Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527b.jpg" width="353">
Personal income in April rose 0.7% following a 0.5% increase in March. Consensus expectations had been for a 0.6% rise. Disposable personal income increased 0.5% (6.0% y/y) following two months of 0.4% gain. When adjusted for price inflation take home pay rose 0.1% (3.3% y/y) following a slight decline in March.
Wages &amp; salaries were notably strong and growth during the prior year was upwardly revised. A 0.7% April increase (7.6% y/y) doubled the prior months&#39; increases and year to year growth through March was revised up to 7.6% from 5.8% y/y estimated earlier. Wages in service producing industries surged 0.9% and y/y growth rose to 9.2% versus the 6.4% pace previously estimated. Even factory sector wages showed life and rose 0.5% (6.4% y/y) in April. Year to year growth through March now stands at 7.0%, up from the 5.8% y/y gain estimated last month.
Offsetting some of this strength have been declines in rental income (-14.1% y/y).
Personal consumption increased 0.6% following an upwardly revised 0.9% increase in March. Consensus expectations had been for a 0.8% gain. Durable goods spending rose 0.7% (9.4% y/y) and spending on services rose 0.3% (5.6% y/y) following earlier gains that were revised down.
Nondurables spending surged 1.1% (8.3% y/y) as spending on gasoline &amp; oil jumped 5.5% (25.9% y/y). Spending on clothing recovered 1.5% (5.9% y/y) following the prior month&#39;s 2.1% drop.
The PCE chain price index rose 0.4% but less food &amp; energy the 0.1% m/m increase was the slimmest of the year. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</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">Personal Income</td>
<td>0.7%</td>
<td>0.5%</td>
<td>7.0%</td>
<td>5.8%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.4%</td>
<td>0.5%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
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Personal income in April rose 0.7% following a 0.5% increase in March. Consensus expectations had been for a 0.6% rise. Disposable personal income increased 0.5% (6.0% y/y) following two months of 0.4% gain. When adjusted for price [...]

U.S. Income & Outlays Firm, Wage Revisions Upward

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527b.jpg" width="353">
Personal income in April rose 0.7% following a 0.5% increase in March. Consensus expectations had been for a 0.6% rise. Disposable personal income increased 0.5% (6.0% y/y) following two months of 0.4% gain. When adjusted for price inflation take home pay rose 0.1% (3.3% y/y) following a slight decline in March.
Wages &amp; salaries were notably strong and growth during the prior year was upwardly revised. A 0.7% April increase (7.6% y/y) doubled the prior months&#39; increases and year to year growth through March was revised up to 7.6% from 5.8% y/y estimated earlier. Wages in service producing industries surged 0.9% and y/y growth rose to 9.2% versus the 6.4% pace previously estimated. Even factory sector wages showed life and rose 0.5% (6.4% y/y) in April. Year to year growth through March now stands at 7.0%, up from the 5.8% y/y gain estimated last month.
Offsetting some of this strength have been declines in rental income (-14.1% y/y).
Personal consumption increased 0.6% following an upwardly revised 0.9% increase in March. Consensus expectations had been for a 0.8% gain. Durable goods spending rose 0.7% (9.4% y/y) and spending on services rose 0.3% (5.6% y/y) following earlier gains that were revised down.
Nondurables spending surged 1.1% (8.3% y/y) as spending on gasoline &amp; oil jumped 5.5% (25.9% y/y). Spending on clothing recovered 1.5% (5.9% y/y) following the prior month&#39;s 2.1% drop.
The PCE chain price index rose 0.4% but less food &amp; energy the 0.1% m/m increase was the slimmest of the year. 

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</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">Personal Income</td>
<td>0.7%</td>
<td>0.5%</td>
<td>7.0%</td>
<td>5.8%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.9%</td>
<td>6.9%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.4%</td>
<td>0.5%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.7%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment A Bit Better 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 27, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527a.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment for all of May did fall 0.9% from the prior month to 85.9 but that was better than the mid-month reading of a 2.7% decline. Consensus expectations had been for a level of 86.0.
Sentiment still is down in each of the last five months and is off 16.3% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the y/y change in real PCE, although the correlation has fallen in recent years.
The reading of current economic conditions recovered late in the month and rose for the first full month since January. Buying conditions for large household goods recovered sharply.
Consumer expectations recovered though expectations about personal finances remained depressed.
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">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>
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<td class="firstcol">Consumer Sentiment</td>
<td>86.9</td>
<td>87.7</td>
<td>-3.7%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
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<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.9</td>
<td>104.4</td>
<td>1.3%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
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<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>75.3</td>
<td>77.0</td>
<td>-7.7%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
BBA Data Show Tentative Firming in UK Mortgage Lending; Consumer Credit Still Soft 
by <a href="/comment/Stone.html">Carol Stone</a> May 27, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527c.jpg" width="353">
British Bankers Association data on lending to individuals have recently been added to Haver&#39;s &quot;UK&quot; database. The April figures were reported today and updated by our &quot;European shift&quot;, the manager and crew who work from roughly midnight in New York to 8:00AM.
Gross new mortgage lending gave a tentative sign of stabilizing after a period of deep weakness during the winter. New loans totaled &pound;14,120 million, up 2.9% from March, although still 12.6% below the April 2004 amount. The number of loans approved for house purchase, 69,323, was off 21.0% from a year ago, but this is the smallest 12-month decline since last August. Intervening months have seen 30%-40% rates of decline.
The average value of newly approved loans has been increasing, but more slowly in recent months. The April figures show a 10.7% rise from a year ago. This is stronger than several months of single-digit increases since last summer, but weaker than the 15%-20% gains prior to that. This general tapering trend is reflected in house prices, with the Halifax Standardised Price, for example, virtually flat for the first four months of 2005. The UK housing market appears to have cooled, and other data on the industry have turned in a mixed, basically indeterminate performance so far this year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050527d.jpg" width="353">
The BBA figures on consumer credit show weakness. The amount of new credit card debt was &pound;7,064 million in April, down 7.2% from a year ago. More, the total amount of credit card debt outstanding fell by a seasonally adjusted &pound;40 million in April, the first monthly decline since August 1994. The recent sluggishness coincides to a decline in UK retail sales of 2.7% in value since September.
The BBA lending data are cited in two sections of our UK database, both in &quot;Financial Data&quot; and also in &quot;Housing and Construction&quot;. They cover several &quot;major banking groups&quot;, the so-called &quot;MBBG&quot; and are styled to parallel some similar concepts reported by the Bank of England for all banks, building societies and other mortgage lenders. Those broader data are due for release on Wednesday 1 June. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">United Kingdom</a> Mil.GBP&nbsp; (NSA except where noted)</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Year Ago</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">Gross New Loans</td>
<td>14,120</td>
<td>13,721</td>
<td>11,938</td>
<td>16,150</td>
<td>15,701</td>
<td>15,071</td>
<td>12,586</td>
</tr>
<tr class="odd">
<td class="firstcol">Loan Approvals- Number</td>
<td>69,323</td>
<td>65,635</td>
<td>47,365</td>
<td>87,800</td>
<td>69,244</td>
<td>76,105</td>
<td>83,915</td>
</tr>
<tr>
<td class="firstcol">- Average Value (&pound;)</td>
<td>122,700</td>
<td>121,600</td>
<td>119,000</td>
<td>110,800</td>
<td>112,083</td>
<td>97,817</td>
<td>87,367</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; - 12-mo. % change</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>10.7</td>
<td>14.6</td>
<td>12.0</td>
<td>14.3</td>
</tr>
<tr>
<td class="firstcol">Credit Card Debt- Gross</td>
<td>7,064</td>
<td>7,586</td>
<td>6,842</td>
<td>7,610</td>
<td>7,707</td>
<td>6,818</td>
<td>6,105</td>
</tr>
<tr class="odd">
<td class="firstcol">- Outstanding EOP</td>
<td>34,015</td>
<td>33,628</td>
<td>33,728</td>
<td>31,139</td>
<td>33,973</td>
<td>28,689</td>
<td>26,409</td>
</tr>
<tr>
<td class="firstcol">- Net Change SA</td>
<td>-40</td>
<td>134</td>
<td>50</td>
<td>&nbsp;</td>
<td>388</td>
<td>310</td>
<td>266</td>
</tr>
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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/050526e.jpg" width="353">
Consumers in Sweden have been less optimistic over the past couple of months than earlier this year, according to the consumer confidence survey conducted by the National Institute of Economic Research (NIER) in Stockholm. The resulting consumer confidence indicator (&quot;CCI&quot;) was 5.9 in May and 6.5 in April after averaging 11.5 in Q1 2005. These are &quot;balance&quot; indicators, the net of &quot;better&quot; less &quot;worse&quot; responses.
The confidence survey consists of two kinds of questions, &quot;macro&quot; questions about the current and expected state of the Swedish economy generally and expectations about unemployment, and &quot;micro&quot; questions about the condition of personal finances now and expected and the willingness to make durable goods purchases. These two segments are telling very different stories. The Macro index has been negative almost continuously since early 2001, indicating a lack of confidence in the overall Swedish outlook. But people seem comfortable with their own situations, so that the Micro index has remained in a tight range averaging 12.5 over the last 15 months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526f.jpg" width="353">
Notably, the Micro index correlates fairly well with Sweden&#39;s retail trade. Also reported today, the retail trade index from Statistics Sweden fell in April by 2.8%, but that followed a 2.2% gain in March. These sales, valued in real terms in fixed 2000 prices, are up 4.0% on a year ago. This is a bit slower than the last three years, but the store types with the less vigorous performance have been in the consumer staples area: food and personal products. The more cyclically sensitive durable goods are showing some strength, along with &quot;household products&quot;. It is seen in the second graph that durable goods sales have a high correlation with that CCI Micro Index, 73% over the last 13 years.
So the bifurcation of the confidence data is puzzling -- how could people be worried about an unfavorable unemployment picture in the year ahead, while being fairly comfortable with their own finances? At the same time, their relative comfort with what they experience for their own financial well-being is reflected in actions they take, that is in growing purchases of durable and household goods.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/NORDIC/@NS/@NS09/@NS09.HTM">Sweden</a></th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Mar 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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<td class="firstcol">Consumer Confidence Indicator</td>
<td>5.9</td>
<td>6.5</td>
<td>10.7</td>
<td>4.9</td>
<td>8.7</td>
<td>0.9</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Macro Index</td>
<td>-19.0</td>
<td>-14.5</td>
<td>-12.0</td>
<td>-18.1</td>
<td>-12.6</td>
<td>-22.7</td>
<td>-7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Micro Index</td>
<td>13.0</td>
<td>11.7</td>
<td>13.8</td>
<td>11.3</td>
<td>12.1</td>
<td>8.8</td>
<td>10.1</td>
</tr>
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<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<td class="firstcol">Retail Trade (2000=100)</td>
<td>--</td>
<td>120.9</td>
<td>124.4</td>
<td>116.1</td>
<td>117.9</td>
<td>112.4</td>
<td>107.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>--</td>
<td>-2.8</td>
<td>2.2</td>
<td>4.0</td>
<td>4.8</td>
<td>4.5</td>
<td>4.6</td>
</tr>
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Consumers in Sweden have been less optimistic over the past couple of months than earlier this year, according to the consumer confidence survey conducted by the National Institute of Economic Research (NIER) in Stockholm. The [...]

Consumer Confidence in Sweden Edges Lower, but Spending on Durable Goods Remains Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526d.jpg" width="353">
The April Index of Help-Wanted Advertising from the Conference Board remained at 39. It fell in March from 41 during the prior two months.
During the last ten years there has been a 65% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume improved to a still low 31% following the evaporation to 10% in March.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;04</th>
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<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>39</td>
<td>38</td>
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The April Index of Help-Wanted Advertising from the Conference Board remained at 39. It fell in March from 41 during the prior two months. During the last ten years there has been a 65% correlation between the level of help-wanted [...]

Help-Wanted Advertising Flat

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526c.jpg" width="353">
Initial claims for unemployment insurance nudged 1,000 higher last week to 323,000 and the prior week&#39;s drop was lessened slightly to 19,000. Consensus expectations had been for 325,000 claims.
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 was little changed at 300,500 (-2.7% y/y).
Continuing claims for unemployment insurance fell 22,000 and the prior week was revised down slightly.
The insured unemployment rate held at 2.0% for the fifth consecutive week.

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<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">05/21/05</th>
<th scope="col">05/14/05</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>323</td>
<td>322</td>
<td>-6.1%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,574</td>
<td>-12.7%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance nudged 1,000 higher last week to 323,000 and the prior week's drop was lessened slightly to 19,000. Consensus expectations had been for 325,000 claims. During the last ten years there has been [...]

Initial Claims for Jobless Insurance Nudged Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526b.jpg" width="353">
US real GDP growth last quarter was revised up to 3.5% (AR) due to a halving of the subtraction from deterioration in the foreign trade deficit. Consensus expectations had been for a 3.7% advance.
Growth in corporate profits (w/IVA &amp; CCA) slowed to 4.5% (13.8% y/y) from 13.5% in 4Q04. The slowdown was due to a 0.8% (+17.6% y/y) decline in US nonfinancial corporate earnings. Growth in financial sector earnings also slowed by two thirds to 11.6% (13.9% y/y) while earnings from abroad rose 11.2% (2.2% y/y), the strongest gain since late 2003.
Profit margins fell for the first quarter in two years though they remained higher than during all of last year.
The drag on US output growth from a larger foreign trade deficit was reduced to 0.7 percentage points as growth in real imports was lowered to 9.1% (9.4% y/y) from 14.7%. Export growth was bumped up to 7.2% (5.9% y/y) from 7.0%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526a.jpg" width="353">
The contribution to GDP growth from faster inventory accumulation was lowered to 0.8 percentage points. Nevertheless, the $25.9B rate of accumulation in the factory sector was the fastest since late 1999.
Domestic demand growth was left unrevised at 3.2%. Growth in business investment was lowered slightly to a weak 3.5% (10.8% y/y). That was offset by an upward revision to consumer spending to 3.6% (3.6% y/y) and residential building to 8.8% (7.4% y/y).
The chain price index was unrevised at 3.2%. The price index for domestic demand also was unrevised at 2.9%.

<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/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">1Q &#39;05 (Prelim.)</th>
<th scope="col">1Q &#39;05 (Advance)</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">GDP</td>
<td>3.5%</td>
<td>3.1%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.8%</td>
<td>1.2%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.7%</td>
<td>1.9%</td>
<td>3.4%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign Trade Effect</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>-1.4%</td>
<td>-0.6%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.2%</td>
<td>3.2%</td>
<td>4.5%</td>
<td>4.0%</td>
<td>4.4%</td>
<td>3.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>3.2%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>2.5%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

US real GDP growth last quarter was revised up to 3.5% (AR) due to a halving of the subtraction from deterioration in the foreign trade deficit. Consensus expectations had been for a 3.7% advance. Growth in corporate profits (w/IVA & [...]

US GDP Growth Revised Up, Corporate Profit Growth Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526b.jpg" width="353">
US real GDP growth last quarter was revised up to 3.5% (AR) due to a halving of the subtraction from deterioration in the foreign trade deficit. Consensus expectations had been for a 3.7% advance.
Growth in corporate profits (w/IVA &amp; CCA) slowed to 4.5% (13.8% y/y) from 13.5% in 4Q04. The slowdown was due to a 0.8% (+17.6% y/y) decline in US nonfinancial corporate earnings. Growth in financial sector earnings also slowed by two thirds to 11.6% (13.9% y/y) while earnings from abroad rose 11.2% (2.2% y/y), the strongest gain since late 2003.
Profit margins fell for the first quarter in two years though they remained higher than during all of last year.
The drag on US output growth from a larger foreign trade deficit was reduced to 0.7 percentage points as growth in real imports was lowered to 9.1% (9.4% y/y) from 14.7%. Export growth was bumped up to 7.2% (5.9% y/y) from 7.0%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526a.jpg" width="353">
The contribution to GDP growth from faster inventory accumulation was lowered to 0.8 percentage points. Nevertheless, the $25.9B rate of accumulation in the factory sector was the fastest since late 1999.
Domestic demand growth was left unrevised at 3.2%. Growth in business investment was lowered slightly to a weak 3.5% (10.8% y/y). That was offset by an upward revision to consumer spending to 3.6% (3.6% y/y) and residential building to 8.8% (7.4% y/y).
The chain price index was unrevised at 3.2%. The price index for domestic demand also was unrevised at 2.9%.

<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/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">1Q &#39;05 (Prelim.)</th>
<th scope="col">1Q &#39;05 (Advance)</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">GDP</td>
<td>3.5%</td>
<td>3.1%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.8%</td>
<td>1.2%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.7%</td>
<td>1.9%</td>
<td>3.4%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign Trade Effect</td>
<td>-0.7%</td>
<td>-1.5%</td>
<td>-1.4%</td>
<td>-0.6%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.2%</td>
<td>3.2%</td>
<td>4.5%</td>
<td>4.0%</td>
<td>4.4%</td>
<td>3.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>3.2%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>2.5%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Nudged Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 26, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526c.jpg" width="353">
Initial claims for unemployment insurance nudged 1,000 higher last week to 323,000 and the prior week&#39;s drop was lessened slightly to 19,000. Consensus expectations had been for 325,000 claims.
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 was little changed at 300,500 (-2.7% y/y).
Continuing claims for unemployment insurance fell 22,000 and the prior week was revised down slightly.
The insured unemployment rate held at 2.0% for the fifth 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">05/21/05</th>
<th scope="col">05/14/05</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>323</td>
<td>322</td>
<td>-6.1%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,574</td>
<td>-12.7%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Flat 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 26, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050526d.jpg" width="353">
The April Index of Help-Wanted Advertising from the Conference Board remained at 39. It fell in March from 41 during the prior two months.
During the last ten years there has been a 65% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume improved to a still low 31% following the evaporation to 10% in March.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>39</td>
<td>38</td>
</tr>
</tbody>
</table>
</body>
</html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050525d.jpg" width="353">
GDP in Spain grew 0.9% in Q1, the same as in Q4, according to the quarterly data released this morning by the National Statistics Institute. Boosts to the quarter&#39;s performance came from government consumption, up 2.6%, and a drop in imports of 1.6%. Household consumption grew 0.6%, slower than in Q4, and capital formation also expanded more slowly. Exports decreased 1.7%, their second successive decline, pulling them down 2.5% compared to a year ago. However, an accompanying decrease in imports stabilized the real net export balance with the Q4 amount.
In today&#39;s report, Spain has switched to chain-linking for calculating quarterly real growth and inflation; the reference year for these calculations is 2000. The data previously used fixed 1995 weights. [Some annual data on the new basis were reported last week.] As seen in the graph and in the table below, growth is consistently higher in the new figures. In 2002 and 2003 this resulted from stronger gains in fixed investment, but through the last year or so, household consumption has been much more vigorous than under the former calculation scheme.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050525e.jpg" width="353">
In the US experience, chain-weighting has a different impact: it tends to reduce total growth and, in particular, that of investment expenditures. It dilutes the effect of heavier buying of equipment, for which prices are falling. But in Spain, the reported volume of investment spending has been raised, perhaps because of the sizable role of construction in the Spanish economy. Construction is a considerably larger share of nominal GDP, 16.7% in Q1, than in the US, 10.2%. Construction prices have increased relative to total GDP, so that item has generally benefited from the chain-weighting process. Its greater weight in turn gives more lift to the total chain-weighted GDP result.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Q1 2005</th>
<th scope="col">Q4 2004</th>
<th scope="col">Q3 2004</th>
<th scope="col">Year/ Year</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">GDP - 2000 Prices</td>
<td>0.9</td>
<td>0.9</td>
<td>0.7</td>
<td>3.1</td>
<td>3.1</td>
<td>2.9</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Memo: GDP - 1995 Prices</td>
<td>--</td>
<td>0.8</td>
<td>0.6</td>
<td>&nbsp;</td>
<td>2.7</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>0.6</td>
<td>1.7</td>
<td>1.4</td>
<td>4.6</td>
<td>4.4</td>
<td>2.5</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>0.9</td>
<td>3.4</td>
<td>2.2</td>
<td>6.5</td>
<td>4.4</td>
<td>5.3</td>
<td>3.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>-1.7</td>
<td>-0.8</td>
<td>1.4</td>
<td>-2.5</td>
<td>2.8</td>
<td>3.6</td>
<td>1.8</td>
</tr>
<tr>
<td class="firstcol">Imports</td>
<td>-1.6</td>
<td>1.6</td>
<td>3.5</td>
<td>5.5</td>
<td>8.1</td>
<td>6.3</td>
<td>3.8</td>
</tr>
</tbody>
</table>
</body>
</html>

GDP in Spain grew 0.9% in Q1, the same as in Q4, according to the quarterly data released this morning by the National Statistics Institute. Boosts to the quarter's performance came from government consumption, up 2.6%, and a drop in [...]

Spanish GDP Growth Maintains Firm Pace; Chain-Linking Introduced

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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251224b0.jpg

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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U.S. Income & Outlays Firm, Wage Revisions Upward

U.S. Income & Outlays Firm, Wage Revisions Upward

Consumer Confidence in Sweden Edges Lower, but Spending on Durable Goods Remains Strong

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US GDP Growth Revised Up, Corporate Profit Growth Down

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