Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031218a.jpg" width="353">
Initial claims for jobless insurance fell 22,000 (-5.9%) last week to 353,000. That followed an increase the prior week that was revised to 10,000 from 13,000 reported initially. Consensus expectations had been for claims of 370,000.
The latest claims figure covers the survey period for December non-farm payrolls. The level is down 9,000 (-2.5%) from the November period.
The four-week moving average of initial claims fell to 361,750 (-10.8% y/y).
Continuing claims for unemployment insurance rose 28,000 but the prior week was revised to a decline of 29,000 versus the 11,000 increase reported initially.
The insured rate of unemployment was unchanged at 2.6%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/13</th>
<th scope="col">12/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>353.0</td>
<td>375.0</td>
<td>-16.2%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,339</td>
<td>-5.5%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Leading Indicators Up As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031218b.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board rose an expected 0.3% in November following an upwardly revised 0.5% October gain.
One month gains amongst the leaders&#39; component dropped to 55% but over a six-month span all of the leading series increased.
Longer weekly hours worked, fewer claims for jobless insurance, improved vendor performance, and improved consumer expectations each contributed meaningfully to the November gain in the leading index.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose for the sixth month in seven. Year to date the coincident indicators are up 1.0% (AR). That YTD increase has been led by a 3.3% gain in real manufacturing &amp; trade sales and a 2.3% gain in industrial production. Employment is about unchanged and real income is up 1.3%.
The ratio of coincident-to-lagging indicators surged to a new record high and prior months were revised up. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.3%</td>
<td>0.5%</td>
<td>2.9%</td>
<td>2.1%</td>
<td>-0.9%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.9%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>-2.5%</td>
<td>-4.4%</td>
<td>-1.3%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index At Ten Year High 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031218c.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions in the manufacturing sector rose in December to 32.1 from 25.9 in November. Consensus expectations were for a slight decline to 25.0.
The latest reading is the highest since December 1993.
During the last twenty years there has been a 63% correlation between the level of the Philadelphia Fed Business Conditions Index and quarterly growth in real GDP. The correlation with quarterly growth in factory sector industrial production has been 76%.
Amongst the sub indexes, new orders boomed to 41.8, the highest level since 1973. Shipments (41.1) also surged to the ten year high. The employment index showed meaningful improvement to 21.9, also a thirty year high.
The business conditions index reflects a separate survey question, not the sub indexes.
A separate survey of expected business conditions in six months fell sharply to 52.3, the lowest level since May.
The prices paid index to its highest level since March 2000.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos1203.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM"> Philadelphia Fed Business Outlook</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Dec &#39;02</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>32.1</td>
<td>25.9</td>
<td>11.3</td>
<td>10.6</td>
<td>7.7</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>31.4</td>
<td>24.9</td>
<td>17.7</td>
<td>16.8</td>
<td>12.2</td>
<td>-0.9</td>
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Initial claims for jobless insurance fell 22,000 (-5.9%) last week to 353,000. That followed an increase the prior week that was revised to 10,000 from 13,000 reported initially. Consensus expectations had been for claims of 370,000. [...]

Initial Claims for Jobless Insurance Drop Sharply

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031217e.jpg" width="353">
Industrial Production excluding construction (2000=100) in the Euro zone has fluctuated in a narrow range of roughly 98-101 since September 11, 2001. Production rose just over one-half of one percent in 2001 and declined over one-half of one percent last year. So far this year, production is only modestly above the comparable period of 2002. However, the rise in October, 1.11% from September to reach 100.83, was the strongest since August, 2001.
The capital goods sector showed the best improvement, rising 2.44%, followed by increases of 1.0%, or better, in the energy and intermediate sectors. Throughout the post September 11, period, production of capital goods has been relatively well maintained. Production of durable consumer goods has been the weakest sector and it continues to show only moderate improvement. Production of consumer durables increased 0.67% in October and that of consumer nondurables, 0.33%. Production of both durable and nondurable consumer goods is below October, 2002.
Recent surveys of business and consumer confidence point to continued, if modest, increases in production. Consumer confidence, however, remains less robust than that of business.

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<colgroup><col><col><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">Euro Zone Industrial Production (2000=100)</th>
<th scope="col">Oct 2003</th>
<th scope="col">Sep 2003&nbsp;</th>
<th scope="col">Oct 2002</th>
<th scope="col">m/m &nbsp;%</th>
<th scope="col">y/y &nbsp;%</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<td class="firstcol">Total, excl construction</td>
<td>100.83</td>
<td>99.72</td>
<td>100.20</td>
<td>1.11</td>
<td>0.63</td>
<td>100.07</td>
<td>100.03</td>
<td>100.08</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital goods</td>
<td>100.74</td>
<td>98.34</td>
<td>99.30</td>
<td>2.44</td>
<td>1.45</td>
<td>99.71</td>
<td>101.68</td>
<td>100.05</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer durables</td>
<td>88.97</td>
<td>88.38</td>
<td>91.50</td>
<td>0.67</td>
<td>-2.77</td>
<td>93.03</td>
<td>98.46</td>
<td>100.16</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer nondurables</td>
<td>101.65</td>
<td>101.32</td>
<td>102.16</td>
<td>0.33</td>
<td>-0.50</td>
<td>101.83</td>
<td>101.28</td>
<td>100.08</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Intermediate</td>
<td>100.37</td>
<td>99.38</td>
<td>99.77</td>
<td>1.00</td>
<td>0.60</td>
<td>99.80</td>
<td>99.55</td>
<td>100.12</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Energy</td>
<td>106.76</td>
<td>105.55</td>
<td>104.36</td>
<td>1.15</td>
<td>2.30</td>
<td>102.78</td>
<td>101.59</td>
<td>100.03</td>
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Industrial Production excluding construction (2000=100) in the Euro zone has fluctuated in a narrow range of roughly 98-101 since September 11, 2001. Production rose just over one-half of one percent in 2001 and declined over one-half [...]

Strongest Increase in Industrial Production in the Eurozone Since August, 2001

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031217a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association last week recovered most of the prior week&#39;s decline with a 12.6% gain.
Purchase applications recovered virtually all of the prior period&#39;s drop with a 9.4% (+15.1% y/y) surge. Nevertheless, purchase applications so far in December are down 1.7% from the November average. Applications to refinance also were strong, up 16.6% w/w, but in December are down 12.9% from November (-54.0% y/y).
During the last ten years there has been a 54% 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 fell to 6.01% and for the month so far are at the lowest since July. 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>.

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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">12/12</th>
<th scope="col">12/05</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>677.2</td>
<td>601.6</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>437.2</td>
<td>399.8</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,072.9</td>
<td>1,775.5</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
U.S. Manpower Hiring Index Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031217b.jpg" width="353">
The Manpower employment survey improved for the second consecutive quarter. For 1Q04, a seasonally adjusted net 13% of 16,000 employers expect to increase hiring activity.
The latest reading is up from 7% in 3Q03. The latest improvement, however, did not reflect an actual increase in hiring strength. Since hiring activity in 1Q is typically weak, seasonal adjustment factors accounted for all of the rise.
Since 1980 there has been a 75% correlation between the Manpower index and the y/y change in nonfarm payrolls.
The latest press release from Manpower Inc. covering employment prospects in 18 countries can be viewed <a href="http://investor.manpower.com/ireye/ir_site.zhtml?ticker=MAN&amp;script=410&amp;layout=-6&amp;item_id=478070"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SC/@SC.HTM"> Manpower Employment Survey</a></th>
<th scope="col">1Q04</th>
<th scope="col">4Q03</th>
<th scope="col">1Q03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Industries - Net Higher (SA)</td>
<td>13</td>
<td>10</td>
<td>16</td>
<td>11</td>
<td>11</td>
<td>17</td>
</tr>
</tbody>
</table>
Chain Store Sales Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031217c.jpg" width="353">
Chain store sales last week recouped 2.1% of the prior week&#39;s slump when sales were depressed by two snowstorms, according to the ICSC-UBS survey.
Despite the rebound, sales so far in December are down 1.6% from the November average. During all of November sales rose 0.5% versus the prior month.
During the last five years there has been a 61% correlation between the year-to-year percent change in the ICSC-UBS measure of 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.
Analysis from the Federal Reserve Bank of New York exploring what chain store sales indicate about consumer spending can be found <a href="http://www.newyorkfed.org/research/epr/96v02n2/9610harr.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS</a><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> (SA, 1977=100)</a></th>
<th scope="col">12/13/03</th>
<th scope="col">12/06/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>420.7</td>
<td>412.2</td>
<td>5.1%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
Small Business Optimism Near 20 Year High 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031217d.jpg" width="353">
The Small Business Optimism Index for November published by the National Federation of Independent Business rose to highest level since early 1984. The index rose 1.2% m/m to a near-record reading of 105.3.
The increase reflected a slight dip to 12% in the percent of small business owners planning to increase employment but a rise in plans to raise prices and capital spending.
The percent of owners planning to raise capital expenditures in the next 3-6 months rose to 29%.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM"> Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col"> Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>105.3</td>
<td>104.0</td>
<td>3.3%</td>
<td>101.2</td>
<td>98.4</td>
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The index of mortgage applications compiled by the Mortgage Bankers Association last week recovered most of the prior week's decline with a 12.6% gain. Purchase applications recovered virtually all of the prior period's drop with a [...]

Mortgage Applications Rebound

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031216b.jpg" width="353">
The Consumer Price Index (CPI-U) fell 0.2% (+1.8% y/y) last month after no change in October. It was the first decline in the CPI since April. Consensus expectations were for a 0.1% rise.
Less food &amp; energy prices fell 0.1%, the first monthly decline since December 1982. Consensus expectations for a 0.1% rise.
Deflation in the prices of core consumer goods continued as they fell 0.4% (-2.5% y/y). Apparel prices fell 0.5% (-1.9% y/y). Prices for household furnishings &amp; operation fell 0.3% (-2.3% y/y). New vehicles were unchanged (-2.1% y/y).
Core services prices were unchanged in November as the 0.4% firming in the prior month evaporated. Shelter prices were unchanged m/m (2.2% y/y) after the 0.4% October increase. Public transportation prices fell for the third month in the last four (2.8% y/y). Medical care services prices were strong again, up 0.5% m/m (4.0% y/y).
Energy prices fell 3.0% as gasoline prices dropped 5.0% (5.4% y/y). So far in December gasoline prices have fallen another 2.3% to $1.48/gallon. Piped gas &amp; electricity prices fell 1.4% (6.5% y/y) but fuel oil prices rose 1.1% (+10.7% y/y).
Food prices again were firm last month, up 0.4% (3.2%). Meat prices soared 3.2% (10.6% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior fell 0.4%. It is similar to the PCE price deflator. The core price measure also fell by 0.3%.

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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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
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<td class="firstcol">Total&nbsp;</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>1.8%</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>1.1%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-2.5%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-3.0%</td>
<td>-3.9%</td>
<td>6.1%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.4%</td>
<td>0.6%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>3.1%</td>
<td>2.3%</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>-0.4%</td>
<td>0.0%</td>
<td>1.3%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
Housing Starts Near 20 Year Record 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031216c.jpg" width="353">
Housing starts jumped 4.5% in November to the highest level since February 1984. Consensus forecasts had been for a moderate decline versus October, which was revised up.
Single family starts rose another 3.3% to another record level of 1.695M units.
Multi-family starts also rose a firm 10.6% and reversed most of the prior month&#39;s decline.
Housing starts were notably strong m/m in the Northeast (22.9% y/y) and in the West (35.3% y/y). Starts were up moderately in the Midwest but fell in the South.
Building permits fell 5.4% m/m and reversed all of the prior month&#39;s gain.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2,070</td>
<td>1,980</td>
<td>17.6%</td>
<td>1,711</td>
<td>1,601</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,695</td>
<td>1,641</td>
<td>20.8%</td>
<td>1,364</td>
<td>1,272</td>
<td>1,232</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>375</td>
<td>339</td>
<td>5.0%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,874</td>
<td>1,981</td>
<td>6.2%</td>
<td>1,750</td>
<td>1,637</td>
<td>1,598</td>
</tr>
</tbody>
</table>
Housing Market Index Unchanged In December 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031216d.jpg" width="353">
The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index was unchanged in December at 70 (+7.7% y/y) from an upwardly revised November level.
During the last fifteen years there has been a 79% correlation between the y/y change in the NAHB index and the change in single family housing starts.
The index of current market conditions for home sales fell 1.3% m/m to 77 (6.9% y/y).
The index which measures expected home sales in six months dropped for the second month, down 6.2% m/m to 76 (10.1% y/y).
Traffic of prospective buyers improved and recovered most of the November decline.
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.
Visit the National Association of Home Builders using this <a href="http://www.nahb.org">link</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM"> Nat&#39;l Association of Home Builders</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</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">Composite Housing Market Index</td>
<td>70</td>
<td>70</td>
<td>65</td>
<td>64</td>
<td>61</td>
<td>56</td>
</tr>
</tbody>
</table>
U.S. Industrial Production Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031216a.jpg" width="353">
Industrial production surged 0.9% in November, nearly double Consensus expectations for a 0.5% gain.
Factory sector boomed 0.9% (1.9% y/y) and the prior month was revised up to a 0.3% gain. It was the strongest monthly increase in factory output since August 1999.
Output in selected high-technology industries surged another 4.1% (27.5% y/y) after the 4.0%, upwardly revised October jump. Output of computers and peripheral equipment jumped 2.6% (15.1% y/y) and output of semiconductors &amp; related equipment skyrocketed 6.2% (45.8% y/y). Output of communications equipment rose a paltry 1.0% (7.8% y/y).
&quot;Taking the Pulse of the Tech Sector: A Coincident Index of High-Tech Activity&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/national_economy/tech_pulse_index.html"> here</a>.
Excluding high-tech, factory output rose 0.7% (0.3% y/y) and the slight October decline was revised to a slight increase. Electrical equipment &amp; appliance outputrose 1.1% (0.4% Y/Y) and furniture output jumped 1.7% (-1.6% y/y). Output of motor vehicles &amp; parts fell for the second consecutive month (-0.3% y/y).
Total capacity utilization rose to 75.7%, the highest level since September 2002.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.9%</td>
<td>0.4%</td>
<td>1.5%</td>
<td>-0.6%</td>
<td>-3.4%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.7%</td>
<td>75.1%</td>
<td>75.4%(11/02)</td>
<td>75.6%</td>
<td>77.4%</td>
<td>82.6%</td>
</tr>
</tbody>
</table>
U.S. Current Account Deficit Shrank in 3Q 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031216e.jpg" width="353">
The US current account deficit was shallower last quarter versus the record deficit in 2Q. Nevertheless, the deficit year-to-date is running at a $551B annual rate, up from last year&#39;s $480.9B. 
The deficit in goods trade improved to $136.2B in 3Q03 but the YTD deficit deteriorated to 547.1B (AR) versus a $482.9B deficit for all of last year and $427.2B in 2001.
Exports of merchandise rose 2.1% (2.0% y/y) following a5.1% decline last year and a 6.9% drop in 2001. Goods imports rose 0.6% (5.5% y/y).
The surplus on services expanded to $14.9B last quarter but the year-to-date surplus of $57.6B (AR) is down from $64.8B last year. The peak services surplus was $91.1B in 1997.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col"> 3Q &#39;03</th>
<th scope="col">2Q &#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$135.0B</td>
<td>$139.4B</td>
<td>$122.7B</td>
<td>$480.9B</td>
<td>$393.7B</td>
<td>$411.5B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$118.7B</td>
<td>$122.5B</td>
<td>$108.7B</td>
<td>$422.0B</td>
<td>$347.1B</td>
<td>$355.8B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>3.3%</td>
<td>0.5%</td>
<td>5.0%</td>
<td>-4.3%</td>
<td>-9.3%</td>
<td>12.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>1.5%</td>
<td>0.6%</td>
<td>4.3%</td>
<td>1.2%</td>
<td>-7.9%</td>
<td>18.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$16.3B</td>
<td>$16.9B</td>
<td>$15.9B</td>
<td>$58.9B</td>
<td>$46.6B</td>
<td>$55.7B</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) fell 0.2% (+1.8% y/y) last month after no change in October. It was the first decline in the CPI since April. Consensus expectations were for a 0.1% rise. Less food & energy prices fell 0.1%, the first [...]

Consumer Prices Fell Broadly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031215a.jpg" width="353">
The Empire State Index of General Business Conditions for December remained at a firm reading of 37.37, down just slightly from the record 40.14 in November. Consensus expectations had been for a larger decline to 33.0.
The new orders index at 31.20 fell 9 points but still indicated expansion. Shipments improved three points to 39.32 to a new record level. The employment index (11.54) rose to a record high.
The index of prices paid rose 3 points to 12.50 and continued the firming trend of the last six months.
The survey includes measures of expectations for business conditions six months ahead. The December index was about stable at the series&#39; high. Expectations for capital expenditures surged 12 points to a new record level.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html"> here</a>.
&quot;Taking the Measure of Manufacturing&quot; from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.phil.frb.org/files/br/brq403tsmt.pdf"> 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/SURVEYS/@S5/@S511/@S511.HTM"> Empire State Manufacturing Survey</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y (12/02)</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col"> 2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>37.37</td>
<td>40.14</td>
<td>12.69</td>
<td>16.15</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Leveled Off 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 15, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031215b.jpg" width="353">
The U.S. Government budget deficit shrank to $43.0B in November. That was less than the $58.9B deficit in November of last year and left the deficit so far this fiscal year about even with FY 2003.
Net receipts rose 3.9% versus in the first two months of this fiscal year versus FY03. All of the gain reflected higher contributions for social insurance, higher estate taxes, higher customs duties and higher miscellaneous taxes. Individual income tax receipts fell 5.5% y/y but corporate taxes were up.
Federal net expenditures rose 2.5% versus the first two months of last fiscal year. The rate of gain eased from last month due to an easing in defense expenditures. Medicare outlays also eased m/m. Spending on health programs rose 5.3% and spending on education surged 10.0%. Interest expense fell 2.6% y/y.
&quot;Global Factors in Budget Deficits&quot; are discussed in this <a href="http://research.stlouisfed.org/publications/iet/20031101/cover.pdf"> paper</a> from the Federal Reserve Bank of St. Louis.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E10602.HTM"> US Government Finance</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;02</th>
<th scope="col">FY2003</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-43.0B</td>
<td>$-69.5B</td>
<td>$-58.9B</td>
<td>$-374.2B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$118.2B</td>
<td>$135.8B</td>
<td>-1.5%</td>
<td>-3.8%</td>
<td>-6.9%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$161.2B</td>
<td>$205.4B</td>
<td>-9.9%</td>
<td>7.2%</td>
<td>7.9%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
</body>
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The Empire State Index of General Business Conditions for December remained at a firm reading of 37.37, down just slightly from the record 40.14 in November. Consensus expectations had been for a larger decline to 33.0. The new orders [...]

Empire State Index Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031212b.jpg" width="353">
Finished producer prices in November reversed some of the prior month&#39;s strength and fell 0.3%. Consensus expectations had been for a 0.2% gain. Core producer prices also changed direction and fell 0.1% versus expectations for a 0.1% uptick.
Most of the unwinding of October&#39;s price strength was due to a decline in vehicle prices. Lower prices for passenger cars and light trucks left overall finished durable goods prices unchanged (1.1% y/y) following a 1.1% spike in October. Tobacco prices rose just 0.1% (-7.4% y/y) after a 0.5% October gain.
Lower truck prices pulled finished capital goods prices down 0.1% (0.9% y/y) following the 0.6% October surge.
Finished energy prices also were weak and fell 1.2% (9.7% y/y). The decline was due to the second monthly decline in gasoline prices (7.8% y/y) and lower fuel oil prices (12.5% y/y). These energy product price series are NSA.
Intermediate goods prices fell 0.2% as energy prices declined. Core intermediate prices rose a moderate 0.2%, but prices for hardwood lumber (8.9% y/y), plywood (39.9% y/y) and copper (11.1% y/y) were quite firm. 
Crude goods prices rose just a modest 0.2%, held back by the fourth decline in five months in crude energy prices (11.3% y/y). Core crude prices were strong reflecting higher metals prices. Iron &amp; steel scrap prices jumped 7.5% (45.7% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM"> Producer Price Index</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>-0.3%</td>
<td>0.8%</td>
<td>3.4%</td>
<td>-1.3%</td>
<td>2.0%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>0.5%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-0.2%</td>
<td>0.4%</td>
<td>3.3%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>0.2%</td>
<td>3.6%</td>
<td>18.6%</td>
<td>-10.6%</td>
<td>0.3%</td>
<td>22.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>4.3%</td>
<td>3.1%</td>
<td>17.4%</td>
<td>3.8%</td>
<td>-10.0%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
U.S. Trade Deficit Deepened 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 12, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031212a.jpg" width="353">
The U.S. foreign trade deficit deepened slightly and about as expected in October to $41.8B. The deficit in September was unrevised.
The trade deficit in petroleum products deepened to $10.0B ($121.6B AR, YTD) and the deficit in nonpetroleum product trade rose to $36.4B ($413.8B AR, YTD).
Exports jumped 2.6% (10.3% YTD, AR) as exports of capital goods surged for the second month, up 3.4% (16.8% YTD, AR) but nonauto consumer goods exports fell 2.3% (+9.9% YTD, AR).
Imports also rose strongly as nonpetroleum imports surged 3.1% (4.0% YTD, AR) and that offset a decline in petroleum imports. Nonauto consumer goods imports were up a strong 5.3%.
By country, the US trade deficit with China deepened to $13.6B in October and to $123.9B (AR) year to date versus a deficit of $103.1B last year. With Japan the US trade deficit deepened to $6.4B and to $65.4B (AR) year to date versus $70.0B last year. The US trade deficit with the European Union deepened to $8.7B and to $91.9B (AR) year to date versus a deficit of $82.1B last year.
Fed Chairman Greenspan&#39;s comments made yesterday on Capitalism and the Role of Globalization are available <a href="http://www.federalreserve.gov/BoardDocs/Speeches/2003/20031211/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM"> Foreign Trade</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$41.8B</td>
<td>$41.3B</td>
<td>$35.2B(10/02)</td>
<td>$418.0B</td>
<td>$357.8B</td>
<td>$375.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.6%</td>
<td>2.9%</td>
<td>7.1%</td>
<td>-3.3%</td>
<td>-5.8%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>2.1%</td>
<td>3.4%</td>
<td>10.6%</td>
<td>2.0%</td>
<td>-5.5%</td>
<td>17.8%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 12, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031212c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index fell unexpectedly in mid-December to 89.6 and fully reversed the prior month&#39;s increase. Consensus expectations had been for a slight rise to 95.5.
During the last ten years there has been a 71% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 82% during the last five years.
The current conditions index fell sharply to 93.6, the lowest level since May. The decline was due to consumers&#39; less favorable perception of their financial situation.
The expectations index fell moderately to 87.1, just off the highs for the year.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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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"> Mid-Dec</th>
<th scope="col"> Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>89.6</td>
<td>93.7</td>
<td>3.3%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>93.6</td>
<td>102.5</td>
<td>-2.5%</td>
<td>97.5</td>
<td>100.1</td>
<td>115.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>87.1</td>
<td>88.1</td>
<td>7.8%</td>
<td>84.6</td>
<td>82.3</td>
<td>102.7</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices in November reversed some of the prior month's strength and fell 0.3%. Consensus expectations had been for a 0.2% gain. Core producer prices also changed direction and fell 0.1% versus expectations for a 0.1% [...]

Producer Prices Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031211b.jpg" width="353">
Retail sales jumped 0.9% last month and the previously reported 0.3% October decline was revised up to little change. Consensus expectations were for a 0.6% November increase.
Excluding motor vehicles &amp; parts dealers, sales rose 0.4% last month and the previously reported 0.2% October gain was doubled. Consensus expectations were for a 0.4% rise.
Sales at food services &amp; drinking places rose 0.3% (9.5% y/y) following a 2.2% October increase that was revised up.
Apparel and accessory store sales surged 1.1% (5.7% y/y), the strongest gain since July. Apparel prices recently have been firming. Sales of furniture and home furnishings jumped 1.0% (8.9% y/y) and sales of electronics ballooned 2.2% (15.0% y/y). Sales at general merchandise stores rose 0.1% (4.9% y/y) following a slight October decline.
Motor vehicle dealers&#39; sales rose 2.6% m/m in November on the strength on a 7.7% jump in unit sales of light vehicles. Sales at gasoline service stations rose 1.6% (5.9% y/y) though gasoline prices fell slightly m/m.
Sales of building materials rose 0.3% (11.0% y/y) following a 1.5% surge the prior month that was little revised.
Sales of nonstore retailers fell 0.4% (6.7% y/y) following five months of strong increase.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM"> Retail Sales &amp; Food Services</a></td>
<td>0.9%</td>
<td>-0.0%</td>
<td>6.9%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.4%</td>
<td>0.4%</td>
<td>6.5%</td>
<td>3.6%</td>
<td>2.9%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 11, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031211a.jpg" width="353">
Initial claims for jobless insurance rose 13,000 last week to 378,000. That followed an unrevised 11,000 increase the prior week. Consensus expectations had been for claims of 365,000.
The four-week moving average of initial claims rose again to 364,750 (-8.1% y/y).
Continuing claims for unemployment insurance rose 11,000. The prior week was revised to a decline of 4,000 versus the 44,000 increase reported initially.
The insured rate of unemployment was unchanged at 2.6% from a downwardly revised level the week prior.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">12/06</th>
<th scope="col">11/29</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>378.0</td>
<td>365.0</td>
<td>-11.9%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,346</td>
<td>-2.1%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Import Prices Strengthen 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 11, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031211c.jpg" width="353">
Prices for imported commodities rose last month by double the Consensus expectation for a 0.2% increase. The 0.4% m/m gain was fueled by a surprising 1.1% jump in petroleum import prices.
So far in December, the price of Brent Crude Oil is up from the $28.71/bbl averaged in November.
Non-petroleum import prices rose 0.3%, the strongest one month gain since June. Capital goods prices rose for the first time since June, up 0.2% (-0.9% y/y). Non-auto consumer goods prices also were up a strong 0.3% (0.2% y/y), the most for any month since mid-2000.
Export prices rose 0.5% led by another jump in food prices (11.0% y/y). Export prices elsewhere were tame.

<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/@E807/@E807.HTM"> Import/Export Prices (NSA)</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.4%</td>
<td>0.0%</td>
<td>2.1%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>6.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>1.1%</td>
<td>1.4%</td>
<td>11.9%</td>
<td>3.0%</td>
<td>-17.2%</td>
<td>66.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>1.1%</td>
<td>-2.4%</td>
<td>-1.5%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.5%</td>
<td>0.3%</td>
<td>1.8%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
U.S. Business Inventories Accumulate 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 11, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031211d.jpg" width="353">
Total business inventories rose 0.4% in October for the second consecutive month. The rise was double Consensus expectations for a 0.2% increase.
Retail inventories added 0.6% in October to the prior month&#39;s 1.1% rise. Rising inventories of motor vehicles and parts led the gains in both months.
Excluding autos, retail inventories rose 0.2% following the 0.9% September surge. Inventories of furniture have been quite strong, up 1.9% (7.2% y/y) after a 1.0% gain in September. Conversely, inventories of apparel (+2.2% y/y) have fallen in six of the last seven months.
Overall business sales jumped 0.7% (5.1% y/y) following the 0.9% September gain. Factory shipments and wholesale sales were strong in both months.
The inventory-to-sales ratio fell to 1.35, a new record low.

<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>0.4%</td>
<td>1.9%</td>
<td>2.1%</td>
<td>-4.7%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.6%</td>
<td>1.1%</td>
<td>5.1%</td>
<td>7.6%</td>
<td>-2.9%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.2%</td>
<td>0.9%</td>
<td>3.4%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.5%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>0.4%</td>
<td>-4.9%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>-1.8%</td>
<td>-6.1%</td>
<td>3.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales jumped 0.9% last month and the previously reported 0.3% October decline was revised up to little change. Consensus expectations were for a 0.6% November increase. Excluding motor vehicles & parts dealers, sales rose 0.4% [...]

U.S. Retail Sales Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031210a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association cratered 12.2% last week (-30.3% y/y) following an 11.7% decline the week prior.
Purchase applications fell 9.5% (+11.4% y/y) to the lowest level in a month after a 3.9% decline the week earlier. Applications to refinance dropped 15.5% w/w (-53.2% y/y).
During the last ten years there has been a 54% 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 reversed all of the prior week&#39;s rise and fell to 6.03%. The effective rate on a 15-year mortgage similarly reversed course and fell to 5.44%.
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>.
Mortgage delinquencies as reported by the Mortgage Bankers Association fell in 3Q03 to 4.28%, the lowest level since 3Q 2000. The percentage of loans entering foreclosure rose to 0.38%, near the record high.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/05</th>
<th scope="col">11/28</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>601.6</td>
<td>685.1</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>399.8</td>
<td>441.8</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,775.5</td>
<td>2,100.0</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol"><a href="http://www.haverselect.com/dlx/MBAMTG/MBAMTG.HTM">MBA: All Mortgage Loans, US (SA, %)</a></td>
<td> 3Q 03</td>
<td> 2Q 03</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total Past Due</td>
<td>4.28%</td>
<td>4.62</td>
<td>4.65%</td>
<td>4.63%</td>
<td>4.02%</td>
</tr>
</tbody>
</table>
Revisions to U.S. GDP Growth Minor, Profits Raised 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 10, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031210b.jpg" width="353">
The rate of economic expansion since the recession&#39;s end to 2Q03 was revised to 2.6% from an originally reported 2.7% annualized rate.
The last recession appears milder than initially estimated, with the economy down 0.5% rather than the previously estimated 0.6%.
Corporate profits in 2002 were revised up substantially due to a change in the treatment of stock options. Profits of domestic industries as a percentage of gross domestic income were 7.1% versus 6.3% estimated earlier.
Savings were revised sharply lower beginning in 1987 because personal spending was higher than previously thought and personal income was revised down.
Price inflation was revised higher last year due to a raised estimate of prices (deflation eliminated) for nonresidential structures and slightly more inflation in the prices of residential structures. Other price series were little revised except that more deflation is now estimated in the prices of equipment &amp; software in 2001.
Visit the Bureau of Economic Analysis for the latest on the comprehensive revisions to the National Income and Product Accounts, which date back to 1929, at this <a href="http://bea.gov/bea/newsrel/2003cr_newsrelease.htm">location</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"> Chained 2000 $, % AR</a></th>
<th scope="col"> 2Q &#39;03 </th>
<th scope="col"> 1Q &#39;03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col"> 2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.1%</td>
<td>&nbsp;2.0%</td>
<td>2.2%</td>
<td>0.5%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Previously Published</td>
<td>3.3%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Chained GDP Price Deflator</td>
<td>1.1%</td>
<td>2.3%</td>
<td>1.5%</td>
<td>2.4%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Previously Published</td>
<td>1.0%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of mortgage applications compiled by the Mortgage Bankers Association cratered 12.2% last week (-30.3% y/y) following an 11.7% decline the week prior. Purchase applications fell 9.5% (+11.4% y/y) to the lowest level in a [...]

Mortgage Applications & Delinquencies Down

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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Tian Yong Woon

In this week's Letter, we examine the underbelly of the AI boom, the risks that sit beneath its optimism. Start with the public mood: American concern about AI has grown alongside adoption over the past three to four years (chart 1). Those worries span mass job displacement, misuse of top-end models by bad actors, and fears of being left behind. The first of these is already surfacing: in June, AI was again the most cited reason for announced US layoffs, with year-to-date AI-linked cuts above 100,000 (chart 2). Technology led all sectors in overall cuts, though the data do not isolate how many were AI-driven. Among those hit, the young are arguably the most exposed to these labour effects. They enter a labour pool swollen by displaced professionals, just as AI masters the entry-level tasks where they would start. India and Indonesia illustrate the stakes on youth NEET, the share not in education, employment, or training, both above 20% and among Asia's highest (chart 3). Beyond the labour market, the same optimism reshapes asset prices. The rally has lifted AI-related valuations to historic highs and concentrated a few names in cap-weighted indexes (chart 4). That raises correlation and the risk of a sharper index fall should the rally unravel. The same concentration runs through economies via exports, from Taiwan's advanced chips to South Korea's memory (chart 5). Its footprint is physical too, and cuts both ways: data-centre investment has lifted growth in Johor, Malaysia (chart 6) while straining local power and water. None of this argues against riding the AI wave, which still promises real productivity and welfare gains. Rather, these are caveats that investors and policymakers must keep in view, since the story is not all upside.

**AI-related concerns**
AI adoption has exploded over the past three to four years, and Americans' concerns have risen alongside it (chart 1). That is understandable, given how advanced and broad AI's proven applications have become. They now span everyday tasks and subject-specific work across fields such as finance and production, as well as tech and development, the sector AI was born in. Major concerns run from mass AI-induced job displacement to a more recent fear, that top-end models fall into the wrong hands and are used by bad actors. A further worry is distributional: AI advances are powerful and could deliver leaps in productivity, yet they may also leave many people behind. Those most exposed include workers already displaced from their jobs and people facing scarcer basic resources as AI demand competes for them. Others simply lack equitable access to AI tools or their benefits.

260713T1.jpg

**AI-driven job displacement**
Some of the fears US workers first had about AI-driven job displacement are already playing out. In June, AI was again the most cited reason for announced job cuts in the US (chart 2). That pushed year-to-date job cuts attributed to AI above 100,000, more than half of all AI-tagged cuts since AI became a selectable reason in 2023. The data come from the latest survey by Challenger, Gray & Christmas. This likely reflects AI's disproportionately heavy impact on certain industries such as technology, which again led all sectors in cuts. At the same time, announced hiring plans stayed subdued, leaving laid-off workers with limited opportunities to find new roles. All of this is occurring even as market valuations remain elevated on the broader wave of AI optimism.

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**AI and youth unemployment**
Arguably among those bearing the brunt of these labour-related effects are the youth. Many have graduated on a curriculum built largely for a pre-AI era. They now enter a labour pool swollen by experienced professionals whom AI has displaced. At the same time, AI is proving especially capable at the entry-level tasks on which young workers usually start. An elevated youth unemployment rate only intensifies the competition young people face for gainful employment. On the broader NEET measure, which also captures youth who are neither working nor studying, India and Indonesia stand out. On the latest available WDI data, both have youth NEET rates above 20%, among the highest in Asia and above the global average (chart 3). Should employers in these economies adopt AI aggressively across processes and production, including physical AI such as humanoid robots, the problem could worsen. Yet firms that stay purely labour-intensive risk losing out to rivals using more efficient, and perhaps cheaper, AI-driven methods.

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**Concentration risk**
The recent wave of AI optimism has pushed the equity valuations of major AI developers and AI-related goods producers to historically high levels. These gains are partly backed by strong earnings and upbeat forward guidance. Most major indexes are weighted by market capitalisation, so a counter's weight tracks its price. As these counters have outperformed their peers (chart 4), their index weight has risen close to mechanically, when holding the number of shares constant. This raises concentration risk, since a small group of counters now carries more of the index and moves it more closely. So, if the rally in these counters were to unravel deeply, it would drag the broader index down more heavily with it.

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AI-related concentration risk is not confined to equity indexes; it also shows up in the growth of major economies. In Asia, that risk usually runs through a country's exports. Take Taiwan, the world's largest advanced semiconductor exporter, as an example. As chart 5 shows, its recent export growth has come more than entirely from integrated circuits and from infocomm and audiovisual equipment. Other goods categories have often contributed negatively in recent months. This is good news for the Taiwanese economy, which sits right at the centre of the global AI boom. Yet it is also a source of concentration risk, should AI-related goods demand collapse or substantial alternative supply emerge elsewhere. A similar story applies to South Korea, through its role in supplying high-end memory chips.

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**Data centres, energy, and water**
Finally, rapidly advancing AI promises major productivity gains and broad improvements to daily life. Yet AI infrastructure rests on resource-intensive inputs: the energy needed for data centre compute, and the water needed to cool those centres. Both may deprive real people of the very resources they need to survive. One recent hotspot is Malaysia, which has courted a wave of foreign direct investment to expand its data centre footprint in the state of Johor. These capital inflows are welcome, and have lifted state-level growth through the construction sector (chart 6). But they have also raised concerns about straining local grids and water supplies, possibly leaving less for residents. Among estimates, a recent one puts data centres at around 40% of Johor's electricity demand by 2035. That is pressuring the state to expand generation capacity and grid access to match the data centre pipeline already in place. Its neighbour Singapore faced similar strains earlier, and has since repositioned itself as a hub for the most advanced and efficient data centres, partly because of its severe land constraints. 

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Asia

Economic Letter from Asia: The AI Underbelly

Robert Brusca

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Manufacturing output in the countries of the European Monetary Union continues to underperform. The median change for the 11 countries reporting on the table is a 0.5% decline in May following a 0.3% increase in April. However, only 41.7% of the reporters are accelerating in May, compared to 25% in April, although in March over half of the reporters had showed some acceleration, with output at 61.5%.

In May, of these eleven early reporters, seven showed month-to-month declines in output. This compares to four showing declines in April and four showing declines in March.

**Sequential trends**
Over 12 months, output is declining in four of these eleven countries: Germany, Luxembourg, Ireland, and Portugal. Over six months, output declines in five of the eleven countries. Over three months, output declines in four of the eleven countries. Over these broader sequential periods, output is increasing in most cases; only one country, Ireland, shows consistent declines in output over three months, six months, and 12 months. However, among EMU countries, only Italy shows output expanding on all three timelines, although Sweden, an EU member country, also shows output increasing in all three periods.

Amid the output weakness in May, the quarter-to-date calculation for industrial production growth is also broadly weak. In May, seven of the eleven quarter-to-date changes in industrial production are negative. Positive results, increases in the quarter-to-date, are registered by Germany, Luxembourg, Greece, and Portugal.

The ranking of the year-over-year growth rates shows seven countries with output growth rate rankings below 50%, marking them as below their respective medians. The comparisons for output growth are taken back to 2006, a period of about 20 years.

Four EMU countries rank above their twenty-year medians: France, Italy, Luxembourg, and Greece.

The snapshot of industry in the monetary union is consistent, showing little momentum, little strength, and relatively low rankings for current growth rates; only a minority of reporters show an acceleration in growth in May compared to April. With the situation in the Strait of Hormuz deteriorating again, the outlook for industrial production has to remain guarded.

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Europe

Industrial Sector Remains Under Pressure in EMU

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.