Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123c.jpg" width="353">
The total number of mortgage applications dropped 3.4% last week to the lowest level since January, according to the Mortgage Bankers Association. The decline pulled the average level in November 5.5% below October.
Applications to refinance, down 6.9%, fell sharply for the fifth consecutive week. The November average is down 14.0% from October.
Purchase applications fell 1.2% and reversed about half of the prior week&#39;s gain. Purchase applications in November are 0.6% ahead of October. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage slipped to 6.48% from 6.59% the prior week. The effective rate on a 15-year mortgage also fell to 6.11% from 6.18%. 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>.
Can U.S. Monetary Policy Fall (Again) into an Expectation Trap? from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr229.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/18/05</th>
<th scope="col">11/11/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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</thead>
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<td class="firstcol">Total Market Index</td>
<td>635.4</td>
<td>657.6</td>
<td>-11.1%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>472.3</td>
<td>477.9</td>
<td>1.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,584.1</td>
<td>1,702.4</td>
<td>-27.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
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The total number of mortgage applications dropped 3.4% last week to the lowest level since January, according to the Mortgage Bankers Association. The decline pulled the average level in November 5.5% below October. Applications to [...]

Mortgage Applications Fell Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123d.jpg" width="353">
The November reading of consumer sentiment from the University of Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through mid-month. Consensus expectations had been for a rise to 81.0.
During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
Improved expectations fostered the m/m rise. The index of Consumer expectations rose 10.1% as expected business conditions during the next year surged 22.1% while expectations for personal finances recovered all of the prior month&#39;s drop. The mean expected inflation rate for the next twelve months fell further to 4.1% from 5.5% expected in October &amp; September.
The current conditions index held onto the improvement through mid-month and rose 9.9% versus October. The reading of personal finances rose 7.3% and reversed all of the October decline and the reading of buying conditions for large household goods jumped 12.9% to the highest level since August.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Why Hasn&#39;t the Jump in Oil Prices Led to a Recession? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-31.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov (Final)</th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
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<td class="firstcol">Consumer Sentiment</td>
<td>81.6</td>
<td>79.9</td>
<td>74.2</td>
<td>-12.1%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>100.2</td>
<td>100.3</td>
<td>91.2</td>
<td>-4.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>69.6</td>
<td>66.8</td>
<td>63.2</td>
<td>-18.3%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
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The November reading of consumer sentiment from the University of Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through mid-month. Consensus expectations had been for a rise to 81.0. During the last ten years there [...]

U.S. Consumer Sentiment Lifted Further By Drop in Oil Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123d.jpg" width="353">
The November reading of consumer sentiment from the University of Michigan rose 10.0% m/m to 81.6, adding a bit to the improvement through mid-month. Consensus expectations had been for a rise to 81.0.
During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
Improved expectations fostered the m/m rise. The index of Consumer expectations rose 10.1% as expected business conditions during the next year surged 22.1% while expectations for personal finances recovered all of the prior month&#39;s drop. The mean expected inflation rate for the next twelve months fell further to 4.1% from 5.5% expected in October &amp; September.
The current conditions index held onto the improvement through mid-month and rose 9.9% versus October. The reading of personal finances rose 7.3% and reversed all of the October decline and the reading of buying conditions for large household goods jumped 12.9% to the highest level since August.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.
Why Hasn&#39;t the Jump in Oil Prices Led to a Recession? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-31.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov (Final)</th>
<th scope="col">Nov (Prelim)</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
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<td class="firstcol">Consumer Sentiment</td>
<td>81.6</td>
<td>79.9</td>
<td>74.2</td>
<td>-12.1%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>100.2</td>
<td>100.3</td>
<td>91.2</td>
<td>-4.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>69.6</td>
<td>66.8</td>
<td>63.2</td>
<td>-18.3%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
Mortgage Applications Fell Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123c.jpg" width="353">
The total number of mortgage applications dropped 3.4% last week to the lowest level since January, according to the Mortgage Bankers Association. The decline pulled the average level in November 5.5% below October.
Applications to refinance, down 6.9%, fell sharply for the fifth consecutive week. The November average is down 14.0% from October.
Purchase applications fell 1.2% and reversed about half of the prior week&#39;s gain. Purchase applications in November are 0.6% ahead of October. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage slipped to 6.48% from 6.59% the prior week. The effective rate on a 15-year mortgage also fell to 6.11% from 6.18%. 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>.
Can U.S. Monetary Policy Fall (Again) into an Expectation Trap? from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr229.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">11/18/05</th>
<th scope="col">11/11/05</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>635.4</td>
<td>657.6</td>
<td>-11.1%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>472.3</td>
<td>477.9</td>
<td>1.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,584.1</td>
<td>1,702.4</td>
<td>-27.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Stable 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123a.jpg" width="353">
The Conference Board&#39;s Index of Help-Wanted Advertising held at 38 in October versus the downwardly revised September level and 38 in August. The average level so far this year is 39.
During the last ten years there has been a 62% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume improved further to 57% in October after gains during the prior two months.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>38</td>
<td>38</td>
<td>36</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123b.jpg" width="353">
Initial claims for unemployment insurance rose 30,000 to 335,000 last week and reversed the little revised 23,000 decline the prior week. Consensus expectations had been for a lesser increase to 311,000 claims.
Hurricane related claims totaled 21,000 and brought the total of the three storms during the last twelve weeks to 582,000.
The four-week moving average of initial claims ticked up slightly to 323,250 (-2.5% y/y).
Continuing claims for unemployment insurance rose a sharp 59,000 following three successive weeks of decline.
The insured rate of unemployment held at 2.2% for the ninth consecutive week.
Minutes of the Federal Open Market Committee November 1, 2005 can be found <a href="http://www.federalreserve.gov/fomc/minutes/20051101.htm"> here</a>.
Estimating the &quot;Neutral&quot; Real Interest Rate in Real Time from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-27.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/19/05</th>
<th scope="col">11/12/05</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>
<td class="firstcol">Initial Claims</td>
<td>335</td>
<td>305</td>
<td>3.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,824</td>
<td>3.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Italian Consumer Confidence Improves in November as Inflation Concerns Moderate 
by <a href="/comment/Stone.html">Carol Stone</a> November 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123e.jpg" width="353">
Italy&#39;s private institute ISAE reported its monthly consumer survey results for November this morning. They show an improving trend in the overall confidence indicator, albeit well below the highs of about four years ago. The indicator is 108.8 this month, 1980=100 and seasonally adjusted, up 3.2 points from October and well above the average of 101.5 for 2004.
Looking at some of the broad components, it&#39;s a little hard to see the total index&#39;s better than 7% improvement in people&#39;s confidence levels over last year&#39;s average level. Only the same tiny portion of survey respondents believe the &quot;general situation&quot; is getting better, and the number of those perceiving a worsening trend has declined only minimally. Household financial expectations rated a -7 in November, compared with -8 in 2004. Unemployment expectations seem still to be deteriorating. The share of respondents looking for unemployment to increase over the coming year was 48%, compared with 40% for last year as a whole and only 35% in 2002. This group has taken away from those expecting steady unemployment, which has fallen to 35% this month from 44% for 2004. These movements toward increasing concerns about unemployment extend a pattern that has prevailed since 2001. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051123f.jpg" width="353">
However, there are some positive hints on the inflation front. More consumers look for inflation to pick up than did so last year, but these are many fewer than expected so in 2001 and 2002. This is illustrated in the second graph, where it is also seen that the November figures show marked improvement from October. These price expectations are giving some aid to plans for &quot;major purchases&quot;; the outlook there is still absolutely negative, but it has stabilized in recent months. Referring to durable goods, the survey item &quot;present ability for purchases&quot; has a 10% &quot;favorable&quot; reading in November, up from 7 last year. The &quot;unfavorable&quot; reading is 58% compared with 58% last year. These hardly indicate a consumer spending boom on the horizon, but they do suggest that consumers are less stressed about the buying environment than they have been for some time.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Italy ISAE Consumer Survey</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Nov 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Confidence Indicator (SA, 1980 =100)</td>
<td>108.8</td>
<td>105.6</td>
<td>103.8</td>
<td>101.5</td>
<td>106.2</td>
<td>115.8</td>
<td>122.6</td>
</tr>
<tr>
<td colspan="8">General Situation Last 12 Mos.</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Improving</td>
<td>4</td>
<td>3</td>
<td>4</td>
<td>3</td>
<td>4</td>
<td>9</td>
<td>15</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Worsening</td>
<td>72</td>
<td>77</td>
<td>76</td>
<td>77</td>
<td>73</td>
<td>54</td>
<td>43</td>
</tr>
<tr class="odd">
<td colspan="8">Price Trends Next 12 Mos.</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rapid Increase</td>
<td>7</td>
<td>11</td>
<td>6</td>
<td>5</td>
<td>7</td>
<td>16</td>
<td>21</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Modest Increase</td>
<td>17</td>
<td>21</td>
<td>13</td>
<td>14</td>
<td>15</td>
<td>35</td>
<td>37</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Flat</td>
<td>47</td>
<td>41</td>
<td>52</td>
<td>54</td>
<td>51</td>
<td>31</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unsure</td>
<td>10</td>
<td>8</td>
<td>8</td>
<td>5</td>
<td>5</td>
<td>2</td>
<td>5</td>
</tr>
<tr>
<td colspan="8">Unemployment Next 12 Mos.</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Large Increase</td>
<td>14</td>
<td>17</td>
<td>13</td>
<td>8</td>
<td>8</td>
<td>7</td>
<td>7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Modest Increase</td>
<td>34</td>
<td>33</td>
<td>32</td>
<td>32</td>
<td>31</td>
<td>28</td>
<td>23</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unchanged</td>
<td>35</td>
<td>35</td>
<td>36</td>
<td>44</td>
<td>42</td>
<td>43</td>
<td>39</td>
</tr>
</tbody>
</table>
</body>
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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/051122e.jpg" width="353">
Final results for Germany&#39;s third quarter Gross Domestic Product were released today. In addition to revisions of the preliminary estimates of total GDP released a week ago, details of the composition of both the expenditure and income sides of the national accounts are given. Estimates of the contribution to growth of the various sectors are also available and are shown in the table below for the first three quarters of 2005.
In the first chart we show the contribution of domestic demand and net exports to total GDP growth. Over the past five years changes in both net exports and domestic demand have been erratic and have tended to offset one another. In the last quarter, a positive contribution of 1.30 percentage points from net exports was offset by a negative contribution of 0.60 percentage points from domestic demand.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122f.jpg" width="353">
According to data on the income side of the National Accounts there has been a marked change in the distribution of income in Germany over the past five years. The share of compensation of employees in net national income has been declining over this period, as shown in the second chart. From 62.9% of net national income in the first quarter of 2001, employee compensation has declined to 58.5&amp; in the third quarter of 2005. The counterpart to the decline in the share of compensation has been the rise in the share of entrepreneurial income (shown in the third chart) from 25.1% in the first quarter of 2001 to 29.1% in the third quarter of 2005. The changing distribution of income may account for a part of the sluggish trend in private consumption over this period.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122g.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Germany Contribution to Growth</th>
<th scope="col">Q3 05&nbsp; % Pts</th>
<th scope="col">Q2 05 % Pts </th>
<th scope="col">Q1 05 % Pts</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Growth of Gross Domestic Product</td>
<td>0.70</td>
<td>0.0</td>
<td>0.10</td>
</tr>
<tr>
<td class="firstcol">Net Exports</td>
<td>1.30</td>
<td>-1.00</td>
<td>-0.50</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Demand</td>
<td>-0.60</td>
<td>0.90</td>
<td>-0.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumption</td>
<td>-0.10</td>
<td>0.30</td>
<td>-0.30</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Private</td>
<td>-0.10</td>
<td>0.00</td>
<td>-0.60</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Government</td>
<td>0.00</td>
<td>0.30</td>
<td>0.20</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Gross Fixed Investment</td>
<td>0.20</td>
<td>0.10</td>
<td>0.10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>-0.70</td>
<td>0.50</td>
<td>-0.20</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Share of Net National Income</td>
<td>Q1 01&nbsp; %&nbsp;</td>
<td>Q3 05 %&nbsp; </td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Compensation of Employees</td>
<td>62.9</td>
<td>59.5</td>
<td></td>
</tr>
<tr>
<td class="firstcol">Entrepreneurial Income</td>
<td>25.1&nbsp;</td>
<td>&nbsp;29.1</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

Final results for Germany's third quarter Gross Domestic Product were released today. In addition to revisions of the preliminary estimates of total GDP released a week ago, details of the composition of both the expenditure and [...]

Revisions and Additions to German National Accounts Data for Q3

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122c.jpg" width="353">
Last week, the US average retail gasoline price continued lower to $2.20 per gallon from $2.30 during the prior week and from $2.73 one month earlier. As of yesterday, the spot market price for gasoline was $1.44 per gallon and has roughly held that level for seven days.
Retail gasoline prices peaked in early September at $3.07 per gallon and have since fallen 72 cents or 28%. During that period spot gasoline prices are down $1.18 or 45%. The implied rise in gasoline retailers&#39; margins has restored profitability. However, that rise in the retail price of gasoline versus the spot price followed several years of margin decline.
During the past month margins have fallen roughly 20%, in part reflecting a decline in gasoline demand of up to 3.5% versus the year ago level. In turn, lower prices seem to have revived demand which spiked last week and raised the four week average level of gasoline demand to roughly even with a year earlier after declining sharply through September &amp; October. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122d.jpg" width="353">
Crude oil prices have continued lower as well. WTI crude yesterday at $57.21 per barrel was down versus an average of $62.50 during October and was 18% lower than the late August high of $69.82.
In November, natural gas prices reversed some of the strength of the prior three months. During the last three weeks gas prices averaged $10.08/mmbtu versus the high of $13.53 averaged during October. Nevertheless, prices still are up 71% versus all of last year.

<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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">11/21/05</th>
<th scope="col">12/31/04</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>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.20</td>
<td>$1.79</td>
<td>13.0%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$57.21</td>
<td>$41.78</td>
<td>18.0%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
</body>
</html>

Last week, the US average retail gasoline price continued lower to $2.20 per gallon from $2.30 during the prior week and from $2.73 one month earlier. As of yesterday, the spot market price for gasoline was $1.44 per gallon and has [...]

Gasoline Prices Fell In A Competitive Market

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122b.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that last week, chain store sales recovered more than all of the prior period&#39;s decline with a 1.0% jump. It was the second w/w jump that strong this month and it lifted the average level of sales in November 1.2% above October which rose 0.1% from September.
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.
The leading indicator of chain store sales from ICSC rose 0.6% (-1.7% y/y) during the latest week following a 0.2% increase the prior week.
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. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122a.jpg" width="353">
Through the second week of November, the Johnson Redbook survey indicated a lesser 0.2% (3.5% y/y) gain in store sales versus October. The survey tracks 15 stores and reflects same-store sales of retailers that account for roughly 85% of the department store category in the Census Bureau&#39;s monthly retail sales report.
During the last nine years there has been a 67% correlation between the y/y change in the Redbook store sales index and the change in non-auto retail sales less gasoline, as published by the US Census Department.

<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">11/19/05</th>
<th scope="col">11/12/05</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>458.0</td>
<td>453.3</td>
<td>4.2%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

The International Council of Shopping Centers (ICSC)-UBS survey indicated that last week, chain store sales recovered more than all of the prior period's decline with a 1.0% jump. It was the second w/w jump that strong this month and [...]

Chain Store Sales Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122b.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that last week, chain store sales recovered more than all of the prior period&#39;s decline with a 1.0% jump. It was the second w/w jump that strong this month and it lifted the average level of sales in November 1.2% above October which rose 0.1% from September.
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.
The leading indicator of chain store sales from ICSC rose 0.6% (-1.7% y/y) during the latest week following a 0.2% increase the prior week.
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. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122a.jpg" width="353">
Through the second week of November, the Johnson Redbook survey indicated a lesser 0.2% (3.5% y/y) gain in store sales versus October. The survey tracks 15 stores and reflects same-store sales of retailers that account for roughly 85% of the department store category in the Census Bureau&#39;s monthly retail sales report.
During the last nine years there has been a 67% correlation between the y/y change in the Redbook store sales index and the change in non-auto retail sales less gasoline, as published by the US Census Department.

<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">11/19/05</th>
<th scope="col">11/12/05</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>458.0</td>
<td>453.3</td>
<td>4.2%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Gasoline Prices Fell In A Competitive Market 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 22, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122c.jpg" width="353">
Last week, the US average retail gasoline price continued lower to $2.20 per gallon from $2.30 during the prior week and from $2.73 one month earlier. As of yesterday, the spot market price for gasoline was $1.44 per gallon and has roughly held that level for seven days.
Retail gasoline prices peaked in early September at $3.07 per gallon and have since fallen 72 cents or 28%. During that period spot gasoline prices are down $1.18 or 45%. The implied rise in gasoline retailers&#39; margins has restored profitability. However, that rise in the retail price of gasoline versus the spot price followed several years of margin decline.
During the past month margins have fallen roughly 20%, in part reflecting a decline in gasoline demand of up to 3.5% versus the year ago level. In turn, lower prices seem to have revived demand which spiked last week and raised the four week average level of gasoline demand to roughly even with a year earlier after declining sharply through September &amp; October. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122d.jpg" width="353">
Crude oil prices have continued lower as well. WTI crude yesterday at $57.21 per barrel was down versus an average of $62.50 during October and was 18% lower than the late August high of $69.82.
In November, natural gas prices reversed some of the strength of the prior three months. During the last three weeks gas prices averaged $10.08/mmbtu versus the high of $13.53 averaged during October. Nevertheless, prices still are up 71% versus all of last year.

<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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">11/21/05</th>
<th scope="col">12/31/04</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>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.20</td>
<td>$1.79</td>
<td>13.0%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$57.21</td>
<td>$41.78</td>
<td>18.0%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
Revisions and Additions to German National Accounts Data for Q3   
by <a href="/comment/Curley.html">Louise Curley</a> November 22, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122e.jpg" width="353">
Final results for Germany&#39;s third quarter Gross Domestic Product were released today. In addition to revisions of the preliminary estimates of total GDP released a week ago, details of the composition of both the expenditure and income sides of the national accounts are given. Estimates of the contribution to growth of the various sectors are also available and are shown in the table below for the first three quarters of 2005.
In the first chart we show the contribution of domestic demand and net exports to total GDP growth. Over the past five years changes in both net exports and domestic demand have been erratic and have tended to offset one another. In the last quarter, a positive contribution of 1.30 percentage points from net exports was offset by a negative contribution of 0.60 percentage points from domestic demand.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122f.jpg" width="353">
According to data on the income side of the National Accounts there has been a marked change in the distribution of income in Germany over the past five years. The share of compensation of employees in net national income has been declining over this period, as shown in the second chart. From 62.9% of net national income in the first quarter of 2001, employee compensation has declined to 58.5&amp; in the third quarter of 2005. The counterpart to the decline in the share of compensation has been the rise in the share of entrepreneurial income (shown in the third chart) from 25.1% in the first quarter of 2001 to 29.1% in the third quarter of 2005. The changing distribution of income may account for a part of the sluggish trend in private consumption over this period.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051122g.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Germany Contribution to Growth</th>
<th scope="col">Q3 05&nbsp; % Pts</th>
<th scope="col">Q2 05 % Pts </th>
<th scope="col">Q1 05 % Pts</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Growth of Gross Domestic Product</td>
<td>0.70</td>
<td>0.0</td>
<td>0.10</td>
</tr>
<tr>
<td class="firstcol">Net Exports</td>
<td>1.30</td>
<td>-1.00</td>
<td>-0.50</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Demand</td>
<td>-0.60</td>
<td>0.90</td>
<td>-0.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumption</td>
<td>-0.10</td>
<td>0.30</td>
<td>-0.30</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Private</td>
<td>-0.10</td>
<td>0.00</td>
<td>-0.60</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Government</td>
<td>0.00</td>
<td>0.30</td>
<td>0.20</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Gross Fixed Investment</td>
<td>0.20</td>
<td>0.10</td>
<td>0.10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>-0.70</td>
<td>0.50</td>
<td>-0.20</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Share of Net National Income</td>
<td>Q1 01&nbsp; %&nbsp;</td>
<td>Q3 05 %&nbsp; </td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Compensation of Employees</td>
<td>62.9</td>
<td>59.5</td>
<td></td>
</tr>
<tr>
<td class="firstcol">Entrepreneurial Income</td>
<td>25.1&nbsp;</td>
<td>&nbsp;29.1</td>
<td>&nbsp;</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/051121b.jpg" width="353">
The Euro Zone&#39;s surplus on trade in goods rose in September to 1,239.5 million euros from 190.0 million euros in August. This was only the third month this year in which a rise in the trade balance took place. For the nine months through September, the trade surplus is 57% below the corresponding period of 2004. The deterioration in the trade surplus is shown in the first chart.
The main factors in the deterioration of the trade surplus have been the rise in the euro which tended to dampen export demand and the rise in the price of oil which increased imports. The second chart shows the year-to-year increases in total imports and imports of mineral fuels and lubricants. Since early 2004 the year-to-year increase in imports of mineral fuels and lubricants has ranged between 25 and 50%. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051121c.jpg" width="353">
The euro has been declining for most of this year and the price of crude has recently eased suggesting that the outlook for the balance of trade in goods is improving. The Euro has declined about 14% from the peak reached on December 30, 2004.Just two months ago the Brent Crude oil was $64.49 a barrel. It is now 18% lower at $52.66. The dollar value of the euro and the price of Brent Crude oil are shown in the third chart on a daily basis.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051121d.jpg" width="353"> 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Euro Zone Trade in Goods (Millions of Euros)</th>
<th scope="col">Sep 05&nbsp;</th>
<th scope="col">Aug 05</th>
<th scope="col">Sep 04</th>
<th scope="col">M/M %&nbsp;</th>
<th scope="col">Y/Y&nbsp;&nbsp;&nbsp; %</th>
<th scope="col">2004 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;</th>
<th scope="col">2003 &nbsp;</th>
<th scope="col">2002&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Balance</td>
<td>1,239</td>
<td>190</td>
<td>2,673</td>
<td>1,049*</td>
<td>-1,434*</td>
<td>71,827</td>
<td>70,027</td>
<td>99,097</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Exports</td>
<td>107,019</td>
<td>106,672</td>
<td>95,492</td>
<td>0.33</td>
<td>12.07</td>
<td>1,144,937</td>
<td>1,059,880</td>
<td>1,083,611</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Imports</td>
<td>105,779</td>
<td>106,482</td>
<td>92,818</td>
<td>-0.66</td>
<td>13.96</td>
<td>1,073,110</td>
<td>989,853</td>
<td>984,514</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Mineral Fuels &amp; Lubricants</td>
<td>22,285</td>
<td>23,126</td>
<td>15,545</td>
<td>-3.66</td>
<td>43.36</td>
<td>164,390</td>
<td>143,620</td>
<td>137,521</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Peak&nbsp;</td>
<td>Date</td>
<td>Current</td>
<td>Date</td>
<td>Pct Chg</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Euro&nbsp; ($)</td>
<td>1.3623&nbsp;</td>
<td>12/30/04&nbsp;</td>
<td>1.1741&nbsp;</td>
<td>11/18/05&nbsp;</td>
<td>-13.8&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Brent Crude Oil&nbsp; ($/bbl)</td>
<td>64.49&nbsp;</td>
<td>9/21/05&nbsp;</td>
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The Euro Zone's surplus on trade in goods rose in September to 1,239.5 million euros from 190.0 million euros in August. This was only the third month this year in which a rise in the trade balance took place. For the nine months [...]

Declines in the Euro and the Price of Oil Improve the Euro Zone Balance of Trade in Goods

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

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

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: November 2005

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Mortgage Applications Fell Further

U.S. Consumer Sentiment Lifted Further By Drop in Oil Prices

U.S. Consumer Sentiment Lifted Further By Drop in Oil Prices

Revisions and Additions to German National Accounts Data for Q3

Gasoline Prices Fell In A Competitive Market

Chain Store Sales Up

Chain Store Sales Up

Declines in the Euro and the Price of Oil Improve the Euro Zone Balance of Trade in Goods