Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050623a.jpg" width="353">
Initial claims for unemployment insurance fell a sharp 20,000 to 314,000 last week, the lowest level in two months. Consensus expectations had been for 330,000 claims and the prior week&#39;s figure was revised up slightly.
The latest figure covers the survey period for nonfarm payrolls in June and was down 8,000 (-2.5%) from the May period.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims fell slightly to 333,000 (-3.5% y/y).
A 38,000 decline in continuing claims for unemployment insurance retraced most of the prior week&#39;s downwardly revised 56,000 jump.
The insured unemployment rate fell back to 2.0% from 2.1% the prior week.
More Life vs. More Goods: Explaining Rising Health Expenditures from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-10.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">06/18/05</th>
<th scope="col">06/11/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>314</td>
<td>334</td>
<td>-9.8%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,600</td>
<td>-11.9%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Slipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050623b.jpg" width="353">
The National Association of Realtors reported that sales in May of existing homes declined a modest 0.7% to 7,130M versus the unrevised record during the prior month. Consensus expectations had been for roughly the same decline to 7.15M.
The data reflect closings of home sales in earlier months.<blockquote></blockquote>
Sales of single-family homes fell 1.1% to 6.210M and were down m/m throughout the country except in the West where they rose 1.4% (-1.3% y/y). Sales in the South slipped 0.8% (+5.6% y/y) and in the Midwest closings dropped 4.7% (0.0% y/y). In the Northeast sales fell 1.2% (+3.7% y/y).
The median price of an existing single family home rose slightly m/m to a record $204,600 (12.2% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.
Fed Chairman Greenspan&#39;s Testimony on China is available <a href="http://www.federalreserve.gov/boarddocs/testimony/2005/20050623/default.htm"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Home Sales</td>
<td>7,130</td>
<td>7,180</td>
<td>3.5%</td>
<td>6,723</td>
<td>6,170</td>
<td>5,653</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>6,210</td>
<td>6,280</td>
<td>2.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
</tr>
</tbody>
</table>
Consumers Fret Over Economic Situation in Italy & Netherlands 
by <a href="/comment/Stone.html">Carol Stone</a> June 23, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050623c.jpg" width="353">
Consumer confidence has eroded in Italy this month, with a decline of 1.4 percentage points in the ISAE indicator to 102.9 from 104.3 in May (seasonally adjusted, 1980=100). Concern over the overall economic situation is the broad source of discomfort, as people&#39;s assessment of the &quot;general economic situation&quot; dropped to 76.0 from 83.9 last month. While total confidence remains stronger than 2004 levels, the &quot;general&quot; indicator has fallen below last year&#39;s range.
At the same time, people see their own economic situations as holding up -- or at least not worsening as severely. The &quot;personal situation&quot; gauge climbed 1.8 points to 117.1, the highest level since September 2002. Associated survey items, such as household finances and financial expectations are moving in a narrow range, and buying attitudes toward major purchases and ability to save are actually improving. Attitudes about job prospects are mixed. This survey sees unemployment going higher, but new regulations give employers more flexibility about using temporary and part-time workers, so there is uncertainty about their implication for the number of jobs and the financial implications.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050623d.jpg" width="353">
These considerations accompany the uncertainty over the EU constitution and the rise in energy costs. Perhaps the surprising thing about this survey is that its final outcome wasn&#39;t lower.
In the Netherlands, consumer confidence did drop more sharply, to -26 this month from -22 in May and -16 in April. The components here show the same pattern as in Italy, however, as the macro indicator, &quot;economic climate&quot; plunged to -30 from -22 in May and -8 in April. The &quot;willingness to buy&quot; indicator has been fairly stable, with -23 this month after -22 in May and -20 in April. The deterioration in these data break an improving trend that had run from mid-2003 to this spring, just before the vote over the EU constitution. This too suggests that consumers&#39; worries are more over political uncertainties that about their own economic situation. Not though, please note, that they are optimistic about that, but just that their distress is less intense.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ITALY/ITALY.HTM">Italy</a>(Index, 1980=100)</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">June 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
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<tr class="odd">
<td class="firstcol">&nbsp; Consumer Confidence Indicator</td>
<td>102.9</td>
<td>104.3</td>
<td>100.1</td>
<td>101.4</td>
<td>106.1</td>
<td>115.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; General Economic Situation</td>
<td>76.0</td>
<td>83.9</td>
<td>89.0</td>
<td>88.6</td>
<td>91.4</td>
<td>105.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Personal Economic Situation</td>
<td>117.1</td>
<td>115.3</td>
<td>106.5</td>
<td>107.9</td>
<td>113.5</td>
<td>121.1</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/BENELUX/@B2/@B2.HTM">Netherlands</a> &nbsp; Consumer Confidence Survey&nbsp; &nbsp; (% balance)</td>
<td>-26</td>
<td>-22</td>
<td>-25</td>
<td>-25</td>
<td>-35</td>
<td>-25</td>
</tr>
</tbody>
</table>


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Initial claims for unemployment insurance fell a sharp 20,000 to 314,000 last week, the lowest level in two months. Consensus expectations had been for 330,000 claims and the prior week's figure was revised up slightly. The latest [...]

Initial Claims for Unemployment Insurance Fell

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/050622f.jpg" width="353">
After a strong rebound in 2004, the growth in the Taiwanese economy shows signs of moderation. Year-to-year growth in GDP was 2.5% in Q1, the slowest in seven quarters. Today, the Directorate-General of Budgeting, Accounting and Statistics reported employment growth of a respectable 19,000 in May (not seasonally adjusted) following 22,000 in April. But manufacturing jobs declined in those two months and also in March and February, the longest string of reductions since late 2001. This is shallow compared to the outright recession in 2001, but it is a clear break in the previous uptrend. The unemployment rate ticked higher in May to 4.1% from a cyclical low of 4.0% in April; while this is still below the 4.4% of both the year-ago and 2004 average, in the last several months, the rate looks to have stopped falling.
Growth in Taiwan presently is concentrated in service industries. Jobs are increasing the most in what might be termed &quot;support&quot; functions for the economy: travel, finance, real estate and health care.
Taiwan&#39;s labor market thus seems to be hesitating, and the behavior of employment in its neighboring nations has been mixed. In Hong Kong, for instance, total employment is up markedly, but as in Taiwan, the growth is in services, as manufacturing continues a longer-run downtrend. In South Korea, employment has strengthened a bit in the last few months, but factory jobs are flat. So Taiwan&#39;s recent ambivalent performance is not unique. We&#39;d surmise that rising energy costs and the gains in the vast Chinese economy are pressuring these smaller Asian economies.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEPR/@P5/@P5.HTM">Taiwan</a>NSA, Thousands</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">May 2004</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</td>
<td>9,918</td>
<td>9,899</td>
<td>9,764</td>
<td>9,786</td>
<td>9,573</td>
<td>9,454</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>2,713</td>
<td>2,717</td>
<td>2,664</td>
<td>2,672</td>
<td>2,590</td>
<td>2,564</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Private Services*</td>
<td>5,439</td>
<td>5,417</td>
<td>5,309</td>
<td>5,325</td>
<td>5,174</td>
<td>5,084</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>4.1</td>
<td>4.0</td>
<td>4.4</td>
<td>4.4</td>
<td>5.0</td>
<td>5.2</td>
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After a strong rebound in 2004, the growth in the Taiwanese economy shows signs of moderation. Year-to-year growth in GDP was 2.5% in Q1, the slowest in seven quarters. Today, the Directorate-General of Budgeting, Accounting and [...]

Taiwan Employment Grows, but Factory Sector Lags; Similar Pattern for Other Asian NICs

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The price of oil touched $59.37 on Monday then a barrel of West Texas Intermediate crude dropped back yesterday to $56.91. So far in 2005 the price of crude has averaged $52.75, up 26% versus last year&#39;s average.
In the US, the average price for unleaded regular gasoline rose to $2.16 per gallon last week versus an average of $2.13 during the prior five weeks. The high was $2.28 in early April.
Wholesale natural gas prices jumped to $7.28/mmbtu (15.6% y/y) last week. During only one week in early April was the price higher.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622d.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622e.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">06/21/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.16</td>
<td>$1.79</td>
<td>12.6%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$56.91</td>
<td>$41.78</td>
<td>33.7%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
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</html>

The price of oil touched $59.37 on Monday then a barrel of West Texas Intermediate crude dropped back yesterday to $56.91. So far in 2005 the price of crude has averaged $52.75, up 26% versus last year's average. In the US, the [...]

Crude Oil Prices Pushing $60 per Barrel

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622a.jpg" width="353">
The Mortgage Bankers Association reported that last week, total mortgage applications retraced more than half of the prior week&#39;s surge and fell 11.3% w/w. Nevertheless, applications so far in June remain 11.0% ahead of the May average which rose 6.5% versus April.
Purchase applications retraced all of the prior week&#39;s surge and fell 9.4% w/w. In June, applications are 2.2% ahead of May which rose 3.1% from April. During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance reversed about one third of the prior week&#39;s 25.6% w/w jump. In June refis are 22.4% ahead of May.
The effective interest rate on a conventional 30-year mortgage was about unchanged w/w at 5.86% and remained down from the 5.92% averaged during May. The effective rate on a 15-year mortgage rose to 5.54%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
The latest National Delinquency Survey from the the Mortgage Bankers Association can be viewed <a href="http://www.mortgagebankers.org/news/index.cfm?STRING=http://www.mortgagebankers.org/news/2005/pr0621.html"> here</a>.
Is the Bond Market Irrational? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20050701/cover.pdf"> here</a>.
Social Security, Saving, and Wealth Accumulation also from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20050501/cover.pdf"> here</a>.

<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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">06/17/05</th>
<th scope="col">06/10/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>786.8</td>
<td>887.0</td>
<td>30.9%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>479.4</td>
<td>529.3</td>
<td>5.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,575.0</td>
<td>2,967.4</td>
<td>77.0%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The Mortgage Bankers Association reported that last week, total mortgage applications retraced more than half of the prior week's surge and fell 11.3% w/w. Nevertheless, applications so far in June remain 11.0% ahead of the May [...]

Mortgage Applications Retraced Prior Week's Jump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622a.jpg" width="353">
The Mortgage Bankers Association reported that last week, total mortgage applications retraced more than half of the prior week&#39;s surge and fell 11.3% w/w. Nevertheless, applications so far in June remain 11.0% ahead of the May average which rose 6.5% versus April.
Purchase applications retraced all of the prior week&#39;s surge and fell 9.4% w/w. In June, applications are 2.2% ahead of May which rose 3.1% from April. During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance reversed about one third of the prior week&#39;s 25.6% w/w jump. In June refis are 22.4% ahead of May.
The effective interest rate on a conventional 30-year mortgage was about unchanged w/w at 5.86% and remained down from the 5.92% averaged during May. The effective rate on a 15-year mortgage rose to 5.54%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
The latest National Delinquency Survey from the the Mortgage Bankers Association can be viewed <a href="http://www.mortgagebankers.org/news/index.cfm?STRING=http://www.mortgagebankers.org/news/2005/pr0621.html"> here</a>.
Is the Bond Market Irrational? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20050701/cover.pdf"> here</a>.
Social Security, Saving, and Wealth Accumulation also from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20050501/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">06/17/05</th>
<th scope="col">06/10/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>786.8</td>
<td>887.0</td>
<td>30.9%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>479.4</td>
<td>529.3</td>
<td>5.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,575.0</td>
<td>2,967.4</td>
<td>77.0%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Crude Oil Prices Pushing $60 per Barrel 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 22, 2005


The price of oil touched $59.37 on Monday then a barrel of West Texas Intermediate crude dropped back yesterday to $56.91. So far in 2005 the price of crude has averaged $52.75, up 26% versus last year&#39;s average.
In the US, the average price for unleaded regular gasoline rose to $2.16 per gallon last week versus an average of $2.13 during the prior five weeks. The high was $2.28 in early April.
Wholesale natural gas prices jumped to $7.28/mmbtu (15.6% y/y) last week. During only one week in early April was the price higher.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622d.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622e.jpg" width="353">

<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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">06/21/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.16</td>
<td>$1.79</td>
<td>12.6%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$56.91</td>
<td>$41.78</td>
<td>33.7%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
Taiwan Employment Grows, but Factory Sector Lags; Similar Pattern for Other Asian NICs 
by <a href="/comment/Stone.html">Carol Stone</a> June 22, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622f.jpg" width="353">
After a strong rebound in 2004, the growth in the Taiwanese economy shows signs of moderation. Year-to-year growth in GDP was 2.5% in Q1, the slowest in seven quarters. Today, the Directorate-General of Budgeting, Accounting and Statistics reported employment growth of a respectable 19,000 in May (not seasonally adjusted) following 22,000 in April. But manufacturing jobs declined in those two months and also in March and February, the longest string of reductions since late 2001. This is shallow compared to the outright recession in 2001, but it is a clear break in the previous uptrend. The unemployment rate ticked higher in May to 4.1% from a cyclical low of 4.0% in April; while this is still below the 4.4% of both the year-ago and 2004 average, in the last several months, the rate looks to have stopped falling.
Growth in Taiwan presently is concentrated in service industries. Jobs are increasing the most in what might be termed &quot;support&quot; functions for the economy: travel, finance, real estate and health care.
Taiwan&#39;s labor market thus seems to be hesitating, and the behavior of employment in its neighboring nations has been mixed. In Hong Kong, for instance, total employment is up markedly, but as in Taiwan, the growth is in services, as manufacturing continues a longer-run downtrend. In South Korea, employment has strengthened a bit in the last few months, but factory jobs are flat. So Taiwan&#39;s recent ambivalent performance is not unique. We&#39;d surmise that rising energy costs and the gains in the vast Chinese economy are pressuring these smaller Asian economies.

<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/EMERGEPR/@P5/@P5.HTM">Taiwan</a>NSA, Thousands</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">May 2004</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</td>
<td>9,918</td>
<td>9,899</td>
<td>9,764</td>
<td>9,786</td>
<td>9,573</td>
<td>9,454</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>2,713</td>
<td>2,717</td>
<td>2,664</td>
<td>2,672</td>
<td>2,590</td>
<td>2,564</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Private Services*</td>
<td>5,439</td>
<td>5,417</td>
<td>5,309</td>
<td>5,325</td>
<td>5,174</td>
<td>5,084</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>4.1</td>
<td>4.0</td>
<td>4.4</td>
<td>4.4</td>
<td>5.0</td>
<td>5.2</td>
</tr>
</tbody>
</table>
</body>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622c.jpg" width="353">
The analysts and institutional investors who participate in the ZEW Survey continue to be pessimistic about current conditions in the German economy. The balance between optimists and pessimists has average about -70 for the past year or so, indicating that the percentage of optimists has been roughly 15%, while that of the pessimists has been 85%. The first chart shows the balance of optimists over pessimists for current conditions and for the six month&#39;s outlook.
The participants have tended to be more optimistic regarding the outlook six months ahead. But even here they are loosing heart. While the balance of optimists over pessimists rose to 19.5% in June from 13.9% in May, the balance is will below the 47.4% of June, 2004. The actual percentage of optimists rose to 59.75%in June from 56.95 in May, but was well below the 73.7% percentage of optimists in June 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050622b.jpg" width="353">
The recent decline in the euro may have helped to raise the June percentage of optimists regarding the six month&#39;s outlook, but the more recent rise in the price of oil is likely to have an opposite effect in the months to come. The daily value of the Euro in U. S. dollars and the dollar price of a barrel of Brent Crude Oil since early this year are shown in the second chart. 

<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/GERMANY/GERMANY.HTM">Germany</a></th>
<th scope="col">Jun 05</th>
<th scope="col">May 05</th>
<th scope="col">Jun 04</th>
<th scope="col">M/M dif</th>
<th scope="col">Y/Y dif</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Appraisal Balance</td>
<td>-70.0</td>
<td>-69.3</td>
<td>-69.8</td>
<td>-0.7</td>
<td>-0.2</td>
<td>-67.7</td>
<td>-92.3</td>
<td>-83.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percentage Optimists&nbsp;</td>
<td>15.0</td>
<td>15.35</td>
<td>15.10</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>16.15</td>
<td>3.85</td>
<td>8.35</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percentage Pessimists</td>
<td>85.0</td>
<td>84.65</td>
<td>84.90</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>83.85</td>
<td>96.15</td>
<td>91.65</td>
</tr>
<tr>
<td class="firstcol">6 Months Hence Appraisal</td>
<td>19.5</td>
<td>13.9</td>
<td>47.4</td>
<td>5.6</td>
<td>-27.9</td>
<td>44.6</td>
<td>38.4</td>
<td>45.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Percentage Optimists&nbsp;</td>
<td>59.75</td>
<td>56.95</td>
<td>73.7</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>72.3</td>
<td>69.2</td>
<td>72.65</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Percentage Pessimists</td>
<td>40.25</td>
<td>43.05</td>
<td>26.3</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>27.7</td>
<td>31.8</td>
<td>27.35</td>
</tr>
</tbody>
</table>
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The analysts and institutional investors who participate in the ZEW Survey continue to be pessimistic about current conditions in the German economy. The balance between optimists and pessimists has average about -70 for the past year [...]

Investor Confidence in Germany Improves A Bit in June but a Mood of Pessimism Dominates

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050621a.jpg" width="353">
Chain store sales inched up another 0.1% last week following gains of 0.6% and 0.4% during the prior two periods according to the International Council of Shopping Centers (ICSC)-UBS survey. So far in June sales are 0.3% below the prior month&#39;s average because of sharp declines through most of May.
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC jumped 0.9% w/w (3.0% y/y) for the second consecutive week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
What Difference Would An Inflation Target Make? from the Federal Reserve Bank of Richmond can be found <a href="http://www.richmondfed.org/publications/economic_research/economic_quarterly/pdfs/spring2005/hetzel.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/18/05</th>
<th scope="col">06/11/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>455.9</td>
<td>455.5</td>
<td>3.7%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
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Chain store sales inched up another 0.1% last week following gains of 0.6% and 0.4% during the prior two periods according to the International Council of Shopping Centers (ICSC)-UBS survey. So far in June sales are 0.3% below the [...]

Chain Store Sales Rose For Third Week

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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Kathleen Stephansen, CBE

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Initial claims for unemployment insurance dropped 10,000 to 214,000 in the week of December 20, from 224,000 during the week of December 13. The four-week moving average of initial claims was 216,750, a decrease of 750 from the prior week’s unrevised 217,500.

Federal government employees initially filed 805 (NSA) jobless insurance claims in the week ended December 13, after filing 1091 claims in the week ended December 6.

Continuing claims for unemployment insurance rose 38,000 to 1.923 million in the week ending December 13, after rising 55,000 to 1.885 million, revised from 1.897 million in the week ending December 6. The four-week moving average was 1.894 million in the week ending December 13, down 5,250 from 1.899 million, revised from 1,902,000 in the week ending December 6. The insured unemployment rate stood at 1.3% in the week of December 13, up from 1.2% in the week of December 6.

Federal government employees’ continuing benefits claims were 12,887 (NSA) in the week ending December 6, from 14,077 (NSA) in the week of November 29. 

The insured unemployment rate varied greatly across individual states and territories. In the week ending December 6, the highest unemployment rates were in New Jersey and Washington (both 2.40%), Massachusetts and Minnesota (both 2.10%), California and Rhode Island (both 2.00%). The lowest rates were in Florida (0.30%), and Alabama, Louisiana, North Carolina (all 0.40%). Rates in other notable states include New York (1.80%), Illinois and Pennsylvania (both 1.70%), and Texas (1.10%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.


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- Initial claims declined from the prior week.
- Continuing claims rose from the prior week.
- The insured unemployment rate edged up.


U.S. Initial Claims for Unemployment Insurance Dropped in Latest Week

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Mortgage applications dropped 5.0% w/w (+49.8% y/y) in the week of December 19, after a drop of 3.8% w/w (+40.9% y/y) in the week of December 12, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house fell 3.7% w/w (+15.9% y/y) in the latest week, the third consecutive weekly decline, following a drop of 2.8% w/w (+12.3% y/y) in the December 12 week. Applications for loan refinancing dropped 5.6% w/w (+110.1% y/y) in the December 19 week after a decline of 3.6% w/w (+86.0% y/y) in the week of December 12. 

The effective interest rate on a 30-year fixed-rate loan fell 8bps to 6.48% in the week ending December 19 from 6.56% in the week ending December 12. The rate on 15-year fixed-rate mortgages dropped 5bps to 5.86% in the latest week from 5.91% in the prior week. The 30-year Jumbo rate rose 8bps to 6.63% in the December 19 week from 6.55% in the December 12 week. The rate on a 5-year ARM jumped 20bps to 5.96% in the latest week from 5.76% in the December 12 week.

The share of applications for refinancing an existing loan edged up to 59.1% of total applications in the December19 week from 59.0% in the week ending December 12. The adjustable-rate mortgage (ARM) share of activity rose to 8.1% in the latest week from 7.2% in the December 12 week.

The average size of a mortgage loan edged down 0.1% w/w (+7.8% y/y) to $399,700 in the week ending December 19, following a rise of 1.5% w/w (6.4% y/y) to $400,000 in the December 12 week. The average size of a purchase loan rose 1.0% w/w (1.1% y/y) to $428,600 in the latest week, after rising 0.6% w/w (-0.3% y/y) to $424,200 in the prior week. The average size of a loan to refinance a mortgage declined 0.9% w/w (+24.9% y/y) to $379,700 in the December 19 week, following a rise of 2.3% w/w (19.8% y/y) to $383,300 in the week ending December 12.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.


- Both purchase applications and refinancing loan applications fell in the latest week.
- Effective interest rate on 30-year fixed loans fell to 6.48%.
- Average loan size edged down.


U.S. Mortgage Applications Dropped in the Week of December 19

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Real GDP grew 4.3% (SAAR) during the third quarter following a 3.8% Q2 gain, revised from 3.3% reported initially. These increases followed a minimally revised 0.6% decline in Q1. A 3.0% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.3% compared to 2.1% y/y in Q2 and remained below its most recent high of 3.4% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment surged 7.0% (4.2% y/y) last quarter after edging 0.6% higher in Q2. Before-tax earnings with IVA & CCA rose 4.2% (9.1% y/y) after improving 0.2% in Q2. Financial sector earnings rose 6.2% (21.1% y/y) after rising 1.1% in Q2. Nonfinancial corporate profits rose 2.5% (3.3% y/y) after edging 0.5% higher in Q2. Earnings from abroad jumped 10.6% (26.3% y/y) following a 2.9% Q2  decline.

Foreign trade balance improvement added 1.59 percentage points to growth last quarter after adding 4.83 percentage points in Q2. Real exports increased 2.1% (1.5% y/y) after falling 0.5% in Q2. Real imports declined 1.2% (-1.8% y/y) after declining 8.3% in Q2. Inventories subtracted 0.22 percentage points from growth after subtracting 3.44 percentage point from Q2 growth.

Real final sales to private domestic purchasers grew 3.0% (2.6% y/y) last quartter after rising 2.9% in Q2, revised from 1.6%. Personal consumption expenditures rose 3.5% (2.6% y/y) after a 2.5% rise, revised from 1.6%. Durable goods spending rose 1.6% (3.2% y/y) after increasing 2.3% in Q2. Motor vehicle purchases declined 6.7% (+1.6% y/y) after strengthening 9.7% in Q2. Spending on home furnishings & appliances weakened 4.2% (+0.7% y/y) following a 2.0% fall. Recreational goods & vehicle buying surged 15.7% (7.0% y/y) last quarter after falling 2.5% in Q2.

Nondurable goods outlays in constant dollars rose 3.9% (3.0% y/y) last quarter following 2.2% growth in Q2. Apparel spending strengthened 6.7% (7.0% y/y) following a 5.8% rise. Food & beverage buying gained 2.0% (1.3% y/y) after edging 0.2% higher. Gasoline & fuel oil purchases improved 1.3% (-0.2% y/y) after falling 2.8% in Q2.



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Real spending on services increased 3.7% (2.4% y/y) in Q3 after a 2.6% Q2 gain. Outlays on housing & utilities edged 0.3% higher (1.0% y/y) after easing 0.2% in Q2. Health care expenditures surged 6.8% (4.5% y/y) after a 4.8% increase. Transportation outlays gained 3.1% both  q/q and y/y after a 7.0% rise, while recreation spending jumped 6.6% (2.4% y/y) following a 3.9% rise. Restaurant & hotel expenditures increased 1.2% (2.0% y/y) after strengthening 5.9% in Q2. Financial services expenditures rose 2.6% both q/q and y/y following a 4.8% Q2 increase.

Business fixed investment in constant dollars increased 2.8% (3.9% y/y) last  quarter following a 7.3% Q2 rise, revised from 5.7%. Expenditures on structures declined 6.3% both q/q and y/y, after falling for six consecutive quarters. Expenditures on producers’ durable equipment increased 5.4% (7.4% y/y), after strengthening 8.5% in Q2. Outlays on information processing equipment rose 8.4% (18.6% y/y), after strengthening 11.7% during Q2. Industrial equipment investment rose 2.0% (3.4% y/y) after a 6.5% rise. Transportation equipment investment fell  2.7% (+3.0% y/y) after strengthening 25.2%. Intellectual property product spending rose 5.4% last quarter (6.4% y/y), after surging 15.0% in Q2.

Residential structures investment in real terms declined 5.1% (-1.8% y/y), the same as in Q2. It was the third consecutive quartly decline.

Government spending rose 2.2% (1.1% y/y) during the third quarter after an unrevised 0.1% easing in Q2. Federal government expenditures rose 2.9% (-1.0% y/y) after falling 5.3% in Q2. National defense expenditures increased 5.8% (1.0% y/y) after rising 0.9% in Q2. State & local government spending rose 1.8% (2.4% y/y) following a 3.1% rise.

The GDP chain price index rose 3.8% (3.0% y/y) last quarter vs. 2.1% in Q2. The PCE chain price index increased 2.8% (2.7% y/y) following a 2.1% rise. The PCE price index excluding food and energy rose 2.9% (2.9% y/y) after increasing 2.6% in Q2. The business fixed investment price index rose 5.2% (1.5% y/y) in Q3 after a 0.4% decline. The residential price index rose 4.5% (3.3% y/y) last quarter after a 2.2% rise, while the government price index increased 4.4% (3.5% y/y) following a 3.3% rise.

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



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- Consumer spending strengthens; growth in business investment decelerates.
- Corporate profit growth led by earnings abroad.
- Rise in chain price index accelerates.


U.S. GDP Growth is Strong in Q3; Profits Jump

Sandy Batten

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Industrial production fell 0.1% m/m in October but rose 0.2% m/m (2.5% y/y) in November. The Action Economics Forecast Survey expected 0.1% monthly gains in both months. Manufacturing activity was tepid with manufacturing production falling 0.4% m/m in October and unchanged in November. Manufacturing output has not posted a monthly gain since July. Mining output fell 0.8% m/m in October but rebounded 1.7% m/m in November. Utilities output surged 2.6% m/m in October but fell 0.4% m/m in November. Compared to a year ago, manufacturing production is up 1.9%; mining output is up 3.9%; and utilities output is up 4.8%.

By market group, output of durable consumer goods plunged 2.6% m/m in October and fell another 0.2% in November. Production of durable consumer goods has declined in five of the previous six months. Production of nondurable consumer goods rose 0.5% m/m in both October and November. Compared to a year ago, durable consumer goods production has fallen 5.9% while nondurable consumer goods output has risen 2.7%. Business equipment production fell 0.3% m/m in October but rebounded 0.3% m/m in November and is up 11.2% y/y. Production of nonindustrial supplies fell 0.3% m/m in both October and November.

By industry group, output of durable goods fell 0.5% m/m in October and declined 0.1% m/m in November but were up 3.2% from a year ago. Motor vehicle and parts production slumped 5.1% m/m in October and declined 1.0% m/m in November to be down 5.6% from a year ago. Monthly motor vehicle output has declined in five of the previous six months. In contrast, production of computers and electronic products increased 1.5% m/m in October and rose 0.8% m/m in November. Aerospace production continued to rise, increasing 2.0% m/m in October and 1.1% m/m in November to be up 25.2% from a year ago. Output of nondurable goods fell 0.2% m/m in October and edged up 0.1% m/m in November. Their output is up 0.9% from a year ago. Apparel output fell 1.3% m/m in October but recovered in November, rising 2.3% m/m. Food and beverage output rose 0.3% m/m in October and another 1.2% in November.

Output of selected high-technology industries rebounded in October and November. After having declined 1.0% m/m in both August and September, production jumped 1.9% m/m in October and 1.1% m/m in November to stand 11.8% higher than a year ago. Manufacturing output excluding selected high-tech industries fell 0.4% m/m in October and was unchanged in November. It has risen only 1.6% over the past year. Manufacturing excluding motor vehicle production was unchanged in October and edged up 0.1% m/m in November; it is up 2.6% y/y.

Total industry capacity utilization edged down to 75.9% in October from 76.0% in September and then recovered the decline in November, edging up to 76.0%. In the manufacturing sector, the utilization rate slumped to 75.4% in October from 75.8% in September and remained at 75.4% in November. The October/November reading is the lowest since January.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- Today’s release contained figures for both October and November that had been delayed by the federal government shutdown.
- IP fell in October but recovered in November.
- Manufacturing output was tepid, falling in October and unchanged in November.
- A surge in utilities output in October prevented a larger decline in total production.
- A jump in mining output in November accounted for all of the increase in total production.


U.S. Industrial Production Fell in October and Recovered in November

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New orders for durable goods fell a more-than-expected 2.2% (+4.8% y/y) in October following an upwardly revised 0.7% m/m rise in September (previously +0.5% m/m) and a 3.0% monthly jump in August. The Action Economics Forecast Survey expected a 1.5% m/m decline. A 23.7% m/m drop in aircraft orders more than accounted for the overall decline. Orders excluding aircraft increased 0.2% m/m (4.0% y/y) in October on top of a 0.5% monthly increase in September.

More generally, transportation orders fell 6.5% m/m (+7.3% y/y) in October following a 0.6% m/m increase in September and an 8.0% monthly jump in August. In addition to the drop in aircraft orders, orders for motor vehicles and parts edged up 0.1% m/m in October, their sixth consecutive monthly increase. Across other sectors, orders for primary metals fell 0.7% m/m, their first monthly decline in ten months. Orders for electrical equipment and appliances slumped 1.5% m/m, their first monthly decline in seven months. In contrast, orders for fabricated metal products rose 0.5% m/m, their fourth consecutive monthly gain. Machinery orders increased 0.8% m/m, their eighth consecutive monthly rise. Orders for computers and electronic products increased a solid 1.0% m/m on top of a 1.2% monthly increase in September.

Shipments of core capital goods (nondefense capital goods shipments excluding aircraft) are a reliable coincident indicator of business spending on equipment in the national accounts. They rose 0.7% m/m in October following an upwardly revised 1.2% monthly gain in September (previously +0.9%). The was the second consecutive monthly increase and the fifth in the past six months. The strong end to Q3 and the continued rise in the first month of Q4 provides a solid starting point for all of Q4. The October shipments figure was 5.9% at an annual rate above the Q3 average. Core capital goods orders rose 0.5% m/m in October on top of an upwardly revised 1.1% m/m increase in September (previously +0.9%). This was the fourth consecutive monthly rise.

Total manufacturing shipments edged up 0.1% m/m (+2.8% y/y) in October after having been essentially unchanged in September. Shipments of durable goods increased 0.6% m/m (5.9% y/y), led by 1.4% monthly jump in transportation shipments. However, apart from a 0.1% m/m decline in shipments of other durable goods, all of the other major sectors posted monthly gains in October. In contrast, shipments of nondurable goods fell 0.4% m/m (-0.3% y/y) in October for their third consecutive monthly decline. The monthly decline was led by a 2.4% m/m fall in shipments of petroleum and coal products although it was relatively widely spread across major sectors. The one exception was a 2.1% m/m increase in leather product shipments, but this came after four consecutive sizeable monthly declines.

Unfilled durable goods orders increased 0.2% m/m (7.9% y/y) in October for their third consecutive monthly gain following a 0.8% m/m rise in September and a 0.7% m/m increase in August. Total factory inventories were unchanged in October (+1.4% y/y) following 0.1% monthly declines in both August and September. Durable goods inventories edged up 0.1% m/m in October while inventories of nondurable goods fell 0.2% m/m, the third consecutive monthly decline.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.



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- New orders for durable goods slumped 2.2% m/m in October following increases in both August and September
- A 24% monthly drop in aircraft orders drove the overall decline
- Orders excluding aircraft rose 0.2% m/m in October
- Core capital goods shipments and orders continued to rise in October with small upward revisions to September


Economy in Brief: 2005

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