Winnie Tapasanun

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Total industrial production ticked up 0.1% m/m (1.0% y/y) in December after being virtually unchanged in November (+0.2% initially) and a 0.8% decline in October (-0.9% previously), according to the Federal Reserve Board. The December IP index at 102.5, the same as in October, was 7.4% above a low of 95.4 in February 2021. A 0.1% m/m easing had been expected in the Action Economics Forecast Survey. IP fell 0.8% q/q in Q4 2023 after a 0.5% q/q rise in Q3 2023, falling at a 3.1% annualized rate following a 1.8% Q3 annualized rate of increase. IP rose 0.2% in 2023, 3.4% in 2022 and 4.4% in 2021.

By **industry groups**, manufacturing production edged up 0.1% (1.2% y/y) in December, the fifth m/m increase in six months, after a downwardly revised 0.2% rise in November (+0.3% initially). Durable goods production fell 0.4% (+1.0% y/y) following a 1.0% November rebound, reflecting output drops of 2.4% (0.0% y/y) in electrical equipment, appliances & components, 1.9% (+0.2% y/y) in wood products, 1.2% (-3.8% y/y) in machinery, 1.2% (-2.3% y/y) in fabricated metal products, 1.0% (+1.6% y/y) in miscellaneous durables goods, 0.5% (-4.7% y/y) in nonmetallic mineral products, and 0.1% (+4.2% y/y) in primary metals. The following durable goods categories, however, rose m/m in December, reflecting output rises of 1.6% (4.8% y/y) in motor vehicles & parts, 1.3% (-6.6% y/y) in furniture & related products, and 0.1% (7.9% y/y) in computer & electronic products. Meanwhile, production for aerospace & miscellaneous transportation equipment held steady (5.4% y/y) in December following two consecutive m/m increases.

Nondurable goods production rose 0.6% (1.7% y/y) in December, the first m/m rise since September, after a 0.5% decline in November, reflecting output increases of 2.2% (8.0% y/y) in petroleum & coal products, 0.8% (-1.1% y/y) in food, beverages & tobacco, 0.7% (-1.1% y/y) in plastics & rubber products, 0.3% (4.8% y/y) in chemicals, and 0.3% (-12.0% y/y) in apparel & leather goods. In contrast, the following nondurable goods categories fell m/m in December, including output drops of 1.3% (+0.4% y/y) in paper and 0.6% (-7.9% y/y) in printing & related support activities. Meanwhile, production for textiles & product mills was unchanged (-3.5% y/y) in December following two successive m/m declines.

Mining activity grew 0.9% (4.3% y/y) in December, the first m/m gain since September, following a downwardly revised 1.0% decline in November (+0.3% initially). In contrast, utilities output slid 1.0% (-4.9% y/y), the fourth consecutive m/m slide, worsening a 0.7% November decrease (-0.4% initially).

By **market groups**, consumer goods output rose 0.2% (-1.0% y/y) in December after a 0.1% rebound in November, reflecting a 0.9% gain (1.6% y/y) in durable consumer goods and no change (-1.7% y/y) in nondurable consumer goods. Materials production moved up 0.1% (2.7% y/y) in December following two successive m/m drops. To the downside, business equipment output fell 0.2% (-0.1% y/y) in December, the third m/m fall in four months, after a 1.0% increase in November. Construction supplies production dipped 0.1% (-1.0% y/y), the seventh m/m decline in eight months, following a 0.6% November drop.

In **special classifications**, factory output of selected high-tech industries advanced 0.9% (18.1% y/y) in December, the 11th straight m/m gain, on top of a 1.7% rise in November. Manufacturing production excluding selected high-tech industries was virtually unchanged (0.8% y/y) following a 0.2% November rebound, while manufacturing production excluding both selected high-tech and motor vehicles & parts slipped 0.1% (+0.5% y/y), the third consecutive m/m decline.

Capacity utilization was unchanged at an expected 78.6% in December (with the November rate revised down from 78.8% initially reported). The December reading was 1.1 percentage points below its long-run (1972–2022) average. Manufacturing capacity utilization held steady at 77.1% (with the November rate revised down from 77.2% initially reported).

Industrial production and capacity are located 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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- IP +0.1% m/m (+1.0% y/y) in Dec.; downward revision for Nov.
- Mfg. IP inches up 0.1% m/m, w/ durable goods down 0.4% and nondurable goods up 0.6%; motor vehicles production rises 1.6%, the second successive m/m gain.
- Mining activity rebounds vs. two consecutive m/m drops, but utilities output falls for the fourth straight month.
- Performance in key categories in market groups is mixed.
- Capacity utilization holds steady at 78.6%.

U.S. Industrial Production Unexpectedly Increases in December

Tom Moeller

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The Housing Market Index compiled by the National Association of Home Builders/Wells Fargo increased 18.9% in January (25.7% y/y) to 44 following an unrevised 8.8% December increase. These gains followed four consecutive months of decline. Despite the recent improvement, the index remained below its recent peak of 56 in July. Looking back, the index peaked at 90 in November 2020.

The average rate on a 30-year fixed rate mortgage fell to 6.66% last week from a high of 7.79% in the last week of October, according to Freddie Mac.

The NAHB reported that its single-family sales measure rose 17.1% (20.0% y/y) to 48 following a 2.5% December rise. These increases followed four straight months of decline. The reading of prospective sales in six months rose 26.7% (54.1% y/y) to 57, its highest level in six months. The traffic of prospective buyers index increased 20.8% (26.1% y/y) to 29 following a 14.3% increase. This reading remained below the November 2020 high of 77.

Regionally, there was improvement in all but one region of the country. In the West, the index rose 31.0% both m/m and y/y to 38 following a 3.6% December gain. The index was below its high of 54 six months earlier. The index for the South increased 25.6% both m/m and y/y to 49 after rising 11.4% during December. In the Northeast, the index rose 1.8% (64.7% y/y) to 56 following a 3.8% December rise. In the Midwest, the index held steady at 35 but rose 9.4% y/y. It remained below its high of 85 in November 2020.

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

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

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- Increase extends prior month’s gain.
- Prospective buyer traffic is strong.
- Regional changes are mixed.

U.S. Home Builders Sentiment Strengthens in January as Mortgage Rates Fall

Sandy Batten

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Import prices for all goods were unchanged m/m (-1.6% y/y) in December following a downwardly revised 0.5% m/m decline in November (previously -0.4% m/m), according to the Bureau of Labor Statistics. Export prices fell 0.9% m/m (-3.2% y/y), the same monthly decrease as in November. The Action Economics Forecast Survey had looked for a 0.5% monthly decline in import prices and a 0.7% m/m decrease in export prices.

Prices for imported fuel and lubricants declined 0.3% m/m in December following decreases of 6.5% in November and 3.6% in October. Lower petroleum prices in December more than offset higher natural gas prices. Imported fuel and lubricant prices fell 7.3% from December 2022 to December 2023. Nonfuel import prices were unchanged in December, after ticking up 0.1% m/m in November and declining 0.1% in October. Higher prices in December for nonfuel industrial supplies and materials and automotive vehicles were offset by lower prices for capital goods and foods, feeds, and beverages. The price index for nonfuel imports declined 0.8% for the year ended in December.

The price index for exports decreased 0.9% m/m in December for the third consecutive month. Lower prices for both agricultural (-0.6% m/m) and nonagricultural (-0.9% m/m) exports contributed to the December drop. Export prices fell 3.2% over the past year. Despite the recent declines, the December decrease was the smallest 12-month drop since February 2023. Driven by lower fuel prices, nonagricultural industrial supplies and materials prices declined 2.2% m/m in December, the third consecutive monthly decline. Prices for the major finished goods export categories were mostly up in December. Consumer goods prices rose 0.3% m/m following a 0.2% monthly decline in November. The price index for automotive vehicles advanced 0.2% m/m in December, after a 0.1% decline the previous month. Prices for exported capital goods were unchanged in December following a 0.1% m/m decrease in November.

The import and export price series can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Imported fuel prices fell 0.3% m/m while nonfuel prices were unchanged.
- For exports, the December decline reflected lower nonag and ag prices.

U.S. Import Prices Were Unchanged in December While Export Prices Fell

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Total business inventories slipped 0.1% (+0.4% y/y) in November, the same monthly decline as in October. Inventories were little changed throughout all of 2023. The November decline matched the expectations of the Informa Global Markets Survey.

Manufacturing inventories rose 0.1% m/m (-0.2% y/y) in November after having been unchanged in October. Wholesale inventories fell 0.2% m/m (-3.0% y/y), their eighth monthly decline in the past nine months. Retail inventories, the new information in this report, slipped 0.1% m/m (+5.3% y/y) in November following a 0.04% m/m decline in October.

The small decline in retail inventories in November was relatively widespread. Of the major sectors, only motor vehicle inventories experienced an increase (+1.8% m/m). When those are excluded, the remaining inventories fell 0.9% m/m, the third consecutive monthly decline. Furniture inventories declined 1.7% m/m in November, their ninth consecutive monthly decline. Building material inventories fell 0.7% m/m; food and beverage store inventories dropped 1.1% m/m; clothing inventories decreased 0.7% m/m; general merchandise store inventories edged down 0.2% m/m, their fourth decline in the past five months.

Total business sales increased 0.2% m/m (+1.0% y/y) in November following a 1.1% monthly decline in October. Manufacturing shipments rebounded 0.5% m/m (-0.4% y/y) in November after a 1.3% monthly decline in October. Wholesale sales were essentially unchanged (+0.5% y/y) in November versus a 1.5% m/m fall in October. Retail sales edged up 0.1% m/m (4.8% y/y) in November following a 0.3% monthly decline in October. The November increase was led by higher motor vehicle and clothing sales. In a separate release today, retail sales were reported up 0.6% m/m in December.

With the monthly changes in both sales and inventories being relatively small in November, the inventory/sales (I/S) ratio was unchanged at 1.37 in November. The manufacturing I/S/ ratio was also unchanged at 1.48. The wholesale I/S ratio slipped to 1.34 from 1.35 in October. The retail I/S ratio was unchanged at 1.30 in November, where it has been since last May.

The manufacturing and trade data are in Haver’s **USECON** database. The Informa Global Markets forecast is in the **MMSAMER** database.

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- Total inventories declined 0.1% m/m, led by wholesalers.
- Total sales edged up 0.2% m/m.
- Inventory/sales ratio was unchanged in November.

U.S. Business Inventories Slipped in November While Sales Edged Up

Carol Stone, CBE

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Retail gasoline prices for all grades edged down to an average of $3.18 per gallon (-6.9%) in the week ended January 15 from $3.20 the week before. The recent high was $4.00 per gallon in the third week of September, and the all-time high was $5.11 in the week ended June 13, 2022. Retail prices for on-highway diesel fuel averaged $3.86 per gallon in the January 15 week (-14.6% y/y), up from $3.83 the week before. These are up modestly from a recent low of $3.77 per gallon in the ended July 3, 2023.

The price of West Texas Intermediate crude oil averaged $71.91 per barrel (-6.7% y/y) in the week ended January 12, down from $72.38 in the prior week. The recent range for this basic petroleum gauge was a low of $69.32 per barrel in the week of June 30, 2023, and a high of $91.45 in the week of September 29, 2023; the all-time high was seen in the week of July 4, 2008, at $142.46 per barrel. Yesterday, January 16, the price of West Texas Intermediate crude oil was $72.40 per barrel. The price of European Brent crude oil rose to $78.37 per barrel (-2.8% y/y) in the week ended January 12 from $76.88 in the January 5 week. The price of Brent has recently ranged from a low of $73.55 in the week ended June 30, 2023, to a high of $127.40 in the week ended June 10, 2022.

Natural gas prices rose to an average of $3.09/mmbtu in the week ended January 12 from $2.68/mmbtu in the January 5 week. The latest week compares to a recent high of $3.20 for the average of the October 13 week and a low of $1.93 in the week of June 2, 2023. Yesterday, the natural gas price touched $3.25/mmbtu, which it has also hit on Tuesday and Wednesday of last week.

Gasoline demand remained firm in the four-week period ended January 5, rising 3.2% from a year ago, up from 2.7% in the four weeks ended December 29. Demand for all petroleum products was up 1.6% in the four weeks ended January 5 after increasing 0.6% in the period ended December 29. Crude oil input to refineries strengthened further in the four weeks ended January 5, advancing 9.3% y/y after a 6.0% increase in the prior four-week period.

Gasoline inventories continued to increase in the January 5 week, rising 8.0% y/y following a 6.4% y/y increase the week before. Stocks of residual fuel oil fell 12.8% y/y in the January 5 week, less than the prior week’s 17.8% y/y decrease. Crude oil inventories, including the Strategic Petroleum Reserve, decreased 2.9% y/y in the January 5 week, following a 1.0% decrease the week before.

Measured in days’ supply, gasoline inventories were 28.7 days in the January 5 week, up from 27.3 days in the December 29 week. The recent high was 29.7 days in the week of January 20, 2023, and the recent low was 23.4 days in the week of June 30, 2023. Crude oil inventories marked 26.1 days of supply in the January 5 week, marginally more than the 26.1 days in the December 29 week; these compare to a recent high of 31.9 days in the week of March 3, 2023, and a recent low of 25.0 days in the week of September 1, 2023.

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

- Average gasoline prices down 2 cents in Jan. 15 week.
- Crude oil prices down 47 cents per barrel.
- Natural gas prices near recent highs.

U.S. Petroleum Prices Edged Down in Latest Week, while Natural Gas Rose

Kathleen Stephansen, CBE

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Mortgage applications surged another 10.4% w/w (-12.0% y/y) in the week ended January 12, following the 9.9 % w/w (2.1% y/y) jump in the week ended January 5.  These data come from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.  Applications for loans to purchase a house rose 9.2% (-19.3% y/y) in the week ended January 12, after rising 5.6% (-6.8% y/y) in the week ended January 5.  Applications for refinancing a loan jumped another 10.8% (10.3% y/y) in the latest week, following the 18.8% (30.2% y/y) advance in the prior week.

The share of applications for refinancing an existing loan edged down to 37.5% in the week ended January 12 from the 38.3% share in the week ended January 5. The percentage of applications that were ARMs rose to 5.9% in the latest week from 5.4% in the week ended January 5.

The effective rate on a 30-year fixed-rate loan edged down 4bps to 6.94% in the week ended January 12 from 6.98% in the week ended January 5. The rate on 15-year fixed-rate mortgages dropped 17bps 6.38% in the latest week from 6.55% in the week ended January 5. This is the lowest rate since the 6.33% rate reached in the week ended May 19, 2023. The rate on 30-year Jumbo loan dropped 12bps to 6.99% in the week ended January 12, following the 14bps rise to 7.11% in the week ended January 5. The rate on the 5-year ARM rose 2bps to 6.40% in the latest week, after the 45bps jump to 6.38% in the week of January 5.

The average loan size rose 2.1% w/w (0.7% y/y) to $360,800 in the January 12 week, after a decline of 0.8% w/w (+1.0% y/y) to $353,500 in the January 5 week. The average size of a purchase loan rose 3.0% w/w (3.5% y/y) to $414,900 in the week ended January 12, after the 1.1% w/w (+3.6% y/y) decline to $402,900 in the week ended January 5. The average loan size to refinance a mortgage declined 1.2% w/w (+4.0% y/y) to $270,700 in the week ended January 12, after a rise of 2.5% w/w (4.8% y/y) to $274,100 in the January 5 week.

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.

- Total mortgage applications surged 10.4% in the week ended January 12.
- Applications for loans to purchase and to refinance also posted strong rises.
- The average effective rates on fixed-rate loans dropped in the latest week.

U.S. Mortgage Applications Rose Sharply in the Latest Week

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General Business Conditions index declined to -43.7 in January from -14.5 in December. The weakening followed a 24 point December shortfall from +9.1 in November. The figures are produced by the Federal Reserve Bank of New York. For January, a reading of -4.0 had been expected in the Action Economics Forecast Survey. The percentage of respondents reporting an increase in business conditions fell to 10.4% from 17.9% in December and 33.2% in November while the percentage reporting a decrease rose to 54.2% from 32.4% last month and 24.1% in November.

Haver Analytics constructs an ISM-adjusted series, which is comparable to the ISM manufacturing index. The index fell to 39.7 in January from 45.3 in December and 50.4 in November. The index stands at its lowest point since April 2020 and remains below the high of 63.4 in July 2021. A level of 50 is the breakeven point between expansion and contraction.

The new orders index collapsed to -49.4 this month from -11.3 in December. A lessened 12.2% of respondents reported higher orders while an increased 61.5% reported a decline. The shipments index declined to -31.3 after falling to -6.4 in December and remained below a high of 23.9 in April of last year. The inventories index weakened to -7.4 from -5.2 in December. The unfilled orders index eased to -24.2 in January from -24.0 in December. It roughly equaled the lowest reading since December 2013 and was negative for the ninth consecutive month. The inventories reading declined to -7.4 from -5.2 last month, after having increased to 9.1 in November. The average workweek reading of -6.1 this month compared to -2.4 in December.

Working higher, the employment index rose to -6.9 in January from -8.4 in December, but remained well below its recent high of 14.0 in December of 2022. A fairly steady 7.5% of respondents reported increases in employment while a lessened 14.4% reported lower employment. Also rising, the delivery times reading improved to -8.4 this month from -15.6 in December, but remained well below the October 2021 high of 38.0 as delivery times shortened.

Inflation pressures picked up slightly in January. The prices paid index rose to 23.2 from 16.7 but the index remained down from 33.0 one year earlier. It was well below its April 2022 high of 86.4. A lessened twenty-five percent of respondents reported higher prices while a lessened 2.1% reported a decline. The prices received index fell, however, to 9.5 from of 11.5 in December. Its low was 3.9 in July. The index remained down from 28.4 last February. A lessened 11.6% of respondents reported higher prices received this month while a lessened 2.1% reported lower prices.

Indicating that firms are more optimistic about the future, expectations for business conditions in the next six months improved during January after moving higher in December as well. The index for future business conditions rose to 18.8 in January from 12.1 in December. It is up from a July 2022 low of -6.2.  The delivery times and unfilled orders series surged. The employment & hours worked indexes strengthened along with most other readings, including new orders & shipments. Expectations for capital spending also improved as did expected technology spending. The indexes of expected prices paid and received both increased.

The latest survey was conducted between January 3 and January 10. The headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- Reading falls 29 points to lowest level since May 2020.
- Component declines are widespread, though employment & price readings move higher.
- Six-month outlook improves again.

U.S. Empire State Manufacturing Index Collapses in January

Robert Brusca

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The ZEW economic situation in January 2024 improved in the euro area and in the United States as it deteriorated in Germany. Two of the three metrics retain large negative readings and all three remained very weak in their respective historic queue of data.

The euro area economic situation improved from -62.7 in December to -59.3 in January. The U.S. situation improved from +7.8 in December to a stronger +15.3 in January, while Germany slipped from -77.1 in December to marginally weaker -77.3 this month. The U.S. current situation is the best of the lot, but still below its historic median with a ranking at its 42.2 percentile, below its median which occurs at a percentile ranking of 50. The euro area has a ranking in its 25.9 percentile and Germany has a ranking in its 14-percentile.

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The table below shows economic expectations improved in January for both the U.S. and for Germany with Germany’s assessment positive and rising by 2.4 points. The U.S. expectation assessment that is negative rose by 12.2 points. Both have percentile standing around their respective 40th percentile mark.

Inflation expectations are deeply negative for both the euro area and the U.S. with a euro-ranking at its 6.5 percentile and the U.S. ranking at its 4.1 percentile. Both readings' diffusion values remained deeply negative in January as inflation expectations continued to be damped.

Short-term interest rate expectations in the euro area fell by 5.5 points while they fell by 18.7 points in the U.S. Short-term rates have expectation rankings in their 12th percentile for the EMU; they are at their sixth percentile for the U.S., underscoring that short-term rates are expected to fall in both areas.

For long-term rates, the negative readings are not as low in raw terms as the rank standings even weaker, under the 7% mark for Germany and under the 3% mark for the U.S. Long-term rates are expected to fall as well.

Stock market expectations in January rose for the EMU but fell in Germany and in the U.S., with German and EMU rankings below the 20th percentile and U.S. rankings at their 41-percentile.

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The ZEW survey this month shows ongoing weakness, below median expectations, ongoing inflation reduction and interest rate optimism. Global conditions remain weak and central banks are still hiking or holding rates high to reduce inflation that is excessive wherever there is a target for it. But inflation itself has been falling and market participants- ZEW experts included- are expecting lower interest rates ahead.

ZEW: Economic Situation Improves on the Month in the Euro Area and the U.S.

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

Blue Chip forecasters expect US to lead aggressive policy rate cuts over coming year—apart from Japan

Ratio of job openings to the number unemployed in the US now below pre-pandemic level

U.S. layoffs not showing as much cooling in labor markets as unemployment rate

While goods prices have moderated, service price inflation remains elevated and sticky

Since Jan 2023, BCEI US outlook has improved, worsened for Japan and the euro area

Persistent negative US economic surprises leading to big rate-cut expectations

Germany is Euro area weakling

Flash PMIs show good start to Q3 in US; loss of momentum in the euro area

Chinese economy on downtrend could threaten global economy

Working age population labor force participation near all-time high as retirements increase

Blue Chip forecasters look for widespread policy rate cuts just ahead

Flash June PMIs point to a widespread slowdown apart from the US

Announcement of snap French election is causing concern across Europe

The UK economy’s post-pandemic under-performance relative to its pre-pandemic trend

US Beveridge Curve back to near pre-pandemic levels

Negative economic surprises in the US but positive in Europe, especially the UK

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Industrial production (IP) decreased 0.3% in October (-0.3% y/y) following a 0.5% decline in September, which was revised from -0.3%, and a 0.5% increase in August, revised from +0.3%. The October result was equal to the Action Economics Forecast Survey estimate of -0.3%. The Federal Reserve estimates that the strike at Boeing reduced total IP by 0.2% in October after cutting it by 0.3% in September, and the effects of Hurricanes Helene and Milton reduced the total by 0.1% in October.

Industrial production in manufacturing industries fell 0.5% in October (-0.3% y/y) after a 0.3% decrease in September, revised from -0.4% reported before, but a 0.6% rise in August, revised slightly from 0.5%. The October amount was reduced by a 1.2% decline in durable goods manufacturing which followed a 0.7% decrease in September.  Among major durable goods industries, aerospace and other miscellaneous transportation industries had a 5.8% decline in October, which followed an 8.0% reduction in September. Motor vehicles and parts production fell 3.1% in October and just 0.4% in September.

Output of nondurable goods industries increased 0.1% in both October and September, which followed a modest 0.1% decrease in August. The largest October increase among nondurable goods industries was in petroleum and coal, in which production rose 0.9% after a 1.5% increase in September and 0.9% in August. Output of chemical industries rose 0.6% in October and production of paper increased 0.5%.  Other nondurable goods saw production decreases in October, especially printing and related activities, -2.6%, and plastics and rubber products, -1.0%.

Output in nonmanufacturing industries rose in October, with electric and gas utilities up 0.7% after 0.3% in September and mining output up 0.3% in October following a drop of 1.9% in September.

Capacity utilization across all industries was 77.1% in October, down from 77.4% in September and 77.9% in August.  The Action Economics Forecast Survey had estimated 77.2%. While the actual amount had a moderate reduction, it did yield the lowest utilization rate since 76.6% in April 2021. In the manufacturing sector, utilization was 76.1%, down from 76.6% in September and the lowest since 73.8% in February 2021.

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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- Total production down 0.3% in October with downward revision to September
- Manufacturing output down 0.5%
- Capacity utilization rate in manufacturing lowest since early 2021



U.S. Industrial Production Down Again with Boeing Strike and Hurricane Effects Continuing

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Total business inventories rose 0.1% (2.2% y/y) in September following three consecutive months of 0.3% increase. A 0.2% rise had been expected in the Informa Global Markets Survey.

Retail inventories rose 0.9% (6.7% y/y) in September after a 0.8% August increase. Monthly Increases have been fairly stable for six months. Motor vehicle inventories increased 2.1% (20.9% y/y) after a 1.2% rise.	General merchandise inventories rose 0.2% (2.3% y/y) after a 1.4% gain. Food and beverage store inventories fell 0.5% (+0.6% y/y) following a 1.3% increase. 
Furniture & appliance inventories rose 0.3% (-5.5% y/y) after falling 0.8%. Clothing inventories rose 0.8% (2.5% y/y) after two consecutive 0.9% increases while inventories of building materials rose 0.6% (-0.2% y/y) after a 0.3% gain.

Manufacturing inventories edged 0.2% lower (+0.2% y/y) in September after rising 0.1% in August. Wholesale inventories fell 0.2% (+0.3% y/y) in September after increasing 0.2% in both of the prior two months.

Total business sales rose 0.3% (0.5% y/y) in September after a 0.2% decline in August.  Factory shipments fell 0.4% (+0.2% y/y) after a 0.7% decline. Wholesale sales rose 0.3% (-0.4% y/y) following a 0.2% increase. Retail sales increased 0.8% (1.7% y/y) following a 0.2% decline.

The inventory/sales (I/S) ratio held steady at 1.38 and has been roughly stable since late in 2022. The manufacturing I/S ratio held m/m at 1.46 in September, up from 1.45 in July. The wholesale I/S eased to 1.34 but has been moving sideways since the middle of last year. The retail I/S ratio held m/m at 1.33, up sharply from early-2021.

The manufacturing and trade data are in Haver’s **USECON** database. The Informa Global Markets forecast is in the **MMSAMER** database.


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- Inventories increase is led by retailers.
- Sales improvement also paced by retailers.
- Inventory/sales ratio is steady.


U.S. Business Inventories and Sales Increase in September

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Total retail sales increased 0.4% (2.8% y/y) during October after a 0.8% September gain, revised from 0.4%. August sales eased 0.1%, revised from a 0.1% rise, according to the U.S. Census Bureau. A 0.3% increase had been expected in the Action Economics Forecast Survey. Excluding motor vehicles & parts, retail sales edged 0.1% higher (2.7% y/y) after a 1.0% September rise, revised from 0.5%. August sales less autos were revised to a 0.1% decline from a 0.2% increase. Sales of motor vehicles & parts rose 1.6% (3.4% y/y) last month after rising a minimally revised 0.2% in September. This compares to a 0.8% gain (4.1 y/y) in unit light vehicle sales which followed a 4.9% September increase.

Sales in the retail control group, which excludes autos, building materials, gasoline stations, and food services, eased 0.1% (+3.6% y/y) after rising 1.2% in September, revised from 0.7%. These sales are used in the construction of personal consumption expenditures in NIPA accounts.

Elsewhere, sales performance was mixed in October. Electronics & appliance store sales jumped 2.3% (-2.3% y/y) after falling 2.9% in September. Building materials & garden equipment store sales rose 0.5% (2.8% y/y) after rising 1.0%. Sales of nonstore retailers grew 0.3% (7.0% y/y) after a 1.7% rise. General merchandise store purchases improved 0.2% (3.1% y/y) after a 0.6% gain. Within that category, department store sales eased 0.2% (-0.0% y/y) following a 0.4% rise.  Gasoline service station sales edged up 0.1% (-7.1% y/y) after falling 0.9% in September.

Working lower, sporting goods, hobby shop, book & music store sales fell 1.1% (-3.4% y/y) after they moved 0.9% higher in September. Furniture & home furnishing store sales declined 1.3% (+1.5% y/y) after they rose 0.7% in September. 
Miscellaneous store sales, which account for 2.2% of the total, declined 1.6% (+4.0% y/y) after improving 2.2% in September.

In the nondiscretionary categories, health & personal care store sales declined 1.1% (+1.6% y/y) last month after a 2.3% September rise. It was the first decline in six months. Food & beverage store sales edged 0.1% higher last month and rose 2.7% y/y).

Consumers’ penchant to dine out continued last month. Restaurant & drinking place sales increased 0.7% (4.3% y/y) in October, the seventh consecutive monthly rise.

Retail sales data can be found in Haver's **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**

Economic Outlook from Federal Reserve Chair Jerome H. Powell can be found [here](https://www.federalreserve.gov/newsevents/speech/powell20241114a.htm).

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- September sales increase is doubled.
- Most sales categories’ sales are little changed. 
- Motor vehicle sales surge while gasoline purchases edge higher.


U.S. Retail Sales Rise Moderately in October; Nonauto Sales Gain Minimally

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Prices in the foreign trade sector rose last month. Import prices rose 0.3% (0.8% y/y) in October following a 0.4% (-0.1% y/y) decline in September. The Action Economics Forecast Survey expected a 0.1% decline. Export prices rose 0.8% (-0.1% y/y) in October, after a 0.6% (-1.9% y/y) decline in September, revised from -0.7%. The Action Economic Forecast Survey expected a 0.1% drop.

Import prices excluding fuels rose 0.2% (2.3% y/y) in October, following a 0.2% (2.0% y/y) rise in September. Import prices for fuels & lubricants rose 1.5% (-13.6% y/y), following the drop of 7.5% (-18.2% y/y) in September. Prices for overall industrial supplies and materials rose 1.4% (-1.4% y/y) in October, after a decline of 2.0% (-4.6% y/y) in September. Auto import prices edged up 0.1% (2.3% y/y) last month, following a rise of 0.2% (2.7% y/y) in September. Nonauto consumer goods prices increased 0.1% (1.2% y/y) after a similar 0.1% (0.8% y/y) rise in September. Capital goods prices edged higher by 0.1% (0.8% y/y) after a rise of 0.1% (0.4% y/y) the prior month. However, foods, feeds & beverage prices declined 1.6% (+3.9% y/y) in October after 0.1% (+5.2% y/y) decline in September.

The rise in export prices in October was broad-based. Agricultural commodities rose 2.0% (-1.9% y/y) in October, after a 0.9% (-4.8% y/y) rise in September. Nonagricultural product prices rose 0.6% (0.0% y/y) following a decline of 0.8% (-1.5% y/y) in September. Export prices of industrial supplies and materials rose 1.3% (-2.3% y/y) in October after a drop of 1.9% (-5.6% y/y) the prior month.  Motor vehicle & parts prices rose 0.5% (3.3% y/y) in October after being flat (+3.0% y/y) in September. Nonauto consumer goods prices declined 0.2% (-0.7% y/y) last month after a rise of 0.3% (-0.8% y/y) in September. Capital goods prices rose 0.2% (1.8% y/y) after being flat (+1.6% y/y) in September.

Each of these monthly trade price numbers are not seasonally adjusted. The import and export price series can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.



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- Import prices rose in most categories last month and are up y/y.
- Export price increases were broad-based, but still declining y/y.


U.S. Import and Export Prices Rose in October

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The General Business Conditions Index from the Federal Reserve Bank of New York surprisingly soared to 31.2 in November from -11.9 in October. This is the highest reading since December 2021. The Action Economics Forecast Survey had expected an increase but only to -0.9. The percentage of respondents reporting an improvement in business conditions increased to 40.9% in November from 26.6% in the previous month while the percentage reporting a decrease plummeted to 9.7% from 38.5%. The survey responses were collected between November 4 and November 12.

The headline index reflects the answer to a single question concerning the state of economic activity. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. That index jumped to 56.6 in November, its highest reading since July 2022 from 48.1 in October. A level of 50 is the breakeven point between expansion and contraction. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

New orders and shipments were the primary factors behind the November surge. The new orders index climbed thirty-eight points to 28.0 with 42.0% of respondents reporting an increase. The shipments index rose thirty-five points to 32.5 from -2.7 in October with 45.8% of respondents reporting an increase. Unfilled orders fell to -10.3 from -2.2. The inventories index climbed to 1.0 from -7.5, signaling that inventories levelled off. The delivery times index moved up to 3.1 from -3.2 in October, suggesting that delivery times were slightly longer, and the supply availability index remained in negative territory at -4.1, a sign that supply availability worsened slightly in November.

Employment deteriorated slightly in November while the workweek lengthened. The index for the number of employees declined to 0.9 from 4.1 in October, indicating that employment levels were little changed in November. Twelve percent of respondents reported an increase in employment vs. 12.7% in October while 11.2% reported a decline, up from 8.6% in October. By contrast, the average workweek index rose to 6.1, pointing to a modest increase in hours worked, from 4.7 in October.

Inflation indicators were mixed in November but remained modest. The prices paid index edged down to 27.8 from 29.0 while the prices received index edged up to 12.4 from 10.8. Twenty-eight percent of respondents reported paying higher prices in November vs. 33.3% in October while 14.4% reported receiving higher prices, down from 17.2% in October.
Firms remained optimistic that conditions would continue to improve in the months ahead. After reaching a multi-year high last month, the index for future business activity edged down 5.5 points to a still-high reading of 33.2, with half of respondents expecting conditions to improve over the next six months. Growth of both orders and shipments are expected to slow from the October reading. Employment is expected to grow moderately. Capital spending plans continued to expand with its index rising to 13.4, its highest reading since January.

The headline index reflects the answer to only one question concerning general business conditions and is not calculated from the components. The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.


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- The headline index jumped up 43.1 points to highest reading in nearly three years.
- Led by outsized gains in new orders and shipments.
- Delivery times were slightly longer.
- Labor market indicators were more lackluster.


U.S. Empire State Manufacturing Index Soars in November