Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031120e.jpg" width="353">
<span style="font-size:10.0pt;font-family:Verdana;
mso-fareast-font-family:&quot;MS Mincho&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
mso-ansi-language:EN-US;mso-fareast-language:JA;mso-bidi-language:AR-SA">October retail sales in the UK picked up further from recent months, establishing a distinct uptrend after a pause last winter. Total retail sales in volume terms rose at a 6.2% annual rate in the three months ended October, stronger than the summer&#39;s 5.2% and much firmer than last winter&#39;s nearly flat 0.3%.
<span style="font-size:10.0pt;font-family:Verdana;
mso-fareast-font-family:&quot;MS Mincho&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
mso-ansi-language:EN-US;mso-fareast-language:JA;mso-bidi-language:AR-SA">Both food and non-food stores have gained strength in recent months, with non-food clearly in the lead. Within that sector, the advances have rotated among groups. &quot;Other&quot;, which would encompass books, gifts, jewelry, sporting goods and miscellaneous items have most recently been the strongest, up at a 10.5% annual pace in the latest three months Clothing stores have the largest year-on-year increase, 7.5%. So-called &quot;non-specialized&quot; stores have had less buoyant sales, while those at non-stores, that is mail order and Internet buying, have been falling rather markedly.
<span style="font-size:10.0pt;font-family:Verdana;
mso-fareast-font-family:&quot;MS Mincho&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
mso-ansi-language:EN-US;mso-fareast-language:JA;mso-bidi-language:AR-SA">Thus, UK consumers seem to be selective in their buying and have seen the novelty of shopping from home fade somewhat. Even so, demand is growing firmly and has already contributed to the Bank of England&#39;s decision earlier this month to raise its &quot;repo rate&quot; from 3.5% to 3.75%. The Bank&#39;s Monetary Policy Committee indicated that, among other factors in their decision, they had expected household spending to be slower than has developed in these last several months.

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<th scope="col" class="firstcol">&nbsp;</th>
3-Month % Change (Annualized)
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Sales Volume</td>
<td>Oct 2003</td>
<td>July 2003</td>
<td>April 2003</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">&nbsp; All items</td>
<td>6.2</td>
<td>5.2</td>
<td>0.3</td>
<td>7.2</td>
<td>6.3</td>
<td>4.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mainly food</td>
<td>4.7</td>
<td>3.9</td>
<td>1.8</td>
<td>6.1</td>
<td>3.5</td>
<td>2.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Predominantly&nbsp; Nonfood</td>
<td>8.7</td>
<td>7.2</td>
<td>1.9</td>
<td>7.4</td>
<td>9.2</td>
<td>6.5</td>
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October retail sales in the UK picked up further from recent months, establishing a distinct uptrend after a pause last winter. Total retail sales in volume terms rose at a 6.2% annual rate in the three months ended October, stronger [...]

UK Retail Sales Resume Firm Growth

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031120a.jpg" width="353">
Initial claims for jobless insurance fell to 355,000 last week. Down 15,000 w/w and down 73,000 (17.1%) since early September, claims were near the lowest level since early 2001. Consensus expectations had been for claims of 365,000.
The four-week moving average of initial claims fell to 367,250 (-8.0% y/y), the lowest level since February 2001.
Continuing claims for unemployment insurance rose 21,000 in the latest week but the prior week&#39;s gain was revised to 1,000 versus 49,000 reported initially. Continuing claims for unemployment insurance are down 7.5% from the peak in late June.
The insured rate of unemployment ticked up to 2.8% but the prior two weeks were revised down to 2.7%.
&quot;Monetary Policy in Jobless Recoveries&quot; from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20031101/cover.pdf"> here</a>.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">11/15</th>
<th scope="col">11/08</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>355.0</td>
<td>370.0</td>
<td>-7.8%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,497</td>
<td>-2.2%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Leading Indicators Up More Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 20, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031120c.jpg" width="353">
The Conference Board reported that the Composite Index of Leading Economic Indicators rose 0.4% in October following an upwardly revised no change in September. The rise was twice Consensus expectations for a 0.2% gain.
Gains amongst the leaders&#39; component broadened to 60%. Over a six-month span, 85% of the leading series rose.
Fewer claims for jobless insurance, improved vendor performance, higher building permits and higher stock prices each contributed meaningfully to the October 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 posted a 0.2% gain for the second month. Year to date the coincident indicators are up 0.8% (AR). That YTD increase has been led by a 3.5% gain in real manufacturing &amp; trade sales and a 2.0% gain in industrial production. Employment has fallen
The ratio of coincident-to-lagging indicators was unchanged. 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.
&quot;Should the Fed React to the Stock Market?&quot; is a new report from the Federal Reserve Bank of San Francisco and it is available <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-34.html"> here</a>.

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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">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>
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</thead>
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<td class="firstcol">Leading</td>
<td>0.4%</td>
<td>0.0%</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>0.2%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.2%</td>
<td>-0.6%</td>
<td>-2.4%</td>
<td>-4.4%</td>
<td>-1.3%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
Chicago Fed National Activity Index Positive 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 20, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031120b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) in October (0.01) remained positive for the third month in four.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
The three-month moving average of the CFNAI fell slightly to -0.07 from 0.06 the prior period.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
For a complete discussion of the latest Chicago Fed&#39;s National Activity Index click <a href="http://www.chicagofed.org/economicresearchanddata/national/pdffiles/CFNAI_november2003.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM"> Chicago Fed</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">CFNAI</td>
<td>0.01</td>
<td>0.16</td>
<td>-0.65</td>
<td>-0.35</td>
<td>-1.17</td>
<td>-0.15</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 20, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031120d.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions in the manufacturing sector fell in November to 25.9 versus 28.0 in October. Consensus expectations were for a reading of 25.0.
The business conditions index remained near its highest level since July 1996.
During the last twenty years there has been a 64% 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 77%.
Amongst the sub indexes, new orders backpedaled from the October high to 20.8 versus 29.0. Shipments (26.8) also fell but only modestly. The employment index at 3.3 remained positive for the second consecutive month.
The business conditions index reflects a separate survey question, not the sub indexes.
A separate survey of expected business conditions in six months improved to 63.4, recovering most of the prior month&#39;s decline.
The prices paid index rose slightly to 24.9.
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/bos1103.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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">General Activity Index</td>
<td>25.9</td>
<td>28.0</td>
<td>6.5</td>
<td>7.7</td>
<td>-17.2</td>
<td>8.3</td>
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<tr>
<td class="firstcol">Prices Paid Index</td>
<td>24.9</td>
<td>22.3</td>
<td>16.6</td>
<td>12.2</td>
<td>-0.9</td>
<td>27.2</td>
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Initial claims for jobless insurance fell to 355,000 last week. Down 15,000 w/w and down 73,000 (17.1%) since early September, claims were near the lowest level since early 2001. Consensus expectations had been for claims of 365,000. [...]

Initial Claims for Jobless Insurance Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031119f.jpg" width="353">
As in the US CPI data reported yesterday, consumer prices in other countries were restrained last month by lower energy costs. Canada&#39;s All-Items index was flat on the month, seasonally adjusted, and up 1.6% on the year. This latter is the smallest 12-month increase since June 2002. A retreat in the 12-month rise from 2.0% in September was entirely accounted for by energy. Excluding that sector, the 12-month rate was 1.9% in both September and October.
In France, the entire CPI was up 0.3% from September to October and 2.2% from October 2002. During the 12 months, energy prices actually fell 0.4%, so that the 12-month rate excluding energy is 2.4%. However, in October, the main mover in French inflation was tobacco, which surged 6.8%. Without that large increase, the CPI would have risen just 1.8%. In France, this 12-month CPI excluding tobacco has been under 2% since last April. So inflation for non-smokers is quite low.
As noted in our commentary on the US CPI yesterday, energy prices have continued to decline in November, pointing to another month of modest inflation, not only in the US but, as we see here, among other nations as well.

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<th scope="col" class="firstcol">12-Month Percent Changes</th>
<th scope="col">Oct 2003</th>
<th scope="col">Sep 2003</th>
<th scope="col">Aug 2003&nbsp;</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
<tbody>
<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>
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<td class="firstcol">Canada</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<tr class="odd">
<td class="firstcol">&nbsp; CPI&nbsp; all items</td>
<td>1.6</td>
<td>2.0</td>
<td>2.0</td>
<td>2.3</td>
<td>2.5</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI excl energy</td>
<td>1.9</td>
<td>1.9</td>
<td>1.7</td>
<td>2.7</td>
<td>2.0</td>
<td>1.5</td>
</tr>
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<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<td class="firstcol">France</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; CPI&nbsp; all items</td>
<td>2.2</td>
<td>2.1</td>
<td>1.9</td>
<td>1.9</td>
<td>1.7</td>
<td>1.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; CPI excl energy</td>
<td>2.4</td>
<td>2.3</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
<td>0.8</td>
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<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<td>&nbsp;</td>
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As in the US CPI data reported yesterday, consumer prices in other countries were restrained last month by lower energy costs. Canada's All-Items index was flat on the month, seasonally adjusted, and up 1.6% on the year. This latter [...]

Energy Prices Hold Back Canadian and French CPIs

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031119d.jpg" width="353">
Housing starts surged unexpectedly in October, rising 2.9% m/m to the highest level since January 1986. Consensus forecasts had been for a moderate decline versus September, which was revised up.
Single family starts rose 5.7% m/m to a record high 1.617M. Year-to-date, single family starts are up 7.3% versus all of last year.
Multi-family starts slipped 8.5% m/m and year-to-date are down 2.6% versus last year.
Huge declines in total housing starts in the Northeast and in the Midwest were offset last month by strength elsewhere. The 18.0% decline in starts in the Northeast mostly reflected lower multi-family starts. The same was true for the 8.0% decline in starts in the Midwest. Starts rose in other regions of the country, but the 18.6% m/m gain in single family starts in the West (16.8% y/y) was notable.
Building permits rose 5.2% m/m reflecting a 3.2% increase in single family permits and an 18.7% rise in permits for 5 or more unit structures.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">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</td>
<td>1,960</td>
<td>1,905</td>
<td>18.6%</td>
<td>1,711</td>
<td>1,601</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,617</td>
<td>1,530</td>
<td>18.4%</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>343</td>
<td>375</td>
<td>19.5%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,973</td>
<td>1,875</td>
<td>8.8%</td>
<td>1,750</td>
<td>1,637</td>
<td>1,598</td>
</tr>
</tbody>
</table>
Housing Market Index Dipped in November 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031119a.jpg" width="353">
The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index fell in November to 69 (+7.8% y/y). Though the index has been volatile in recent months, it remained near four-year highs.
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 a slight 1.3% m/m to 77 (8.5% y/y).
The index which measures expected home sales in six months fell 3.7% m/m to 79 (12.9% y/y).
Traffic of prospective buyers slacked off to the lowest level since May.
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>.

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<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">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>
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</thead>
<tbody>
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<td class="firstcol">Composite Housing Market Index</td>
<td>69</td>
<td>72</td>
<td>64</td>
<td>61</td>
<td>56</td>
<td>62</td>
</tr>
</tbody>
</table>
Mortgage Applications Jump, Interest Rates Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031119b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association jumped 5.9% last week (-44.7% y/y) and recouped most of the prior week&#39;s decline. Nevertheless, applications remained near the three month low.
Purchase applications jumped 13.5% (+23.4% y/y) to the highest level since early September. Applications to refinance fell another 1.9% (-66.9% 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 sharply w/w to 5.95%, the lowest level since late September. The effective rate on a 15-year mortgage also fell w/w to 5.30%.
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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<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">11/14</th>
<th scope="col">11/07</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>663.2</td>
<td>626.0</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>425.9</td>
<td>375.5</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,043.9</td>
<td>2,084.2</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
Small Business Optimism Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031119c.jpg" width="353">
The Small Business Optimism Index for October published by the National Federation of Independent Business recouped virtually all of the prior month&#39;s decline. The index rose 2.1% m/m to a near-record reading of 104.0
The increase reflected a rise to 13% in the percent of small business owners planning to increase employment. Nevertheless, The percentage of firms with one or more jobs open fell to 18%. That is near the middle of the range in place since early last year.
The percent of owners planning to raise capital expenditures in the next 3-6 months recovered some of the September decline and rose to 28%.
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">Oct</th>
<th scope="col">Sept</th>
<th scope="col"> Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>104.0</td>
<td>101.9</td>
<td>3.6%</td>
<td>101.2</td>
<td>98.4</td>
</tr>
</tbody>
</table>
</body>
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Housing starts surged unexpectedly in October, rising 2.9% m/m to the highest level since January 1986. Consensus forecasts had been for a moderate decline versus September, which was revised up. Single family starts rose 5.7% m/m to [...]

Single Family Housing Starts Set Record

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031119e.jpg" width="353">
The latest data on employment in Germany is encouraging. Since the data are not seasonally adjusted, year-to-year comparisons are more meaningful than quarter-to-quarter comparisons. On this basis the trend in total employment appears to have begun to turn up from the trough reached in the first quarter of this year.
Much of the improvement in employment has taken place in the service sectors--the financial and business area and in the broad category of social services that cover health, education, welfare, etc. Employment in these sectors has shown a secular upward trend. Among the more cyclical sectors, the trade and transport sector employment is beginning to improve, but the construction and manufacturing sectors continue to lag.

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<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Employment in Germany</th>
<th scope="col">Q3 2003</th>
<th scope="col">Q2 2003</th>
<th scope="col">Q1 2003&nbsp;</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col"> Y/Y&nbsp; %</th>
<th scope="col">Y/Y&nbsp; %</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>38276</td>
<td>38235</td>
<td>37832</td>
<td>-1.2</td>
<td>-1.3</td>
<td>-1.5</td>
<td>38668</td>
<td>38914</td>
<td>38750</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>8103</td>
<td>8131</td>
<td>8085</td>
<td>-2.8</td>
<td>-2.7</td>
<td>-3.1</td>
<td>8338</td>
<td>8528</td>
<td>8522</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>2331</td>
<td>2304</td>
<td>2216</td>
<td>-5.6</td>
<td>-5.7</td>
<td>-6.6</td>
<td>2427</td>
<td>2587</td>
<td>2761</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade and transport</td>
<td>9717</td>
<td>9709</td>
<td>9621</td>
<td>-1.5</td>
<td>-1.8</td>
<td>-2.2</td>
<td>9857</td>
<td>9913</td>
<td>9848</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Finance and other business</td>
<td>6029</td>
<td>5965</td>
<td>5904</td>
<td>0.6</td>
<td>0.4</td>
<td>0.2</td>
<td>5963</td>
<td>5900</td>
<td>5713</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Social services</td>
<td>11143</td>
<td>11191</td>
<td>11128</td>
<td>0.2</td>
<td>0.4</td>
<td>0.6</td>
<td>11147</td>
<td>11033</td>
<td>10943</td>
</tr>
</tbody>
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</body>
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The latest data on employment in Germany is encouraging. Since the data are not seasonally adjusted, year-to-year comparisons are more meaningful than quarter-to-quarter comparisons. On this basis the trend in total employment appears [...]

Year-to-Year Growth in German Employment Turns Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031118a.jpg" width="353">
The Consumer Price Index (CPI-U) was unchanged (2.1% y/y) last month following a 0.3% gain in September. Consensus expectations were for a 0.1% rise.
Energy prices fell 3.9% as gasoline prices dropped 6.8% (9.8% y/y). So far in November gasoline prices have fallen another 3.3%. Fuel oil prices fell for the second month, down 1.3% (+10.3% y/y) and piped gas &amp; electricity prices fell 1.1% (8.0% y/y).
Analysis from the Federal Reserve Bank of Dallas titled &quot;Business Cycles: The Role of Energy Prices&quot; can be found <a href="http://www.dallasfed.org/research/papers/2003/wp0304.pdf"> here</a>.
Food prices were firm last month and rose 0.6% (2.9%). Meat prices have been strong, rising 1.8% in October and 7.8% y/y.
Less food &amp; energy prices were somewhat firmer than expected, up 0.2% (1.3% y/y) versus Consensus expectations for a 0.1% rise.
Core services prices firmed last month and rose 0.4%, reflecting a 0.4% (2.4% y/y) gain in shelter prices. Public transportation prices also were firm, up 1.1% (3.9% y/y). Medical care services prices rose 0.4% (4.1% y/y).
Prices of core consumer goods continued to deflate led by a 0.3% (-2.1% y/y) decline in prices for new vehicles. Prices for household furnishings &amp; operation rose 0.2% (-2.2% y/y), the first monthly gain since February. Apparel prices also rose 0.2% (-1.6%).
Tobacco prices rose 0.2% (-0.2% y/y). The CPI less food, energy &amp; tobacco rose 0.2% (1.3% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior was unchanged. It is similar to the PCE price deflator. The core price measure rose 0.4%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM"> Consumer Price Index</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.0%</td>
<td>0.3%</td>
<td>2.1%</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>0.2%</td>
<td>0.1%</td>
<td>1.3%</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>-0.3%</td>
<td>-0.4%</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>0.4%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-3.9%</td>
<td>3.0%</td>
<td>8.8%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.6%</td>
<td>0.2%</td>
<td>2.9%</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>0.0%</td>
<td>0.3%</td>
<td>1.6%</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>0.4%</td>
<td>0.1%</td>
<td>0.8%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deepened Further in October 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031118c.jpg" width="353">
The U.S. Government budget deficit deepened to $69.5B in October. That was deeper than the $54.1B deficit in October of last year but near Consensus estimates for a $71.0B deficit. 
Federal net expenditures surged 15.0% versus last year due to a 29.4% jump in defense spending. Spending on health programs rose 8.4% and spending on education rose 7.9%. Growth in Medicare outlays jumped 15.7% y/y and Social Security outlays rose 4.0%. Interest expense fell 4.4% y/y.
Net receipts jumped 9.1% versus last year. That reflected a jump in corporate income taxes which more than doubled versus last October. Individual tax payments fell 0.1% y/y. Social insurance contributions rose 2.8% y/y and excise taxes rose 0.4%.

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#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>$-69.5B</td>
<td>$26.3B</td>
<td>$-54.1B</td>
<td>$-374.2B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$135.8B</td>
<td>$191.7B</td>
<td>9.1%</td>
<td>-3.8%</td>
<td>-6.9%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$205.4B</td>
<td>$165.3B</td>
<td>15.0%</td>
<td>7.2%</td>
<td>7.9%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Eased 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031118b.jpg" width="353">
Chain store sales eased 0.8% last week following a 1.2% pop the week prior according to the BTM-UBSW survey.
So far in November sales are 0.5% ahead of last month&#39;s average. That followed a 0.6% m/m decline during all of October.
During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.
The BTM-UBSW 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.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">11/15/03</th>
<th scope="col">11/08/03</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>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>421.7</td>
<td>425.3</td>
<td>6.2%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
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</body>
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The Consumer Price Index (CPI-U) was unchanged (2.1% y/y) last month following a 0.3% gain in September. Consensus expectations were for a 0.1% rise. Energy prices fell 3.9% as gasoline prices dropped 6.8% (9.8% y/y). So far in [...]

CPI Unchanged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031118d.jpg" width="353">
Gross domestic product in Indonesia rose 0.91% in the third quarter. It has generally been on a rising trend since the trough reached in the 1988 Asian crisis. At 112.304.4 Billions Rupiahs, it is now slightly above the peak rate reached in the third quarter of 1997 before the crisis.
Over the period from the third quarter of 1987 to the third quarter of 2003, the composition of output has changed significantly. Private consumption has risen almost 15% and government consumption, almost 30%. Exports of goods and services have declined about 3% over the period, but imports have declined by 28% so that a deficit in the balance of 2,991.2 Billions Rupiah in the third quarter of 1987 has become a surplus of 5,675.5 Billions Rupiah in the third quarter of 2003. Gross capital formation has yet to recover. The latest figure is almost one-half of that reached in the pre crisis period.

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<colgroup><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Q3 2003 %</th>
<th scope="col">Q2 2003 %</th>
<th scope="col">Q1 2003 %</th>
<th scope="col">Q3 2003 Bil 93 Rupiahs</th>
<th scope="col">Q3 1987 Bil 93 Rupiahs</th>
<th scope="col">% Change</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1.48</td>
<td>2.13</td>
<td>0.91</td>
<td>112,304.4</td>
<td>110,804.1</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Private consumption</td>
<td>1.33</td>
<td>0.90</td>
<td>0.78</td>
<td>79,260.2</td>
<td>68,972.2</td>
<td>14.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Government consumption</td>
<td>8.29</td>
<td>9.44</td>
<td>-12.06</td>
<td>10,113.0</td>
<td>7,967.6</td>
<td>26.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gross capital formation</td>
<td>0.16</td>
<td>-1.93</td>
<td>-1.21</td>
<td>17,255.7</td>
<td>36,855.5</td>
<td>-53.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports of goods and services</td>
<td>3.78</td>
<td>-3.17</td>
<td>1.81</td>
<td>29,832.5</td>
<td>30709.9</td>
<td>-2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports of goods and services</td>
<td>5.64</td>
<td>-8.33</td>
<td>4.73</td>
<td>24,157.0</td>
<td>33701.1</td>
<td>-28.3</td>
</tr>
</tbody>
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Gross domestic product in Indonesia rose 0.91% in the third quarter. It has generally been on a rising trend since the trough reached in the 1988 Asian crisis. At 112.304.4 Billions Rupiahs, it is now slightly above the peak rate [...]

Third Quarter Indonesian GDP Exceeds pre 1988 Crisis Levels

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031117a.jpg" width="353">
The Empire State Index of General Business Conditions for November surged even further to 41.01 following a jump in October to a record 34.11 (revised upward). Consensus expectations had been for a decline this month to 30.0.
New orders (41.37) were notably strong as were shipments (37.6). Both indexes rose sharply to new records in November. Employment (10.26) eased slightly m/m but the latest level was the second highest on record.
The index of prices paid rose slightly to 9.40 and continued the firming trend of the last five months.
The survey includes measures of expectations for business conditions six months ahead. The November index rose to a new high of 67.00 as expectations for capital expenditures improved further, also 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>.

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<thead>
<tr>
<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y (11/02)</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>41.01</td>
<td>34.11</td>
<td>9.91</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
U.S. Business Inventories Up Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031117b.jpg" width="353">
Total business inventories rose an unexpected 0.3% in September, the first monthly increase since March. Consensus expectations were for no change.
Retail inventories rebounded 1.0% following the 0.7% plunge in August. Excluding autos, retail inventories surged 0.8% (2.7% y/y), the most for any month since May 2000.
This jump was led by a 2.1% (9.5% y/y) spike in the building materials category and a 1.0% (2.1% y/y) recovery in inventories at general merchandise stores following several months of decline.
Retail inventories of motor vehicles and parts gained back 1.5% (9.5% y/y) versus the 2.1% August drop. According to the Federal Reserve, the gain was accomplished as output of motor vehicles rose 6.5% in September.
Overall business sales surged 0.6% (4.6% y/y) led by a 1.4% (3.1% y/y) jump in factory shipments which primarily reflected a 6.2% jump in shipments of transportation equipment.
The inventory-to-sales ratio was stable for the third month at the record low level of 1.36.
A report titled &quot;Inventory Dynamics and Business Cycles: What Has Changed?&quot; from economists at The Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2003/200326/200326abs.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM"> Business Inventories</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>-0.4%</td>
<td>1.6%</td>
<td>2.1%</td>
<td>-4.7%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>1.0%</td>
<td>-0.7%</td>
<td>5.0%</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>0.8%</td>
<td>0.1%</td>
<td>2.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.9%</td>
<td>0.4%</td>
<td>-4.9%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
<td>3.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Empire State Index of General Business Conditions for November surged even further to 41.01 following a jump in October to a record 34.11 (revised upward). Consensus expectations had been for a decline this month to 30.0. New [...]

Empire State Index Surged Again

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

Chinese economy on downtrend could threaten global economy

Working age population labor force participation near all-time high as retirements increase

Blue Chip forecasters look for widespread policy rate cuts just ahead

Flash June PMIs point to a widespread slowdown apart from the US

Announcement of snap French election is causing concern across Europe

The UK economy’s post-pandemic under-performance relative to its pre-pandemic trend

US Beveridge Curve back to near pre-pandemic levels

Negative economic surprises in the US but positive in Europe, especially the UK

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

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The NFIB Small Business Optimism Index declined to 91.2 during August after rising to 93.7 in July, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. The index held steady y/y but has improved from a March low of 88.5. Eight of the 10 index components declined last month. The NFIB Small Business Uncertainty Index increased to 92 in August. It remained higher than its recent low of 65 in November 2023.

The outlook for business conditions in the next six months deteriorated in the latest survey. The net balance of respondents expecting the economy to improve fell to -13% in August from -7% in July but remained higher than a record-low of -61% in June 2022. Expected real sales fell to a net -18% in August, a five-month low. The latest reading as increased from a low of -29% in July 2022. A steady net -16% of respondents reported higher nominal sales in the past three months, down from the most recent positive reading of 1% in May 2022.

Plans to make capital outlays increased to 24% in August following three straight months at 23%. This reading was up from its recent low of 20% in March but remained below a high of 31% in October 2021. Plans to expand business fell to 4% in August after rising to 5% in July and holding at 4% for the prior four consecutive months. Expected credit conditions deteriorated to -8% in August, after three consecutive months at -7, and remained below its high six months ago.

On the labor front, 56% of respondents reported few or no qualified workers to fill job openings in August, up from 49% in July and the highest percentage since September of last year. These readings were below a high of 61% in May 2022. A net 13% planned to increase employment in August, below the most recent high of 18% in November of last year and a peak of 32% in August 2021.

Overall earnings trends deteriorated sharply last month to the weakest reading since March 2020, falling to -37% in August from -30% in July.

On the pricing front, the net percent raising their average selling prices declined to 20% in August, down from 22% in July and below a high of 66% in March of 2022. The percentage planning to raise prices edged higher to 25% in August from 24% in July but remained well below a high of 52% in March 2022.

Wage inflation held steady as a net 33% of respondents raised compensation during the last three months, the same as in July but below 38% reported in the June survey. Compensation peaked at 50% in January 2022. A net 20% of firms planned to raise worker compensation in the next three months, up from 18% in July but below a high of 32% in October 2022.

Inflation continued to be the single most important issue facing small businesses, as reported by 24% of NFIB members in August. The quality of labor was the second most important concern as reported by 21% of members. Other major concerns were taxes, 13%, the cost of labor, 9%, and government requirements, 8%.

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- Expectations for economy & sales decline.
- Employment plans weaken but job openings surge.
- Prices ease but expectations edge higher.

U.S. NFIB Small Business Optimism Index Backpedals in August

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Retail gasoline prices for all grades weakened to $3.36 per gallon (-14.7% y/y) in the week ended September 9 from $3.41 per gallon in the previous week. Prices were below the late-April high of $3.79 per gallon and at the lowest level since the second week of February. They also were below the all-time high of $5.11 in the week ended June 13, 2022. Prices are increased, however, versus the low of $3.18 per gallon in the third week of December. Retail prices for on-highway diesel fuel declined to $3.56 per gallon (-21.7% y/y) last week compared to $3.63 in the prior week. These prices reached a high of $4.63 per gallon in the third week of September of last year.

The average price of West Texas Intermediate crude oil weakened to $69.33 per barrel (-20.5% y/y) in the week ended September 6 from $75.97 per barrel in the prior week. Prices roughly equaled the lowest level since the last week of June 2023 and were lower than the $91.45 high in the last week of September 2023. They peaked at $142.46 per barrel in the week of July 4, 2008. Yesterday, the price of West Texas Intermediate crude oil was $68.71 per barrel. The price of European Brent crude oil fell to $75.25 per barrel (-17.6% y/y) in the week ended September 6 compared to $80.83 in the prior week. The price of Brent has recently ranged from a low of $73.55 in the week ended June 30, 2023 to a high of $127.40 in the week ended June 10, 2022. Yesterday, the price was $72.37 per barrel.

Natural gas prices averaged $2.04/mmbtu (-19.0% y/y) in the week ended September 6 compared to $1.90 in the prior week. Prices recently touched a high of $2.73/mmbtu in the second week of June and they remained above their low of $1.40/mmbtu in the second week of March. Prices reached a high of $9.56/mmbtu averaged in the last week of August 2022. Yesterday, the price of natural gas was $2.03/mmbtu.

Gasoline demand increased 0.9% y/y in the four weeks ended August 30 after improving 1.1% y/y in the four weeks ended August 23. Demand for all petroleum products weakened 1.6% y/y in the last four weeks after falling 2.9% y/y in the previous period. Crude oil input to refineries rose 0.3% y/y in the four weeks ended August 30 after a 0.4% y/y decline during the previous four-week period.

Gasoline inventories rose 2.1% y/y in the week of August 30 after rising 0.5% y/y in the prior week. Inventories of residual fuel oil fell 2.3% y/y after declining 1.9% y/y in the previous week. Crude oil inventories, including the Strategic Petroleum Reserve, rose 4.0% y/y in the week of August 30, the same as during the prior week.

Measured in days’ supply, gasoline inventories were 24.0 days in the week ended August 30 following 23.9 days one week earlier. The recent low was 23.4 days in the week of June 30, 2023. Crude oil inventories fell to 25.0 days in the week of August 30. These compare to a recent high of 31.9 days in the week of March 3, 2023 and a low of 25.0 days in the week of September 1, 2023.

These data are reported by the Energy Information Administration of the U. S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** and **USENERGY** databases.

- Gasoline prices fall to seven-month low.
- Crude oil prices decline sharply.
- Natural gas prices rise slightly.

U.S. Gasoline & Crude Oil Prices Decline in Latest Week

Robert Brusca

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Inflation of the European Monetary Union in August rose by 0.2% compared with 0.3% gain in July and a 0.2% rise in June. The three-month inflation rate at 2.5%, however, is part of a slow progression higher that compares to a 2.2% annual rate over six months and a 2.1% annual rate over 12 months, a moderate but clear accelerating pattern.

**Country level trends**
The four largest countries in the monetary union also are exhibiting patterns that suggest or that outright demonstrate, inflation acceleration at least based on headline measures. Germany is the largest monetary union economy and is a slight exception with a 2.2% inflation rate over three months, down from 2.5% over six months but up from 2.1% over 12 months. France demonstrates inflation rising from 2.2% over 12 months to a pace of 2.4% over six months to a strong 3.6% over three months. In Italy, inflation transitions from a low 1.3% over 12 months to a 3% pace over six months, to another strong pace of 3.7% over three months. Spain is the true exception with inflation well behaved across most of the cohorts at 2.3% over 12 months, an elevated pace but not by much, especially when compared to a 0.7% pace over six months that only ticks up to a 0.8% annual rate over three months.

**Monthly results by country**
The inflation process among these four large countries is still somewhat mercurial as August showed declines in inflation in Germany and Italy on a month-to-month basis while Spain's inflation was flat. On the face of it, this is good news; however, July brought an increase in prices of 0.8% month-to-month in Italy, 0.5% in Germany, 0.4% in France with a moderate 0.2% gain in Spain. So whatever the three-month pace is, it's the product of some fairly erratic monthly numbers and therefore not yet something that we can consider to be very reliable.

**Core inflation**
Core inflation is a different story. Here we get core or at least an ex-energy reading from Germany, Italy, and Spain. The August readings are contained with German ex-energy inflation up by 0.2%, Italian core inflation up by 0.1% and Spain’s core inflation up by 0.3%. These are decelerations from stronger gains in July across the board. And two of these three countries also had larger increases in June than they had in August. Looking at the progression of core inflation for Germany, the 12-month ex-energy rate is 2.5%, the six-month pace is 2.6%, and the three-month pace is 2.4%; all pretty steady stuff. Italy shows core inflation at 2.4% over six months and 12 months that moves up to 3.1% over three months. Spain shows core inflation at 2.7% over 12 months, up to 2.8% over six months and up to 4.3% over three months.

The performance of Brent oil prices explains the headline/core difference as oil prices fell over these progressively longer periods; over shorter periods oil prices have fallen faster tending to push headline inflation down faster over these short horizons contributing to the illusion of inflation deceleration. Even so, deceleration is not a pattern that is detectable in headline inflation for these countries.

The bottoms line here is that core inflation is still stuck and too high and that is too much evidence of inflation accelerating even in the face of easing oil prices for monetary policy to seek further accommodation.

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As we peruse the inflation trends, we find they are accompanied by output trends that are erratic even more than they are weak. Median output among the early reporting EMU members in July shows a gain of 1.0% compared to a gain of 0.4% in June. These contrast to a 0.5% drop in May. Median output among this group falls by 3.7% annualized over three months, rises by 1.5% annualized over six months, and falls by 0.9% over 12 months. And output is falling on the median measure in the quarter-to-date (early in Q3). Still, we also see output trends accelerate more than they decelerate across countries in June and July with a proportion of about 60% accelerating to 40% not accelerating.  Over three months, that full period shows acceleration in only about one third of reporters; output accelerates in half the reporters over six months and for two-thirds of them over 12 months.

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**Mixed, as well as, mixed-up trends**
On balance, the performance of inflation and industrial output in the EMU is mixed. Over three months the output trend is especially hard to pin down with declines of 26.5%, 18.3% and 17% annualized for some reporters juxtaposed to increases of 23.7% annualized, 18.4% annualized and 11.1% annualized- and, of course, more. In such a mixed constellation of growth rates, it is hard to discern trend. However, Portugal, the Netherlands, France and Germany, each reporter shows declines in each of the broader sequential periods- they also show deterioration is worsening. Belgium, Finland and Ireland, a decidedly smaller class of economy, all show persistent IP expansion and acceleration. The quarter-to-date shows declines outnumber increases across EMU members by two-to-one. Still, a lot of these trends are rooted in sharp declines logged in July. The gyrating three-month growth rates also are important contributors to growth results over six months and 12 months. When three-month growth rates are turbulent, they tend to impart their turbulence across the timeline.

For now there is more weakening in this report that I would like to see, but it also is still a mixed report. PMI data remind us that while manufacturing has been weak there has been countervailing strength in services to support growth. The failure of inflation data to clearly fall into line and weaken also is suggestive of a more mixed real sector economic performance. With such data trends in progress, central banks are likely to continue to play the waiting game.

Europe

Core Inflation in Key EMU Members: Mostly Above Target and Not Falling

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Consumer credit outstanding strengthened $25.5 billion (1.9% y/y) in July after rising $5.2 billion in June, revised from $8.9 billion, and increasing $11.7 billion in May, revised from $13.9 billion. It was the largest runup in loan balances since November 2022. A $10.2 billion increase had been expected in the Action Economics Forecast Survey. The ratio of consumer credit outstanding to disposable personal income stood basically unchanged at 24.3% in July, a ratio that has drifted lover the last two years.

Revolving credit outstanding, which includes credit cards, rose $10.6 billion in July (6.6% y/y) following a $0.4 billion decline in June and an $8.5 billion May rise. Revolving credit outstanding held by depository institutions rose 7.2% y/y, down from a high of 17.0% y/y growth in August 2022. Revolving credit held by finance companies fell 8.3% y/y while revolving credit held by credit unions rose 6.3% y/y in July, below the 16.4% y/y peak in February 2022.

Nonrevolving credit outstanding increased $14.8 billion (0.3% y/y) in July after increasing $5.6 billion in June and rising $3.2 billion in May. Nonrevolving credit held by banks fell a lessened 1.8% y/y while finance company credit rose 3.8% y/y. Credit union nonrevolving balances was fairly steady y/y, off from 20.3% y/y growth in January 2023. Federal government balances rose 0.2% y/y to $1.49 trillion.

The value of student loans outstanding totaled $1.75 trillion at the end of June, down 0.9% y/y, and there was $1.56 trillion in motor vehicle loans at the end of June, up 1.8% from a year earlier.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Revolving credit outstanding rebounds.
- Nonrevolving credit gain almost triples.

U.S. Consumer Credit Usage Surges in July

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Wholesale trade inventories increased 0.2% (0.4% y/y) during July after holding steady in June, revised from 0.2%, and an unrevised 0.5% May gain. The increase compared to a 0.3% rise expected in the Informa Global Markets Survey and compared to a 0.3% gain in the advance report issued two weeks ago.

Durable goods inventories edged 0.1% higher last month (2.6% y/y) following a 0.2% decline. Machinery inventories, the largest sector, fell 0.3% (+12.0% y/y) while motor vehicles & parts, the second largest grouping, edged 0.1% higher (11.8% y/y). Electrical equipment inventories rose 0.5% (-4.0% y/y). Inventories of nondurable goods increased 0.5% (-3.2% y/y) following a 0.4% rise. Drug inventories, which make up a quarter of nondurable inventories, rose 2.5% (4.4% y/y). Grocery inventories, the second largest category, eased 0.6% (-2.3% y/y). Petroleum inventories dropped 1.7% (-9.1% y/y). Apparel inventories edged 0.1% higher (-15.1% y/y) and chemical inventories weakened 0.5% (-8.8% y/y).

Sales at the wholesale level strengthened 1.1% (2.9% y/y) in July after a 0.3% June decline, revised from -0.6%. A 0.2% July rise had been expected in the Action Economics Forecast Survey.

Durable goods sales increased 0.5% in July (3.2% y/y) after a 0.6% increase. Sales of electrical equipment, the largest sector, rose 0.2% (9.7% y/y), the same as in June. Professional and commercial equipment sales, which includes computers, jumped 1.2% (6.0% y/y), while vehicle sales rose 0.4% (5.4% y/y). Nondurable product sales improved 1.6% (2.6% y/y) after declining 1.6% in June. Petroleum product sales, the largest category, rose 3.9% (1.3% y/y). Drug store sales jumped 1.5% (9.3% y/y) while grocery store sales gained 0.3% (2.8% y/y). Sales of apparel jumped 2.5% (3.7% y/y) while chemical sales declined 0.9% (-2.9% y/y). Paper sales rose 0.9% (-2.1% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level eased to 1.35 in July from 1.36 in June and has been moving sideways for the last year.

The I/S ratio for durable goods was minimally changed at 1.80. The machinery ratio declined to 3.09 while motor vehicles rose to 1.89. The I/S ratio for nondurable goods eased to 0.94, down from 1.01 early last year. The petroleum industry I/S ratio slipped to 0.32, and the drug industry moved up to 1.02. Apparel's I/S ratio of 2.19 stood below its 2.67 level one year earlier.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

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- Inventory gain extends trend of moderate accumulation.
- Jump in sales concentrates in nondurables.
- Inventory-to-sales ratio continues sideways movement.

Economy in Brief: November 2003

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