Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429h.jpg" width="353">
The April Chicago Purchasing Managers Business Barometer gave back more than half of the prior month&#39;s 6.5 point jump. Nevertheless, the level of 65.6 was above Consensus expectations for 62.5 and the average level so far this year is up from 2004.
The employment index gave back less than half the prior month&#39;s surge. During the last ten years there has been a 78% correlation between the level of the employment index and the three month change in factory sector employment. The new orders and the production indexes fell a bit harder.
The index of prices paid fell again to the lowest level since late 2003. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">&nbsp;April &#39;04</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">Business Barometer</td>
<td>65.6</td>
<td>69.2</td>
<td>64.2</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>71.0</td>
<td>76.7</td>
<td>65.8</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>66.1</td>
<td>68.2</td>
<td>75.5</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
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The April Chicago Purchasing Managers Business Barometer gave back more than half of the prior month's 6.5 point jump. Nevertheless, the level of 65.6 was above Consensus expectations for 62.5 and the average level so far this year is [...]

Chicago Purchasing Agents' Index Backpedaled

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429g.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment for all of April fell 5.3% from March to 87.7. The decline contrasted to Consensus expectations for a slightly firmer reading of 89.0.
Sentiment has fallen in each of the last four months and is off 15.5% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the unemployment rate.
Consumer expectations added to the decline earlier in the month and dropped 7.0%, down for the fourth straight month. The expected change in real family income fell 12.2% to the lowest level since 1991. More unemployment was expected by the highest percentage since late 2003 and price inflation was expected to quicken.
The reading of current economic conditions fell 3.3%, a slight improvement from the mid-month reading.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429f.jpg" width="353">
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">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>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>87.7</td>
<td>92.6</td>
<td>-6.9%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.4</td>
<td>108.0</td>
<td>-0.6%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>77.0</td>
<td>82.8</td>
<td>-11.8%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
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The University of Michigan's reading of consumer sentiment for all of April fell 5.3% from March to 87.7. The decline contrasted to Consensus expectations for a slightly firmer reading of 89.0. Sentiment has fallen in each of the last [...]

U.S. Consumer Sentiment Down: Expectations Eased Further

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The employment cost index for private industry workers rose 0.6% last quarter and the rise was quite a bit more moderate than Consensus expectations for a 1.0% increase. Earlier figures were slightly revised.
Moderation came as benefit costs rose the least in three years. The 1.1% gain reflected a 0.4% (+6.3% y/y) rise in the manufacturing sector which compared to quarterly gains between 2 and 4% during the prior three years. The y/y rise in the cost of health benefits rose to 7.5% versus 7.3% growth in 2004 and a 10.5% rise during 2003.
Wage and salary growth picked up to 0.6% from 0.4% in 4Q04 but y/y growth is down by one-third from the peak in early 2002. Wages account for roughly 70% of the compensation index. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429d.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429e.jpg" width="353"> 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></th>
<th scope="col">1Q &#39;05</th>
<th scope="col">4Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>0.6%</td>
<td>0.8%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.6%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>3.0%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>1.1%</td>
<td>1.6%</td>
<td>5.8%</td>
<td>6.9%</td>
<td>6.4%</td>
<td>4.7%</td>
</tr>
</tbody>
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The employment cost index for private industry workers rose 0.6% last quarter and the rise was quite a bit more moderate than Consensus expectations for a 1.0% increase. Earlier figures were slightly revised. Moderation came as [...]

Employment Cost Index Eased With Benefit Costs

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429a.jpg" width="353">
Personal income in March topped Consensus expectations and rose 0.5% following an upwardly revised 0.4% increase in February. Disposable personal income also rose 0.5% (5.8% y/y) although when adjusted for price inflation take home pay was unchanged m/m (3.3% y/y).
Wage &amp; salary income rose 0.3% (5.8% y/y) following an upwardly revised like gain in February. Wages in service producing industries rose 0.4% (6.4% y/y) however factory sector wages fell 0.2% (5.8% y/y), the first decline in four months.
Personal consumption increased 0.6% and beat expectations for a 0.4% gain while February&#39;s increase was revised up. Durable goods spending jumped 2.2% (5.2% y/y) as spending on motor vehicles advanced 6.2% (7.5% y/y).
Nondurables spending fell slightly even though spending on gasoline &amp; oil rose 6.4% (16.7% y/y), all a function of a 7.6% (20.2% y/y) rise prices. Spending on clothing fell 2.3% (+1.9% y/y). Services spending rose 0.6% (6.1% y/y) as the cost of household operation, including utilities, rose 1.7% (10.3% y/y).
The personal savings rate fell to 0.4%. The low number compares to the net worth of the household sector (from the flow of funds accounts) which has been rising. Total net worth was 5.5 times disposable income in 4Q04, up 10% versus the lows of two years earlier. The gain was powered by a 23.5% rise in the owners equity in real estate over those two years.
The PCE chain price index rose 0.5% and less food &amp; energy, the 0.3% m/m increase pulled the y/y gain back to its highest level since early 2003. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429b.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429c.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">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">Personal Income</td>
<td>0.5%</td>
<td>0.4%</td>
<td>6.0%</td>
<td>5.6%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.7%</td>
<td>6.1%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.4%</td>
<td>0.5%</td>
<td>1.0%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.5%</td>
<td>0.3%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Personal income in March topped Consensus expectations and rose 0.5% following an upwardly revised 0.4% increase in February. Disposable personal income also rose 0.5% (5.8% y/y) although when adjusted for price inflation take home [...]

U.S. Income & Spending Above Expectations

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429a.jpg" width="353">
Personal income in March topped Consensus expectations and rose 0.5% following an upwardly revised 0.4% increase in February. Disposable personal income also rose 0.5% (5.8% y/y) although when adjusted for price inflation take home pay was unchanged m/m (3.3% y/y).
Wage &amp; salary income rose 0.3% (5.8% y/y) following an upwardly revised like gain in February. Wages in service producing industries rose 0.4% (6.4% y/y) however factory sector wages fell 0.2% (5.8% y/y), the first decline in four months.
Personal consumption increased 0.6% and beat expectations for a 0.4% gain while February&#39;s increase was revised up. Durable goods spending jumped 2.2% (5.2% y/y) as spending on motor vehicles advanced 6.2% (7.5% y/y).
Nondurables spending fell slightly even though spending on gasoline &amp; oil rose 6.4% (16.7% y/y), all a function of a 7.6% (20.2% y/y) rise prices. Spending on clothing fell 2.3% (+1.9% y/y). Services spending rose 0.6% (6.1% y/y) as the cost of household operation, including utilities, rose 1.7% (10.3% y/y).
The personal savings rate fell to 0.4%. The low number compares to the net worth of the household sector (from the flow of funds accounts) which has been rising. Total net worth was 5.5 times disposable income in 4Q04, up 10% versus the lows of two years earlier. The gain was powered by a 23.5% rise in the owners equity in real estate over those two years.
The PCE chain price index rose 0.5% and less food &amp; energy, the 0.3% m/m increase pulled the y/y gain back to its highest level since early 2003. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429b.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429c.jpg" width="353">

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</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">Personal Income</td>
<td>0.5%</td>
<td>0.4%</td>
<td>6.0%</td>
<td>5.6%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.6%</td>
<td>0.7%</td>
<td>6.1%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.4%</td>
<td>0.5%</td>
<td>1.0%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.5%</td>
<td>0.3%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3%</td>
<td>0.2%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Employment Cost Index Eased With Benefit Costs 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2005


The employment cost index for private industry workers rose 0.6% last quarter and the rise was quite a bit more moderate than Consensus expectations for a 1.0% increase. Earlier figures were slightly revised.
Moderation came as benefit costs rose the least in three years. The 1.1% gain reflected a 0.4% (+6.3% y/y) rise in the manufacturing sector which compared to quarterly gains between 2 and 4% during the prior three years. The y/y rise in the cost of health benefits rose to 7.5% versus 7.3% growth in 2004 and a 10.5% rise during 2003.
Wage and salary growth picked up to 0.6% from 0.4% in 4Q04 but y/y growth is down by one-third from the peak in early 2002. Wages account for roughly 70% of the compensation index. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429d.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429e.jpg" width="353"> 

<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/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></th>
<th scope="col">1Q &#39;05</th>
<th scope="col">4Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>0.6%</td>
<td>0.8%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.6%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>3.0%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>1.1%</td>
<td>1.6%</td>
<td>5.8%</td>
<td>6.9%</td>
<td>6.4%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Down: Expectations Eased Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429g.jpg" width="353">
The University of Michigan&#39;s reading of consumer sentiment for all of April fell 5.3% from March to 87.7. The decline contrasted to Consensus expectations for a slightly firmer reading of 89.0.
Sentiment has fallen in each of the last four months and is off 15.5% from the January &#39;04 peak. During the last ten years there has been a 75% (inverse) correlation between the level of consumer sentiment and the unemployment rate.
Consumer expectations added to the decline earlier in the month and dropped 7.0%, down for the fourth straight month. The expected change in real family income fell 12.2% to the lowest level since 1991. More unemployment was expected by the highest percentage since late 2003 and price inflation was expected to quicken.
The reading of current economic conditions fell 3.3%, a slight improvement from the mid-month reading.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429f.jpg" width="353">
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</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>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>87.7</td>
<td>92.6</td>
<td>-6.9%</td>
<td>95.2</td>
<td>87.6</td>
<td>89.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.4</td>
<td>108.0</td>
<td>-0.6%</td>
<td>105.6</td>
<td>97.2</td>
<td>97.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>77.0</td>
<td>82.8</td>
<td>-11.8%</td>
<td>88.5</td>
<td>81.4</td>
<td>84.6</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Backpedaled 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050429h.jpg" width="353">
The April Chicago Purchasing Managers Business Barometer gave back more than half of the prior month&#39;s 6.5 point jump. Nevertheless, the level of 65.6 was above Consensus expectations for 62.5 and the average level so far this year is up from 2004.
The employment index gave back less than half the prior month&#39;s surge. During the last ten years there has been a 78% correlation between the level of the employment index and the three month change in factory sector employment. The new orders and the production indexes fell a bit harder.
The index of prices paid fell again to the lowest level since late 2003. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

<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/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">&nbsp;April &#39;04</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">Business Barometer</td>
<td>65.6</td>
<td>69.2</td>
<td>64.2</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>71.0</td>
<td>76.7</td>
<td>65.8</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>66.1</td>
<td>68.2</td>
<td>75.5</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
</table>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050428d.jpg" width="353">
Germany&#39;s Federal Statistical Office today introduced its new chain-weighted GDP data with benchmark revisions through Q4 2004. No new periods were published; that will occur for Q1 2005 on May 24.
The chain-linking is calculated on an annual basis, with each line item adjusted by the prices prevailing during the previous year. This is similar to the UK process, but different from the US, which uses the immediate prior quarter. Like the US, though, Germany moved to a reference year in 2000, meaning that price and quantity indexes equal 100 in that year. The fixed-weight base period, most recently 1995, is now obsolete. 2000 is not a &quot;base&quot; year, but the reference year for the index calculations.
With this revision, the German statistics office also introduced other methodological changes. Greater use is made of hedonic pricing, that is, price indices that account for quality changes in goods and services. Newly available service sector statistics are incorporated as well as data from the quadrennial compilation of cost structure information. Finally, &quot;FISIM&quot; data, financial intermediation services indirectly measured, are reorganized according to conventions of the EU statistics regulations.
Interestingly, these various technical changes had only a mild impact on total GDP, which now shows about 0.2% more growth annually than before. In the most recent years, the difference is smaller still, as seen in the table below. Growth in 2004 was virtually the same at 1.6%, according to both methods.
Certainly, some GDP components do show a larger difference. Equipment investment is one of these, as might be expected, with a growth differential averaging about 1.2 percentage points over the last 10 years. Thus, for example, equipment outlays were up 0.9% last year by the new data, but down by 0.2% according to the old calculation scheme. Over the last five or six years, private consumption growth has been nearly the same, but prior to 1998, the chain calculation far outperformed the old fixed-weight regime, so the amount of consumption is larger now than shown before.
As we have noted with other countries as they change this GDP compilation system, the new data don&#39;t alter our subjective sense of the economy&#39;s health, but they give us a much more solid assessment of it, particularly as spending and production priorities shift around. Sometimes relative pricing is the reason this happens, but other times, technology, demographics and politics are more significant and these forces can push both prices and quantities. So a flexible accounting system gives a better vision of the &quot;big picture&quot; of real growth and inflation, regardless of what year is chosen to be &quot;100&quot;.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/GERMANY.HTM">Germany</a></th>
<th scope="col">Q4 2004</th>
<th scope="col">Q3 2004</th>
<th scope="col">Q2 2004</th>
<th scope="col">Q1 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">GDP - New (Bil.Ch.2000 Euros)</td>
<td>528.27</td>
<td>529.00</td>
<td>529.20</td>
<td>528.12</td>
<td>2123.14</td>
<td>2090.35</td>
<td>2090.30</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-0.1</td>
<td>-0.0</td>
<td>0.2</td>
<td>0.4</td>
<td>1.6</td>
<td>0.0</td>
<td>0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">GDP - Old (Bil.1995 Euros)</td>
<td>501.60</td>
<td>502.77</td>
<td>502.66</td>
<td>500.89</td>
<td>2007.92</td>
<td>1987.53</td>
<td>1990.27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-0.2</td>
<td>0.0</td>
<td>0.4</td>
<td>0.5</td>
<td>1.6</td>
<td>-0.1</td>
<td>0.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Equipment Investment - New &nbsp; % Change</td>
<td>-0.6</td>
<td>3.4</td>
<td>2.8</td>
<td>-3.7</td>
<td>0.9</td>
<td>-0.3</td>
<td>-7.4</td>
</tr>
<tr>
<td class="firstcol">Equipment Investment - Old &nbsp; % Change</td>
<td>-0.4</td>
<td>3.4</td>
<td>1.9</td>
<td>-3.9</td>
<td>-0.2</td>
<td>-1.5</td>
<td>-8.5</td>
</tr>
</tbody>
</table>
</body>
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Germany's Federal Statistical Office today introduced its new chain-weighted GDP data with benchmark revisions through Q4 2004. No new periods were published; that will occur for Q1 2005 on May 24. The chain-linking is calculated on [...]

Germany's Chain GDP Yield Slightly Higher Long-Term Growth through 2004

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050428a.jpg" width="353">
Initial unemployment insurance claims last week recovered 21,000 of the lessened 33,000 decline the prior period. The level of 320,000 equaled Consensus expectations.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The four week moving average of initial claims fell sharply to 323,000 (-7.2% y/y).
Continuing claims for unemployment insurance dropped a sharp 76,000 to the lowest level since March of 2001.
The insured unemployment rate slipped to 2.0%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/23/05</th>
<th scope="col">04/16/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>320</td>
<td>299</td>
<td>-5.9%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,555</td>
<td>-15.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial unemployment insurance claims last week recovered 21,000 of the lessened 33,000 decline the prior period. The level of 320,000 equaled Consensus expectations. During the last ten years there has been a (negative) 75% [...]

Initial Claims for Jobless Insurance Bounce Back

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050428c.jpg" width="353">
The Conference Board&#39;s National March Index of Help-Wanted Advertising fell to 39 from 41 during the prior two months.
During the last ten years there has been a 67% correlation between the level of help-wanted advertising and the three month change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume evaporated to 10% from 53% in February.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.
Help-Wanted Advertising and Job Vacancies from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-02.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">March</th>
<th scope="col">Feb</th>
<th scope="col">March &#39;04</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>41</td>
<td>39</td>
</tr>
</tbody>
</table>
</body>
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The Conference Board's National March Index of Help-Wanted Advertising fell to 39 from 41 during the prior two months. During the last ten years there has been a 67% correlation between the level of help-wanted advertising and the [...]

Help-Wanted Advertising Slipped

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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Chicago Purchasing Agents' Index Backpedaled

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Employment Cost Index Eased With Benefit Costs

U.S. Income & Spending Above Expectations

U.S. Income & Spending Above Expectations

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