Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041117a.jpg" width="353">
The Consumer Price Index (CPI-U) jumped 0.6% last month, the strongest increase since May. The gain easily beat Consensus forecasts for a 0.4% rise. The 0.2% gain in prices less food and energy just beat the Consensus forecast for a 0.1% rise.
Gasoline prices jumped 8.6% (26.6% y/y) last month but so far in November have not risen further. Fuel oil prices also were strong and surged 8.1% (35.0% y/y). Natural gas prices fell for the second month (+3.1% y/y).
&quot;Core&quot; commodities prices again rose and the 0.4% gain was driven by a 1.0% (0.8% y/y) rise in household furnishings &amp; operation. New motor vehicle prices also increased for the first month in four, up 0.4% (-0.5% y/y) and apparel prices rose 0.2% (-0.7% y/y) .
The increase in services prices less energy eased a bit to 0.2% as the gain in shelter prices fell to just 0.1% (2.8% y/y). Health care services rose 0.4% (5.1% y/y) and tuition &amp; child care costs rose 0.4% (6.8% y/y). Public transportation prices rose 1.4% (-2.3% y/y) after two months of decline.
The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.5%. Similar to the PCE price deflator, core chain prices rose 0.4% for the second consecutive month.
&quot;Labor Markets, Energy Prices, and the Outlook for 2005&quot; from Michael H. Moskow, President &amp; CEO of the Federal Reserve Bank of Chicago are available <a href="http://www.chicagofed.org/news_and_conferences/speeches/2004_11_16_wbbm.cfm"> here</a>.

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<thead>
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<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.6%</td>
<td>0.2%</td>
<td>3.2%</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>0.3%</td>
<td>2.0%</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>0.4%</td>
<td>0.2%</td>
<td>0.1%</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>0.3%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>4.2%</td>
<td>-0.4%</td>
<td>15.2%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.6%</td>
<td>0.0%</td>
<td>3.5%</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>0.5%</td>
<td>0.3%</td>
<td>2.7%</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>0.4%</td>
<td>0.4%</td>
<td>1.7%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
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The Consumer Price Index (CPI-U) jumped 0.6% last month, the strongest increase since May. The gain easily beat Consensus forecasts for a 0.4% rise. The 0.2% gain in prices less food and energy just beat the Consensus forecast for a [...]

Consumer Prices Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041117a.jpg" width="353">
The Consumer Price Index (CPI-U) jumped 0.6% last month, the strongest increase since May. The gain easily beat Consensus forecasts for a 0.4% rise. The 0.2% gain in prices less food and energy just beat the Consensus forecast for a 0.1% rise.
Gasoline prices jumped 8.6% (26.6% y/y) last month but so far in November have not risen further. Fuel oil prices also were strong and surged 8.1% (35.0% y/y). Natural gas prices fell for the second month (+3.1% y/y).
&quot;Core&quot; commodities prices again rose and the 0.4% gain was driven by a 1.0% (0.8% y/y) rise in household furnishings &amp; operation. New motor vehicle prices also increased for the first month in four, up 0.4% (-0.5% y/y) and apparel prices rose 0.2% (-0.7% y/y) .
The increase in services prices less energy eased a bit to 0.2% as the gain in shelter prices fell to just 0.1% (2.8% y/y). Health care services rose 0.4% (5.1% y/y) and tuition &amp; child care costs rose 0.4% (6.8% y/y). Public transportation prices rose 1.4% (-2.3% y/y) after two months of decline.
The chained CPI, which adjusts for shifts in the mix of consumer purchases rose 0.5%. Similar to the PCE price deflator, core chain prices rose 0.4% for the second consecutive month.
&quot;Labor Markets, Energy Prices, and the Outlook for 2005&quot; from Michael H. Moskow, President &amp; CEO of the Federal Reserve Bank of Chicago are available <a href="http://www.chicagofed.org/news_and_conferences/speeches/2004_11_16_wbbm.cfm"> here</a>.

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<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.6%</td>
<td>0.2%</td>
<td>3.2%</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>0.3%</td>
<td>2.0%</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>0.4%</td>
<td>0.2%</td>
<td>0.1%</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>0.3%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>4.2%</td>
<td>-0.4%</td>
<td>15.2%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.6%</td>
<td>0.0%</td>
<td>3.5%</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>0.5%</td>
<td>0.3%</td>
<td>2.7%</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>0.4%</td>
<td>0.4%</td>
<td>1.7%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
</table>
Industrial Production Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041117b.jpg" width="353">
Industrial production rose a firm 0.7% following a downwardly revised 0.1% rise the prior month. Consensus expectations had been for a 0.4% increase in October.
Production in the factory sector jumped 0.8% (6.0% y/y) after the unrevised 0.3% decline the prior month.
Motor vehicles output recovered 2.3% (2.8% y/y) following the prior month&#39;s decline. Furniture output also recovered 0.9% (2.0% y/y) after two down months and textile output rose 0.8% (-2.2% y/y). High tech sector output again was firm with a 0.9% (18.8% y/y) rise.
Factory sector output excluding motor vehicles &amp; high tech rose 0.5% (+5.3% y/y).
Total capacity utilization rose to 77.7% as capacity grew 1.5% y/y.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</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">Industrial Production</td>
<td>0.7%</td>
<td>0.1%</td>
<td>5.2%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>77.7%</td>
<td>77.3%</td>
<td>75.0%(11/03)</td>
<td>74.8%</td>
<td>75.6%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
Housing Starts Stronger Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041117c.jpg" width="353">
In October, housing starts rose 6.4% to 2.027M, the highest level of the year.Consensus expectations had been for 1.96M starts.
Single-family starts recouped nearly all of the prior month&#39;s decline with a 5.7% gain. Year to date single family starts averaged 1.605M, up 6.6% from last year&#39;s full year average. Multi-family starts rose 9.5% and the year to date average equals last year.
Building permits fell 0.7% m/m to 1.984M. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041117d.jpg" width="353">
The Composite Housing Market Index from the National Association of Home Builders (NAHB) was stable in November t the downwardly revised October level of 71.
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 also surged to its highest in a year and the index of expected sales in six months jumped the highest level since 1999.
During the last ten years there has been a 60% correlation between the level of single family housing starts and the NAHB Index.

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<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/@E901/@E90101/@E90101.HTM">Housing Starts (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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,027</td>
<td>1,905</td>
<td>2.2%</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>1,645</td>
<td>1,556</td>
<td>0.1%</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 82</td>
<td>349</td>
<td>12.7%</td>
<td>348</td>
<td>347</td>
<td>330</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,984</td>
<td>1 ,998</td>
<td>-1.5%</td>
<td>1,8 89</td>
<td>1,749</td>
<td>1,637</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/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></td>
<td>Nov</td>
<td>Oct</td>
<td>Nov &#39;03</td>
<td>2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr class="odd">
<td class="firstcol">Composite Housing Market Index</td>
<td>7 1</td>
<td>71</td>
<td>7 0</td>
<td>64</td>
<td>61</td>
<td>56</td>
</tr>
</tbody>
</table>
Mortgage Applications Rise on Higher Refis 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041117e.jpg" width="353">
Mortgage applications rose 4.3% last week and reversed nearly all of the prior week&#39;s decline, according to the Mortgage Bankers Association (MBA).
Applications to refinance jumped 10.7%, up 74.3% from the early June low.
Purchase applications slipped for the second week but a late month jump lifted the November average so far 5.0% versus October. 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.
The effective interest rate on a conventional 30-year mortgage was about stable at 5.95%. It averaged 5.92% in October. The effective rate on a 15-year mortgage also was about stable at 5.40%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/12/04</th>
<th scope="col">11/05/04</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>758.3</td>
<td>727.3</td>
<td>14.3%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>480.3</td>
<td>483.0</td>
<td>12.8%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,375.4</td>
<td>2,148.7</td>
<td>16.2%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116d.jpg" width="353">
Inflation in the UK continues to be well behaved. The official measure of inflation is the year-over-year percent change in the Consumer Price Index (CPI). In October, the inflation was 1.18%, up from the September rate of 1.09%, due largely to increases in gasoline and home heating oil.
The CPI was formerly called the Harmonized Index of Consumer Prices (HICP) and is based on the same methodology used by Eurostat to measure inflation; thus, it provides a measure of inflation that is directly comparable with the other members of the EU. Currently, at 1.2% inflation in the UK is well below that in the EU as a whole, which is running at about 2%.
The Retail Price Index was, for many years, the most widely quoted measure of inflation in the U. K. In the UK data base, Haver publishes data that explain the difference between inflation computed by the RPI and the CPI.
Before adopting the CPI, the Bank of England had used the Retail Price Index excluding Mortgage Interest Payments (RPIX) as its target, Inflation under this measure was generally 1 to 2 percentage points higher than that of the CPI, as shown in the attached chart.

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<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">U.K. Inflation Indicators</th>
<th scope="col">Oct 04</th>
<th scope="col">Sep 04</th>
<th scope="col">Oct 03</th>
<th scope="col">Sep 03&nbsp;&nbsp;</th>
<th scope="col">Y/Y Oct</th>
<th scope="col">Y/Y Sep</th>
<th scope="col">&nbsp;2003&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2002&nbsp;</th>
<th scope="col">&nbsp; 2001&nbsp; &nbsp;</th>
</tr>
</thead>
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<td class="firstcol">CPI (1996=100)</td>
<td>111.7</td>
<td>111.4</td>
<td>110.4</td>
<td>110.2</td>
<td>1.18</td>
<td>1.09</td>
<td>109.8</td>
<td>108.3</td>
<td>106.9</td>
</tr>
<tr>
<td class="firstcol">RPI (87=100)</td>
<td>188.6</td>
<td>188.1</td>
<td>182.6</td>
<td>183.5</td>
<td>3.29</td>
<td>3.07</td>
<td>181.3</td>
<td>176.2</td>
<td>173.3</td>
</tr>
<tr class="odd">
<td class="firstcol">RPIX (87=100)</td>
<td>185.1</td>
<td>184.7</td>
<td>181.2</td>
<td>181.3</td>
<td>2.10</td>
<td>1.88</td>
<td>180.0</td>
<td>175.1</td>
<td>171.3</td>
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</tbody>
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Inflation in the UK continues to be well behaved. The official measure of inflation is the year-over-year percent change in the Consumer Price Index (CPI). In October, the inflation was 1.18%, up from the September rate of 1.09%, due [...]

Oil Prices Largely Responsible for Small Rise in Inflation in the United Kingdom

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116c.jpg" width="353">
Chain store sales fell 0.4% on the heels of the prior week&#39;s 1.3% surge, according to the International Council of Shopping Centers (ICSC)-UBS.
The decline left sales so far in November 0.5% ahead of October.
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.
Last week&#39;s sales decline was preceded by a 0.4% w/w fall in the leading indicator of chain store sales from ICSC.
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. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/13/04</th>
<th scope="col">11/06/04</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>436.1</td>
<td>438.0</td>
<td>3.4%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales fell 0.4% on the heels of the prior week's 1.3% surge, according to the International Council of Shopping Centers (ICSC)-UBS. The decline left sales so far in November 0.5% ahead of October. During the last ten years [...]

Chain Store Sales Off

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116b.jpg" width="353">
The PPI for finished goods surged 1.7% last month, nearly triple Consensus expectations for a 0.6% gain and the strongest monthly increase since January 1990. Less food &amp; energy, the 0.3% rise in &quot;core&quot; prices also was triple expectations for a 0.1% gain.
Finished energy prices spiked 6.8% (17.0% y/y) higher paced by a 14.2% (45.3% y/y) rise in gasoline prices and an 18.7% (66.4% y/y) gain in fuel oil prices. Residential natural gas prices rose 1.7% (8.2% y/y).
A 0.2% gain in core finished consumer goods prices reflected a modest 0.2% (1.7% y/y) gain in nondurable goods prices but durables prices rose 0.4% (1.6% y/y) for the second consecutive month.Finished capital goods prices also rose 0.4% (1.9% y/y) for the second month.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116a.jpg" width="353">
Finished food prices jumped 1.6% (2.4% y/y) reflecting strong gains in prices for fruits, vegetables and meats.
&quot;Cattle prices on a two-year wild ride&quot; from the Federal Reserve Bank of Minneapolis can be found <a href="http://minneapolisfed.org/pubs/fedgaz/04-03/cattle.cfm"> here</a>.
Crude prices reversed the prior month&#39;s decline with a 4.3% jump. Less food &amp; energy, crude prices were more than firm with a 5.5% spike as metals prices took off; iron &amp; steel scrap, +90.7% y/y; copper scrap, +47.2% y/y; nonferrous metal ores, +46.2% y/y. During the last thirty years &quot;core&quot; crude prices have been a fair indicator of industrial sector activity with a 51% correlation between the six month change in core crude prices and the change in factory sector industrial production.
Intermediate goods prices jumped 0.9% higher as energy prices rose 4.3% (16.6% y/y). Core intermediate prices were tame and rose 0.3%.

<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/@E802/@E80201/@E80201.HTM">Producer Price Index</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">Finished Goods</td>
<td>1.7%</td>
<td>0.1%</td>
<td>4.4%</td>
<td>3.2%</td>
<td>-1.3%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.7%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.9%</td>
<td>0.1%</td>
<td>8.9%</td>
<td>4.7%</td>
<td>-1.5%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.7%</td>
<td>7.8%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>4.3%</td>
<td>-4.2%</td>
<td>15.8%</td>
<td>25.1%</td>
<td>-10.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>5.4%</td>
<td>-2.5%</td>
<td>28.3%</td>
<td>12.4%</td>
<td>3.8%</td>
<td>-10.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

The PPI for finished goods surged 1.7% last month, nearly triple Consensus expectations for a 0.6% gain and the strongest monthly increase since January 1990. Less food & energy, the 0.3% rise in "core" prices also was triple [...]

Producer Prices Surge, Core Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116b.jpg" width="353">
The PPI for finished goods surged 1.7% last month, nearly triple Consensus expectations for a 0.6% gain and the strongest monthly increase since January 1990. Less food &amp; energy, the 0.3% rise in &quot;core&quot; prices also was triple expectations for a 0.1% gain.
Finished energy prices spiked 6.8% (17.0% y/y) higher paced by a 14.2% (45.3% y/y) rise in gasoline prices and an 18.7% (66.4% y/y) gain in fuel oil prices. Residential natural gas prices rose 1.7% (8.2% y/y).
A 0.2% gain in core finished consumer goods prices reflected a modest 0.2% (1.7% y/y) gain in nondurable goods prices but durables prices rose 0.4% (1.6% y/y) for the second consecutive month.Finished capital goods prices also rose 0.4% (1.9% y/y) for the second month.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116a.jpg" width="353">
Finished food prices jumped 1.6% (2.4% y/y) reflecting strong gains in prices for fruits, vegetables and meats.
&quot;Cattle prices on a two-year wild ride&quot; from the Federal Reserve Bank of Minneapolis can be found <a href="http://minneapolisfed.org/pubs/fedgaz/04-03/cattle.cfm"> here</a>.
Crude prices reversed the prior month&#39;s decline with a 4.3% jump. Less food &amp; energy, crude prices were more than firm with a 5.5% spike as metals prices took off; iron &amp; steel scrap, +90.7% y/y; copper scrap, +47.2% y/y; nonferrous metal ores, +46.2% y/y. During the last thirty years &quot;core&quot; crude prices have been a fair indicator of industrial sector activity with a 51% correlation between the six month change in core crude prices and the change in factory sector industrial production.
Intermediate goods prices jumped 0.9% higher as energy prices rose 4.3% (16.6% y/y). Core intermediate prices were tame and rose 0.3%.

<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/@E802/@E80201/@E80201.HTM">Producer Price Index</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">Finished Goods</td>
<td>1.7%</td>
<td>0.1%</td>
<td>4.4%</td>
<td>3.2%</td>
<td>-1.3%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.7%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.9%</td>
<td>0.1%</td>
<td>8.9%</td>
<td>4.7%</td>
<td>-1.5%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.7%</td>
<td>7.8%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>4.3%</td>
<td>-4.2%</td>
<td>15.8%</td>
<td>25.1%</td>
<td>-10.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>5.4%</td>
<td>-2.5%</td>
<td>28.3%</td>
<td>12.4%</td>
<td>3.8%</td>
<td>-10.0%</td>
</tr>
</tbody>
</table>
Chain Store Sales Off 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041116c.jpg" width="353">
Chain store sales fell 0.4% on the heels of the prior week&#39;s 1.3% surge, according to the International Council of Shopping Centers (ICSC)-UBS.
The decline left sales so far in November 0.5% ahead of October.
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.
Last week&#39;s sales decline was preceded by a 0.4% w/w fall in the leading indicator of chain store sales from ICSC.
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. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/13/04</th>
<th scope="col">11/06/04</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>436.1</td>
<td>438.0</td>
<td>3.4%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041115d.jpg" width="353">
The weak dollar is likely to be high on the agenda at the meeting of the finance ministers and central bankers of the Group of 20 in Berlin this coming weekend, and it is likely to engender a debate over exchange rate policies. The members of the Group of 20 are the finance ministries and central bankers of Argentina, Australia, Brazil, Canada*, China, France*, Germany*, India, Indonesia, Italy*, Japan*, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.K*, the U.S* and the European Union, represented by the Council presidency and European Central Bank.Exchange rate policies differ widely among the countries of the group, with the industrial countries generally favoring floating rates and most of the emerging markets favoring fixed exchange rates.
The diversity of exchange rate policies has resulted in a major realignment of currencies over the past couple of years. While the trade weighted dollar has declined some 13% from its recent peak of February, 2002, the euro has appreciated by more than 40% and the Canadian and Australian dollars have appreciated more than 25%. In contrast to these movements, Asian currencies, except for Japanese yen and Korean won, have shown little or no appreciation. The attached chart highlights the diverse movement of the euro and the Taiwan dollar that is taken to be representative of the trends in non Japanese and non Korean Asian countries. Note: * countries form the Group of 7.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 04</th>
<th scope="col">Sep&nbsp;04</th>
<th scope="col">Oct 03</th>
<th scope="col">Feb 02</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">Feb 02-&nbsp; Oct 04 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Weighted Dollar (January 1997=100)</td>
<td>113.15</td>
<td>114.81</td>
<td>116.21</td>
<td>129.54</td>
<td>-1.48</td>
<td>-2.62</td>
<td>-12.65</td>
</tr>
<tr>
<td class="firstcol">Euro Zone (Euro/$)</td>
<td>125.07</td>
<td>122.24</td>
<td>117.14</td>
<td>87.07</td>
<td>2.32</td>
<td>6.77</td>
<td>43.64</td>
</tr>
<tr class="odd">
<td class="firstcol">UK ($/ L)</td>
<td>1.8077</td>
<td>1.79370</td>
<td>1.67920</td>
<td>1.4525.</td>
<td>.078</td>
<td>7.65</td>
<td>27.06</td>
</tr>
<tr>
<td class="firstcol">Canada (C$/US$)</td>
<td>1.2469</td>
<td>1.2881</td>
<td>1.3221</td>
<td>1.5964</td>
<td>3.30</td>
<td>6.03</td>
<td>28.03</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan&nbsp;(Yen/$)</td>
<td>108.78</td>
<td>111.09</td>
<td>109.50</td>
<td>133.64</td>
<td>1.20</td>
<td>0.66</td>
<td>18.60</td>
</tr>
<tr>
<td class="firstcol">Korea (Won/$)</td>
<td>1141.57</td>
<td>1148.72</td>
<td>1169.34</td>
<td>1320.53</td>
<td>0.06</td>
<td>2.43</td>
<td>15.68</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan (Tai$/US$)</td>
<td>33.775</td>
<td>33.893</td>
<td>33.875</td>
<td>35.073</td>
<td>0.35</td>
<td>0.29</td>
<td>3.84</td>
</tr>
<tr>
<td class="firstcol">China (Yuan/$)</td>
<td>8.2765</td>
<td>8.2767</td>
<td>8.2768</td>
<td>8.2767</td>
<td>0.00</td>
<td>0.00.</td>
<td>0.00</td>
</tr>
</tbody>
</table>
</body>
</html>

The weak dollar is likely to be high on the agenda at the meeting of the finance ministers and central bankers of the Group of 20 in Berlin this coming weekend, and it is likely to engender a debate over exchange rate policies. The [...]

The Weak Dollar Likely to Be High on the Agenda at the Meeting of the Finance Ministers of the Group of 20 This Weekend

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041115a.jpg" width="353">
Total business inventories edged 0.1% higher in September following strong accumulation during most of this year.
Retail inventories slipped 0.4% due to a sharp 1.3% decline in motor vehicle inventories (+12.1% y/y). Non-auto inventories advanced 0.2% though m/m declines were widespread amongst categories.
Wholesale inventories rose 0.5% (9.8% y/y). During the last ten years there has been a 63% correlation between the y/y change in wholesale inventories and the change in imports of merchandise.
Overall business sales rose 0.3% (+10.4% y/y) following strong gains during the prior two months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041115b.jpg" width="353">
The ratio of inventories-to-sales was stable at 1.32 for the third consecutive month and versus 1.37 averaged last year.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.1%</td>
<td>0.7%</td>
<td>7.3%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>-4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.4%</td>
<td>0.5%</td>
<td>7.2%</td>
<td>4.9%</td>
<td>6.0%</td>
<td>-2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.2%</td>
<td>0.4%</td>
<td>5.5%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.5%</td>
<td>1.1%</td>
<td>9.8%</td>
<td>2.2%</td>
<td>0.4%</td>
<td>-4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.3%</td>
<td>0.7%</td>
<td>5.7%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Total business inventories edged 0.1% higher in September following strong accumulation during most of this year. Retail inventories slipped 0.4% due to a sharp 1.3% decline in motor vehicle inventories (+12.1% y/y). Non-auto [...]

U.S. Inventories Up Slightly

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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

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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

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

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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

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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.

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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

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.

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- 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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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

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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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