Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519b.jpg" width="353">
In April the National Activity Index (CFNAI) compiled by the Federal Reserve Bank of Chicago improved to 0.10 from a downwardly revised -0.04 in March.
The figures left the three-month moving average of the CFNAI at 0.08, its lowest since 2003. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
During the last twenty years there has been a 74% correlation between the level of the CFNAI and q/q growth in real GDP.
The latest CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_may2005.pdf">here</a>.
M2 and &quot;Reigniting Inflation&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20050601/cover.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.10</td>
<td>-0.04</td>
<td>0.47</td>
<td>0.39</td>
<td>-0.11</td>
<td>-0.40</td>
</tr>
</tbody>
</table>
</body>
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In April the National Activity Index (CFNAI) compiled by the Federal Reserve Bank of Chicago improved to 0.10 from a downwardly revised -0.04 in March. The figures left the three-month moving average of the CFNAI at 0.08, its lowest [...]

Chicago Fed Nat'l Activity Index: Economic Growth Near Trend

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519c.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board fell for the fourth straight month in April. The 0.2% decline followed a downwardly revised 0.6% drop in March. Six-month growth in the leaders fell further to -1.0%. Growth in the leaders deeper than -2.5% preceded past US recessions.
During the last ten years there has been a 50% correlation between the six-month change in the leading indicators and the change in real GDP.
The breadth of one month gain amongst the 10 components of the leading index improved markedly to 50% from just 10% in March. Higher building permits and lower claims for unemployment insurance offset negative contributions from stock prices, the yield curve and the money supply.
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.2% for the second month. Six-month growth in the index was 2.5% and during the last ten years there has been an 84% correlation between six month growth in the coincident indicators and two quarter growth in real GDP.
The lagging indicators rose 0.4% mostly due to higher C&amp;I loans.
The ratio of the coincident to the lagging indicators which measures actual economic performance relative to excess fell for the third month this year.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
New Economy-New Policy Rules? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/01/09/0109jb.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">6-Month Chg</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">Leading</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-0.5%</td>
<td>2.9%</td>
<td>1.3%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.1%</td>
<td>2.6%</td>
<td>0.4%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>0.4%</td>
<td>-2.1%</td>
<td>-1.9%</td>
<td>-2.3%</td>
</tr>
</tbody>
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The Composite Index of Leading Economic Indicators reported by the Conference Board fell for the fourth straight month in April. The 0.2% decline followed a downwardly revised 0.6% drop in March. Six-month growth in the leaders fell [...]

Leading Indicators Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519c.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board fell for the fourth straight month in April. The 0.2% decline followed a downwardly revised 0.6% drop in March. Six-month growth in the leaders fell further to -1.0%. Growth in the leaders deeper than -2.5% preceded past US recessions.
During the last ten years there has been a 50% correlation between the six-month change in the leading indicators and the change in real GDP.
The breadth of one month gain amongst the 10 components of the leading index improved markedly to 50% from just 10% in March. Higher building permits and lower claims for unemployment insurance offset negative contributions from stock prices, the yield curve and the money supply.
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.2% for the second month. Six-month growth in the index was 2.5% and during the last ten years there has been an 84% correlation between six month growth in the coincident indicators and two quarter growth in real GDP.
The lagging indicators rose 0.4% mostly due to higher C&amp;I loans.
The ratio of the coincident to the lagging indicators which measures actual economic performance relative to excess fell for the third month this year.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
New Economy-New Policy Rules? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/01/09/0109jb.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">6-Month Chg</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">Leading</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-0.5%</td>
<td>2.9%</td>
<td>1.3%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.1%</td>
<td>2.6%</td>
<td>0.4%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>0.4%</td>
<td>-2.1%</td>
<td>-1.9%</td>
<td>-2.3%</td>
</tr>
</tbody>
</table>
Chicago Fed Nat'l Activity Index: Economic Growth Near Trend 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 19, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519b.jpg" width="353">
In April the National Activity Index (CFNAI) compiled by the Federal Reserve Bank of Chicago improved to 0.10 from a downwardly revised -0.04 in March.
The figures left the three-month moving average of the CFNAI at 0.08, its lowest since 2003. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
During the last twenty years there has been a 74% correlation between the level of the CFNAI and q/q growth in real GDP.
The latest CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_may2005.pdf">here</a>.
M2 and &quot;Reigniting Inflation&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20050601/cover.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">April &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.10</td>
<td>-0.04</td>
<td>0.47</td>
<td>0.39</td>
<td>-0.11</td>
<td>-0.40</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 19, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519a.jpg" width="353">
Following three weeks of increase, initial claims for unemployment insurance fell 20,000 last week to 321,000 and the prior period&#39;s gain was little revised. Consensus expectations had been for 330,000 claims.
The latest figure covers the survey period for May nonfarm payrolls and claims are up 22,000 (7.4%) from the April period.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims rose to 329,750 (-2.6% y/y).
Continuing claims for unemployment insurance rose 5,000 and the prior week&#39;s gain was little revised.
The insured unemployment rate held at 2.0% for the fourth consecutive weeks.
This morning&#39;s speech titled Government-sponsored enterprises by Fed Chairman Alan Greenspan can be found <a href="http://www.federalreserve.gov/BoardDocs/Speeches/2005/20050519/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">05/14/05</th>
<th scope="col">05/07/05</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>321</td>
<td>341</td>
<td>-8.0%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,601</td>
<td>-11.7%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
Employment Gains in Germany, Denmark; Decline in Netherlands Is Moderating 
by <a href="/comment/Stone.html">Carol Stone</a> May 19, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519d.jpg" width="353">
Employment conditions in several countries are showing some improvement. After about three years of decline or sluggishness, uptrends are developing in the number of people employed. This is evident in Germany, where seasonally adjusted employment rose 38,000 in Q1, extending the recent string of gains to a fifth quarter. At 39.965 million, the level is the highest since the third quarter of 2002. Before seasonal adjustment, the figure is 39.579 million, up 0.5% from a year ago.
In Denmark, the lack of seasonal adjustment makes the comparisons less obvious, but gains are there, nonetheless. At 2.698 million in Q1, jobs are up 0.7% from a year ago and achieved the highest Q1 total since 1999. As seen in the first graph, the 4-quarter moving average has been rising since Q1 2004.
In both of these countries, it is the service sector where turnarounds are evolving. In Germany, this segment, represented by total employment less agriculture, industry and construction, was up in Q1 by 356,000 from a year ago, growth of 1.3%. Industry employment is still decreasing, down 1.2% in the same time span. This is, however, a slower pace of decline than was experienced from the beginning of 2002 to the middle of last year. Quarterly patterns are more erratic in Denmark, but recent 4-quarter growth rates in service industries have also averaged 1.3%. Industry employment is still weak, but looks to be trying to bottom out, maintaining a tight range around 440,000 for the last year.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050519e.jpg" width="353">
Finally, in the Netherlands, total employment hit a new cyclical low of 7.001 million (seasonally adjusted) in February, but rebounded to 7.024 million in March. These data are expressed as three-month centered moving averages, so the good rise reported for March (average of February, March and April) suggests that the April figure alone probably had a more significant increase. As it stands, before seasonal adjustment, the March level is just barely below March 2004, the least weak reading since August 2003.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/INDUSTRIALDETAIL.HTM">Industrial Countries</a> Not Seasonally Adjusted</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Year Ago</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">Germany-Total Employment </td>
<td>38579*</td>
<td>&nbsp;</td>
<td>38376*</td>
<td>38861</td>
<td>38720</td>
<td>39092</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Industry </td>
<td>7910*</td>
<td>&nbsp;</td>
<td>8009*</td>
<td>8018</td>
<td>8139</td>
<td>8356</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Services</td>
<td>27743*</td>
<td>&nbsp;</td>
<td>27387*</td>
<td>27708</td>
<td>27379</td>
<td>27392</td>
</tr>
<tr>
<td class="firstcol">Netherlands - Employment </td>
<td>7024</td>
<td>7001</td>
<td>7033</td>
<td>7036</td>
<td>7113</td>
<td>7123</td>
</tr>
<tr class="odd">
<td class="firstcol">Denmark - Employment </td>
<td>2698*</td>
<td>&nbsp;</td>
<td>2680*</td>
<td>2720</td>
<td>2693</td>
<td>2712</td>
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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/050518c.jpg" width="353">
Perhaps it goes without saying that energy production is a major part of the Norwegian economy. But balance of trade data, which were reported today for April, underscore that fact dramatically. The total balance of trade is seen to be a surplus of NKr27.6 billion in April, up from March&#39;s NKr25.9 billion and a monthly average of NKr20.1 billion. The petroleum sector more than accounts for the surplus, as apart from it, the trade accounts run deficits, the latest at NKr7.3 billion. The energy sector exports were NKr22.0 billion in April, a little more than 61% of total exports.
&quot;Energy sector&quot; is a term we apply to the Central Statistics Bureau&#39;s listing of &quot;crude oil, natural gas, ships and oil platforms&quot;. Norway is unusual among oil exporting nations in also constructing the transportation equipment and the water-borne drilling rigs. In April, these exports were a mere NKr28 million, but when even a single rig or ship is delivered, these exports can spike to NKr2 or 3 billion.
The price of energy, of course, also plays a major role in the reported amount of energy-related exports and thence the overall trade surplus. In the second chart, the close comparison is readily apparent. There, we used the balance of trade converted to US$, plotted with the price of Brent crude. The correlation is a very tight 91%. The correlation with the balance expressed in Kroner is still 84%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518d.jpg" width="353">
Data for Norway are included in Haver&#39;s &quot;NORDIC&quot; and &quot;G10&quot; databases. Conversions to US dollars and some seasonal adjustment is performed in the series contained in G10/Norway.

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<colgroup><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/NORDIC/@NN/@NN.HTM">Norway</a> Millions NKr</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>27,605</td>
<td>25,943</td>
<td>20,326</td>
<td>20,133</td>
<td>16,639</td>
<td>16,377</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy Sector*</td>
<td>-7,264</td>
<td>-6,632</td>
<td>-6,771</td>
<td>-7,876</td>
<td>-6,314</td>
<td>-5,751</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>57,081</td>
<td>54,166</td>
<td>44,956</td>
<td>47,298</td>
<td>40,245</td>
<td>39,413</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy Sector*</td>
<td>22,045</td>
<td>21,433</td>
<td>17,816</td>
<td>18,809</td>
<td>16,800</td>
<td>16,663</td>
</tr>
<tr>
<td class="firstcol">Kroner/US$</td>
<td>6.3199</td>
<td>6.1972</td>
<td>6.9242</td>
<td>6.7412</td>
<td>7.0800</td>
<td>7.9839</td>
</tr>
</tbody>
</table>
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Perhaps it goes without saying that energy production is a major part of the Norwegian economy. But balance of trade data, which were reported today for April, underscore that fact dramatically. The total balance of trade is seen to [...]

Huge Role for Oil & Equipment in Norway Trade

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518b.jpg" width="353">
Total mortgage applications dropped 10.5% last week and reversed more than all of the prior week&#39;s increase according to the Mortgage Bankers Association. Nevertheless, applications so far in May are 8.0% ahead of the April average.
Applications to purchase a home slumped 10.8% w/w but in May are 5.8% 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 10.0% w/w but are 11.0% higher than in April.
The effective interest rate on a conventional 30-year mortgage fell back below 6.0% to 5.97%. The effective rate on a 15-year mortgage was 5.59%.
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>.
Credit Risk Management Guidance for Home Equity Lending from the Federal Reserve Board and other agencies is available <a href="http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050516/default.htm"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">05/13/05</th>
<th scope="col">05/06/05</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>699.2</td>
<td>781.0</td>
<td>6.9%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>469.3</td>
<td>526.2</td>
<td>3.3%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,036.7</td>
<td>2,263.3</td>
<td>12.1%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Total mortgage applications dropped 10.5% last week and reversed more than all of the prior week's increase according to the Mortgage Bankers Association. Nevertheless, applications so far in May are 8.0% ahead of the April average. [...]

Mortgage Applications Dropped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518a.jpg" width="353">
The CPI-U rose 0.6% in April due to a 4.5% jump in energy prices. Consensus expectations had been for a 0.4% rise in the total.Food prices also were strong posting a 0.7% advance, the strongest in nearly a year. Over the first four months of 2005 the CPI rose 4.8% at an annual rate.
Prices less food &amp; energy were unchanged last month, the first unchanged monthly reading since 2003. During the first four months of this year the core CPI rose 2.6% at an annual rate. Consensus expectations had been for a 0.2% increase in April.
Core goods prices fell for the first month since last August. Apparel prices reversed much of the prior month&#39;s strength with a 0.6% decline (-0.5% y/y). Home furnishings &amp; operation prices were unchanged for the second consecutive month due to a 1.5% (-0.8% y/y) drop in prices of window &amp; wall coverings. Appliance prices (-0.1% y/y) and furniture prices (-0.6% y/y) also are down year to year. New &amp; used motor vehicle prices were unchanged (+1.6% y/y).
Services price inflation eased. Less energy, the 0.2% increase was the weakest since January. Shelter prices were unchanged (2.7% y/y) following a 0.6% pop in March while the gain in medical care services prices halved to 0.3% (5.0% y/y). Public transportation prices were strong for the second consecutive month, up 1.7% (1.7% y/y), and school tuition rose another 0.6% (6.5% y/y).
Energy prices added to the prior month&#39;s increase. The 4.5% increase was pumped by a 6.4% (24.3% y/y) rise in gasoline prices, a 4.8% (33.4% y/y) jump in fuel oil prices and a 2.3% (8.1% y/y) surge natural gas &amp; electricity prices. In May gasoline prices have fallen to an average $2.20 per gallon ($2.16 in the latest week) versus $2.24 averaged in April.
Food prices jumped 0.7% due to a 3.4% (5.2% y/y) recovery in fruit &amp; vegetable prices following four months of decline. Beverage prices also were strong for the second month, up 1.1% (3.6% y/y) and prices of meat, poultry &amp; fish prices doubled the 0.2% March increase (3.1% y/y).
The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.5%. Core chain prices eased, however, to 0.2%.
A Walk Around the World Economy, remarks by Richard W. Fisher, President and Chief Financial Officer of the Federal Reserve Bank of Dallas are available <a href="http://www.dallasfed.org/news/speeches/fisher/fs050510.html"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</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&nbsp;</td>
<td>0.5%</td>
<td>0.6%</td>
<td>3.5%</td>
<td>2.7%</td>
<td>2.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.9%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>4.5%</td>
<td>4.0%</td>
<td>16.9%</td>
<td>10.9%</td>
<td>12.2%</td>
<td>-5.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.7%</td>
<td>0.2%</td>
<td>3.1%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.5%</td>
<td>0.7%</td>
<td>2.9%</td>
<td>2.3%</td>
<td>2.0%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.5%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
</body>
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The CPI-U rose 0.6% in April due to a 4.5% jump in energy prices. Consensus expectations had been for a 0.4% rise in the total.Food prices also were strong posting a 0.7% advance, the strongest in nearly a year. Over the first four [...]

Consumer Price Inflation Again Raised By Energy

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518a.jpg" width="353">
The CPI-U rose 0.6% in April due to a 4.5% jump in energy prices. Consensus expectations had been for a 0.4% rise in the total.Food prices also were strong posting a 0.7% advance, the strongest in nearly a year. Over the first four months of 2005 the CPI rose 4.8% at an annual rate.
Prices less food &amp; energy were unchanged last month, the first unchanged monthly reading since 2003. During the first four months of this year the core CPI rose 2.6% at an annual rate. Consensus expectations had been for a 0.2% increase in April.
Core goods prices fell for the first month since last August. Apparel prices reversed much of the prior month&#39;s strength with a 0.6% decline (-0.5% y/y). Home furnishings &amp; operation prices were unchanged for the second consecutive month due to a 1.5% (-0.8% y/y) drop in prices of window &amp; wall coverings. Appliance prices (-0.1% y/y) and furniture prices (-0.6% y/y) also are down year to year. New &amp; used motor vehicle prices were unchanged (+1.6% y/y).
Services price inflation eased. Less energy, the 0.2% increase was the weakest since January. Shelter prices were unchanged (2.7% y/y) following a 0.6% pop in March while the gain in medical care services prices halved to 0.3% (5.0% y/y). Public transportation prices were strong for the second consecutive month, up 1.7% (1.7% y/y), and school tuition rose another 0.6% (6.5% y/y).
Energy prices added to the prior month&#39;s increase. The 4.5% increase was pumped by a 6.4% (24.3% y/y) rise in gasoline prices, a 4.8% (33.4% y/y) jump in fuel oil prices and a 2.3% (8.1% y/y) surge natural gas &amp; electricity prices. In May gasoline prices have fallen to an average $2.20 per gallon ($2.16 in the latest week) versus $2.24 averaged in April.
Food prices jumped 0.7% due to a 3.4% (5.2% y/y) recovery in fruit &amp; vegetable prices following four months of decline. Beverage prices also were strong for the second month, up 1.1% (3.6% y/y) and prices of meat, poultry &amp; fish prices doubled the 0.2% March increase (3.1% y/y).
The chained CPI which adjusts for shifts in the mix of consumer purchases rose 0.5%. Core chain prices eased, however, to 0.2%.
A Walk Around the World Economy, remarks by Richard W. Fisher, President and Chief Financial Officer of the Federal Reserve Bank of Dallas are available <a href="http://www.dallasfed.org/news/speeches/fisher/fs050510.html"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</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&nbsp;</td>
<td>0.5%</td>
<td>0.6%</td>
<td>3.5%</td>
<td>2.7%</td>
<td>2.3%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-2.0%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.9%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>4.5%</td>
<td>4.0%</td>
<td>16.9%</td>
<td>10.9%</td>
<td>12.2%</td>
<td>-5.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.7%</td>
<td>0.2%</td>
<td>3.1%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.5%</td>
<td>0.7%</td>
<td>2.9%</td>
<td>2.3%</td>
<td>2.0%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.5%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>1.9%</td>
</tr>
</tbody>
</table>
Mortgage Applications Dropped 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 18, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518b.jpg" width="353">
Total mortgage applications dropped 10.5% last week and reversed more than all of the prior week&#39;s increase according to the Mortgage Bankers Association. Nevertheless, applications so far in May are 8.0% ahead of the April average.
Applications to purchase a home slumped 10.8% w/w but in May are 5.8% 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 10.0% w/w but are 11.0% higher than in April.
The effective interest rate on a conventional 30-year mortgage fell back below 6.0% to 5.97%. The effective rate on a 15-year mortgage was 5.59%.
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>.
Credit Risk Management Guidance for Home Equity Lending from the Federal Reserve Board and other agencies is available <a href="http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050516/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">05/13/05</th>
<th scope="col">05/06/05</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>699.2</td>
<td>781.0</td>
<td>6.9%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>469.3</td>
<td>526.2</td>
<td>3.3%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,036.7</td>
<td>2,263.3</td>
<td>12.1%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Huge Role for Oil & Equipment in Norway Trade 
by <a href="/comment/Stone.html">Carol Stone</a> May 18, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518c.jpg" width="353">
Perhaps it goes without saying that energy production is a major part of the Norwegian economy. But balance of trade data, which were reported today for April, underscore that fact dramatically. The total balance of trade is seen to be a surplus of NKr27.6 billion in April, up from March&#39;s NKr25.9 billion and a monthly average of NKr20.1 billion. The petroleum sector more than accounts for the surplus, as apart from it, the trade accounts run deficits, the latest at NKr7.3 billion. The energy sector exports were NKr22.0 billion in April, a little more than 61% of total exports.
&quot;Energy sector&quot; is a term we apply to the Central Statistics Bureau&#39;s listing of &quot;crude oil, natural gas, ships and oil platforms&quot;. Norway is unusual among oil exporting nations in also constructing the transportation equipment and the water-borne drilling rigs. In April, these exports were a mere NKr28 million, but when even a single rig or ship is delivered, these exports can spike to NKr2 or 3 billion.
The price of energy, of course, also plays a major role in the reported amount of energy-related exports and thence the overall trade surplus. In the second chart, the close comparison is readily apparent. There, we used the balance of trade converted to US$, plotted with the price of Brent crude. The correlation is a very tight 91%. The correlation with the balance expressed in Kroner is still 84%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050518d.jpg" width="353">
Data for Norway are included in Haver&#39;s &quot;NORDIC&quot; and &quot;G10&quot; databases. Conversions to US dollars and some seasonal adjustment is performed in the series contained in G10/Norway.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/NORDIC/@NN/@NN.HTM">Norway</a> Millions NKr</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>27,605</td>
<td>25,943</td>
<td>20,326</td>
<td>20,133</td>
<td>16,639</td>
<td>16,377</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy Sector*</td>
<td>-7,264</td>
<td>-6,632</td>
<td>-6,771</td>
<td>-7,876</td>
<td>-6,314</td>
<td>-5,751</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>57,081</td>
<td>54,166</td>
<td>44,956</td>
<td>47,298</td>
<td>40,245</td>
<td>39,413</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; ex Energy Sector*</td>
<td>22,045</td>
<td>21,433</td>
<td>17,816</td>
<td>18,809</td>
<td>16,800</td>
<td>16,663</td>
</tr>
<tr>
<td class="firstcol">Kroner/US$</td>
<td>6.3199</td>
<td>6.1972</td>
<td>6.9242</td>
<td>6.7412</td>
<td>7.0800</td>
<td>7.9839</td>
</tr>
</tbody>
</table>
</body>
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Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050517h.jpg" width="353">
The first quarter preliminary report for Japan&#39;s Real Gross Domestic Product released today was surprisingly good. GDP increased at annual rate of 5.3%. Last year also started out with a bang--a slightly larger increase, 5.6%-- but this was followed by declines of 0.83% and 1.04% in the second and third quarters and a minimal increase of 0.06% in the fourth quarter.
The composition of this year&#39;s first quarter increase is significantly different from that of last year&#39;s (See table below) and suggests that the outlook may be more promising. Although private inventory accumulation accounted for almost one-third of the increases in both years, there were encouraging shifts from the public to the private sector in the remaining two-thirds of the increase. Household consumption accounted for 49% of the total increase in 2005, up from 27.1% in 2004, while government consumption went from 17.2% to 10.1%. Private gross fixed investment accounted for 8.2% of the increase in the first quarter of 2005 in contrast to a negative impact of 26.6% in 2004, while public gross fixed investment dropped to 5.8% from a 33.3% contribution in 2004.
These increases in the private domestic sector&#39;s contribution to growth were all the more impressive in view of negative impact of the external sector. Net exports of goods and services were a drag on growth in 2005 of almost 6% whereas they contributed 19% to growth in 2004.
While the increase in activity in the private domestic sector is encouraging, deflation remains a stubborn problem. The non seasonally adjusted chain-linked GDP deflator in the first quarter of 2005 was 1.2% below the comparable figure of a year ago. There is, however, some evidence that prices at the wholesale level are beginning to move up and may eventually lead to price rises at the consumer level. Japan&#39;s Corporate Goods Price Index released yesterday, showed a year to year increase of 3.3% in April. The index has shown increases since May of 2004, the first sustained rise since the late nineties. The attached chart shows the year-to-year changes in this index together with the year-to-year changes in the chain linked GDP deflator.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Fourth to First Quarter Change&nbsp;</th>
<th scope="col">2005 Bil. Yen</th>
<th scope="col">2004 Bil. Yen</th>
<th scope="col">2005 %</th>
<th scope="col">2004 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>3416.0</td>
<td>1958.2</td>
<td>49.2</td>
<td>27.1</td>
</tr>
<tr>
<td class="firstcol">Government Consumption</td>
<td>699.9</td>
<td>1250.5</td>
<td>10.1</td>
<td>17.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Gross Fixed Invest.</td>
<td>51.2</td>
<td>-1.957.7</td>
<td>8.2</td>
<td>-26.6</td>
</tr>
<tr>
<td class="firstcol">Public Gross Fixed Invest.</td>
<td>404.8</td>
<td>2432.1</td>
<td>5.8</td>
<td>33.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Inventory Change</td>
<td>2312.0</td>
<td>2207.6</td>
<td>33.3</td>
<td>30.4</td>
</tr>
<tr>
<td class="firstcol">Public Inventory Change</td>
<td>-48.9</td>
<td>68.4</td>
<td>-0.7</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Exports of Goods and Services</td>
<td>-412.4</td>
<td>1389.0</td>
<td>-5.9</td>
<td>19.1</td>
</tr>
<tr>
<td class="firstcol">Total of Items Listed*</td>
<td>6942.6</td>
<td>7348.1</td>
<td>100.0</td>
<td>100.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Change in GDP</td>
<td>6950.2</td>
<td>7267.6</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

The first quarter preliminary report for Japan's Real Gross Domestic Product released today was surprisingly good. GDP increased at annual rate of 5.3%. Last year also started out with a bang--a slightly larger increase, 5.6%-- but [...]

Japan's Real GDP Strong in First Quarter,2005: Deflation Still a Problem

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

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

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

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

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Kathleen Stephansen, CBE

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

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

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

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

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

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


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


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

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

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

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

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

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


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


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

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

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

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

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

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



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

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

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

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

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

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



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


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

Sandy Batten

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

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

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

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

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

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



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


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

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

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

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

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

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

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



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


Economy in Brief: 2005

Jump to:

Chicago Fed Nat'l Activity Index: Economic Growth Near Trend

Leading Indicators Down Again

Leading Indicators Down Again

Huge Role for Oil & Equipment in Norway Trade

Mortgage Applications Dropped

Consumer Price Inflation Again Raised By Energy

Consumer Price Inflation Again Raised By Energy

Japan's Real GDP Strong in First Quarter,2005: Deflation Still a Problem