Louise Curley

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Business confidence in France declined sharply in April. The composite business climate indicator, reported today, fell 3.16% from 95 in March to 92 in April. The decline was largely accounted for by depressed household spending and lower export orders.
The French decline follows yesterday&#146;s report of a further decline in German business confidence. The IFO indicator fell 1.70% to 86.6 in April from 88.1 in March. 
The imminence of the end of the war in Iraq has failed to stem the erosion in confidence in the EuroZone; as a result, forecasters have lowered their expectation of growth in the area. The OECD is now estimating growth at only 1% for 2003, down from the 1.8% earlier estimate.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GQ/@GQ8/@GQ804/@GQ804.HTM">Business Climate Indicators</a></th>
<th scope="col">April 03</th>
<th scope="col">Mar03</th>
<th scope="col">Apr 02</th>
<th scope="col">M/M%</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">France</td>
<td>92</td>
<td>95</td>
<td>98</td>
<td>-3.16</td>
<td>-6.12</td>
<td>96</td>
<td>101</td>
<td>120</td>
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<td class="firstcol">Germany</td>
<td>86.6</td>
<td>88.1</td>
<td>90.5</td>
<td>-1.70</td>
<td>-4.31</td>
<td>89.1</td>
<td>89.9</td>
<td>99.3</td>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GQ/@GQ2/@GQ202/@GQ202.HTM">GDP</a> (Quarterly % Change, SA/WDA)</th>
<th scope="col">Q4 02</th>
<th scope="col">Q3 02</th>
<th scope="col">Q2 02</th>
<th scope="col">Q1 02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">France</td>
<td>-0.08</td>
<td>0.33</td>
<td>0.47</td>
<td>0.72</td>
<td>1.22</td>
<td>2.10</td>
<td>4.23</td>
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<td class="firstcol">Germany</td>
<td>-0.03</td>
<td>0.31</td>
<td>0.15</td>
<td>0.29</td>
<td>0.22</td>
<td>0.75</td>
<td>3.09</td>
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Business confidence in France declined sharply in April. The composite business climate indicator, reported today, fell 3.16% from 95 in March to 92 in April. The decline was largely accounted for by depressed household spending and [...]

Continued Erosion of Business Confidence in France and Germany

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Winnie Tapasanun

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U.S. house prices rose 0.4% m/m in October after unrevised increases of 0.7% in September and 0.4% in August, according to the Federal Housing Finance Agency (FHFA) House Price Index. The October reading was the fifth straight m/m gain and the sixth in seven months. The October HPI at 432.32 was 11.7% above a low of 387.02 in August 2022 and 53.6% above a low of 281.41 in May 2020. The year-on-year rate of increase held at 4.5% for the third successive month, having remained lower than 6.5% in October 2023 and well below a high of 18.8% in February 2022.

House prices rose m/m in October (vs. September) in six of the nine census divisions. These included West South Central (1.0% vs. 0.2%), East North Central (0.9% vs. 0.3%), Middle Atlantic (0.5% vs. 1.4%), South Atlantic (0.5% vs. 0.5%), East South Central (0.3% vs. 1.1%), and New England (0.1% vs. 1.5%). To the downside, house prices fell m/m in three census divisions in October (vs. September): Pacific (-0.4% vs. 0.4%), Mountain (-0.1% vs. 1.6%), and West North Central (-0.1% vs. 0.8%).

Year-on-year house prices continued to gain in October, with the pace of advance accelerating (vs. September) in three of the nine census divisions. These were East North Central (6.7% vs. 6.5%), South Atlantic (3.7% vs. 3.5%), and West South Central (2.4% vs. 1.2%). Meanwhile, house price growth decelerated y/y in October (vs. September) in the following six census divisions: Pacific (2.3% vs. 3.2%), Mountain (3.9% vs. 4.1%), West North Central (4.6% vs. 5.5%), East South Central (5.6% vs. 6.1%), New England (5.9% vs. 6.5%), and Middle Atlantic (7.0% vs. 7.3%).

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

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- FHFA HPI +0.4% (+4.5% y/y) in October vs. +0.7% (+4.5% y/y) in September.
- House prices up m/m in six of nine census divisions but down for the first time since June in Pacific (-0.4%), Mountain (-0.1%), and West North Central (-0.1%).
- House prices up y/y in all of the nine regions, w/ the highest rate in Middle Atlantic (7.0%).

U.S. FHFA House Prices Rise for the Fifth Consecutive Month in October

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The Pending Home Sales Index, a forward-looking measure of home sales based on contract signings, rose 2.2% m/m to 79.0 in November after a downwardly revised 1.8% increase to 77.3 in October (+2.0% & 77.4 initially) and a 7.5% gain in September (unrevised), according to the National Association of Realtors (NAR). The November reading was the fourth consecutive m/m rise and the highest PHSI level since February 2023. The year-on-year rate accelerated to 6.9% in November, the highest since May 2021, from 5.3% in October; thus, posting an improvement from a negative 4.6% in November 2023. Nevertheless, the PHSI had fallen 36.9% since its October 2021 high of 125.1 and 38.3% since its August 2020 peak of 128.0.

The m/m rise in November sales occurred as the average rate on a 30-year mortgage rose to 6.81% in November, the highest since July, after rising to 6.43% in October. These rates, while below their recent high of 7.62% in October 2023, had remained higher than a low of 5.22% in August 2022 and well above a record-low 2.68% in December 2020.

Pending home sales rose m/m in November in three of the four major regions. Sales in the South advanced 5.2% (8.5% y/y) in November, the third successive m/m gain, after a 0.7% increase in October. Sales in the West rose 0.5% (11.8% y/y), the third m/m rise in four months, following October’s no change. Sales in the Midwest grew 0.4% (1.6% y/y), the fourth straight m/m increase, on top of a 4.0% October rise. To the downside, sales in the Northeast fell 1.3% (+5.6% y/y) in November, the first m/m fall since August, following a 4.7% gain in October.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- PHSI +2.2% (+6.9% y/y) in November vs. +1.8% (+5.3% y/y) in October.
- Home sales up m/m in the South (5.2%), West (0.5%) and Midwest (0.4%) but down m/m in the Northeast (-1.3%).
- Home sales up y/y in all four regions, w/ the highest y/y rate in the West (11.8%).

U.S. Pending Home Sales Gain for the Fourth Straight Month in November

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The advance estimate of the U.S. international trade deficit in goods ballooned to $102.86 billion in November after narrowing to $98.26 billion in October, data from the U.S. Census Bureau showed. The November deficit was larger than an $88.60 billion shortfall in November 2023. A deficit of $101.0 billion for November had been expected by the Action Economics Forecast Survey. The deficit had reached a peak of $120.72 billion in March 2022. In Q3'24, the goods trade deficit widened to $305.80 billion, the largest since Q2'22, after rising to $293.74 billion in Q2'24. The trade deficit subtracted 0.44%-point from real GDP growth in Q3'24 after having subtracted 0.83%-point in Q2'24. The monthly deficit averaged $101.93 billion in Q3'24, the biggest since Q2'22, up from an average of $97.91 billion in Q2'24.

Total goods exports recovered 4.4% m/m (6.1% y/y) in November, the first monthly gain in three months, reversing a 3.1% decline in October. Nevertheless, exports had fallen 2.7% since a July 2022 high. The gain in exports in November reflected exports m/m increases of 15.8% (-4.4% y/y) in automotive vehicles & parts, 7.7% (5.4% y/y) in nonfood consumer goods excluding autos, 7.6% (4.2% y/y) in industrial supplies & materials, 7.3% (6.7% y/y) in foods, feeds & beverages, and 5.4% (6.7% y/y) in capital goods excluding autos. In contrast, exports of other goods were the only end-use category with a monthly drop in November; they plunged 30.1% (+40.7% y/y), the first m/m drop since June, following a record 68.3% October surge.

Total goods imports rose 4.5% m/m (9.6% y/y) in November, up for the second month in three, following a 5.5% decrease in October. However, imports had fallen 3.4% since a March 2022 high. The rise in imports in November reflected m/m increases in all imports end-use categories. These included m/m rises of 15.1% (12.7% y/y) in other goods, 7.4% (16.3% y/y) in foods, feeds & beverages, 6.9% (3.1% y/y) in industrial supplies & materials, 4.3% (14.0% y/y) in capital goods excluding autos, 3.2% (-0.8% y/y) in automotive vehicles & parts, and 1.1% (14.5% y/y) in nonfood consumer goods excluding autos.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Larger-than-expected goods trade deficit after October’s narrowing.
- Exports rise 4.4%, the first m/m gain since August.
- Imports rebound 4.5%, the second m/m increase in three months.

U.S. Goods Trade Deficit Widens to $102.86 Billion in November

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 1,000 to 219,000, seasonally adjusted, in the week ended December 21, from the unrevised level of 220,000 in the week ended December 14.  The Action Economic Forecast Survey had expected claims to be 222,000. The 4-week moving average was 226,500 in the December 21 week, an increase of 1,000 from 225,500 in the December 14 week.

The total number of unemployment insurance beneficiaries was 1.910 million in the week ended December 14, up 46,000 from the December 7 week of 1.864 million, revised down by 10,000 from1.874 million. The December 14 level was the highest one for insured unemployment since November 13, 2021, when it was 1.974 million. This total number of beneficiaries is also known as “continuing claims.” The 4-week moving average was 1.881 million in the week ended December 14, up 3,250 from 1.878 million in the week ended December 7. The insured unemployment rate, that is, the total number of beneficiaries as a percent of covered employment, was 1.3% in the latest week, up from 1.2% in the week ended December 7.

Unemployment rates vary markedly across states. The Labor Department reports that for the week ended December 7, the insured unemployment rate was highest in New Jersey (2.38%), followed by California (2.16%), Alaska (2.05%), Minnesota (2.10%), and Washington (2.14%). The lowest rates were in Florida (0.33%), followed by Virginia (0.41%), Alabama (0.44%), South Dakota, Kentucky and New Hampshire (all 0.50%). Unemployment rates in other major states include Massachusetts (1.78%), Illinois and Pennsylvania (both 1.72%), New York (1.69%), Texas (1.06%), and Ohio (1.01%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor, 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. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims were lower than expected in the week ended December 21.
- Continuing claims rose to the highest level since November 2021.
- The insured unemployment rate rose to 1.3%.

U.S. Initial Unemployment Claims Edged Down in Most Recent Week