Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802e.jpg" width="353">
Chain store sales jumped 0.9% during the final week of July according to the International Council of Shopping Centers (ICSC)-UBS survey. This fifth consecutive gain lifted sales in July 0.4% higher than during June when sales fell 0.4% versus May.
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 was unchanged (0.3% y/y).
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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<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">07/30/05</th>
<th scope="col">07/23/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>462.8</td>
<td>456.9</td>
<td>4.9%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
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Chain store sales jumped 0.9% during the final week of July according to the International Council of Shopping Centers (ICSC)-UBS survey. This fifth consecutive gain lifted sales in July 0.4% higher than during June when sales fell [...]

Chain Store Sales Ended July Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802c.jpg" width="353">
Factory inventories fell in June, down modestly for the third consecutive month. Three month growth in inventories fell to -0.9% (AR) versus the peak rate of accumulation near 12% in March and 7.5% growth last year. The slowdown accounts for much of this year&#39;s slowdown in factory output growth.
Slower rates of inventory accumulation continue notable in the primary metals industry where three month growth fell to 0.5% versus the high of 42.2% and in the electrical equipment industry where growth in inventories fell to 1.8% versus an 18.5% peak. The level of computer inventories has been declining this year versus a peak growth rate of 13% last summer.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802d.jpg" width="353">
Factory shipments fell slightly in June and three month growth fell to 3.7% versus the high above 20% early last year.
Orders to the factory sector jumped 1.0% and the rise in durable goods orders was revised up to 2.0% from the advance report of a 1.4% gain.
Unfilled orders surged another 2.8% as backlogs of aircraft &amp; parts jumped 5.8% (30.2% y/y). Less transportation altogether backlogs rose 1.9% (9.5% y/y) boosted by a 2.5% (14.8% y/y) gain in machinery. The ratio of unfilled orders to shipments outside of transportation jumped the highest level since 2002.<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">June</th>
<th scope="col">May</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">Inventories</td>
<td>-0.0%</td>
<td>-0.2%</td>
<td>6.4%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>1.0%</td>
<td>3.6%</td>
<td>9.8%</td>
<td>10.9%</td>
<td>3.7%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>6.2%</td>
<td>10.5%</td>
<td>2.6%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>2.8%</td>
<td>2.1%</td>
<td>10.1%</td>
<td>9.1%</td>
<td>4.2%</td>
<td>-6.1%</td>
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Factory inventories fell in June, down modestly for the third consecutive month. Three month growth in inventories fell to -0.9% (AR) versus the peak rate of accumulation near 12% in March and 7.5% growth last year. The slowdown [...]

U.S. Factory Inventories Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802b.jpg" width="353">
June personal income rose 0.5% following an unrevised 0.2% gain in May. Consensus expectations had been for a 0.4% increase. The strength in the total&#39;s rise owed to a 2.0% (6.1% y/y) increase in proprietors&#39; income.
Higher receipts from assets also lifted earnings last month as interest income rose 1.5% (4.3% y/y) and dividend income rose 0.8% (9.5% y/y).
Wages &amp; salaries rose a modest 0.2% (7.4% y/y) following a slim 0.1% gain in May. Factory sector wages fell 0.2% (5.7% y/y) though service sector wages rebounded 0.3% (8.8% y/y) following no change the prior month.
Disposable personal income jumped 0.5% (5.3% y/y) following a 0.2% increase in May. Adjusted for price inflation take home pay rose 0.5% (2.9% y/y) though upward revisions to pricing lowered slightly recent y/y gains.
Matching Consensus expectations, personal consumption expenditures surged 0.8% on the strength of higher sales of light vehicles. Spending on durables overall reversed the May decline with a 2.9% (8.0% y/y) increase. Nondurables spending rose a moderate 0.7% (7.3% y/y) and spending on services increased 0.5% (6.2% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802a.jpg" width="353">
The personal savings rate fell to 0.0% though the household sector&#39;s net worth (from the Flow of Funds Accounts) has been rising, helped by a 16% increase in owners&#39; equity in real estate.
The PCE chain price index fell slightly due to a 0.3% decline in gasoline prices which subsequently rose 6.2% in July. In August, gas prices are about equal to the prior month&#39;s average of $2.29. Less food &amp; energy, prices also were unchanged as durable goods prices fell 0.4% (-0.5% y/y) and services prices increased a moderate 0.2% (2.9% y/y).
Closing the Gap from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20050801/cover.pdf"> here</a>. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">June</th>
<th scope="col">May</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">Personal Income</td>
<td>0.5%</td>
<td>0.2%</td>
<td>6.6%</td>
<td>5.9%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.8%</td>
<td>-0.0%</td>
<td>6.7%</td>
<td>6.5%</td>
<td>4.9%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.0%</td>
<td>0.4%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>2.1%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.0%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>2.6%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>2.0%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
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June personal income rose 0.5% following an unrevised 0.2% gain in May. Consensus expectations had been for a 0.4% increase. The strength in the total's rise owed to a 2.0% (6.1% y/y) increase in proprietors' income. Higher receipts [...]

June Growth in U.S. Personal Income Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802b.jpg" width="353">
June personal income rose 0.5% following an unrevised 0.2% gain in May. Consensus expectations had been for a 0.4% increase. The strength in the total&#39;s rise owed to a 2.0% (6.1% y/y) increase in proprietors&#39; income.
Higher receipts from assets also lifted earnings last month as interest income rose 1.5% (4.3% y/y) and dividend income rose 0.8% (9.5% y/y).
Wages &amp; salaries rose a modest 0.2% (7.4% y/y) following a slim 0.1% gain in May. Factory sector wages fell 0.2% (5.7% y/y) though service sector wages rebounded 0.3% (8.8% y/y) following no change the prior month.
Disposable personal income jumped 0.5% (5.3% y/y) following a 0.2% increase in May. Adjusted for price inflation take home pay rose 0.5% (2.9% y/y) though upward revisions to pricing lowered slightly recent y/y gains.
Matching Consensus expectations, personal consumption expenditures surged 0.8% on the strength of higher sales of light vehicles. Spending on durables overall reversed the May decline with a 2.9% (8.0% y/y) increase. Nondurables spending rose a moderate 0.7% (7.3% y/y) and spending on services increased 0.5% (6.2% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802a.jpg" width="353">
The personal savings rate fell to 0.0% though the household sector&#39;s net worth (from the Flow of Funds Accounts) has been rising, helped by a 16% increase in owners&#39; equity in real estate.
The PCE chain price index fell slightly due to a 0.3% decline in gasoline prices which subsequently rose 6.2% in July. In August, gas prices are about equal to the prior month&#39;s average of $2.29. Less food &amp; energy, prices also were unchanged as durable goods prices fell 0.4% (-0.5% y/y) and services prices increased a moderate 0.2% (2.9% y/y).
Closing the Gap from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20050801/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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">June</th>
<th scope="col">May</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">Personal Income</td>
<td>0.5%</td>
<td>0.2%</td>
<td>6.6%</td>
<td>5.9%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.8%</td>
<td>-0.0%</td>
<td>6.7%</td>
<td>6.5%</td>
<td>4.9%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.0%</td>
<td>0.4%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>2.1%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.0%</td>
<td>0.0%</td>
<td>2.2%</td>
<td>2.6%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>2.0%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802c.jpg" width="353">
Factory inventories fell in June, down modestly for the third consecutive month. Three month growth in inventories fell to -0.9% (AR) versus the peak rate of accumulation near 12% in March and 7.5% growth last year. The slowdown accounts for much of this year&#39;s slowdown in factory output growth.
Slower rates of inventory accumulation continue notable in the primary metals industry where three month growth fell to 0.5% versus the high of 42.2% and in the electrical equipment industry where growth in inventories fell to 1.8% versus an 18.5% peak. The level of computer inventories has been declining this year versus a peak growth rate of 13% last summer.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802d.jpg" width="353">
Factory shipments fell slightly in June and three month growth fell to 3.7% versus the high above 20% early last year.
Orders to the factory sector jumped 1.0% and the rise in durable goods orders was revised up to 2.0% from the advance report of a 1.4% gain.
Unfilled orders surged another 2.8% as backlogs of aircraft &amp; parts jumped 5.8% (30.2% y/y). Less transportation altogether backlogs rose 1.9% (9.5% y/y) boosted by a 2.5% (14.8% y/y) gain in machinery. The ratio of unfilled orders to shipments outside of transportation jumped the highest level since 2002.<a href="http://research.stlouisfed.org/publications/review/05/07/Gali.pdf"> </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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">June</th>
<th scope="col">May</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">Inventories</td>
<td>-0.0%</td>
<td>-0.2%</td>
<td>6.4%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>1.0%</td>
<td>3.6%</td>
<td>9.8%</td>
<td>10.9%</td>
<td>3.7%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>6.2%</td>
<td>10.5%</td>
<td>2.6%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>2.8%</td>
<td>2.1%</td>
<td>10.1%</td>
<td>9.1%</td>
<td>4.2%</td>
<td>-6.1%</td>
</tr>
</tbody>
</table>
Chain Store Sales Ended July Strong 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802e.jpg" width="353">
Chain store sales jumped 0.9% during the final week of July according to the International Council of Shopping Centers (ICSC)-UBS survey. This fifth consecutive gain lifted sales in July 0.4% higher than during June when sales fell 0.4% versus May.
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 was unchanged (0.3% y/y).
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><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">07/30/05</th>
<th scope="col">07/23/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>462.8</td>
<td>456.9</td>
<td>4.9%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
UK's CBI Survey of Distributive Trades Confirms Slowdown in Retail Trade and Expects Continued Weakness 
by <a href="/comment/Curley.html">Louise Curley</a> August 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802g.jpg" width="353">
The results of the CBI (Confederation of British Industries) survey of the distributive trades released today show that the balance of opinion on the volume of retail sales improved minimally in July to -18 from -19 in June, the lowest figure since the survey began in 1983. Expectations of the volume of retail sales have caught up with the reported volumes and suggest that August will once again show only a minimal improvement to a balance of -17. The balance of reported sales volume for the retail sector has shown only one modest positive number--2 in February--since the beginning of the year.
There was more positive news for wholesale trade as can be seen in the first chart which shows the balance on reported sales volume for retail and wholesale trade. Although the balance on reported wholesale trade sales volume declined to 22 from 32 in June, the balance is significantly positive. Expected sales volume for August, however, are down to a positive 10. The balance on reported motor trade sales volume has been positive since May, but decreasing and the expected balance for August is once again negative at -4.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802h.jpg" width="353">
Balances of opinions on the annual growth of sales volume are also reported. In the most recent survey, Grocers showed the most positive results and Furniture and Carpet stores, the most dismal, as seen in the second chart.
The CBI Distributive Trades survey covers 20,000 outlets of firms responsible for 40% of employment in retailing. The most recent survey was conducted between June 29 and July 20, 2005 and included 125 responses.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/@U9/@U9.HTM">CBI Distributive Trade Survey</a></th>
<th scope="col">Aug 05</th>
<th scope="col">July 05</th>
<th scope="col">Jun 05</th>
<th scope="col">May&nbsp; 05</th>
<th scope="col">April&nbsp; 05</th>
<th scope="col">Mar 05&nbsp;&nbsp;</th>
<th scope="col">&nbsp;Feb 05</th>
<th scope="col">Jan&nbsp; 05</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Trade Sales Volume</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Expected</td>
<td>-17</td>
<td>-18</td>
<td>5</td>
<td>1</td>
<td>3</td>
<td>14</td>
<td>7</td>
<td>8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Reported</td>
<td></td>
<td>-18</td>
<td>-19</td>
<td>-7</td>
<td>-14</td>
<td>-9</td>
<td>2</td>
<td>-3</td>
</tr>
<tr>
<td class="firstcol">Wholesale Trade Sales Volume</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected</td>
<td>10</td>
<td>25</td>
<td>23</td>
<td>16</td>
<td>-7</td>
<td>-4</td>
<td>15</td>
<td>6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Reported</td>
<td>&nbsp;</td>
<td>22</td>
<td>32</td>
<td>24</td>
<td>2</td>
<td>-17</td>
<td>9</td>
<td>28</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Trade Sales Volume</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; Expected</td>
<td>-4</td>
<td>2</td>
<td>7</td>
<td>6</td>
<td>-5</td>
<td>4</td>
<td>7</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Reported</td>
<td>&nbsp;</td>
<td>3</td>
<td>7</td>
<td>8</td>
<td>-7</td>
<td>-16</td>
<td>2</td>
<td>-9</td>
</tr>
<tr>
<td class="firstcol">Growth in Annual Sales Volume--Reported</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Grocers</td>
<td></td>
<td>21</td>
<td>31</td>
<td>77</td>
<td>20</td>
<td>31</td>
<td>19</td>
<td>4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Furniture and Carpets</td>
<td></td>
<td>-92</td>
<td>-84</td>
<td>-77</td>
<td>-58</td>
<td>-72</td>
<td>6</td>
<td>-16</td>
</tr>
</tbody>
</table>
</body>
</html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802f.jpg" width="353">
While the number of employed persons in Japan declined 0.26% in June from May to 64.18 million on a seasonally unadjusted basis, it was 0.69% above the June, 2004 figure. The number of unemployed persons declined by 8.8% in May to June and was 9.4% below June, 2004. As a result, the unemployment rate is now 4.2% compared with 4.6% in May, 2005 and also in June, 2004.
June also saw a year-to-year rise in Japanese wages. The average monthly cash wage in Japan amounted to 467,814 Yen or $4,156 at the current rate of exchange. The granting of bonuses in June and December distorts the month to month changes in the wage data that are available only on a not seasonally adjusted basis. The year to year changes are the more meaningful comparisons. In June, cash wages were almost 0.7% above the comparable figure of last year.
Cash Earnings are equal to money earned before deductions for income tax, social insurance contribution, union dues and payment for good purchased, etc. In the Haver Data Base for Japan there is a breakdown of cash earnings. Total cash earnings consist of Contractual Cash Earnings and Bonuses. Contractual Cash Earnings, in turn are the sum of Scheduled Cash Earnings and Overtime Earnings, which include, in addition to over-time payments, other special payments, such as marriage allowances, etc.
In the attached chart we show the year-to-year changes in the Scheduled Cash Earnings and Overtime Earnings. Scheduled cash earnings have shown year-to-year increases in April, May and June of this year, the first increases since April, 2003. Overtime earnings, on the other hand have shown year-to-year increases since mid 2002 and in June were 2.4% above the comparable figure for last year.
Rising employment and wages should augur well for Japanese consumer incomes and spending.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/JAPAN.HTM">Japan</a></th>
<th scope="col">Jun 05</th>
<th scope="col">May 05</th>
<th scope="col">Jun 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment and Unemployment (No. of persons in Mil)</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">Employed Persons</td>
<td>64.18</td>
<td>64.35</td>
<td>63.74</td>
<td>-0.26</td>
<td>0.69</td>
<td>63.29</td>
<td>63.16</td>
<td>63.30</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed Persons&nbsp;</td>
<td>2..80</td>
<td>3.07</td>
<td>3.09</td>
<td>-8.79</td>
<td>-9.39</td>
<td>3.13</td>
<td>3.50</td>
<td>3.59</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate %</td>
<td>4.2</td>
<td>4.6</td>
<td>4.6</td>
<td>-0.4*</td>
<td>-0.4*</td>
<td>4.7</td>
<td>5.3</td>
<td>5.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Monthly Averages in Yen</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">Cash Wages</td>
<td>467,801</td>
<td>276,908</td>
<td>466,932</td>
<td>n.m.</td>
<td>1.27</td>
<td>332,598</td>
<td>341,790</td>
<td>343,219</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Contract Wages</td>
<td>273,712</td>
<td>271,336</td>
<td>272,652</td>
<td>0.97</td>
<td>0.39</td>
<td>272,049</td>
<td>278,748</td>
<td>278,873</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Scheduled Wages</td>
<td>254,875</td>
<td>252,332</td>
<td>254,258</td>
<td>1.01</td>
<td>0.24</td>
<td>253,106</td>
<td>260,153</td>
<td>261,000</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Over-Time</td>
<td>18,837</td>
<td>18,742</td>
<td>18,394</td>
<td>0.51</td>
<td>2.41</td>
<td>18,943</td>
<td>18,595</td>
<td>17,873</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Bonus &amp; Other Wages</td>
<td>194,102</td>
<td>5,833</td>
<td>189,280</td>
<td>n.m.</td>
<td>2.35</td>
<td>60,549</td>
<td>63,042</td>
<td>64,344</td>
</tr>
</tbody>
</table>
</body>
</html>

While the number of employed persons in Japan declined 0.26% in June from May to 64.18 million on a seasonally unadjusted basis, it was 0.69% above the June, 2004 figure. The number of unemployed persons declined by 8.8% in May to [...]

Rises in Japanese Employment and Wages: Good Omens for Japanese Consumer Incomes and Spending

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050801b.jpg" width="353">
The June value of construction put in place fell 0.3% following a deepened decline in May. June was the fifth monthly drop this year. Consensus expectations had been for a 0.7% increase.
The 2005 declines in construction spending generally have been moderate especially when set against a 7.5% upward spike in February.
Private residential building activity added to earlier month&#39;s declines with a 0.4% dip but remained up 9.1% versus last year. A 12.2% pop in February was driven by improvements. The value of new single family building rose 0.2% (7.6% y/y) for the seventh consecutive monthly gain.
Nonresidential building rose 0.2% following the downwardly revised 2.1% May decline. Multi-retail building was quite strong, up 2.3% (22.1% y/y), led by shopping mall construction which rose 15.8% (-7.2% y/y).
Public construction spending dipped 0.5% after an upwardly revised 3.2% May gain. Construction activity on highways &amp; streets, nearly one third of the value of public construction spending, dipped 0.4% (+8.6% y/y).
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.

<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/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">June</th>
<th scope="col">May</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</td>
<td>-0.3%</td>
<td>-1.7%</td>
<td>7.9%</td>
<td>11.1%</td>
<td>5.4%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.2%</td>
<td>-3.1%</td>
<td>8.1%</td>
<td>13.8%</td>
<td>6.3%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-0.4%</td>
<td>-3.4%</td>
<td>9.1%</td>
<td>18.5%</td>
<td>12.9%</td>
<td>8.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.2%</td>
<td>-2.1%</td>
<td>5.6%</td>
<td>3.9%</td>
<td>-5.4%</td>
<td>-13.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>-0.5%</td>
<td>3.2%</td>
<td>7.2%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>5.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

The June value of construction put in place fell 0.3% following a deepened decline in May. June was the fifth monthly drop this year. Consensus expectations had been for a 0.7% increase. The 2005 declines in construction spending [...]

U.S. Construction Spending Down for Fifth Month This Year

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050801a.jpg" width="353">
The Institute of Supply Management reported that last month the Composite Index of activity in the manufacturing sector jumped nearly three points from June to 56.6. The latest is the highest level for the index since December and easily beat Consensus expectations for a modest up tick to 54.5.
During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
Pricing in the factory sector weakened further with the prices paid index falling below 50, to 48.5, for the first time since February 2002.
Production strengthened materially as indicated by a 5.6 jump in the index to 61.2, its highest level since last September. Inventory restocking apparently provided little of the boost to output as the inventory index fell to the lowest level since April 2004.
New orders added to the strong gain in June and rose to the year&#39;s highest level of 60.6 with higher export orders leading the gain. The export order index recovered all of the prior month&#39;s drop with a 5.5 point jump to 55.9.
Job growth improved as well. After two months below the break even level of 50 the employment index rose 3.3 points to 53.2, its highest since March. During the last twenty years there has been a 67% correlation between the level of the ISM Employment Index and the three month growth in factory sector employment.

<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">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>56.6</td>
<td>53.8</td>
<td>61.6</td>
<td>60.5</td>
<td>53.3</td>
<td>52.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>60.6</td>
<td>57.2</td>
<td>63.8</td>
<td>63.5</td>
<td>57.9</td>
<td>56.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>48.5</td>
<td>50.5</td>
<td>77.0</td>
<td>79.8</td>
<td>59.6</td>
<td>57.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The Institute of Supply Management reported that last month the Composite Index of activity in the manufacturing sector jumped nearly three points from June to 56.6. The latest is the highest level for the index since December and [...]

July ISM Factory Index Highest This Year

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050801a.jpg" width="353">
The Institute of Supply Management reported that last month the Composite Index of activity in the manufacturing sector jumped nearly three points from June to 56.6. The latest is the highest level for the index since December and easily beat Consensus expectations for a modest up tick to 54.5.
During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
Pricing in the factory sector weakened further with the prices paid index falling below 50, to 48.5, for the first time since February 2002.
Production strengthened materially as indicated by a 5.6 jump in the index to 61.2, its highest level since last September. Inventory restocking apparently provided little of the boost to output as the inventory index fell to the lowest level since April 2004.
New orders added to the strong gain in June and rose to the year&#39;s highest level of 60.6 with higher export orders leading the gain. The export order index recovered all of the prior month&#39;s drop with a 5.5 point jump to 55.9.
Job growth improved as well. After two months below the break even level of 50 the employment index rose 3.3 points to 53.2, its highest since March. During the last twenty years there has been a 67% correlation between the level of the ISM Employment Index and the three month growth in factory sector employment.

<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">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>56.6</td>
<td>53.8</td>
<td>61.6</td>
<td>60.5</td>
<td>53.3</td>
<td>52.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>60.6</td>
<td>57.2</td>
<td>63.8</td>
<td>63.5</td>
<td>57.9</td>
<td>56.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>48.5</td>
<td>50.5</td>
<td>77.0</td>
<td>79.8</td>
<td>59.6</td>
<td>57.6</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Down for Fifth Month This Year  
by <a href="/comment/Moeller.html">Tom Moeller</a> August 1, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050801b.jpg" width="353">
The June value of construction put in place fell 0.3% following a deepened decline in May. June was the fifth monthly drop this year. Consensus expectations had been for a 0.7% increase.
The 2005 declines in construction spending generally have been moderate especially when set against a 7.5% upward spike in February.
Private residential building activity added to earlier month&#39;s declines with a 0.4% dip but remained up 9.1% versus last year. A 12.2% pop in February was driven by improvements. The value of new single family building rose 0.2% (7.6% y/y) for the seventh consecutive monthly gain.
Nonresidential building rose 0.2% following the downwardly revised 2.1% May decline. Multi-retail building was quite strong, up 2.3% (22.1% y/y), led by shopping mall construction which rose 15.8% (-7.2% y/y).
Public construction spending dipped 0.5% after an upwardly revised 3.2% May gain. Construction activity on highways &amp; streets, nearly one third of the value of public construction spending, dipped 0.4% (+8.6% y/y).
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.

<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/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">June</th>
<th scope="col">May</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</td>
<td>-0.3%</td>
<td>-1.7%</td>
<td>7.9%</td>
<td>11.1%</td>
<td>5.4%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.2%</td>
<td>-3.1%</td>
<td>8.1%</td>
<td>13.8%</td>
<td>6.3%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-0.4%</td>
<td>-3.4%</td>
<td>9.1%</td>
<td>18.5%</td>
<td>12.9%</td>
<td>8.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.2%</td>
<td>-2.1%</td>
<td>5.6%</td>
<td>3.9%</td>
<td>-5.4%</td>
<td>-13.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>-0.5%</td>
<td>3.2%</td>
<td>7.2%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>5.7%</td>
</tr>
</tbody>
</table>
 Rises in Japanese Employment and Wages: Good Omens for Japanese Consumer Incomes and Spending 
by <a href="/comment/Curley.html">Louise Curley</a> August 1, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802f.jpg" width="353">
While the number of employed persons in Japan declined 0.26% in June from May to 64.18 million on a seasonally unadjusted basis, it was 0.69% above the June, 2004 figure. The number of unemployed persons declined by 8.8% in May to June and was 9.4% below June, 2004. As a result, the unemployment rate is now 4.2% compared with 4.6% in May, 2005 and also in June, 2004.
June also saw a year-to-year rise in Japanese wages. The average monthly cash wage in Japan amounted to 467,814 Yen or $4,156 at the current rate of exchange. The granting of bonuses in June and December distorts the month to month changes in the wage data that are available only on a not seasonally adjusted basis. The year to year changes are the more meaningful comparisons. In June, cash wages were almost 0.7% above the comparable figure of last year.
Cash Earnings are equal to money earned before deductions for income tax, social insurance contribution, union dues and payment for good purchased, etc. In the Haver Data Base for Japan there is a breakdown of cash earnings. Total cash earnings consist of Contractual Cash Earnings and Bonuses. Contractual Cash Earnings, in turn are the sum of Scheduled Cash Earnings and Overtime Earnings, which include, in addition to over-time payments, other special payments, such as marriage allowances, etc.
In the attached chart we show the year-to-year changes in the Scheduled Cash Earnings and Overtime Earnings. Scheduled cash earnings have shown year-to-year increases in April, May and June of this year, the first increases since April, 2003. Overtime earnings, on the other hand have shown year-to-year increases since mid 2002 and in June were 2.4% above the comparable figure for last year.
Rising employment and wages should augur well for Japanese consumer incomes and spending.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/JAPAN.HTM">Japan</a></th>
<th scope="col">Jun 05</th>
<th scope="col">May 05</th>
<th scope="col">Jun 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment and Unemployment (No. of persons in Mil)</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">Employed Persons</td>
<td>64.18</td>
<td>64.35</td>
<td>63.74</td>
<td>-0.26</td>
<td>0.69</td>
<td>63.29</td>
<td>63.16</td>
<td>63.30</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed Persons&nbsp;</td>
<td>2..80</td>
<td>3.07</td>
<td>3.09</td>
<td>-8.79</td>
<td>-9.39</td>
<td>3.13</td>
<td>3.50</td>
<td>3.59</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate %</td>
<td>4.2</td>
<td>4.6</td>
<td>4.6</td>
<td>-0.4*</td>
<td>-0.4*</td>
<td>4.7</td>
<td>5.3</td>
<td>5.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Monthly Averages in Yen</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">Cash Wages</td>
<td>467,801</td>
<td>276,908</td>
<td>466,932</td>
<td>n.m.</td>
<td>1.27</td>
<td>332,598</td>
<td>341,790</td>
<td>343,219</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Contract Wages</td>
<td>273,712</td>
<td>271,336</td>
<td>272,652</td>
<td>0.97</td>
<td>0.39</td>
<td>272,049</td>
<td>278,748</td>
<td>278,873</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Scheduled Wages</td>
<td>254,875</td>
<td>252,332</td>
<td>254,258</td>
<td>1.01</td>
<td>0.24</td>
<td>253,106</td>
<td>260,153</td>
<td>261,000</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Over-Time</td>
<td>18,837</td>
<td>18,742</td>
<td>18,394</td>
<td>0.51</td>
<td>2.41</td>
<td>18,943</td>
<td>18,595</td>
<td>17,873</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Bonus &amp; Other Wages</td>
<td>194,102</td>
<td>5,833</td>
<td>189,280</td>
<td>n.m.</td>
<td>2.35</td>
<td>60,549</td>
<td>63,042</td>
<td>64,344</td>
</tr>
</tbody>
</table>
</body>
</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

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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

Jump to:

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