Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051026b.jpg" width="353">
The 3Q &#39;05 Composite Business Index published by the Manufacturers&#39; Alliance/MAPI fell to 66 from 68 the prior quarter. The latest is the lowest level since 2Q &#39;03.
During the last ten years there has been a 66% correlation between the Composite Index Level and quarterly growth in US factory sector output.
The current orders index continued lower to 81 and is down from the peak of 93, yet the index remained up sharply from the low of 30 during 2001.
The 3Q export orders index fell to 68 and earlier figures were revised lower. During the last ten years there has been a 73% correlation between the export orders index and the y/y change in real US exports.
The profit margins index slipped slightly to 60 from 61 in 2Q but was well off last year&#39;s highs of 73.Capital spending intentions for the coming year moved lower q/q but the trend continued the sideways movement in place since late 2003. During the last ten years there has been a 74% correlation between the capital spending index a y/y growth in business investment in equipment &amp; software.
For the latest US Business Outlook from the MAPI click <a href="http://www.mapi.net/html/prelease.cfm?release_id=2024">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveys/@SE/@SE.HTM">Manufacturers&#39; Alliance/MAPI Survey</a></th>
<th scope="col">3Q &#39;05</th>
<th scope="col">2Q &#39;05</th>
<th scope="col">3Q &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
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<td class="firstcol">Composite Business Index</td>
<td>66</td>
<td>68</td>
<td>75</td>
<td>76</td>
<td>67</td>
<td>60</td>
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The 3Q '05 Composite Business Index published by the Manufacturers' Alliance/MAPI fell to 66 from 68 the prior quarter. The latest is the lowest level since 2Q '03. During the last ten years there has been a 66% correlation between [...]

MAPI Business Outlook Survey Fell Further

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The Conference Board's Index of Consumer Confidence fell 7.2% (-3.1% y/y) to 104.7 during December following a 2.9% November rise, revised from 1.9%. The level of confidence remains up from a low of 97.5 in April. The Action Economics Forecast Survey expected a reading of 112.8 in December. Consumer confidence has been fluctuating between 97.5 and 114.0 over the past two years.

Both components of the index fell this month. The present situation index eased 0.8% (-4.8% y/y) to 140.2 after rising 3.9% in November to 141.4. The expectations index dropped 13.4% (-1.0% y/y) in December to 81, after rising 2.0% in November.

The percentage of respondents assessing business conditions as “good” fell to 19.1% this month after declining to 21.6% in November. It was the lowest percentage in three months. The percentage assessing conditions as “bad” rose to 16.7% from 15.3% in November. The appraisal of labor market conditions improved in December as 37.0% of respondents thought jobs were plentiful, up from 33.6% in November. Jobs were viewed as hard to get by 14.8% of respondents this month following 15.2% in November. This measure has risen steadily this year from 11.0% in January. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) rose m/m to 22.2%, but remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions worsened in December. A lessened 21.7% of respondents expect conditions to improve over the next six months, down from 24.7% in November, while a higher 18.3% expect them to deteriorate	, up from 15.9% in November. On employment, 19.1% expect the number of jobs to increase over the next six months versus 22.8% in November. A higher 21.3% respondents expect the number of jobs to decline versus 17.9% in November. A lessened 17.2% expect income to increase in six months versus 20.7% in November. That remained increased from 16.3% in February and compares to 14.3% who expect income to decrease.

The expected rate of price inflation over the next twelve months held at 5.0% in December. It was the lowest since March 2020. Interest rates are expected to rise over the year by 48.5% of respondents, up from 45.5% in November. The percentage of respondents expecting equity prices to increase over the next twelve months fell to 52.9% from 57.2% in November, while the percentage expecting a decline increased to 25.0% from 21.7%.

The percentage of respondents planning to buy a home in December fell to 4.9%, its lowest in four months, from 6.2% in November. Plans to purchase an automobile edged down this month to 11.4% from 13.1% in November.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

Trends in Work from Home in the U.S.: Insights from Six Datasets from the Federal Reserve Bank of St. Louis is available [here](https://www.stlouisfed.org/on-the-economy/2024/dec/trends-work-from-home-us-insights-six-datasets)





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- Confidence weakens to lowest level in three months.
- Present situations measure dips, while expectations fall sharply.
- Inflation expectations are unchanged, but interest rate expectations rise.



Consumer Confidence Declines in December; Inflation Expectations Steady

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New orders for durable goods declined 1.1% (-5.2% y/y) in November following a 0.8% October rise and a 0.4% September decline, according to the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 0.3% decline. The decline reflected a 2.9% drop (-16.1% y/y) in orders for transportation equipment which reversed a 1.8% October increase. Orders outside the transportation sector slipped 0.1% (+1.5% y/y) 	after rising 0.2% in October. Defense orders fell 12.5% (+11.5% y/y) after a 2.9% decline. Nondefense orders eased 0.3% (-6.1% y/y) after a 1.0% rise.

The decline in transportation equipment orders reflected a 6.0% m/m fall in orders for aircraft & parts and a 0.3% easing (+1.6% y/y) in orders for motor vehicles & parts after a 0.5% slip. Orders for electrical equipment & appliances rose 0.4% (4.1% y/y) after a 1.6% gain in October. Orders for computers & electronic products fell 0.7% (+1.4% y/y) after slipping 0.4%. Showing strength, machinery orders increased 1.0% (1.7% y/y) last month following a 0.5% October rise. “Other durable goods” orders held steady (+0.4% y/y) after three straight months of modest increase. Orders for fabricated metal products declined 1.6% (+1.7% y/y) following a 0.2% rise while orders for primary metals improved 0.7% (1.8% y/y) after a 0.4% easing. 

Nondefense capital goods orders declined 0.6% (-18.9% y/y) following a 3.1% October increase. Nondefense capital goods orders excluding aircraft rose 0.7% (1.1% y/y), after slipping 0.1% in October.

Shipments from all manufacturing industries rose 0.2% (1.3% y/y) in November after three consecutive monthly declines. Shipments of durable goods slipped 0.1% (+1.0% y/y), also following three monthly declines. Transportation shipments fell 1.2% (+1.1% y/y) while machinery shipments held steady (-0.1% y/y). Shipments in most other durable goods series were little changed. Shipments of nondurable goods rose 0.5% (1.6% y/y) in November after a 0.2% rise in October.

Unfilled durable goods orders increased 0.3% (2.0% y/y) in November, the fifth consecutive monthly rise. Unfilled orders for nondefense capital goods rose 0.6% for a second month (3.1% y/y) while nondefense capital goods order backlogs edged 0.1% higher (-1.2% y/y) and have fallen sharply since the end of 2022.

Inventories of all manufacturing industries rose 0.3% (0.5% y/y) in November after rising 0.1% in October. Durable goods inventories rose 0.4% (1.1% y/y) after little change earlier in the year while nondurable goods inventories rose 0.2% (-0.5% y/y) after easing for two consecutive months. 

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.


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- Total orders dragged lower by aircraft; excluding transportation, orders are little changed.
- Core capital goods orders improve.
- Unfilled orders & inventories rise.


U.S. Durable Goods Orders Decline Sharply in November

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**The PCE chain price index** edged 0.1% higher in November, following unrevised gains of 0.2% in both of the prior two months. The y/y rise moved up to 2.4% after deceleration in the prior three months. The price index excluding food and energy also inched up 0.1% last month, after two months of 0.3% gain. The y/y rise held at 2.8% in November, up from a 2.7% low throughout Q3. 

**Durable goods prices** held steady (-1.1% y/y) in November, after a 0.1% October uptick. Motor vehicle & prices jumped 0.7% (-1.4% y/y) following a 0.9% rise. Recreational product prices declined 0.6% (-1.4% y/y) last month, after declining in each of the prior three months, while home furnishings & appliance costs were unchanged (-1.4% y/y) as they were in October. 

**Prices of nondurable goods** were unchanged both m/m and y/y last month after declines in each of the prior three months. Clothing prices rose 0.1% (0.9% y/y) after falling 1.4%. Food prices rose 0.2% (1.4% y/y) following no change and gasoline & oil prices rose 0.5% (-8.6% y/y) after a 1.0% decline.  

**Services prices** increased 0.2% (3.8% y/y) in November, after rising 0.4% in the prior month. Housing & utility prices rose 0.2% (4.6% y/y) after 0.4% gains in the prior two months, and services prices excluding energy & healthcare increased 0.2% (4.2% y/y) in November after a 0.4% gain. Healthcare prices rose 0.2% (2.5% y/y) as did housing & utilities costs (4.6% y/y). Transportation prices declined 0.5% (+1.5% y/y) while hotel & restaurant prices strengthened 0.7% (3.5% y/y). Recreation services costs rose 0.3% (3.3% y/y) after a 0.6% rise.

**Personal consumption expenditures (PCE) **increased 0.4% (5.5% y/y) in November, after a 0.3% October rise, revised from 0.4%. A 0.5% increase had been expected in the Action Economics Forecast Survey. When adjusted for price changes, PCE increased 0.3% (2.9% y/y) last month, after edging 0.1% higher in October.

**Real spending on durable goods** strengthened 1.8% (5.7% y/y) in November, after a 0.2% October rise. Real spending on motor vehicles increased 2.4% (5.0% y/y), after easing 0.3% in October. Real outlays on furnishings & durable household equipment rose 0.6% (4.7% y/y) in November, following a 0.2% decline in September, while real spending on recreational goods & vehicles jumped 2.7% (7.7% y/y) last month, after a 0.4% rise in October. Spending on “other” durable goods eased 0.1% (4.5% y/y) after strengthening 1.3% in October.

**Nondurable goods** spending in real terms improved 0.2% (2.2% y/y) in November, after falling 0.2% during October. Real clothing and footwear purchases jumped 1.3% (2.4% y/y) last month, following a 0.9% gain (+0.6% y/y) in October. Real food & beverage purchases fell 0.3% (+1.2% y/y), after easing 0.1% in the prior month. Real outlays on gasoline & other energy products declined 0.6% (+0.4% y/y), after falling 0.5%. Real spending on “other” nondurable goods rose 0.4% (3.4% y/y) last month, following a 0.6% decline.

**Real spending** on services edged 0.1% higher (2.7% y/y) in November, following two months of 0.2% increase. Real spending on housing & utilities eased 0.1% (0.9% y/y) last month, after holding steady in October, while real healthcare spending rose 0.2% (5.3% y/y), after rising 0.3%. Real spending on food services & accommodations weakened 0.6% (-0.3% y/y) in November, and reversed the prior month’s rise. Real spending on financial services & insurance gained 0.4% (3.4% y/y) after a 0.1% uptick. Real spending on transportation services eased slightly (+2.1% y/y) in November, after a decline of 0.1% in October. Recreation spending strengthened 1.2% (2.1% y/y) after falling 0.5% in October. Spending on “other” services slipped 0.2% (+1.1% y/y) after rising 0.3% in the prior month.

**Personal income** rose 0.3% (5.3% y/y) in November, after a rise of 0.7% in October, revised from 0.6%. A 0.4% gain was expected. Wages & salaries rose 0.6% (5.8% y/y) last month, following a rise of 0.5% in October. Rental income improved 0.1% (5.2% y/y), after a 0.5% October rise. Proprietors’ income edged 0.1% higher (2.4% y/y), following a 0.4% gain in October. Income from assets eased 0.1% (+1.0% y/y), after strengthening 1.0%, and current transfer receipts slipped 0.1% (+8.7% y/y) in November, after rising 0.9% in October. Government social benefits eased 0.1% (+8.6% y/y) in November, after improving 1.0% in the prior month.

**Disposable personal income** increased 0.3% (5.1% y/y) in November, following a rise of 0.7% in October. After adjusting for price changes, disposable income improved 0.2% (2.6% y/y), after gaining 0.5% in October.

**The personal saving rate** slipped to 4.4% in November, after rising to 4.5% in October. The rate remained below a January high of 5.5%. Personal saving fell 1.7% (+0.2% y/y) in November, after rising 10.3% in October.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.


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- Price index held back by steady goods costs and slower services price rise.
- Real spending growth concentrated in goods.
- Disposable income growth slows.


U.S. Core PCE Price Gain Cools in November; Real Spending Rise Picks Up

Robert Brusca

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Italian consumer confidence edged lower in December as business confidence in manufacturing notch lower as well. Consumer confidence has slipped for three months in a row. But still has a 67-percentile standing on data back to 1997. 

**The last 12 Months**
Consumers rate the overall situation over the last 12-months as slightly weaker, falling on balance over three-months and with a 61.2 percentile standing. 

**Looking ahead**-
**Over the next 12-months**- the overall situation has slipped for three months in a row and is net lower over 12-months as well. The expected overall situation has strengthened but lies only in its 23rd percentile, which is quite weak. Expected unemployment conditions are slightly weaker in December and lower on balance over 3-months and 12-months with a 69.3 percentile standing. Household budgets weakened in December but have strengthened on balance over 3-months and 12-months. The standing for the response is in this 77the percentile robust in the face of deteriorating unemployment prospects. 

The household situation for the last 12-months improved in December and had improved over the past 3- and 12-months. With a 68-percentile standing. But, looking ahead over the next 12-months, conditions are slightly weaker in November and December than in October and slightly lower on balance over 12-months. The standing on this metric is in its 13th percentile. As firmly as conditions were viewed for households over the last 12-months there is just as much concern about the future spinning that forward. 

The prospect for making major purchases is unchanged month-to-month but weaker on balance over 3-months with a midrange standing in December just above its historic median at its 52.5 percentile.    

Italy has had stronger ranking confidence reading than many other EMU members, by may not be losing its advantage as its forward-looking metrics are losing purchase. 
 


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Italian Confidence Erodes in December 