Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223d.jpg" width="353">
The European Central Bank today reported that the Euro-Zone12 countries had an aggregate current account deficit of &#128;9 billion in October, the largest monthly deficit since December 2000. Adverse movements in both credit and debit flows were responsible for the sizable deterioration from -&#128;3.3 billion in September and a surplus of &#128;3.1 billion in the year-earlier month. (All data here are seasonally adjusted.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223e.jpg" width="353">
In the month, goods exports fell &#128;2.8 billion, so token increases in credit flows in other parts of the current account were not able to offset completely that decline and total credits to the current account eased by &#128;1.0 billion. Debit items, however, rose once again, this month by &#128;4.8 billion, with a total increase of &#128;22.6 billion in the last year. It&#39;s easy to say, oh well, higher priced petroleum must have done that. It was important, but total goods imports accounted for only about 60% of the deterioration. Outflows of investment income were the other major negative, increasing &#128;3.2 billion from September to &#128;32.6 billion, tied for a record high with September 2000. Growth in foreign investments into the Euro-Zone countries over the last five years, particularly for portfolio investment, have apparently generated the rising outflow of interest and dividends. All together, the balance on goods, usually in comfortable surplus for the Euro-Zone as a whole, diminished to just barely positive in October, &#128;300 million. Net investment income was -&#128;7.4 billion, the second largest such shortfall since these accounts began in 1997; only August 2000 was larger, with &#128;8.0 billion.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223f.jpg" width="353">
One bittersweet note on these data at this holiday season. Net current transfers in October were -&#128;4.4 billion, less negative than September&#39;s &#128;6.2 billion and similar to their recent range between &#128;4 and &#128;5 billion. However, in January 2005, this balance was -&#128;7.9 billion, by far the largest ever, with &#128;14.8 billion in debit outflows, also considerably larger than any other month. We&#39;d surmise that at least some of the extra funds in that month represented European governments&#39; and residents&#39; contributions to Asian tsunami relief, widely recognized as an extraordinary disaster fund-raising effort. See the third graph for an illustration.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U7/@U7A/@U7A19/@U7A19.HTM">Euro-Zone12</a>Bil.&#128;, Seasonally Adjusted</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Oct 2004</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Current Account Balance</td>
<td>-9.0</td>
<td>-3.3</td>
<td>3.1</td>
<td>3.6</td>
<td>2.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Credit</td>
<td>166.8</td>
<td>167.8</td>
<td>156.3</td>
<td>152.5</td>
<td>141.2</td>
<td>144.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Debit</td>
<td>175.8</td>
<td>171.1</td>
<td>153.2</td>
<td>148.8</td>
<td>138.3</td>
<td>139.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods Balance</td>
<td>0.3</td>
<td>5.3</td>
<td>6.6</td>
<td>8.8</td>
<td>9.1</td>
<td>10.9</td>
</tr>
<tr>
<td class="firstcol">Services Balance</td>
<td>2.5</td>
<td>2.5</td>
<td>3.4</td>
<td>2.4</td>
<td>1.6</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Income Balance</td>
<td>-7.4</td>
<td>-4.9</td>
<td>-2.4</td>
<td>-2.8</td>
<td>-3.1</td>
<td>-3.1</td>
</tr>
<tr>
<td class="firstcol">Net Transfers</td>
<td>-4.4</td>
<td>-6.2</td>
<td>-4.5</td>
<td>-4.7</td>
<td>-4.8</td>
<td>-4.1</td>
</tr>
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The European Central Bank today reported that the Euro-Zone12 countries had an aggregate current account deficit of 9 billion in October, the largest monthly deficit since December 2000. Adverse movements in both credit and debit [...]

EU Current Account Deficit Widens in October; Investment Income Contributes as Well as Goods Imports

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223b.jpg" width="353">
New single-family home sales in November fell 11.3% to 1.245M and reversed more than all of the prior month&#39;s downwardly revised 11.4% increase. Consensus expectations had been for a more moderate decline to 1.31M.
Sales fell across the nation except in the Northeast where a 13.4% (9.4% y/y) gain added to the 41.4% rise in October. In the West sales fell 22.1% (+0.6% y/y) and reversed most of the prior month&#39;s increase while sales in the South also reversed the prior month&#39;s gain and fell 5.5% (+10.1% y/y). In the Midwest, sales fell hard for the fifth month in the last six and are down 35.3% since the May peak.
The median price of a new single family home fell for the third straight month. The 4.1% m/m decline (0.3% y/y) to $225,200 left the price about even with last November following appreciation of 17.1% from the end of 2003 to the end of 2004.
The figures from the Census Department reflect home sales counted at the time of sales contract or deposit.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Nov</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>
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</thead>
<tbody>
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<td class="firstcol">New Single-Family</td>
<td>1,245</td>
<td>1,404</td>
<td>6.0%</td>
<td>1,200</td>
<td>1,091</td>
<td>976</td>
</tr>
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New single-family home sales in November fell 11.3% to 1.245M and reversed more than all of the prior month's downwardly revised 11.4% increase. Consensus expectations had been for a more moderate decline to 1.31M. Sales fell across [...]

November New Home Sales Reverse October's Gain

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223c.jpg" width="353">
Consumer sentiment late in December added to gains earlier in the month, reported the University of Michigan. At 91.5 for the month as a whole, sentiment rose 12.1% from November which had risen 10.0% from October and beat Consensus expectations for an increase to 89.0.
During the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
Consumers&#39; expectations rose 15.2% on top of a 10.1% November gain to the highest level since July. Expected business conditions during the next year surged again and the index has improved more than two thirds since September. Expectations for personal finances also jumped. Adding to a small improvement the gains halted declines during the Summer.
The mean expected inflation rate for the next twelve months held steady m/m at 4.1% and was below the 5.5% expected in October &amp; September.
The current conditions index rose 8.9% following a similar gain in November. The reading of personal finances surged 15.5% (6.3% y/y) and the reading of buying conditions for large household goods jumped for the second straight month (-0.6% y/y).Decline&#39;s in consumers&#39; reading of gov&#39;t economic policy (-20.0% y/y) have stabilized during the last two months.
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.

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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">Dec</th>
<th scope="col">Dec (Prelim.)</th>
<th scope="col">Nov</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">Consumer Sentiment</td>
<td>91.5</td>
<td>88.7</td>
<td>81.6</td>
<td>-5.8%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>109.1</td>
<td>106.6</td>
<td>100.2</td>
<td>2.2%</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>80.2</td>
<td>77.3</td>
<td>69.6</td>
<td>-11.8%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
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Consumer sentiment late in December added to gains earlier in the month, reported the University of Michigan. At 91.5 for the month as a whole, sentiment rose 12.1% from November which had risen 10.0% from October and beat Consensus [...]

U.S. Consumer Sentiment Again Stronger Than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223a.jpg" width="353">
Orders for nondefense aircraft more than doubled m/m last month (158.6% y/y) and combined with a 51.6% surge in October to lift durable goods orders 4.4% versus Consensus expectations for a 1.0% November rise.
Less the volatile transportation sector, durable goods orders fell 0.6% for the third consecutive monthly decline.
Declines in orders last month were widespread across industries. Machinery orders, which had been strong, fell 1.6% (+12.7% y/y). Orders for communications equipment also fell 4.4% (+8.6% y/y) as did orders for motor vehicles &amp; parts which fell 5.7% (-2.1% y/y). Finally, fabricated metals orders fell 2.4% (+1.4%), down for the second consecutive month.
To the upside, orders for computers &amp; related products rose 5.3% (11.6% y/y) and primary metals orders increased 1.4% (11.4% y/y).
Orders for nondefense capital goods rose 19.6% due to the surge in aircraft orders which continued to benefit from the end of the Boeing strike in September. Less aircraft, nondefense capital goods orders fell 2.0% and have been erratically moving sideways since the Spring.
Shipments of durable goods fell 0.2% (6.3% y/y) in November following a 1.2% October increase. Less the transportation sector, shipments fell slightly (6.7% y/y) after a 1.0% October jump.
Order backlogs jumped 3.1% (13.9% y/y), again reflecting the rebound in aircraft. Less transportation backlogs rose a more moderate 0.7% (9.6% y/y) but the ratio of backlogs to shipments outside of transportation rose to its highest level since early 2002.
Durable inventories rose 0.5% (4.1% y/y) after a like gain October. The I/S ratio for durable goods increased modestly m/m but remained below the highs of earlier this year.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Nov</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>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>4.4%</td>
<td>3.0%</td>
<td>12.1%</td>
<td>9.5%</td>
<td>4.1%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.6%</td>
<td>-0.2%</td>
<td>7.1%</td>
<td>11.7%</td>
<td>3.1%</td>
<td>-6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>19.6%</td>
<td>6.7%</td>
<td>31.4%</td>
<td>11.0%</td>
<td>4.2%</td>
<td>-9.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.0%</td>
<td>1.2%</td>
<td>7.5%</td>
<td>9.5%</td>
<td>4.8%</td>
<td>-10.5%</td>
</tr>
</tbody>
</table>
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Orders for nondefense aircraft more than doubled m/m last month (158.6% y/y) and combined with a 51.6% surge in October to lift durable goods orders 4.4% versus Consensus expectations for a 1.0% November rise. Less the volatile [...]

Rise in U.S. Durable Goods Orders All Air(craft)

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223a.jpg" width="353">
Orders for nondefense aircraft more than doubled m/m last month (158.6% y/y) and combined with a 51.6% surge in October to lift durable goods orders 4.4% versus Consensus expectations for a 1.0% November rise.
Less the volatile transportation sector, durable goods orders fell 0.6% for the third consecutive monthly decline.
Declines in orders last month were widespread across industries. Machinery orders, which had been strong, fell 1.6% (+12.7% y/y). Orders for communications equipment also fell 4.4% (+8.6% y/y) as did orders for motor vehicles &amp; parts which fell 5.7% (-2.1% y/y). Finally, fabricated metals orders fell 2.4% (+1.4%), down for the second consecutive month.
To the upside, orders for computers &amp; related products rose 5.3% (11.6% y/y) and primary metals orders increased 1.4% (11.4% y/y).
Orders for nondefense capital goods rose 19.6% due to the surge in aircraft orders which continued to benefit from the end of the Boeing strike in September. Less aircraft, nondefense capital goods orders fell 2.0% and have been erratically moving sideways since the Spring.
Shipments of durable goods fell 0.2% (6.3% y/y) in November following a 1.2% October increase. Less the transportation sector, shipments fell slightly (6.7% y/y) after a 1.0% October jump.
Order backlogs jumped 3.1% (13.9% y/y), again reflecting the rebound in aircraft. Less transportation backlogs rose a more moderate 0.7% (9.6% y/y) but the ratio of backlogs to shipments outside of transportation rose to its highest level since early 2002.
Durable inventories rose 0.5% (4.1% y/y) after a like gain October. The I/S ratio for durable goods increased modestly m/m but remained below the highs of earlier this year.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Nov</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>
<tbody>
<tr class="odd">
<td class="firstcol">Durable Goods Orders</td>
<td>4.4%</td>
<td>3.0%</td>
<td>12.1%</td>
<td>9.5%</td>
<td>4.1%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.6%</td>
<td>-0.2%</td>
<td>7.1%</td>
<td>11.7%</td>
<td>3.1%</td>
<td>-6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Nondefense Capital Goods</td>
<td>19.6%</td>
<td>6.7%</td>
<td>31.4%</td>
<td>11.0%</td>
<td>4.2%</td>
<td>-9.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Excluding Aircraft</td>
<td>-2.0%</td>
<td>1.2%</td>
<td>7.5%</td>
<td>9.5%</td>
<td>4.8%</td>
<td>-10.5%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Again Stronger Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223c.jpg" width="353">
Consumer sentiment late in December added to gains earlier in the month, reported the University of Michigan. At 91.5 for the month as a whole, sentiment rose 12.1% from November which had risen 10.0% from October and beat Consensus expectations for an increase to 89.0.
During the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
Consumers&#39; expectations rose 15.2% on top of a 10.1% November gain to the highest level since July. Expected business conditions during the next year surged again and the index has improved more than two thirds since September. Expectations for personal finances also jumped. Adding to a small improvement the gains halted declines during the Summer.
The mean expected inflation rate for the next twelve months held steady m/m at 4.1% and was below the 5.5% expected in October &amp; September.
The current conditions index rose 8.9% following a similar gain in November. The reading of personal finances surged 15.5% (6.3% y/y) and the reading of buying conditions for large household goods jumped for the second straight month (-0.6% y/y).Decline&#39;s in consumers&#39; reading of gov&#39;t economic policy (-20.0% y/y) have stabilized during the last two months.
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.

<table border="0" cellspacing="0" width="100%">
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<thead>
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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">Dec</th>
<th scope="col">Dec (Prelim.)</th>
<th scope="col">Nov</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">Consumer Sentiment</td>
<td>91.5</td>
<td>88.7</td>
<td>81.6</td>
<td>-5.8%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>109.1</td>
<td>106.6</td>
<td>100.2</td>
<td>2.2%</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>80.2</td>
<td>77.3</td>
<td>69.6</td>
<td>-11.8%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
November New Home Sales Reverse October's Gain 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223b.jpg" width="353">
New single-family home sales in November fell 11.3% to 1.245M and reversed more than all of the prior month&#39;s downwardly revised 11.4% increase. Consensus expectations had been for a more moderate decline to 1.31M.
Sales fell across the nation except in the Northeast where a 13.4% (9.4% y/y) gain added to the 41.4% rise in October. In the West sales fell 22.1% (+0.6% y/y) and reversed most of the prior month&#39;s increase while sales in the South also reversed the prior month&#39;s gain and fell 5.5% (+10.1% y/y). In the Midwest, sales fell hard for the fifth month in the last six and are down 35.3% since the May peak.
The median price of a new single family home fell for the third straight month. The 4.1% m/m decline (0.3% y/y) to $225,200 left the price about even with last November following appreciation of 17.1% from the end of 2003 to the end of 2004.
The figures from the Census Department reflect home sales counted at the time of sales contract or deposit.

<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/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Nov</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>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>1,245</td>
<td>1,404</td>
<td>6.0%</td>
<td>1,200</td>
<td>1,091</td>
<td>976</td>
</tr>
</tbody>
</table>
EU Current Account Deficit Widens in October; Investment Income Contributes as Well as Goods Imports 
by <a href="/comment/Stone.html">Carol Stone</a> December 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223d.jpg" width="353">
The European Central Bank today reported that the Euro-Zone12 countries had an aggregate current account deficit of &#128;9 billion in October, the largest monthly deficit since December 2000. Adverse movements in both credit and debit flows were responsible for the sizable deterioration from -&#128;3.3 billion in September and a surplus of &#128;3.1 billion in the year-earlier month. (All data here are seasonally adjusted.)<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223e.jpg" width="353">
In the month, goods exports fell &#128;2.8 billion, so token increases in credit flows in other parts of the current account were not able to offset completely that decline and total credits to the current account eased by &#128;1.0 billion. Debit items, however, rose once again, this month by &#128;4.8 billion, with a total increase of &#128;22.6 billion in the last year. It&#39;s easy to say, oh well, higher priced petroleum must have done that. It was important, but total goods imports accounted for only about 60% of the deterioration. Outflows of investment income were the other major negative, increasing &#128;3.2 billion from September to &#128;32.6 billion, tied for a record high with September 2000. Growth in foreign investments into the Euro-Zone countries over the last five years, particularly for portfolio investment, have apparently generated the rising outflow of interest and dividends. All together, the balance on goods, usually in comfortable surplus for the Euro-Zone as a whole, diminished to just barely positive in October, &#128;300 million. Net investment income was -&#128;7.4 billion, the second largest such shortfall since these accounts began in 1997; only August 2000 was larger, with &#128;8.0 billion.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051223f.jpg" width="353">
One bittersweet note on these data at this holiday season. Net current transfers in October were -&#128;4.4 billion, less negative than September&#39;s &#128;6.2 billion and similar to their recent range between &#128;4 and &#128;5 billion. However, in January 2005, this balance was -&#128;7.9 billion, by far the largest ever, with &#128;14.8 billion in debit outflows, also considerably larger than any other month. We&#39;d surmise that at least some of the extra funds in that month represented European governments&#39; and residents&#39; contributions to Asian tsunami relief, widely recognized as an extraordinary disaster fund-raising effort. See the third graph for an illustration.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@U7/@U7A/@U7A19/@U7A19.HTM">Euro-Zone12</a>Bil.&#128;, Seasonally Adjusted</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Oct 2004</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Current Account Balance</td>
<td>-9.0</td>
<td>-3.3</td>
<td>3.1</td>
<td>3.6</td>
<td>2.9</td>
<td>4.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Credit</td>
<td>166.8</td>
<td>167.8</td>
<td>156.3</td>
<td>152.5</td>
<td>141.2</td>
<td>144.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Debit</td>
<td>175.8</td>
<td>171.1</td>
<td>153.2</td>
<td>148.8</td>
<td>138.3</td>
<td>139.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods Balance</td>
<td>0.3</td>
<td>5.3</td>
<td>6.6</td>
<td>8.8</td>
<td>9.1</td>
<td>10.9</td>
</tr>
<tr>
<td class="firstcol">Services Balance</td>
<td>2.5</td>
<td>2.5</td>
<td>3.4</td>
<td>2.4</td>
<td>1.6</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Income Balance</td>
<td>-7.4</td>
<td>-4.9</td>
<td>-2.4</td>
<td>-2.8</td>
<td>-3.1</td>
<td>-3.1</td>
</tr>
<tr>
<td class="firstcol">Net Transfers</td>
<td>-4.4</td>
<td>-6.2</td>
<td>-4.5</td>
<td>-4.7</td>
<td>-4.8</td>
<td>-4.1</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051222f.jpg" width="353">
The Japanese trade balance has started to improve, with favorable movements in both exports and imports since the surplus reached a low point in September. In November, the surplus was &yen;708.1 billion (seasonally adjusted), almost the same as October&#39;s &yen;698.6, but larger than &yen;584.9 in September. Over the last couple of months, exports have continued to grow, while imports have moderated along with oil prices. Even so, non-oil imports have expanded more, so that the monthly surplus is still well below the nearly &yen;1 trillion on average for all of 2004. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051222g.jpg" width="353">
 Two months ago, when we last wrote about Japan&#39;s trade, we expressed some concern over import growth and the sensitivity to oil prices which it indicated for the health of the Japanese economy generally. This time, we&#39;ve looked at these import data from a longer perspective, and we find some very interesting facts. In 1980, when petroleum prices were at then historic peaks just under $40/barrel, the value of petroleum imports into Japan was &yen;1 trillion monthly. The quantity of petroleum imports averaged 21.2 million kiloliters monthly, making the unit value of petroleum imports &yen;47,200 per kiloliter in 1980. Now, the dollar price of oil is far higher, averaging more than $56/barrel for the first 11 months of this year. But the unit value of oil imports into Japan has been only &yen;34,800! The peak month was October, with &yen;42,700 per kiloliter, still less than the 1980 average. Thus, the stronger yen and weaker dollar have made a tremendous difference for Japan in the burden of this surge in petroleum prices. Granted, the Japanese economy in general is not nearly so robust as it was in 1980 and the recent unit values are much higher than the &yen;10,600 of ten years ago. But the impact is clearly more muted. Further, Japan, as elsewhere in the world, has become less dependent on petroleum usage. In fact, based on fixed-weight GDP in 1995 prices, a kiloliter of imported petroleum in 2004 supported &yen;6.9 million of GDP (in Q2), 88% more than the 1980 average of &yen;3.7 million.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051222h.jpg" width="353"><span style="font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:&quot;MS Mincho&quot;;
mso-bidi-font-family:&quot;Times New Roman&quot;;mso-ansi-language:EN-US;mso-fareast-language:
JA;mso-bidi-language:AR-SA">
 <span style="font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:&quot;MS Mincho&quot;;
mso-bidi-font-family:&quot;Times New Roman&quot;;mso-ansi-language:EN-US;mso-fareast-language:
JA;mso-bidi-language:AR-SA">A technical note on these comments. In the third graph, we compare the unit value of Japanese petroleum imports to the price of West Texas Intermediate crude oil. The unit value series is not contained in Haver&#39;s JAPAN database, nor reported as such, to our knowledge.The Ministry of Finance reports the yen value of these imports, &quot;petroleum, crude and partly refined&quot;, and also the quantity in millions of kiloliters. So, using DLXVG3, we can divide these two series to obtain the unit value. If we used the result as shown, the title of the graph would be the ratio of the codes for the two data series. But we can change that to give it a nicer label: using the drop-down menu under &quot;Graph&quot;, we can click on &quot;Titles&quot; and then &quot;Main Titles&quot; to change the wording and the units as we desire. Then, if we want, we can save the modified graph in a &quot;Folder&quot; to be used later. During the New York City transit strike, I have prepared all of these graphs at home and emailed them and their specifications to Haver&#39;s office, so that they can be uploaded to this website. 

<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/JAPAN/@J9/@J9.HTM">Japan:&nbsp; </a>Bil.&yen;&nbsp; SA except as noted</th>
<th scope="col">Nov 2005 </th>
<th scope="col">Oct 2005 </th>
<th scope="col">Sept 2005 </th>
<th scope="col">Nov 2004 </th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004 </td>
<td>2003 </td>
<td>2002 </td>
</tr>
<tr>
<td class="firstcol">Trade Balance </td>
<td>708.1 </td>
<td>698.6 </td>
<td>584.9 </td>
<td>927.8 </td>
<td>996.2 </td>
<td>844.0 </td>
<td>822.7 </td>
</tr>
<tr class="odd">
<td class="firstcol">Exports </td>
<td>5894.6 </td>
<td>5772.9 </td>
<td>5576.4 </td>
<td>5272.0 </td>
<td>5078.6 </td>
<td>4544.7 </td>
<td>4339.5 </td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr % Chg (NSA) </td>
<td>14.7 </td>
<td>8.0 </td>
<td>8.8 </td>
<td>13.4 </td>
<td>12.1 </td>
<td>4.7 </td>
<td>6.4 </td>
</tr>
<tr class="odd">
<td class="firstcol">Imports </td>
<td>5186.5 </td>
<td>5074.4 </td>
<td>4991.5 </td>
<td>4344.2 </td>
<td>4082.5 </td>
<td>3700.7 </td>
<td>3516.8 </td>
</tr>
<tr>
<td class="firstcol">&nbsp; Yr/Yr % Chg (NSA) </td>
<td>16.6 </td>
<td>17.9 </td>
<td>17.5 </td>
<td>28.1 </td>
<td>10.9 </td>
<td>5.1 </td>
<td>-0.4 </td>
</tr>
</tbody>
</table>


</html>

The Japanese trade balance has started to improve, with favorable movements in both exports and imports since the surplus reached a low point in September. In November, the surplus was ¥708.1 billion (seasonally adjusted), almost the [...]

Japanese Trade Surplus Widens Modestly in November

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051222e.jpg" width="353">
Mass layoffs rose 8.7% from October. Year to year, the number of mass layoffs fell by 13.1%.
During the last ten years there has been a (negative) 87% correlation between the three month average level of layoff announcements and the y/y change in payroll employment.
The number of persons affected by mass layoffs in November rose 11.2% m/m though the number remained below last year. By industry, the number of factory sector layoff announcements rose in November but the number of affected persons fell. In finance &amp; insurance, the number of layoff announcements fell sharply and the number of affected persons dropped 21.1% (-9.4% y/y). In construction, the number of layoff announcements surged and generated a three fold m/m increase in the number of initial claims for unemployment insurance.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period.
How Predictable is Fed Policy? from St. Louis Federal Reserve Bank President William Poole can be found <a href="http://research.stlouisfed.org/publications/review/05/11/Poole.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/WEEKLY/@W5/@W507/@W507.HTM">Mass Layoffs</a></th>
<th scope="col">Nov</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>
<tbody>
<tr>
<td class="firstcol">All US Industries (# Events, SA)</td>
<td>1,183</td>
<td>1,088</td>
<td>-13.1%</td>
<td>15,900</td>
<td>19,155</td>
<td>20,472</td>
</tr>
<tr>
<td class="firstcol">Total (# Persons, SA)</td>
<td>118,098</td>
<td>106,238</td>
<td>-9.3%</td>
<td>1,588,483</td>
<td>1,936,463</td>
<td>2.256,014</td>
</tr>
</tbody>
</table>
</body>
</html>

Mass layoffs rose 8.7% from October. Year to year, the number of mass layoffs fell by 13.1%. During the last ten years there has been a (negative) 87% correlation between the three month average level of layoff announcements and the [...]

Mass Layoffs Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051222a.jpg" width="353">
Initial claims for unemployment insurance fell 13,000 to 318,000 last week following an upwardly revised 3,000 increase the prior week. Consensus expectations had been for 325,000 claims.
The latest figure covers the survey period for December nonfarm payrolls and claims were up 13,000 (4.3%) from the November period. During the last ten year there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell to 324,500 (-3.5% y/y).
Continuing unemployment insurance claims rose 41,000 following a lessened 12,000 gain the prior week.
The insured rate of unemployment ticked up to 2.1% following two weeks at 2.0%. 

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/17/05</th>
<th scope="col">12/10/05</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>318</td>
<td>331</td>
<td>-3.3%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,638</td>
<td>-3.0%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance fell 13,000 to 318,000 last week following an upwardly revised 3,000 increase the prior week. Consensus expectations had been for 325,000 claims. The latest figure covers the survey period for [...]

Initial Unemployment Insurance Claims Fell

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

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

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

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

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

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

Germany is Euro area weakling

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

Chinese economy on downtrend could threaten global economy

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

Blue Chip forecasters look for widespread policy rate cuts just ahead

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

Announcement of snap French election is causing concern across Europe

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

US Beveridge Curve back to near pre-pandemic levels

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

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

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

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

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

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Robert Brusca

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

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

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

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

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

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

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

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

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

Europe

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

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

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

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

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

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

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

U.S. Consumer Credit Usage Surges in July

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

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

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

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

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

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

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

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

Economy in Brief: December 2005

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EU Current Account Deficit Widens in October; Investment Income Contributes as Well as Goods Imports

November New Home Sales Reverse October's Gain

U.S. Consumer Sentiment Again Stronger Than Expected

Rise in U.S. Durable Goods Orders All Air(craft)

Rise in U.S. Durable Goods Orders All Air(craft)

Japanese Trade Surplus Widens Modestly in November

Mass Layoffs Rose

Initial Unemployment Insurance Claims Fell