Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031203e.jpg" width="353">
The mood of French consumers continues to be is one of pessimism. In the latest survey, consumer confidence fell to -30, a one point drop from October and 12 points below November of 2002.
Consumers are on balance, more pessimistic about their present and future living standards. Although there was an increase in the balance who have seen an improvement in their present financial situation, the balance seeing an improvement in their future financial situation declined. Consumers have not changed their outlook for unemployment. The balance of those who expect more unemployment over those who expect less is still a high 62.
In the past, consumer confidence has been an important factor in forecasting consumer spending, but it has seemed to have little influence recently. Consumers have continued spending in spite of their pessimism. For example, the trend of household consumption of manufactured goods shown in the attached chart has been generally upward. Such spending increased 1.6% in October and was 4.32% above October, 2002.
It may be that the drop in consumer confidence, intensified by 9/11, has resulted in a more than cyclical downward shift in the general level of overall confidence.

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<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Confidence of French Households (Balance of Positive over Negative Responses)&nbsp;</th>
<th scope="col">Nov 2003</th>
<th scope="col">Oct 2003</th>
<th scope="col">Nov 2002&nbsp;</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y&nbsp; Chg</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Overall&nbsp;</td>
<td>-30</td>
<td>-29</td>
<td>-18</td>
<td>-1</td>
<td>-12</td>
<td>-16</td>
<td>-7</td>
<td>-1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Improved past living standards</td>
<td>-70</td>
<td>-69</td>
<td>-44</td>
<td>-1</td>
<td>-36</td>
<td>-40</td>
<td>-18</td>
<td>-14</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Improved future living standards</td>
<td>-37</td>
<td>-35</td>
<td>-22</td>
<td>-2</td>
<td>-15</td>
<td>-18</td>
<td>-18</td>
<td>0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Increasing unemployment</td>
<td>62</td>
<td>62</td>
<td>56</td>
<td>0</td>
<td>-6</td>
<td>50</td>
<td>26</td>
<td>-16</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Improved past financial situation</td>
<td>16</td>
<td>14</td>
<td>17</td>
<td>+2</td>
<td>-1</td>
<td>20</td>
<td>22</td>
<td>19</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Improved future financial situation</td>
<td>-7</td>
<td>-5</td>
<td>1</td>
<td>-2</td>
<td>-8</td>
<td>2</td>
<td>3</td>
<td>5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; A good time to make purchases</td>
<td>-18</td>
<td>-18</td>
<td>-12</td>
<td>0</td>
<td>-6</td>
<td>-12</td>
<td>5</td>
<td>8</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>
<tr class="odd">
<td class="firstcol">Household Consumption of Manufactured Goods</td>
<td>Oct 2003</td>
<td>Sep 2003</td>
<td>Oct 2002&nbsp;</td>
<td>M/M&nbsp; %</td>
<td>Y/Y&nbsp; %</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Monthly average (Billions 1995 Euros)</td>
<td>17.8</td>
<td>17.5</td>
<td>17.1</td>
<td>1.60</td>
<td>4.32</td>
<td>17.0</td>
<td>16.8</td>
<td>16.2</td>
</tr>
</tbody>
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The mood of French consumers continues to be is one of pessimism. In the latest survey, consumer confidence fell to -30, a one point drop from October and 12 points below November of 2002. Consumers are on balance, more pessimistic [...]

Consumer Confidence in France Declines

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031202a.jpg" width="353">
Gold prices topped $400 per ounce yesterday for the first time since early 1996. The rise accompanied other indications of strength in pricing power including the rise in the November ISM price index.
During the last twenty years there has been a 41% correlation between the level of gold prices and the y/y change in the CPI.
Prices of metals generally have been strong as industrial activity has firmed. Stainless steel scrap prices have risen nearly 50% since yearend 2002 and copper prices have risen 37%. Aluminum prices also have risen 13%.
During the last twenty years there has been a 43% correlation between the y/y change in metals prices as measured by the Journal of Commerce/ECRI index and the change in factory sector industrial production.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D304/@D304.HTM"> Commodity Prices</a></th>
<th scope="col">12/01/03</th>
<th scope="col">12/31/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Gold: Handy &amp; Harman Base Price ($/oz.)</td>
<td>$400.25</td>
<td>$344.80</td>
<td>26.5%</td>
<td>$310.05</td>
<td>$271.06</td>
<td>$278.88</td>
</tr>
<tr>
<td class="firstcol">Stainless Steel Scrap ($/gross ton)</td>
<td>$1,159.00</td>
<td>$782.00</td>
<td>57.0%</td>
<td>$717.10</td>
<td>$650.52</td>
<td>$739.07</td>
</tr>
<tr class="odd">
<td class="firstcol">Copper: High Grade (COMEX, $/Lb.)</td>
<td>$0.96</td>
<td>$0.70</td>
<td>26.3%</td>
<td>$0.72</td>
<td>$0.73</td>
<td>$0.84</td>
</tr>
</tbody>
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Chain Store Sales Begin Holiday Season Soft 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031202c.jpg" width="353">
Chain store sales fell 0.1% during the week that included Thanksgiving, according to the BTM-UBSW survey. Following the 1.2% gain in sales the opening week of November, weekly sales have been lackluster.
Sales during November with just one day left to tally were 0.5% ahead of October. That followed a 0.6% m/m October decline.
During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.
The BTM-UBSW retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
Analysis from the Federal Reserve Bank of Richmond titled &quot;Why Does Consumer Sentiment Predict Household Spending?&quot; is available <a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=187"> here</a>.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">11/29/03</th>
<th scope="col">11/22/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>422.8</td>
<td>423.3</td>
<td>5.2%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
Challenger Layoffs Eased 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031202b.jpg" width="353">
Announced job cuts in November reversed much of the prior month&#39;s rise according to Challenger, Gray &amp; Christmas. Job cut announcements fell 42.1% m/m after having more than doubled in October.
The three month moving average of job cut announcements nevertheless rose (-13.8% y/y) due to the October spike.
Job cut announcements eased m/m in the aerospace (-85.4% y/y), automotive (-44.2% y/y), chemical (-86.4% y/y), and financial (-90.9% y/y) industries. Announced layoffs in the electronics industry surged m/m although they were down 21.3% y/y.
Job cut announcements differ from layoffs in that many are achieved through attrition or just never occur.
During the last ten years there has been an 83% (inverse) correlation between the three month average level of announced job cuts and the y/y percent change payroll employment.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM"> Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>99,452</td>
<td>171,874</td>
<td>-36.9%</td>
<td>1,431,052</td>
<td>1,956,876</td>
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Gold prices topped $400 per ounce yesterday for the first time since early 1996. The rise accompanied other indications of strength in pricing power including the rise in the November ISM price index. During the last twenty years [...]

Gold Prices Top $400/oz.

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031201c.jpg" width="353">
Manufacturing in the Euro-zone rose for the third month in November according to the diffusion index based on a survey of the purchasing managers of some 3000 companies by Henley-on-Thames, England based NTC Research for Reuters Group, PLC. (A value of the index above 50 indicates expansion, while one below 50 indicates contraction.) In November the overall index rose to 52.19, a rise of 1.72% from October and 5.61% from November, 2002.
November marked the fourth month of expansion for the leading components of the overall index, new orders and output . New orders were especially strong, rising 3.36% in November and output rose 2.33%. Among the lagging indicators, employment, though still in a contractionary phase became less so in November, rising 1.15% and is now 4.78% above the corresponding month of 2002. The declines in delivery times and inventories may be due to the adjustments that normally occur in the months that follow a move from contraction to expansion in new orders and output.

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<th scope="col" class="firstcol">Euro-zone PMI Indexes of&nbsp;&nbsp; Manufacturing</th>
<th scope="col">Q3 2003</th>
<th scope="col">Q2 2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Overall</td>
<td>52.19</td>
<td>51.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Output</td>
<td>54.36</td>
<td>53.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; New Orders</td>
<td>54.99</td>
<td>53.20</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Employment</td>
<td>48.47</td>
<td>47.92</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Delivery times</td>
<td>48.01</td>
<td>48.25</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventories</td>
<td>46.07</td>
<td>47.75</td>
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</tbody>
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Manufacturing in the Euro-zone rose for the third month in November according to the diffusion index based on a survey of the purchasing managers of some 3000 companies by Henley-on-Thames, England based NTC Research for Reuters [...]

Manufacturing in the Euro-zone Rises for Third Month in a Row in November

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031201a.jpg" width="353">
The Purchasing Managers&#146; Composite Index (PMI) released by the Institute of Supply Management jumped to the highest level since December 1983. Rising to 62.8 in November, the reading confirmed that recovery in the factory sector is underway. Consensus expectations were for a reading of 57.5.
During the last twenty years there has been an 83% correlation between the level of the PMI index and the three month growth in factory sector industrial production. There has been a 63% correlation between the level of the PMI Composite Index and quarterly growth in real GDP.
The new orders index rose to 73.7. Up 9.4 points versus October, it also was at the highest level since December 1983. The production index rose to 68.3, up eleven points in just the last two months.
The employment index (51.0) pierced the breakeven level for the first month since September 2000. There has been a 72% correlation during the last ten years between the ISM employment index and the one-month change in factory sector payrolls.
The inventory index rose to 50.0. Up nearly 10 points since the Spring, it was the first reading suggesting an end to inventory decumulation since 2000.
The prices paid index rose last month to 64.0. There has been a 28% correlation between the prices paid index and the y/y change in the finished goods PPI over the last ten years. The correlation with the intermediate materials PPI has been a higher 62%.

<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/@EF02/@EF02.HTM"> ISM Manufacturing Survey</a></th>
<th scope="col"> Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>62.8</td>
<td>53.7</td>
<td>50.5</td>
<td>52.4</td>
<td>44.0</td>
<td>51.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>73.7</td>
<td>64.3</td>
<td>52.4</td>
<td>56.7</td>
<td>46.2</td>
<td>52.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>64.0</td>
<td>58.5</td>
<td>53.0</td>
<td>57.6</td>
<td>42.9</td>
<td>64.8</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Jumped Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031201b.jpg" width="353">
The value of total construction put in place added another 0.9% (7.0% y/y) in October to the strong gains of the prior four months. A 0.5% rise had been expected by the Consensus.
Private residential building activity surged 2.2% and pulled the year-to-date level up 9.7%. Single family home building rose 2.6% in October and was up 13.7% YTD.
Nonresidential building activity fell 2.1% as commercial construction fell 2.5% (-3.1% y/y) and education spending fell 3.4% (1.8% y/y). Office construction rose 0.6% (-12.2% y/y) and managed the third gain in as many months
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM"> Construction Put-in-place</a></th>
<th scope="col"> Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.9%</td>
<td>1.3%</td>
<td>7.0%</td>
<td>1.1%</td>
<td>2.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.8%</td>
<td>1.5%</td>
<td>7.1%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>8.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>2.2%</td>
<td>1.5%</td>
<td>12.6%</td>
<td>8.6%</td>
<td>3.3%</td>
<td>7.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-2.1%</td>
<td>1.6%</td>
<td>-3.6%</td>
<td>-13.0%</td>
<td>-1.3%</td>
<td>8.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>1.2%</td>
<td>0.8%</td>
<td>6.6%</td>
<td>5.3%</td>
<td>7.4%</td>
<td>9.5%</td>
</tr>
</tbody>
</table>
</body>
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The Purchasing Managers Composite Index (PMI) released by the Institute of Supply Management jumped to the highest level since December 1983. Rising to 62.8 in November, the reading confirmed that recovery in the factory sector is [...]

ISM Factory Index a Barnburner

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/031126h.jpg" width="353">
As in the US, GDP in the UK was revised higher for Q3. From 0.6% reported a month ago, it was raised to 0.75%, the largest quarterly growth rate since the first quarter of 2001. The year-on-year growth rose to 2.0% from 1.9% reported initially. This is marginally faster than in Q2, making the best four-quarter performance since the middle of 2001.
Construction activity, up 2.5% on the quarter, and production of business services, up 1.0%, were both larger than originally estimated. Weakness remains, however, in manufacturing, mining, and transportation.
By type of expenditure, consumers and non-profit institutions continue to lead the UK expansion. Business investment has been erratic, falling in this latest period by 1.6%, which reversed a 2.0% advance in Q2. After the pre-Y2K buildup, a 12-quarter growth trend in private capital spending has been ratcheting lower, just piercing zero to -0.3% in Q3 (see chart nearby). More optimistically, recent movement in business investment has been less negative and these expenditures might firm up in coming months if domestic demand continues to grow and as the UK&#39;s trading partners also see renewed expansion that could lift foreign demand for its products.
Notably, unlike other countries, exports have not been a leader in recent UK growth. They were basically unchanged in Q3 and four-quarter &quot;growth&quot; is down at -4.3%. Imports have been relatively flat in recent periods, but the softness in exports has produced a net export deficit (in volume terms) averaging &pound;11.3 billion over the last four quarters, a record by far. One assumes, however, that continuing prosperity among the UK&#39;s neighbors would help narrow that trade imbalance.

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<th scope="col" class="firstcol">Percent Changes</th>
Qtr/Qtr
<th scope="col">Year/ Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">3rd Qtr 2003</td>
<td>2nd Qtr 2003</td>
<td>1st Qtr 2003 &nbsp;</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">GDP, Volume, Chained 2000 Prices</td>
<td>0.7</td>
<td>0.6</td>
<td>0.2</td>
<td>2.0</td>
<td>2.0</td>
<td>1.9</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing</td>
<td>0.0</td>
<td>0.5</td>
<td>-0.1</td>
<td>-0.4</td>
<td>-1.9</td>
<td>-4.3</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>2.4</td>
<td>4.4</td>
<td>-1.8</td>
<td>6.9</td>
<td>7.9</td>
<td>6.3</td>
<td>-0.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Services</td>
<td>1.0</td>
<td>-0.3</td>
<td>1.5</td>
<td>3.0</td>
<td>1.8</td>
<td>3.2</td>
<td>4.7</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Households</td>
<td>0.7</td>
<td>0.7</td>
<td>-0.2</td>
<td>2.5</td>
<td>3.2</td>
<td>4.7</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital&nbsp; Formation</td>
<td>-1.3</td>
<td>1.2</td>
<td>-0.7</td>
<td>0.0</td>
<td>4.8</td>
<td>-1.8</td>
<td>5.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Business Investment</td>
<td>-1.6</td>
<td>2.0</td>
<td>-0.2</td>
<td>0.7</td>
<td>-0.6</td>
<td>-5.1</td>
<td>9.8</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>0.1</td>
<td>-2.6</td>
<td>2.9</td>
<td>-4.3</td>
<td>-1.9</td>
<td>-2.9</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>1.0</td>
<td>-2.5</td>
<td>1.7</td>
<td>-0.9</td>
<td>3.6</td>
<td>0.6</td>
<td>8.7</td>
</tr>
</tbody>
</table>
</body>
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As in the US, GDP in the UK was revised higher for Q3. From 0.6% reported a month ago, it was raised to 0.75%, the largest quarterly growth rate since the first quarter of 2001. The year-on-year growth rose to 2.0% from 1.9% reported [...]

UK Growth in Q3 Strongest in 2-1/2 Years

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031126a.jpg" width="353">
Initial claims for jobless insurance fell 11,000 last week to 351,000, the lowest level since January 2001. Consensus expectations had been for claims of 360,000 and the prior week&#39;s level was revised up.
The four-week moving average of initial claims fell to 358,750 (-8.5% y/y).
Continuing claims for unemployment insurance plummeted 105,000 in the latest week and the prior week was revised to a decline of 3,000 versus the 21,000 increase reported initially. Continuing claims were at the lowest level since late-January.
The insured rate of unemployment was steady at 2.7% for the fourth consecutive week versus the high of 3.0% in June.

<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">11/22</th>
<th scope="col">11/15</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>351.0</td>
<td>362.0</td>
<td>-9.5%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,368</td>
<td>-2.3%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
U.S. Personal Income Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031126c.jpg" width="353">
Personal income rose an expected 0.4% (+3.7% y/y) in October following 0.3% gains in each of the prior three months. Personal disposable income rebounded 0.4% (4.8% y/y) following the 1.0% decline in September.
Wages and salaries rose 0.2% (2.3% y/y). Wages fell 0.2% (-1.0% Y/Y) in the factory sector and have fallen 11.3% since the peak in early 2000. During the last twenty years there has been a 73% correlation between the y/y growth in total wages and the growth in personal consumption expenditures.
Consumer spending fell slightly, as expected, following a revised 0.3% drop in September. Spending on durable goods fell 2.3% (+6.6% y/y) as sales of light vehicles fell for the second month, down 9.5% m/m to 15.64M units. Spending on nondurable goods fell 0.1% (6.4% y/y) as lower gasoline prices pulled the price deflator for nondurables down 0.4%. Services spending rose 0.5% (4.6% y/y).
The PCE price deflator fell 0.1%. Less food and energy prices rose 0.1% (1.2% y/y) for the third consecutive month. The durables&#39; price deflator fell 0.4% (-3.9% y/y) and services prices rose 0.2% (2.9% y/y) for the fourth month.
The savings rate rose to 3.3% but remained at the low end of the range of the last two years.

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.7%</td>
<td>2.7%</td>
<td>3.3%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>-0.0%</td>
<td>-0.3%</td>
<td>5.4%</td>
<td>4.5%</td>
<td>4.5%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>3.3%</td>
<td>3.0%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>2.3%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
U.S. Durable Goods Orders Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031126b.jpg" width="353">
Durable goods orders surged 3.3% in October following an upwardly revised 2.1% September gain. Consensus expectations had been for a 0.5% October rise.
Excluding the volatile transportation sector durable goods orders jumped 2.8% following a 5.1% September gain that was double the initial estimate. Orders for transportation equipment jumped 5.5% last month as orders for nondefense aircraft jumped 22.0% following three months of decline.
Strength in capital goods orders powered overall orders and rose 2.8%. Excluding aircraft and parts, nondefense capital goods orders added another 1.7% (12.7% y/y) to the 5.8% September gain, revised up from 3.9%.
Orders for computers &amp; electronic products jumped another 4.0% (28.7% y/y) following the 7.0% September rise, revised from 2.6%. Orders for computers &amp; related products fell moderately for the second month but orders for communication equipment jumped 25.0% (66.1% y/y). Electrical equipment orders fell slightly (-0.5% y/y).
Shipments of durable goods surged 1.9% (1.9% y/y). Excluding transportation shipments rose 1.4% (3.7% y/y), strong for the fourth month in five.
Durable inventories, up 0.2% (-3.1% y/y), rose for the first month since December of last year. The gain reflected accumulation in the transportation, computers and machinery sectors.

<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/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Durable Goods Orders</td>
<td>3.3%</td>
<td>2.1%</td>
<td>8.2%</td>
<td>-1.7%</td>
<td>-10.5%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>2.8%</td>
<td>5.1%</td>
<td>12.8%</td>
<td>-7.2%</td>
<td>-15.5%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Strong 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031126d.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for November rose much more than expected to 64.1 from 55.0 in October. The rise was to the highest level since February 1995.
Strength amongst the component indexes was broad based. New orders (73.3) and production (69.0) were at the highest levels since the mid-1990s and order backlogs were also up. Employment (48.5) dropped back below the dividing line between rising and falling jobs.
During the last twenty years there has been a 56% correlation between the level of the Chicago PMI and quarterly growth in real GDP.
The index of prices paid jumped to 61.5, the highest level since March.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>64.1</td>
<td>55.0</td>
<td>55.0</td>
<td>52.7</td>
<td>41.4</td>
<td>51.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>73.3</td>
<td>59.2</td>
<td>62.5</td>
<td>56.3</td>
<td>42.3</td>
<td>53.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>67.3</td>
<td>61.5</td>
<td>60.1</td>
<td>56.9</td>
<td>50.4</td>
<td>65.6</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031126e.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index rose a bit less than expected for the full month of November. At 93.7, the index was up only slightly from the mid-month read of 93.5 and was versus Consensus expectations for 94.0.
It was the highest level of Consumer Sentiment since May 2002.
During the last ten years there has been a 71% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 82% during the last five years.
The current conditions index rose to 102.5, the highest level since May 2002.
The expectations index rose to 88.1, the highest level since May of this year.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>93.7</td>
<td>89.6</td>
<td>11.3%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>102.5</td>
<td>99.9</td>
<td>10.1%</td>
<td>97.5</td>
<td>100.1</td>
<td>115.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>88.1</td>
<td>83.0</td>
<td>12.2%</td>
<td>84.6</td>
<td>82.3</td>
<td>102.7</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Unchanged At Three Month Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031126f.jpg" width="353">
The Conference Board&#146;s National Index of Help-Wanted Advertising remained at 37 last month, the depressed level in place since August.
During the last ten years there has been a 93% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume fell to 37% from a downwardly revised September level of 39%.
Indexes of help wanted remained depressed across the country, although Richmond, San Antonio and Sacramento showed some improvement.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;02</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>37</td>
<td>40</td>
</tr>
</tbody>
</table>
New Home Sales Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030925c.jpg" width="353">
Sales of new single family homes fell 3.5% in October to 1.105M (AR). It was the third decline in the last four months from the record high in June. Consensus estimates were for a lesser decline to 1.140M.
Sales declines were spread across the country.
The median price of a new home rose to $190,900 (0.9% y/y).
These new home sales data from the US Census Department reflect current sales versus the existing home sale figures which reflect closings on past sales.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>1,105</td>
<td>1,145</td>
<td>10.0%</td>
<td>977</td>
<td>907</td>
<td>880</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance fell 11,000 last week to 351,000, the lowest level since January 2001. Consensus expectations had been for claims of 360,000 and the prior week's level was revised up. The four-week moving average [...]

Initial Jobless Insurance Claims Lowest Since January 2001

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031125e.jpg" width="353">
Recent releases of several indicators of confidence among businessmen and consumers in the Euro-zone suggest that, on balance, confidence is improving. The IFO indexes of business confidence for West and East Germany have risen steadily since April and May, respectively, and are now well above year ago levels. While still below year ago levels, business confidence in Belgium has improved steadily since March of this year. Business confidence in the Netherlands declined slightly in November but is still well above the low of -10.1 reached in June of this year.
Consumers in the Netherlands and Belgium have seen some improvement in their current economic situation and, as a result, have become more confident. Consumers in Italy, on the contrary, continue to view negatively both their current situation and the outlook for the next twelve months. As a result, they have become even more pessimistic.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Nov 03&nbsp;</th>
<th scope="col">Oct 03</th>
<th scope="col">Nov 02&nbsp;</th>
<th scope="col">M/M&nbsp; %</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">BUSINESS CONFIDENCE</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>
<td class="firstcol">&nbsp; West Germany IFO (1991=100)</td>
<td>95.7</td>
<td>94.3</td>
<td>87.3</td>
<td>1.48</td>
<td>9.62</td>
<td>89.0</td>
<td>89.9</td>
<td>99.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East Germany IFO (1991=100)</td>
<td>105.2</td>
<td>104.7</td>
<td>95.0</td>
<td>0.48</td>
<td>10.74</td>
<td>98.6</td>
<td>101.4</td>
<td>106.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Netherlands (% balance)</td>
<td>-3.8</td>
<td>-3.0</td>
<td>0.7</td>
<td>-0.8</td>
<td>-3.1</td>
<td>-1.6</td>
<td>-1.1</td>
<td>6.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Belgium (% balance</td>
<td>-7.9</td>
<td>-9.4</td>
<td>-6.3</td>
<td>1.5</td>
<td>-1.6</td>
<td>-7.9</td>
<td>-9.4</td>
<td>4.2</td>
</tr>
<tr>
<td class="firstcol">CONSUMER CONFIDENCE</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">&nbsp; Netherlands (% balance)</td>
<td>-30</td>
<td>-36</td>
<td>-30</td>
<td>6</td>
<td>0</td>
<td>-20</td>
<td>-1</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Belgium (% balance)</td>
<td>-6</td>
<td>-15</td>
<td>-4</td>
<td>9</td>
<td>-2</td>
<td>-2</td>
<td>-0</td>
<td>13</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Italy ISAE (1980=100)</td>
<td>104.0</td>
<td>106.8</td>
<td>109.7</td>
<td>-2.62</td>
<td>-5.20</td>
<td>115.8</td>
<td>122.7</td>
<td>119.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Situation in the last 12 months</td>
<td>-75</td>
<td>-70</td>
<td>-69</td>
<td>-5</td>
<td>-6</td>
<td>-46</td>
<td>-28</td>
<td>-37</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Situation&nbsp; expected&nbsp; in the next 12 months</td>
<td>-29</td>
<td>-28</td>
<td>-18</td>
<td>-1</td>
<td>-11</td>
<td>-6</td>
<td>-5</td>
<td>-1</td>
</tr>
</tbody>
</table>
</body>
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Recent releases of several indicators of confidence among businessmen and consumers in the Euro-zone suggest that, on balance, confidence is improving. The IFO indexes of business confidence for West and East Germany have risen [...]

Euro-zone Confidence Indicators Mostly Positive

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031125a.jpg" width="353">
US economic growth last quarter was revised upward to 8.2% (AR). Consensus expectations had been for a revision to 7.8%.
Corporate profits w/IVA &amp; CCA exploded, rising at a 56.0% annual rate (30.0% y/y. That followed a 45.7% gain in 2Q. The burst came as profits after tax jumped 49.8% (13.6% y/y), the biggest quarterly jump since 4Q 1992. Profits in the nonfinancial corporate sector (calculated from the income side of the NIPA) jumped at a 75.2% rate (43.2% y/y).
The GDP revision stemmed primarily from inventories. Slight accumulation, the first since 4Q02, is now shown adding 0.2 percentage points to output growth instead of subtracting 0.7 points.
Domestic final demand growth also was revised upward to 6.8% from 6.6% as business investment in equipment &amp; software was revised to 18.4%, the fastest since 4Q 1998. Growth in residential investment also was revised up to 22.7% but PCE growth was lowered slightly to 6.4%.
Improvement in the foreign trade deficit was unrevised and it added 0.8 percentage points to GDP growth. Export growth was revised up to 11.0% and imports were revised up less to 1.5%.
Inflation was revised down slightly to 1.7%. The PCE price deflator was up 2.3% but excluding food and energy rose just 1.0% (1.2% y/y).

<table border="0" cellspacing="0" width="100%">

</table>
<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/@E7/@E701/@E701.HTM">Chained &#39;96 $, % AR</a></th>
<th scope="col">3Q&#39;03 (Prelim.)</th>
<th scope="col">3Q&#39;03 (Advance)</th>
<th scope="col">2Q&#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>8.2%</td>
<td>7.2%</td>
<td>3.3%</td>
<td>&nbsp;3.5%</td>
<td>2.4%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.2%</td>
<td>-0.7%</td>
<td>-0.7%</td>
<td>-0.3%</td>
<td>0.6%</td>
<td>-1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>8.0%</td>
<td>7.8%</td>
<td>4.0%</td>
<td>3.8%</td>
<td>1.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>0.8%</td>
<td>0.8%</td>
<td>-1.3%</td>
<td>-0.2%</td>
<td>-0.7%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>6.8%</td>
<td>6.6%</td>
<td>5.1%</td>
<td>4.0%</td>
<td>2.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>1.7%</td>
<td>1.8%</td>
<td>1.0%</td>
<td>1.7%</td>
<td>1.1%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031125b.jpg" width="353">
Chain store sales rose 0.4% and gained back half of the 0.8% drop the week prior according to the BTM-UBSW survey.
So far in November sales are 0.5% ahead of last month&#39;s average. That followed a 0.6% m/m decline during all of October.
During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.
The BTM-UBSW retail chain-store sales index is constructed using the same-store sales 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><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">11/22/03</th>
<th scope="col">11/15/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>423.3</td>
<td>421.7</td>
<td>5.6%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
Consumer Confidence Up More Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031125c.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence rose to 91.7 in November, the highest level in over a year. Consensus estimates were for a gain to 84.0 and October&#39;s level was revised up slightly.
The expectations index jumped to 99.4 from 91.5 in October, the highest level since June 2002. The reading of the present situation jumped for the second month to 80.1.
The 12.2% m/m rise in Confidence outpaced the 4.4% November increase in Consumer Sentiment reported by the University of Michigan.
Jobs were viewed as hard to get by 29.5% of respondents, the lowest since April. The appraisal of the present situation improved to its best since the summer of 2002.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>91.7</td>
<td>81.7</td>
<td>8.0%</td>
<td>96.6</td>
<td>106.6</td>
<td>139.0</td>
</tr>
</tbody>
</table>
Existing Home Sales Down in October 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031125d.jpg" width="353">
Sales of existing single family homes reported by the National Association of Realtors fell 4.9% in October to 6.35M. The decline was greater than Consensus expectations.
Record sales in September were revised down slightly. The figures reflect closings of home sales in earlier months.
Sales fell across the nation. In the Northeast sales fell 2.7% (10.6% y/y). In the West sales fell 9.2% to 1.68M (12.8% y/y). Sales in the Midwest were down 4.9% (9.7% y/y) and in the South sales fell 2.7% to 2.57M (14.7% y/y).
The median price of an existing home rose m/m to $172,400 (+8.2% y/y) but the prior month was revised down.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/PublicAffairsWeb.nsf/Pages/EHSOct03?OpenDocument">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/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,350</td>
<td>&nbsp;6,6680</td>
<td>12.8%</td>
<td>5,595</td>
<td>5,292</td>
<td>5,158</td>
</tr>
</tbody>
</table>
</body>
</html>

US economic growth last quarter was revised upward to 8.2% (AR). Consensus expectations had been for a revision to 7.8%. Corporate profits w/IVA & CCA exploded, rising at a 56.0% annual rate (30.0% y/y. That followed a 45.7% gain in [...]

3Q U.S. GDP Revised to 8.2%, Profits Exploded

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Michael J. Moran

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

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

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

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

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

Personal Income, Consumption, and Prices in March

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

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

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

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

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

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

U.S. Pending Home Sales Surge in March

Sandy Batten

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

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

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

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

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

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

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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

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

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

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

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

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

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

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

Economy in Brief: 2003

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