Economic Research and Data

Economic Data Updates :: December 2007

Existing Home Sales (Nov)

Existing single-family home sales increased 0.7 percent (nonannualized) in November, after remaining unchanged in October, and are now down 19.9 percent on a year-over-year basis. The median sales price of existing single-family homes rose 1.9 percent over last month, but is still down 3.7 percent on a year-over-year basis.

New Home Sales (Nov)

New single-family-home sales increased 9.0 percent in November, resuming their decline after having increased 1.7 percent in October. The inventory of homes as measured relative to the current sales pace (months’ supply) jumped back up above 9 months, to 9.3 months, after dropping to 8.8 months in October. Another measure of the sales pace of new homes, the median number of months a home sits unsold after completion, jumped up to 6.2 months in November, its highest mark since July 1993.

Durable Goods

New orders for durable goods increased 0.1 percent (nonannualized) in November. The increase follows three consecutive monthly decreases including a 0.4 percent drop in October, leaving year-to-date growth at 0.6 percent. Orders for nondefense capital goods, excluding aircraft, decreased 0.4 percent during the month, following a 2.9 percent drop in October. Shipments of durable goods remained unchanged during the month after a 0.5 percent increase last month. The speed of inventory accumulation has been rising over the last three months, as inventories rose 0.8 percent in November, following increases 0.4 percent and 0.3 percent in October and September, respectively.

Consumer Sentiment

The University of Michigan’s Index of Consumer Sentiment slid another 0.6 points to 75.5 in December, and is now down 21.4 points from the beginning of the year (January’s index value was 96.9). The consumer expectations component fell to 65.6, its lowest reading in two years. The current economic conditions component dropped 0.5 points to a value of 91, after falling 6.1 points in November. Short-term inflation expectations ticked up in December, rising 0.1 percentage points to 4.4 percent. Longer-term (5-year to 10-year) inflation expectations rose to 3.5 percent, up 0.4 percentage points from October’s low of 3.1 percent.

PCE Price Index

The Personal Consumption Expenditure (PCE) price index rose 7.1 percent (annualized rate) in November, after an upwardly revised 3.9 percent increase in October. While energy prices had much to do with the spike in the headline number, rising 192 percent during the month, the PCE index excluding food and energy (core PCE) was elevated as well, rising 2.8 percent. Core prices for October and September were revised upward, rising 2.7 and 3.2 percent, respectively. For the first time since May, the 12-month growth rate in core PCE edged above 2.0 percent, as it rose to 2.2 percent in November.

Personal Income (Nov)

Nominal personal income rose 4.5 percent (annualized rate) in November, following a revised 2.6 percent increase in October. Wages and salaries rebounded during the month, rising 7.8 percent after posting a 0.5 percent increase in October. Disposable personal income increased 3.9 percent in November and, on a year-over-year basis, increased 5.8 percent, which is in line with the average growth seen since the beginning of 2006. Real (inflation-adjusted) personal consumption expenditures increased 6.8 percent in November, as broad-based strength was seen in both goods (nondurable and durable) and services consumption.

Real GDP (3Q-Final)

Real GDP increased at an annualized rate of 4.9 percent in the third quarter, according to the final estimate released by the Bureau of Economic Analysis, unchanged from the preliminary estimate. Although headline growth remained the same, there was a small upward revision to personal consumption expenditures that was offset by a downward adjustment to private inventories. Third quarter corporate profits (released with GDP), decreased $20.5 billion, after rising $94.7 billion in the second quarter.

Housing Starts (Nov)

Single-family housing starts continued to decline in November, dropping 5.4 percent from a downwardly-revised October figure. So far this year, single family housing starts have declined in nine out of eleven months and have fallen by a third to their lowest level since 1991. Permits for single-family homes, which some believe to be a less volatile indicator of the demand for new construction, fell 5.6% in November and are also at their lowest level since 1991.

Current Account (3Q)

The current account deficit fell $10.5 billion in the third quarter to 5.1 percent of GDP, down from 5.5 percent of GDP in the second quarter. The drop in the deficit was the third decline in the past four quarters and brings the current account deficit to its lowest level relative to GDP since 2004.

Industrial Production

Industrial production increased 3.4 percent (annualized rate) in November, following an 8.2 percent drop in October (its largest decrease in two years). Manufacturing production followed up a weak October with a 4.7 percent gain in November, pushing its 12-month growth rate to 2.2 percent, after three months below 2.0 percent. Production in the mining sector was relatively strong, advancing 14.2 percent during the month, its second strongest month this year. Utilities output fell for the third straight month, decreasing 14.9 percent in November.


The Consumer Price Index (CPI) advanced at a 10.0 percent annualized rate in November, driven largely by a 95.5 percent energy shock that pushed the index to its highest growth rate since September 2005. Consumer prices excluding food and energy (core CPI) rose 3.3 percent during the month. The last time the core CPI was above 3.0 percent was in January. The price increases are largely broad based: while the overall CPI grew 2.2 percent over the past three months, every major component of the index rose more than 3.0 percent over the period except education and communication. This recent acceleration is reflected in the median CPI and the 16 percent trimmed-mean CPI, which rose over the past three months 3.3 percent and 3.4 percent, respectively, and in November each increased 3.7 percent.

Retail Sales

Total retail sales rose 15.7 percent (annualized rate) in November, after a 2.7 percent increase in October and a 10.2 percent advance in September. Sales excluding motor vehicles and parts jumped up 24.1 percent during the month, its largest increase in 22 months. While it was a bad month for autos, falling 12 percent, sales at furniture and home furnishing stores posted a strong 22.7 percent gain. Sales strength was also seen in building materials and supply stores, food and beverage stores, and general merchandise stores.


The Producer Price Index (PPI) spiked up 45.4 percent (annualized rate) in November, its largest monthly increase in 34 years. Energy prices were the culprit, jumping 388 percent during the month, the biggest energy shock the series has ever recorded. Prices excluding food and energy (core PPI) were somewhat elevated, rising 4.5 percent. However, on a year-over-year basis, the growth in core PPI fell 0.6 percentage point to 1.9 percent. Further back on the production line, price signals were mixed, as core intermediate goods increased 12.8 percent and core crude goods fell 5.9 percent in November.

International Trade

The trade deficit increased $0.7 billion in October to end the month at $57.8 billion, as a 0.9 percent increase in exports was outpaced by a 1.0 percent increase in imports. Despite two small increases in the trade deficit over the two months, October’s deficit is still down considerably from the peak deficit of $67.6 billion seen in August 2006.

Import and Export Prices Indexes

Import prices advanced 37.2 percent (annualized rate) in November, their largest increase since October 1990. The increase was due, in part, to a large spike in petroleum prices (up 208.5 percent). On a year-over-year basis, import prices are up 11.4 percent. Nonpetroleum imports rose 9.3 percent during the month. Export prices advanced as well in November, rising 10.7 percent, following a 9.7 percent increase in October. Prices of exported industrial supplies and materials increased 30.8 percent, accounting for most of the jump in overall export prices.

Employment Report

Nonfarm payroll employment rose by 94,000 in November, slightly above expectations, and following a strong growth of 170,000 (revised up from 166,000) October. Service-providing industries added 127,000 jobs during the month on strong broad-based gains in most categories, outside of a 20,000 job loss in financial activities. Goods-producing industries lost 33,000 jobs, mostly on losses in specialty trade contractors (-11,000) and nondurable goods manufacturing (-10,000). Job gains in the service sector were divided among retail trade (24,200), Professional and business services (30,000), Education and health care services (28,000), Leisure and hospitality (26,000), and the government (30,000). The 20,000 job loss in financial activities was roughly split between credit intermediation and related activities and real estate services.

Factory Orders

New orders for manufactured goods rose 0.5 percent (nonannualized rate) in October, following a slight (0.3 percent) increase in September. New orders for durable goods excluding aircraft fell 2.0 percent during the month and are down 1.9 percent on a year-over-year basis. Shipments of manufactured goods jumped 1.0 percent after a flat reading in September. Shipments of durable goods advanced 0.8 percent, changing course after two consecutive monthly decreases. Inventories remained steady in October and are 2.2 percent above October 2006.

Productivity and Costs

Nonfarm business sector productivity (output per hour of all persons) was revised up to 6.3 percent (annualized rate) from the preliminary estimate of 4.9 percent. This surge in productivity—this was the highest quarterly growth rate in productivity since the third quarter of 2003—is partly due to a strong upward revision to third-quarter GDP. Compensation per hour was adjusted down to 4.2 percent growth from 4.7 percent, and it fell to 2.7 percent after accounting for consumer prices. Unit labor costs, a measure some use to track the onset of inflationary pressures, fell 2.0 percent after the revision. However, labor costs are up 3.0 percent from a year ago.

ISM Manufacturing

The Institute for Supply Management (ISM) manufacturing index was virtually unchanged in November, holding at 50.8, which indicates very slight growth (in this diffusion index, a value above 50 indicates expansion). While the new orders and production indexes stayed in positive territory this month, posting values of 52.6 and 51.9, respectively, the employment index fell into contractionary territory by dropping 4.2 points to end the month at 47.8. This is its lowest reading since September 2003, but it would need to fall another 10 to 12 points to approach the index values seen during the last recession.