Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050608b.jpg" width="353">
Total mortgage applications last week recovered more than all of the prior week&#39;s decline and rose 6.5%. Applications began the month 3.5% ahead of the May average which rose 6.5% versus April, according to the Mortgage Bankers Association.
Applications to refinance were quite strong posting a 10.3% w/w increase and began June 9.7% higher than in May which rose 11.2% from April.
Purchase applications rose 3.6% after the prior week&#39;s 4.1% decline to begin the month down modestly from 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.
The effective interest rate on a conventional 30-year mortgage fell to 5.78% from 5.83% the week prior. During only two other weeks this year has the 30 year rate been lower. The effective rate on a 15-year mortgage fell slightly to 5.41%.
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>.
U.S. Economy: We&#39;re All Living on Borrowed Time from William G. Gale and Peter R. Orszag at the Brookings Institution can be found <a href="http://www.brookings.edu/views/op-ed/20050601galeorszag.htm"> here</a>.
Banking, Markets and Efficiency from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr210.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">06/03/05</th>
<th scope="col">05/27/05</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>755.5</td>
<td>709.1</td>
<td>32.8%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>479.3</td>
<td>462.7</td>
<td>10.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,362.1</td>
<td>2,142.1</td>
<td>73.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
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Total mortgage applications last week recovered more than all of the prior week's decline and rose 6.5%. Applications began the month 3.5% ahead of the May average which rose 6.5% versus April, according to the Mortgage Bankers [...]

Mortgage Applications Recovered

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050608a.jpg" width="353">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), firmed to nearly a four year high of 2.7%. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. The total number of job openings also rose 1.8% m/m (17.8% y/y) after an upwardly revised gain in March.
The hires rate backpedaled to 3.4% from a downwardly revised March level. The hires rate is the number of hires during the month divided by employment.
Job separations were stable, indicated by a separation rate of 3.4%. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.7%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.6%</td>
<td>3.4%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body>
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The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings & Labor Turnover Survey (JOLTS), firmed to nearly a four year high of 2.7%. The job openings rate is the number of job openings on the last [...]

JOLTS: U.S. Job Openings Firm Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050608a.jpg" width="353">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), firmed to nearly a four year high of 2.7%. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. The total number of job openings also rose 1.8% m/m (17.8% y/y) after an upwardly revised gain in March.
The hires rate backpedaled to 3.4% from a downwardly revised March level. The hires rate is the number of hires during the month divided by employment.
Job separations were stable, indicated by a separation rate of 3.4%. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.7%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.6%</td>
<td>3.4%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Mortgage Applications Recovered 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050608b.jpg" width="353">
Total mortgage applications last week recovered more than all of the prior week&#39;s decline and rose 6.5%. Applications began the month 3.5% ahead of the May average which rose 6.5% versus April, according to the Mortgage Bankers Association.
Applications to refinance were quite strong posting a 10.3% w/w increase and began June 9.7% higher than in May which rose 11.2% from April.
Purchase applications rose 3.6% after the prior week&#39;s 4.1% decline to begin the month down modestly from 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.
The effective interest rate on a conventional 30-year mortgage fell to 5.78% from 5.83% the week prior. During only two other weeks this year has the 30 year rate been lower. The effective rate on a 15-year mortgage fell slightly to 5.41%.
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>.
U.S. Economy: We&#39;re All Living on Borrowed Time from William G. Gale and Peter R. Orszag at the Brookings Institution can be found <a href="http://www.brookings.edu/views/op-ed/20050601galeorszag.htm"> here</a>.
Banking, Markets and Efficiency from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr210.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/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">06/03/05</th>
<th scope="col">05/27/05</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>755.5</td>
<td>709.1</td>
<td>32.8%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>479.3</td>
<td>462.7</td>
<td>10.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,362.1</td>
<td>2,142.1</td>
<td>73.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Industrial Production Shows Three-Tiered Performance in Netherlands, Slovakia and Turkey 
by <a href="/comment/Stone.html">Carol Stone</a> June 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050608c.jpg" width="353">
Manufacturing activity advanced in three Euro-Asian nations in April, according to industrial production data published today by national statistical offices. In the Netherlands, manufacturing output gained 1.8%, partially reversing two down months. A generally sluggish pattern has prevailed there, so that April&#39;s amount was down 0.7% (working day adjusted) from April 2004. Total industrial output eased in the month by 0.5% as mining activity contracted.
In Slovakia, factory output surged 6% in April, a welcome gain after more than a year of basically no movement. Several diverse industries, especially machinery, textiles and wood products, contributed to the rise. Total industrial production also increased 6% in the month and was 5.5% ahead of a year ago.
For Turkey, a 3.7% rise in manufacturing production for April offset a 4.2% decline in March. Output there has been on a fairly firm uptrend so that year-on-year gains have run 5 to 6% over the past six months and were higher previously. As in Slovakia, a variety of industries are participating in this growth, although in both places, production in specific sectors varies widely from month to month.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050608d.jpg" width="353">
These three countries represent three differing macro-models: the well-developed economy, the emerging economy that&#39;s fairly advanced and a more emergent emerging economy. It&#39;s intriguing to compare the position of industry within each one. In the Netherlands, industry contributes the smallest portion of the country&#39;s gross value added -- about 20%, compared with 26% for Slovakia and 29% for Turkey. Among other contrasts, finance and services come in the reverse order: they total about 25% of GDP in the Netherlands, but 15.5% in Slovakia and a mere 4% in Turkey. One might envision the mature economy as having the largest industrial sector, but on a relative basis, it&#39;s the &quot;younger&quot; economy, which is perhaps developing through its emphasis on manufacturing. The movement and trading of goods and services are about midway in the ranking of their contributions to GDP, with support services, such as finance, real estate and other business services coming in last in the younger economy (but first in the mature region). Relative patterns of growth fit this structure as well. Turkey has the most rapid growth rate: about 8% over the past five years, with Slovakia at 5% and the Netherlands just 0.5%-1% recently. This reminds us of the standard product cycle in an individual industry: rapid growth at first that moderates and then plateaus as the market for the product matures. Whole countries, it seems, can behave the same way.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Apr 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">Netherlands: 2000 = 100</td>
<td>98.5</td>
<td>99.0</td>
<td>97.8</td>
<td>100.2</td>
<td>97.7</td>
<td>100.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>95.7</td>
<td>94.0</td>
<td>96.9</td>
<td>96.2</td>
<td>95.8</td>
<td>98.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mining &amp; Quarrying</td>
<td>111.4</td>
<td>118.6</td>
<td>108.7</td>
<td>120.2</td>
<td>103.8</td>
<td>107.1</td>
</tr>
<tr>
<td class="firstcol">Slovakia: 2000 = 100</td>
<td>131.5</td>
<td>124.1</td>
<td>124.7</td>
<td>124.7</td>
<td>120.9</td>
<td>114.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>142.7</td>
<td>134.6</td>
<td>133.3</td>
<td>134.5</td>
<td>129.9</td>
<td>120.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Mining &amp; Quarrying</td>
<td>84.1</td>
<td>86.6</td>
<td>90.8</td>
<td>94.4</td>
<td>105.5</td>
<td>111.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Turkey: 1997 = 100</td>
<td>131.1</td>
<td>126.5</td>
<td>125.0</td>
<td>123.4</td>
<td>112.4</td>
<td>103.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>131.1</td>
<td>126.4</td>
<td>126.1</td>
<td>123.7</td>
<td>112.1</td>
<td>102.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mining &amp; Quarrying</td>
<td>91.4</td>
<td>87.7</td>
<td>72.4</td>
<td>82.6</td>
<td>79.4</td>
<td>82.0</td>
</tr>
</tbody>
</table>
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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/050607c.jpg" width="353">
Industrial production data for April were released today for Germany, Norway, Brazil and Hungary--a large and a small developed economy and a large and a small emerging economy.
The first chart compares the trend in manufacturing production for Germany and Norway. Indexes for manufacturing rather than the total are used as the total indexes for these countries are particularly erratic, including such volatile industries as construction in Germany and oil and gas extraction and mining and quarrying in Norway. For instance, the increase in the total index for Germany was 1.1% from March to April but after excluding the 18.6% rise in construction, manufacturing was up only 0.5%. In Norway the total was up 4.7%, but excluding the rise of 6.3% in oil and gas extraction and of 17.9% in mining and quarrying, up, manufacturing was up only 2.2% Production has increased in recent months in both countries, but there has been no strong trend since 2000. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607d.jpg" width="353">
In contrast industrial production in the two emerging market countries has been in a strong uptrend since 2000 as can be seen in the second chart. While index numbers tell us nothing of magnitudes, they do reveal changes in the levels of production. To make it easier to compare the growth in production in the four countries we have adjusted the figures for Norway and Brazil, putting both on a bases of 2000 =100. The official Norway data are based on 1995=100 and those for Brazil, on 2002=100. These calculations are shown in the table below.
Currently production in the emerging market economies is well above 2000 levels--some 15% in Brazil and 30% in Hungary while manufacturing production in Norway is slightly below the level of 2000 and in Germany, only slightly above. Production in Brazil is beginning to falter, but production in Hungary is still strong.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production</th>
<th scope="col">Apr 05</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany Mfg 2000=100</td>
<td>105.1</td>
<td>104.6</td>
<td>0.48</td>
<td>2.64</td>
<td>102.7</td>
<td>99.5</td>
<td>99.3</td>
</tr>
<tr>
<td class="firstcol">Norway Mfg 2000=100 Computed</td>
<td>98.4</td>
<td>96.2</td>
<td>2.22</td>
<td>5.63</td>
<td>95.3</td>
<td>93.9</td>
<td>98.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Norway Mfg 1995 =100 Official&nbsp;</td>
<td>101.4</td>
<td>99.2</td>
<td>2.22</td>
<td>5.63</td>
<td>98.2</td>
<td>96.8</td>
<td>101.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Hungary 2000=100</td>
<td>130.50</td>
<td>126.58</td>
<td>3.10</td>
<td>7.26</td>
<td>123.10</td>
<td>114.37</td>
<td>107.82</td>
</tr>
<tr>
<td class="firstcol">Brazil 2000=100&nbsp; Computed</td>
<td>115.69</td>
<td>115.79</td>
<td>-0.04</td>
<td>4.68</td>
<td>112.78</td>
<td>104.37</td>
<td>104.37</td>
</tr>
<tr class="odd">
<td class="firstcol">Brazil 2002=100 Official</td>
<td>110.84</td>
<td>110.88</td>
<td>-0.04</td>
<td>4.68</td>
<td>108.05</td>
<td>100.0</td>
<td>100.0</td>
</tr>
</tbody>
</table>
</body>
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Industrial production data for April were released today for Germany, Norway, Brazil and Hungary--a large and a small developed economy and a large and a small emerging economy. The first chart compares the trend in manufacturing [...]

Industrial Production: Germany, Norway, Brazil and Hungary

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607b.jpg" width="353">
April sales of semiconductors in the Americas as published by the Semiconductor Industry Association fell a sharp 21.1% following a like increase the month prior. This sideways movement in American sales of semis has been in place for roughly a year.
American sales of semiconductors account for 18% of the worldwide total, about half the percentage in 2000. Sales growth in the Asia/Pacific region averaged 41.3% last year, twice the American average, while sales in Japan rose 17.5%. The Asia/Pacific region currently accounts for just under one half of worldwide sales of semiconductors, up from less than one quarter in 2000.
During the last ten years there has been a 66% correlation between the y/y change in American sales of semiconductors and the change in real U.S. investment in equipment &amp; software.

<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/INDUSTRY/@I02/@I0211/@I021101/@I021101.HTM">Semiconductor Sales </a></th>
<th scope="col">April</th>
<th scope="col">March</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">Worldwide</td>
<td>$16.679B</td>
<td>$20.556B</td>
<td>4.7%</td>
<td>28.0%</td>
<td>18.3%</td>
<td>1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Americas</td>
<td>$2.920B</td>
<td>$3.701B</td>
<td>3.8%</td>
<td>20.8%</td>
<td>3.4%</td>
<td>-12.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

April sales of semiconductors in the Americas as published by the Semiconductor Industry Association fell a sharp 21.1% following a like increase the month prior. This sideways movement in American sales of semis has been in place for [...]

Semiconductor Sales Eased

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607a.jpg" width="353">
Chain store sales rose a modest 0.4% during the opening week of June following three consecutive periods of decline according to the International Council of Shopping Centers (ICSC)-UBS survey. The slim increase left sales 0.7% below the May average which rose 0.3% versus April.
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 slipped 0.3% w/w (+0.8% y/y), the first decline in four weeks.
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.
Last night&#39;s remarks by Fed Chairman Alan Greenspan are available <a href="http://www.federalreserve.gov/boarddocs/speeches/2005/20050606/default.htm"> here</a>.
Battle at Bond Bluff: Forecasters vs. Financial Markets from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20050601/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/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/04/05</th>
<th scope="col">05/28/05</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>452.9</td>
<td>451.2</td>
<td>3.3%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales rose a modest 0.4% during the opening week of June following three consecutive periods of decline according to the International Council of Shopping Centers (ICSC)-UBS survey. The slim increase left sales 0.7% below [...]

Chain Store Sales Recovered Some Last Week

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607a.jpg" width="353">
Chain store sales rose a modest 0.4% during the opening week of June following three consecutive periods of decline according to the International Council of Shopping Centers (ICSC)-UBS survey. The slim increase left sales 0.7% below the May average which rose 0.3% versus April.
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 slipped 0.3% w/w (+0.8% y/y), the first decline in four weeks.
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.
Last night&#39;s remarks by Fed Chairman Alan Greenspan are available <a href="http://www.federalreserve.gov/boarddocs/speeches/2005/20050606/default.htm"> here</a>.
Battle at Bond Bluff: Forecasters vs. Financial Markets from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20050601/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/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/04/05</th>
<th scope="col">05/28/05</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>452.9</td>
<td>451.2</td>
<td>3.3%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
Semiconductor Sales Eased 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 7, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607b.jpg" width="353">
April sales of semiconductors in the Americas as published by the Semiconductor Industry Association fell a sharp 21.1% following a like increase the month prior. This sideways movement in American sales of semis has been in place for roughly a year.
American sales of semiconductors account for 18% of the worldwide total, about half the percentage in 2000. Sales growth in the Asia/Pacific region averaged 41.3% last year, twice the American average, while sales in Japan rose 17.5%. The Asia/Pacific region currently accounts for just under one half of worldwide sales of semiconductors, up from less than one quarter in 2000.
During the last ten years there has been a 66% correlation between the y/y change in American sales of semiconductors and the change in real U.S. investment in equipment &amp; software.

<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/INDUSTRY/@I02/@I0211/@I021101/@I021101.HTM">Semiconductor Sales </a></th>
<th scope="col">April</th>
<th scope="col">March</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">Worldwide</td>
<td>$16.679B</td>
<td>$20.556B</td>
<td>4.7%</td>
<td>28.0%</td>
<td>18.3%</td>
<td>1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Americas</td>
<td>$2.920B</td>
<td>$3.701B</td>
<td>3.8%</td>
<td>20.8%</td>
<td>3.4%</td>
<td>-12.6%</td>
</tr>
</tbody>
</table>
Industrial Production:  Germany, Norway, Brazil and Hungary 
by <a href="/comment/Curley.html">Louise Curley</a> June 7, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607c.jpg" width="353">
Industrial production data for April were released today for Germany, Norway, Brazil and Hungary--a large and a small developed economy and a large and a small emerging economy.
The first chart compares the trend in manufacturing production for Germany and Norway. Indexes for manufacturing rather than the total are used as the total indexes for these countries are particularly erratic, including such volatile industries as construction in Germany and oil and gas extraction and mining and quarrying in Norway. For instance, the increase in the total index for Germany was 1.1% from March to April but after excluding the 18.6% rise in construction, manufacturing was up only 0.5%. In Norway the total was up 4.7%, but excluding the rise of 6.3% in oil and gas extraction and of 17.9% in mining and quarrying, up, manufacturing was up only 2.2% Production has increased in recent months in both countries, but there has been no strong trend since 2000. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050607d.jpg" width="353">
In contrast industrial production in the two emerging market countries has been in a strong uptrend since 2000 as can be seen in the second chart. While index numbers tell us nothing of magnitudes, they do reveal changes in the levels of production. To make it easier to compare the growth in production in the four countries we have adjusted the figures for Norway and Brazil, putting both on a bases of 2000 =100. The official Norway data are based on 1995=100 and those for Brazil, on 2002=100. These calculations are shown in the table below.
Currently production in the emerging market economies is well above 2000 levels--some 15% in Brazil and 30% in Hungary while manufacturing production in Norway is slightly below the level of 2000 and in Germany, only slightly above. Production in Brazil is beginning to falter, but production in Hungary is still strong.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production</th>
<th scope="col">Apr 05</th>
<th scope="col">Mar 05</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany Mfg 2000=100</td>
<td>105.1</td>
<td>104.6</td>
<td>0.48</td>
<td>2.64</td>
<td>102.7</td>
<td>99.5</td>
<td>99.3</td>
</tr>
<tr>
<td class="firstcol">Norway Mfg 2000=100 Computed</td>
<td>98.4</td>
<td>96.2</td>
<td>2.22</td>
<td>5.63</td>
<td>95.3</td>
<td>93.9</td>
<td>98.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Norway Mfg 1995 =100 Official&nbsp;</td>
<td>101.4</td>
<td>99.2</td>
<td>2.22</td>
<td>5.63</td>
<td>98.2</td>
<td>96.8</td>
<td>101.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Hungary 2000=100</td>
<td>130.50</td>
<td>126.58</td>
<td>3.10</td>
<td>7.26</td>
<td>123.10</td>
<td>114.37</td>
<td>107.82</td>
</tr>
<tr>
<td class="firstcol">Brazil 2000=100&nbsp; Computed</td>
<td>115.69</td>
<td>115.79</td>
<td>-0.04</td>
<td>4.68</td>
<td>112.78</td>
<td>104.37</td>
<td>104.37</td>
</tr>
<tr class="odd">
<td class="firstcol">Brazil 2002=100 Official</td>
<td>110.84</td>
<td>110.88</td>
<td>-0.04</td>
<td>4.68</td>
<td>108.05</td>
<td>100.0</td>
<td>100.0</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050606c.jpg" width="353">
Despite small increases in the demand for and in placements of permanent staff in recent months, the job market in the United Kingdom has been easing for about a year as revealed in The Survey of Jobs conducted by NTC Research on behalf of the Recruitment and Employment Confederation and Deloitte &amp; Touche LLP. These data are found in the Haver database entitled UKSRVYS.
There are four general aspects of the labor market covered by The Survey of Jobs: recruitment, demand, availability and wages and salaries. And for each of these, diffusion indexes are calculated for both permanent and temporary staff.
Typical of late cyclical trends, as the demand for labor weakens, the supply increases. In May, 2005, the index for the demand for temporary staff was almost 12% below May of 2004. At the same time the index for the availability of temporary staff was more than 20% above May of 2004. While the demand for permanent staff is only about 3% below last year&#39;s comparable figure, the increase in the availability of permanent staff is almost as high as that of temporary staff. The two charts show these inverse relationships for temporary and permanent staff.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050606d.jpg" width="353">
Other signs of weakness in the labor market are the declines in the diffusion indexes for wages and salaries for both permanent and temporary staff. Although these indexes are above the 50 mark, indicating that more people believe they are rising than those who believe they are falling, the indexes are below levels reached a year ago.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Diffusion Indexes</th>
<th scope="col">May 05</th>
<th scope="col">Apr 05</th>
<th scope="col">May 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Demand for Jobs</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Permanent staff</td>
<td>59.5</td>
<td>59.2</td>
<td>61.2</td>
<td>0.51</td>
<td>-2.78</td>
<td>61.5</td>
<td>52.6</td>
<td>51.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Temporary staff</td>
<td>56.0</td>
<td>56.6</td>
<td>63.4</td>
<td>-1.06</td>
<td>-11.67</td>
<td>61.5</td>
<td>55.3</td>
<td>56.3</td>
</tr>
<tr>
<td class="firstcol">Availability for Jobs</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Permanent staff</td>
<td>46.3</td>
<td>44.5</td>
<td>38.7</td>
<td>4.04</td>
<td>19.64</td>
<td>40.8</td>
<td>55.6</td>
<td>59.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Temporary staff</td>
<td>50.0</td>
<td>48.4</td>
<td>41.5</td>
<td>3.95</td>
<td>20.48</td>
<td>43.8</td>
<td>54.3</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Wages and Salaries</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Permanent staff</td>
<td>58.0</td>
<td>60.3</td>
<td>59.7</td>
<td>-3.81</td>
<td>-2.85</td>
<td>5.88</td>
<td>54.3</td>
<td>51.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Temporary staff</td>
<td>55.3</td>
<td>55.7</td>
<td>59.2</td>
<td>-0.72</td>
<td>-6.59</td>
<td>57.9</td>
<td>52.7</td>
<td>51.7</td>
</tr>
<tr>
<td class="firstcol">Recruitment Activity</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Placement of Permanent Staff</td>
<td>56.3</td>
<td>55.9</td>
<td>59.1</td>
<td>0.72</td>
<td>-4.74</td>
<td>59.0</td>
<td>53.4</td>
<td>52.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Billings from temporary and contract staff</td>
<td>53.2</td>
<td>53.3</td>
<td>60.7</td>
<td>-0.19</td>
<td>-12.36</td>
<td>59.1</td>
<td>53.3</td>
<td>53.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Temporary staff margins</td>
<td>49.2</td>
<td>49.7</td>
<td>48.2</td>
<td>-1.01</td>
<td>2.07</td>
<td>48.7</td>
<td>45.9</td>
<td>45.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Despite small increases in the demand for and in placements of permanent staff in recent months, the job market in the United Kingdom has been easing for about a year as revealed in The Survey of Jobs conducted by NTC Research on [...]

UK Survey of Jobs Reveals Softening in the Labor Market

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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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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Mortgage Applications Recovered

JOLTS: U.S. Job Openings Firm Further

JOLTS: U.S. Job Openings Firm Further

Industrial Production: Germany, Norway, Brazil and Hungary

Semiconductor Sales Eased

Chain Store Sales Recovered Some Last Week

Chain Store Sales Recovered Some Last Week

UK Survey of Jobs Reveals Softening in the Labor Market