Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602b.jpg" width="353">
Initial claims for unemployment insurance jumped 25,000 last week to 350,000, the highest level since late March. The prior week&#39;s level was revised up slightly and Consensus expectations had been for 325,000 claims.
The rise in claims was at least partially due to temporary auto industry layoffs not related to regular summer plant shutdowns for retooling.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims rose to 334,500 (-2.6% y/y).
Continuing claims for unemployment insurance reversed all of the prior week&#39;s decline and rose 32,000 to the highest level in six weeks.
The insured unemployment rate remained stable at 2.0% for the sixth consecutive 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">05/28/05</th>
<th scope="col">05/21/05</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>350</td>
<td>325</td>
<td>1.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,602</td>
<td>-12.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance jumped 25,000 last week to 350,000, the highest level since late March. The prior week's level was revised up slightly and Consensus expectations had been for 325,000 claims. The rise in [...]

Initial Claims for Jobless Insurance Jumped

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Non-farm labor productivity growth about matched Consensus expectations and was revised higher to 2.9%. A surprise, however, was that compensation costs were revised up in 1Q to 6.3% and up sharply to 10.4% in 4Q04.
As a result of revisions to compensation, unit labor cost growth accelerated to 4.3% versus 1Q &#39;04 versus an upwardly revised 0.8% during 2004.
Productivity in the nonfinancial corporate sector rose 2.7% (4.9% y/y) following 9.0% growth during 4Q &#39;04. Compensation, however, rose 6.8% after a 10.2% 4Q rise and caused unit labor costs to rise 4.1% (2.0% y/y). The ratio of prices to unit labor costs fell to the lowest level in a year, confirming the crimp on 1Q profits.
Does Wage Inflation Cause Price Inflation? from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/PolicyDis/pd1.pdf">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602c.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602d.jpg" width="353">

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">1Q &#39;05 (Revised)</th>
<th scope="col">1Q &#39;05</th>
<th scope="col">4Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.6%</td>
<td>4.0%</td>
<td>4.3%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>6.3%</td>
<td>4.8%</td>
<td>10.2%</td>
<td>7.0%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.3%</td>
<td>2.2%</td>
<td>7.7%</td>
<td>4.3%</td>
<td>0.8%</td>
<td>-0.3%</td>
<td>-1.1%</td>
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Non-farm labor productivity growth about matched Consensus expectations and was revised higher to 2.9%. A surprise, however, was that compensation costs were revised up in 1Q to 6.3% and up sharply to 10.4% in 4Q04. As a result of [...]

U.S. Productivity Revised Higher But Compensation Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602a.jpg" width="353">
May sales of light vehicles reversed all of the prior month&#39;s gain and fell 4.5% to 16.67M according to the Autodata Corporation.
Car sales were notably weak following a firm April and fell 7.5%. So far this year the average level of car sales is 1.2% above last year.
Sales of light trucks fell 2.0% m/m to 9.14M. The average of truck sales so far this year is down 2.1% versus the first five months of 2004.
Imports&#39; share of the US market for new vehicles was about stable at 20.5% in May, up from 19.9% in 2004.
Gasoline prices fell to an average $2.10 per gallon during the last week of May, down 8.0% from the weekly high of $2.28 in early April but still up 13.2% from last year&#39;s average $1.85.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.67</td>
<td>17.46</td>
<td>-5.9%</td>
<td>16.88</td>
<td>16.63</td>
<td>16.81</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.53</td>
<td>8.14</td>
<td>-4.7%</td>
<td>7.49</td>
<td>7.62</td>
<td>8.07</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.14</td>
<td>9.32</td>
<td>-6.9%</td>
<td>9.39</td>
<td>9.01</td>
<td>8.74</td>
</tr>
</tbody>
</table>
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May sales of light vehicles reversed all of the prior month's gain and fell 4.5% to 16.67M according to the Autodata Corporation. Car sales were notably weak following a firm April and fell 7.5%. So far this year the average level of [...]

U.S. Light Vehicle Sales Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602a.jpg" width="353">
May sales of light vehicles reversed all of the prior month&#39;s gain and fell 4.5% to 16.67M according to the Autodata Corporation.
Car sales were notably weak following a firm April and fell 7.5%. So far this year the average level of car sales is 1.2% above last year.
Sales of light trucks fell 2.0% m/m to 9.14M. The average of truck sales so far this year is down 2.1% versus the first five months of 2004.
Imports&#39; share of the US market for new vehicles was about stable at 20.5% in May, up from 19.9% in 2004.
Gasoline prices fell to an average $2.10 per gallon during the last week of May, down 8.0% from the weekly high of $2.28 in early April but still up 13.2% from last year&#39;s average $1.85.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.67</td>
<td>17.46</td>
<td>-5.9%</td>
<td>16.88</td>
<td>16.63</td>
<td>16.81</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.53</td>
<td>8.14</td>
<td>-4.7%</td>
<td>7.49</td>
<td>7.62</td>
<td>8.07</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.14</td>
<td>9.32</td>
<td>-6.9%</td>
<td>9.39</td>
<td>9.01</td>
<td>8.74</td>
</tr>
</tbody>
</table>
Challenger Layoffs Higher in May 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602e.jpg" width="353">
Job cut announcements jumped in May, however, the 42.2% m/m rise did not reverse all of the prior month&#39;s plunge. Therefore, the three month average of job cut announcements fell further to the lowest level since last August.
During the last ten years there has been an 84% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements rose sharply m/m in the apparel (+234% y/y), computer (496% y/y) and insurance (321% y/y) industries but fell broadly elsewhere.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell for the second month in the last three.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>82,283</td>
<td>57,861</td>
<td>12.2%</td>
<td>1,039,175</td>
<td>1,236,426</td>
<td>1,431,052</td>
</tr>
</tbody>
</table>
U.S. Factory Inventory Growth Slowed 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602f.jpg" width="353">
Factory inventories rose just 0.1% in April following an upwardly revised 0.7% gain in March. These gains lowered the three month growth in inventories to 5.8%, nearly half the high rate of accumulation set last summer.
These figures have been bloated by the surge in oil prices. Less petroleum, factory inventories rose 0.1% (8.1% y/y) in April and the three month rate of accumulation slowed to 5.1% versus 10.9% in August.
A slower rate of inventory accumulation has been notable in the furniture industry where three month growth fell to 2.8% from a high of 28.4%. Accumulation of electrical equipment about halved to 9.6% and the level of computer inventories has declined versus a double digit rate of accumulation last summer. The slowdown in other industries has been widespread.
Factory shipments rose a firm 0.7% but here again the trend has weakened. Three month growth fell to 3.1% from a high of 20.4%. Less petroleum recent growth in shipments has been negative versus 17% growth a year ago.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602g.jpg" width="353">
Orders to the factory sector rose 0.9%, juiced by a 1.9% rise in durable goods orders which was unrevised from the advance report.
Unfilled orders were unchanged and the ratio of unfilled orders to shipments fell to a new low.
Do Technological Improvements in the Manufacturing Sector Raise or Lower Employment? from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/wps/2005/wp05-5.pdf">here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</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 class="odd">
<td class="firstcol">Inventories</td>
<td>0.1%</td>
<td>0.7%</td>
<td>8.6%</td>
<td>7.5%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.9%</td>
<td>0.7%</td>
<td>6.8%</td>
<td>10.9%</td>
<td>3.7%</td>
<td>-1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.7%</td>
<td>1.6%</td>
<td>7.8%</td>
<td>10.5%</td>
<td>2.6%</td>
<td>-2.0%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>6.3%</td>
<td>9.1%</td>
<td>4.2%</td>
<td>-6.1%</td>
</tr>
</tbody>
</table>
U.S. Productivity Revised Higher But Compensation Strong 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 2, 2005


Non-farm labor productivity growth about matched Consensus expectations and was revised higher to 2.9%. A surprise, however, was that compensation costs were revised up in 1Q to 6.3% and up sharply to 10.4% in 4Q04.
As a result of revisions to compensation, unit labor cost growth accelerated to 4.3% versus 1Q &#39;04 versus an upwardly revised 0.8% during 2004.
Productivity in the nonfinancial corporate sector rose 2.7% (4.9% y/y) following 9.0% growth during 4Q &#39;04. Compensation, however, rose 6.8% after a 10.2% 4Q rise and caused unit labor costs to rise 4.1% (2.0% y/y). The ratio of prices to unit labor costs fell to the lowest level in a year, confirming the crimp on 1Q profits.
Does Wage Inflation Cause Price Inflation? from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/research/PolicyDis/pd1.pdf">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602c.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602d.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">1Q &#39;05 (Revised)</th>
<th scope="col">1Q &#39;05</th>
<th scope="col">4Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>2.9%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.6%</td>
<td>4.0%</td>
<td>4.3%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>6.3%</td>
<td>4.8%</td>
<td>10.2%</td>
<td>7.0%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>3.3%</td>
<td>2.2%</td>
<td>7.7%</td>
<td>4.3%</td>
<td>0.8%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602b.jpg" width="353">
Initial claims for unemployment insurance jumped 25,000 last week to 350,000, the highest level since late March. The prior week&#39;s level was revised up slightly and Consensus expectations had been for 325,000 claims.
The rise in claims was at least partially due to temporary auto industry layoffs not related to regular summer plant shutdowns for retooling.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims rose to 334,500 (-2.6% y/y).
Continuing claims for unemployment insurance reversed all of the prior week&#39;s decline and rose 32,000 to the highest level in six weeks.
The insured unemployment rate remained stable at 2.0% for the sixth consecutive 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">05/28/05</th>
<th scope="col">05/21/05</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>350</td>
<td>325</td>
<td>1.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,602</td>
<td>-12.8%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
China Trade in Surplus, but Imports Are Large, Nonetheless 
by <a href="/comment/Stone.html">Carol Stone</a> June 2, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602h.jpg" width="353">
In the May edition of &quot;Haver Analytics News&quot;, we announced the availability of the CEIC China Premium Database. This new database, CHINA, has over 125,000 series covering many, many facets of Chinese economic life. The level of detail is extensive, including such items as the number of visitors to China who arrive on foot in any given month, the prices for common Portland cement by intensity and the gross domestic product of Shanghai, annually, by industry.
Earlier this week, the General Administration of Customs reported foreign trade data for April. The surplus was $4.6 million, consisting of $62.2 billion in exports and $57.6 billion in imports. On examining these figures over time, we were startled to find that, while trade surpluses prevail, the trend is not nearly the one-sided imbalance that one might envision. In fact, there has even been the occasional monthly trade deficit. During the last 12 months, the surplus has averaged $5.4 billion, equivalent to just about 10% of China&#39;s exports. By contrast, in Japan, the 12-month average trade surplus has represented 23% of exports and in Germany, 21%, much larger proportional imbalances than in China.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050602i.jpg" width="353">
Thus, not only are China&#39;s exports large and growing rapidly, so are China&#39;s imports. In 2004, exports of goods totaled $593.6 billion, up 35.4% from 2003. Imports were $560.8 billion, up 35.8%. Just in the last three months, however, imports have slowed, so their average for February, March and April is &quot;just&quot; 10.8% higher than a year ago. Products contributing most to the lessening pace include textiles, paper and several machinery categories. At the same time, as elsewhere, petroleum imports continue to grow strongly, along with its derivatives, chemicals and plastics. Some durable goods remain strong as well, including wood products and electrical equipment.
In the second graph here, we show imports growth along with that of GDP. We see that most of the time since 1999 imports have grown faster than GDP. Thus, even as trade accounts run surpluses, China clearly spends a sizable portion of its export earnings on imported products. A concentration in machinery suggests that building and upgrading plants is a major priority.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CHINA/CHINA.HTM">China</a> Millions of US$</th>
<th scope="col">12-Mo Avg, Apr 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Apr 2004</th>
Monthly Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Trade Balance</td>
<td>5392</td>
<td>4591</td>
<td>5733</td>
<td>-2250</td>
<td>2736</td>
<td>2115</td>
<td>2528</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports, fob</td>
<td>54071</td>
<td>62151</td>
<td>60869</td>
<td>47124</td>
<td>49471</td>
<td>36540</td>
<td>27137</td>
</tr>
<tr>
<td class="firstcol">Imports, cif</td>
<td>48680</td>
<td>57560</td>
<td>55136</td>
<td>49374</td>
<td>46734</td>
<td>34425</td>
<td>24609</td>
</tr>
</tbody>
</table>
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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/050601a.jpg" width="353">
Manufacturing activity in Europe is decreasing. The widely followed &quot;PMI&quot; surveys, compiled by NTC Research in London and published by Reuters, indicate net decreases in overall manufacturing in the Euro-Zone for May, the second consecutive month. The total index is 48.70, off from 49.19 in April. All the major component countries registered readings below 50 as well. In fact, only the Czech Republic is holding onto growth, and at 51.39, that is slowing. Readings above 50 indicate net gains in business, while below 50 show a net contraction.
Yesterday in this space, Louise Curley described weakness in business and consumer confidence in Europe, and of course, French voters surprised their own government and Euro-Zone officials by soundly rejecting the European Union constitution, surely a manifestation of this lack of overall &quot;confidence&quot; in the region. Today&#39;s manufacturing data underscore some fundamental sources for that malaise.
Among the components of the PMI survey, new orders are below 50 for a second month and order backlogs are down for a third successive month. May is the first month that total output has fallen below the 50% breakeven level.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050601b.jpg" width="353">
There is one notable sign of hope in these data. Input prices have been very strong in recent months, reaching a high of 76.7% last October. But the upward pressure on these costs has been dissipating, and in May nearly disappeared altogether. The input price index was 50.73 for the Euro-Zone, the lowest since September 2003. We&#39;d surmise that the recent moderation in energy markets has contributed to this, and other commodity price movements have tempered as well.
In contrast, as we illustrate in the table below, manufacturing in two Asian economies is still growing. In Japan, a modest rise in the PMI index in May extends an uptrend to a fifth month. The China PMI eased from 54.36 to 53.27, but those followed a spurt in March to over 55; the Chinese series remain inconclusive at this time though, because there is only 13 months&#39; worth of data.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PMI for Manufacturing&nbsp;</th>
<th scope="col">May 2005</th>
<th scope="col">April 2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone</td>
<td>48.70</td>
<td>49.19</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>49.44</td>
<td>49.73</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>48.76</td>
<td>49.80</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>47.12</td>
<td>47.98</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Japan</td>
<td>53.53</td>
<td>53.32</td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>53.27</td>
<td>54.36</td>
</tr>
</tbody>
</table>
</body>
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Manufacturing activity in Europe is decreasing. The widely followed "PMI" surveys, compiled by NTC Research in London and published by Reuters, indicate net decreases in overall manufacturing in the Euro-Zone for May, the second [...]

Euro-Zone Manufacturing PMI Shows Net Contraction for Second Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050601c.jpg" width="353">
Total mortgage applications last week gave back more than half of the prior week&#39;s bounce and fell 2.8%. Applications so far in May are 6.5% ahead of April, according to the Mortgage Bankers Association.
Purchase applications dropped 4.1% but in May still are 3.1% ahead of April. During the last ten years there has been a 50% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance fell 1.2% yet in May are 11.2% higher than in April.
The effective interest rate on a conventional 30-year mortgage fell to 5.83% from 5.88% the week prior. The effective rate on a 15-year mortgage fell to 5.42%.
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>.

<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">05/27/05</th>
<th scope="col">05/20/05</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>709.1</td>
<td>729.6</td>
<td>13.5%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>462.7</td>
<td>482.3</td>
<td>0.6%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,142.1</td>
<td>2,167.9</td>
<td>35.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
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</body>
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Total mortgage applications last week gave back more than half of the prior week's bounce and fell 2.8%. Applications so far in May are 6.5% ahead of April, according to the Mortgage Bankers Association. Purchase applications dropped [...]

Mortgage Applications Off Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050601d.jpg" width="353">
After a reasonable start in May, chain store sales subsequently fell during the last three weeks according to the International Council of Shopping Centers (ICSC)-UBS survey. Sales fell 1.0% last week and pulled the May average just 0.3% above April, half the gain during that month.
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 did rise 0.2% w/w (0.5% y/y) pulling the monthly average up 0.4% versus April, the first monthly increase since February.
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.

<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">05/28/05</th>
<th scope="col">05/21/05</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>451.2</td>
<td>455.9</td>
<td>3.1%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
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After a reasonable start in May, chain store sales subsequently fell during the last three weeks according to the International Council of Shopping Centers (ICSC)-UBS survey. Sales fell 1.0% last week and pulled the May average just [...]

Weekly Chain Store Sales Fell For Third Week

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050601g.jpg" width="353">
The total value of construction put in place rose another 0.5% in April and about matched Consensus expectations for a 0.7% gain.
Private residential building activity rose 0.6% for the second month but the value of new single family building declined 0.1% (+11.1% y/y), the first sequential decline since September. Building on new multi-family units jumped 1.4% (16.5% y/y).
Nonresidential building surged 1.3% led higher by a 1.8% (3.0% y/y) advance in office building. Manufacturing building also rose a strong 1.3% (38.7% y/y) but spending on power facilities fell 3.5% (-5.3% y/y).
Public construction fell as spending on highways &amp; streets, nearly one third of the value of public construction spending, dropped for the second consecutive month (-3.7% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050601h.jpg" width="353">
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</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 class="odd">
<td class="firstcol">Total</td>
<td>0.5%</td>
<td>0.6%</td>
<td>8.2%</td>
<td>8.9%</td>
<td>5.1%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.8%</td>
<td>0.7%</td>
<td>10.9%</td>
<td>10.7%</td>
<td>6.0%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>0.6%</td>
<td>0.6%</td>
<td>13.3%</td>
<td>13.9%</td>
<td>13.1%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonresidential</td>
<td>1.3%</td>
<td>1.0%</td>
<td>5.3%</td>
<td>3.7%</td>
<td>-7.1%</td>
<td>-12.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Public</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>-0.4%</td>
<td>3.3%</td>
<td>2.6%</td>
<td>7.0%</td>
</tr>
</tbody>
</table>
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The total value of construction put in place rose another 0.5% in April and about matched Consensus expectations for a 0.7% gain. Private residential building activity rose 0.6% for the second month but the value of new single family [...]

U.S. Construction Again Led Higher By Residential Building

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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Initial Claims for Jobless Insurance Jumped

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