Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907d.jpg" width="353">
The total number of mortgage applications jumped 6.8% last week and recovered to the highest level since late July, according to the Mortgage Bankers Association.
Mortgage applications to refinance surged 7.7% w/w to the highest level since July as the effective interest rate on a conventional 30-year mortgage fell further to 5.87% from 5.98% the prior week. The effective rate on a 15-year mortgage also fell to 5.47%.
Purchase applications surged 6.1% after two weeks of sharp decline but the average level in August fell 1.3% from July. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">09/02/05</th>
<th scope="col">08/26/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>771.6</td>
<td>722.5</td>
<td>11.5%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>499.1</td>
<td>470.6</td>
<td>4.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,357.1</td>
<td>2,187.8</td>
<td>20.9%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
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The total number of mortgage applications jumped 6.8% last week and recovered to the highest level since late July, according to the Mortgage Bankers Association. Mortgage applications to refinance surged 7.7% w/w to the highest level [...]

Lower Rates Spurred Mortgage Applications

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907c.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales were flat last week following four successive weeks of decline during August. 
The ICSC indicated that &quot;The results for this past week reflect the fallout of Hurricane Katrina as national sales were held back by about one percentage point as stores were closed in the path of the hurricane.&#148;
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell in the latest week by 0.1% (+0.2% y/y) following a 0.2% decline the week prior. 
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">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>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>455.4</td>
<td>455.5</td>
<td>3.8%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales were flat last week following four successive weeks of decline during August. The ICSC indicated that "The results for this past week [...]

Chain Store Sales Flat

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907a.jpg" width="353">
Non-farm labor productivity last quarter was revised down to 1.8% from 2.2%. Consensus expectations had been for 2.1% growth. Growth in output was lowered to 4.1% from 4.4% reported initially while hours worked were raised to 2.2% from 2.1%.
Unit labor cost growth was revised sharply higher to 2.5% from 1.3% reflecting the reduction in productivity, but compensation costs were raised even more to 4.4% from 3.5%.
Factory sector productivity growth was similarly reduced to 3.6% (4.6% y/y) from 4.1% due to a lowered estimate of output.An upward revision to manufacturing compensation growth to 8.4% from 6.6% raised unit Labor costs sharply to 4.7% (4.3% y/y) from 2.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907b.jpg" width="353">
Reported for the first time, nonfinancial corporate sector productivity surged 6.8% (6.3% y/y) and the spike lowered unit labor costs by 2.6% (+0.3% y/y). Output rose 9.5% (8.0% y/y). This measure is gleaned from the income side of the National Income &amp; Product Accounts (NIPA) as opposed to the non-farm and manufacturing figures which are derived from the output side. 
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">2Q &#39;05 (Revised)</th>
<th scope="col">2Q &#39;05 (Prelim.)</th>
<th scope="col">1Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>1.8%</td>
<td>2.2%</td>
<td>3.2%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>4.4%</td>
<td>3.5%</td>
<td>5.5%</td>
<td>6.5%</td>
<td>4.5%</td>
<td>4.0%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>2.5%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>4.2%</td>
<td>1.1%</td>
<td>0.2%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>


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Non-farm labor productivity last quarter was revised down to 1.8% from 2.2%. Consensus expectations had been for 2.1% growth. Growth in output was lowered to 4.1% from 4.4% reported initially while hours worked were raised to 2.2% [...]

2Q U.S. Productivity Revised Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907a.jpg" width="353">
Non-farm labor productivity last quarter was revised down to 1.8% from 2.2%. Consensus expectations had been for 2.1% growth. Growth in output was lowered to 4.1% from 4.4% reported initially while hours worked were raised to 2.2% from 2.1%.
Unit labor cost growth was revised sharply higher to 2.5% from 1.3% reflecting the reduction in productivity, but compensation costs were raised even more to 4.4% from 3.5%.
Factory sector productivity growth was similarly reduced to 3.6% (4.6% y/y) from 4.1% due to a lowered estimate of output.An upward revision to manufacturing compensation growth to 8.4% from 6.6% raised unit Labor costs sharply to 4.7% (4.3% y/y) from 2.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907b.jpg" width="353">
Reported for the first time, nonfinancial corporate sector productivity surged 6.8% (6.3% y/y) and the spike lowered unit labor costs by 2.6% (+0.3% y/y). Output rose 9.5% (8.0% y/y). This measure is gleaned from the income side of the National Income &amp; Product Accounts (NIPA) as opposed to the non-farm and manufacturing figures which are derived from the output side. 
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">2Q &#39;05 (Revised)</th>
<th scope="col">2Q &#39;05 (Prelim.)</th>
<th scope="col">1Q &#39;05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>1.8%</td>
<td>2.2%</td>
<td>3.2%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>4.4%</td>
<td>3.5%</td>
<td>5.5%</td>
<td>6.5%</td>
<td>4.5%</td>
<td>4.0%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>2.5%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>4.2%</td>
<td>1.1%</td>
<td>0.2%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>
Chain Store Sales Flat 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 7, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907c.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales were flat last week following four successive weeks of decline during August. 
The ICSC indicated that &quot;The results for this past week reflect the fallout of Hurricane Katrina as national sales were held back by about one percentage point as stores were closed in the path of the hurricane.&#148;
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell in the latest week by 0.1% (+0.2% y/y) following a 0.2% decline the week prior. 
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">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>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>455.4</td>
<td>455.5</td>
<td>3.8%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Lower Rates Spurred Mortgage Applications 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 7, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907d.jpg" width="353">
The total number of mortgage applications jumped 6.8% last week and recovered to the highest level since late July, according to the Mortgage Bankers Association.
Mortgage applications to refinance surged 7.7% w/w to the highest level since July as the effective interest rate on a conventional 30-year mortgage fell further to 5.87% from 5.98% the prior week. The effective rate on a 15-year mortgage also fell to 5.47%.
Purchase applications surged 6.1% after two weeks of sharp decline but the average level in August fell 1.3% from July. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">09/02/05</th>
<th scope="col">08/26/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>771.6</td>
<td>722.5</td>
<td>11.5%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>499.1</td>
<td>470.6</td>
<td>4.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,357.1</td>
<td>2,187.8</td>
<td>20.9%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Industrial Production Gains in Europe:  Can That Pattern Be Sustained? 
by <a href="/comment/Stone.html">Carol Stone</a> September 7, 2005


<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>


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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906b.jpg" width="353">
July data on manufacturing sales and new orders for Germany, released today, present a mixed picture. Manufacturing and mining sales in nominal terms to the German domestic market increased 2.28% in July, one of the few times in recent years that the increase in domestic sales was greater than that of foreign sales, which were up only 0.49%. The trend in new orders, however, suggests that stepped up growth in domestic sales and the deceleration of foreign sales growth may be short lived. Domestic new orders declined by 0.29%. in July while foreign new orders rose sharply--8.24%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906c.jpg" width="353">
New orders and sales are obviously closely related as shown in the first chart which plots total sales and new orders lagged one month. The correlation between the two series is .90. The second and third charts, contrast foreign and domestic sales and foreign and domestic new orders. Domestic new orders and sales have shown little growth over the past five years. Foreign orders and sales have shown a good upward trend since 2003 in spite of a rise in the Euro over much of this period until recently. Growth in the manufacturing industry is Germany is still highly dependent on foreign demand.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906d.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Manufacturing New Orders and Sales (2000=100)</th>
<th scope="col">Jul&nbsp; 05</th>
<th scope="col">Jun 05</th>
<th scope="col">Jul 04</th>
<th scope="col">M/M %</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">New Orders Total Nominal</td>
<td>114.6</td>
<td>110.4</td>
<td>105.8</td>
<td>3.80</td>
<td>8.32</td>
<td>104.8</td>
<td>98.9</td>
<td>98.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Domestic</td>
<td>102.2</td>
<td>102.5</td>
<td>98.3</td>
<td>-0.29</td>
<td>3.97</td>
<td>98.3</td>
<td>94.6</td>
<td>94.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Foreign</td>
<td>130.1</td>
<td>120.2</td>
<td>115.1</td>
<td>8.24</td>
<td>13.03</td>
<td>112.9</td>
<td>104.3</td>
<td>102.5</td>
</tr>
<tr>
<td class="firstcol">Sales, Manufacturing &amp; Mining</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>111.1</td>
<td>109.5</td>
<td>106.9</td>
<td>1.46</td>
<td>3.93</td>
<td>105.2</td>
<td>100.7</td>
<td>100.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Domestic</td>
<td>103.0</td>
<td>100.7</td>
<td>100.6</td>
<td>2.28</td>
<td>2.39</td>
<td>99.4</td>
<td>96.9</td>
<td>97.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Foreign</td>
<td>124.2</td>
<td>123.6</td>
<td>117.1</td>
<td>0.49</td>
<td>6.06</td>
<td>114.5</td>
<td>106.7</td>
<td>106.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
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July data on manufacturing sales and new orders for Germany, released today, present a mixed picture. Manufacturing and mining sales in nominal terms to the German domestic market increased 2.28% in July, one of the few times in [...]

Manufacturing Sales and New Orders in Germany

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906a.jpg" width="353">
The Institute for Supply Management reported that the Business Activity Index for the non-manufacturing sector rebounded in August from the prior month&#39;s decline and jumped 4.5 points to 65.0, the highest level since April of last year. Consensus expectations had been for near stability at 60.
Since the series&#39; inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.
Orders rose solidly for the second consecutive month to the highest level in two years and the employment index rose 3.4 points to the highest level since February. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power backpedaled but just a bit. The 3.2 point decline reversed about one third of the jump in July.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
Survey Says ..., analyzing BLS&#39;s employment surveys, from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20050901/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#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">Business Activity Index</td>
<td>65.0</td>
<td>60.5</td>
<td>59.3</td>
<td>62.4</td>
<td>58.2</td>
<td>55.1</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>67.1</td>
<td>70.3</td>
<td>70.1</td>
<td>69.0</td>
<td>56.8</td>
<td>54.0</td>
</tr>
</tbody>
</table>


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The Institute for Supply Management reported that the Business Activity Index for the non-manufacturing sector rebounded in August from the prior month's decline and jumped 4.5 points to 65.0, the highest level since April of last [...]

ISM Non-Manufacturing Index Rebounded

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906a.jpg" width="353">
The Institute for Supply Management reported that the Business Activity Index for the non-manufacturing sector rebounded in August from the prior month&#39;s decline and jumped 4.5 points to 65.0, the highest level since April of last year. Consensus expectations had been for near stability at 60.
Since the series&#39; inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.
Orders rose solidly for the second consecutive month to the highest level in two years and the employment index rose 3.4 points to the highest level since February. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power backpedaled but just a bit. The 3.2 point decline reversed about one third of the jump in July.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
Survey Says ..., analyzing BLS&#39;s employment surveys, from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20050901/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#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">Business Activity Index</td>
<td>65.0</td>
<td>60.5</td>
<td>59.3</td>
<td>62.4</td>
<td>58.2</td>
<td>55.1</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>67.1</td>
<td>70.3</td>
<td>70.1</td>
<td>69.0</td>
<td>56.8</td>
<td>54.0</td>
</tr>
</tbody>
</table>
Manufacturing Sales and New Orders in Germany 
by <a href="/comment/Curley.html">Louise Curley</a> September 6, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906b.jpg" width="353">
July data on manufacturing sales and new orders for Germany, released today, present a mixed picture. Manufacturing and mining sales in nominal terms to the German domestic market increased 2.28% in July, one of the few times in recent years that the increase in domestic sales was greater than that of foreign sales, which were up only 0.49%. The trend in new orders, however, suggests that stepped up growth in domestic sales and the deceleration of foreign sales growth may be short lived. Domestic new orders declined by 0.29%. in July while foreign new orders rose sharply--8.24%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906c.jpg" width="353">
New orders and sales are obviously closely related as shown in the first chart which plots total sales and new orders lagged one month. The correlation between the two series is .90. The second and third charts, contrast foreign and domestic sales and foreign and domestic new orders. Domestic new orders and sales have shown little growth over the past five years. Foreign orders and sales have shown a good upward trend since 2003 in spite of a rise in the Euro over much of this period until recently. Growth in the manufacturing industry is Germany is still highly dependent on foreign demand.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050906d.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Manufacturing New Orders and Sales (2000=100)</th>
<th scope="col">Jul&nbsp; 05</th>
<th scope="col">Jun 05</th>
<th scope="col">Jul 04</th>
<th scope="col">M/M %</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">New Orders Total Nominal</td>
<td>114.6</td>
<td>110.4</td>
<td>105.8</td>
<td>3.80</td>
<td>8.32</td>
<td>104.8</td>
<td>98.9</td>
<td>98.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Domestic</td>
<td>102.2</td>
<td>102.5</td>
<td>98.3</td>
<td>-0.29</td>
<td>3.97</td>
<td>98.3</td>
<td>94.6</td>
<td>94.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Foreign</td>
<td>130.1</td>
<td>120.2</td>
<td>115.1</td>
<td>8.24</td>
<td>13.03</td>
<td>112.9</td>
<td>104.3</td>
<td>102.5</td>
</tr>
<tr>
<td class="firstcol">Sales, Manufacturing &amp; Mining</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total</td>
<td>111.1</td>
<td>109.5</td>
<td>106.9</td>
<td>1.46</td>
<td>3.93</td>
<td>105.2</td>
<td>100.7</td>
<td>100.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Domestic</td>
<td>103.0</td>
<td>100.7</td>
<td>100.6</td>
<td>2.28</td>
<td>2.39</td>
<td>99.4</td>
<td>96.9</td>
<td>97.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Foreign</td>
<td>124.2</td>
<td>123.6</td>
<td>117.1</td>
<td>0.49</td>
<td>6.06</td>
<td>114.5</td>
<td>106.7</td>
<td>106.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>


</html>

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

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Kathleen Stephansen, CBE

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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

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