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/051228g.jpg" width="353">
Japan&#39;s Statistics Bureau in the Ministry of Internal Affairs and Communications (MIC) yesterday reported consumer prices for November. Generally, these prices seem to be working their way into an upturn, but the extent of this firming trend depends on the price measure being applied and what time comparison is being used.
The total index, the so-called General CPI, continues to decline on a year-over-year basis. In November it was 0.8% below November 2004, the weakest change since October 2002. Seasonally adjusted and compared month-to-month, however, it looks to be stabilizing: it has actually increased from 97.5 in June to November&#39;s 97.8.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228h.jpg" width="353">
As in many other countries, a &quot;core&quot; rate is used for government policymaking and investment planning. Core rates are supposedly less volatile that total indexes and are defined to exclude items where supply forces predominate. So their movements reflect such non-economic events as bad weather, war and possibly political priorities, not so much market influences. Up to now in Japan, the &quot;core&quot; has been the general index less fresh food. This latter item is clearly more subject to weather and seasonal forces than to consumer demand pressures. The subset of the CPI excluding fresh food has been deemed the most useful for monetary policy focus. Thus, yesterday [overnight in Western markets between Monday and Tuesday] the November report made news when this core index rose on a year-to-year basis for the first time since October 2003 and for only the second time since the spring of 1998. On a month-to-month basis, this index too has been rising over the course of this year, suggesting that the year-to-year pattern could stay positive. At least one news account reported that some investors were beginning to look for a change in the Bank of Japan&#39;s current &quot;quantitative monetary easing&quot; as this price trend might be sustained during 2006.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228i.jpg" width="353">
At the same time, with this release, the MIC has introduced still another core rate, one similar to those used elsewhere which exclude both food and energy products. Haver Analytics added this new series to the JAPAN database just this morning. Only two years of history are available, running back to November 2003, so these data are not yet seasonally adjusted. This price measure is still going down. In the month from October, the index fell from 97.4 to 97.1, which in turn is off 0.2% from November 2004. The earliest levels, in November and December 2003, were 97.9. So it appears that the pick up in the standard core rate may be due to energy, and when that is excluded, general prices remain soft. Among various &quot;subgroups&quot; of prices, clothing has risen for well over a year and furniture has edged up just the last three months. Housing costs and reading and recreation appear to be stabilizing after long downward paths. Thus, while the pace of deflation has surely slowed, it is hard to read any threat of renewed inflation into this price behavior.
At the same time, the Japanese economy itself is firming. Today, for example, METI reported that industrial production for November was up 1.4% from October, a fourth consecutive monthly advance after some hesitation in the spring and early summer. So forces may be developing for more sustainable growth and firmer prices in Japan, but the mixed behavior of the various CPI measures leaves implications for monetary policy fairly vague at the present time.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J504/@J50401/@J50401.HTM">Japan CPI (2000=100)</a></th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General CPI, SA</td>
<td>97.8</td>
<td>97.7</td>
<td>97.8</td>
<td>98.6</td>
<td>98.1</td>
<td>98.1</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change, NSA</td>
<td>-0.8</td>
<td>-0.7</td>
<td>-0.3</td>
<td>&nbsp;</td>
<td>-0.0*</td>
<td>-0.3*</td>
<td>-0.9*</td>
</tr>
<tr class="odd">
<td class="firstcol">Gen CPI ex Fresh Food, SA</td>
<td>97.9</td>
<td>98.0</td>
<td>97.9</td>
<td>97.8</td>
<td>97.9</td>
<td>98.0</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change, NSA</td>
<td>0.1</td>
<td>0.0</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>-0.1*</td>
<td>-0.3*</td>
<td>-0.8*</td>
</tr>
<tr class="odd">
<td class="firstcol">Gen CPI ex Food &amp; Fuel, NSA</td>
<td>97.1</td>
<td>97.4</td>
<td>97.4</td>
<td>97.3</td>
<td>97.4</td>
<td>[97.9**]</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change, NSA</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-0.2</td>
<td>&nbsp;</td>
<td>-0.6*</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>
</body>
</html>

Japan's Statistics Bureau in the Ministry of Internal Affairs and Communications (MIC) yesterday reported consumer prices for November. Generally, these prices seem to be working their way into an upturn, but the extent of this [...]

Japan's CPI: Firming or Still Soft?

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228e.jpg" width="353">
The total number of mortgage applications fell a hard 6.8% last week to the lowest level since mid-2002 and pulled the average level during December down 6.0% from November.
Purchase applications were notably weak, again. The 4.5% w/w drop was the third consecutive weekly hard decline and was to the lowest level since mid-February. The December average of purchase applications was off 1.7% from November.
During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales
Applications to refinance were even weaker. An 11.2% w/w plunge pulled the December average 13.0% below November.
The effective interest rate on a conventional 30-year mortgage was steady at 6.44% versus 6.45% the prior week. Rates averaged 6.52% in November and averaged 5.81% in June. The effective rate on a 15-year mortgage also was steady at 6.06%. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/23/05</th>
<th scope="col">12/16/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>554.1</td>
<td>594.6</td>
<td>-18.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>432.9</td>
<td>453.1</td>
<td>-10.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,259.1</td>
<td>1,418.1</td>
<td>-30.2%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications fell a hard 6.8% last week to the lowest level since mid-2002 and pulled the average level during December down 6.0% from November. Purchase applications were notably weak, again. The 4.5% w/w [...]

Mortgage Applications At Three Year Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228d.jpg" width="353">
Chain store sales added 2.8% last week to the 2.4% jump during the week prior according to the International Council of Shopping Centers (ICSC)-UBS survey. 
The two increases did much to rescue the December average from an abysmal start when sales fell 3.1% during the opening week. As a result the month&#39;s average is down just 0.8% from November which rose 1.2% from October.
During the last ten years there has been a 51% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
Lower gasoline prices may have added to consumers&#39; Holiday spirit. Retail gas prices fell a penny to $2.20 per gallon (22.7% y/y) last week after two weeks of moderate increase. Natural gas prices also backed off a bit after five weeks of strong gain although they were still roughly double last year&#39;s level. 
Further declines in gasoline &amp; natural gas prices were evident in yesterday&#39;s spot market trading when gasoline ended down four cents from the week prior. Warmer weather helped lower natural gas prices roughly $3/mmbtu or 22% to the lowest level since mid-November.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">12/24/05</th>
<th scope="col">12/17/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>467.6</td>
<td>455.0</td>
<td>3.9%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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Chain store sales added 2.8% last week to the 2.4% jump during the week prior according to the International Council of Shopping Centers (ICSC)-UBS survey. The two increases did much to rescue the December average from an abysmal [...]

Chain Store Sales Reflect A Cheery Spirit & Lower Gas Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228f.jpg" width="353">
The December index of Consumer Confidence surged 5.4% to 103.6 on top of a 15.4% recovery the prior month, reported the conference Board. The index stood at the highest level since August and exceeded Consensus expectations for a lesser gain to 102.3. The gain lagged a bit the 12.1% m/m jump in Consumer sentiment reported last week by the University of Michigan.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
The index of consumers&#39; expectations added 3.6% (-9.0% y/y) to the 26.1% m/m spike during November. Optimism rose that more jobs would be created and that the inflation rate during the during the next year would ease.
Consumers&#39; assessment of the present situation rose 7.3% (14.9% y/y) on top of a 5.0% increase during November. Jobs were viewed as plentiful by 23.3% of respondents, the highest since August and fewer (22.2%) thought jobs were hard to get, the lowest since 2002.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<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/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>103.6</td>
<td>98.3</td>
<td>0.9%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The December index of Consumer Confidence surged 5.4% to 103.6 on top of a 15.4% recovery the prior month, reported the conference Board. The index stood at the highest level since August and exceeded Consensus expectations for a [...]

Consumer Confidence Buoyed By More Jobs & Lower Gas Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228f.jpg" width="353">
The December index of Consumer Confidence surged 5.4% to 103.6 on top of a 15.4% recovery the prior month, reported the conference Board. The index stood at the highest level since August and exceeded Consensus expectations for a lesser gain to 102.3. The gain lagged a bit the 12.1% m/m jump in Consumer sentiment reported last week by the University of Michigan.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
The index of consumers&#39; expectations added 3.6% (-9.0% y/y) to the 26.1% m/m spike during November. Optimism rose that more jobs would be created and that the inflation rate during the during the next year would ease.
Consumers&#39; assessment of the present situation rose 7.3% (14.9% y/y) on top of a 5.0% increase during November. Jobs were viewed as plentiful by 23.3% of respondents, the highest since August and fewer (22.2%) thought jobs were hard to get, the lowest since 2002.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<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/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>103.6</td>
<td>98.3</td>
<td>0.9%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
Chain Store Sales Reflect A Cheery Spirit & Lower Gas Prices 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 28, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228d.jpg" width="353">
Chain store sales added 2.8% last week to the 2.4% jump during the week prior according to the International Council of Shopping Centers (ICSC)-UBS survey. 
The two increases did much to rescue the December average from an abysmal start when sales fell 3.1% during the opening week. As a result the month&#39;s average is down just 0.8% from November which rose 1.2% from October.
During the last ten years there has been a 51% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
Lower gasoline prices may have added to consumers&#39; Holiday spirit. Retail gas prices fell a penny to $2.20 per gallon (22.7% y/y) last week after two weeks of moderate increase. Natural gas prices also backed off a bit after five weeks of strong gain although they were still roughly double last year&#39;s level. 
Further declines in gasoline &amp; natural gas prices were evident in yesterday&#39;s spot market trading when gasoline ended down four cents from the week prior. Warmer weather helped lower natural gas prices roughly $3/mmbtu or 22% to the lowest level since mid-November.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">12/24/05</th>
<th scope="col">12/17/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>467.6</td>
<td>455.0</td>
<td>3.9%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Mortgage Applications At Three Year Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 28, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228e.jpg" width="353">
The total number of mortgage applications fell a hard 6.8% last week to the lowest level since mid-2002 and pulled the average level during December down 6.0% from November.
Purchase applications were notably weak, again. The 4.5% w/w drop was the third consecutive weekly hard decline and was to the lowest level since mid-February. The December average of purchase applications was off 1.7% from November.
During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales
Applications to refinance were even weaker. An 11.2% w/w plunge pulled the December average 13.0% below November.
The effective interest rate on a conventional 30-year mortgage was steady at 6.44% versus 6.45% the prior week. Rates averaged 6.52% in November and averaged 5.81% in June. The effective rate on a 15-year mortgage also was steady at 6.06%. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/23/05</th>
<th scope="col">12/16/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>554.1</td>
<td>594.6</td>
<td>-18.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>432.9</td>
<td>453.1</td>
<td>-10.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,259.1</td>
<td>1,418.1</td>
<td>-30.2%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Japan's CPI: Firming or Still Soft? 
by <a href="/comment/Stone.html">Carol Stone</a> December 28, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228g.jpg" width="353">
Japan&#39;s Statistics Bureau in the Ministry of Internal Affairs and Communications (MIC) yesterday reported consumer prices for November. Generally, these prices seem to be working their way into an upturn, but the extent of this firming trend depends on the price measure being applied and what time comparison is being used.
The total index, the so-called General CPI, continues to decline on a year-over-year basis. In November it was 0.8% below November 2004, the weakest change since October 2002. Seasonally adjusted and compared month-to-month, however, it looks to be stabilizing: it has actually increased from 97.5 in June to November&#39;s 97.8.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228h.jpg" width="353">
As in many other countries, a &quot;core&quot; rate is used for government policymaking and investment planning. Core rates are supposedly less volatile that total indexes and are defined to exclude items where supply forces predominate. So their movements reflect such non-economic events as bad weather, war and possibly political priorities, not so much market influences. Up to now in Japan, the &quot;core&quot; has been the general index less fresh food. This latter item is clearly more subject to weather and seasonal forces than to consumer demand pressures. The subset of the CPI excluding fresh food has been deemed the most useful for monetary policy focus. Thus, yesterday [overnight in Western markets between Monday and Tuesday] the November report made news when this core index rose on a year-to-year basis for the first time since October 2003 and for only the second time since the spring of 1998. On a month-to-month basis, this index too has been rising over the course of this year, suggesting that the year-to-year pattern could stay positive. At least one news account reported that some investors were beginning to look for a change in the Bank of Japan&#39;s current &quot;quantitative monetary easing&quot; as this price trend might be sustained during 2006.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228i.jpg" width="353">
At the same time, with this release, the MIC has introduced still another core rate, one similar to those used elsewhere which exclude both food and energy products. Haver Analytics added this new series to the JAPAN database just this morning. Only two years of history are available, running back to November 2003, so these data are not yet seasonally adjusted. This price measure is still going down. In the month from October, the index fell from 97.4 to 97.1, which in turn is off 0.2% from November 2004. The earliest levels, in November and December 2003, were 97.9. So it appears that the pick up in the standard core rate may be due to energy, and when that is excluded, general prices remain soft. Among various &quot;subgroups&quot; of prices, clothing has risen for well over a year and furniture has edged up just the last three months. Housing costs and reading and recreation appear to be stabilizing after long downward paths. Thus, while the pace of deflation has surely slowed, it is hard to read any threat of renewed inflation into this price behavior.
At the same time, the Japanese economy itself is firming. Today, for example, METI reported that industrial production for November was up 1.4% from October, a fourth consecutive monthly advance after some hesitation in the spring and early summer. So forces may be developing for more sustainable growth and firmer prices in Japan, but the mixed behavior of the various CPI measures leaves implications for monetary policy fairly vague at the present time.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J5/@J504/@J50401/@J50401.HTM">Japan CPI (2000=100)</a></th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General CPI, SA</td>
<td>97.8</td>
<td>97.7</td>
<td>97.8</td>
<td>98.6</td>
<td>98.1</td>
<td>98.1</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change, NSA</td>
<td>-0.8</td>
<td>-0.7</td>
<td>-0.3</td>
<td>&nbsp;</td>
<td>-0.0*</td>
<td>-0.3*</td>
<td>-0.9*</td>
</tr>
<tr class="odd">
<td class="firstcol">Gen CPI ex Fresh Food, SA</td>
<td>97.9</td>
<td>98.0</td>
<td>97.9</td>
<td>97.8</td>
<td>97.9</td>
<td>98.0</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change, NSA</td>
<td>0.1</td>
<td>0.0</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>-0.1*</td>
<td>-0.3*</td>
<td>-0.8*</td>
</tr>
<tr class="odd">
<td class="firstcol">Gen CPI ex Food &amp; Fuel, NSA</td>
<td>97.1</td>
<td>97.4</td>
<td>97.4</td>
<td>97.3</td>
<td>97.4</td>
<td>[97.9**]</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Yr/Yr % Change, NSA</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-0.2</td>
<td>&nbsp;</td>
<td>-0.6*</td>
<td>--</td>
<td>--</td>
</tr>
</tbody>
</table>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228a.jpg" width="353">
The Economic Sentiment Indicator of Slovakia has been on a generally rising trend since early 2004. (See the first chart.) The index rose 0.4% in December to 113.4 (2000=100) from November and was 7.0% above the December, 2004 level of 106.0. The index is based on four confidence indicators that measure the balance between optimists and pessimists. These are the Industrial Confidence Indicator which has a weight of 40% and the Construction Confidence, the Consumer Confidence and the Retail Trade Confidence indicators each of which has a weight of 20%. A strong rise in confidence in the retail trade sector overcame weakness in confidence in the Industrial, Construction and Consumer sectors. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228b.jpg" width="353">
Consumers have generally taken a dim view of the economy. In December there were 17.8% more pessimists than optimists among consumers, an increase of 3.2 percentage points from November and 1.0 percentage points from December, 2004. Until the recent deterioration in consumer confidence, it had shown an improving trend starting in early 2004. In spite of the generally pessimistic view of consumers, retailers have consistently been, on balance, optimistic. In December the balance of optimists for retail trade was 23.0%, up from 22.0% in November and from a -6.7 in December of 2004. The contrast between the trends in consumer confidence and that of the retailers is shown in the second chart. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228c.jpg" width="353">
Similar trends are found in comparing confidence in the Industrial and Constructions sectors, as shown in the third chart. Except for a small excess of pessimists in late 2001 optimists have until recently outweighed pessimists in the Industrial sector while there has been a preponderance of pessimists in the construction sector. In December, however there was another slight excess of pessimists in the industrial sector as the 6.7% excess of optimists in November fell 7.4 percentage points to 0.7% excess of pessimists. The 6.5% excess of pessimists in the construction sector in December was 2.0 percentage points above November but it was 12.5 percentage points lower than that of December, 2004.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGECW/@EC/@EC7/@EC7.HTM">Slovakia</a>&nbsp;</th>
<th scope="col">Dec 05&nbsp;</th>
<th scope="col">Nov 05 </th>
<th scope="col">Dec 04</th>
<th scope="col">M/M Dif&nbsp;</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Economic Sentiment Indicator (2000=100)</td>
<td>113.4</td>
<td>112.9</td>
<td>106.0</td>
<td>0.44*</td>
<td>6.98*</td>
<td>111.6</td>
<td>106.2</td>
<td>105.3</td>
</tr>
<tr>
<td class="firstcol">Components (Balances)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Industrial confidence (40%)</td>
<td>-0.7</td>
<td>6.7</td>
<td>-0.3</td>
<td>-7.4</td>
<td>-0.4</td>
<td>4.6</td>
<td>6.8</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction confidence (20%)</td>
<td>-6.5</td>
<td>-4.5</td>
<td>-19.0</td>
<td>-2.0</td>
<td>12.5</td>
<td>-10.2</td>
<td>-21.8</td>
<td>-18.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail trade confidence&nbsp; (20%)</td>
<td>23.0</td>
<td>22.0</td>
<td>-6.7</td>
<td>3.0</td>
<td>31.7</td>
<td>14.5</td>
<td>4.4</td>
<td>12.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer confidence&nbsp; (20%)</td>
<td>-17.8</td>
<td>-14.6</td>
<td>-16.8</td>
<td>-3.2</td>
<td>-1.0</td>
<td>-14.6</td>
<td>-23.9</td>
<td>-34.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The Economic Sentiment Indicator of Slovakia has been on a generally rising trend since early 2004. (See the first chart.) The index rose 0.4% in December to 113.4 (2000=100) from November and was 7.0% above the December, 2004 level [...]

Economic Sentiment in Slovakia Slows in December

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051227a.jpg" width="353">
At 4.40%, current yields on 10 Year Treasury securities for the most part match the yields on the 2 Year. Fed Chairman Alan Greenspan, and many economists, have indicated that the yield curve&#39;s ability to signal changes in economic conditions has slackened as financial markets have broadened and become more complex.
Narrow Money, Broad Money, and the Transmission of Monetary Policy from the Federal Reserve Bank of Richmond is available <a href="http://www.federalreserve.gov/events/conferences/mmp2004/pdf/goodfriend.pdf"> here</a>.
In the past the move of toward parity, let alone inversion, of the 10-2 Year spread has preceded recessions in the U.S. Without fail it has signaled a marked slowing of liquidity and recently the growth in the monetary base has slowed to 3% from 9% in 2002.
The slowing reflects the effects of higher interest rates on consumers&#39; inclination to borrow and spend as well as banks&#39; inclination to lend.
Certainly, the U.S. economy is &quot;awash in cash.&quot; But in a twelve trillion dollar economy such as the U.S., growth is determined at the margin.

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At 4.40%, current yields on 10 Year Treasury securities for the most part match the yields on the 2 Year. Fed Chairman Alan Greenspan, and many economists, have indicated that the yield curve's ability to signal changes in economic [...]

Inverted Treasury Yield Curve Signals Less Liquidity

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051227a.jpg" width="353">
At 4.40%, current yields on 10 Year Treasury securities for the most part match the yields on the 2 Year. Fed Chairman Alan Greenspan, and many economists, have indicated that the yield curve&#39;s ability to signal changes in economic conditions has slackened as financial markets have broadened and become more complex.
Narrow Money, Broad Money, and the Transmission of Monetary Policy from the Federal Reserve Bank of Richmond is available <a href="http://www.federalreserve.gov/events/conferences/mmp2004/pdf/goodfriend.pdf"> here</a>.
In the past the move of toward parity, let alone inversion, of the 10-2 Year spread has preceded recessions in the U.S. Without fail it has signaled a marked slowing of liquidity and recently the growth in the monetary base has slowed to 3% from 9% in 2002.
The slowing reflects the effects of higher interest rates on consumers&#39; inclination to borrow and spend as well as banks&#39; inclination to lend.
Certainly, the U.S. economy is &quot;awash in cash.&quot; But in a twelve trillion dollar economy such as the U.S., growth is determined at the margin.

Economic Sentiment in Slovakia Slows in December 
by <a href="/comment/Curley.html">Louise Curley</a> December 27, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228a.jpg" width="353">
The Economic Sentiment Indicator of Slovakia has been on a generally rising trend since early 2004. (See the first chart.) The index rose 0.4% in December to 113.4 (2000=100) from November and was 7.0% above the December, 2004 level of 106.0. The index is based on four confidence indicators that measure the balance between optimists and pessimists. These are the Industrial Confidence Indicator which has a weight of 40% and the Construction Confidence, the Consumer Confidence and the Retail Trade Confidence indicators each of which has a weight of 20%. A strong rise in confidence in the retail trade sector overcame weakness in confidence in the Industrial, Construction and Consumer sectors. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228b.jpg" width="353">
Consumers have generally taken a dim view of the economy. In December there were 17.8% more pessimists than optimists among consumers, an increase of 3.2 percentage points from November and 1.0 percentage points from December, 2004. Until the recent deterioration in consumer confidence, it had shown an improving trend starting in early 2004. In spite of the generally pessimistic view of consumers, retailers have consistently been, on balance, optimistic. In December the balance of optimists for retail trade was 23.0%, up from 22.0% in November and from a -6.7 in December of 2004. The contrast between the trends in consumer confidence and that of the retailers is shown in the second chart. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051228c.jpg" width="353">
Similar trends are found in comparing confidence in the Industrial and Constructions sectors, as shown in the third chart. Except for a small excess of pessimists in late 2001 optimists have until recently outweighed pessimists in the Industrial sector while there has been a preponderance of pessimists in the construction sector. In December, however there was another slight excess of pessimists in the industrial sector as the 6.7% excess of optimists in November fell 7.4 percentage points to 0.7% excess of pessimists. The 6.5% excess of pessimists in the construction sector in December was 2.0 percentage points above November but it was 12.5 percentage points lower than that of December, 2004.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGECW/@EC/@EC7/@EC7.HTM">Slovakia</a>&nbsp;</th>
<th scope="col">Dec 05&nbsp;</th>
<th scope="col">Nov 05 </th>
<th scope="col">Dec 04</th>
<th scope="col">M/M Dif&nbsp;</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Economic Sentiment Indicator (2000=100)</td>
<td>113.4</td>
<td>112.9</td>
<td>106.0</td>
<td>0.44*</td>
<td>6.98*</td>
<td>111.6</td>
<td>106.2</td>
<td>105.3</td>
</tr>
<tr>
<td class="firstcol">Components (Balances)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Industrial confidence (40%)</td>
<td>-0.7</td>
<td>6.7</td>
<td>-0.3</td>
<td>-7.4</td>
<td>-0.4</td>
<td>4.6</td>
<td>6.8</td>
<td>4.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction confidence (20%)</td>
<td>-6.5</td>
<td>-4.5</td>
<td>-19.0</td>
<td>-2.0</td>
<td>12.5</td>
<td>-10.2</td>
<td>-21.8</td>
<td>-18.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail trade confidence&nbsp; (20%)</td>
<td>23.0</td>
<td>22.0</td>
<td>-6.7</td>
<td>3.0</td>
<td>31.7</td>
<td>14.5</td>
<td>4.4</td>
<td>12.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer confidence&nbsp; (20%)</td>
<td>-17.8</td>
<td>-14.6</td>
<td>-16.8</td>
<td>-3.2</td>
<td>-1.0</td>
<td>-14.6</td>
<td>-23.9</td>
<td>-34.8</td>
</tr>
</tbody>
</table>
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Heavy US manufacturing states underperforming while Sun Belt states outperforming

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

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Andrew Cates

**Energy and labour markets**
Chart 1 below highlights two key trends: the real consumer price of energy in the OECD economies (indexed to 1970) has shown significant volatility, with sharp spikes during periods of energy crises (e.g., 1970s oil shocks, 2008, and post-pandemic supply constraints) and declines following market adjustments or advances in energy production. Meanwhile, the US labour share of business output has experienced a steady decline since the 1980s, reflecting structural changes in the economy such as globalization, technological advances, a shift in bargaining power away from labour toward capital as well as higher real energy prices. These trends and the interplay between them will arguably form the basis of several policy choices that will be made (or already are being made) by a new US administration.

250123Z1.jpg

**Electricity prices**
Energy prices, their level and their volatility, arguably play a much bigger role in broader macroeconomic fluctuations than they are given credit for. Chart 2 below shows electricity prices (a 2-year average) across six major developed economies. It shows that the US has faced the cheapest electricity at around $44/MWh. The UK and Germany, in contrast, have faced the most expensive electricity at respectively $106/MWh and $94/MWh. This disparity reflects a mix of factors: European countries, particularly the UK and Germany, face elevated prices due to heavy reliance on natural gas imports, exacerbated by geopolitical tensions (e.g., reduced Russian supply), higher renewable energy integration costs, and carbon pricing mechanisms. The US, in contrast, enjoys lower electricity costs due to more abundant domestic energy resources, particularly natural gas, and less exposure to international energy markets. Against this backdrop it is hardly a surprise that the US economy has flourished (relative to other advanced economies) while the UK and Germany have floundered.

250123Z2.jpg

**The UK labour market**
This week’s labour market data additionally suggest that the UK will probably struggle to keep pace with the US economy in the period immediately ahead. The data specifically revealed that employment growth is slowing on all measures, and the PAYE measure of payrolls in particular (see chart 3 below). And while private sector pay growth has also slowed, the 6-month annualised rates of growth still stood at a relatively lofty 5.8% in December. Weaker employment growth will encourage the BoE to cut rates again before too long (probably in February) but weaker wage growth could also be necessary for a much looser policy stance to be enacted over the next few months.

250123Z3.jpg

**Household savings and labour market activity**
At a broader global level, a key risk to the economic outlook at present concerns restrictive monetary policy and its impact on labour market activity and household spending. Chart 4 below shows that household saving rates in the world’s major economies have – on the whole – been rebounding over the past two years. Simultaneously, the unemployment rate in advanced economies has begun to climb. These trends align with the tightening of monetary policy that’s been enacted in recent years and economic uncertainty. But if that combination persists, it could place a bigger brake on the world economy this year than many analysts are anticipating.

250123Z4.jpg

**China’s credit impulse**
Another big source of uncertainty, at present, concerns China. Chart 5 below compares the Citigroup Economic Surprise Index for emerging markets (EM) and Haver’s calculations for China’s credit impulse (the change in new credit as a percentage of GDP). The chart suggests that China's credit growth influences broader EM economic fluctuations. During periods of robust credit growth (e.g., 2020-2021), driven by stimulus measures, EM economies benefited from improved liquidity and demand from China. Conversely, periods of credit tightening (e.g., 2017 and 2023-2024) weighed on economic surprises, reflecting weaker support for growth. These dynamics underline China’s outsized role in shaping sentiment and economic conditions in emerging markets. That its credit impulse, moreover, remained negative in Q4 (of 2024) underscores how China might continue to exert downward pressure on the world economy in the period immediately ahead.

250123Z5.jpg

**South Korean trade**
Another source of uncertainty for the world economy, at present, is the optimism surrounding AI. While proponents highlight its transformative potential to boost productivity, efficiency, and innovation across industries, sceptics question the timeline for a meaningful economic impact. With that in mind it would be inappropriate to draw strong conclusions from chart 6 below but it is certainly of note that South Korea – which has been heavily reliant on AI-fuelled trade – saw a big slowdown in export growth in the first 20 days of January. Much of that slowdown, moreover, could be traced to a big drop in semiconductor trade.

250123Z6.jpg

Financial markets have enjoyed a notable lift in sentiment over recent days, driven by renewed optimism about the domestic economic policies of a new US administration. Investors have certainly been cheered by early signals of a pro-growth strategy, with the energy sector taking centre stage following a ceasefire between Israel and Gaza and the announcement of measures aimed at reducing US energy costs (see charts 1 and 2). Meanwhile, China’s stronger-than-expected growth figures last week and softer-than-expected inflation readings from both the US and the UK have fuelled gains across equity and bond markets, bolstering risk appetite in other markets. However, despite the prevailing optimism, several factors warrant caution. Chief among them is the global uncertainty that surrounds the policy choices of a new US administration. The policy choices of central banks will also be critical, particularly as labour market strength could keep inflation risks alive (charts 3 and 4). Questions also linger about China’s ability to sustain its growth momentum, especially as its property sector and consumer demand face ongoing challenges (chart 5). Finally, while artificial intelligence is increasingly seen as a driver of future growth and productivity, doubts persist over its near-term potential to meaningfully transform the world economy (chart 6). For now, investors appear content to ride the wave of positive sentiment, but vigilance over these risks will be critical as the economic landscape continues to evolve.

Charts of the Week: Trump Cards

250123A1.jpg

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Initial claims for unemployment insurance rose to 223,000 in the third week of January from an unrevised 217,000 during the prior week. A 215,000 increase in initial claims had been expected in the Action Economics Forecast Survey. Initial claims have risen from a 203,000 low in the first week of January. During the last four weeks, initial claims averaged 213,500, down from 226,750 four weeks earlier.

Continuing claims for jobless insurance increased 46,000 (7.8% y/y) to 1.899 million in the week ended January 11 from 1.853 million in the prior week. Ongoing claims have risen from a low of 1.834 million in the third week of December. The four week moving average of continuing jobless insurance claims eased to 1.866 million, down from a 1.888 million high in the third week of November.

The insured rate of unemployment was 1.2% for the fourth straight week. This level was increased from a 2022 low of 0.9% and compares to the rise in the overall unemployment rate to 4.1% from 3.4% over the same period.

Unemployment rates vary widely across states. The Labor Department reports that for the week ended January 4, the insured unemployment rate was highest in Rhode Island (3.22%), New Jersey (3.07%), Minnesota (2.73%), Washington (2.52%) and Massachusetts (2.41%). The insured unemployment rates were lowest in Florida (0.33%), Virginia (0.43%), Tennessee (0.58%) and Alabama (0.52%) and the Virgin Islands (0.67%). Rates in other notable states include California (2.32%), Pennsylvania (2.24%), New York (2.08%) and Texas (1.13%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial jobless claims increase to highest level in six weeks. 
- Continuing claims approach four-week high.
- The insured unemployment rate remains low.

U.S. Unemployment Insurance Claims Rise in Latest Week

Robert Brusca

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EU order trends ‘improved’ slightly in January as the net diffusion reading rose from -40 to -34. Still, that improvement leaves orders below their 3-month, 6-month, or 12-month averages. The queue standard of January orders is in the lower 14th percentile of its historic queue of data. Obviously, it remains a historically weak reading. The order series is volatile as the chart shows. But it is still in a clear downtrend even with the uptick this month.

Export orders have approximately the same profile as for orders overall. But export orders weaken slightly in January compared to December. Export orders overall have a slightly weaker queue standing than total orders at a 13.4 percentile level.

The diffusion readings for stocks of finished goods weakened in January but even with its weaker January assessment, stocks have a firm-to-strong 72.5 percentile standing.

Looking ahead, the outlook for output volume over the next three months improved sharply from its stunning weak reading of -31 in December. However, the rise to -19 in January represents only a 4.8 percentile standing.

Unfortunately, average output prices for three months ahead has reading of +27 in January, up from +23 in December and +11 in November; the backtracking in prices expected, has brought the expectation level for the current reading to a high, 90-percentile standing. These rising inflation expectations are going to be a real problem for the Bank of England.

IP data lag the CBI survey responses. The manufacturing IP growth rate, year-on-year, has a 17.4 percentile standing as of its most recent observation in November 2024. That is also very weak. The CBI results are not giving a different message from the industrial production data, but they are timelier.

The ramp up in inflation expectation is not good new with CPI-H inflation at 3.5% year-over-year and with the core pace at 4.2%. Core inflation, sequentially, is looking stable around the 4.2% pace; for the headline, the pace has accelerated from 3.5% over 12 months to a pace of 5.4% over three months. These results, coupled with the rise in CBI expectations, are not good news for the U.K. or for the BOE.

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United Kingdom

U.K. Order Trends Are Still Eroding

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The Conference Board's Leading Economic Index fell 0.1% (-3.0% y/y) during December, following a 0.4% November rise, revised from 0.3%, and a 0.3% October decline, revised from -0.4%. A 0.1% easing in the December index had been expected in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity. The index has been trending lower since January 2022, contrasting with positive real economic growth.

During December, component changes amongst the leaders diverged. Series which contributed positively to the index change included a longer factory sector workweek, improved factory orders for consumer goods, an increase in orders for nondefense capital goods excluding aircraft, higher stock prices in the S&P 500 index and the leading credit index. Series contributing negatively were higher initial unemployment insurance claims, a lower ISM new orders index, falling building permits, the interest rate yield curve and consumer expectations for business/economic conditions.

The Coincident Economic Index rose 0.4% last month (1.6% y/y) after rising 0.2% in November and holding steady in October. Movement amongst the four components was uniformly positive in December. Industrial production jumped by the largest amount since February, real personal income strengthened steadily, payroll employment improved on prior two months’ increases while real manufacturing & trade sales rose steadily.

The Lagging Economic Index improved 0.1% last month (0.3% y/y) after rising 0.2% in November and remaining unchanged in October. The 6-month change in the services CPI, the 6-month change in unit labor costs and the ratio of consumer installment credit-to-personal income contributed positively to the index change. The business inventory-to-sales ratio contributed nothing to the index change. The duration of unemployment, the prime interest rate charged by banks and commercial & industrial loans outstanding contributed negatively to the index change.

The ratio of coincident-to-lagging indicators, considered another leading indicator, rose 0.3% last month after holding steady for two straight months.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [website](https://www.conference-board.org/us/) for coverage of leading indicator series from around the world.

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- Movement in leading indicator components remains mixed.
- Coincident indicators strengthen.
- Lagging indicators edge higher.

U.S. Leading Indicators Ease

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Retail gasoline prices for all grades rose to an average $3.23 per gallon (1.5% y/y) in the week ending January 20 from $3.16 in the prior week. The all-time high of $5.11 was in the week ending June 13, 2022. The retail price for on-highway diesel fuel jumped	to $3.72 per gallon (-3.2% y/y) in the week of January 20, the highest level since early-August, from $3.60 in the prior week. The latest price was down from a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil rose to $78.58 per barrel (7.3% y/y) in the week ending January 17 after increasing to $74.32 in the prior week. It was the highest level in five months but still below the peak of $120.46 in the week of June 10, 2022. Yesterday, the price was $75.89 per barrel. The price of European Brent crude oil rose to $82.53 per barrel (3.0% y/y) in the week of January 17 from $78.14 in the prior week. Prices remained below a peak of $127.40 in the week of June 10, 2022. Yesterday’s price was $80.57 per barrel.

Natural gas prices surged to an average $5.47/mmbtu (87.3% y/y) in the week of January 17 from $3.93 in the prior week, posting the highest level since a high of $5.11/mmbtu in the week of January 12, 2024. Prices reached a low of $1.40/mmbtu in the week of March 15, 2024 and a peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $4.40/mmbtu.

Gasoline demand rose 0.8% y/y in the four weeks ending January 10 on top of a 1.2% y/y gain in the prior four weeks. Demand for all petroleum products increased 1.1% y/y in the four weeks ending January 10. Crude oil input to refineries increased 1.2% y/y in the four weeks ending January 10 after a 1.5% y/y rise in the prior four weeks.

Gasoline inventories fell 1.8% y/y in the week ending January 10 after a 3.0% y/y decline in the prior week. In contrast, residual fuel oil inventories fell 12.1% y/y in the week of January 10 following a 5.7% y/y decrease in the prior week. Crude oil inventories rose 2.7% y/y in the week of January 10, the same as during the prior week.

Measured in days’ supply, gasoline inventories rose to 28.7 days in the week of January 10 from 27.5 days in the prior	 week, registering the highest reading since the end of February 2024. The recent low was 22.9 days in the week of November 8. The supply of crude oil was little changed at 24.6 days in the week of January 10, still near the lowest number since a low of 24.8 days in the week of September 20, 2024 and below a high of 31.9 days in the week of March 3, 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** & **USENERGY** database.

- Gasoline prices reach three-month high.
- Crude oil costs surge.
- Natural gas prices strengthen to two-year high.

Economy in Brief: 2005

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