Business Outlook
• PMI was registered at 50.8 percent indicating that
manufacturing economy is generally expanding.
However, compared to October’s 50.9 percent it
indicates that manufacturing industry is expanding at a
slower rate.
• Profits from current production decreased $19.3 billion in
the third quarter, in contrast to an increase of $94.7
billion in the second quarter.
• Domestic profits of financial corporation decreased $29.1
billion in the third quarter, in contrast to an increase of
$25.3 in the second.
Purchasing Manager's Index
58
Percentage
56
54
52
50
48
46
44
Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov06
06
07
07
07
07
07
07
07
07
07
07
07
Corporate Profit
$1,800.0
$1,400.0
$1,200.0
$1,000.0
$800.0
$600.0
$400.0
$200.0
$0.0
20
02
q
20 1
02
q
20 3
03
q
20 1
03
q
20 3
04
q
20 1
04
q
20 3
05
q
20 1
05
q
20 3
06
q
20 1
06
q
20 3
07
q
20 1
07
q3
Billions of dollars
$1,600.0
Due to the weakening of the dollar, the US current account deficit has been
declining due to an increase in exports and a decrease in imports.
U.S. Dollar vs. Other Currencies
USD to EURO
USD to Canadian Dollar (CAD)
USD to Chinese Yuan
USD to Japanese Yen
U.S. Dollar Index
The dollar has been dropping due to rumors that the Federal Reserve will cut
interest this month.
The dollar has fallen 5% against the pound; 7% against the yen; 10% against the
euro; 14% against the Canadian dollar; and 8% against the Federal Reserve’s trade
weighted basket of currencies.
Housing Market
•
Building Permits went down 24.3% compared to October 2006, and
Housing Starts went down 16.4% compared to October 2006.
•
Existing Home Sales went down 20.7% compared to October 2006, and
current existing home inventory went up by 15.4% compared to October
2006.
•
Median sales price of existing home went down by 5.1% compared to last
year, and average sales price of existing home went down by 3.4%
compared to last year.
•
Persistent weakness in the housing market will lead to below-trend growth
for the rest of this year.
•
Job losses in residential buildings (-9,000) and in residential specialty trade
contractors (-13,000) were offset by job gaining in nonresidential specialty
trade contractors (+16,000)
Existing Home Sales in the United States & Current
Housing Inventory
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
2006
Oct
Sept
Aug
Jul
Jun
Apr
May
Mar
Feb
Jan
Dec
Nov
Oct
Existing Home Sales
Inventory
2007
Existing Home Sales in the United States & Current
Housing Inventory
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
Existing Home Sales
Inventory
2,000,000
1,000,000
0
Oct
2006
Dec
Feb
Apr
Jun
Aug
Oct
Sales Price of Existing Homes
300,000
200,000
Median sales price of existing
homes
Average sales price of existing
homes
150,000
100,000
50,000
2006
2007
Oct
Sept
Aug
Jul
Jun
May
Apr
Mar
Feb
Jan
Dec
Nov
0
Oct r
Dollars
250,000
Consumer confidence has been dropping since August. The Consumer Confidence
Index is 87.3, compared to 95.2 in September.
This is the lowest since October 2005; it’s reading then was 85.2.
The Present Situation Index is down 115.4 from 118.0 during October.
Declining Credit
Source: Federal Reserve
•Personal Income increased .2%
•Disposable Income increased by .5%
•Personal Consumption Expenditures increased by 2%
All figures were lower than the increases economists
projected.
Personal Consumption Expenditures
(Seasonally adjusted)
2
20
07
:
Q
4
20
06
:
Q
2
20
06
:
Q
4
20
05
:
Q
2
20
05
:
Q
4
20
04
:
Q
2
Q
04
:
20
20
03
:
Q
4
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Ja
n05
Ap
r-0
5
Ju
l-0
O 5
ct
-0
Ja 5
n06
Ap
r-0
6
Ju
l-0
O 6
ct
-0
6
Ja
n07
Ap
r-0
7
Ju
l-0
O 7
ct
-0
7
10-Year TIPS-Derived Expected Inflation
3
2.5
2
1.5
1
0.5
0
Oil Prices
Crude oil futures have
declined significantly from a
high of $98.18 on November
23, amid speculation that
OPEC may increase oil
production.
Markets
DJIA
NASDAQ
Source: Bloomberg
S&P 500
Source: Bloomberg
DJ Wilshire 5000
Source: Bloomberg
Source: Wilshire Associates
Outstanding Commercial Paper
Source: Federal Reserve