Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511a.jpg" width="353">
The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit.
Total exports jumped 1.5% following two months of little change. Goods exports surged 1.4% (6.9% y/y) on the strength of a 6.6% increase in foods, feeds &amp; beverages and a 3.3% (4.7% y/y) rise in capital goods. Exports of advanced technology products jumped 31.3% (NSA, +2.9% y/y).
In other categories export performance paled. Exports of non-auto consumer goods were unchanged (9.8% y/y) after a 3.1% spike in February and automotive exports fell 1.2% (+7.0% y/y), down for the second month.
Services exports rose 1.8% (7.7% y/y) as passenger fares jumped 3.9% 14.5% y/y) and spending on travel surged 2.8% (10.8% y/y).
Total imports slumped 2.5% despite a 4.1% (32.4% y/y) rise in petroleum products. The average price of crude oil surged 11.6% to $41.14 per bbl. (34.3% y/y). Imports of non-petroleum goods fell 4.6% (+4.7% y/y) as capital goods imports fell 1.1% (+8.3% y/y) for the second monthly decline and nonauto consumer goods imports plunged 6.8% (+4.5% y/y).
The US trade deficit with China improved for the second month to $12.9B ($162.0B in 2004) as exports surged (-2.0% y/y) and imports fell (+17.4% y/y). The US trade deficit with Japan deepened further to $7.8B ($75.2B in 2004) but the monthly trade deficit with the Asian NICs nearly dissolved ($21.9B in 2004) due to a 22.1% surge in exports (3.8% y/y). The US trade deficit with the European Union deepened to $9.3B ($110.0B in 2004), the result of an 11.7% jump in imports (+1.0% y/y) which outpaced a 12.7% (4.8% y/y) rise in exports.
Are We Underestimating the Gains from Globalization for the United States? from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci11-4.pdf"> here</a>.
The Evolution and Implications of the U.S. Current Account Deficit from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=FF60B8DE-5056-9F06-99823AB38DD7EFB2&amp;method=display"> here</a>.
Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be viewed <a href="http://research.stlouisfed.org/publications/iet/20050501/cover.pdf"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$55.0.0B</td>
<td>$60.6B</td>
<td>$47.1B (3/04)</td>
<td>$617.1B</td>
<td>$496.5B</td>
<td>$421.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>1.5%</td>
<td>0.2%</td>
<td>7.1%</td>
<td>12.4%</td>
<td>4.6%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.5%</td>
<td>1.5%</td>
<td>10.3%</td>
<td>16.3%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
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The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit. Total exports jumped 1.5% following two months of [...]

U.S. Trade Deficit Posted Surprising Improvement

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511a.jpg" width="353">
The U.S. foreign trade deficit improved unexpectedly in March to $55.0B from the little revised record of $60.6B in February. Consensus expectations had been for a $61.5B deficit.
Total exports jumped 1.5% following two months of little change. Goods exports surged 1.4% (6.9% y/y) on the strength of a 6.6% increase in foods, feeds &amp; beverages and a 3.3% (4.7% y/y) rise in capital goods. Exports of advanced technology products jumped 31.3% (NSA, +2.9% y/y).
In other categories export performance paled. Exports of non-auto consumer goods were unchanged (9.8% y/y) after a 3.1% spike in February and automotive exports fell 1.2% (+7.0% y/y), down for the second month.
Services exports rose 1.8% (7.7% y/y) as passenger fares jumped 3.9% 14.5% y/y) and spending on travel surged 2.8% (10.8% y/y).
Total imports slumped 2.5% despite a 4.1% (32.4% y/y) rise in petroleum products. The average price of crude oil surged 11.6% to $41.14 per bbl. (34.3% y/y). Imports of non-petroleum goods fell 4.6% (+4.7% y/y) as capital goods imports fell 1.1% (+8.3% y/y) for the second monthly decline and nonauto consumer goods imports plunged 6.8% (+4.5% y/y).
The US trade deficit with China improved for the second month to $12.9B ($162.0B in 2004) as exports surged (-2.0% y/y) and imports fell (+17.4% y/y). The US trade deficit with Japan deepened further to $7.8B ($75.2B in 2004) but the monthly trade deficit with the Asian NICs nearly dissolved ($21.9B in 2004) due to a 22.1% surge in exports (3.8% y/y). The US trade deficit with the European Union deepened to $9.3B ($110.0B in 2004), the result of an 11.7% jump in imports (+1.0% y/y) which outpaced a 12.7% (4.8% y/y) rise in exports.
Are We Underestimating the Gains from Globalization for the United States? from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci11-4.pdf"> here</a>.
The Evolution and Implications of the U.S. Current Account Deficit from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/invoke.cfm?objectid=FF60B8DE-5056-9F06-99823AB38DD7EFB2&amp;method=display"> here</a>.
Unwinding the Current Account Deficit from the Federal Reserve Bank of St. Louis can be viewed <a href="http://research.stlouisfed.org/publications/iet/20050501/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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</thead>
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<td class="firstcol">Trade Deficit</td>
<td>$55.0.0B</td>
<td>$60.6B</td>
<td>$47.1B (3/04)</td>
<td>$617.1B</td>
<td>$496.5B</td>
<td>$421.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>1.5%</td>
<td>0.2%</td>
<td>7.1%</td>
<td>12.4%</td>
<td>4.6%</td>
<td>-3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.5%</td>
<td>1.5%</td>
<td>10.3%</td>
<td>16.3%</td>
<td>8.5%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Small Business Optimism Down Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511b.jpg" width="353">
The Small Business Optimism Index reported by the National Federation of Independent Business (NFIB) fell another 2.6% in April and is off 7.3% from the peak last November. The decline occurred as the percentage of firms expecting the economy to improve collapsed to 5% versus 47% in November.
During the last ten years there has been a 64% correlation between the level of the NFIB index and the two quarter change in real GDP.
The job outlook brightened only slightly. The percentage of firms planning to raise employment rose one point to 11% but was half the 20% of December 2003. A brighter job market picture came from the percentage of firms with one or more job openings at 23% which was well up from the low of 15% during 2003. During the last ten years there has been a 67% correlation between hiring plans and the three month growth in nonfarm payrolls.
The percentage of firms planning to raise capital spending slid to 32%, well off from the 38% this past December.
The percentage of firms raising average selling prices slipped to 23%.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

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<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">April</th>
<th scope="col">Mar</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>
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<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>99.8</td>
<td>102.5</td>
<td>-5.3%</td>
<td>104.6</td>
<td>101.3</td>
<td>101.2</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings Firm 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511d.jpg" width="353">
The Job Openings &amp; Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics indicated that the job openings rate held firm at 2.6% versus an upwardly revised level in February. 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. The total number of job openings was about stable m/m but up 14.9% y/y.
The March hires rate continued the trend of improvement and rose to 3.7%. The hires rate is the number of hires during the month divided by employment.
Job separations rose and reversed most of the decline during the prior two months. The separation rate rose to 3.3%. 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.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511c.jpg" width="353">
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>.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">&nbsp;Mar &#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>2.6%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.7%</td>
<td>3.6%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Mortgage Applications Surged as Rates Remained Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511e.jpg" width="353">
Total mortgage applications jumped 9.4% last week according to the Mortgage Bankers Association and began the month 13.9% ahead of the depressed April average.
Applications to purchase a home jumped 9.1% w/w and started May 11.9% 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 rose 9.8%.
The effective interest rate on a conventional 30-year mortgage ticked up to 6.02% from 5.98% but remained down from the high of 6.34% in late March. The effective rate on a 15-year mortgage was 5.65%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
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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">05/06/05</th>
<th scope="col">04/29/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>781.0</td>
<td>714.1</td>
<td>5.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>526.2</td>
<td>482.5</td>
<td>6.5%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,263.3</td>
<td>2,061.2</td>
<td>3.6%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Trade Deficit Eases in UK, Surplus Increases in Canada, but Energy May Be Starting to Restrain Demand for Non-Energy Imports 
by <a href="/comment/Stone.html">Carol Stone</a> May 11, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511g.jpg" width="353">
The surprising reduction in the US trade deficit for March begs for comparison with trade data reported today by other major countries. We&#39;ve highlighted here the role of energy in two oil-producing nations, the UK and Canada, along with the US. In the US, the petroleum deficit continued to widen, but modestly, while the non-petroleum deficit fell sharply in the month, as described by Tom Moeller in the Haver.com homepage commentary for today.
In the UK, the overall trade deficit decreased to &pound;4.4 billion in March from &pound;5.1 billion in February. The non-oil deficit also decreased, but just slightly, reflecting a 1.8% rise in non-oil exports after two successive monthly declines. The oil surplus in the UK is marginal, and in some months, oil even runs a small deficit. The non-oil deficit had widened fairly consistently from 1997 through the middle of last year and has since begun to diminish gradually, as import growth has tended to slow.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050511f.jpg" width="353">
Canada&#39;s trade balance was C$4.235 billion in March, up from C$4.155 billion in February. The energy surplus is drifting down a little, with the March value, C$3.4 billion, off from the 2004 average of C$3.7 billion. Exports of energy products have flattened in the last six month, but energy imports are trending upward, as seen in the second graph. The surplus in non-energy trade has fallen more distinctly with a modest slowing of those exports.
In both the US and the UK, non-energy imports have recently turned down. For the US, this is just a one-month development and could easily be reversed, but in the UK, March was the third month. Possibly the weight of energy on these economies is starting to restrain other purchasing from abroad. This is an important development to monitor.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">Millions of Local Currency, Seasonally Adjusted</th>
<th scope="col">Mar 2005</th>
<th scope="col">Feb 2005</th>
<th scope="col">Mar 2004</th>
Monthly Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">UK: Balance on Goods</td>
<td>-4,412</td>
<td>-5,037</td>
<td>-4,108</td>
<td>-4,829</td>
<td>-3,972</td>
<td>-3,890</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Oil</td>
<td>384</td>
<td>44</td>
<td>193</td>
<td>163</td>
<td>344</td>
<td>478</td>
</tr>
<tr>
<td class="firstcol">Balance ex Oil</td>
<td>-4,796</td>
<td>-5,081</td>
<td>-4,519</td>
<td>-4,992</td>
<td>-4,316</td>
<td>-4,368</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">Canada: Balance on Goods</td>
<td>4,235</td>
<td>4,155</td>
<td>5,584</td>
<td>5,602</td>
<td>4,848</td>
<td>4,768</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Energy</td>
<td>3,386</td>
<td>3,053</td>
<td>3,164</td>
<td>3,693</td>
<td>3,406</td>
<td>2,738</td>
</tr>
<tr>
<td class="firstcol">Balance ex Energy</td>
<td>849</td>
<td>102</td>
<td>2,420</td>
<td>1,909</td>
<td>1,442</td>
<td>2,030</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">US: Balance on Goods</td>
<td>-57,171</td>
<td>-63,538</td>
<td>-50,026</td>
<td>-54,234</td>
<td>-44,362</td>
<td>-39,022</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Petroleum</td>
<td>-16,992</td>
<td>-16,343</td>
<td>-13,013</td>
<td>-13,653</td>
<td>-10,034</td>
<td>-7,764</td>
</tr>
<tr>
<td class="firstcol">Balance ex Petroleum</td>
<td>-41,179</td>
<td>-47,195</td>
<td>-37,013</td>
<td>-40,582</td>
<td>-34,329</td>
<td>-31,258</td>
</tr>
</tbody>
</table>
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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/050510f.jpg" width="353">
German exports, seasonally adjusted, rose 2.1%, in March after having declined by almost 3% in February. At the same time imports declined 1.2%. As a result, the balance of trade rose by 2.9 billion euros to 15.1 billion euros, an all time peak. Chart 1 shows Germany&#39;s balance of trade in goods.
The improvement in the balance of trade in goods has favorable implications for growth in the economy. Exports have been the one bright spot in the German economy and have accounted for most of what little growth the economy has shown. Imports, of course, affect GDP negatively, and the rising cost of oil has muted the positive influence of exports. Chart 2 shows the effect of rising oil prices over the last year on Germany&#39;s imports of crude oil and gas imports. While the imports of crude oil and gas have dropped in the first two months of this year, the price of oil remains a risk to the outlook.
In the table below we show both the seasonally adjusted and the non seasonally adjusted data. Strictly speaking, the percentage change from one period to the next should be calculated on the basis of seasonally adjusted data. In the absence of seasonal adjustments, the most meaningful percentage change is that of one period to the same period in the previous year. In its press release the Federal Statistical Office of Germany reports percentage changes in this manner.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510g.jpg" width="353">

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/GERMANY.HTM">Germany</a></th>
<th scope="col">Mar 05</th>
<th scope="col">Feb&nbsp; 05</th>
<th scope="col">Mar 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports (SA Bil Euros)</td>
<td>62.7</td>
<td>61.5</td>
<td>59.0</td>
<td>2.1</td>
<td>&nbsp;</td>
<td>725.5</td>
<td>666.9</td>
<td>654.5</td>
</tr>
<tr>
<td class="firstcol">Imports (SA Bil Euros)</td>
<td>47.9</td>
<td>48.24</td>
<td>44.62</td>
<td>-1.2</td>
<td>&nbsp;</td>
<td>570.3</td>
<td>535.9</td>
<td>520.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (SA Bil Euros)</td>
<td>15.1</td>
<td>13.2</td>
<td>14.4</td>
<td>1.9</td>
<td>&nbsp;</td>
<td>155.2</td>
<td>131.01</td>
<td>134.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports (NSA Bil Euros)</td>
<td>65.3</td>
<td>59.7</td>
<td>64.7</td>
<td>&nbsp;</td>
<td>0.9</td>
<td>733.2</td>
<td>664.43</td>
<td>651.32</td>
</tr>
<tr>
<td class="firstcol">Imports (NSA Bil Euros)</td>
<td>49.0</td>
<td>46.2</td>
<td>48.1</td>
<td>&nbsp;</td>
<td>1.9</td>
<td>577.1</td>
<td>534.5</td>
<td>518.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (NSA Bil Euros)</td>
<td>16.3</td>
<td>13.5</td>
<td>16.6</td>
<td>&nbsp;</td>
<td>-3.0</td>
<td>156.1</td>
<td>130.0</td>
<td>132.8</td>
</tr>
</tbody>
</table>
</body>
</html>

German exports, seasonally adjusted, rose 2.1%, in March after having declined by almost 3% in February. At the same time imports declined 1.2%. As a result, the balance of trade rose by 2.9 billion euros to 15.1 billion euros, an all [...]

Balance of German Trade in Goods Reached New Peak in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510a.jpg" width="353">
In the US, the average price for unleaded regular gasoline eased to $2.19 per gallon last week, down for the fourth consecutive week and off 4.1% from the peak of $2.28.
As of March, the price of gasoline had risen 83.3% versus the low in late 2001. Relative to non-energy prices in the CPI, gasoline prices rose 72.0% during the period.
Mitigating the economic impact of these gains is the 50% decline in the ratio of petroleum usage versus US real GDP during the last thirty years.
The price of oil also fell last week. West Texas Intermediate crude dropped to $52.04 per barrel versus the earlier high of $57.28.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510e.jpg" width="353">
Wholesale natural gas prices slipped to $6.56/mmbtu (+8.8% y/y), down 8.5% from the April average.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">05/09/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.19</td>
<td>$1.79</td>
<td>12.6%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$52.04</td>
<td>$41.78</td>
<td>33.7%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
</body>
</html>

In the US, the average price for unleaded regular gasoline eased to $2.19 per gallon last week, down for the fourth consecutive week and off 4.1% from the peak of $2.28. As of March, the price of gasoline had risen 83.3% versus the [...]

Gasoline Prices Ease

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510b.jpg" width="353">
Chain store sales opened the month of May with a 0.7% rise which added to the 0.5% increase of the prior week, according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase raised the level of sales 1.4% versus April when they rose 0.6% from March.
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 0.4% (-1.2% y/y) during the final week of April.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">05/07/05</th>
<th scope="col">04/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>461.4</td>
<td>458.0</td>
<td>3.5%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales opened the month of May with a 0.7% rise which added to the 0.5% increase of the prior week, according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase raised the level of sales 1.4% [...]

Weekly Chain Store Sales Up Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510b.jpg" width="353">
Chain store sales opened the month of May with a 0.7% rise which added to the 0.5% increase of the prior week, according to the International Council of Shopping Centers (ICSC)-UBS survey. The increase raised the level of sales 1.4% versus April when they rose 0.6% from March.
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 0.4% (-1.2% y/y) during the final week of April.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">05/07/05</th>
<th scope="col">04/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>461.4</td>
<td>458.0</td>
<td>3.5%</td>
<td>4.6%</td>
<td>2.9%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
Gasoline Prices Ease 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510a.jpg" width="353">
In the US, the average price for unleaded regular gasoline eased to $2.19 per gallon last week, down for the fourth consecutive week and off 4.1% from the peak of $2.28.
As of March, the price of gasoline had risen 83.3% versus the low in late 2001. Relative to non-energy prices in the CPI, gasoline prices rose 72.0% during the period.
Mitigating the economic impact of these gains is the 50% decline in the ratio of petroleum usage versus US real GDP during the last thirty years.
The price of oil also fell last week. West Texas Intermediate crude dropped to $52.04 per barrel versus the earlier high of $57.28.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510e.jpg" width="353">
Wholesale natural gas prices slipped to $6.56/mmbtu (+8.8% y/y), down 8.5% from the April average.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.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/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">05/09/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$2.19</td>
<td>$1.79</td>
<td>12.6%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$52.04</td>
<td>$41.78</td>
<td>33.7%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
</tbody>
</table>
Balance of German Trade in Goods Reached New Peak in March 
by <a href="/comment/Curley.html">Louise Curley</a> May 10, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510f.jpg" width="353">
German exports, seasonally adjusted, rose 2.1%, in March after having declined by almost 3% in February. At the same time imports declined 1.2%. As a result, the balance of trade rose by 2.9 billion euros to 15.1 billion euros, an all time peak. Chart 1 shows Germany&#39;s balance of trade in goods.
The improvement in the balance of trade in goods has favorable implications for growth in the economy. Exports have been the one bright spot in the German economy and have accounted for most of what little growth the economy has shown. Imports, of course, affect GDP negatively, and the rising cost of oil has muted the positive influence of exports. Chart 2 shows the effect of rising oil prices over the last year on Germany&#39;s imports of crude oil and gas imports. While the imports of crude oil and gas have dropped in the first two months of this year, the price of oil remains a risk to the outlook.
In the table below we show both the seasonally adjusted and the non seasonally adjusted data. Strictly speaking, the percentage change from one period to the next should be calculated on the basis of seasonally adjusted data. In the absence of seasonal adjustments, the most meaningful percentage change is that of one period to the same period in the previous year. In its press release the Federal Statistical Office of Germany reports percentage changes in this manner.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510g.jpg" width="353">

<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/GERMANY/GERMANY.HTM">Germany</a></th>
<th scope="col">Mar 05</th>
<th scope="col">Feb&nbsp; 05</th>
<th scope="col">Mar 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports (SA Bil Euros)</td>
<td>62.7</td>
<td>61.5</td>
<td>59.0</td>
<td>2.1</td>
<td>&nbsp;</td>
<td>725.5</td>
<td>666.9</td>
<td>654.5</td>
</tr>
<tr>
<td class="firstcol">Imports (SA Bil Euros)</td>
<td>47.9</td>
<td>48.24</td>
<td>44.62</td>
<td>-1.2</td>
<td>&nbsp;</td>
<td>570.3</td>
<td>535.9</td>
<td>520.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (SA Bil Euros)</td>
<td>15.1</td>
<td>13.2</td>
<td>14.4</td>
<td>1.9</td>
<td>&nbsp;</td>
<td>155.2</td>
<td>131.01</td>
<td>134.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports (NSA Bil Euros)</td>
<td>65.3</td>
<td>59.7</td>
<td>64.7</td>
<td>&nbsp;</td>
<td>0.9</td>
<td>733.2</td>
<td>664.43</td>
<td>651.32</td>
</tr>
<tr>
<td class="firstcol">Imports (NSA Bil Euros)</td>
<td>49.0</td>
<td>46.2</td>
<td>48.1</td>
<td>&nbsp;</td>
<td>1.9</td>
<td>577.1</td>
<td>534.5</td>
<td>518.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance (NSA Bil Euros)</td>
<td>16.3</td>
<td>13.5</td>
<td>16.6</td>
<td>&nbsp;</td>
<td>-3.0</td>
<td>156.1</td>
<td>130.0</td>
<td>132.8</td>
</tr>
</tbody>
</table>
</body>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510c.jpg" width="353">
March Industrial production data were released today for the developed nations-- Germany, Denmark, the United Kingdom; and for the developing nations--Slovakia, Turkey and Malaysia. Each country reported a decline in production from February, adding to the evidence of a slow down in world growth in the first quarter of 2005.
While Turkey showed the largest decline, it followed an unusually large-- 9%-- rise in February. Unexpected declines occurred in the United Kingdom where production was down by 1.14% and in Germany where production declined by 0.79%. In both cases the consensus had predicted a rise.
The year-to-year percentage changes in the data generally show a declining trend over the past year or so in all the reporting countries except Germany, where the data appear trend less. The first chart compares the year-to-year changes in production for Germany and the United Kingdom. Although Turkey and Malaysia show a declining trend in year-to-year changes, the percent changes have yet to record declines, indicating that production is still increasing on a year-to-year basis as shown in the second chart. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050510d.jpg" width="353"> The same cannot be said for Denmark where the average year-to-year decline for the first quarter was 3.88% and for Slovakia where there has been little change in the level of production.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INDUSTRIAL&nbsp; PRODUCTION</th>
<th scope="col">Mar 05</th>
<th scope="col">Feb 05</th>
<th scope="col">Mar 04</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y%</th>
<th scope="col">&nbsp;2004&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2003</th>
<th scope="col">&nbsp;2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany (2000=1000</td>
<td>100.9</td>
<td>101.7</td>
<td>99.3</td>
<td>-0.79</td>
<td>1.61</td>
<td>100.8</td>
<td>98.4</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">U. K. (2001=100)</td>
<td>95.8</td>
<td>96.9</td>
<td>97.6</td>
<td>-1.14</td>
<td>-4.84</td>
<td>97.8</td>
<td>97.3</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Denmark (2000=100)</td>
<td>97</td>
<td>99</td>
<td>103</td>
<td>-2.02</td>
<td>-5.83</td>
<td>102</td>
<td>102</td>
<td>103</td>
</tr>
<tr>
<td class="firstcol">Turkey (1997=100)</td>
<td>129.0</td>
<td>137.0</td>
<td>122.7</td>
<td>-5.84</td>
<td>5.13</td>
<td>123.4</td>
<td>112.4</td>
<td>103.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovakia (2000=100)</td>
<td>124.1</td>
<td>126.7</td>
<td>127.9</td>
<td>-2.05</td>
<td>-2.97</td>
<td>124.7</td>
<td>120.9</td>
<td>114.8</td>
</tr>
<tr>
<td class="firstcol">Malaysia (1993=100)</td>
<td>237.5</td>
<td>240.3</td>
<td>226.0</td>
<td>-1.17</td>
<td>5.09</td>
<td>229.6</td>
<td>206.3</td>
<td>188.8</td>
</tr>
</tbody>
</table>
</body>
</html>

March Industrial production data were released today for the developed nations-- Germany, Denmark, the United Kingdom; and for the developing nations--Slovakia, Turkey and Malaysia. Each country reported a decline in production from [...]

March Industrial Production Data Show Declines in Developed and Emerging Nations

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050509a.jpg" width="353">
The Weekly Leading Index of the US economy from the Economic Cycle Research Institute (ECRI) fell 0.2% in the latest period and it was the fifth decline since mid-March. The six month growth rate of 3.0% continued to signal economic expansion though it was down from the recent high of 3.9%.
Higher claims for jobless insurance and weaker commodity prices contributed to the index&#39;s decline offset somewhat by a rise in mortgage applications and lower interest rates.
During the last ten years there has been a 69% correlation between six-month growth in the ECRI leading index and two quarter growth in real U.S. GDP.
The components of the ECRI weekly leading index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The ECRI Leading Index&#39;s recent pattern generally mirrors the Conference Board&#39;s Index of Leading Economic Indicators, with a slight lead. Construction of the ECRI Leading Index differs from the Conference Board Index but there has been a 70% correlation between the y/y percent change in the two series over the last 10 years.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months.
The latest from ECRI is available <a href="http://www.businesscycle.com/">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/weekly/@W8/@W801/@W801.HTM">ECRI Leading Index</a></th>
<th scope="col">04/29/05</th>
<th scope="col">04/22/05</th>
<th scope="col">Growth Rate</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">Weekly</td>
<td>134.4</td>
<td>134.7</td>
<td>3.0%</td>
<td>4.2%</td>
<td>6.6%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>April</td>
<td>Mar</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Monthly</td>
<td>134.9</td>
<td>135.4</td>
<td>3.3%</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

The Weekly Leading Index of the US economy from the Economic Cycle Research Institute (ECRI) fell 0.2% in the latest period and it was the fifth decline since mid-March. The six month growth rate of 3.0% continued to signal economic [...]

ECRI Leaders' Forward Momentum Down

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

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