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/051109c.jpg" width="353">
The riots in France are widely believed to be linked to unemployment conditions, particularly among young people from North African immigrant families. As we discussed here September 30, national unemployment stands at just under 10%, and the rate for workers under 25 is more than twice this, at about 23%. This morning, the French Government statistical agency INSEE reported regional unemployment rates, which we carry in the FRANCE database. These cover the total labor force and are not broken down by age-group. These, along with September&#39;s monthly national data reported ten days ago, indicate that rates have been decreasing, now since June.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109d.jpg" width="353">
In the accompanying charts and table, we highlight &quot;departments&quot; that the New York Times reports today contain cities on a list authorized by the central police to impose a curfew, that is, where the violence is deemed to be greatest. These include Paris, Nice, Marseille, Dijon, Toulouse, Strasbourg, Nancy, Rouen, Avignon. Ironically, as seen in the exhibits, unemployment rates in the relevant departments had started to ease in Q3. The national rate fell from 10.1% to 9.8%, and every department we show here was down by at least 0.1% on the quarter. Still, these decreases are a very recent development, with the longer runs of these series still generally headed upward. Only in Provence, in the South, is unemployment even steady with its level three years ago. Another fact of irony is the situation in Alsace, with one of the lowest unemployment levels in the country; it is also the locale with the largest increase, from just 6.6% on average in 2002 to 8.7% in Q3 2005. So conditions of relative prosperity there eroded markedly, at least through the middle of this year.
It&#39;s clearly too soon to see the effect of the disturbances on any other French economic data, but a final irony of course is that the situation is likely to be dampening activity, just when the worst of the unemployment conditions might have been starting to stabilize on their own. 

<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/FRANCE/@F05/@F05.HTM">France &amp; Selected Departments:</a> SA, %</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q3 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France: Total</td>
<td>9.8</td>
<td>10.1</td>
<td>10.0</td>
<td>10.0</td>
<td>9.8</td>
<td>9.1</td>
</tr>
<tr>
<td class="firstcol">Ile-de-France (Paris)</td>
<td>13.3</td>
<td>13.4</td>
<td>13.2</td>
<td>13.1</td>
<td>12.7</td>
<td>12.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Bourgogne (Dijon)</td>
<td>8.5</td>
<td>8.8</td>
<td>8.7</td>
<td>8.7</td>
<td>8.6</td>
<td>7.9</td>
</tr>
<tr>
<td class="firstcol">Haut-Normandie (Rouen)</td>
<td>10.8</td>
<td>11.0</td>
<td>11.0</td>
<td>10.9</td>
<td>10.6</td>
<td>10.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Alsace (Strasbourg)</td>
<td>8.7</td>
<td>8.9</td>
<td>8.6</td>
<td>8.5</td>
<td>7.8</td>
<td>6.6</td>
</tr>
<tr>
<td class="firstcol">Pyrenees (Toulouse)</td>
<td>9.8</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Provence (Avignon, Nice, Marseilles)</td>
<td>11.7</td>
<td>11.9</td>
<td>11.9</td>
<td>11.9</td>
<td>12.1</td>
<td>11.7</td>
</tr>
</tbody>
</table>
</body>
</html>

The riots in France are widely believed to be linked to unemployment conditions, particularly among young people from North African immigrant families. As we discussed here September 30, national unemployment stands at just under 10%, [...]

France: The Riots Come Just When Unemployment Was Starting To Ease

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109a.jpg" width="353">
Last week, the total number of mortgage applications recovered about half of the prior period&#39;s decline with a 2.3% rise according to the Mortgage Bankers Association. The modest increase followed weekly declines from June to October and left applications 17.5% below the monthly peak during June.
Purchase applications rose for just the second week in the last eight and the 6.4% rise reversed nearly all of the prior week&#39;s decline. Nevertheless purchase applications remained 6.0% below the July peak. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance continued down another 3.4% leaving the level of refi&#39;s nearly one third below the recent peak in June and 79.5% below the monthly high during 2003.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109b.jpg" width="353">
The Federal Home Loan Mortgage Corporation reported that 72% of refinances resulted in a 5% higher loan amount during 3Q &#39;05, nearly double the percentage during 2003.
The effective interest rate on a conventional 30-year mortgage rose to 6.58% from 6.46% the prior week while the effective rate on a 15-year mortgage rose to 6.19%, the highest since July 2002. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
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>.
A rising housing tide from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/pubs/fedgaz/05-05/cover.cfm"> 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">11/04/05</th>
<th scope="col">10/28/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>661.3</td>
<td>646.7</td>
<td>-9.1%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>465.7</td>
<td>437.6</td>
<td>-3.6%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,798.8</td>
<td>1,862.8</td>
<td>-16.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
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Last week, the total number of mortgage applications recovered about half of the prior period's decline with a 2.3% rise according to the Mortgage Bankers Association. The modest increase followed weekly declines from June to October [...]

Mortgage Applications Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109a.jpg" width="353">
Last week, the total number of mortgage applications recovered about half of the prior period&#39;s decline with a 2.3% rise according to the Mortgage Bankers Association. The modest increase followed weekly declines from June to October and left applications 17.5% below the monthly peak during June.
Purchase applications rose for just the second week in the last eight and the 6.4% rise reversed nearly all of the prior week&#39;s decline. Nevertheless purchase applications remained 6.0% below the July peak. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance continued down another 3.4% leaving the level of refi&#39;s nearly one third below the recent peak in June and 79.5% below the monthly high during 2003.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109b.jpg" width="353">
The Federal Home Loan Mortgage Corporation reported that 72% of refinances resulted in a 5% higher loan amount during 3Q &#39;05, nearly double the percentage during 2003.
The effective interest rate on a conventional 30-year mortgage rose to 6.58% from 6.46% the prior week while the effective rate on a 15-year mortgage rose to 6.19%, the highest since July 2002. The interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
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>.
A rising housing tide from the Federal Reserve Bank of Minneapolis can be found <a href="http://www.minneapolisfed.org/pubs/fedgaz/05-05/cover.cfm"> 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">11/04/05</th>
<th scope="col">10/28/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>661.3</td>
<td>646.7</td>
<td>-9.1%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>465.7</td>
<td>437.6</td>
<td>-3.6%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,798.8</td>
<td>1,862.8</td>
<td>-16.3%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
France: The Riots Come Just When Unemployment Was Starting To Ease 
by <a href="/comment/Stone.html">Carol Stone</a> November 9, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109c.jpg" width="353">
The riots in France are widely believed to be linked to unemployment conditions, particularly among young people from North African immigrant families. As we discussed here September 30, national unemployment stands at just under 10%, and the rate for workers under 25 is more than twice this, at about 23%. This morning, the French Government statistical agency INSEE reported regional unemployment rates, which we carry in the FRANCE database. These cover the total labor force and are not broken down by age-group. These, along with September&#39;s monthly national data reported ten days ago, indicate that rates have been decreasing, now since June.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051109d.jpg" width="353">
In the accompanying charts and table, we highlight &quot;departments&quot; that the New York Times reports today contain cities on a list authorized by the central police to impose a curfew, that is, where the violence is deemed to be greatest. These include Paris, Nice, Marseille, Dijon, Toulouse, Strasbourg, Nancy, Rouen, Avignon. Ironically, as seen in the exhibits, unemployment rates in the relevant departments had started to ease in Q3. The national rate fell from 10.1% to 9.8%, and every department we show here was down by at least 0.1% on the quarter. Still, these decreases are a very recent development, with the longer runs of these series still generally headed upward. Only in Provence, in the South, is unemployment even steady with its level three years ago. Another fact of irony is the situation in Alsace, with one of the lowest unemployment levels in the country; it is also the locale with the largest increase, from just 6.6% on average in 2002 to 8.7% in Q3 2005. So conditions of relative prosperity there eroded markedly, at least through the middle of this year.
It&#39;s clearly too soon to see the effect of the disturbances on any other French economic data, but a final irony of course is that the situation is likely to be dampening activity, just when the worst of the unemployment conditions might have been starting to stabilize on their own. 

<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/FRANCE/@F05/@F05.HTM">France &amp; Selected Departments:</a> SA, %</th>
<th scope="col">Q3 2005</th>
<th scope="col">Q2 2005</th>
<th scope="col">Q3 2004</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France: Total</td>
<td>9.8</td>
<td>10.1</td>
<td>10.0</td>
<td>10.0</td>
<td>9.8</td>
<td>9.1</td>
</tr>
<tr>
<td class="firstcol">Ile-de-France (Paris)</td>
<td>13.3</td>
<td>13.4</td>
<td>13.2</td>
<td>13.1</td>
<td>12.7</td>
<td>12.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Bourgogne (Dijon)</td>
<td>8.5</td>
<td>8.8</td>
<td>8.7</td>
<td>8.7</td>
<td>8.6</td>
<td>7.9</td>
</tr>
<tr>
<td class="firstcol">Haut-Normandie (Rouen)</td>
<td>10.8</td>
<td>11.0</td>
<td>11.0</td>
<td>10.9</td>
<td>10.6</td>
<td>10.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Alsace (Strasbourg)</td>
<td>8.7</td>
<td>8.9</td>
<td>8.6</td>
<td>8.5</td>
<td>7.8</td>
<td>6.6</td>
</tr>
<tr>
<td class="firstcol">Pyrenees (Toulouse)</td>
<td>9.8</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Provence (Avignon, Nice, Marseilles)</td>
<td>11.7</td>
<td>11.9</td>
<td>11.9</td>
<td>11.9</td>
<td>12.1</td>
<td>11.7</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/051108f.jpg" width="353">
About a week ago, the Japanese Cabinet Office&#39;s synthetic indexes of some of the components of Gross Domestic Product intimated that third quarter GDP growth might slow from the second quarter and could even be negative. Another indicator of economic growth was released today by the Teikoku Data Bank, Ltd*. Their monthly survey, conducted over the internet, of more than 20,000 domestic Japanese firms shows how business men appraise current conditions and the prospects of conditions three, six and twelve months ahead.
TDB&#39;s economic trends research is a fairly recent endeavor. Data for current conditions are available from May 2002 and those for conditions three, six and twelve months ahead are available only form April, 2004. The first chart shows the available data for the appraisals of current conditions for the whole economy and for conditions expected in three months. Like most survey respondents, respondents to the TDB survey tend to believe things will be better in the future as a result the three month ahead index has generally been higher than that of current conditions. Atypically, however, the October diffusion index of current conditions improved while that for conditions three months ahead declined.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108g.jpg" width="353">
Throughout their limited histories the diffusion indexes in the TDB&#39;s economic trends series have rarely been above the 50% mark that would indicates a neutral or positive appraisal of conditions. They have, however, improved from the extreme pessimism of the early years. In addition to an appraisal of economic trends for the economy as a whole, there are appraisals by large and small firms and appraisals for conditions in a number of industries. Small and medium sized firms are becoming less negative on the general outlook. In October the index for current conditions for the economy by small firms rose .67 percentage points or more than the .11 percentage points for the large firms. Two of the industries--manufacturing and retail-for which there are diffusion indexes of current conditions are shown in the second chart. While continued improvement is seen in manufacturing, there is less enthusiasm for the retail sector. In October, the manufacturing index increased by .46 percentage points while that for the retail sector declined by .13 percentage points.
On balance it would seem that the data contained in the TDB&#39;s October economic trend series point to a lackluster performance.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J8/@J812/@J812.HTM">Teikoku Data Bank, Ltd. Economic Trends Diffusion Indexes</a></th>
<th scope="col">Oct 05&nbsp;</th>
<th scope="col">Sep 05</th>
<th scope="col">Oct 04</th>
<th scope="col">M/M Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2004 &nbsp; &nbsp;</th>
<th scope="col">2003 &nbsp;</th>
<th scope="col">May 2002&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Economy</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current conditions</td>
<td>46.01</td>
<td>45.45</td>
<td>43.86</td>
<td>0.56</td>
<td>2.15</td>
<td>43.58</td>
<td>32.49</td>
<td>26.91</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Conditions 3-months ahead</td>
<td>49.71</td>
<td>50.11</td>
<td>47.99</td>
<td>-0.40</td>
<td>1.72</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Large Firms</td>
<td>48.35</td>
<td>48.24</td>
<td>46.13</td>
<td>0.11</td>
<td>2.22</td>
<td>46.21</td>
<td>34.16</td>
<td>28.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Small to Medium Firms</td>
<td>45.22</td>
<td>44.55&nbsp;</td>
<td>43.11</td>
<td>0.67&nbsp;</td>
<td>2.11&nbsp;</td>
<td>42.72&nbsp;</td>
<td>31.93</td>
<td>&nbsp;26.38</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>47.76&nbsp;</td>
<td>43.30&nbsp;</td>
<td>45.96&nbsp;</td>
<td>0.46&nbsp;</td>
<td>1.80&nbsp;</td>
<td>46.05&nbsp;</td>
<td>34.18&nbsp;</td>
<td>26.90&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail&nbsp;</td>
<td>41.70&nbsp;</td>
<td>41.83&nbsp;</td>
<td>40.36&nbsp;</td>
<td>-0.13&nbsp;</td>
<td>1.34&nbsp;</td>
<td>40.21&nbsp;</td>
<td>31.59&nbsp;</td>
<td>29.00&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

About a week ago, the Japanese Cabinet Office's synthetic indexes of some of the components of Gross Domestic Product intimated that third quarter GDP growth might slow from the second quarter and could even be negative. Another [...]

Teikoku Data Bank's Current Economic Trends: Another Indicator for Japanese Economic Growth

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108d.jpg" width="353">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), rose in September to 2.7% from 2.5% in August. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. A 190,000 increase (12.6% y/y) in the total number of job openings more than reversed the declines of the prior two months.
The hires rate remained steady at 3.4% for the second consecutive month and equaled the 2004 average. The hires rate is the number of hires during the month divided by employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108e.jpg" width="353">
The job separations rate also remained steady at 3.4% but this year&#39;s levels have been elevated versus the 3.2% 2004 average. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.
The Economic Role of Cities in the 21st Century from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/Q3_05_Carlino.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.7%</td>
<td>2.5%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.4%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings & Labor Turnover Survey (JOLTS), rose in September to 2.7% from 2.5% in August. The job openings rate is the number of job openings on the last [...]

JOLTS: U.S. Job Openings & Hires Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108a.jpg" width="353">
Last week, chain store sales posted the largest gain since April according to the International Council of Shopping Centers (ICSC)-UBS survey. The 1.0% jump pulled the starting point for November sales 1.3% above the October average which rose just 0.1% from the prior month
The sales jump was aided by another ten cent drop in the average US retail price of regular gasoline to $2.38 per gallon (+18.7 y/y). Retail gas prices are down 22.5% since the early September peak of $3.07 but during the last several days the spot market price for gasoline has bottomed out, suggesting that further retail price declines will be limited. 
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell 0.6% (-3.4% y/y) during the latest week following an upwardly revised 0.2% gain the prior week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/05/05</th>
<th scope="col">10/29/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>456.1</td>
<td>451.6</td>
<td>4.1%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


</html>

Last week, chain store sales posted the largest gain since April according to the International Council of Shopping Centers (ICSC)-UBS survey. The 1.0% jump pulled the starting point for November sales 1.3% above the October average [...]

Chain Store Sales Jumped As Gas Prices Fell Another Dime

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108b.jpg" width="353">
The index of small business optimism from the National Federation of Independent Business (NFIB) jumped 3.7% in October, despite the devastation wreaked by three Hurricanes.
The economic outlook brightened as 14% of firms expected the economy to improve, the best reading since June, although the percentage remained well below the 34-37% range from 2002 to 2004. Plans for adding to employment held steady at 17%, the same as during the last three months. On the negative side, the percentage of firms planning to raise capital expenditures fell back to the lowest level of the year.
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108c.jpg" width="353">
The percentage of firms planning to raise average selling prices fell to 23% from 27% during the prior two months and from 26% during all of last year. The percentage of firm actually raising prices also dipped to 22% from 25% in September but those readings remained up versus 19% averaged in 2004. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.
The percentage of firms with one or more job openings fell two points to 21%, last year&#39;s average. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The latest press release from the NFIB is available <a href="http://www.nfib.com/object/IO_24996.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>103.7</td>
<td>100.0</td>
<td>-0.2%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of small business optimism from the National Federation of Independent Business (NFIB) jumped 3.7% in October, despite the devastation wreaked by three Hurricanes. The economic outlook brightened as 14% of firms expected the [...]

Small Business Optimism Up, Pricing Intentions Cool

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108b.jpg" width="353">
The index of small business optimism from the National Federation of Independent Business (NFIB) jumped 3.7% in October, despite the devastation wreaked by three Hurricanes.
The economic outlook brightened as 14% of firms expected the economy to improve, the best reading since June, although the percentage remained well below the 34-37% range from 2002 to 2004. Plans for adding to employment held steady at 17%, the same as during the last three months. On the negative side, the percentage of firms planning to raise capital expenditures fell back to the lowest level of the year.
During the last ten years there has been a 70% correlation between the level of the NFIB index and the two quarter change in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108c.jpg" width="353">
The percentage of firms planning to raise average selling prices fell to 23% from 27% during the prior two months and from 26% during all of last year. The percentage of firm actually raising prices also dipped to 22% from 25% in September but those readings remained up versus 19% averaged in 2004. During the last ten years there has been a 60% correlation between the change in the producer price index and the level of the NFIB price index.
The percentage of firms with one or more job openings fell two points to 21%, last year&#39;s average. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.
The latest press release from the NFIB is available <a href="http://www.nfib.com/object/IO_24996.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM">Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>103.7</td>
<td>100.0</td>
<td>-0.2%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
</table>
Chain Store Sales Jumped As Gas Prices Fell Another Dime 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108a.jpg" width="353">
Last week, chain store sales posted the largest gain since April according to the International Council of Shopping Centers (ICSC)-UBS survey. The 1.0% jump pulled the starting point for November sales 1.3% above the October average which rose just 0.1% from the prior month
The sales jump was aided by another ten cent drop in the average US retail price of regular gasoline to $2.38 per gallon (+18.7 y/y). Retail gas prices are down 22.5% since the early September peak of $3.07 but during the last several days the spot market price for gasoline has bottomed out, suggesting that further retail price declines will be limited. 
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell 0.6% (-3.4% y/y) during the latest week following an upwardly revised 0.2% gain the prior week.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/05/05</th>
<th scope="col">10/29/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>456.1</td>
<td>451.6</td>
<td>4.1%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings & Hires Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108d.jpg" width="353">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), rose in September to 2.7% from 2.5% in August. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. A 190,000 increase (12.6% y/y) in the total number of job openings more than reversed the declines of the prior two months.
The hires rate remained steady at 3.4% for the second consecutive month and equaled the 2004 average. The hires rate is the number of hires during the month divided by employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108e.jpg" width="353">
The job separations rate also remained steady at 3.4% but this year&#39;s levels have been elevated versus the 3.2% 2004 average. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.htm">here</a>.
The Economic Role of Cities in the 21st Century from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/Q3_05_Carlino.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.7%</td>
<td>2.5%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.4%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Teikoku Data Bank's Current Economic Trends: Another Indicator for Japanese Economic Growth  
by <a href="/comment/Curley.html">Louise Curley</a> November 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108f.jpg" width="353">
About a week ago, the Japanese Cabinet Office&#39;s synthetic indexes of some of the components of Gross Domestic Product intimated that third quarter GDP growth might slow from the second quarter and could even be negative. Another indicator of economic growth was released today by the Teikoku Data Bank, Ltd*. Their monthly survey, conducted over the internet, of more than 20,000 domestic Japanese firms shows how business men appraise current conditions and the prospects of conditions three, six and twelve months ahead.
TDB&#39;s economic trends research is a fairly recent endeavor. Data for current conditions are available from May 2002 and those for conditions three, six and twelve months ahead are available only form April, 2004. The first chart shows the available data for the appraisals of current conditions for the whole economy and for conditions expected in three months. Like most survey respondents, respondents to the TDB survey tend to believe things will be better in the future as a result the three month ahead index has generally been higher than that of current conditions. Atypically, however, the October diffusion index of current conditions improved while that for conditions three months ahead declined.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051108g.jpg" width="353">
Throughout their limited histories the diffusion indexes in the TDB&#39;s economic trends series have rarely been above the 50% mark that would indicates a neutral or positive appraisal of conditions. They have, however, improved from the extreme pessimism of the early years. In addition to an appraisal of economic trends for the economy as a whole, there are appraisals by large and small firms and appraisals for conditions in a number of industries. Small and medium sized firms are becoming less negative on the general outlook. In October the index for current conditions for the economy by small firms rose .67 percentage points or more than the .11 percentage points for the large firms. Two of the industries--manufacturing and retail-for which there are diffusion indexes of current conditions are shown in the second chart. While continued improvement is seen in manufacturing, there is less enthusiasm for the retail sector. In October, the manufacturing index increased by .46 percentage points while that for the retail sector declined by .13 percentage points.
On balance it would seem that the data contained in the TDB&#39;s October economic trend series point to a lackluster performance.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/JAPAN/@J8/@J812/@J812.HTM">Teikoku Data Bank, Ltd. Economic Trends Diffusion Indexes</a></th>
<th scope="col">Oct 05&nbsp;</th>
<th scope="col">Sep 05</th>
<th scope="col">Oct 04</th>
<th scope="col">M/M Dif</th>
<th scope="col">Y/Y Dif</th>
<th scope="col">2004 &nbsp; &nbsp;</th>
<th scope="col">2003 &nbsp;</th>
<th scope="col">May 2002&nbsp;&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Economy</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current conditions</td>
<td>46.01</td>
<td>45.45</td>
<td>43.86</td>
<td>0.56</td>
<td>2.15</td>
<td>43.58</td>
<td>32.49</td>
<td>26.91</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Conditions 3-months ahead</td>
<td>49.71</td>
<td>50.11</td>
<td>47.99</td>
<td>-0.40</td>
<td>1.72</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Current Conditions</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Large Firms</td>
<td>48.35</td>
<td>48.24</td>
<td>46.13</td>
<td>0.11</td>
<td>2.22</td>
<td>46.21</td>
<td>34.16</td>
<td>28.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Small to Medium Firms</td>
<td>45.22</td>
<td>44.55&nbsp;</td>
<td>43.11</td>
<td>0.67&nbsp;</td>
<td>2.11&nbsp;</td>
<td>42.72&nbsp;</td>
<td>31.93</td>
<td>&nbsp;26.38</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>47.76&nbsp;</td>
<td>43.30&nbsp;</td>
<td>45.96&nbsp;</td>
<td>0.46&nbsp;</td>
<td>1.80&nbsp;</td>
<td>46.05&nbsp;</td>
<td>34.18&nbsp;</td>
<td>26.90&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail&nbsp;</td>
<td>41.70&nbsp;</td>
<td>41.83&nbsp;</td>
<td>40.36&nbsp;</td>
<td>-0.13&nbsp;</td>
<td>1.34&nbsp;</td>
<td>40.21&nbsp;</td>
<td>31.59&nbsp;</td>
<td>29.00&nbsp;</td>
</tr>
</tbody>
</table>


</html>

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

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Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

U.S. Energy Prices Are Mixed in Latest Week

Tian Yong Woon

This week, we examine recent developments in US-China trade and assess the broader implications of US trade actions for the BRIC bloc—Brazil, Russia, India, and China. Last week, the US and China extended their tariff truce by 90 days, a move welcomed by equity markets (chart 1). While this pause eased fears of renewed trade tensions, it remains temporary and fragile, with no durable resolution in sight.

As for China’s economy, July data disappointed: retail sales, industrial production, and fixed-asset investment all missed expectations (chart 2). This may signal that tariffs are beginning to bite, as earlier growth drivers—such as some front-loading of imports and one-off consumption boosts like China’s durable-goods subsidy—are fading (chart 3). Newer measures, including loan-interest subsidies, may provide some interim relief. Meanwhile, the property sector remains under heavy strain, with further price and investment declines evidenced in July (chart 4).

In the broader regional context, US trade measures may inadvertently push trading partners closer together, complicating Washington’s bilateral strategy. The BRIC bloc shows tentative signs of greater alignment, though this has yet to appear in data for trade flows (chart 5). China and India, however, are warming toward one another: Foreign Minister Wang Yi’s visit to India this week—focused on the Himalayan border among other issues—suggests an improving dialogue. Separately, discussions at the national level to restart direct flights between the two countries also signal a thaw. Full economic integration remains distant, but the scale of both economies suggests significant potential if relations continue to improve (chart 6).

**The US-China tariff truce**
Last week, the US and China announced a 90-day extension to their mutual tariff truce. Although largely expected, the move still generated further equity market gains (see chart 1). This contrasts sharply with worst-case scenarios earlier this year, when tensions peaked and Washington imposed sweeping tariffs of 145% on Chinese imports — levels that would have severely disrupted global trade and growth if sustained. Instead, both sides agreed to keep additional tariffs at 10% until November 10, allowing more time to pursue a durable trade deal. Still, this is merely a pause rather than progress. 

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**The China docket**
In the meantime, China’s latest monthly data releases were watched closely and offered valid reasons for caution despite earlier signs of resilience. More specifically, retail sales, industrial production, and fixed-asset investment (chart 2) all missed expectations, suggesting US tariff and non-tariff measures are beginning to weigh on growth alongside persistent domestic headwinds. Also, China’s unemployment rate inched higher, while property prices continued to decline. If such weakness persists, calls for additional policy support will grow, even though debt-fuelled measures risk merely trading today’s problems for tomorrow’s.

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**China retail sales**
Diving deeper into the individual releases, chart 3 highlights the gradual slowdown in China’s retail sales in recent months, with growth easing to 3.7% y/y in July. By product category, the deceleration reflects weaker automobile sales — amid authorities’ clampdown on carmaker price wars — and softer furniture sales, suggesting a one-off boost from the government’s durable-goods subsidy programme may now be fading. Clearer confirmation could come if sales growth of other subsidized goods, such as home appliances, also begin to weaken. Still, retail spending — and broader consumption activity — may gain fresh support from China’s new loan-interest subsidy programme, which covers both consumer borrowing and eligible service-sector business loans.

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**China property prices and investment**
Moving next to China’s beleaguered property market, the sector has shown no meaningful recovery for several years. Prices remain on a downtrend, and repeated investor attempts to call a bottom have proven futile. The latest data offered no relief: property prices continued to decline, while investment in the sector fell 12% y/y year-to-date in July (chart 4). That said, the pace of price declines has slowed sharply compared with last year. Even so, what was once a major engine of China’s growth continues to shrink into a shadow of its former self.

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**The BRIC bloc**
While recent trade measures appear favourable for the US, lowering partner tariffs and modestly raising Washington’s own rates, significant risks remain. Such moves could push US trading partners closer together, undermining the administration’s strategy of leveraging bilateral negotiations. One potential area of alignment is the BRIC bloc — Brazil, Russia, India, and China. Although hard data have yet to show major shifts (see chart 5), recent headlines suggest small steps toward deeper cooperation. That said, Russia remains constrained by heavy US sanctions and pressure, as reflected in trade flows with its closest partners.

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Digging a little further, China and India have recently begun to ease their decades-long frosty ties, partly in response to this year’s US trade tensions. A key sign of improving relations is China’s Foreign Minister Wang Yi’s high-profile visit to India from Monday to Wednesday this week. The visit focused on, among other topics, the disputed Himalayan border — which, if resolved, would mark a major step in restoring bilateral relations — and trade across the border. Other indicators of a warming relationship include ongoing talks to restart direct flights, suspended during the pandemic. Given the sheer size of their populations and economies, as shown in chart 6, a fully developed China-India economic partnership could unlock immense potential. However, the path to meaningful economic integration remains at an early stage, with numerous hurdles still to navigate.

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Asia

Economic Letter from Asia: BRIC by BRIC

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The Housing Market Index, compiled by the National Association of Home Builders/Wells Fargo, eased 3.0% (-17.9% y/y) to 32 in August, reversing the 3.1% July rise to 33. It remained below the break-even point of 50, where it’s been since May of last year. The index remains below a July 2023 high of 56 and a November 2020 peak of 90.

The rate on a 30-year fixed rate mortgage averaged 6.61% in the first two weeks of August versus 6.72% during all of July. It fell to 6.58% last week and remained below the high of 7.79% in the last week of October 2023, according to Freddie Mac.

The single-family sales measure declined 2.8% (-20.5% y/y) this month to 35, after rising 2.9% in July. The prospective sales in six months measure held steady (-12.2% y/y) at 43, after rising 7.5% in July. The traffic of prospective buyers’ index rose 10.0% (-12.0% y/y) to 22 in August, after declining 4.8% in July.

Housing weakness centered in the Northeast this month with the index declining 18.8% (-15.2% y/y) to 39, after rising 9.1% in July. It was the lowest level since January 2023.  In the West, the index rose 4.0% (-29.7% y/y) to 26, its highest level in three months. The index for the Midwest held steady (+13.2% y/y) at 43, and matched the highest level in four months. The index in the South also held steady at 29 (-25.6% y/y), after falling in each month of this year.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's **SURVEYS** database.

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- Overall reading matches lowest level since December 2022.
- Current sales slip, expectations steady, while traffic improves.
- Lower Northeast reading accounts for overall index decline.

Economy in Brief: November 2005

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