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/050909b.jpg" width="353">
The trade deficit in the UK widened anew in July, according to data reported today by the Office of National Statistics (ONS). After a jump in exports lowered the June deficit to -&pound;2.21 billion, the July deficit was -&pound;3.43 billion, almost the same as in May. Exports were up 5.5% in June, then dropped back by 3.9% in July. Imports rose 0.5% in each month, almost completely accounted for by fuel imports.
The June gain in exports was in most kinds of goods and services and was mirrored by similar-sized reductions in July. This swing took place in trade with non-EU countries, especially the US, Japan and non-OECD countries. Exports to the EU-25 nations have been fairly stable for the last several months. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050909c.jpg" width="353">
We also note a modest deterioration in the UK&#39;s trade balance in fuel. This is not recent, but occurred during 2004 when there was a marked rise in fuel imports. The value of fuel exports has also risen, but due only to the uptrend in prices. The volume of exports is decreasing, while that of imports rose markedly going into this year and has oscillated widely during 2005. The impact on import values is greater because import prices for fuel have been rising noticeably faster than export prices. Two-way trade in crude oil (the SUM of exports and imports of crude), measured in tonnes, has been largely constant at 9.5-10 million tonnes since at least 2002, despite the large changes in prices.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK Trade, SA, Bil.&pound;</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">July 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: Goods &amp; Services</td>
<td>-3.43</td>
<td>-2.21</td>
<td>-3.48</td>
<td>-3.85</td>
<td>-3.34</td>
<td>-2.58</td>
<td>-2.63</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>25.93</td>
<td>27.00</td>
<td>25.59</td>
<td>24.10</td>
<td>24.17</td>
<td>23.52</td>
<td>22.91</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>29.36</td>
<td>29.20</td>
<td>29.06</td>
<td>27.95</td>
<td>27.51</td>
<td>26.10</td>
<td>25.54</td>
</tr>
<tr class="odd">
<td class="firstcol">Fuels</td>
<td>0.09</td>
<td>0.01</td>
<td>0.01</td>
<td>-0.03</td>
<td>0.10</td>
<td>0.42</td>
<td>0.53</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>2.08</td>
<td>1.85</td>
<td>1.84</td>
<td>1.51</td>
<td>1.50</td>
<td>1.38</td>
<td>1.33</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports</td>
<td>1.99</td>
<td>1.84</td>
<td>1.74</td>
<td>1.53</td>
<td>1.40</td>
<td>0.96</td>
<td>0.80</td>
</tr>
</tbody>
</table>
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The trade deficit in the UK widened anew in July, according to data reported today by the Office of National Statistics (ONS). After a jump in exports lowered the June deficit to -£2.21 billion, the July deficit was -£3.43 billion, [...]

UK Trade Balance Widens in July, Offsetting June Drop

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050909a.jpg" width="353">
Import prices last month about matched Consensus expectations and jumped 1.3%, although July&#39;s gain was revised lower to 0.8% from 1.1% reported initially.
Petroleum prices surged another 7.1% on top of a downwardly revised 6.1% spike in July. So far in September, Brent crude oil prices have averaged $65.00 and yesterday traded at $63.79/bbl. versus an average $64.10 in August.
Import prices other than petroleum were unchanged following three consecutive months of 0.2% decline. The July decline was revised deeper from 0.1%. Prices for nonauto consumer goods fell 0.2% (+1.1% y/y) for the second month and capital goods prices were unchanged (-0.4% y/y). Computer, peripheral &amp; semiconductor prices rose 0.1% (-6.0% y/y). Excluding computers capital goods prices fell 0.1% (2.2% y/y) for the second consecutive month.
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar.
Export prices slipped 0.1% as agricultural prices fell 0.6% (+6.6% y/y) and nonagricultural prices fell 0.1% (+2.7% y/y).
 U.S. Jobs Gained and Lost through Trade: A Net Measure from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci11-8.pdf">here</a>.
 The Beige Book covering U.S. regional economic conditions from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/FOMC/BeigeBook/2005/20050907/Default.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Aug</th>
<th scope="col">July</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">Import - All Commodities</td>
<td>1.3%</td>
<td>0.8%</td>
<td>7.6%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.1%</td>
<td>6.1%</td>
<td>42.5%</td>
<td>30.5%</td>
<td>21.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>1.8%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>-2.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>3.1%</td>
<td>3.9%</td>
<td>1.6%</td>
<td>-1.0%</td>
</tr>
</tbody>
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Import prices last month about matched Consensus expectations and jumped 1.3%, although July's gain was revised lower to 0.8% from 1.1% reported initially. Petroleum prices surged another 7.1% on top of a downwardly revised 6.1% spike [...]

Import Prices Jumped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050909a.jpg" width="353">
Import prices last month about matched Consensus expectations and jumped 1.3%, although July&#39;s gain was revised lower to 0.8% from 1.1% reported initially.
Petroleum prices surged another 7.1% on top of a downwardly revised 6.1% spike in July. So far in September, Brent crude oil prices have averaged $65.00 and yesterday traded at $63.79/bbl. versus an average $64.10 in August.
Import prices other than petroleum were unchanged following three consecutive months of 0.2% decline. The July decline was revised deeper from 0.1%. Prices for nonauto consumer goods fell 0.2% (+1.1% y/y) for the second month and capital goods prices were unchanged (-0.4% y/y). Computer, peripheral &amp; semiconductor prices rose 0.1% (-6.0% y/y). Excluding computers capital goods prices fell 0.1% (2.2% y/y) for the second consecutive month.
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar.
Export prices slipped 0.1% as agricultural prices fell 0.6% (+6.6% y/y) and nonagricultural prices fell 0.1% (+2.7% y/y).
 U.S. Jobs Gained and Lost through Trade: A Net Measure from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci11-8.pdf">here</a>.
 The Beige Book covering U.S. regional economic conditions from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/FOMC/BeigeBook/2005/20050907/Default.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Aug</th>
<th scope="col">July</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">Import - All Commodities</td>
<td>1.3%</td>
<td>0.8%</td>
<td>7.6%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.1%</td>
<td>6.1%</td>
<td>42.5%</td>
<td>30.5%</td>
<td>21.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>1.8%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>-2.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>3.1%</td>
<td>3.9%</td>
<td>1.6%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
UK Trade Balance Widens in July, Offsetting June Drop 
by <a href="/comment/Stone.html">Carol Stone</a> September 9, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050909b.jpg" width="353">
The trade deficit in the UK widened anew in July, according to data reported today by the Office of National Statistics (ONS). After a jump in exports lowered the June deficit to -&pound;2.21 billion, the July deficit was -&pound;3.43 billion, almost the same as in May. Exports were up 5.5% in June, then dropped back by 3.9% in July. Imports rose 0.5% in each month, almost completely accounted for by fuel imports.
The June gain in exports was in most kinds of goods and services and was mirrored by similar-sized reductions in July. This swing took place in trade with non-EU countries, especially the US, Japan and non-OECD countries. Exports to the EU-25 nations have been fairly stable for the last several months. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050909c.jpg" width="353">
We also note a modest deterioration in the UK&#39;s trade balance in fuel. This is not recent, but occurred during 2004 when there was a marked rise in fuel imports. The value of fuel exports has also risen, but due only to the uptrend in prices. The volume of exports is decreasing, while that of imports rose markedly going into this year and has oscillated widely during 2005. The impact on import values is greater because import prices for fuel have been rising noticeably faster than export prices. Two-way trade in crude oil (the SUM of exports and imports of crude), measured in tonnes, has been largely constant at 9.5-10 million tonnes since at least 2002, despite the large changes in prices.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK Trade, SA, Bil.&pound;</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">July 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: Goods &amp; Services</td>
<td>-3.43</td>
<td>-2.21</td>
<td>-3.48</td>
<td>-3.85</td>
<td>-3.34</td>
<td>-2.58</td>
<td>-2.63</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>25.93</td>
<td>27.00</td>
<td>25.59</td>
<td>24.10</td>
<td>24.17</td>
<td>23.52</td>
<td>22.91</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>29.36</td>
<td>29.20</td>
<td>29.06</td>
<td>27.95</td>
<td>27.51</td>
<td>26.10</td>
<td>25.54</td>
</tr>
<tr class="odd">
<td class="firstcol">Fuels</td>
<td>0.09</td>
<td>0.01</td>
<td>0.01</td>
<td>-0.03</td>
<td>0.10</td>
<td>0.42</td>
<td>0.53</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>2.08</td>
<td>1.85</td>
<td>1.84</td>
<td>1.51</td>
<td>1.50</td>
<td>1.38</td>
<td>1.33</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports</td>
<td>1.99</td>
<td>1.84</td>
<td>1.74</td>
<td>1.53</td>
<td>1.40</td>
<td>0.96</td>
<td>0.80</td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908c.jpg" width="353">
The Australian economy remains strong, as labor markets show favorable trends and GDP growth in Q2 was the best since late 2003. August&#39;s labor force survey included a gain in employment of 32,600, following July&#39;s 12,100. One forecast survey had expected the number of people employed to be flat in August. Indeed, a quick glance at the graph showing the monthly changes suggests that this would be a logical supposition: this current string of monthly increases is a long one, 12 months. Employment in Australia is characterized by a quite erratic monthly pattern, rather than the currently persisting increases. In fact, the length of this 12-month stretch has not been surpassed since 1980.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908d.jpg" width="353"> 
Other aspects of the data describe general strength in the labor market. Two months ago, we first saw the unemployment rate at 5%, a low for at least 28 years, and that has been maintained now for a third successive month. Further, the participation rate has hit another new high, 64.8%. Sometimes, a low unemployment rate only signals that people have withdrawn from the labor force, that they see few opportunities to work, so they reduce their participation. This is clearly not the case presently in Australia, with record participation, now also sustaining its current historic range for a third month; before this year, the proportion of the population working or wanting to work had only been more than 64% in five individual months since the inception of these data in February 1978.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908e.jpg" width="353">
Australian GDP, reported yesterday (September 7) also showed this strength in Q2. At a 1.3% quarterly increase, it was marginally higher than forecasts, which called for 1.2%. Business investment rebounded after a Q1 decline, with both construction and machinery experiencing large increases. Exports accelerated after slowing somewhat in Q1, while import growth eased, so that the net export deficit was a much smaller drag on growth than it had been in Q1. Consumer spending expanded at about the same 0.8% pace as in Q1. The nation&#39;s economy continues to benefit from the growth in China and from the worldwide increases in commodity prices; the mining sector in particular is seeing vigorous growth, along with petroleum refining and processing of nonmetallic minerals. Finance and parts of the transportation sector are joining in the gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">Aug 2004</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">Employed (thous)</td>
<td>10067.5</td>
<td>10034.9</td>
<td>9664.3</td>
<td>9682.2</td>
<td>9481.4</td>
<td>9270.5</td>
</tr>
<tr>
<td class="firstcol">Change (thous/%)</td>
<td>+32.6</td>
<td>+12.1</td>
<td>4.2</td>
<td>2.1</td>
<td>2.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed (thous)</td>
<td>529.9</td>
<td>524.8</td>
<td>527.0</td>
<td>566.9</td>
<td>610.9</td>
<td>636.1</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>5.0</td>
<td>5.0</td>
<td>5.7</td>
<td>5.5</td>
<td>6.1</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>64.8</td>
<td>64.6</td>
<td>63.4</td>
<td>63.6</td>
<td>63.6</td>
<td>63.4</td>
</tr>
</tbody>
</table>
</body>
</html>

The Australian economy remains strong, as labor markets show favorable trends and GDP growth in Q2 was the best since late 2003. August's labor force survey included a gain in employment of 32,600, following July's 12,100. One [...]

Australian Employed Continues to Rise; Unemployment Rate Maintains Record Low

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908b.jpg">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), dipped in July to 2.6% from an upwardly revised June. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. A 102,000 decline in the total number of job openings reversed about half of the prior month&#39;s rise but openings remained up 9.7% y/y.
The hires rate dipped slightly to 3.4% for the second consecutive monthly decline. The hires rate is the number of hires during the month divided by employment.
The job separations rate fell sharply to 3.1%, the lowest level since January 2004. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.5%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body>
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The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings & Labor Turnover Survey (JOLTS), dipped in July to 2.6% from an upwardly revised June. The job openings rate is the number of job openings on [...]

JOLTS: U.S. Job Openings & Hires Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908a.jpg" width="353">
Initial claims for unemployment insurance dipped 1,000 last week to 319,000 from the prior week&#39;s unrevised level. Consensus expectations had been for a decline to 315,000.
The figure included about 10,000 disaster-related applications from hurricane-battered Alabama, Louisiana and Mississippi, a number likely to surge in coming weeks.
The four-week moving average of initial claims rose to 318,500 (-6.0% y/y).
Continuing claims for unemployment insurance fell 5,000 in the latest week following a downwardly revised 27,000 increase the week prior.
The insured unemployment rate remained at its four-year low of 2.0% for the eighth consecutive week.
Analysis of the Economic &amp; Budgetary Effects of Hurricane Katrina from the US Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/66xx/doc6627/09-06-ImpactKatrina.pdf">here</a>.
Consumption Taxes: Macroeconomic Effects and Policy Issues from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/Pdf/2Q05garn.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">Unemployment Insurance (000s)</a></th>
<th scope="col">09/03/05</th>
<th scope="col">08/27/05</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>319</td>
<td>320</td>
<td>-2.1%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,593</td>
<td>-9.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance dipped 1,000 last week to 319,000 from the prior week's unrevised level. Consensus expectations had been for a decline to 315,000. The figure included about 10,000 disaster-related [...]

Initial Claims for Unemployment Insurance Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908a.jpg" width="353">
Initial claims for unemployment insurance dipped 1,000 last week to 319,000 from the prior week&#39;s unrevised level. Consensus expectations had been for a decline to 315,000.
The figure included about 10,000 disaster-related applications from hurricane-battered Alabama, Louisiana and Mississippi, a number likely to surge in coming weeks.
The four-week moving average of initial claims rose to 318,500 (-6.0% y/y).
Continuing claims for unemployment insurance fell 5,000 in the latest week following a downwardly revised 27,000 increase the week prior.
The insured unemployment rate remained at its four-year low of 2.0% for the eighth consecutive week.
Analysis of the Economic &amp; Budgetary Effects of Hurricane Katrina from the US Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/66xx/doc6627/09-06-ImpactKatrina.pdf">here</a>.
Consumption Taxes: Macroeconomic Effects and Policy Issues from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/Pdf/2Q05garn.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">Unemployment Insurance (000s)</a></th>
<th scope="col">09/03/05</th>
<th scope="col">08/27/05</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>319</td>
<td>320</td>
<td>-2.1%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,593</td>
<td>-9.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings & Hires Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908b.jpg" width="353">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), dipped in July to 2.6% from an upwardly revised June. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. A 102,000 decline in the total number of job openings reversed about half of the prior month&#39;s rise but openings remained up 9.7% y/y.
The hires rate dipped slightly to 3.4% for the second consecutive monthly decline. The hires rate is the number of hires during the month divided by employment.
The job separations rate fell sharply to 3.1%, the lowest level since January 2004. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.5%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Australian Employed Continues to Rise; Unemployment Rate Maintains Record Low 
by <a href="/comment/Stone.html">Carol Stone</a> September 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908c.jpg" width="353">
The Australian economy remains strong, as labor markets show favorable trends and GDP growth in Q2 was the best since late 2003. August&#39;s labor force survey included a gain in employment of 32,600, following July&#39;s 12,100. One forecast survey had expected the number of people employed to be flat in August. Indeed, a quick glance at the graph showing the monthly changes suggests that this would be a logical supposition: this current string of monthly increases is a long one, 12 months. Employment in Australia is characterized by a quite erratic monthly pattern, rather than the currently persisting increases. In fact, the length of this 12-month stretch has not been surpassed since 1980.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908d.jpg" width="353"> 
Other aspects of the data describe general strength in the labor market. Two months ago, we first saw the unemployment rate at 5%, a low for at least 28 years, and that has been maintained now for a third successive month. Further, the participation rate has hit another new high, 64.8%. Sometimes, a low unemployment rate only signals that people have withdrawn from the labor force, that they see few opportunities to work, so they reduce their participation. This is clearly not the case presently in Australia, with record participation, now also sustaining its current historic range for a third month; before this year, the proportion of the population working or wanting to work had only been more than 64% in five individual months since the inception of these data in February 1978.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908e.jpg" width="353">
Australian GDP, reported yesterday (September 7) also showed this strength in Q2. At a 1.3% quarterly increase, it was marginally higher than forecasts, which called for 1.2%. Business investment rebounded after a Q1 decline, with both construction and machinery experiencing large increases. Exports accelerated after slowing somewhat in Q1, while import growth eased, so that the net export deficit was a much smaller drag on growth than it had been in Q1. Consumer spending expanded at about the same 0.8% pace as in Q1. The nation&#39;s economy continues to benefit from the growth in China and from the worldwide increases in commodity prices; the mining sector in particular is seeing vigorous growth, along with petroleum refining and processing of nonmetallic minerals. Finance and parts of the transportation sector are joining in the gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">Aug 2004</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">Employed (thous)</td>
<td>10067.5</td>
<td>10034.9</td>
<td>9664.3</td>
<td>9682.2</td>
<td>9481.4</td>
<td>9270.5</td>
</tr>
<tr>
<td class="firstcol">Change (thous/%)</td>
<td>+32.6</td>
<td>+12.1</td>
<td>4.2</td>
<td>2.1</td>
<td>2.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed (thous)</td>
<td>529.9</td>
<td>524.8</td>
<td>527.0</td>
<td>566.9</td>
<td>610.9</td>
<td>636.1</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>5.0</td>
<td>5.0</td>
<td>5.7</td>
<td>5.5</td>
<td>6.1</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>64.8</td>
<td>64.6</td>
<td>63.4</td>
<td>63.6</td>
<td>63.6</td>
<td>63.4</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/050907e.jpg" width="353">
Industrial production in Europe appears to be holding up well, according to data for four countries reported today for July. Month-to-month movements are a bit erratic, but trends are distinctly upward, nonetheless.
As Louise Curley explained here yesterday, Germany&#39;s manufacturing sector is growing, at least for the present. Her commentary on factory sales data cited their 3.8% gain in July. The production behind those sales was up 1.3%, with total industrial output (excluding construction) up 1.1%. This was the second marked increase in a row after a sluggish performance in the winter and spring. The July gains were widespread across individual industries, with only petroleum refining, machinery and electrical equipment experiencing declines; that in machinery followed spike in June.
In Norway, total industrial production was up 1.1% in July after a drop of 6.2% in June. Oil and gas extraction dominates Norwegian industry; that sector rose after two sharp declines, and has been on an extended downtrend. By contrast, Norway&#39;s factories saw a small downtick in July, but prior increases have pushed their year-on-year performance to 4.0% growth, a pick-up after a small increase in 2004 and annual declines running all the way back through 1999. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907f.jpg" width="353">
In Hungary and Slovakia, modest increases in July followed declines in June, but year-on-year gains are substantial, at 5.8% and 4.7%, respectively. These countries&#39; industrial sectors have been expanding vigorously for at least the last four years, and the gains in Hungary for one version of its index go back to 1993.
Thus, as we indicated at the beginning, European industry seems stronger than might have perhaps been expected, given the high level of the euro and the high level of energy prices. However, this latter factor in particular may yet become burdensome for these nations. Louise Curley also pointed out here yesterday that domestic new orders in Germany have already turned flat. So it remains to be seen how long the recent gains in European production can be sustained.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production*</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
<th scope="col">Year/Year</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">Germany</td>
<td>1.1</td>
<td>1.4</td>
<td>0.6</td>
<td>3.0</td>
<td>0.4</td>
<td>-1.0</td>
</tr>
<tr>
<td class="firstcol">Norway</td>
<td>1.1</td>
<td>-6.2</td>
<td>-3.4</td>
<td>2.0</td>
<td>-4.1</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Oil &amp; Gas Extraction</td>
<td>1.2</td>
<td>-9.5</td>
<td>-5.7</td>
<td>-1.5</td>
<td>-1.7</td>
<td>-1.5</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>-0.1</td>
<td>1.1</td>
<td>4.0</td>
<td>1.5</td>
<td>-4.3</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Hungary</td>
<td>1.2</td>
<td>-1.6</td>
<td>5.8</td>
<td>8.4</td>
<td>6.6</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Slovakia</td>
<td>0.2</td>
<td>-0.5</td>
<td>4.7</td>
<td>4.2</td>
<td>5.0</td>
<td>6.4</td>
</tr>
</tbody>
</table>
</body>
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Industrial production in Europe appears to be holding up well, according to data for four countries reported today for July. Month-to-month movements are a bit erratic, but trends are distinctly upward, nonetheless. As Louise Curley [...]

Industrial Production Gains in Europe: Can That Pattern Be Sustained?

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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Initial claims for unemployment insurance dropped 10,000 to 214,000 in the week of December 20, from 224,000 during the week of December 13. The four-week moving average of initial claims was 216,750, a decrease of 750 from the prior week’s unrevised 217,500.

Federal government employees initially filed 805 (NSA) jobless insurance claims in the week ended December 13, after filing 1091 claims in the week ended December 6.

Continuing claims for unemployment insurance rose 38,000 to 1.923 million in the week ending December 13, after rising 55,000 to 1.885 million, revised from 1.897 million in the week ending December 6. The four-week moving average was 1.894 million in the week ending December 13, down 5,250 from 1.899 million, revised from 1,902,000 in the week ending December 6. The insured unemployment rate stood at 1.3% in the week of December 13, up from 1.2% in the week of December 6.

Federal government employees’ continuing benefits claims were 12,887 (NSA) in the week ending December 6, from 14,077 (NSA) in the week of November 29. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 6, the highest unemployment rates were in New Jersey and Washington (both 2.40%), Massachusetts and Minnesota (both 2.10%), California and Rhode Island (both 2.00%). The lowest rates were in Florida (0.30%), and Alabama, Louisiana, North Carolina (all 0.40%). Rates in other notable states include New York (1.80%), Illinois and Pennsylvania (both 1.70%), and Texas (1.10%). These state data are not seasonally adjusted.

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


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- Initial claims declined from the prior week.
- Continuing claims rose from the prior week.
- The insured unemployment rate edged up.


U.S. Initial Claims for Unemployment Insurance Dropped in Latest Week

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Mortgage applications dropped 5.0% w/w (+49.8% y/y) in the week of December 19, after a drop of 3.8% w/w (+40.9% y/y) in the week of December 12, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house fell 3.7% w/w (+15.9% y/y) in the latest week, the third consecutive weekly decline, following a drop of 2.8% w/w (+12.3% y/y) in the December 12 week. Applications for loan refinancing dropped 5.6% w/w (+110.1% y/y) in the December 19 week after a decline of 3.6% w/w (+86.0% y/y) in the week of December 12. 

The effective interest rate on a 30-year fixed-rate loan fell 8bps to 6.48% in the week ending December 19 from 6.56% in the week ending December 12. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.86% in the latest week from 5.91% in the prior week. The 30-year Jumbo rate rose 8bps to 6.63% in the December 19 week from 6.55% in the December 12 week. The rate on a 5-year ARM jumped 20bps to 5.96% in the latest week from 5.76% in the December 12 week.

The share of applications for refinancing an existing loan edged up to 59.1% of total applications in the December19 week from 59.0% in the week ending December 12. The adjustable-rate mortgage (ARM) share of activity rose to 8.1% in the latest week from 7.2% in the December 12 week.

The average size of a mortgage loan edged down 0.1% w/w (+7.8% y/y) to $399,700 in the week ending December 19, following a rise of 1.5% w/w (6.4% y/y) to $400,000 in the December 12 week. The average size of a purchase loan rose 1.0% w/w (1.1% y/y) to $428,600 in the latest week, after rising 0.6% w/w (-0.3% y/y) to $424,200 in the prior week. The average size of a loan to refinance a mortgage declined 0.9% w/w (+24.9% y/y) to $379,700 in the December 19 week, following a rise of 2.3% w/w (19.8% y/y) to $383,300 in the week ending December 12.

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


- Both purchase applications and refinancing loan applications fell in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.48%.
- Average loan size edged down.


U.S. Mortgage Applications Dropped in the Week of December 19

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Real GDP grew 4.3% (SAAR) during the third quarter following a 3.8% Q2 gain, revised from 3.3% reported initially. These increases followed a minimally revised 0.6% decline in Q1. A 3.0% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.3% compared to 2.1% y/y in Q2 and remained below its most recent high of 3.4% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment surged 7.0% (4.2% y/y) last quarter after edging 0.6% higher in Q2. Before-tax earnings with IVA & CCA rose 4.2% (9.1% y/y) after improving 0.2% in Q2. Financial sector earnings rose 6.2% (21.1% y/y) after rising 1.1% in Q2. Nonfinancial corporate profits rose 2.5% (3.3% y/y) after edging 0.5% higher in Q2. Earnings from abroad jumped 10.6% (26.3% y/y) following a 2.9% Q2  decline.

Foreign trade balance improvement added 1.59 percentage points to growth last quarter after adding 4.83 percentage points in Q2. Real exports increased 2.1% (1.5% y/y) after falling 0.5% in Q2. Real imports declined 1.2% (-1.8% y/y) after declining 8.3% in Q2. Inventories subtracted 0.22 percentage points from growth after subtracting 3.44 percentage point from Q2 growth.

Real final sales to private domestic purchasers grew 3.0% (2.6% y/y) last quartter after rising 2.9% in Q2, revised from 1.6%. Personal consumption expenditures rose 3.5% (2.6% y/y) after a 2.5% rise, revised from 1.6%. Durable goods spending rose 1.6% (3.2% y/y) after increasing 2.3% in Q2. Motor vehicle purchases declined 6.7% (+1.6% y/y) after strengthening 9.7% in Q2. Spending on home furnishings & appliances weakened 4.2% (+0.7% y/y) following a 2.0% fall. Recreational goods & vehicle buying surged 15.7% (7.0% y/y) last quarter after falling 2.5% in Q2.

Nondurable goods outlays in constant dollars rose 3.9% (3.0% y/y) last quarter following 2.2% growth in Q2. Apparel spending strengthened 6.7% (7.0% y/y) following a 5.8% rise. Food & beverage buying gained 2.0% (1.3% y/y) after edging 0.2% higher. Gasoline & fuel oil purchases improved 1.3% (-0.2% y/y) after falling 2.8% in Q2.



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Real spending on services increased 3.7% (2.4% y/y) in Q3 after a 2.6% Q2 gain. Outlays on housing & utilities edged 0.3% higher (1.0% y/y) after easing 0.2% in Q2. Health care expenditures surged 6.8% (4.5% y/y) after a 4.8% increase. Transportation outlays gained 3.1% both  q/q and y/y after a 7.0% rise, while recreation spending jumped 6.6% (2.4% y/y) following a 3.9% rise. Restaurant & hotel expenditures increased 1.2% (2.0% y/y) after strengthening 5.9% in Q2. Financial services expenditures rose 2.6% both q/q and y/y following a 4.8% Q2 increase.

Business fixed investment in constant dollars increased 2.8% (3.9% y/y) last  quarter following a 7.3% Q2 rise, revised from 5.7%. Expenditures on structures declined 6.3% both q/q and y/y, after falling for six consecutive quarters. Expenditures on producers’ durable equipment increased 5.4% (7.4% y/y), after strengthening 8.5% in Q2. Outlays on information processing equipment rose 8.4% (18.6% y/y), after strengthening 11.7% during Q2. Industrial equipment investment rose 2.0% (3.4% y/y) after a 6.5% rise. Transportation equipment investment fell  2.7% (+3.0% y/y) after strengthening 25.2%. Intellectual property product spending rose 5.4% last quarter (6.4% y/y), after surging 15.0% in Q2.

Residential structures investment in real terms declined 5.1% (-1.8% y/y), the same as in Q2. It was the third consecutive quartly decline.

Government spending rose 2.2% (1.1% y/y) during the third quarter after an unrevised 0.1% easing in Q2. Federal government expenditures rose 2.9% (-1.0% y/y) after falling 5.3% in Q2. National defense expenditures increased 5.8% (1.0% y/y) after rising 0.9% in Q2. State & local government spending rose 1.8% (2.4% y/y) following a 3.1% rise.

The GDP chain price index rose 3.8% (3.0% y/y) last quarter vs. 2.1% in Q2. The PCE chain price index increased 2.8% (2.7% y/y) following a 2.1% rise. The PCE price index excluding food and energy rose 2.9% (2.9% y/y) after increasing 2.6% in Q2. The business fixed investment price index rose 5.2% (1.5% y/y) in Q3 after a 0.4% decline. The residential price index rose 4.5% (3.3% y/y) last quarter after a 2.2% rise, while the government price index increased 4.4% (3.5% y/y) following a 3.3% 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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- Consumer spending strengthens; growth in business investment decelerates.
- Corporate profit growth led by earnings abroad.
- Rise in chain price index accelerates.


U.S. GDP Growth is Strong in Q3; Profits Jump

Sandy Batten

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Industrial production fell 0.1% m/m in October but rose 0.2% m/m (2.5% y/y) in November. The Action Economics Forecast Survey expected 0.1% monthly gains in both months. Manufacturing activity was tepid with manufacturing production falling 0.4% m/m in October and unchanged in November. Manufacturing output has not posted a monthly gain since July. Mining output fell 0.8% m/m in October but rebounded 1.7% m/m in November. Utilities output surged 2.6% m/m in October but fell 0.4% m/m in November. Compared to a year ago, manufacturing production is up 1.9%; mining output is up 3.9%; and utilities output is up 4.8%.

By market group, output of durable consumer goods plunged 2.6% m/m in October and fell another 0.2% in November. Production of durable consumer goods has declined in five of the previous six months. Production of nondurable consumer goods rose 0.5% m/m in both October and November. Compared to a year ago, durable consumer goods production has fallen 5.9% while nondurable consumer goods output has risen 2.7%. Business equipment production fell 0.3% m/m in October but rebounded 0.3% m/m in November and is up 11.2% y/y. Production of nonindustrial supplies fell 0.3% m/m in both October and November.

By industry group, output of durable goods fell 0.5% m/m in October and declined 0.1% m/m in November but were up 3.2% from a year ago. Motor vehicle and parts production slumped 5.1% m/m in October and declined 1.0% m/m in November to be down 5.6% from a year ago. Monthly motor vehicle output has declined in five of the previous six months. In contrast, production of computers and electronic products increased 1.5% m/m in October and rose 0.8% m/m in November. Aerospace production continued to rise, increasing 2.0% m/m in October and 1.1% m/m in November to be up 25.2% from a year ago. Output of nondurable goods fell 0.2% m/m in October and edged up 0.1% m/m in November. Their output is up 0.9% from a year ago. Apparel output fell 1.3% m/m in October but recovered in November, rising 2.3% m/m. Food and beverage output rose 0.3% m/m in October and another 1.2% in November.

Output of selected high-technology industries rebounded in October and November. After having declined 1.0% m/m in both August and September, production jumped 1.9% m/m in October and 1.1% m/m in November to stand 11.8% higher than a year ago. Manufacturing output excluding selected high-tech industries fell 0.4% m/m in October and was unchanged in November. It has risen only 1.6% over the past year. Manufacturing excluding motor vehicle production was unchanged in October and edged up 0.1% m/m in November; it is up 2.6% y/y.

Total industry capacity utilization edged down to 75.9% in October from 76.0% in September and then recovered the decline in November, edging up to 76.0%. In the manufacturing sector, the utilization rate slumped to 75.4% in October from 75.8% in September and remained at 75.4% in November. The October/November reading is the lowest since January.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Today’s release contained figures for both October and November that had been delayed by the federal government shutdown.
- IP fell in October but recovered in November.
- Manufacturing output was tepid, falling in October and unchanged in November.
- A surge in utilities output in October prevented a larger decline in total production.
- A jump in mining output in November accounted for all of the increase in total production.


U.S. Industrial Production Fell in October and Recovered in November

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New orders for durable goods fell a more-than-expected 2.2% (+4.8% y/y) in October following an upwardly revised 0.7% m/m rise in September (previously +0.5% m/m) and a 3.0% monthly jump in August. The Action Economics Forecast Survey expected a 1.5% m/m decline. A 23.7% m/m drop in aircraft orders more than accounted for the overall decline. Orders excluding aircraft increased 0.2% m/m (4.0% y/y) in October on top of a 0.5% monthly increase in September.

More generally, transportation orders fell 6.5% m/m (+7.3% y/y) in October following a 0.6% m/m increase in September and an 8.0% monthly jump in August. In addition to the drop in aircraft orders, orders for motor vehicles and parts edged up 0.1% m/m in October, their sixth consecutive monthly increase. Across other sectors, orders for primary metals fell 0.7% m/m, their first monthly decline in ten months. Orders for electrical equipment and appliances slumped 1.5% m/m, their first monthly decline in seven months. In contrast, orders for fabricated metal products rose 0.5% m/m, their fourth consecutive monthly gain. Machinery orders increased 0.8% m/m, their eighth consecutive monthly rise. Orders for computers and electronic products increased a solid 1.0% m/m on top of a 1.2% monthly increase in September.

Shipments of core capital goods (nondefense capital goods shipments excluding aircraft) are a reliable coincident indicator of business spending on equipment in the national accounts. They rose 0.7% m/m in October following an upwardly revised 1.2% monthly gain in September (previously +0.9%). The was the second consecutive monthly increase and the fifth in the past six months. The strong end to Q3 and the continued rise in the first month of Q4 provides a solid starting point for all of Q4. The October shipments figure was 5.9% at an annual rate above the Q3 average. Core capital goods orders rose 0.5% m/m in October on top of an upwardly revised 1.1% m/m increase in September (previously +0.9%). This was the fourth consecutive monthly rise.

Total manufacturing shipments edged up 0.1% m/m (+2.8% y/y) in October after having been essentially unchanged in September. Shipments of durable goods increased 0.6% m/m (5.9% y/y), led by 1.4% monthly jump in transportation shipments. However, apart from a 0.1% m/m decline in shipments of other durable goods, all of the other major sectors posted monthly gains in October. In contrast, shipments of nondurable goods fell 0.4% m/m (-0.3% y/y) in October for their third consecutive monthly decline. The monthly decline was led by a 2.4% m/m fall in shipments of petroleum and coal products although it was relatively widely spread across major sectors. The one exception was a 2.1% m/m increase in leather product shipments, but this came after four consecutive sizeable monthly declines.

Unfilled durable goods orders increased 0.2% m/m (7.9% y/y) in October for their third consecutive monthly gain following a 0.8% m/m rise in September and a 0.7% m/m increase in August. Total factory inventories were unchanged in October (+1.4% y/y) following 0.1% monthly declines in both August and September. Durable goods inventories edged up 0.1% m/m in October while inventories of nondurable goods fell 0.2% m/m, the third consecutive monthly decline.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.



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- New orders for durable goods slumped 2.2% m/m in October following increases in both August and September
- A 24% monthly drop in aircraft orders drove the overall decline
- Orders excluding aircraft rose 0.2% m/m in October
- Core capital goods shipments and orders continued to rise in October with small upward revisions to September


Economy in Brief: 2005

Jump to:

UK Trade Balance Widens in July, Offsetting June Drop

Import Prices Jumped

Import Prices Jumped

Australian Employed Continues to Rise; Unemployment Rate Maintains Record Low

JOLTS: U.S. Job Openings & Hires Dipped

Initial Claims for Unemployment Insurance Dipped

Initial Claims for Unemployment Insurance Dipped

Industrial Production Gains in Europe: Can That Pattern Be Sustained?