3 O3</th>
<th scope="col">Q2 03&nbsp;&nbsp;&nbsp;</th>
<th scope="col">&nbsp;Q1 03&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Chile</td>
<td>6.84</td>
<td>5.26</td>
<td>4.65</td>
<td>3.27</td>
<td>3.12</td>
<td>3.02</td>
<td>3.65</td>
</tr>
<tr>
<td class="firstcol">Argentina</td>
<td>n.a.</td>
<td>7.0</td>
<td>11.3</td>
<td>11.7</td>
<td>10.2</td>
<td>7.7</td>
<td>5.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Brazil</td>
<td>n.a.</td>
<td>5.71</td>
<td>2.67</td>
<td>-0.06</td>
<td>-1.48</td>
<td>-1.07</td>
<td>1.86</td>
</tr>
<tr>
<td class="firstcol">Mexico</td>
<td>4.42</td>
<td>3.94</td>
<td>3.73</td>
<td>1.99</td>
<td>0.61</td>
<td>0.11</td>
<td>2.53</td>
</tr>
<tr class="odd">
<td class="firstcol">Peru</td>
<td>4.78</td>
<td>3.59</td>
<td>4.944</td>
<td>2.94</td>
<td>3.04</td>
<td>3.56</td>
<td>5.67</td>
</tr>
</tbody>
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Chile reported today that real GDP was up 6.84% over a year ago, compared with a 5.26% rise in the second quarter and a 4.65% rise in the first quarter. Earlier this month, Mexico and Peru reported third quarter growth near 5%. Brazil [...]

Chile Reports Third Quarter Growth of Almost 7%

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123a.jpg" width="353">
Last week, chain store sales recovered 0.8% following the prior week&#39;s 0.4% dip, according to the International Council of Shopping Centers (ICSC)-UBS.
Sales so far in November are 0.7% ahead of October.
Not so positive was the second consecutive 0.5% weekly decline in the leading indicator of chain store sales from ICSC. The monthly average is up just 0.2% from October which rose 0.4% from September.
During the last ten years there has been a 60% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
This 2001 report from the Federal Reserve Bank of New York examines <a href="http://www.newyorkfed.org/research/current_issues/ci7-11.pdf"> &quot;The Effect of Tax Changes on Consumer Spending&quot;</a>. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/20/04</th>
<th scope="col">11/13/04</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">Total Weekly Chain Store Sales</td>
<td>439.6</td>
<td>436.1</td>
<td>3.9%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
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Last week, chain store sales recovered 0.8% following the prior week's 0.4% dip, according to the International Council of Shopping Centers (ICSC)-UBS. Sales so far in November are 0.7% ahead of October. Not so positive was the second [...]

Chain Store Sales Recover

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) for October rose to 0.52 but the prior month&#39;s negative reading was deepened slightly. The three-month moving average of the CFNAI fell to the lowest level in nearly a year.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
During the last twenty years there has been a 74% correlation between the level of the CFNAI and q/q growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.52</td>
<td>-0.04</td>
<td>0.19</td>
<td>-0.11</td>
<td>-0.40</td>
<td>-1.19</td>
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The Chicago Fed National Activity Index (CFNAI) for October rose to 0.52 but the prior month's negative reading was deepened slightly. The three-month moving average of the CFNAI fell to the lowest level in nearly a year. A zero value [...]

Chicago Fed Nat'l Activity Index Improved Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041123c.jpg" width="353">
Sales of existing single family homes held the high ground with a 0.1% (+5.6% y/y) slip in October to 6.75M. September sales were revised up slightly and Consensus expectations had been for sales of 6.72M.
The figures reflect closings of home sales in earlier months.
Sales fell moderately in most areas of the country except in the South where they rose (+7.4% y/y) to a record high.
The median price of an existing home rose slightly to $187,000 (+8.8% y/y) following three months of decline.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">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>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,750</td>
<td>&nbsp;6,760</td>
<td>5.6%</td>
<td>6,098</td>
<td>5,593</td>
<td>5,290</td>
</tr>
</tbody>
</table>
</body>
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Sales of existing single family homes held the high ground with a 0.1% (+5.6% y/y) slip in October to 6.75M. September sales were revised up slightly and Consensus expectations had been for sales of 6.72M. The figures reflect closings [...]

U.S. Existing Home Sales Remained High

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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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.

260709Z1.jpg

**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).

260709Z2.jpg

**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.

260709Z3.jpg

**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.

260709Z4.jpg

**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.

260709Z5.jpg

**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.

260709Z6.jpg

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).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/0dl4LKZaL1oTC5UPIaqrA9?utm_source=generator&si=7aa69345dbfd4ac4" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Growth Holds Firm

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

260709A1.jpg

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.

260709C1.jpg

260709D1.jpg

- 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

260709E.jpg

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.

260709.jpg

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

260708A2.jpg

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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.

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