Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810a.jpg" width="353">
A jump in petroleum prices, last month by 7.0%, again was the strength behind a 1.5% surge in overall July import prices. The surge was the largest since March and was ahead of Consensus expectations for a 1.1% increase. 
An 8.2% (4.2% y/y) rise in crude oil prices was behind the strength in petroleum prices, overall. Higher fuel oil prices also contributed with an 11.5% (9.3% y/y) spike. Early in August, a decline yesterday in the price of Brent crude oil to $69.97 from an average $76.97 during July promises a reversal of perhaps all the strength during that month.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810b.jpg" width="353">
Less petroleum, import prices rose a modest 0.2% after a 0.1% uptick during June which was lower than the initial report of a 0.2% gain. 
 During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a reduced 47% against a broader basket of currencies. Why a Dollar Depreciation May Not Close the U.S. Trade Deficit from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci13-5/ci13-5.html">here</a>
Prices for industrial supplies &amp; materials excluding petroleum fell 0.1% (+8.3% y/y). Paper &amp; paper base stock prices fell 0.3% (-1.3% y/y) and metal prices fell 0.3% (+16.4% y/y). Building material prices rose 2.7% (-0.6 y/y). These detailed import price series can be found in the Haver USINT database. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810c.jpg" width="353">
Capital goods prices rose 0.2% (0.1% y/y) for the second month, led down again by a 0.2% (-5.9% y/y) drop in computers, peripheral and semiconductors. Less the high tech sector, capital goods prices rose a strong 0.4% (2.6% y/y) for the second month.
Prices for imported non-manufactured consumer goods were firm with a 0.5% ( 3.2% y/y) rise. Prices for most other nonauto consumer goods were little changed, except apparel prices which rose 0.3% (1.2% y/y).
Overall export prices rose 0.2% and the 3.9% y/y gain was the weakest since November of last year. Agricultural prices rose 1.5% (17.8% y/y) but nonagricultural export prices were unchanged (+2.8% y/y). 
Today&#39;s statement by the Federal Reserve on Providing Liquidity to Financial Markets can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2007/20070810/default.htm"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>1.5%</td>
<td>0.9%</td>
<td>2.8%</td>
<td>4.8%</td>
<td>7.5%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.0%</td>
<td>4.4%</td>
<td>4.1%</td>
<td>20.6%</td>
<td>37.6%</td>
<td>30.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.8%</td>
<td>1.7%</td>
<td>2.7%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>3.9%</td>
</tr>
</tbody>
</table>


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A jump in petroleum prices, last month by 7.0%, again was the strength behind a 1.5% surge in overall July import prices. The surge was the largest since March and was ahead of Consensus expectations for a 1.1% increase. An 8.2% (4.2% [...]

U.S. Import Prices Boosted in July By Oil

Carol Stone, CBE

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<div align="left" style="width: 971; height: 976"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810g.jpg" width="353">
It&#39;s just past noon in New York as we&#39;re writing today and news services tell us stock markets have just turned positive on the day&#39;s trading. Current conditions in financial markets and among financial institutions suggest that we might benefit from a look at more of Haver&#39;s short-term financial data offerings besides the yield spreads we examined here about a week ago.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810h.jpg" width="353">
Yesterday - Thursday - the federal funds rate spiked well above the Federal Reserve&#39;s target, with an effective rate for the day of 5.41%. Generally, as seen in the table and the first graph, this rate runs just a few basis points either side of the target. So even the seemingly modest 16 basis points was a major move and indicative of tightening conditions in money markets. At the same time, this very market stress was reflected in rising prices of federal funds rate futures. These higher prices correspond to lower rates, signaling that market participants are starting to price in an easing by the Fed, through a reduction in their target funds rate. Again, we see in the graph that the nearby contract has hardly budged since July 2006, when markets were still anticipating more tightening. So the little blip we see over the very last few days is the most movement there&#39;s been in a year and it shows markets are starting to look seriously for the Fed to ease. The performance of the December contract, pushing up through 95 yesterday, indicates that traders expect the rate to be moved to 5% by December and with a non-trivial chance for 4.75%. These series, along with other Fed funds futures contracts, are in the &quot;Interest Rates&quot; menus of Haver&#39;s DAILY database.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810i.jpg" width="353">
In the WEEKLY database, we can find some information about altered trading patterns and credit aggregates. The Federal Reserve collects data on transactions volume from the group of security dealers it trades with, known as &quot;primary dealers&quot;. This dataset includes US Government securities, federal agency debt, the so-called &quot;agency&quot; mortgage-backeds (those issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation), and corporate securities. We show here the dealers&#39; trading volume in MBS and Governments. That in MBS has declined noticeably in the last three weeks. These figures are highly variable, but even using a four-week moving average, we see that the recent experience has the lowest turnover since January, which is typically a slow month. In contrast, trading in Governments has increased; the latest week, ended August 1, averaged $513.1 billion a day with customers (&quot;Others&quot; in this dataset, in contrast to inter-dealer brokers). This is a record by far, but with variability here, the four-week average does not yet exhibit such an extreme. It seems unlikely, though, that trading in Treasuries would have been much reduced in the subsequent periods. We&#39;ll watch that data closely next week to be sure.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810j.jpg" width="353">
Finally, some packaged bonds and loans are financed in the short-term money markets through the vehicle of asset-backed commercial paper. Traditionally, commercial paper was unsecured debt issued by businesses to finance inventories or other aspects of daily operations. In the last several years, though, asset-backed paper has grown rapidly and is now larger than the more customary type of paper. The risks, even if only perceived risks, in asset-backed credit now involve this segment of the money markets, as well as the bond markets.</div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">DAILY</th>
<th scope="col">Aug 9</th>
<th scope="col">Aug 8</th>
<th scope="col">Aug 7</th>
<th scope="col">Week Ago</th>
<th scope="col">Month Ago</th>
<th scope="col">3 Mos. Ago</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Fed Funds Rate</td>
<td>5.41</td>
<td>5.27</td>
<td>5.26</td>
<td>5.24</td>
<td>5.22</td>
<td>5.21</td>
</tr>
<tr class="odd">
<td class="firstcol">Fed FundsFutures Price: Sept</td>
<td>94.875</td>
<td>94.775</td>
<td>94.755</td>
<td>94.785</td>
<td>94.760</td>
<td>94.795</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Dec</td>
<td>95.100</td>
<td>94.940</td>
<td>94.965</td>
<td>94.965</td>
<td>94.765</td>
<td>94.920</td>
</tr>
<tr>
<td colspan="7">&nbsp;</td>
</tr>
<tr>
<td class="firstcol">WEEKLY</td>
<td>Aug 8</td>
<td>Aug 1</td>
<td>July 25</td>
<td colspan="3">4-Week Averages ending</td>
</tr>
<tr>
<td class="firstcol">June 27</td>
<td>May 30</td>
<td>Jan 3</td>
</tr>
<tr class="odd">
<td class="firstcol">Primary Dealer Transactions in Gov&#39;t Securities</td>
<td>--*</td>
<td>513.1</td>
<td>290.1</td>
<td>371.4</td>
<td>270.3</td>
<td>246.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Primary Dealer Transactions in MBS</td>
<td>--*</td>
<td>205.1</td>
<td>135.7</td>
<td>312.3</td>
<td>248.1</td>
<td>167.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Commercial Paper Outstanding</td>
<td>2223.5</td>
<td>2212.7</td>
<td>2224.6</td>
<td>2127.4</td>
<td>2092.4</td>
<td>1970.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Asset-Backed</td>
<td>1182.9</td>
<td>1180.8</td>
<td>1177.7</td>
<td>1143.5</td>
<td>1113.8</td>
<td>1038.6</td>
</tr>
</tbody>
</table>
Japan IP Rebounds in June but still has Uncertain Momentum 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 10, 2007


<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810f.jpg" width="353">
Industrial production in Japan has clearly been slowing down. But the three-month pace is showing more lift. Still, this is the volatile measure and its greater lift does not mean that will remain force. For the time being Japan appears to be doing better, but its momentum remains uncertain. By sector, manufacturing is strong over three months but still lower over 6 months and one year and its gain is based on the first monthly rise in four months. Investment and mining categories have a bit more of an uptrend in place; mining is up over 3-month, 6-month and one-year period. This sector does not look solid enough to justify a rate hike anytime soon. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Japan Industrial Production Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m %</td>
<td colspan="3">Saar %</td>
<td>Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Mining &amp; Manufacturing</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>3.4%</td>
<td>-2.0%</td>
<td>2.3%</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">Total Industry</td>
<td>1.2%</td>
<td>-0.6%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>-2.7%</td>
<td>2.3%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>3.4%</td>
<td>-1.8%</td>
<td>2.3%</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">Food &amp; Tobacco</td>
<td>-1.5%</td>
<td>0.7%</td>
<td>-0.6%</td>
<td>-5.4%</td>
<td>-0.9%</td>
<td>-0.7%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">Textiles</td>
<td>1.1%</td>
<td>0.2%</td>
<td>0.0%</td>
<td>5.3%</td>
<td>-1.6%</td>
<td>-3.7%</td>
<td>-2.9%</td>
</tr>
<tr>
<td class="firstcol">Transportation</td>
<td>0.7%</td>
<td>4.2%</td>
<td>-2.4%</td>
<td>9.5%</td>
<td>-5.4%</td>
<td>5.8%</td>
<td>6.4%</td>
</tr>
<tr class="odd">
<td colspan="8">Product</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>3.5%</td>
<td>-3.4%</td>
<td>0.6%</td>
<td>2.4%</td>
<td>-2.5%</td>
<td>0.8%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">Intermediate Goods</td>
<td>1.3%</td>
<td>-0.5%</td>
<td>-0.3%</td>
<td>1.7%</td>
<td>-0.7%</td>
<td>4.4%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">Investment Goods</td>
<td>0.1%</td>
<td>2.0%</td>
<td>0.6%</td>
<td>11.4%</td>
<td>0.0%</td>
<td>-1.2%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">Mining</td>
<td>4.1%</td>
<td>0.6%</td>
<td>0.4%</td>
<td>21.9%</td>
<td>18.5%</td>
<td>9.1%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">Electricity &amp; Gas</td>
<td>0.3%</td>
<td>-2.6%</td>
<td>2.0%</td>
<td>-1.4%</td>
<td>-1.7%</td>
<td>2.9%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
Industrial Production Slips and Slows in France 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 10, 2007


<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810e.jpg" width="353">
For the second quarter as whole, industrial production is off in France at a 1% pace. This drop is led by weakness in auto output that has fallen at a 9.2% annual rate in the quarter. But the output of consumer goods and intermediate goods has gone flat in the quarter. Capital goods output is still expanding at a slightly slower 1.3% annual rate in Q2 over Q1. IP had risen by 3.8% (saar) in Q1 with auto output up by 10.7 (saar) in the quarter.
For June itself the intermediate goods sector is the most surprising with output falling by 1.4% adding to the weakness in often volatile autos where output is off by an even sharper 2.3%. For autos it is the second monthly drop in a row. For intermediate goods the drop comes after a gain of 0.7% in May. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
French IP Excluding construction
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr>
<td class="firstcol">IP total</td>
<td>-0.5%</td>
<td>0.5%</td>
<td>-1.0%</td>
<td>-3.8%</td>
<td>-0.2%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer goods</td>
<td>0.2%</td>
<td>1.0%</td>
<td>-1.1%</td>
<td>0.0%</td>
<td>2.7%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital goods</td>
<td>0.9%</td>
<td>0.1%</td>
<td>-0.7%</td>
<td>1.1%</td>
<td>3.3%</td>
<td>0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate goods</td>
<td>-1.4%</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>-4.8%</td>
<td>-2.4%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Auto</td>
<td>-2.3%</td>
<td>-2.7%</td>
<td>0.7%</td>
<td>-16.2%</td>
<td>-4.4%</td>
<td>-6.9%</td>
</tr>
</tbody>
</table>
U.S. Import Prices Boosted in July By Oil 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 10, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810a.jpg" width="353">
A jump in petroleum prices, last month by 7.0%, again was the strength behind a 1.5% surge in overall July import prices. The surge was the largest since March and was ahead of Consensus expectations for a 1.1% increase. 
An 8.2% (4.2% y/y) rise in crude oil prices was behind the strength in petroleum prices, overall. Higher fuel oil prices also contributed with an 11.5% (9.3% y/y) spike. Early in August, a decline yesterday in the price of Brent crude oil to $69.97 from an average $76.97 during July promises a reversal of perhaps all the strength during that month.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810b.jpg" width="353">
Less petroleum, import prices rose a modest 0.2% after a 0.1% uptick during June which was lower than the initial report of a 0.2% gain. 
 During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a reduced 47% against a broader basket of currencies. Why a Dollar Depreciation May Not Close the U.S. Trade Deficit from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci13-5/ci13-5.html">here</a>
Prices for industrial supplies &amp; materials excluding petroleum fell 0.1% (+8.3% y/y). Paper &amp; paper base stock prices fell 0.3% (-1.3% y/y) and metal prices fell 0.3% (+16.4% y/y). Building material prices rose 2.7% (-0.6 y/y). These detailed import price series can be found in the Haver USINT database. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070810c.jpg" width="353">
Capital goods prices rose 0.2% (0.1% y/y) for the second month, led down again by a 0.2% (-5.9% y/y) drop in computers, peripheral and semiconductors. Less the high tech sector, capital goods prices rose a strong 0.4% (2.6% y/y) for the second month.
Prices for imported non-manufactured consumer goods were firm with a 0.5% ( 3.2% y/y) rise. Prices for most other nonauto consumer goods were little changed, except apparel prices which rose 0.3% (1.2% y/y).
Overall export prices rose 0.2% and the 3.9% y/y gain was the weakest since November of last year. Agricultural prices rose 1.5% (17.8% y/y) but nonagricultural export prices were unchanged (+2.8% y/y). 
Today&#39;s statement by the Federal Reserve on Providing Liquidity to Financial Markets can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2007/20070810/default.htm"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>1.5%</td>
<td>0.9%</td>
<td>2.8%</td>
<td>4.8%</td>
<td>7.5%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.0%</td>
<td>4.4%</td>
<td>4.1%</td>
<td>20.6%</td>
<td>37.6%</td>
<td>30.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.8%</td>
<td>1.7%</td>
<td>2.7%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>3.9%</td>
</tr>
</tbody>
</table>


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It's just past noon in New York as we're writing today and news services tell us stock markets have just turned positive on the day's trading. Current conditions in financial markets and among financial institutions suggest that we [...]

Fed Funds Futures Price in Easing, Dealer Trading Volume Favors Treasuries: More on Haver's Short-Term Financial Data

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809d.jpg" width="353">
Yesterday the Bureau of Economic Analysis of the Commerce Department released the annual revision of the capital stock data, known more formally as &quot;Fixed Assets and Consumer Durable Goods&quot;. There is new data for year-end 2006 and revision of 2004 and 2005. All these series, at current, historical and real costs, plus associated data on investment and depreciation are contained in Haver&#39;s CAPSTOCK database. It is roughly the case that for any item in real terms, that is, chained 2000 dollars, the change in the capital stock each year equals investment minus depreciation.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809e.jpg" width="353">
We select here for highlight a single line-item, Private Residential Fixed Assets. This measure of the housing stock on a current cost basis expanded just 5.3% in 2006, less than half the pace of the two prior years and the smallest annual increase since 1995. In recent years, the largest increase was 11.9% in 2004. Historically, the largest single increase in this 82-year-long dataset was in 1946, the first year after World War II, when it increased more than 23%. In the late 1970s as the Baby Boomer generation were forming their own households and having their children, the housing stock expanded at an average annual rate just over 16%. These figures are all in current cost terms<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809f.jpg" width="353">
In the last few years, we&#39;ve come to talk informally about &quot;McMansions&quot;: the building of enormous houses in great quantity that makes them seem somewhat mass produced. In some cases, homebuyers have bought an existing house and had it demolished to build their new home in some desired location where no vacant property is readily available. In looking at these capital stock data, we think we see some evidence of this in the substantial increases in the real values of both investment and depreciation in 2004 and 2005. Investment increased by 18% in 2004 and nearly 14% in 2005; last year, investment decreased 0.4%. Depreciation barreled ahead 11% and 24% in those years, respectively; it then dropped off last year by 21%. The long history of these data show how much out of line the recent developments in homebuilding are with more traditional patterns.
Basic demand for housing of course has its origin in household formation. Is this responsible for the recent huge increases in the housing stock? Actually only a little. The growth in the number of households has actually been quite modest: the Census Bureau&#39;s annual count shows an increase of 1.3% annually from 2000 to 2004, when the real housing stock rose 2.9%. In 2005, households increased 1.2% and the housing stock, 3.0%. In 2006, the comparison was 0.9% households and 3.0% real stock. Thus, the amount of house per household is increasing. In the last graph here, we see it up 2.1% last year, reaching $109,000 in chained 2000 prices; since 2000, this has gained at a 1.7% annual pace. Bigger houses seem still to be the vogue. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Stock, Year-End, Bil.$</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003*</th>
<th scope="col">2000*</th>
<th scope="col">1995*</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total @ Current Cost</td>
<td>17,103.5</td>
<td>16,245.3</td>
<td>14,802.5</td>
<td>13,224.7</td>
<td>10,675.7</td>
<td>7,839.8</td>
</tr>
<tr>
<td class="firstcol">% Change</td>
<td>5.3%</td>
<td>9.7%</td>
<td>11.9%</td>
<td>7.4%</td>
<td>6.4%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total @ Real Cost</td>
<td>12,488.9</td>
<td>12,115.4</td>
<td>11,763.3</td>
<td>11,401.4</td>
<td>10,487.8</td>
<td>9,174.2</td>
</tr>
<tr>
<td class="firstcol">% Change</td>
<td>3.1%</td>
<td>3.0%</td>
<td>3.2%</td>
<td>2.8%</td>
<td>2.7%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Dollar Change</td>
<td>373.5</td>
<td>352.1</td>
<td>361.9</td>
<td>304.5</td>
<td>262.7</td>
<td>190.2</td>
</tr>
<tr>
<td class="firstcol">Real Investment</td>
<td>565.1</td>
<td>593.5</td>
<td>556.7</td>
<td>476.2</td>
<td>416.4</td>
<td>327.6</td>
</tr>
<tr>
<td class="firstcol">Real Depreciation</td>
<td>256.9</td>
<td>310.4</td>
<td>234.7</td>
<td>184.8</td>
<td>144.0</td>
<td>111.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Yesterday the Bureau of Economic Analysis of the Commerce Department released the annual revision of the capital stock data, known more formally as "Fixed Assets and Consumer Durable Goods". There is new data for year-end 2006 and [...]

2006 Housing Stock Has Smallest Gain in 11 Years, But Housing Stock per Household Continues To Grow

Robert Brusca

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809c.jpg" width="353">
The UK trade balance has remained fairly stable through all this volatility. 
The shorter growth horizons show that export growth has started to pick up at a fast pace than import growth. Yr/Yr exports are off a bit more than imports, but over the past 3-6 months they are up at a much faster pace and accelerating. Export growth is stronger across road vehicles, basic materials and firmer for capital goods. For food, beverages and tobacco, flows are still weak and dropping. 
For imports, basic materials are strong and so are road vehicles, but vehicle imports have slowed somewhat. Food, beverages and tobacco imports are steady. Capital goods imports have slowed their decline. Overall imports are lower over three months at a 1% pace and up over six months by just 1.8%. 
The slowing in imports has allowed the strength in exports to bolster the trade position in general. In June the deficit improved slightly to -&pound;6.27bln compared to -&pound;6.44bln in May. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK Trade trends for goods
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>-&pound;&pound; 6.27</td>
<td>-&pound;&pound; 6.44</td>
<td>-&pound;&pound; 6.61</td>
<td>-&pound;&pound; 6.78</td>
<td>-&pound;&pound; 6.72</td>
</tr>
<tr>
<td colspan="6">Exports</td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>4.9%</td>
<td>4.6%</td>
<td>19.3%</td>
<td>10.6%</td>
<td>-13.3%</td>
</tr>
<tr>
<td class="firstcol">Capital goods</td>
<td>3.2%</td>
<td>4.3%</td>
<td>3.3%</td>
<td>-21.0%</td>
<td>-52.0%</td>
</tr>
<tr>
<td class="firstcol">Road Vehicles</td>
<td>5.3%</td>
<td>0.2%</td>
<td>32.8%</td>
<td>17.1%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Basic Materials</td>
<td>-1.4%</td>
<td>5.7%</td>
<td>67.9%</td>
<td>41.0%</td>
<td>15.4%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-9.1%</td>
<td>9.5%</td>
<td>-21.0%</td>
<td>-4.4%</td>
<td>-0.8%</td>
</tr>
<tr>
<td colspan="6">IMPORTS</td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>2.9%</td>
<td>0.5%</td>
<td>-1.0%</td>
<td>1.8%</td>
<td>-11.9%</td>
</tr>
<tr>
<td class="firstcol">Capital goods</td>
<td>4.0%</td>
<td>-1.7%</td>
<td>-9.7%</td>
<td>-26.3%</td>
<td>-52.7%</td>
</tr>
<tr>
<td class="firstcol">Road Vehicles</td>
<td>3.7%</td>
<td>6.9%</td>
<td>18.8%</td>
<td>36.6%</td>
<td>12.3%</td>
</tr>
<tr>
<td class="firstcol">Basic Materials</td>
<td>1.2%</td>
<td>2.7%</td>
<td>46.3%</td>
<td>15.3%</td>
<td>22.7%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-1.5%</td>
<td>-0.4%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td colspan="6">*Stg Blns; mo or period average</td>
</tr>
</tbody>
</table>
</body>
</html>

The UK trade balance has remained fairly stable through all this volatility. The shorter growth horizons show that export growth has started to pick up at a fast pace than import growth. Yr/Yr exports are off a bit more than imports, [...]

After a SURGE, UK Export and Import Growth Plummeted and Has Begun to Recover

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<div align="left"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809a.jpg" width="353"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809b.jpg" width="353">
Initial claims for unemployment insurance rose again last week, to 316,000. The 7,000 w/w increase followed a 6,000 rise during the prior week that was revised up slightly. Consensus expectations had been for 310,000 claims in the latest period.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims rose slightly to 307,750 (-1.2% y/y).
Continuing claims for unemployment insurance rose 39,000 after a revised 21,000 decline during the prior week. The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 1.9%. </div>

<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">08/04/07 </th>
<th scope="col">07/28/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;316</td>
<td>309</td>
<td>-0.9%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,52559</td>
<td>3.7%</td>
<td>2,545</td>
<td>3.3%</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance rose again last week, to 316,000. The 7,000 w/w increase followed a 6,000 rise during the prior week that was revised up slightly. Consensus expectations had been for 310,000 claims in the [...]

U.S. Claims for Jobless Insurance Exceed Expectations

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<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809d.jpg" width="353">
Yesterday the Bureau of Economic Analysis of the Commerce Department released the annual revision of the capital stock data, known more formally as &quot;Fixed Assets and Consumer Durable Goods&quot;. There is new data for year-end 2006 and revision of 2004 and 2005. All these series, at current, historical and real costs, plus associated data on investment and depreciation are contained in Haver&#39;s CAPSTOCK database. It is roughly the case that for any item in real terms, that is, chained 2000 dollars, the change in the capital stock each year equals investment minus depreciation.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809e.jpg" width="353">
We select here for highlight a single line-item, Private Residential Fixed Assets. This measure of the housing stock on a current cost basis expanded just 5.3% in 2006, less than half the pace of the two prior years and the smallest annual increase since 1995. In recent years, the largest increase was 11.9% in 2004. Historically, the largest single increase in this 82-year-long dataset was in 1946, the first year after World War II, when it increased more than 23%. In the late 1970s as the Baby Boomer generation were forming their own households and having their children, the housing stock expanded at an average annual rate just over 16%. These figures are all in current cost terms<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809f.jpg" width="353">
In the last few years, we&#39;ve come to talk informally about &quot;McMansions&quot;: the building of enormous houses in great quantity that makes them seem somewhat mass produced. In some cases, homebuyers have bought an existing house and had it demolished to build their new home in some desired location where no vacant property is readily available. In looking at these capital stock data, we think we see some evidence of this in the substantial increases in the real values of both investment and depreciation in 2004 and 2005. Investment increased by 18% in 2004 and nearly 14% in 2005; last year, investment decreased 0.4%. Depreciation barreled ahead 11% and 24% in those years, respectively; it then dropped off last year by 21%. The long history of these data show how much out of line the recent developments in homebuilding are with more traditional patterns.
Basic demand for housing of course has its origin in household formation. Is this responsible for the recent huge increases in the housing stock? Actually only a little. The growth in the number of households has actually been quite modest: the Census Bureau&#39;s annual count shows an increase of 1.3% annually from 2000 to 2004, when the real housing stock rose 2.9%. In 2005, households increased 1.2% and the housing stock, 3.0%. In 2006, the comparison was 0.9% households and 3.0% real stock. Thus, the amount of house per household is increasing. In the last graph here, we see it up 2.1% last year, reaching $109,000 in chained 2000 prices; since 2000, this has gained at a 1.7% annual pace. Bigger houses seem still to be the vogue. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Stock, Year-End, Bil.$</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003*</th>
<th scope="col">2000*</th>
<th scope="col">1995*</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total @ Current Cost</td>
<td>17,103.5</td>
<td>16,245.3</td>
<td>14,802.5</td>
<td>13,224.7</td>
<td>10,675.7</td>
<td>7,839.8</td>
</tr>
<tr>
<td class="firstcol">% Change</td>
<td>5.3%</td>
<td>9.7%</td>
<td>11.9%</td>
<td>7.4%</td>
<td>6.4%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total @ Real Cost</td>
<td>12,488.9</td>
<td>12,115.4</td>
<td>11,763.3</td>
<td>11,401.4</td>
<td>10,487.8</td>
<td>9,174.2</td>
</tr>
<tr>
<td class="firstcol">% Change</td>
<td>3.1%</td>
<td>3.0%</td>
<td>3.2%</td>
<td>2.8%</td>
<td>2.7%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Dollar Change</td>
<td>373.5</td>
<td>352.1</td>
<td>361.9</td>
<td>304.5</td>
<td>262.7</td>
<td>190.2</td>
</tr>
<tr>
<td class="firstcol">Real Investment</td>
<td>565.1</td>
<td>593.5</td>
<td>556.7</td>
<td>476.2</td>
<td>416.4</td>
<td>327.6</td>
</tr>
<tr>
<td class="firstcol">Real Depreciation</td>
<td>256.9</td>
<td>310.4</td>
<td>234.7</td>
<td>184.8</td>
<td>144.0</td>
<td>111.0</td>
</tr>
</tbody>
</table>
After a SURGE, UK Export and Import Growth Plummeted and Has Begun to Recover 
by <a href="/comment/Brusca.html">Robert Brusca</a> August 9, 2007


<div align="left"><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070809c.jpg" width="353">
The UK trade balance has remained fairly stable through all this volatility. 
The shorter growth horizons show that export growth has started to pick up at a fast pace than import growth. Yr/Yr exports are off a bit more than imports, but over the past 3-6 months they are up at a much faster pace and accelerating. Export growth is stronger across road vehicles, basic materials and firmer for capital goods. For food, beverages and tobacco, flows are still weak and dropping. 
For imports, basic materials are strong and so are road vehicles, but vehicle imports have slowed somewhat. Food, beverages and tobacco imports are steady. Capital goods imports have slowed their decline. Overall imports are lower over three months at a 1% pace and up over six months by just 1.8%. 
The slowing in imports has allowed the strength in exports to bolster the trade position in general. In June the deficit improved slightly to -&pound;6.27bln compared to -&pound;6.44bln in May. </div>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK Trade trends for goods
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="2">m/m%</td>
<td colspan="3">% Saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3M</td>
<td>6M</td>
<td>12M</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance*</td>
<td>-&pound;&pound; 6.27</td>
<td>-&pound;&pound; 6.44</td>
<td>-&pound;&pound; 6.61</td>
<td>-&pound;&pound; 6.78</td>
<td>-&pound;&pound; 6.72</td>
</tr>
<tr>
<td colspan="6">Exports</td>
</tr>
<tr>
<td class="firstcol">All Exports</td>
<td>4.9%</td>
<td>4.6%</td>
<td>19.3%</td>
<td>10.6%</td>
<td>-13.3%</td>
</tr>
<tr>
<td class="firstcol">Capital goods</td>
<td>3.2%</td>
<td>4.3%</td>
<td>3.3%</td>
<td>-21.0%</td>
<td>-52.0%</td>
</tr>
<tr>
<td class="firstcol">Road Vehicles</td>
<td>5.3%</td>
<td>0.2%</td>
<td>32.8%</td>
<td>17.1%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Basic Materials</td>
<td>-1.4%</td>
<td>5.7%</td>
<td>67.9%</td>
<td>41.0%</td>
<td>15.4%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-9.1%</td>
<td>9.5%</td>
<td>-21.0%</td>
<td>-4.4%</td>
<td>-0.8%</td>
</tr>
<tr>
<td colspan="6">IMPORTS</td>
</tr>
<tr>
<td class="firstcol">All Imports</td>
<td>2.9%</td>
<td>0.5%</td>
<td>-1.0%</td>
<td>1.8%</td>
<td>-11.9%</td>
</tr>
<tr>
<td class="firstcol">Capital goods</td>
<td>4.0%</td>
<td>-1.7%</td>
<td>-9.7%</td>
<td>-26.3%</td>
<td>-52.7%</td>
</tr>
<tr>
<td class="firstcol">Road Vehicles</td>
<td>3.7%</td>
<td>6.9%</td>
<td>18.8%</td>
<td>36.6%</td>
<td>12.3%</td>
</tr>
<tr>
<td class="firstcol">Basic Materials</td>
<td>1.2%</td>
<td>2.7%</td>
<td>46.3%</td>
<td>15.3%</td>
<td>22.7%</td>
</tr>
<tr>
<td class="firstcol">Food Beverages &amp; Tobacco</td>
<td>-1.5%</td>
<td>-0.4%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td colspan="6">*Stg Blns; mo or period average</td>
</tr>
</tbody>
</table>
U.S. Claims for Jobless Insurance Exceed Expectations 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 9, 2007


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Initial claims for unemployment insurance rose again last week, to 316,000. The 7,000 w/w increase followed a 6,000 rise during the prior week that was revised up slightly. Consensus expectations had been for 310,000 claims in the latest period.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims rose slightly to 307,750 (-1.2% y/y).
Continuing claims for unemployment insurance rose 39,000 after a revised 21,000 decline during the prior week. The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment remained at 1.9%. </div>

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<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">08/04/07 </th>
<th scope="col">07/28/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Initial Claims</td>
<td>&nbsp;316</td>
<td>309</td>
<td>-0.9%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,52559</td>
<td>3.7%</td>
<td>2,545</td>
<td>3.3%</td>
<td>2,459</td>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070808i.jpg" width="353">
Consumer price behavior varies widely in Central and Eastern Europe, apparently depending on the degree of development in various economies. In the Czech Republic, inflation is slow and restrained, much like that in Western Europe, while Lithuania and Latvia show inflationary tendencies quite distinct from their larger regional neighbor. All three countries reported CPI data for July today.
In the Czech Republic, the total CPI was up just 0.3% in the month and 2.3% from July 2006. A measure of &quot;core&quot; prices, which excludes regulated prices and taxes, was up 0.2% in the month and 1.1% from a year ago. On a year-over-year basis, which is the easiest way to compare the three countries, health care, housing and alcohol have the largest increases in the Czech Republic, running about 3 to 4% for the first two, while alcohol is up 10.8%. Food prices are up 2.5%, an increase close to that in the overall index. Clothing, which had been declining, was unchanged in July from July 2006. Prices of recreational activities, communications and transportation are all down slightly from a year ago.
In Lithuania, the CPI in July was up 0.7% from June and 5.1% from a year ago. Food prices there have risen 10.3% year-to-year, in an acceleration that began last October. Housing costs are up 11.2%, also gaining more rapidly since last October. Restaurants and hotels see almost a double-digit increase, 9.8%. Other sectors have less extreme inflation, with prices of clothing and communications actually down from their year-ago levels. Home furnishings are up just 1.9%.
Inflation in Latvia runs an order of magnitude higher even than in Lithuania. Over the latest 12 months, it was 9.5%, including 1.6% in July from June. As in Lithuania, communications prices are down and clothing prices are the next weakest category. But food prices are up 12.2% in the past year and housing costs 15.1%. Restaurant prices and hotel rates went up 16.6%. Overall, the Latvian economy encompasses rapid real growth, more than 11% year-to-year in Q1, the latest figure. Employment then was 2.5% higher than a year ago and productivity (calculated by Haver as GDP per employee) gained an impressive 8.5%. Money growth, however, been very fast at 28.7% in Q2, although this is down from 40%+ expansion during 2006. The currency, the lat, is held steady with the euro, and the country&#39;s trade deficit is widening noticeably. Thus, Latvia appears to be a rapidly changing economy and persistent high inflation is part of the mix. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070808j.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070808k.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol">CPI % Changes</th>
July 2007
June 2007
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Mo/Mo</td>
<td>Yr/Yr</td>
<td>Mo/Mo</td>
<td>Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">Lithuania</td>
<td>0.7</td>
<td>5.1</td>
<td>0.2</td>
<td>4.8</td>
<td>3.7</td>
<td>2.7</td>
<td>1.2</td>
</tr>
<tr>
<td colspan="8">&nbsp;</td>
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<tr class="odd">
<td class="firstcol">Latvia</td>
<td>1.6</td>
<td>9.5</td>
<td>1.0</td>
<td>8.8</td>
<td>6.5</td>
<td>6.8</td>
<td>6.2</td>
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<td colspan="8">&nbsp;</td>
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<tr class="odd">
<td class="firstcol">Czech Rep, Total</td>
<td>0.29*</td>
<td>2.3</td>
<td>0.29*</td>
<td>2.5</td>
<td>2.5</td>
<td>1.8</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Core</td>
<td>0.23</td>
<td>1.1</td>
<td>0.17</td>
<td>1.2</td>
<td>0.7</td>
<td>1.1</td>
<td>1.5</td>
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Consumer price behavior varies widely in Central and Eastern Europe, apparently depending on the degree of development in various economies. In the Czech Republic, inflation is slow and restrained, much like that in Western Europe, [...]

CPI Inflation Restrained in Czech Republic, Moderate in Lithuania and Very Fast in Latvia

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

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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Consumer credit outstanding increased $13.1 billion (2.3% y/y) in September after rising $3.1 billion in August, revised from $0.4 billion, and $17.7 billion in July, revised from $18.1 billion. A $10.0 billion rise had been expected in the Action Economics Forecast Survey.

Nonrevolving credit outstanding rose $11.4 billion (2.1% y/y) in September after increasing $9.2 billion in August, revised from $6.3 billion, and increasing $6.7 billion in July, revised from $6.9 billion. Nonrevolving credit held by depository institutions declined 6.8% y/y in September after falling 7.4% y/y in August. Finance company debt holdings fell 1.5% y/y after declining 1.3%, while credit union holdings rose an increased 12.8% y/y in September, the quickest growth since in two years. Nonrevolving debt of the federal government rose 3.6% y/y in September, the same as in August.

In September, revolving credit outstanding, which includes credit cards, rose $1.7 billion (2.6% y/y) after falling $6.1 billion in August, revised from a $6.0 billion decline, and rising $11.0 billion in July, revised from $11.2 billion. Revolving credit outstanding held by depository institutions fell 3.0% y/y. Revolving credit held by finance companies fell a steady 14.7% y/y in September, while credit union debt rose 4.5% y/y in September, up from 3.7% y/y in August.

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

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

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- Notable gain in credit usage follows prior month’s slowdown.
- Nonrevolving credit usage strengthens and revolving turns positive.

U.S. Consumer Credit Strengthens in September

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% during the prior four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Moves Sideways in Latest Four Weeks

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The chart provides a good overview for German trade trend. The table breaks trade trends down by categories and provides growth rates on shorter horizons of 3 months, 6 months and 12 months. But the chart depicts the overarching trends well. It shows the German surplus being diminished on a gradual path and not altogether in a clear monotonic fashion. Export and import lines on the chart move mostly sideways (horizontal). The export line is below the import line since late last year. These two series plots on the right-hand scale and they depict growth rates (year-over-year). So sideways movements mean roughly steady growth. Exports have been growth steadily year-over-year at a weak pace that on occasion has been a decline in terms of their year-on-year value. Generally, the green line is in positive territory. The red import line has been stronger, indicating somewhat better, steadier import growth over the period.

While exports had a good September, export growth sequenced from 12-months to 6-months, to 3-months has been weakening. Imports also put in a strong September but are showing some erosion from 12-month to 6-months to 3-months in terms of annualized rates of growth. Still, import growth rates remain quite strong and consistent; the sense of erosion is clear but also moderate – it’s a moderate erosion in progress for imports.

Capital goods exports from Germany are improving- this observation is based on lagged data with a one-month lag built in. But consumer goods and vehicle exports are slowing and rather sharply- likely as a result of U.S. tariffs.

Import side trends, with the same lag, are not as clear cut. Capital goods imports are growing, and motor vehicle imports are improving and accelerating. Consumer goods imports have erratically slowed.

Real exports and imports on sequential lagged data show exports contracting on most horizons while imports generate consistent positive growth in real terms. There is a big difference in these two trends expressed in real terms.

On balance, German trade trends are shifting. The trade balance is gradually eroding. Change is in play.

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Germany

German Trade Surplus Shrinks Despite Strong Exports

Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

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**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

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**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

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**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

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**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

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**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

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Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

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Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). 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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- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

Economy in Brief: 2007

Jump to:

U.S. Import Prices Boosted in July By Oil

Fed Funds Futures Price in Easing, Dealer Trading Volume Favors Treasuries: More on Haver's Short-Term Financial Data

2006 Housing Stock Has Smallest Gain in 11 Years, But Housing Stock per Household Continues To Grow

After a SURGE, UK Export and Import Growth Plummeted and Has Begun to Recover

U.S. Claims for Jobless Insurance Exceed Expectations

2006 Housing Stock Has Smallest Gain in 11 Years, But Housing Stock per Household Continues To Grow

CPI Inflation Restrained in Czech Republic, Moderate in Lithuania and Very Fast in Latvia

CPI Inflation Restrained in Czech Republic, Moderate in Lithuania and Very Fast in Latvia