Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051111a.jpg" width="353">
The modest 0.2% increase in the September Leading Index of the Major 7 OECD economies marked the fourth consecutive gain and it improved the leaders&#39; six month growth rate to 1.1%, the best in twelve months.The increase reflected improvement in Japan &amp; Europe but declines in North America.
During the last ten years there has been a 68% correlation between the change in the leading index and the q/q change in the GDP Volume Index for the Big Seven countries in the OECD.
The leading index for Japan jumped 1.0%, the most for any month since early 2002, as share prices increased and the interest rate yield spread widened. The six month growth rate surged to 2.3%, the best since early 2004, and its correlation with real growth in Japan has been a meaningful 42% during the last ten years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051111b.jpg" width="353">
Leaders in the European Union (15 countries) rose for the fourth month and the 0.5% increase lifted the six month growth rate to 2.3%, the highest in a year. During the last ten years there has been a 60% correlation between the change in the leading index and the q/q change in the GDP volume index for the European Union.
German leaders increased for the fifth consecutive month. A 0.5% gain raised six month growth to 3.3% as new orders bounced back from an August drop and the business climate improved. The correlation between the leaders and the change in the German GDP volume index has been a low 19% during the last ten years.
The French leaders rose for the third consecutive month. The 0.5% increase pulled the six month growth rate into positive territory for the first time since March with a 0.3% growth rate and the correlation between the leaders with growth in France&#39;s GDP volume index has been a higher 43% during the last ten years. The Italian leading index showed perhaps the most meaningful monthly improvement with a 0.8% gain that followed an upwardly revised 0.9% August increase. The six month growth rate improved to 1.9%, the best since early 2004, although its correlation with GDP growth has been a low 0.9% during the last ten years.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051111c.jpg" width="353">
The UK leaders increased just 0.1% but it was the fourth rise in as many months. The gain raised the six month growth rate to 0.2% and its correlation with real GDP growth has been 29% during the last ten years.
The U.S. leaders fell for the second consecutive month and the 0.3% decline lowered the six month growth rate to 0.3%, the worst since May. The correlation between the leaders and real GDP growth has been a high 58% during the last ten years. The Canadian leaders also fell and the 0.5% decline dropped six month growth to -1.0%. The leaders&#39; growth also has been highly correlated with Canadian real GDP growth, to the tune of 49% during the last ten years.
The latest OECD Leading Indicator report is available <a href="http://www.oecd.org/dataoecd/33/31/35645542.pdf">here</a>.
What Caused The Great Moderation? Some Cross-Country Evidence from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/3q05summ.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM">OECD</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</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">Composite Leading Index&nbsp;</td>
<td>102.51</td>
<td>102.31</td>
<td>0.6%</td>
<td>102.03</td>
<td>97.59</td>
<td>96.30</td>
</tr>
<tr>
<td class="firstcol">&nbsp;6 Month Growth Rate</td>
<td>1.1%</td>
<td>0.8%</td>
<td>&nbsp;</td>
<td>3.5%</td>
<td>2.6%</td>
<td>2.2%</td>
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The modest 0.2% increase in the September Leading Index of the Major 7 OECD economies marked the fourth consecutive gain and it improved the leaders' six month growth rate to 1.1%, the best in twelve months.The increase reflected [...]

OECD Leaders Up Again

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/051110b.jpg" width="353">
Several countries reported CPI data today for October.A common feature of all the countries we examined was a tempering of inflation as energy prices backed off their storm-related highs of September.
In France and Denmark, the October CPI actually declined 0.1% in the month, following 0.4% increases in both countries in September.For France, tellingly, the subset of the CPI excluding energy was flat in both months.
Ireland&#39;s total CPI rose 0.2% in October after 0.8% in September.It is seen to experience somewhat higher inflation trends overall than the others of these countries.Finally, in Norway, the total CPI was flat following September&#39;s 0.3% rise. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110c.jpg" width="353">
Clearly, one month need not mark a turning point in inflation trends. But this is welcome relief however long it lasts.We have noted all along how relatively immune other prices have been to the energy situation.This agreeable circumstance may yet change, given the squeeze on business operating margins that has already taken place from the surge in energy.Demand responses could well limit the ultimate pass-through, though, as sluggish economies in Europe also have little capacity to shoulder further price burdens.
<span style="font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:&quot;MS Mincho&quot;;
mso-bidi-font-family:&quot;Times New Roman&quot;;mso-ansi-language:EN-US;mso-fareast-language:
JA;mso-bidi-language:AR-SA">As a footnote, the individual months&#39; figures we quote here are seasonally adjusted data found in Haver&#39;s G10 database.This database is a summary compilation of major data in major countries, the well-known G10, plus Australia, Austria, other Nordic nations, Ireland, Spain and so on.In that database Haver performs some additional seasonal adjustment of data beyond that provided by many countries.The more comprehensive databases covering individual countries consist largely in data provided by the countries&#39; official statistics sources, which we do not augment, while G10 is a database we compile ourselves for the convenience of having a quick summary of large countries, but with a modest amount of detail.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GZ/@GZ5/@GZ501/@GZ501.HTM">CPI, % Changes, SA*</a></th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Aug 2005&nbsp;</th>
<th scope="col">Oct 2004**&nbsp;</th>
December/December
</tr>
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<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
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<td class="firstcol">France</td>
<td>-0.1</td>
<td>0.4</td>
<td>0.3</td>
<td>1.8</td>
<td>2.1</td>
<td>2.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ex Energy</td>
<td>0.0</td>
<td>0.0</td>
<td>0.5</td>
<td>1.0</td>
<td>1.5</td>
<td>2.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>0.2</td>
<td>0.8</td>
<td>0.3</td>
<td>3.0</td>
<td>2.6</td>
<td>1.9</td>
<td>5.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Denmark</td>
<td>-0.1</td>
<td>0.4</td>
<td>0.2</td>
<td>2.0</td>
<td>1.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
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<td class="firstcol">Norway</td>
<td>0.0</td>
<td>0.3</td>
<td>0.5</td>
<td>1.8</td>
<td>1.1</td>
<td>0.6</td>
<td>2.8</td>
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Several countries reported CPI data today for October.A common feature of all the countries we examined was a tempering of inflation as energy prices backed off their storm-related highs of September. In France and Denmark, the [...]

CPI Data Show Some Relief for Energy in October

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110f.jpg" width="353">
A 2,000 increase in initial claims for unemployment insurance to 326,000 reversed only a piece of the prior week&#39;s revised 6,000 decline. Consensus expectations had been for 323,000 claims.
The four-week moving average of initial claims fell sharply to 334,250 (-0.3% y/y).
Continuing claims for unemployment insurance rose 23,000 following a downwardly revised 72,000 drop during the prior week.
The insured rate of unemployment remained at 2.2% for the seventh week.

<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">11/05/05</th>
<th scope="col">10/29/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>326</td>
<td>324</td>
<td>-1.5%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,818</td>
<td>0.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
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A 2,000 increase in initial claims for unemployment insurance to 326,000 reversed only a piece of the prior week's revised 6,000 decline. Consensus expectations had been for 323,000 claims. The four-week moving average of initial [...]

Initial Jobless Insurance Claims Remain Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110e.jpg" width="353">
The preliminary reading of consumer sentiment in November from the University of Michigan rose 7.7% to 79.9, the highest level in three months. Consensus expectations had been for less of an improvement to 76.8.
During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
The mean expected inflation rate for the next twelve months fell sharply to 4.6 from 5.5% expected in October. That prompted Consumer expectations to rise 5.7% and expected business conditions during the next year to surge 14.7%.
The current conditions index also improved 10.0% m/m (-4.2% y/y) due to 10% gains in personal finances and in buying conditions for large household goods.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</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">Consumer Sentiment</td>
<td>79.9</td>
<td>74.2</td>
<td>-13.9%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>100.3</td>
<td>91.2</td>
<td>-4.2%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>66.8</td>
<td>63.2</td>
<td>-21.6%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
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The preliminary reading of consumer sentiment in November from the University of Michigan rose 7.7% to 79.9, the highest level in three months. Consensus expectations had been for less of an improvement to 76.8. During the last ten [...]

U.S. Consumer Sentiment Lifted By Drop in Oil Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110d.jpg" width="353">
Import prices fell an expected 0.3% last month following the revised 2.3% spike in September. Petroleum prices were the source of weakness as they reversed more than half of the prior month&#39;s gain with a 4.4% drop. Crude oil prices fell 4.1% and &quot;other&quot; petroleum prices fell 14.4% but those decline were offset by a 20.9% (114.1% y/y) increase in natural gas.
Excluding petroleum, prices were strong for the second consecutive month and rose 0.8%. The gain reflected a 4.4% (16.1% y/y) rise in non-oil industrial supplies which repeated the gain in September. Elsewhere, paper prices rose 1.0% (3.8% y/y) and chemical prices jumped 2.1% (11.7% y/y). On the weak side, nonauto consumer goods prices fell 0.1% (+1.2% y/y) and capital goods prices slipped 0.3% (-0.5% y/y). Excluding another decline in computer prices, capital goods prices fell 0.1% (2.0% y/y).
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar.
Export prices jumped 0.6% as nonagricultural prices rose 0.6% (3.5% y/y).
 Time-Varying Pass-Through from Import Prices to Consumer Prices: Evidence from an Event Study with Real-Time Data from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr228.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</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">Import - All Commodities</td>
<td>-0.3%</td>
<td>2.3%</td>
<td>8.1%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-4.4%</td>
<td>8.0%</td>
<td>30.9%</td>
<td>30.5%</td>
<td>21.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.8%</td>
<td>1.0%</td>
<td>3.7%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>-2.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.6%</td>
<td>0.8%</td>
<td>3.6%</td>
<td>3.9%</td>
<td>1.6%</td>
<td>-1.0%</td>
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Import prices fell an expected 0.3% last month following the revised 2.3% spike in September. Petroleum prices were the source of weakness as they reversed more than half of the prior month's gain with a 4.4% drop. Crude oil prices [...]

Import Prices Declined

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110a.jpg" width="353">
The combination of higher oil prices, higher gasoline imports and lost aircraft exports due to the Boeing strike pushed the September U.S. foreign trade deficit deeper to a record $66.1B from a little revised $59.2B in August. Consensus expectations had been for less of a deepening to $61.0B.
Imports of goods &amp; services surged 2.4% in September. Petroleum imports jumped another 4.4% (58.7% y/y) as the per barrel price of crude petroleum rose 8.9% to $57.32 (52.8% y/y) though the value of crude oil imports fell 7.0% due to refinery shutdowns following Hurricane Katrina. Offsetting that decline, however, was a nearly one quarter surge in the value of imports of fuel oil &amp; gasoline.
Imports of nonpetroleum goods surged 2.4% (10.1% y/y) in September as foods, feeds &amp; beverages jumped 4.1% (17.6% y/y) and industrial supplies &amp; materials surged 6.2% (33.0% y/y) additionally reflecting a 30.0% spike in natural gas (88.05 y/y).
Capital goods imports also rose a strong 0.9% (8.8% y/y) as imports of advanced technology products jumped 3.7% (NSA, 11.0% y/y). Imports of nonauto consumer goods jumped 2.6 (10.7% y/y) though imports of autos, parts &amp; engines fell 3.5% (+3.7% y/y).
Total exports collapsed 2.6% due to a 7.4% drop in capital goods exports, driven by the four-week strike at Boeing Co. which caused exports of civilian aircraft to drop $2.4B or 72.3% m/m. Also, exports of advanced technology products more than reversed all of the prior month&#39;s gain with a 7.9% drop (NSA, -0.8% y/y). Finally, Gulf port closings contributed to the 5.8% m/m decline in exports of foods, feeds &amp; beverages though these declines were dampened by a 4.1% (12.3% y/y) rise in nonauto consumer goods exports.
Services exports surged 1.6% (10.9% y/y) due to a 1.8% (13.0% y/y) jump in private travel and a 3.0% (18.1% y/y) spike in &quot;other&quot; private transportation services.
The US trade deficit with China deepened sharply to a record $20.1B ($161.9B in 2004) due to a 4.2% (NSA, 26.8% y/y) surge in imports that was accompanied by a 17.8% drop in exports (NSA, +11.9% y/y). The US trade deficit with Japan again improved slightly m/m to $6.4B ($75.6B in 2004) while the monthly trade deficit with the Asian NICs deepened for the fifth consecutive month to $1.5B ($21.9B in 2004). The deficit with the European Union improved slightly to $10.1B ($109.3B in 2004) due to a 1.9% (3.5% y/y) gain in exports.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
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<td class="firstcol">Trade Deficit</td>
<td>$66.1B</td>
<td>$59.3B</td>
<td>$51.9B (9/04)</td>
<td>$617.6B</td>
<td>$494.8B</td>
<td>$421.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-2.6%</td>
<td>1.5%</td>
<td>7.7%</td>
<td>12.6%</td>
<td>4.6%</td>
<td>-3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>2.4%</td>
<td>1.8%</td>
<td>14.5%</td>
<td>16.6%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
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The combination of higher oil prices, higher gasoline imports and lost aircraft exports due to the Boeing strike pushed the September U.S. foreign trade deficit deeper to a record $66.1B from a little revised $59.2B in August. [...]

Record U.S. Trade Deficit Suffered Triple Whammy

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110a.jpg" width="353">
The combination of higher oil prices, higher gasoline imports and lost aircraft exports due to the Boeing strike pushed the September U.S. foreign trade deficit deeper to a record $66.1B from a little revised $59.2B in August. Consensus expectations had been for less of a deepening to $61.0B.
Imports of goods &amp; services surged 2.4% in September. Petroleum imports jumped another 4.4% (58.7% y/y) as the per barrel price of crude petroleum rose 8.9% to $57.32 (52.8% y/y) though the value of crude oil imports fell 7.0% due to refinery shutdowns following Hurricane Katrina. Offsetting that decline, however, was a nearly one quarter surge in the value of imports of fuel oil &amp; gasoline.
Imports of nonpetroleum goods surged 2.4% (10.1% y/y) in September as foods, feeds &amp; beverages jumped 4.1% (17.6% y/y) and industrial supplies &amp; materials surged 6.2% (33.0% y/y) additionally reflecting a 30.0% spike in natural gas (88.05 y/y).
Capital goods imports also rose a strong 0.9% (8.8% y/y) as imports of advanced technology products jumped 3.7% (NSA, 11.0% y/y). Imports of nonauto consumer goods jumped 2.6 (10.7% y/y) though imports of autos, parts &amp; engines fell 3.5% (+3.7% y/y).
Total exports collapsed 2.6% due to a 7.4% drop in capital goods exports, driven by the four-week strike at Boeing Co. which caused exports of civilian aircraft to drop $2.4B or 72.3% m/m. Also, exports of advanced technology products more than reversed all of the prior month&#39;s gain with a 7.9% drop (NSA, -0.8% y/y). Finally, Gulf port closings contributed to the 5.8% m/m decline in exports of foods, feeds &amp; beverages though these declines were dampened by a 4.1% (12.3% y/y) rise in nonauto consumer goods exports.
Services exports surged 1.6% (10.9% y/y) due to a 1.8% (13.0% y/y) jump in private travel and a 3.0% (18.1% y/y) spike in &quot;other&quot; private transportation services.
The US trade deficit with China deepened sharply to a record $20.1B ($161.9B in 2004) due to a 4.2% (NSA, 26.8% y/y) surge in imports that was accompanied by a 17.8% drop in exports (NSA, +11.9% y/y). The US trade deficit with Japan again improved slightly m/m to $6.4B ($75.6B in 2004) while the monthly trade deficit with the Asian NICs deepened for the fifth consecutive month to $1.5B ($21.9B in 2004). The deficit with the European Union improved slightly to $10.1B ($109.3B in 2004) due to a 1.9% (3.5% y/y) gain in exports.

<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/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</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">Trade Deficit</td>
<td>$66.1B</td>
<td>$59.3B</td>
<td>$51.9B (9/04)</td>
<td>$617.6B</td>
<td>$494.8B</td>
<td>$421.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-2.6%</td>
<td>1.5%</td>
<td>7.7%</td>
<td>12.6%</td>
<td>4.6%</td>
<td>-3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>2.4%</td>
<td>1.8%</td>
<td>14.5%</td>
<td>16.6%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Import Prices Declined 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110d.jpg" width="353">
Import prices fell an expected 0.3% last month following the revised 2.3% spike in September. Petroleum prices were the source of weakness as they reversed more than half of the prior month&#39;s gain with a 4.4% drop. Crude oil prices fell 4.1% and &quot;other&quot; petroleum prices fell 14.4% but those decline were offset by a 20.9% (114.1% y/y) increase in natural gas.
Excluding petroleum, prices were strong for the second consecutive month and rose 0.8%. The gain reflected a 4.4% (16.1% y/y) rise in non-oil industrial supplies which repeated the gain in September. Elsewhere, paper prices rose 1.0% (3.8% y/y) and chemical prices jumped 2.1% (11.7% y/y). On the weak side, nonauto consumer goods prices fell 0.1% (+1.2% y/y) and capital goods prices slipped 0.3% (-0.5% y/y). Excluding another decline in computer prices, capital goods prices fell 0.1% (2.0% y/y).
During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies and a lower 57% against the real value of the dollar.
Export prices jumped 0.6% as nonagricultural prices rose 0.6% (3.5% y/y).
 Time-Varying Pass-Through from Import Prices to Consumer Prices: Evidence from an Event Study with Real-Time Data from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr228.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</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">Import - All Commodities</td>
<td>-0.3%</td>
<td>2.3%</td>
<td>8.1%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-4.4%</td>
<td>8.0%</td>
<td>30.9%</td>
<td>30.5%</td>
<td>21.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.8%</td>
<td>1.0%</td>
<td>3.7%</td>
<td>2.6%</td>
<td>1.1%</td>
<td>-2.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.6%</td>
<td>0.8%</td>
<td>3.6%</td>
<td>3.9%</td>
<td>1.6%</td>
<td>-1.0%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Lifted By Drop in Oil Prices 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110e.jpg" width="353">
The preliminary reading of consumer sentiment in November from the University of Michigan rose 7.7% to 79.9, the highest level in three months. Consensus expectations had been for less of an improvement to 76.8.
During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.
The mean expected inflation rate for the next twelve months fell sharply to 4.6 from 5.5% expected in October. That prompted Consumer expectations to rise 5.7% and expected business conditions during the next year to surge 14.7%.
The current conditions index also improved 10.0% m/m (-4.2% y/y) due to 10% gains in personal finances and in buying conditions for large household goods.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</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">Consumer Sentiment</td>
<td>79.9</td>
<td>74.2</td>
<td>-13.9%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>100.3</td>
<td>91.2</td>
<td>-4.2%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>66.8</td>
<td>63.2</td>
<td>-21.6%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Remain Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110f.jpg" width="353">
A 2,000 increase in initial claims for unemployment insurance to 326,000 reversed only a piece of the prior week&#39;s revised 6,000 decline. Consensus expectations had been for 323,000 claims.
The four-week moving average of initial claims fell sharply to 334,250 (-0.3% y/y).
Continuing claims for unemployment insurance rose 23,000 following a downwardly revised 72,000 drop during the prior week.
The insured rate of unemployment remained at 2.2% for the seventh week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">11/05/05</th>
<th scope="col">10/29/05</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>326</td>
<td>324</td>
<td>-1.5%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,818</td>
<td>0.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
CPI Data Show Some Relief for Energy in October 
by <a href="/comment/Stone.html">Carol Stone</a> November 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110b.jpg" width="353">
Several countries reported CPI data today for October.A common feature of all the countries we examined was a tempering of inflation as energy prices backed off their storm-related highs of September.
In France and Denmark, the October CPI actually declined 0.1% in the month, following 0.4% increases in both countries in September.For France, tellingly, the subset of the CPI excluding energy was flat in both months.
Ireland&#39;s total CPI rose 0.2% in October after 0.8% in September.It is seen to experience somewhat higher inflation trends overall than the others of these countries.Finally, in Norway, the total CPI was flat following September&#39;s 0.3% rise. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051110c.jpg" width="353">
Clearly, one month need not mark a turning point in inflation trends. But this is welcome relief however long it lasts.We have noted all along how relatively immune other prices have been to the energy situation.This agreeable circumstance may yet change, given the squeeze on business operating margins that has already taken place from the surge in energy.Demand responses could well limit the ultimate pass-through, though, as sluggish economies in Europe also have little capacity to shoulder further price burdens.
<span style="font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:&quot;MS Mincho&quot;;
mso-bidi-font-family:&quot;Times New Roman&quot;;mso-ansi-language:EN-US;mso-fareast-language:
JA;mso-bidi-language:AR-SA">As a footnote, the individual months&#39; figures we quote here are seasonally adjusted data found in Haver&#39;s G10 database.This database is a summary compilation of major data in major countries, the well-known G10, plus Australia, Austria, other Nordic nations, Ireland, Spain and so on.In that database Haver performs some additional seasonal adjustment of data beyond that provided by many countries.The more comprehensive databases covering individual countries consist largely in data provided by the countries&#39; official statistics sources, which we do not augment, while G10 is a database we compile ourselves for the convenience of having a quick summary of large countries, but with a modest amount of detail.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GZ/@GZ5/@GZ501/@GZ501.HTM">CPI, % Changes, SA*</a></th>
<th scope="col">Oct 2005</th>
<th scope="col">Sept 2005</th>
<th scope="col">Aug 2005&nbsp;</th>
<th scope="col">Oct 2004**&nbsp;</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>-0.1</td>
<td>0.4</td>
<td>0.3</td>
<td>1.8</td>
<td>2.1</td>
<td>2.2</td>
<td>2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ex Energy</td>
<td>0.0</td>
<td>0.0</td>
<td>0.5</td>
<td>1.0</td>
<td>1.5</td>
<td>2.4</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>0.2</td>
<td>0.8</td>
<td>0.3</td>
<td>3.0</td>
<td>2.6</td>
<td>1.9</td>
<td>5.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Denmark</td>
<td>-0.1</td>
<td>0.4</td>
<td>0.2</td>
<td>2.0</td>
<td>1.2</td>
<td>1.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Norway</td>
<td>0.0</td>
<td>0.3</td>
<td>0.5</td>
<td>1.8</td>
<td>1.1</td>
<td>0.6</td>
<td>2.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

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Consumers remain in a spending mood. Total retail sales increased 0.5% (3.9% y/y) during July after rising 0.9% in June, revised from 0.6%, and falling 0.8% in May, revised from down 0.9%. The overall rise matched expectations in the Action Economics Forecast Survey. Sales excluding autos rose an expected 0.3% last month (3.7% y/y) following a 0.8% June gain, revised from 0.5%, and a 0.1% dip during May, revised from -0.2%.

Sales in the retail control group, which excludes autos, building materials, gasoline and food services, rose 0.5% (4.8% y/y) last month after increasing 0.8% in June, revised from 0.5%, and 0.3% in May, revised from 0.2%. These sales are used in the construction of personal consumption expenditures in the NIPA accounts. These sales rose 3.9% (AR) last quarter following a 3.7% Q1 rise.

Light vehicle sales increased 1.6% (4.7% y/y) in July after rising 1.4% in June, following a 3.8% decline in May. This compares to a 7.6% (6.0% y/y) rise in unit sales of motor vehicles last month which followed declines in each of the prior three months. Gasoline service station sales eased 0.7% (-2.9% y/y) during July after a 0.6% rise during June. Gasoline prices fell 1.2% (-9.8% y/y) last month after holding steady in June. Sales of building materials & garden equipment declined 1.0% (-2.6% y/y) after a 1.3% rise during June.

Elsewhere, sales were mixed last month. Furniture & home furnishings sales increased 1.4% (5.1% y/y) after rising 0.1% in June. Nonstore retail sales rose 0.8% (8.0% y/y) after increasing 0.9% in June. Sporting goods & hobby shop sales increased 0.8% (2.3% y/y) following a 0.7% decline. Apparel store sales increased 0.7% (5.0% y/y) during July following a 1.1% gain. General merchandise store sales rose 0.4% (2.3% y/y) after they moved 0.5% higher in June, and department store sales improved 0.9% (-0.8% y/y) after falling 0.6% in June.

Working lower, miscellaneous store sales fell 1.7% (+10.6% y/y) during July after strengthening 2.7% in June. Electronics & appliance store sales eased 0.6% (-2.3% y/y) last month after two consecutive months of moderate decline.

In the nondiscretionary sales sector, food & beverage store sales rose 0.5% (2.5% y/y) last month following a 0.8% rise in June. Health & personal care store sales also rose 0.4% (5.6% y/y) last month after strengthening 1.0% in June.

Restaurant & drinking establishment sales fell 0.4% (+5.6% y/y) in July after rising 0.6% in June.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economic Forecast Survey in **AS1REPNA**.

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- Strong vehicle sales pace the increase.
- Nonauto sales are mixed. 
- Sales in the retail control group (used to estimate PCE) increase.

U.S. Retail Sales Post Solid Increase in July; June Gain Revised Up

Winnie Tapasanun

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Industrial production (IP) dipped 0.1% m/m in July after upwardly revised increases of 0.4% in June (+0.3% initially) and 0.1% in May (0.0% previously), data from the Federal Reserve Board showed. A 0.0% m/m for July had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase accelerated to 1.4% in July from 0.7% in June; it was well above -0.2% y/y in July 2024. The July IP index was at 104.0, marginally down from 104.1 in June (the highest since September 2018) and 2.5% above a low of 101.5 in January 2024.

By **industry groups**, manufacturing production was virtually unchanged (+1.4% y/y) in July following rises of 0.3% in June (+0.1% initially) and 0.2% in May (+0.3% previously). Durable goods production grew 0.3% (2.7% y/y) in July, the second m/m gain in three months, following a 0.1% downtick in June. Within durables, the following categories rose m/m in July, including output increases of 1.7% (8.9% y/y) in aerospace & miscellaneous transportation equipment, 1.3% (-1.7% y/y) in miscellaneous durables goods, 1.0% (-2.0% y/y) in electrical equipment, appliances & components, 1.0% (-0.2% y/y) in furniture & related products, 0.7% (1.7% y/y) in wood products, 0.6% (-1.3% y/y) in nonmetallic mineral products, 0.2% (-0.3% y/y) in fabricated metal products, and 0.1% (5.6% y/y) in computer & electronic products. Notably, aircraft & parts production climbed 1.1% (11.4% y/y) in July, the ninth straight m/m rise, on top of a 2.3% gain in June. To the downside, the following durable goods categories fell for the third time in four months in July, including machinery (-0.3%; +0.9% y/y), motor vehicles & parts (-0.3%; +8.3% y/y), and primary metals (-0.3%; +4.0% y/y).

Nondurable goods production fell 0.4% (+0.6% y/y) in July, down for the third month in four, following a 0.7% rebound in June, reflecting m/m output falls of all nondurable goods categories. These included output declines of 2.1% (-4.7% y/y) in textiles & product mills, 1.7% (-5.5% y/y) in apparel & leather goods, 0.8% (-3.1% y/y) in plastics & rubber products, 0.5% (0.0% y/y) in paper, 0.5% (+0.7% y/y) in petroleum & coal products, 0.4% (+2.5% y/y) in chemicals, 0.2% (+0.3% y/y) in food, beverages & tobacco, and 0.1% (-1.3% y/y) in printing & related support activities.

Mining activity slid 0.4% (+1.9% y/y) in July, the third m/m slide in four months, after an unrevised 0.3% decrease in June. Utilities output declined 0.2% (+0.8% y/y), down for the second month in three, following a downwardly revised 1.8% June gain (+2.8% initially), with a 0.3% decrease (+1.6% y/y) in electric utilities output and a 0.5% rebound (-5.3% y/y) in natural gas utilities output.

By **market groups**, materials production fell 0.3% (+1.8% y/y) in July, the first m/m fall since March, after a 0.5% advance in June. Construction supplies production declined 0.2% (+2.0% y/y) following a 0.3% June increase. To the upside, business equipment output rose 0.5% (3.8% y/y) in July, the ninth consecutive m/m rise, after a 0.1% uptick in June. Consumer goods output edged up 0.1% (0.6% y/y) after a 0.3% June rebound, reflecting increases of 0.1% (2.5% y/y) in durable consumer goods and 0.1% (0.1% y/y) in nondurable consumer goods.

In **special classifications**, factory output of selected high-tech industries rose 1.4% (14.0% y/y) in July on top of an upwardly revised 0.9% gain in June (+0.5% initially), posting the fourth successive m/m rise and the seventh in eight months. Meanwhile, manufacturing production excluding selected high-tech industries dipped 0.1% (+1.1% y/y) in July, the first m/m easing since April, following a 0.3% increase in June; manufacturing production excluding selected high-tech and motor vehicles & parts slipped 0.1% (+0.6% y/y), the third m/m decline in four months, following a 0.5% June rebound.

Capacity utilization fell to 77.5% in July from a three-month-high 77.7% in June (77.6% previously). The Action Economics Forecast Survey forecasted 77.6%. The July reading was 2.1 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization dipped to 76.8% in July from an unrevised 76.9% in June; the July rate was 1.4 percentage points below its long-run average.

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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- July IP -0.1% (+1.4% y/y), led by a 0.4% decline in mining activity.
- Mfg. IP unchanged, w/ durables up 0.3% and nondurables down 0.4%.
- Utilities output -0.2%, the second m/m fall in three months.
- Key categories in market groups post mixed results.
- Capacity utilization down 0.2%pt. to 77.5%; mfg. capacity utilization down 0.1%pt. to 76.8%.

U.S. Industrial Production Eases in July

Sandy Batten

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The Empire State Manufacturing Index of General Business Conditions unexpectedly advanced more than 6 points to 11.9 in August after having jumped nearly 22 points to 5.5 in July, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. This is the highest reading since November 2024 and indicates a pickup in the pace of economic activity in New York State. A reading of -1.0 for August had been expected by the Action Economics Forecast Survey. The percentage of respondents reporting an increase in general business conditions rose to 34.7% in August from 32.4% in July while the percentage reporting a decrease fell to 22.8% in August, the lowest reading since February, from 26.9% in July. The August survey was conducted between August 4 and August 11.

The headline index just reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index slipped to 54.3 in August from 54.7 in July, still well above the critical 50 level that separates expansion from contraction but indicating that the components were not quite as strong as the headline index in August. The calculated index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

The August increase was led by a more than 13-point increase in the new orders index, to 15.4 from 2.0. Thirty-six percent of respondents reported an increase in orders, up slightly from 35% in July. However, only 20.4% reported a decline in orders, down markedly from 32.9% in July and a recent high of 40.2% in March. The shipments index was little changed in August but remained at a solid 12.2. Inventories reversed course sharply, falling to -6.4, the first negative reading since last August, from 15.6 in July. Employment also slowed with the index falling to 4.4 from 9.2 in July.

Indications of supply-chain disruptions continued to emerge. Delivery times lengthened markedly with the index jumping to 17.4 in August, its highest reading since May 2022, from an already elevated 8.3 in July. Twenty percent of respondents reported an increase in delivery times, up from nearly 15% in July, while only 2.8% reported a shortening versus 6.4% in July. Moreover, the supply availability index remained in negative territory at -5.5 versus -11.0 in July.

Inflation indexes softened a bit in August but remained elevated. The prices paid index edged down to 54.1 from 56.0 in July while the prices received index slid to 22.9 from 25.7 in July. Both remain significantly elevated relative to the beginning of the year.

Firm optimism about the future (the next six months) soured a bit in August. The index for future general business conditions fell eight points to 16.0, suggesting that businesses expect activity to increase in the months ahead, but firms were less optimistic than they were last month. New orders and shipments were expected to increase. Two-thirds of respondents expect input prices to pick up further over the next six months. Of some concern, capital spending plans were soft with the expectations index plunging to -0.9 in August from 9.2 in July.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- The highest reading since November 2024.
- The August rise was led by stronger new orders and continued gains in shipments.
- More evidence of nascent supply-chain problems.
- Outlook six months ahead faded slightly.

FRBNY Empire State Manufacturing Index Unexpectedly Advances in August

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Import prices unexpectedly increased 0.4% m/m (-0.2% y/y) in July after declines of 0.1% m/m in June and 0.4% m/m in May, according to the Bureau of Labor Statistics. An unchanged reading had been expected by the Action Economics Forecast Survey. Export prices edged up 0.1% m/m (2.2% y/y) in July following a 0.5% monthly gain in June. The Action Economic Forecast Survey had also looked for an unchanged reading.

For imports, prices for imported fuel advanced 2.7% m/m in July following an increase of 0.8% m/m in June and a decrease of 5.0% m/m in May. The July increase was the largest monthly advance since the index rose 3.0% m/m in January 2025. Higher prices for imported petroleum and natural gas drove the July increase, advancing 2.4% m/m and 4.7% m/m, respectively. Imported fuel prices fell 12.1% y/y in July 2025 with imported petroleum prices down 13.7% y/y while imported natural gas prices soared 62.2% y/y.

Apart from imported fuel, prices for nonfuel imports advanced 0.3% m/m percent in July, following a decrease of 0.3% m/m in June. Higher prices for nonfuel industrial supplies and materials (1.0% m/m), consumer goods (0.4% m/m), and capital goods (0.1% m/m) more than offset lower prices for automotive vehicles (-0.2% m/m) and foods, feeds, and beverages (-0.1% m/m). Nonfuel import prices increased 0.9% y/y in July and have not declined on an over-the-year basis since a 0.6% decrease in February 2024. Higher prices for nonfuel industrial supplies and materials; capital goods; and foods, feeds, and beverages contributed to the year-over-year advance.

Higher prices for nonagricultural exports drove the July increase in overall export prices. The price index for agricultural exports was unchanged in July following a 0.8% m/m increase in June. Higher prices for meat (1.1% m/m) and vegetables (3.4% m/m) lower prices for corn (-1.9% m/m) and animal feeds (-1.6% m/m). The price index for agricultural exports increased 3.4% y/y in July, the largest 12-month rise since a 5.3% y/y advance in January 2023. Nonagricultural export prices ticked up 0.1% m/m in July, after rising 0.5% m/m in June and falling 0.8% m/m in May. Higher prices for automotive vehicles (0.7% m/m), capital goods (0.2% m/m), and consumer goods (0.2% m/m) more than offset lower prices for nonagricultural industrial supplies and materials (-0.1% m/m). Prices for nonagricultural exports increased 2.0% y/y in July. Higher prices for nonagricultural industrial supplies and materials, capital goods, and automotive vehicles drove the year-over-year advance.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Import prices rose 0.4% m/m in July against expectations of no change after declines in both May and June.
- Higher prices for imported petroleum and natural gas drove the July rebound. 
- Export prices ticked up 0.1% m/m, largely reflecting higher prices for nonagricultural exports.

U.S. Import Prices Rebounded in July

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Total business inventories increased 0.2% during June after holding steady in May and April. The y/y gain has decelerated to 1.6% from November’s 2.6%. Retail inventories rose 0.2% for the second straight month and the y/y increase fell to 2.4% from 7.5% in November.

Within the retail sector, auto inventories increased 1.0% (-1.0% y/y) after rising 0.6% in May. Retail inventories excluding autos edged 0.1% lower (4.1% y/y) and reversed the May increase. General merchandise store inventories fell 0.4% (+1.9% y/y), their third consecutive monthly decline. Food & beverage store inventories eased slightly (+4.0% y/y) and inventories at building materials & garden equipment stores rose 0.3% (6.7% y/y) after holding steady in May. Furniture & appliance store inventories increased 0.2% (1.8% y/y) following two months of strong increase. Clothing inventories rose 0.4% (1.5% y/y) and reversed the May decline.

Wholesale inventories edged 0.1% higher (1.3% y/y) in June following a 0.3% fall during May. Factory sector inventories rose 0.2% (1.1% y/y) following a 0.1% easing in May.

Total business sales increased 0.5% (3.8% y/y) during June, following a 0.4% May decline. Retail sales increased 0.9% (4.0% y/y) in June after falling 0.8% in May. Wholesale sales rose 0.3% (5.5% y/y) after a 0.4% decline in May. Factory sales rose 0.5% (1.8% y/y) on the heels of 0.2% gain.

The business sector inventory/sales (I/S) ratio eased to 1.38 in June from 1.39 in the previous month. The I/S ratios for retailers and wholesalers both held steady in June at 1.30, while the manufacturing I/S ratio was unchanged at 1.57.

The manufacturing and trade data are in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Inventory increase is first in three months & spread across sectors.
- Sales rise is led by retailers.
- I/S ratios are little changed.

Economy in Brief: November 2005

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OECD Leaders Up Again

OECD Leaders Up Again

CPI Data Show Some Relief for Energy in October

Initial Jobless Insurance Claims Remain Low

U.S. Consumer Sentiment Lifted By Drop in Oil Prices

Import Prices Declined

Record U.S. Trade Deficit Suffered Triple Whammy

Record U.S. Trade Deficit Suffered Triple Whammy