Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020219.jpg" width="353">
Housing starts rose more than expected last month as mortgage rates fell. December starts were revised up slightly. 
The rise in starts was due to a 3.5% increase in single-family starts, the third consecutive monthly increase. 
Multi-family starts surged 18.9%, recouping most of the 24.7% plunge the month earlier. Starts of 2-4 unit structures were notably strong. 
By region starts were mixed: up in the Northeast and the South, down in the West and flat in the Midwest. 
Yields on conventional 30-year mortgages fell to 7.00% last month from 7.07% in December. 
Building permits rose 3.1%, up strong for the third consecutive month. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, AR)</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,678</td>
<td>1,579</td>
<td>0.7%</td>
<td>1,606</td>
<td>1,575</td>
<td>1,647</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,345</td>
<td>1,299</td>
<td>0.7%</td>
<td>1,275</td>
<td>1,233</td>
<td>1,306</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>333</td>
<td>280</td>
<td>0.9%</td>
<td>331</td>
<td>342</td>
<td>341</td>
</tr>
</tbody>
</table>
</body>
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Housing starts rose more than expected last month as mortgage rates fell. December starts were revised up slightly. The rise in starts was due to a 3.5% increase in single-family starts, the third consecutive monthly increase. Multi- [...]

Housing Starts Strongest Since Early 2000

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020215b.jpg" width="353">
Finished producer prices in January rose as expected for the first time in four months. Higher food prices (0.8%) caused the increase. Prior months&#39; data was revised slightly.
Finished goods prices fell slightly and are down 0.4% over the last four months.
Core finished consumer goods prices fell slightly and are down 0.3% during the last four months. Tobacco prices fell sharply. 
Prices of home electronic equipment fell for the third month in four. Household furniture prices rose slightly but men&#39;s apparel prices collapsed. 
Capital equipment prices fell slightly and are down 0.6% over the last four months.
Gasoline prices rose for the first month in four. Residential natural gas prices also rose for the first month in twelve.
Intermediate goods prices fell for the tenth month in twelve. Core intermediate prices were unchanged and are down 0.9% over the last four months. 
Crude goods prices rose reflecting higher crude oil and food prices. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Producer Price Index</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-2.8%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-4.8%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>3.7%</td>
<td>-9.6%</td>
<td>-40.2%</td>
<td>0.5%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.5%</td>
<td>-0.3%</td>
<td>-9.5%</td>
<td>-10.0%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Industrial Production Decline Moderated 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020215a.jpg" width="353">
Industrial production fell slightly last month, as expected. December&#39;s decline was deepened slightly.
Excluding high tech industries, industrial output fell for the sixth consecutive month, down 3.1% during that period.
Manufacturing output was unchanged, only the third month of no decline since summer 2000.
Output of consumer goods fell but the output of business equipment was up for the first time since August 2000, reflecting higher output of industrial and other business equipment.
Output of high tech products rose for the second month in four, but December&#39;s previously reported gain was revised away. Output of computers and office equipment rose for the fourth consecutive month, up 6.2% during the last four months. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Production &amp; Capacity</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-5.1%</td>
<td>-3.7%</td>
<td>4.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>74.2%</td>
<td>74.4%</td>
<td>79.3%(1/01)</td>
<td>76.8%</td>
<td>81.8%</td>
<td>81.4%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Sagged 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020215c.jpg" width="353">
The Univ. of Michigan&#39;s Index of Consumer Sentiment fell unexpectedly in mid-February. A slight increase has been expected. 
The decline in sentiment reflected a lower reading of consumer expectations but a higher reading of the current situation. 
The University of Michigan survey is not seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">Univ. of Michigan</th>
<th scope="col">Mid-Feb &#39;02</th>
<th scope="col">Jan &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>90.9</td>
<td>93.0</td>
<td>0.3%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices in January rose as expected for the first time in four months. Higher food prices (0.8%) caused the increase. Prior months' data was revised slightly. Finished goods prices fell slightly and are down 0.4% over [...]

Producer Prices Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020214c.jpg" width="353">
Prices for imported commodities rose more than expected last month, led by a jump in oil prices. Updated seasonal factors altered past data slightly. 
Petroleum import prices rose for the first time in four months and erased the decline in December. Crude oil prices have since fallen in February. 
Nonpetroleum import prices also rose, but just slightly. Prices of importedmotor vehicles and capital goods fell last month. Imported food prices rose sharply. 
Export prices fell for the eleventh month in twelve.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Import/Export Prices (NSA)</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.4%</td>
<td>-0.9%</td>
<td>-8.6%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>6.0%</td>
<td>-5.8%</td>
<td>-31.5%</td>
<td>-17.1%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>-5.2%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-2.8%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020214a.jpg" width="353">
Initial claims for unemployment insurance fell as expected in the latest week. The prior week&#39;s level was little revised. It was the eighth week in ten that claims remained below 400,000
The four-week moving average of claims fell to 376,000.
Continuing claims for unemployment insurance rose slightly in the latest week, and the decline in continuing claims has lagged the drop in initial claims.
The insured rate of unemployment was unchanged at 2.7% for the third consecutive week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Unemployment Insurance (000s)</th>
<th scope="col">02/09/02</th>
<th scope="col">02/02/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>373.0</td>
<td>381.0</td>
<td>8.4%</td>
<td>408.0</td>
<td>302.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,429</td>
<td>40.3%</td>
<td>3,031</td>
<td>2,127</td>
<td>2,187</td>
</tr>
</tbody>
</table>
Inventories Liquidated Through Yearend 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020214b.jpg" width="353">
Total business inventories fell as expected in December. The decline in November inventories was deepened due to a lowered estimate of manufacturing inventories.
Inventory liquidation during the last four months of 2001 (-10.8% AR) by far set a record for that length of time and it was double the rate that sales declined. 
Retail inventories fell only in two categories, clothing and general merchandise stores. Furniture inventories rose for the third month in row. 
Overall business sales were unchanged following the sharp November decline.
The inventory-to-sales ratio was stable at 1.39 for the third month in a row.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Inventories</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Nov &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.4%</td>
<td>-1.2%</td>
<td>-5.9%</td>
<td>-5.9%</td>
<td>6.0%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.1%</td>
<td>-1.0%</td>
<td>-4.9%</td>
<td>-4.9%</td>
<td>6.8%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>-0.2%</td>
<td>-0.7%</td>
<td>-1.8%</td>
<td>-1.8%</td>
<td>4.4%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-5.3%</td>
<td>-5.3%</td>
<td>7.1%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-7.2%</td>
<td>-7.2%</td>
<td>4.6%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

Prices for imported commodities rose more than expected last month, led by a jump in oil prices. Updated seasonal factors altered past data slightly. Petroleum import prices rose for the first time in four months and erased the [...]

First Rise in Import Prices Since May '01

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020213.jpg" width="353">
Total retail sales fell as expected last month due to lower auto sales. Sales excluding autos were quite a bit stronger than expected and December nonauto results were revised up. 
Though sales at gasoline service stations rose for the first time in four months on the strength of higher gas prices, price deflation elsewhere fueled sales. 
Sales of furniture and home furnishings rose 0.4% following three months of huge gain, but sales of electronics and appliances fell 3.6%, again following three months of outsized gain. 
Sales at clothing and accessory stores jumped 2.5% following a 2.7% December gain. 
Sales at general merchandise stores rose 2.1%, December&#39;s gain of 1.0% was double the initial estimated rise, and it was the seventh monthly increase in eight.
Sales at motor vehicle and parts dealers fell 4.3%, the third consecutive monthly decline. Sales of domestic and imported light vehicles fell 4.2% to 15.825 units (SAAR). 

<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">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Sales &amp; Food Services</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>3.5%</td>
<td>7.6%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.2%</td>
<td>0.7%</td>
<td>2.5%</td>
<td>2.8%</td>
<td>8.0%</td>
<td>7.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

Total retail sales fell as expected last month due to lower auto sales. Sales excluding autos were quite a bit stronger than expected and December nonauto results were revised up. Though sales at gasoline service stations rose for the [...]

Retail Sales Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020212.jpg" width="353">
Chain store sales rose 2.1% in the first full week of February. The surge followed a slight 0.7% decline the prior week and raised sales so far in February 1.0% above January. 
Through early February, the Tokyo Bank Leading Indicator of chain store sales also had improved, albeit less than actual sales. 
During the last ten years, the correlation between the leading indicator of chain store sales and actual sales has been low.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">BTM-UBSW (SA, 1977=100)</th>
<th scope="col">2/09/02</th>
<th scope="col">02/02/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>406.6</td>
<td>398.2</td>
<td>4.1%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
</body>
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Chain store sales rose 2.1% in the first full week of February. The surge followed a slight 0.7% decline the prior week and raised sales so far in February 1.0% above January. Through early February, the Tokyo Bank Leading Indicator [...]

Weekly Chain Store Sales Build Momentum

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020211.jpg" width="353">
Prices for industrial commodities have risen nearly 5% since the lows last November according to the FIBER index of industrial materials price index (formerly the Journal of Commerce index). 
The FIBER index is heavily weighted (nearly 50%) toward crude oil and benzene prices which are up 6% during the period.
Prices in most other categories also have risen since the fall, including metals, textiles and miscellaneous commodities.
During the last twenty years there has been a 46% correlation between the three-month percent change in the FIBER index and the three-month change in factory sector industrial production.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">FIBER Industrial Materials Price Index (1990=100)</th>
<th scope="col">02/08/02</th>
<th scope="col">02/01/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Items</td>
<td>80.90</td>
<td>80.18</td>
<td>-9.4%</td>
<td>85.28</td>
<td>94.18</td>
<td>92.50</td>
</tr>
</tbody>
</table>
</body>
</html>

Prices for industrial commodities have risen nearly 5% since the lows last November according to the FIBER index of industrial materials price index (formerly the Journal of Commerce index). The FIBER index is heavily weighted (nearly [...]

Higher Commodity Prices Signal Recovery in Manufacturing

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020207b.jpg" width="353">
The Institute for Supply Management (formerly the NAPM) business activity index of the nonmanufacturing sector fell more than expected last month. A slight decline had been expected and new seasonal factors lowered the December level significantly. 
New orders and imports fell, while employment was about unchanged for the second month. 
Business activity for the nonmanufacturing sector is a question separate from the components mentioned above. This is in contrast to the NAPM manufacturing sector composite index that reflects component activity. 
During the last four years, there has been a 44% correlation between the level of the NAPM nonmanufacturing index and quarterly growth in real GDP in the service sector. 
The survey of nonmanufacturing activity dates only to July 1997. Therefore its seasonal adjustment should be viewed tentatively.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ISM Nonmanufacturing Survey</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>49.6</td>
<td>50.1</td>
<td>52.1</td>
<td>49.0</td>
<td>59.2</td>
<td>59.1</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020207a.jpg" width="353">
Initial claims for unemployment insurance fell slightly more than expected in the latest week. The prior week&#39;s level was little revised.
The decline in weekly claims since the October peak has lowered the four-week moving average to 380,500, down 24.8% since that peak.
Continuing claims for unemployment insurance fell in the latest week, but the prior week&#39;s level was revised up significantly.
The insured rate of unemployment was unchanged at 2.7%. The prior week&#39;s level was revised up.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Unemployment Insurance (000s)</th>
<th scope="col">02/02/02</th>
<th scope="col">01/26/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>376.0</td>
<td>391.0</td>
<td>4.2%</td>
<td>408.0</td>
<td>302.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,427</td>
<td>45.6%</td>
<td>3,031</td>
<td>2,127</td>
<td>2,187</td>
</tr>
</tbody>
</table>
</body>
</html>

The Institute for Supply Management (formerly the NAPM) business activity index of the nonmanufacturing sector fell more than expected last month. A slight decline had been expected and new seasonal factors lowered the December level [...]

ISM Nonmanufacturing Index Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201a.jpg" width="353">
The recent decline in nonfarm payrolls moderated as expected last month continuing a trend since payrolls fell 448,000 last October. December&#39;s decline was deepened slightly but the November drop was lessened. 
From the household survey, the unemployment rate fell despite a sharp drop in employment as the labor force fell by a record 924,000. 
The one-month diffusion index of payroll employment rose to 50.1, the first reading over 50 (more firms expanding payrolls than contracting) since last March. The three-month figure rose slightly to 38.1. 
Manufacturing payrolls again fell but by the least amount since September. The employment diffusion index for the factory sector improved to 40.8. 
Employment in the service sector rose due to strength in retail hiring. 
The index of aggregate hours worked (employment times hours worked) fell 0.4% and January was 0.5% below the 4Q average. 
Average hourly earnings were unchanged and the sharp December increase was revised lower. 
The establishment survey figures for nonfarm payrolls are based on reports provided to the US Labor Dept. by businesses. The household survey figures (incl. the unemployment rate) are based on a mail survey of US households.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Employment</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-89,000</td>
<td>-130,000</td>
<td>-0.9%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-89,000</td>
<td>-122,000</td>
<td>-7.2%</td>
<td>-4.2%</td>
<td>-0.5%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>34.0</td>
<td>34.1</td>
<td>34.4</td>
<td>34.2</td>
<td>34.4</td>
<td>34.5</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.0%</td>
<td>0.3%</td>
<td>4.0%</td>
<td>4.2%</td>
<td>3.8%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.6%</td>
<td>5.8%</td>
<td>4.2%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
ISM Index Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201c.jpg" width="353">
The Institute of Supply Management Manufacturing Index - formerly the NAPM Composite Manufacturing Index - rose as expected last month. New seasonal factors altered the historical data slightly. 
Each of the index component series rose except new orders which was about unchanged following a surge in December. 
Deflationary pressure fell as the price index rose to the highest level since last spring.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ISM Manufacturing Survey</th>
<th scope="col">Jan&#39; 02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>49.9</td>
<td>48.1</td>
<td>41.7</td>
<td>43.9</td>
<td>51.6</td>
<td>54.6</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>43.9</td>
<td>33.2</td>
<td>64.6</td>
<td>43.0</td>
<td>64.8</td>
<td>54.2</td>
</tr>
</tbody>
</table>
Construction Spending Rose in December 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201b.jpg" width="353">
The value of construction put-in-place rose precisely as expected in December. The November total was revised down due to a lowered estimate of nonresidential building but the decline in residential building was lessened. 
Residential building activity rose due to a jump in construction of multi-unit structures. The value of single-unit construction fell for the third month in four. 
Nonresidential building activity fell for the eighth month of the year. 
Spending by governments fell slightly after strong gains the prior two months.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Construction Put-in-place</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Nov &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>5.6%</td>
<td>7.0%</td>
<td>8.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>6.0%</td>
<td>5.6%</td>
<td>7.4%</td>
<td>11.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.4%</td>
<td>-2.6%</td>
<td>-11.7%</td>
<td>-0.2%</td>
<td>8.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Public</td>
<td>-0.2%</td>
<td>4.2%</td>
<td>16.0%</td>
<td>11.0%</td>
<td>4.5%</td>
<td>10.1%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Rose Less than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201d.jpg" width="353">
The University of Michigan&#146;s Index of Consumer Sentiment rose less than expected in January due to weakness late in the month. 
Nevertheless, the 4.7% m/m rise reflected a sharply higher reading of expectations. The reading of current economic conditions fell and nearly erased the December gain. 
The figures are not seasonally adjusted. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">University of Michigan</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>93.0</td>
<td>88.8</td>
<td>-1.8%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The recent decline in nonfarm payrolls moderated as expected last month continuing a trend since payrolls fell 448,000 last October. December's decline was deepened slightly but the November drop was lessened. From the household [...]

Job Loss Smallest Since August

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

Blue Chip forecasters expect US to lead aggressive policy rate cuts over coming year—apart from Japan

Ratio of job openings to the number unemployed in the US now below pre-pandemic level

U.S. layoffs not showing as much cooling in labor markets as unemployment rate

While goods prices have moderated, service price inflation remains elevated and sticky

Since Jan 2023, BCEI US outlook has improved, worsened for Japan and the euro area

Persistent negative US economic surprises leading to big rate-cut expectations

Germany is Euro area weakling

Flash PMIs show good start to Q3 in US; loss of momentum in the euro area

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Winnie Tapasanun

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250117S32.jpg

Industrial production (IP) rose a larger-than-expected 0.9% m/m (0.5% y/y) in December following an upwardly revised 0.2% increase in November (-0.1% initially) and a downwardly revised 0.5% decline in October (-0.4% previously), data from the Federal Reserve Board showed. A 0.3% m/m December increase had been expected in the Action Economics Forecast Survey. The December IP index at 103.2 was the highest since June 2024; it was 4.2% above a low of 99.0 in September 2021 and 8.1% above a low of 95.5 in February 2021. The Fed estimated that increases in aircraft & parts output contributed 0.2 percentage point to December IP growth after the resolution of the Boeing strike. In Q4 2024, IP fell 0.2% q/q after falling 0.2% q/q in Q3 2024, dropping at a 0.6% annualized rate following a 0.8% Q3 annualized rate of decline. IP fell 0.3% in 2024 after rising 0.2% in 2023 and 3.4% in 2022.

By **industry groups**, manufacturing production gained 0.6% (0.03% y/y) in December following an upwardly revised 0.4% increase in November (+0.2% initially) and two consecutive m/m declines. Durable goods production rose 0.4% (-1.2% y/y) in December following a 0.9% rebound in November. This reflected m/m output rises of 6.3% (-5.6% y/y) in aerospace & miscellaneous transportation equipment, 1.7% (-1.9% y/y) in primary metals, 0.9% (-0.4% y/y) in fabricated metal products, and 0.5% (3.0% y/y) in electrical equipment, appliances & components. Notably, aircraft & parts production climbed 11.4% (-9.2% y/y), the largest m/m gain since May 2020, following a 0.7% November rebound. In contrast, the following durable goods categories fell m/m in December, including output drops of 2.0% (-3.7% y/y) in furniture & related products, 1.0% (-4.9% y/y) in miscellaneous durables goods, 0.7% (+3.8% y/y) in computer & electronic products, 0.6% (-5.7% y/y) in motor vehicles & parts, 0.6% (-1.3% y/y) in nonmetallic mineral products, 0.2% (+0.7% y/y) in machinery, and 0.2% (+2.7% y/y) in wood products.

Nondurable goods production rose 0.7% (1.4% y/y) in December after edging up 0.1% in November and October. The December rise reflected m/m output increases of all nondurable goods categories, including 1.6% (1.2% y/y) in petroleum & coal products, 1.5% (5.5% y/y) in printing & related support activities, 1.2% (-7.2% y/y) in apparel & leather goods, 0.8% (5.4% y/y) in chemicals, 0.6% (-1.0% y/y) in food, beverages & tobacco, 0.3% (1.3% y/y) in paper, 0.2% (-4.2% y/y) in plastics & rubber products, and 0.1% (2.3% y/y) in textiles & product mills.

Mining activity rose 1.8% (0.3% y/y) in December following an upwardly revised 0.5% decline in November (-0.9% initially). Utilities output rose 2.1% (4.3% y/y) following an upwardly revised 0.7% November drop (-1.3% initially). They increased for the second time in three months.

By **market groups**, business equipment output rose 1.4% (-4.3% y/y) in December following a 1.4% rise in November and two successive m/m decreases. Materials production advanced 1.2% (1.4% y/y) after virtually unchanged. Construction supplies production increased 0.9% (0.9% y/y) after holding steady. Consumer goods output rose 0.5% (0.3% y/y) in December after a 0.5% rebound, reflecting a 0.4% decline (-5.3% y/y) in durable consumer goods and a 0.7% gain (1.9% y/y) in nondurable consumer goods.

In **special classifications**, factory output of selected high-tech industries rose 1.1% (7.9% y/y) in December after holding steady in November (+0.3% initially) and four straight m/m rises. Manufacturing production excluding selected high-tech industries grew 0.6% (-0.2% y/y) following a 0.4% November rebound and two consecutive m/m declines. Manufacturing production excluding selected high-tech and motor vehicles & parts rose 0.7% (0.3% y/y) after a 0.2% November increase and three straight m/m decreases.

Capacity utilization rose to 77.6% in December, the highest since August, after holding at 77.0% in November (76.8% initially). The Action Economics Forecast Survey forecasted 77.0%. The December reading was 2.1 percentage points below its long-run (1972–2023) average. Manufacturing capacity utilization rose to 76.6% in December, the highest since September, from 76.2% in November (76.0% initially); the December rate was 1.7 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

250117T32.jpg

250117U32.jpg

- Dec. IP +0.9% m/m (+0.5% y/y), up for the second straight month; IP Index at a 6-month high.
- Mfg. IP +0.6% m/m, w/ durable goods up 0.4% and nondurable goods up 0.7%.
- Mining activity +1.8% and utilities output +2.1%, up for the second month in three.
- Key categories in market groups all gain.
- Capacity utilization increases to a 4-month-high 77.6%.

U.S. Industrial Production Exceeds Expectations in December

250117F18.jpg

250117G18.jpg

Total housing starts jumped 15.8% m/m to a higher-than-expected 1.499 million units at a seasonally adjusted annual rate (SAAR) in December after declines of 3.7% to 1.294 million in November (-1.8% m/m, 1.289 million initially) and 0.8% to 1.344 million in October (-3.2% m/m, 1.312 million previously), data from the U.S. Census Bureau showed. The Action Economics Forecast Survey had expected 1.320 million starts for December. The December reading was the first m/m rise since August and the highest level since February 2024. The year-on-year rate was at -4.4% in December, the smallest y/y decline since September and less severe than -14.3% in November; it was +17.0% y/y in December 2023. Starts were 18.0% below a recent peak of 1.828 million in April 2022. During all of 2024, housing starts fell 4.0% after falling 8.4% in 2023 and 3.3% in 2022.

Single-family starts rose 3.3% (-2.6% y/y) to 1.050 million in December on top of a 7.7% rise to 1.016 million in November (1.011 million initially), registering the fourth m/m rise in five months and the highest level since February 2024. They reached a high of 1.222 million in November 2021 and a high of 1.286 in December 2020. Multi-family starts surged 61.5% (-8.4% y/y) to 449,000, the highest level since December 2023, reversing a 30.7% November decrease to 278,000. They reached a high of 624,000 units in November 2022 and a high of 627,000 units in April 2022.

Housing starts gained in all the major regions except in the West. Starts in the Northeast jumped 40.2% (22.7% y/y) to a three-month-high 157,000 in December, the third m/m increase in four months, after a 2.8% rebound in November. Starts in the Midwest recovered 20.0% (1.0% y/y) to 204,000, up for the second month in three, following a 32.5% November slump. Starts in the South advanced 17.7% (0.1% y/y) to 853,000, the highest level since February 2024, following a 10.2% November rise and two consecutive m/m declines. To the downside, starts in the West fell 0.7% (-26.2% y/y) to 285,000 on top of an 11.7% decrease, registering the third m/m fall in four months and the lowest level since July 2024. Notably, the South continued to post the largest level figure (853,000) for housing starts among the four regions. It showed a peak of 1.048 million in April 2022.

Building permits slid 0.7% (-3.1% y/y) to 1.483 million in December, the third m/m slide in four months, following a 5.2% rise to 1.493 million in November (compared to 1.493 million recently revised on December 23 and 1.505 million initially reported on December 18). They reached a high of 1.915 million in January 2022 and a high of 1.883 million in January 2021. Single-family permits rose 1.6% (-2.5% y/y) to 992,000, the third straight m/m rise and the highest level since February 2024, after a 0.5% increase to 976,000. They reached a high of 1.251 million in January 2022 and a high of 1.250 in January 2021. Multi-family permits fell 5.0% (-4.3% y/y) to 491,000, down for the third month in four, after having recovered 15.4% to 517,000. They reached a peak of 813,000 units in February 2023 and a high of 799,000 units in June 2022.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

250117H18.jpg

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- Housing starts +15.8% (-4.4% y/y) to 1.499 mil. in Dec. vs. -3.7% (-14.3% y/y) to 1.294 mil. in Nov.
- Single-family starts highest since Feb. ’24; multi-family starts highest since Dec. ’23.
- Housing starts up m/m and y/y in the Northeast, Midwest and South but down in the West.
- Building permits fall for the third month in four, due to a drop in multi-family permits.

U.S. Housing Starts Rebound in December; Highest Level Since February 2024

Robert Brusca

250117E.jpg

U.K. sales volume for retail sales has been slipping roughly since mid-2024. The 3-month volume index is falling at a 4.4% annual rate over three months. Sales are up at a scant 0.2% annual rate over six months and by 3.5% year-over-year. Passenger car registrations show weakness falling at a 7.6% annual rate over three months, gaining at a 4.6% pave over six months, and then showing contraction at a minor -0.1% rate over 12 months.

**Volume Trends**
Apart from the sequential data, the monthly volume results show a decline in December, a gain in November and a drop in October. The monthly nominal data show small nominal gain in November and December against a sharper nominal decline in October.

U.K. nominal sales QTD relative nominal decline in the fourth quarter with retail sales volumes also show decline dropping at a 2.9% annual rate overall. Passenger car registrations are falling at a 12.4% annual rate in the fourth quarter.

**Surveys and Confidence**
U.K. surveys on retailing for the ‘time of year’ and the ‘volume of orders’ from the Confederation of British Industry (CBI) show sputtering monthly results. The CBI reading for time of year (TOY) and volume of orders (VoO) both show net decline of three months. VoO also falls over six months whereas TOY sales are higher over six months. Both TOY and VoO sales are higher over 12 months. TOY sales are up by 2-index points while VoO sales are up by 28 of their index points. While the year-on-year survey results show short-term agreement, their year-on-year signals seem different. But their long-term ranking results alone again show similarity at the TOY sales log a 21.8 percentile standing vs. VoO that is even weaker at a14-percentile mark. It is an even weaker full-sample standing despite the better 12-month gain. We often see this sort of thing in data comparisons. But if surveys are well-constructed, they usually track but there often are still disparities. That is true here as well and we can nit-pick the details but the overarching message here is that conditions are weak. Consumer confidence from GfK has been volatile over the span but when we rank the confidence index, it stands at 40.5 percentile level, which is stronger than for the surveys but still below its median and barely over half the standing of real retail sales growth.

**Rankings/Standings**
The consumer confidence standing is interesting at 40.5% but it is not ‘close’ to the volume ranking which is at its 77-percentile. The confidence ranking is still slightly below its median. The retail sales ranking is applied to real sales and their 12-month growth rate. The ranking of sales volume is much higher than any ranking registered by CBI surveys or by consumer confidence. Passenger car registrations are weak, too, at a 47.2 percentile standing. In contrast, nominal retail sales have a 60.6 percentile standing. Part of that is the boost they get from the 80.9 percentile standing from the CPI-H, from inflation.

250117.jpg

United Kingdom

U.K. Retail Sales Volumes Slide

Andrew Cates

**Global bond markets**
The sell-off in bond markets has been a global phenomenon. This is illustrated in chart 1 showing the movement in 10-year government bond yields in the US, UK and Germany over the past 12 months. Still, as the chart’s scaling indicates, divergences in yield levels between the US and UK versus Germany suggest different dynamics have been at play. The US and UK, for example, have been leading the sell-off compared with Germany (and other eurozone members).

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**Global inflation expectations**
That suggests that inflation expectations coupled with inflation uncertainty have been a driver of higher yields. Chart 2 below shows the evolution of consensus forecasts for CPI inflation in 2025 across the US, UK, the euro area (and Japan) throughout 2024. Notably, expectations for inflation in the US and UK inflation rose steadily over the year. In contrast, euro area inflation forecasts remained relatively stable, hovering close to the ECB’s target of around 2%. We will focus more on this again below but for the record Japan’s inflation forecasts saw a gradual uptick, at the same time, but remained modest, increasing from 1.5% to just above 2%.

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**Overseas demand**
The role of overseas demand for US government debt in driving US yields higher could also have been significant. Chart 3 below shows the evolution of foreign holdings of US Treasury securities from 2013 to 2024, segmented by key regions: Japan, China, Europe, and the rest of the world. Over the period, total foreign holdings steadily increased, surpassing $9 trillion by 2024. Notably, Japan has now emerged as the largest single holder of US Treasuries, with its share growing significantly, while China’s holdings, though substantial, have showed some decline in recent years. But a new US administration led by President-elect Trump could now be further disrupting this picture. A potential pivot toward more protectionist policies alongside some question marks about the independence of the Fed and the dollar’s role as the world’s reserve currency could be combining to undermine overseas demand for safe-haven assets in the United States.

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**Japan**
Japan is worthy of some further separate comment in this regard. That’s because its capital flows are highly significant for global financial markets due to Japan's status as one of the world’s largest net creditor nations. Changes in Japanese capital flows—such as a shift back to domestic assets driven by rising yields or inflation expectations—usually create ripple effects, influencing global bond yields, currency markets (particularly the yen), and risk sentiment. This is why, notwithstanding relatively stable consensus inflation forecasts for 2025 that we noted above, the sharp rise in longer-term market-based inflation forecasts is noteworthy. Chart 5 below illustrates Haver’s calculations for the 5-year breakeven inflation rate in Japan from 2019 to 2024, and shows a sustained increase in those expectations in recent years. That follows several years of subdued expectations driven by entrenched deflationary pressures and weak demand. That the 5-year breakeven inflation rate crossed 2% toward the end of last year is also noteworthy given the Bank of Japan’s inflation objectives. For it potentially signals that monetary policy is still loose and that a further campaign to normalise policy beckons in the months ahead.

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**Quantitative tightening** 
Central bank monetary policies more generally are also worthy of some discussion and particularly their balance sheet policies. Chart 5 below depicts the relationship between central banks' asset holdings as a percentage of GDP (a four-quarter change of an unweighted average for the US, Japan, and the euro area) and the real 10-Year bond yield in the US. The chart underscores the close connection between central bank asset purchases and real yields. In combination with looser US fiscal policy – and a higher degree of government bond issuance – the underlying supply and demand dynamics in the US Treasury market (and other government debt markets) have been shifting. Reduced demand from central banks, in other words, has coincided with additional supply from governments, and thereby amplifying upward pressure on real yields. 


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**US and UK inflation**
The key takeaway from this discussion is that a confluence of factors has driven global yields higher in recent weeks. Inflation and monetary policy concerns, fiscal policy uncertainty, and shifts in capital flows have all likely contributed. As highlighted earlier, the trajectory of yields from here will hinge on incoming economic data and how policymakers respond. On that first point, however, it was notable that this week brought some encouraging news: the latest CPI inflation reports from both the US and UK came in weaker than expected. Notably, the details were also reassuring, with service-sector inflation showing further signs of moderation in both economies (see chart 6 below). This could ease some of the pressure on central banks to keep monetary policy restrictive in the period immediately ahead.

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A steep sell-off in global bond markets has dominated financial headlines over the past week or so, drawing intense scrutiny from investors and policymakers alike (chart 1). The implications of this for the global economy, however, will depend on the underlying drivers that have been fuelling the rout. With our charts this week, we examine the data to identify some of the likely culprits. Inflation concerns are front and centre, with rising consumer prices in recent months (chart 2) reigniting fears of tighter monetary policy. Waning overseas demand, particularly from Japan and China (charts 3 and 4), may also be playing a significant role. Meanwhile, quantitative tightening (chart 5) has possibly siphoned liquidity from financial markets, while fiscal policy uncertainties are further rattling investor confidence. The easy conclusion is that all these factors—ranging from inflationary pressures to fiscal risks—are complicit to varying degrees. However, whether this marks the beginning of a broader reckoning or merely a passing squall hinges on how incoming data now evolve and how policymakers respond to these challenges. On that first point, weaker-than-expected inflation data from the US and UK this week appear to have stopped the rot for now (chart 6). On the latter, a new US administration could add another layer of unpredictability and the coming weeks could prove pivotal in shaping market expectations and the trajectory of the global economy.

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Charts of the Week: Yielding Conclusions

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Total retail sales increased a less-than-expected 0.4% m/m in December after an upwardly revised rises of 0.8% in November (+0.7% initially) and 0.6% in October (+0.5% previously), data from the U.S. Census Bureau showed. The December m/m reading was the fourth consecutive m/m gain and the fifth in six months. A 0.6% m/m December increase had been expected in the Action Economics Forecast Survey. The year-on-year rate decelerated to 3.9% in December from 4.1% in November. The latest y/y figure, below 5.2% in December 2023, was also lower than a high of 17.1% in February 2022 and significantly below a peak of 52.5% in April 2021. During all of 2024, retail sales rose 2.6% after gaining 3.6% in 2023 and 9.1% in 2022.

Excluding motor vehicles & parts, retail sales rose 0.4% (2.9% y/y) in December after an unrevised 0.2% increase in November, registering the fourth successive m/m rise and the sixth in seven months. A 0.5% m/m December increase had been expected. Sales of motor vehicles & parts grew 0.7% (8.4% y/y), the fourth straight m/m gain, on top of a 3.1% November increase; this compared to a 3.1% rise (7.2% y/y) in unit light vehicle sales following a 3.0% November increase.

Sales in the retail control group, which excludes autos, building materials, gasoline stations, and food services, rose 0.7% (4.1% y/y) in December, up for the third month in four, following a 0.4% rise in November. These sales are used in the construction of personal consumption expenditures in NIPA accounts. Nonauto sales excluding gasoline & building materials grew 0.5% (3.8% y/y), the fourth consecutive m/m gain, after a 0.3% November increase.

Sales by category were mostly positive in December. Miscellaneous store sales jumped 4.3% (3.7% y/y) in December, the first m/m gain since September, reversing a 3.9% drop in November. Sporting goods, hobby shop, book & music store sales rose 2.6% (1.8% y/y), the first m/m rise in three months, following a 0.3% November decline. Furniture & home furnishing store sales advanced 2.3% (8.4% y/y), the eighth m/m gain in nine months, on top of a 1.3% November increase. Clothing & accessory store sales rebounded 1.5% (2.4% y/y), the third m/m gain in four months, following a 0.8% November drop. Gasoline station sales rose 1.5% (-1.2% y/y) in December after rising 0.2% in the prior two months. Electronics & appliance store sales rose 0.4% (5.8% y/y), the third straight m/m rise, after a 0.9% November increase. General merchandise store sales rose 0.3% (2.6% y/y), up for the third month in four, after holding steady in November; within this grouping, department store sales edged up 0.1% (-1.8% y/y) after falling 0.4% in November and October. Nonstore retail sales grew 0.2% (6.0% y/y), the third m/m increase in four months, after a 1.7% November gain.

To the downside, building materials & garden equipment store sales slid 2.0% (-1.8% y/y), the third consecutive m/m slide, on top of a 0.8% November decrease.

In the nondiscretionary sales categories, health & personal care store sales fell 0.2% (+3.4% y/y) in December, down for the second month in three, following a 0.3% increase in November. Food & beverage store sales, however, rose 0.8% (3.1% y/y), the third m/m rise in four months, reversing a 0.2% November decline.

Consumers seemed to eat out less frequently in December amid still-high inflation (December CPI +0.4% m/m, +2.9% y/y; core CPI +0.2% m/m, +3.2% y/y). Restaurant & drinking place sales fell 0.3% (+2.4% y/y) in December, the first m/m fall since March 2024, following an upwardly revised 0.1% uptick in November (-0.4% initially).

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

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- December total retail sales +0.4% (+3.9% y/y), w/ m/m rises in most categories.
- Ex-auto sales +0.4% (+2.9% y/y); auto sales +0.7% (+8.4% y/y).
- Rebounds in miscellaneous store sales (+4.3%) and sporting goods store sales (+2.6%).
- Drops in building materials & garden equipt. store sales (-2.0%) and restaurant & drinking place sales (-0.3%).

Economy in Brief: February 2002

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