Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060120d.jpg" width="353">
The University of Michigan reported that consumer sentiment in January rose another 2.1% to 93.4. The rise was the third off the October low which has totaled 25.9% and the gain surpassed Consensus expectations for an increase to 92.5.
During the last ten years there has been a 76% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
The current conditions index rose 2.7% as the reading of buying conditions for large household goods rose sharply back to last year&#39;s high, though the reading of personal finances fell slightly (-4.1% y/y). Consumers&#39; assessment of gov&#39;t economic policy (-12.2% y/y) improved to the highest level since October.
Consumers&#39; expectations increased a moderate 1.6% following the 15.2% December spurt. Expected business conditions during the next year and during the net five years rose but expectations for personal finances gave back most of a December surge.
The mean expected inflation rate for the next twelve months fell to 3.5% from 4.1% and was below the 5.5% expected in October &amp; September.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Jan&nbsp;</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>93.4</td>
<td>91.5</td>
<td>-2.2%</td>
<td>88.6</td>
<td>95.2</td>
<td>87.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>112.0</td>
<td>109.1</td>
<td>1.0%</td>
<td>105.9</td>
<td>105.6</td>
<td>97.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>81.5</td>
<td>80.2</td>
<td>-4.9%</td>
<td>77.4</td>
<td>88.5</td>
<td>81.4</td>
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The University of Michigan reported that consumer sentiment in January rose another 2.1% to 93.4. The rise was the third off the October low which has totaled 25.9% and the gain surpassed Consensus expectations for an increase to [...]

U.S. Consumer Sentiment Rose Further

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119e.jpg" width="353">
Industrial sales and orders rebounded markedly in Italy in November after pausing in October, according to data reported today by Istat, the Italian national statistical agency. Total orders gained 1.8% and stand 4.0% above a year ago, while sales (often called &#147;turnover&#148; there) were up 1.6% in the month and 4.4% on the year.
As the case in much of Europe, the foreign sector is tending to run ahead of the domestic economy. For the entire period since the index base year of 2000, foreign orders are up 14.5%, while domestic orders have been virtually flat. In the past year, foreign orders are up 5.8% and foreign sales by 7.6%, compared with somewhat over 3% for domestic orders and sales.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119f.jpg" width="353">
Individual industries are experiencing mixed fortunes, with electrical equipment, furniture and chemicals advancing in the last year. Metals and machinery see slowing growth, and transportation equipment and wood products have been flat. Finally, textiles and paper products are declining.
By type, consumer goods turnover seems recently to have the most consistent growth, albeit less dramatic expansion. Capital goods are tending to expand, but very unevenly from month-to-month, so there is little identifiable momentum. Energy products are very strong, but other intermediate goods have been erratic and trendless.
A reminder that these data appear in several Haver databases: most obviously in ITALY, our comprehensive and detailed country-source database. But also, a summary is presented in G10, a collection of major industrial countries in Europe plus the US, Canada, and Japan. And EUROSTAT, compiled from Eurostat, the EU statistical agency, contains an array of industrial orders throughout Europe. <span style="font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Verdana;
mso-fareast-font-family:&quot;Times New Roman&quot;;mso-bidi-font-family:&quot;Times New Roman&quot;;
mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA"> 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ITALY/@I06/@I06.HTM">Italy Industry</a> </th>
Nov 2005 
<th scope="col">Oct 2005 </th>
<th scope="col">Year Ago </th>
<th scope="col">2004 </th>
<th scope="col">2003 </th>
<th scope="col">2002 </th>
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<td class="firstcol">Index* </td>
<td>% Chg </td>
</tr>
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<td class="firstcol"><h1>Sales </h1></td>
<td>109.6 </td>
<td>1.6 </td>
<td>-0.6 </td>
<td>4.4 </td>
<td>3.1 </td>
<td>-1.0 </td>
<td>1.1 </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic </td>
<td>108.2 </td>
<td>1.4 </td>
<td>-0.3 </td>
<td>3.3 </td>
<td>2.9 </td>
<td>-0.6 </td>
<td>0.8 </td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign </td>
<td>113.5 </td>
<td>2.0 </td>
<td>-1.4 </td>
<td>7.6 </td>
<td>3.6 </td>
<td>-2.3 </td>
<td>1.7 </td>
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<td class="firstcol">Orders </td>
<td>104.1 </td>
<td>1.8 </td>
<td>-0.9 </td>
<td>4.0 </td>
<td>4.7 </td>
<td>-3.8 </td>
<td>2.3 </td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic </td>
<td>99.5 </td>
<td>2.1 </td>
<td>-1.3 </td>
<td>3.1 </td>
<td>3.9 </td>
<td>-3.5 </td>
<td>1.0 </td>
</tr>
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<td class="firstcol">&nbsp; Foreign </td>
<td>114.5 </td>
<td>1.1 </td>
<td>-0.1 </td>
<td>5.8 </td>
<td>6.3 </td>
<td>-4.2 </td>
<td>5.1 </td>
</tr>
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Industrial sales and orders rebounded markedly in Italy in November after pausing in October, according to data reported today by Istat, the Italian national statistical agency. Total orders gained 1.8% and stand 4.0% above a year [...]

Italian Industry Moves Unevenly Higher Through November

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119g.jpg" width="353">
The Index of General Business Conditions in the manufacturing sector for January from the Philadelphia Fed fell sharply to 3.3 from 10.9 in December. Consensus expectations had been for improvement to 13.1. It was the lowest level for the index since last June.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 50% correlation with q/q growth in real GDP.
The business conditions index reflects a separate survey question, not the sub indexes, and most of the sub indexes improved this month versus December.
The sub index measuring new orders rose to 11.1, its highest since October, from 5.8. Shipments also rose to 18.6 from 9.4 while the index covering the number of employees advanced to 11.7 from 7.9. During the last ten years there has been a 64% correlation between the employment index and the three month growth in factory payrolls.
The separate index of expected business conditions in six months fell moderately, reversing most of the revised rise in December. Expectations for employment also backpedaled after sharp improvement during December.
The prices paid index fell moderately and the index of future prices fell to its lowest level since last June. During the last ten years there has been a 75% correlation between the prices paid index and the three month growth in the intermediate goods PPI. The correlation with the finished goods PPI has been 50% and with the CPI it&#39;s been 43%.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0106.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
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<td class="firstcol">General Activity Index</td>
<td>3.3</td>
<td>10.9</td>
<td>11.0</td>
<td>12.4</td>
<td>28.0</td>
<td>10.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>44.9</td>
<td>47.1</td>
<td>64.1</td>
<td>43.5</td>
<td>51.2</td>
<td>16.8</td>
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The Index of General Business Conditions in the manufacturing sector for January from the Philadelphia Fed fell sharply to 3.3 from 10.9 in December. Consensus expectations had been for improvement to 13.1. It was the lowest level for [...]

Philadelphia Fed Business Activity Off Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119a.jpg" width="353">
Initial claims for unemployment insurance dropped 36,000 to 271,000 last week following a downwardly revised 15,000 increase the prior week. Consensus expectations had been for 315,000 claims.
The latest figure covers the survey period for January nonfarm payrolls and initial claims fell a sharp 48,000 (15.0%) from the December period to the lowest level since March 2000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119b.jpg" width="353">
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell sharply to 299,000 (-11.2% y/y), its lowest level since July 2000.
Continuing unemployment insurance claims dropped a sharp 158,000 to the lowest level since February 2001.
The insured rate of unemployment fell to 2.0% after four weeks at 2.1%.

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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">01/14/06</th>
<th scope="col">01/07/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
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<td class="firstcol">Initial Claims</td>
<td>271</td>
<td>307</td>
<td>-16.9%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,534</td>
<td>-6.4%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
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</tbody>
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Initial claims for unemployment insurance dropped 36,000 to 271,000 last week following a downwardly revised 15,000 increase the prior week. Consensus expectations had been for 315,000 claims. The latest figure covers the survey [...]

Initial Jobless Insurance Claims Dropped Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119d.jpg" width="353">
Housing starts slumped 8.0% m/m last month to 1.933M units following a little revised 3.4% increase in November. The decline was to the lowest level since March but did not prevent starts for all of 2005 from rising 6.0% to a record 2.066M. Consensus expectations had been for a lesser decline in December to 2.05M starts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119c.jpg" width="353">
Single-family starts plummeted 12.3% m/m to 1.577M from the near record November level. The gain was most pronounced in the West where starts fell 21.7% (-17.1% y/y) and in the Midwest where single family starts dropped 22.6% (-23.8% y/y). In the Northeast single family starts fell for the fifth month in the last six, down 4.5% (-9.3% y/y) and in the South starts fell 4.2% (+4.3% y/y).
Multi family starts rose 10.2% m/m following a downwardly revised gain during November. Building permits fell 4.4% to the lowest level since May.
The latest Beige Book covering regional economic conditions in the US from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2006/20060118/default.htm"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,933</td>
<td>2,121</td>
<td>-5.7%</td>
<td>2,066</td>
<td>1,950</td>
<td>1,854</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,577</td>
<td>1,798</td>
<td>-7.9%</td>
<td>1,713</td>
<td>1,604</td>
<td>1,505</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>356</td>
<td>323</td>
<td>5.6%</td>
<td>353</td>
<td>345</td>
<td>349</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,068</td>
<td>2,163</td>
<td>-0.6%</td>
<td>2,121</td>
<td>2,058</td>
<td>1,8 88</td>
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Housing starts slumped 8.0% m/m last month to 1.933M units following a little revised 3.4% increase in November. The decline was to the lowest level since March but did not prevent starts for all of 2005 from rising 6.0% to a record [...]

Housing Starts Fell To Lowest Level Since March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119d.jpg" width="353">
Housing starts slumped 8.0% m/m last month to 1.933M units following a little revised 3.4% increase in November. The decline was to the lowest level since March but did not prevent starts for all of 2005 from rising 6.0% to a record 2.066M. Consensus expectations had been for a lesser decline in December to 2.05M starts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119c.jpg" width="353">
Single-family starts plummeted 12.3% m/m to 1.577M from the near record November level. The gain was most pronounced in the West where starts fell 21.7% (-17.1% y/y) and in the Midwest where single family starts dropped 22.6% (-23.8% y/y). In the Northeast single family starts fell for the fifth month in the last six, down 4.5% (-9.3% y/y) and in the South starts fell 4.2% (+4.3% y/y).
Multi family starts rose 10.2% m/m following a downwardly revised gain during November. Building permits fell 4.4% to the lowest level since May.
The latest Beige Book covering regional economic conditions in the US from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2006/20060118/default.htm"> here</a>.

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<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/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a> </th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,933</td>
<td>2,121</td>
<td>-5.7%</td>
<td>2,066</td>
<td>1,950</td>
<td>1,854</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,577</td>
<td>1,798</td>
<td>-7.9%</td>
<td>1,713</td>
<td>1,604</td>
<td>1,505</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>356</td>
<td>323</td>
<td>5.6%</td>
<td>353</td>
<td>345</td>
<td>349</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>2,068</td>
<td>2,163</td>
<td>-0.6%</td>
<td>2,121</td>
<td>2,058</td>
<td>1,8 88</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Dropped Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> January 19, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119a.jpg" width="353">
Initial claims for unemployment insurance dropped 36,000 to 271,000 last week following a downwardly revised 15,000 increase the prior week. Consensus expectations had been for 315,000 claims.
The latest figure covers the survey period for January nonfarm payrolls and initial claims fell a sharp 48,000 (15.0%) from the December period to the lowest level since March 2000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119b.jpg" width="353">
During the last ten years there has been a (negative) 75% correlation between the level of initial jobless insurance claims and the m/m change in payroll employment.
The four-week moving average of initial claims fell sharply to 299,000 (-11.2% y/y), its lowest level since July 2000.
Continuing unemployment insurance claims dropped a sharp 158,000 to the lowest level since February 2001.
The insured rate of unemployment fell to 2.0% after four weeks at 2.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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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">01/14/06</th>
<th scope="col">01/07/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>271</td>
<td>307</td>
<td>-16.9%</td>
<td>332</td>
<td>343</td>
<td>402</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,534</td>
<td>-6.4%</td>
<td>2,663</td>
<td>2,924</td>
<td>3,532</td>
</tr>
</tbody>
</table>
Philadelphia Fed Business Activity Off Sharply  
by <a href="/comment/Moeller.html">Tom Moeller</a> January 19, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119g.jpg" width="353">
The Index of General Business Conditions in the manufacturing sector for January from the Philadelphia Fed fell sharply to 3.3 from 10.9 in December. Consensus expectations had been for improvement to 13.1. It was the lowest level for the index since last June.
During the last ten years there has been a 68% correlation between the level of the Philadelphia Fed Business Conditions Index and three month growth in factory sector industrial production. There has been a 50% correlation with q/q growth in real GDP.
The business conditions index reflects a separate survey question, not the sub indexes, and most of the sub indexes improved this month versus December.
The sub index measuring new orders rose to 11.1, its highest since October, from 5.8. Shipments also rose to 18.6 from 9.4 while the index covering the number of employees advanced to 11.7 from 7.9. During the last ten years there has been a 64% correlation between the employment index and the three month growth in factory payrolls.
The separate index of expected business conditions in six months fell moderately, reversing most of the revised rise in December. Expectations for employment also backpedaled after sharp improvement during December.
The prices paid index fell moderately and the index of future prices fell to its lowest level since last June. During the last ten years there has been a 75% correlation between the prices paid index and the three month growth in the intermediate goods PPI. The correlation with the finished goods PPI has been 50% and with the CPI it&#39;s been 43%.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0106.html">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/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan &#39;05</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>3.3</td>
<td>10.9</td>
<td>11.0</td>
<td>12.4</td>
<td>28.0</td>
<td>10.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>44.9</td>
<td>47.1</td>
<td>64.1</td>
<td>43.5</td>
<td>51.2</td>
<td>16.8</td>
</tr>
</tbody>
</table>
Italian Industry Moves Unevenly Higher Through November 
by <a href="/comment/Stone.html">Carol Stone</a> January 19, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119e.jpg" width="353">
Industrial sales and orders rebounded markedly in Italy in November after pausing in October, according to data reported today by Istat, the Italian national statistical agency. Total orders gained 1.8% and stand 4.0% above a year ago, while sales (often called &#147;turnover&#148; there) were up 1.6% in the month and 4.4% on the year. 
As the case in much of Europe, the foreign sector is tending to run ahead of the domestic economy. For the entire period since the index base year of 2000, foreign orders are up 14.5%, while domestic orders have been virtually flat. In the past year, foreign orders are up 5.8% and foreign sales by 7.6%, compared with somewhat over 3% for domestic orders and sales.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060119f.jpg" width="353">
Individual industries are experiencing mixed fortunes, with electrical equipment, furniture and chemicals advancing in the last year. Metals and machinery see slowing growth, and transportation equipment and wood products have been flat. Finally, textiles and paper products are declining.
By type, consumer goods turnover seems recently to have the most consistent growth, albeit less dramatic expansion. Capital goods are tending to expand, but very unevenly from month-to-month, so there is little identifiable momentum. Energy products are very strong, but other intermediate goods have been erratic and trendless.
A reminder that these data appear in several Haver databases: most obviously in ITALY, our comprehensive and detailed country-source database. But also, a summary is presented in G10, a collection of major industrial countries in Europe plus the US, Canada, and Japan. And EUROSTAT, compiled from Eurostat, the EU statistical agency, contains an array of industrial orders throughout Europe.<span style="font-size:10.0pt;mso-bidi-font-size:12.0pt;font-family:Verdana;
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mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA"> 

<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/ITALY/@I06/@I06.HTM">Italy Industry</a> </th>
Nov 2005 
<th scope="col">Oct 2005 </th>
<th scope="col">Year Ago </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">Index* </td>
<td>% Chg </td>
</tr>
<tr>
<td class="firstcol"><h1>Sales </h1></td>
<td>109.6 </td>
<td>1.6 </td>
<td>-0.6 </td>
<td>4.4 </td>
<td>3.1 </td>
<td>-1.0 </td>
<td>1.1 </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic </td>
<td>108.2 </td>
<td>1.4 </td>
<td>-0.3 </td>
<td>3.3 </td>
<td>2.9 </td>
<td>-0.6 </td>
<td>0.8 </td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign </td>
<td>113.5 </td>
<td>2.0 </td>
<td>-1.4 </td>
<td>7.6 </td>
<td>3.6 </td>
<td>-2.3 </td>
<td>1.7 </td>
</tr>
<tr class="odd">
<td class="firstcol">Orders </td>
<td>104.1 </td>
<td>1.8 </td>
<td>-0.9 </td>
<td>4.0 </td>
<td>4.7 </td>
<td>-3.8 </td>
<td>2.3 </td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic </td>
<td>99.5 </td>
<td>2.1 </td>
<td>-1.3 </td>
<td>3.1 </td>
<td>3.9 </td>
<td>-3.5 </td>
<td>1.0 </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign </td>
<td>114.5 </td>
<td>1.1 </td>
<td>-0.1 </td>
<td>5.8 </td>
<td>6.3 </td>
<td>-4.2 </td>
<td>5.1 </td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060118f.jpg" width="353">
Employment has begun to falter in the UK, according to the latest Labor Force Survey, published today by the Office of National Statistics (ONS). In the 3 months centered on October, the number of people employed fell 49,000 from September&#39;s 3-month average and stood only 0.8% above a year ago. As recently as August the year-on-year gain was 1.3%. The employment rate decreased 0.2 percentage points in the October reading to 74.5% from 74.7% in September and 74.8 in the October period of 2004. This rate, the number employed compared to the population of &quot;working age&quot; (16-59 for women and 16-64 for men), peaked at 75.0% last January. Commensurately, the unemployment rate has risen, reaching 5.0% most recently, up from a low of 4.7% recorded in August.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060118g.jpg" width="353">
Associated wage and unemployment insurance data also show softening. The average earnings index, watched by many in the UK as a harbinger of inflation pressures, had just a 3.4% yearly growth rate in the three months ended November, slowing from 4.6% as recently as April. The number of claimants for Jobseeker&#39;s Allowance benefits rose in the month of December to 909,100 from 901,900 in November and 825,000 in December 2004.
There are other scattered signs of softening in the UK. Consumer confidence turned negative in October, and industrial production declined irregularly through much of 2005. The CBI industrial trends survey shows marked declines in order books continuously since March. GDP growth slowed to below 2% year-on-year in Q2 and Q3. [Q4 data are due to be reported next Wednesday, January 25.] Exports, by contrast, have been rising as have retail sales. So there is some mixed quality to UK economic activity, but the basic industry appears sluggish and it&#39;s hardly surprising that the labor market is sharing in this.

<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/@U7/@U7.HTM">UK Labor Force Survey (SA)</a></th>
<th scope="col">Dec 2005</th>
<th scope="col">Nov 2005</th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Year Ago</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">Employment (Thous)</td>
<td>--</td>
<td>--</td>
<td>28,764</td>
<td>28,813</td>
<td>28,542</td>
<td>28,465</td>
<td>28,183</td>
<td>27,917</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Change (Thous/%)</td>
<td>--</td>
<td>--</td>
<td>-49</td>
<td>-12</td>
<td>0.8</td>
<td>1.0</td>
<td>1.0</td>
<td>0.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment Rate (%)</td>
<td>--</td>
<td>--</td>
<td>74.5</td>
<td>74.7</td>
<td>74.8</td>
<td>74.8</td>
<td>74.6</td>
<td>74.5</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>--</td>
<td>--</td>
<td>5.0</td>
<td>4.9</td>
<td>4.7</td>
<td>4.8</td>
<td>5.0</td>
<td>5.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Earnings Index (Yr/Yr %) </td>
<td>--</td>
<td>3.4</td>
<td>3.6</td>
<td>4.1</td>
<td>4.3</td>
<td>4.3</td>
<td>3.4</td>
<td>3.5</td>
</tr>
<tr>
<td class="firstcol">Claimant Count (Thous)</td>
<td>909.1</td>
<td>901.9</td>
<td>891.5</td>
<td>878.0</td>
<td>825.0</td>
<td>853.6</td>
<td>933.3</td>
<td>946.7</td>
</tr>
</tbody>
</table>
</body>
</html>

Employment has begun to falter in the UK, according to the latest Labor Force Survey, published today by the Office of National Statistics (ONS). In the 3 months centered on October, the number of people employed fell 49,000 from [...]

UK Labor Market Weakens in Late 2005

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

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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Andrew Cates

**US monetary policy**
This first chart shows that Chair Powell’s cautious tone in the aftermath of this week’s FOMC meeting led markets to scale back expectations for further near-term easing. Fed funds futures for late 2025 through mid-2026 rose slightly, signalling that investors now expect a shallower and slower easing cycle than before. While the rate cut itself confirmed the Fed’s gradual pivot toward easier policy, markets interpreted Powell’s remarks as suggesting that a December move is not guaranteed and that the central bank remains wary of declaring victory on inflation too soon.

251030Z1.jpg

**The global business cycle**
The latest flash PMI surveys for October highlight a still-divergent global picture, with services-led resilience offsetting persistent manufacturing weakness. Activity remains strongest in India and the United States, both comfortably in expansion territory, while Germany has shown one of the clearest signs of improvement within the euro area after a long period of contraction. The broader euro area and UK readings point to modest but positive momentum, suggesting that growth is stabilising rather than accelerating. In contrast, France remains mired below the 50 threshold, signalling continued contraction, and Japan and Australia are treading water with only marginal gains.

251030Z2.jpg

**Consumer confidence in the US and Europe** 
Consumer confidence trends have diverged across major economies in 2025. In the UK, sentiment has improved gradually, supported by easing inflation and lower interest rates. In the euro area, confidence has stabilised after a prolonged downturn, though households remain wary. By contrast, US confidence has slipped further, probably reflecting a softening labour market, slowing wage growth, and heightened concern about job security. Overall, global consumer sentiment remains fragile and uneven, suggesting that household spending could stay subdued even if price pressures recede and monetary policy becomes more accommodative.

251030Z3.jpg

**Credit conditions in the euro area** 
The latest data on Euro Area M3 growth underline that monetary conditions remain mildly restrictive, even after the ECB’s recent rate reductions. Money growth has decelerated sharply over the past year, with only a limited contribution from private-sector credit and little net support from lending to government. The ECB’s Q4 Bank Lending Survey, released this week, suggests that while financing conditions are beginning to ease, credit dynamics remain weak. Banks reported a further net tightening of credit standards for firms, reflecting continued risk aversion, even as loan demand from businesses and households picked up modestly thanks to lower interest rates and improving sentiment.

251030Z4.jpg

**The UK manufacturing sector**
Turning to the UK, the latest CBI Industrial Trends Survey offers little sign of improvement in manufacturing conditions. The balance of firms reporting excess stocks of finished goods has fallen further into negative territory, consistent with efforts to run down inventories amid weak demand and high uncertainty. And on that score, the share of firms citing uncertainty about demand over the next year as a constraint on capital expenditure has shifted up, highlighting persistent caution in investment planning. Together, these indicators point to a sector still struggling to regain momentum after a protracted slowdown—one where firms are prioritising cost control and liquidity preservation over expansion, despite an easing in headline inflation and gradual monetary policy support.

251030Z5.jpg

**Traded goods price inflation**
The Drewry Container Index, which tracks global shipping costs for a standard 40-foot container, has fallen back in recent months from the elevated levels seen in 2024, reflecting softer global trade volumes and a partial unwinding of last year’s supply-chain pressures. Even so, concerns have re-emerged that new US tariff measures and associated logistical bottlenecks could push freight rates and producer price inflation (PPI) higher in the coming months. The final chart below illustrates how closely traded goods price inflation, represented by Haver’s aggregation of PPI inflation for advanced economies, has tended to move with swings in container shipping costs. While traded goods inflation remains subdued for now, any renewed disruptions to global shipping routes or tariff-driven frictions could quickly feed through to higher input costs—especially in manufacturing sectors reliant on long and complex supply chains.

251030Z6.jpg

Global equity markets are once again flirting with record highs, buoyed by renewed optimism that the global economy can achieve a soft landing—and by persistent enthusiasm over the potential productivity gains from AI-related investment. The Federal Reserve’s decision to cut rates by 25bps this week—its second this autumn—initially reinforced expectations that global monetary policy is shifting toward a more accommodative stance. However, Chair Powell’s reminder that a further cut in December was “not inevitable” tempered that optimism and was met with some disappointment in financial markets (chart 1). Even so, the broader tone remains constructive, though it contrasts with a still-fragile macro environment. Renewed conflict in Gaza, the ongoing US government shutdown, and intensifying trade tensions have kept risk sentiment uneven and underscored the fragility of the recovery. The latest flash PMIs (chart 2) show modest global expansion led by services, while manufacturing continues to struggle. Consumer confidence (chart 3) tells a similar story: sentiment has weakened in the US as the labour market softens, stabilised in the euro area, and improved slightly in the UK. In the euro area, sluggish money and credit growth (chart 4) and the ECB’s latest bank-lending survey confirm that financial conditions remain mildly restrictive despite recent rate cuts. The UK CBI Industrial Trends Survey (chart 5) points to manufacturers reducing inventories and deferring investment plans amid demand uncertainty. Externally, the Drewry Container Index (chart 6) has fallen back from 2024’s elevated levels, signalling easing supply-chain pressures and subdued traded-goods inflation—though tariff realignments remain a potential source of friction.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/1qTfb8cqkuic21S0HPE4Wt?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Optimism with Caveats

251029F20.jpg

251029G20.jpg

At today’s meeting of the Federal Open Market Committee, the target range for the Fed funds rate was reduced to 3.75%-to-4.00% from 4.00%-to-4.25%. It was the lowest range since December 2022. The current range compares to a high of 5.25%-to-5.50% in mid-September 2024. Today’s target range matched expectations in the Action Economics Forecast Survey. The action was supported by all but two FOMC members; one preferred to lower the target range by 50 basis points and another preferred no cut.

The following statement was released after today’s meeting: “Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.”

“The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”

U.S. economic figures can be found in Haver’s **USECON** database & interest rate data are in the **WEEKLY** & **DAILY** databases.

251029H20.jpg

251029I20.jpg

- FOMC lowers funds rate target by quarter point for second time this year.
- The decision was approved by all but two FOMC voters.
- Asset purchases to end.

FOMC Reduces Fed Funds Rate Target as Expected

251029F5.jpg

251029G5.jpg

The Pending Home Sales Index from the National Association of Realtors (NAR) remained unchanged last month (-0.9% y/y) at 74.8 following a 4.2% August increase, revised from 4.0%, after easing an unrevised 0.3% in July. So far in 2025 sales have risen 1.1%, but the index remained 40.2% below its most recent peak of 125.1 in October 2021. The index is a forward-looking measure of home sales based on contract signings.

Steady pending home sales occurred as the average rate on a 30-year mortgage fell to 6.35%	 in September after declining to 6.59% in August. It has weakened to an average 6.28% so far in October. These rates are down from a high of 7.04% in the third week of January, but remain well above a low of 5.22% in August 2022 and more than double a record low 2.68% in December 2020.

Pending home sales were mixed last month in the four major regions of the country. Pending home sales in the Northeast increased 3.1% (0.5% y/y) after falling 1.1% in August. In the South, sales improved 1.1% (0.9% y/y) after increasing 3.2%. Moving lower, sales in the Midwest declined 3.4% (-1.5% y/y) after rising 8.7% in August. Sales in the West eased 0.2% last month (-5.3% y/y) after a 5.0% August improvement.

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

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

- Sales remain at highest level since March.
- Year-to-year date sales rise modestly.
- Regional changes are mixed.


U.S. Pending Home Sales Hold Steady in September as Mortgage Rates Fall

Sandy Batten

251029A2.jpg

251029B2.jpg

Mortgage applications rose 7.1% w/w (+57.9% y/y) in the week ended October 24 after having declined in each of the previous four weeks, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Purchase applications increased 4.5% w/w (+19.2% y/y) following four consecutive weekly declines. Applications for refinancing jumped up 9.3% w/w (+110.8% y/y) on top of a 4.0% weekly advance in the previous week.

Mortgage interest rates mostly declined last week, continuing their general downtrend since May. The effective interest rate on a 30-year fixed-rate loan fell seven basis points to 6.47% in the week ended October 24, the lowest rate since September 2024, while the 15-year rate declined nine basis points to 5.82%. Since late May, the 30- year rate has declined 70 basis points while the 15-year rate has fallen 60 basis points over the same period. The rate on a 30-year Jumbo mortgage edged down two basis points to 6.48%. By contrast, the rate on a 5-year ARM rose six basis points to 5.84%.

The share of applications for refinancing an existing loan rose to 57.1% in the week ended October 24 from 55.9% in the previous week. This was the third consecutive weekly increase. The adjustable-rate mortgage (ARM) share of activity fell to 8.9% from 10.8% in the previous week.

The average size of a mortgage loan fell 0.6% w/w (+6.9% y/y) to $412,300 in the week ended October 24. This was the first weekly decline in three weeks and remained well below the series high of $452,000 in the week of September 12. The average size of a purchase loan declined 0.5% w/w (-2.3% y/y) to $436,800. This was the third weekly decline in the past four weeks. The average size of a refinanced loan edged down 0.4% w/w (+29.5% y/y) to $393,900 after having jumped 6.8% w/w in the previous week.

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.

- Applications increased 7.1% w/w, their first weekly gain in five weeks.
- Both applications for purchase and for refinancing rose.
- Fixed mortgage interest rates continued their general downtrend.

U.S. Mortgage Applications Rebounded on Further Decline in Rates

251028N4.jpg

251028O4.jpg

The Conference Board's Index of Consumer Confidence fell 1.0% during October (-13.7% y/y) to 94.6. A level of 93.6 had been expected this month in the Action Economics Forecast Survey. The decline in Consumer Confidence was the third consecutive monthly drop. It followed a 2.2% September shortfall, revised from -3.7%, and an unrevised 0.9% August decline. The index was 16.1% below its peak last November.

The Present Situation index rose 1.4% in October (-5.0% y/y) after falling 3.7% in September, revised from down 5.3%, after easing an unrevised 0.3% in August. The Expectations Index declined 3.9% this month (-22.2% y/y) after easing 0.4% in September, revised from a 1.7% decline.

The percentage of respondents assessing business conditions as “good” rose to 20.2% in October after falling to 19.9% in September. It remained close to its weakest reading since April. The percentage assessing conditions as “bad” fell to 14.7% from 15.3% in September. The appraisal of labor market conditions improved as a slightly higher 27.8% described “jobs plentiful” versus 26.9% in September. That remained below a high of 56.7% in March of 2022. Jobs were viewed as “hard to get” by a fairly steady 18.4% of respondents this month, but that was increased from a low of 10.5% in February 2023. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) rose to 9.4% compared to 8.7% in September and 11.1% in August. This measure remained below a high of 47.1% in March 2022. It has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions continued to deteriorate this month as a lessened 19.0% of respondents expect conditions to improve over the next six months, after 19.3% did so in September, while a steady 22.6% expect them to worsen, after rising from 23.5% in August. On employment, 15.8% expect the number of jobs to increase over the next six months versus 16.6% in September. The percentage expecting the number of jobs to decline in the next six months increased to 27.8% after easing to 25.7% in September. A lessened 17.9% of respondents expect income to increase in six months, down from 18.2% in September. That remained off a high of 20.7% in November of last year and compares to a 12.5% who expect income to decrease, up from 11.7% in September.

The expected rate of price inflation over the next twelve months edged higher to 5.9% in October from 5.8% in September. These remain up from a low of 5.0% last November. Fifty-three percent of respondents expect interest rates to rise this year, up from a low of 47.2% October of 2024. The percentage of respondents expecting equity prices to increase over the next twelve months held steady at 49.9%, the most since January. The percentage expecting a decline in stock prices increased to 28.5% after falling to 27.4% in September.

The percentage of respondents planning to buy a home fell to 5.7% this month and reversed two straight months of increase. Plans to purchase an automobile improved to 11.6% of respondents this month and mostly reversed the September decline to 11.4%. These readings remain up from a low of 10.6% in April.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Confidence level is lowest in six months				.
- Present situation index increases but expectations decline.
- Inflation expectations remain contained.

Economy in Brief: January 2006

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