Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830c.jpg" width="353">
The Nat&#39;l Employment Report, published by the payroll processor ADP, indicated that August private nonfarm payrolls rose 107,000. The August figure from BLS will be published this Friday.
The rise in ADP&#39;s measure of July private nonfarm payrolls of 99,000 was accompanied by a 113,000 rise in private nonfarm payrolls as published by the Bureau of Labor Statistics.
ADP has compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which grew an average of 11,333 per month over the last year.
The full ADP National Employment Report can be found <a href="http://www.investquest.com/iq/a/aud/ne/news/adp083006es.htm">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">Aug</th>
<th scope="col">July</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">Nonfarm Private Payroll Employment (Chg.)</td>
<td>107,000</td>
<td>99,000</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>-0.4%</td>
</tr>
</tbody>
</table>
</body>
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The Nat'l Employment Report, published by the payroll processor ADP, indicated that August private nonfarm payrolls rose 107,000. The August figure from BLS will be published this Friday. The rise in ADP's measure of July private [...]

ADP Nat'l Employment Report: Growth Stable & Slower

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830a.jpg" width="353">
U.S. real GDP growth during 2Q &#39;06 was revised higher to 2.9% (AR) from the advance report of 2.5% growth. The figure about matched Consensus expectations for a 3.0% rise.
Reported for the first time, 2Q profits advanced 3.2% (20.5% y/y), far slower than the double digit increases during the prior two quarters. Profits at U.S. nonfinancial corporations grew just 0.6% (15.6% y/y), after an 11.6% surge during 1Q and financial corporate profits grew 7.8% (27.8% y/y). Earnings of overseas corporations posted a 4.0% (27.0% y/y) increase.
Growth in final sales to domestic purchasers was little revised at 1.7% (3.0% y/y) following four quarters of 3.7% growth.
Growth in business fixed investment was revised somewhat higher to a still-slowed 4.7% (7.3% y/y) rate. Spending on equipment &amp; software continued to show a decline of 1.6% (+6.8% y/y), much of it in spending on transportation equipment, but growth in structures spending ramped up to 22.1% (8.4% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830b.jpg" width="353">
The advance in real personal consumption expenditures held at a little revised 2.6% versus 3.4% during the prior four quarters. Durables spending grew 0.4% (3.6% y/y) as motor vehicles &amp; parts fell 0.8%, less than initially estimated.
The decline in residential investment was deepened to 9.8% (-1.2% y/y) and that reduced 2Q GDP growth by 0.6 percentage points.
Real spending by the federal government fell 4.3% (+2.1% y/y), a decline which subtracted 0.3 percentage points from GDP growth.
A stronger contribution from inventories added 0.6 percentage points to GDP growth, revised from 0.4 points. Meanwhile, an improved net export deficit added a little-revised 0.4 percentage points to growth as exports grew 5.1% (7.9% y/y) and imports rose 0.6% (6.2% y/y).
The rise in the GDP chain price index was unrevised at 3.3%, the fourth straight quarter at that rate, though the domestic final sales price deflator grew 4.0% (3.7% y/y). Less food &amp; energy consumer prices rose 2.8% (2.3% y/y), initially reported at 2.9%.
The minutes of the latest FOMC meeting can be found <a href="http://www.federalreserve.gov/fomc/minutes/20060808.htm"> here</a>
Income, Poverty and Health Insurance in the United States: 2005 from the U.S. Census Bureau is available <a href="http://www.census.gov/prod/2006pubs/p60-231.pdf"> here</a>.

<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/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">2Q &#39;06 (Prelim.)</th>
<th scope="col">2Q &#39;06 (Advance)</th>
<th scope="col">1Q &#39;06</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 class="odd">
<td class="firstcol">GDP</td>
<td>2.9%</td>
<td>2.5%</td>
<td>5.6%</td>
<td>3.5%</td>
<td>3.2%</td>
<td>3.9%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>--</td>
<td>0.4%</td>
<td>-0.0%</td>
<td>0.6%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>--</td>
<td>2.1%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>3.5%</td>
<td>3.5%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign Trade Effect</td>
<td>--</td>
<td>&nbsp;0.3%</td>
<td>-0.0%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>--</td>
<td>1.6%</td>
<td>5.4%</td>
<td>3.0%</td>
<td>3.6%</td>
<td>4.0%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>--</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>


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U.S. real GDP growth during 2Q '06 was revised higher to 2.9% (AR) from the advance report of 2.5% growth. The figure about matched Consensus expectations for a 3.0% rise. Reported for the first time, 2Q profits advanced 3.2% (20.5% [...]

US GDP Growth Revised Up, Profit Growth Slowed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830a.jpg" width="353">
U.S. real GDP growth during 2Q &#39;06 was revised higher to 2.9% (AR) from the advance report of 2.5% growth. The figure about matched Consensus expectations for a 3.0% rise.
Reported for the first time, 2Q profits advanced 3.2% (20.5% y/y), far slower than the double digit increases during the prior two quarters. Profits at U.S. nonfinancial corporations grew just 0.6% (15.6% y/y), after an 11.6% surge during 1Q and financial corporate profits grew 7.8% (27.8% y/y). Earnings of overseas corporations posted a 4.0% (27.0% y/y) increase.
Growth in final sales to domestic purchasers was little revised at 1.7% (3.0% y/y) following four quarters of 3.7% growth.
Growth in business fixed investment was revised somewhat higher to a still-slowed 4.7% (7.3% y/y) rate. Spending on equipment &amp; software continued to show a decline of 1.6% (+6.8% y/y), much of it in spending on transportation equipment, but growth in structures spending ramped up to 22.1% (8.4% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830b.jpg" width="353">
The advance in real personal consumption expenditures held at a little revised 2.6% versus 3.4% during the prior four quarters. Durables spending grew 0.4% (3.6% y/y) as motor vehicles &amp; parts fell 0.8%, less than initially estimated.
The decline in residential investment was deepened to 9.8% (-1.2% y/y) and that reduced 2Q GDP growth by 0.6 percentage points.
Real spending by the federal government fell 4.3% (+2.1% y/y), a decline which subtracted 0.3 percentage points from GDP growth.
A stronger contribution from inventories added 0.6 percentage points to GDP growth, revised from 0.4 points. Meanwhile, an improved net export deficit added a little-revised 0.4 percentage points to growth as exports grew 5.1% (7.9% y/y) and imports rose 0.6% (6.2% y/y).
The rise in the GDP chain price index was unrevised at 3.3%, the fourth straight quarter at that rate, though the domestic final sales price deflator grew 4.0% (3.7% y/y). Less food &amp; energy consumer prices rose 2.8% (2.3% y/y), initially reported at 2.9%.
The minutes of the latest FOMC meeting can be found <a href="http://www.federalreserve.gov/fomc/minutes/20060808.htm"> here</a>
Income, Poverty and Health Insurance in the United States: 2005 from the U.S. Census Bureau is available <a href="http://www.census.gov/prod/2006pubs/p60-231.pdf"> here</a>.

<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/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">2Q &#39;06 (Prelim.)</th>
<th scope="col">2Q &#39;06 (Advance)</th>
<th scope="col">1Q &#39;06</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 class="odd">
<td class="firstcol">GDP</td>
<td>2.9%</td>
<td>2.5%</td>
<td>5.6%</td>
<td>3.5%</td>
<td>3.2%</td>
<td>3.9%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>--</td>
<td>0.4%</td>
<td>-0.0%</td>
<td>0.6%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>--</td>
<td>2.1%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>3.5%</td>
<td>3.5%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign Trade Effect</td>
<td>--</td>
<td>&nbsp;0.3%</td>
<td>-0.0%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.5%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>--</td>
<td>1.6%</td>
<td>5.4%</td>
<td>3.0%</td>
<td>3.6%</td>
<td>4.0%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>--</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.3%</td>
<td>3.0%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
ADP Nat'l Employment Report: Growth Stable & Slower 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 30, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830c.jpg" width="353">
The Nat&#39;l Employment Report, published by the payroll processor ADP, indicated that August private nonfarm payrolls rose 107,000. The August figure from BLS will be published this Friday.
The rise in ADP&#39;s measure of July private nonfarm payrolls of 99,000 was accompanied by a 113,000 rise in private nonfarm payrolls as published by the Bureau of Labor Statistics.
ADP has compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which grew an average of 11,333 per month over the last year.
The full ADP National Employment Report can be found <a href="http://www.investquest.com/iq/a/aud/ne/news/adp083006es.htm">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">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/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">Aug</th>
<th scope="col">July</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">Nonfarm Private Payroll Employment (Chg.)</td>
<td>107,000</td>
<td>99,000</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>-0.4%</td>
</tr>
</tbody>
</table>
Mortgage Applications Portend Further Weakness in Housing 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 30, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830d.jpg" width="353">
The total number of mortgage applications slipped another 0.9% last week according to the Mortgage Bankers Association. The average level of applications in August rose 2.9% from July.
Last week&#39;s decline was led by a 1.6% drop in purchase applications and applications are down 17.8% from the weekly high in January. It was sixth decline in the last seven weeks and lowered purchase apps in August 3.5% below the July average. That was the fourth consecutive m/m decline.
During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance were roughly unchanged w/w and rose 13.3% in August versus July.
The effective interest rate on a conventional 30-year mortgage was about unchanged at 6.60% versus 6.58% the prior week. The peak for 30 year financing was 7.08% late in June. The rate on 15-year financing also remained unchanged at 6.32% and the peak rate was 6.75%. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
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%">
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<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">08/25/06</th>
<th scope="col">08/18/06</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>556.5</td>
<td>561.5</td>
<td>-23.0%</td>
<td>708.6</td>
<td>735.1</td>
<td>1,067.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>375.9</td>
<td>382.2</td>
<td>-20.1%</td>
<td>470.9</td>
<td>454.5</td>
<td>395.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,609.2</td>
<td>1,608.5</td>
<td>-26.4%</td>
<td>2,092.3</td>
<td>2,366.8</td>
<td>4,981.8</td>
</tr>
</tbody>
</table>
Summer Retail Sales Slow in Japan & Italy, Firmer in Norway & Slovenia 
by <a href="/comment/Stone.html">Carol Stone</a> August 30, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830e.jpg" width="353">
Retail sales data were reported today for four very different economies. While &quot;globalization&quot; may be bringing many aspects of the world economy closer together, these reports indicate that people&#39;s shopping behavior varies widely from place to place.
In Japan, sales were off 1.7% in July from June, and remained marginally under the year-ago volume. As seen in the graph, the best we can say for Japan&#39;s retailing sector is that it is stabilizing after a protracted period of decline. We are all pleased with the growth that is developing in Japan overall, but consumers seem not yet to be participating. Louise Curley also made this point yesterday in her discussion of the monthly survey on households&#39; living expenditures. Among the retail sales segments, there is some slight growth in food, and clothing has been flat since late 2003. Downtrends are still evident at general merchandise stores and household furnishings. Motor vehicle dealers saw lower sales in July, after a basically trendless period since early 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830f.jpg" width="353">
Retail sales are also fairly slow in Italy, hovering in a narrow band the past three years. In June, total sales were up a mere 0.1% from May and 1.3% from the year before. We admit to being mildly amused that the greatest strength among Italian retailers is at supermarkets and other food stores. It&#39;s good to know Italians enjoy Italian food as much as the rest of us do. Non-food stores&#39; sales are lagging, however.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060830g.jpg" width="353">
Two smaller European countries are seeing good growth in retail sales. In Norway, they were up 0.6% in July, after falling 0.8% in June. But they are up 3.6% from July 2005 and the longer-term performance shows an annualized pace of 4.6% over the past five years. In Slovenia, the growth is stronger still: 8.7% from one year ago and a 5.6% average rate of change from five years ago. Available detail indicates that Slovenians are busy buying cars and other vehicles and fueling and servicing them; those sales ran a sizable 17% above a year ago in volume terms. Standard &quot;retail trade&quot; stores report growth from the year ago of 2%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Indexes, 2000=100, Seas Adj</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">May 2006</th>
<th scope="col">Year Ago</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">Japan</td>
<td>92.1</td>
<td>93.7</td>
<td>93.8</td>
<td>92.2</td>
<td>93.0</td>
<td>91.7</td>
<td>92.5</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>--</td>
<td>108.3</td>
<td>108.2</td>
<td>107.0</td>
<td>107.3</td>
<td>106.9</td>
<td>107.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Norway</td>
<td>126.16</td>
<td>125.41</td>
<td>126.46</td>
<td>119.53</td>
<td>119.34</td>
<td>114.53</td>
<td>110.68</td>
</tr>
<tr>
<td class="firstcol">Slovenia (NSA)</td>
<td>147.4</td>
<td>149.7</td>
<td>148.6</td>
<td>135.6</td>
<td>135.2</td>
<td>123.3</td>
<td>117.4</td>
</tr>
</tbody>
</table>


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Louise Curley

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<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829e.jpg" width="353">
The Japanese Ministry of Internal Affairs and Communication publishes a variety of data relating to household&#39;s living expenditures as part of their report on the Family Income and Expenditure Survey. There are data on the actual expenditures for all households and for workers&#39; household. In addition to total expenditures, there are a number of spending categories.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829f.jpg" width="353"> Data are given for &quot;fundamental&quot; and &quot;selective&quot; expenditures, what we would call nondiscretionary and discretionary spending. There are indexes--seasonally adjusted and not seasonally adjusted-- of the actual expenditures based on 2005=100. . Nominal and Real Indexes on a seasonally adjusted basis are available for all households, including agricultural, forestry and fisheries households and for all households excluding those households. Similar data for workers&#39; households are also available. The data start in January 2000.
The monthly data have shown a slight downward trend over the past seven years as can be seen in the first chart that shows the year to year changes in the real and nominal indexes for workers&#39; households. If the monthly data of the real index for living expenditures for all households including agriculture, forestry and fisheries households are aggregated to a quarterly basis, the quarterly data appear to show the same general movement as that shown by household consumption in the national accounts as can be seen in the second chart. Thus the living expenditure data appear to be coincident rather than leading indicators of total household consumption.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829g.jpg" width="353">
The data can be used to reveal spending patterns. For example, fundamental expenditures tend to take up between 52-58% of total spending while selected expenditures take up between 40-48% as shown in the third chart.

<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/JAPAN/@J8/@J808/@J808.HTM">Japan</a></th>
<th scope="col">Jul&nbsp; 06</th>
<th scope="col">Jun 06</th>
<th scope="col">May 05</th>
<th scope="col">Apr 06&nbsp; &nbsp;&nbsp;</th>
<th scope="col">Mar 06 &nbsp;&nbsp;&nbsp;&nbsp;</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">Household Living Expenditures</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Household (000 Yen)</td>
<td>292.328</td>
<td>280.824</td>
<td>292.114</td>
<td>312.872</td>
<td>313.350</td>
<td>-0.81</td>
<td>0.38</td>
<td>-1.34</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Year/Year % Change</td>
<td>-0.83</td>
<td>-1.12</td>
<td>-1.24</td>
<td>-1.56</td>
<td>-1.87</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"> Workers&#39; HHs&nbsp; (000 Yen) </td>
<td>320.677</td>
<td>301.978</td>
<td>310.482</td>
<td>346.086</td>
<td>340.010</td>
<td>-0.64</td>
<td>1.55</td>
<td>-1.40</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.46</td>
<td>-2.29</td>
<td>-2.10</td>
<td>-3.88</td>
<td>-3.77</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Workers&#39;&nbsp; Households&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Real (2005=100)</td>
<td>96.1</td>
<td>96.7</td>
<td>97.9</td>
<td>96.2</td>
<td>95.5</td>
<td>-0.34</td>
<td>1.61</td>
<td>-1.12</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.74</td>
<td>-2.91</td>
<td>-2.30</td>
<td>-3.90</td>
<td>-3.34</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol"> Nominal (2005=100) </td>
<td>96.4</td>
<td>97.0</td>
<td>99.2</td>
<td>96.3</td>
<td>95.3</td>
<td>-0.70</td>
<td>1.61</td>
<td>-1.38</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.23</td>
<td>-2.41</td>
<td>-2.19</td>
<td>-4.08</td>
<td>-3.74</td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>
</body>
</html>

The Japanese Ministry of Internal Affairs and Communication publishes a variety of data relating to household's living expenditures as part of their report on the Family Income and Expenditure Survey. There are data on the actual [...]

Japanese Household's Living Expenditures

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829a.jpg" width="353">
According to the International Council of Shopping Centers (ICSC)-UBS survey, chain store sales rose a moderate 0.6% last week, the first w/w gain since July.
The increase helped the average sales level in August rise 0.4% above July, the first m/m gain in four months.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829b.jpg" width="353">
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.
The leading indicator of chain store sales from ICSC-UBS rose a modest 0.1% (-2.4% y/y) in the latest week after several weeks of decline.
The retail price for a gallon of regular unleaded gasoline fell another eight cents to an average $2.85 (+9.0% y/y). The decline lowered the average this month to $2.95 versus a July average of $2.98. In spot market trading yesterday, regular unleaded gasoline prices fell sharply to $1.77 as Ernesto was downgraded to a tropical storm and moved out of the Gulf of Mexico. 
Oil prices similarly fell with the spot price of WTI crude down to $70.62 per bbl. (+5.1% y/y) and the price is lower today. Natural gas prices also fell to $6.52/mmbtu (-33.9% y/y) in spot trading. 
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">08/26/06</th>
<th scope="col">08/19/06</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">Total Weekly Chain Store Sales</td>
<td>471.7</td>
<td>469.1</td>
<td>3.6%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

According to the International Council of Shopping Centers (ICSC)-UBS survey, chain store sales rose a moderate 0.6% last week, the first w/w gain since July. The increase helped the average sales level in August rise 0.4% above July, [...]

Weekly Chain Store Sales Up, Gasoline Prices Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829d.jpg" width="353">
The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in August confidence to 102.9.
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.
Consumers&#39; assessment of the present situation reversed all of the prior month&#39;s modest uptick and fell 8.0% (-0.3% y/y) to the lowest level (123.4) this year. The percentage of respondents who viewed business conditions as good (26.1%) fell though the percentage that viewed jobs as hard to get (21.1%) rose to its highest level this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829c.jpg" width="353">
The index measuring consumers&#39; expectations fell 5.7% (-10.2% y/y). Expectations for better business conditions worsened to the lowest (15.9%) since October and fewer respondents expected more jobs.
Expectations for the inflation rate in twelve months jumped to 5.5%, the highest level since May.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.
Wealth inequality is vast and growing from the Economic Policy Institute is available <a href="http://www.epi.org/content.cfm/webfeatures_snapshots_20060823"> 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/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">August</th>
<th scope="col">July</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>99.6</td>
<td>107.0</td>
<td>-5.6s%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in [...]

Consumer Confidence Fell Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829d.jpg" width="353">
The Conference Board reported that consumer confidence in August fell a sharp 6.9% to 99.6, its lowest level since November. The July level was revised up slightly but Consensus expectations had been for a more moderate decline in August confidence to 102.9.
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.
Consumers&#39; assessment of the present situation reversed all of the prior month&#39;s modest uptick and fell 8.0% (-0.3% y/y) to the lowest level (123.4) this year. The percentage of respondents who viewed business conditions as good (26.1%) fell though the percentage that viewed jobs as hard to get (21.1%) rose to its highest level this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829c.jpg" width="353">
The index measuring consumers&#39; expectations fell 5.7% (-10.2% y/y). Expectations for better business conditions worsened to the lowest (15.9%) since October and fewer respondents expected more jobs.
Expectations for the inflation rate in twelve months jumped to 5.5%, the highest level since May.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.
Wealth inequality is vast and growing from the Economic Policy Institute is available <a href="http://www.epi.org/content.cfm/webfeatures_snapshots_20060823"> 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/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">August</th>
<th scope="col">July</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>99.6</td>
<td>107.0</td>
<td>-5.6s%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Up, Gasoline Prices Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 29, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829a.jpg" width="353">
According to the International Council of Shopping Centers (ICSC)-UBS survey, chain store sales rose a moderate 0.6% last week, the first w/w gain since July.
The increase helped the average sales level in August rise 0.4% above July, the first m/m gain in four months.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829b.jpg" width="353">
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.
The leading indicator of chain store sales from ICSC-UBS rose a modest 0.1% (-2.4% y/y) in the latest week after several weeks of decline.
The retail price for a gallon of regular unleaded gasoline fell another eight cents to an average $2.85 (+9.0% y/y). The decline lowered the average this month to $2.95 versus a July average of $2.98. In spot market trading yesterday, regular unleaded gasoline prices fell sharply to $1.77 as Ernesto was downgraded to a tropical storm and moved out of the Gulf of Mexico. 
Oil prices similarly fell with the spot price of WTI crude down to $70.62 per bbl. (+5.1% y/y) and the price is lower today. Natural gas prices also fell to $6.52/mmbtu (-33.9% y/y) in spot trading. 
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">08/26/06</th>
<th scope="col">08/19/06</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">Total Weekly Chain Store Sales</td>
<td>471.7</td>
<td>469.1</td>
<td>3.6%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
 Japanese Household's Living Expenditures  
by <a href="/comment/Curley.html">Louise Curley</a> August 29, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829e.jpg" width="353">
The Japanese Ministry of Internal Affairs and Communication publishes a variety of data relating to household&#39;s living expenditures as part of their report on the Family Income and Expenditure Survey. There are data on the actual expenditures for all households and for workers&#39; household. In addition to total expenditures, there are a number of spending categories.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829f.jpg" width="353"> Data are given for &quot;fundamental&quot; and &quot;selective&quot; expenditures, what we would call nondiscretionary and discretionary spending. There are indexes--seasonally adjusted and not seasonally adjusted-- of the actual expenditures based on 2005=100. . Nominal and Real Indexes on a seasonally adjusted basis are available for all households, including agricultural, forestry and fisheries households and for all households excluding those households. Similar data for workers&#39; households are also available. The data start in January 2000.
The monthly data have shown a slight downward trend over the past seven years as can be seen in the first chart that shows the year to year changes in the real and nominal indexes for workers&#39; households. If the monthly data of the real index for living expenditures for all households including agriculture, forestry and fisheries households are aggregated to a quarterly basis, the quarterly data appear to show the same general movement as that shown by household consumption in the national accounts as can be seen in the second chart. Thus the living expenditure data appear to be coincident rather than leading indicators of total household consumption.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060829g.jpg" width="353">
The data can be used to reveal spending patterns. For example, fundamental expenditures tend to take up between 52-58% of total spending while selected expenditures take up between 40-48% as shown in the third chart.

<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/JAPAN/@J8/@J808/@J808.HTM">Japan</a></th>
<th scope="col">Jul&nbsp; 06</th>
<th scope="col">Jun 06</th>
<th scope="col">May 05</th>
<th scope="col">Apr 06&nbsp; &nbsp;&nbsp;</th>
<th scope="col">Mar 06 &nbsp;&nbsp;&nbsp;&nbsp;</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">Household Living Expenditures</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Household (000 Yen)</td>
<td>292.328</td>
<td>280.824</td>
<td>292.114</td>
<td>312.872</td>
<td>313.350</td>
<td>-0.81</td>
<td>0.38</td>
<td>-1.34</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Year/Year % Change</td>
<td>-0.83</td>
<td>-1.12</td>
<td>-1.24</td>
<td>-1.56</td>
<td>-1.87</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"> Workers&#39; HHs&nbsp; (000 Yen) </td>
<td>320.677</td>
<td>301.978</td>
<td>310.482</td>
<td>346.086</td>
<td>340.010</td>
<td>-0.64</td>
<td>1.55</td>
<td>-1.40</td>
</tr>
<tr class="odd">
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.46</td>
<td>-2.29</td>
<td>-2.10</td>
<td>-3.88</td>
<td>-3.77</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Workers&#39;&nbsp; Households&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Real (2005=100)</td>
<td>96.1</td>
<td>96.7</td>
<td>97.9</td>
<td>96.2</td>
<td>95.5</td>
<td>-0.34</td>
<td>1.61</td>
<td>-1.12</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.74</td>
<td>-2.91</td>
<td>-2.30</td>
<td>-3.90</td>
<td>-3.34</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol"> Nominal (2005=100) </td>
<td>96.4</td>
<td>97.0</td>
<td>99.2</td>
<td>96.3</td>
<td>95.3</td>
<td>-0.70</td>
<td>1.61</td>
<td>-1.38</td>
</tr>
<tr>
<td class="firstcol"> &nbsp; Year/Year % Change </td>
<td>-1.23</td>
<td>-2.41</td>
<td>-2.19</td>
<td>-4.08</td>
<td>-3.74</td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828d.jpg" width="353">
Estonia and Lithuania reported that average monthly wages in the second quarter were 14.96% and 14.12%, respectively, above the second quarter of 2005. Wage growth in Lithuania has been accelerating and this was the highest year-to-year increase to date.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828f.jpg" width="353"> Wage growth in Estonia, on the other hand, had decelerated from 14.63% in the second quarter of 2001 to 7.26% in the second quarter of 2004, since then it has accelerated. The trends of wage growth in the two countries are shown in the first chart. To get some idea of the relative level of wages in the two countries we converted the wages in local currency into wages in euros. There are 15.646 Estonian Kroon in one Euro and 3.452 Lithuanian Litas in one Euro. In terms of euros the average monthly wage level in the second quarter of this year was 440 euros for Lithuania and 609.euros for Estonia.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060828e.jpg" width="353">
Two other emerging countries of Europe, Slovenia and Slovakia reported the results of recent business surveys. The results are the excess of those who believe conditions will improve over those who believe conditions will worsen. Those participating in Slovakia&#39;s Industry Confidence Survey have generally shown an excess of optimists over pessimists, while those participating in Slovenia&#39;s Combined Confidence Indicator have had an excess of pessimists until November, 2005. Since then there has been an increasing excess of optimists as can be seen in the second chart. The disparity between the two surveys may be due to the fact that the Combined Confidence Indicator includes the opinions of consumers who until recently have been pessimistic whereas Slovakia&#39;s Industry Confidence Survey does not. In the third chart, we have plotted the Slovenia&#39;s Combined Confidence Indicator with the Consumer Component. It is clear that the consumer has had a negative effect on the combined index until recently. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Q2 06</th>
<th scope="col">Q1 06</th>
<th scope="col">Q2 05</th>
<th scope="col">Q/Q %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005&nbsp;%</th>
<th scope="col">2004 %</th>
<th scope="col">2003 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;Monthly Wage NAS</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Estonia (Kroon)</td>
<td>9531</td>
<td>8591</td>
<td>8291</td>
<td>2.96</td>
<td>14.96</td>
<td>11.94</td>
<td>7.71</td>
<td>9.64</td>
</tr>
<tr class="odd">
<td class="firstcol">Estonia (Euro</td>
<td>609</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Lithuania (Litas)</td>
<td>1519.7</td>
<td>14370</td>
<td>1331.5</td>
<td>5.76</td>
<td>14.13</td>
<td>10.02</td>
<td>5.71</td>
<td>4.41</td>
</tr>
<tr class="odd">
<td class="firstcol">Lithuania&nbsp; (Euro)</td>
<td>440</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Aug 06</td>
<td>Jul 06</td>
<td>Aug 05</td>
<td>Q/Q Dif</td>
<td>Y/Y Dif</td>
<td>2005 Dif</td>
<td>2004 Dif</td>
<td>2003 Dif</td>
</tr>
<tr class="odd">
<td class="firstcol">Measures of Confidence</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Slovakia Business Survey % Bal</td>
<td>10.7</td>
<td>9.7</td>
<td>-1.3</td>
<td>1.0</td>
<td>12.0</td>
<td>4.6</td>
<td>6.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovenia Combined Sentiment Indicator % Bal</td>
<td>6</td>
<td>7</td>
<td>-1</td>
<td>-1</td>
<td>7</td>
<td>-1</td>
<td>-1</td>
<td>-5</td>
</tr>
<tr>
<td class="firstcol">Slovenia Consumer</td>
<td>-14</td>
<td>-13</td>
<td>-20</td>
<td>-1</td>
<td>6</td>
<td>-19</td>
<td>-19</td>
<td>-20</td>
</tr>
</tbody>
</table>
</body>
</html>

Estonia and Lithuania reported that average monthly wages in the second quarter were 14.96% and 14.12%, respectively, above the second quarter of 2005. Wage growth in Lithuania has been accelerating and this was the highest year-to- [...]

Strong Increases in Wages in Estonia and Lithuania: Improved Confidence in Slovenia and Slovakia

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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

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

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

FOMC expects much more easing now than in June

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

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

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

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

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

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

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

Germany is Euro area weakling

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

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

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The Consumer Price Index increased 0.3% during November, up from four consecutive months of 0.2% gain. Expectations had been for a 0.2% rise in the Action Economics Forecast Survey. The y/y increase picked up to 2.7% from 2.6% in October and was the quickest rise in four months. The three-month increase rose to 3.0% (AR) from 2.5% but remained below the 4.6% high in April of this year. Prices excluding food & energy rose an expected 0.3% for the fourth consecutive month. Core consumer prices increased 3.7% (AR) during the last three months, up from 1.6% in July, and 3.3% y/y. Food prices rose 0.4% last month (2.4% y/y) after a 0.2% gain while energy prices rose 0.2% (-3.2% y/y) after holding steady in October.

The CPI less food, energy and shelter, another measure of core pricing power, rose 0.3% after a 0.2% gain. The 2.2% y/y rise was increased from a July low of 1.7% but remained below the 7.6% y/y peak in February 2022. It compared to a low of 0.3% y/y in May 2020.

Services costs less energy rose a steady 0.3% in November (4.6% y/y). Shelter costs rose 0.3% following a 0.4% rise in October. Its 4.7% y/y rise compares to an 8.2% peak in March 2023. Owners’ equivalent rent of primary residences increased 0.2% (4.9% y/y), following a 0.4% rise and was the weakest increase since April 2021. Rents of primary residences rose a similarly depressed 0.2% (4.4% y/y) after two consecutive months of 0.3% rise, but the cost of lodging away from home surged 3.2% (3.7% y/y) following a 0.4% October gain. Transportation service prices held steady last month (+7.1% y/y) after rising 0.4% in October, as public transportation prices also were unchanged (2.9% y/y) after a 2.4% October surge. Medical care service costs rose 0.4% (3.7% y/y) the same as in October. Education & communication prices eased 0.2% (+1.8% y/y) for the second straight month. Recreation services prices rose 0.7% (3.5% y/y), the same as in October.

During November, the CPI for goods less food & energy increased 0.3% (-0.6% y/y) after holding steady in October. Home furnishings prices rose 0.7% (-1.0% y/y), as appliance costs also rose 0.7% (-1.0% y/y).  Apparel costs rose 0.2% (1.1% y/y) after a 1.5% decline. Education & communication product costs fell 1.1% (-5.4% y/y) the same as in October while medical care product prices declined 0.1% (NSA, +0.4% y/y) in November. Prices for recreation products weakened 0.5% (-1.5% y/y), the fourth decline in five months. Transportation product prices rose 0.9% (-1.4% y/y) after improving 0.8%. New vehicle prices rose 0.6% (-0.7% y/y) after holding steady while used car & truck prices strengthened 2.0% (-3.4% y/y) after a 2.7% rise.

Food prices rose 0.4% (2.4% y/y) in November following a 0.2% October increase. Egg prices rebounded 8.2% (37.5% y/y) after a 6.4% decline. Meat, poultry & fish prices rebounded 1.1% (1.5% y/y) after falling 0.8% while cereal & bakery product prices weakened 1.1% (-0.5% y/y) after a 1.0% rise. Fruit & vegetable prices rose 0.2% (1.1	% y/y) after increasing 0.4%, while dairy prices eased 0.1% (+1.2% y/y) after rising 1.0% in October. Nonalcoholic beverage prices rose 1.5% (2.8% y/y) after a 0.4% October rise.

Energy prices rose 0.2% (-3.2% y/y) in November after holding steady in October. Gasoline prices rose 0.6	% (-8.1% y/y) after three straight monthly declines. Amongst other energy products, fuel oil & propane prices rose 0.4% (-10.7% y/y) after declining 2.2%. Electricity prices eased 0.4% (3.1% y/y) after a 1.2% gain, while natural gas prices jumped 1.0% (1.8% y/y) following a 0.3% October gain.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Food prices pick up.
- Services price gains remain steady.
- Core goods prices pick up.

U.S. CPI Picks Up Modestly in November; Core Prices Rise Steadily

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The U.S. Treasury Department reported a U.S. government budget deficit of $624.2 billion budget deficit for the first two months of FY 2025 after a $380.6 billion deficit for the first two months of FY’24. For November alone, the government ran a budget deficit of $366.8 billion, which compared to a deficit of $314.0 billion twelve months earlier. The Action Economics Forecast Survey expected a $356.5 billion deficit in November.

Overall revenues this fiscal year so far declined 7.3% y/y as individual income tax receipts fell 11.6% y/y. The level of corporate tax receipts nearly halved y/y. Social insurance revenues increased 7.4% y/y and excise taxes increased 34.0% y/y in FY’25. Customs duties rose 6.1% y/y in the first two months of FY’15.

Federal government outlays increased 18.3% y/y in early FY’25 after a 16.7% rise early in FY’24. Defense spending rose 13.7% y/y, as it did early in FY’24. Social Security outlays rose 6.9% y/y after rising 12.0% y/y in FY’24. Interest payments rose 8.0% y/y in FY’25 after a 63.7% rise a year earlier. Health program spending rose 12.0% y/y after holding steady early in FY’24 while Medicare payments doubled y/y. Income security outlays rose 31.8% y/y compared to a 15.1% y/y decline in the first two months of FY’24.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.


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- Personal income tax receipts weaken.
- Corporate tax payments roughly halve y/y.
- Social Security spending fuels outlay growth.

U.S. Government Budget Deficit Deepens So Far in FY 2025

Kathleen Stephansen, CBE

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Mortgage applications in the week ended December 6 increased 5.4% (15.9% y/y) after rising 2.8% (18.1% y/y) in the week ended November 29. Applications for loans to purchase a house dropped 4.1% (+3.5% y/y) in the December 6 week, after a rise of 5.6% (11.8% y/y) in the November 29 week, while applications to refinance a loan surged 27.2% (42.2% y/y) in the latest week after declining 0.6% (+33.5% y/y) the week before. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey and the amounts quoted here are seasonally adjusted.

The effective interest rate on a 30-year fixed rate loan was 6.86% in the week ended December 6, down slightly from 6.89% in the November 29 week. The rate on a 5-year ARM dropped 50bps to 5.96% in the latest week from 6.46% in the November 29 week, still higher than 5.84% in mid-September. The rate on a 30-year jumbo loan was 6.94% in the week ended December 6, down slightly from 6.96% in the November 29 week, but slightly higher than 6.90% in mid-October.

The share of applications to refinance an existing mortgage was 46.8% in the December 6 week, sharply higher than the 38.7% share in the November 29 week. The largest share in recent months was 55.7% the week of September 20. The share of applications for ARMs was 5.3% in the latest week, down from 6.0% in the November 29 week. The last time the share was 5.3% was in the week ended February 25, 2022.

The average loan size in the December 6 week was $368,200, down 2.5% from $377,600 in the November 29 week, and up 3.6% from a year ago. The average size of an application for a loan to purchase a house was $416,200 in December 6 week, down from $431,900 in the week before, while the average size of an application to refinance an existing loan increased to $313,600 in the latest week from $291,500 in the November 29 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Applications to purchase a house drop, while applications to refinance surge.
- Slight decrease in rates on 30-year fixed-rate loans.
- Average loan size decreases modestly.

U.S. Mortgage Applications Rise in the December 6 Week

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U.S. nonfarm business productivity (output per hour) increased an unrevised 2.2% (SAAR) during Q3’24 after a 2.1% rise in Q2 and a 0.7% Q1 gain. The figure matched expectations in the Action Economics Survey. The 2.0% y/y increase remained below its 2.7% gain in 2023 (Q4/Q4) but was improved from a 1.4% decline in 2022. It also was greatly improved versus the 1.2% average between 2009 and 2019. Nonfarm business output increased 3.5% (2.8% y/y) after a 3.0% gain, revised from 3.5%, while hours-worked rose 1.2% (0.7% y/y) after increasing 0.9%.

Compensation growth slowed to 3.1% (4.3% y/y), revised from 4.2%, after a slightly revised 4.8% gain. As a result, unit labor costs grew 0.8% (2.2% y/y) last quarter, revised from 1.9% after a 1.1% decline, revised from a 2.4% increase. The Action Economics survey expected unit labor costs to rise 1.6% last quarter.

In the manufacturing sector, productivity in Q3 improved 0.9% (0.6% (y/y), revised from 1.0%, after rising a minimally changed 0.2% in Q2 and falling 0.7% in Q1. Compensation grew 2.6% (2.4% y/y), revised from 6.4%, following a 5.6% decline in Q2, revised from a 6.2% rise. Unit labor costs rose 1.7% (1.8% y/y), revised from 5.3%, after a 5.8% fall, revised from a 5.8% increase.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Annual increase remains below last year’s gain.
- Compensation growth dips.
- Increase in unit labor costs slows.

U.S. Productivity Growth Is Steady & Unrevised in Q3’24

Winnie Tapasanun

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The NFIB Small Business Optimism Index rose to 101.7 in November, the seventh m/m rise in eight months and the highest level since June 2021, following a 2.2-point increase to 93.7 in October, according to the November 2024 Small Business Economic Trends survey conducted by the National Federation of Independent Business. This was the first time in 35 months that the index was above the 50-year average of 98. The index was also up from its recent low of 88.5 in March 2024, 90.6 in November 2023, and a low of 89.0 in April 2023; nevertheless, having remained below a high of 102.5 in June 2021. Nine of the 10 index components rose, none fell, and one was unchanged. The NFIB Small Business Uncertainty Index fell to 98 in November, the lowest level since August, from a record-high 110 in October; however, it was well above its recent low of 65 in November 2023 and a low of 55 in June 2022.

The outlook for business conditions in the next six months turned positive in the latest survey. The net balance of respondents expecting the economy to improve jumped to 36% in November, the sixth m/m rise in seven months and the highest level since June 2020, after a seven-point increase to -5% in October; it was significantly above a record low of -61% in June 2022. Expected real sales gained to a net 14% in November following a five-point rise to -4% in October, posting the highest level since February 2020. The latest reading was up from a low of -21% in May 2023 and a low of -29% in July 2022. A net -13% of respondents reported higher nominal sales in the past three months, up from -20% reported in October and registering the highest reading since June. The latest reading, however, was down from the most recent positive reading of 1% in May 2022 and a peak of 9% in June 2021.

Plans to make capital outlays rose to 28% in November from 22% in October, up from a low of 19% in September and a low of 19% in April 2023. The November number posted the highest reading since January 2022; nevertheless, having remained below a high of 31% in October 2021. Plans to expand the business advanced to 14% in November following a two-point increase to 6% in October; the latest figure, up from a low of 2% in March 2023, registered the best reading since a high of 15% in June 2021. Meanwhile, expected credit conditions edged up to -5% in November after a two-point increase to -6% in October; the latest number was slightly above its recent high of -6% in February 2024 but below a high of -4% in May 2022 and a high of -3% in November 2021.

On the labor front, labor markets remained relatively tight. Forty-eight percent of respondents reported that qualified workers to fill job openings were hard to find in November, up from 46% in October. These numbers were below a high of 57% in September 2023, a high of 61% in May 2022, and a peak of 62% in September 2021. A net 18% planned to increase employment in November, up from 15% in October and 15% in September, but it was down from a high of 26% in May 2022 and a peak of 32% in August 2021. Notably, 36% reported positions not able to be filled in November, up from 35% in October and registering the highest since August. These figures remained below a high of 51% in May 2022.

Overall earnings trends continued to improve in November while having remained in negative territory since December 2019. The figure increased to -26% in November, still a poor reading, following a one-point uptick to -33% in October; these numbers were below a high of -18% in March 2023.

On the pricing front, inflation pressures, while trending down, remained at an inflationary level. The net percent raising their average selling prices rose to 24% in November after a one-point decline to 21% in October; these numbers, however, were slightly down from 25% in November 2023 and well below a high of 66% in March 2022. The percentage planning to raise prices rose to 28% in November following a one-point increase to 26% in October; these figures were below 34% in November 2023 and a high of 52% in March 2022.

Wage inflation was still relatively high in the November survey. A net 32% of respondents raised compensation during the last three months, slightly up from 31% reported in the October survey. However, it was down from a high of 46% in February 2023 and a peak of 50% in January 2022. A net 28% of firms planned to raise worker compensation in the next three months, up from 23% reported in October and registering the highest reading since December 2023; nevertheless, having remained below a high of 30% in November 2023 and a high of 32% in October 2022.

Inflation continued to be an issue facing small businesses, as reported by 20% of NFIB members in November as the single most important problem. Registering the lowest reading since January 2024, the November figure was down from 23% in October and a peak of 37% in July 2022. The quality of labor was the second important concern with 19% in November, slightly down from 20% in October. Other concerns (in November vs. October) included taxes (14% vs. 16%), the cost of labor (11% vs 8%), and government requirements (8% vs. 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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- November NFIB Small Business Optimism Index up 8.0 pts. to 101.7.
- Uncertainty Index down 12 pts. to a three-month-low 98.
- Expectations for economy up 41 pts. to 36%, the highest since June ’20.
- Expected real sales up 18 pts. to 14%, the highest since February ’20.
- Inflation (20%) remains top business problem, followed by Quality of Labor (19%); both slightly down from October.

Economy in Brief: August 2006

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ADP Nat'l Employment Report: Growth Stable & Slower

US GDP Growth Revised Up, Profit Growth Slowed

US GDP Growth Revised Up, Profit Growth Slowed

Japanese Household's Living Expenditures

Weekly Chain Store Sales Up, Gasoline Prices Down

Consumer Confidence Fell Sharply

Consumer Confidence Fell Sharply

Strong Increases in Wages in Estonia and Lithuania: Improved Confidence in Slovenia and Slovakia