Retail Sales Decline

October 31, 2002

· Real GDP last quarter grew slightly less than Consensus expectations for a 3.5% (AR) rise. Nevertheless it was the second strongest quarterly rate of growth since 2Q 2000.

· Domestic final demand growth of 3.2% was paced by 4.2% growth in consumer spending. That was led by a 48.0% rise in motor vehicle purchases. Residential investment actually fell a slight 0.7% as construction spending on residential buildings was down in July & August versus 2Q.

· Capital spending rose a slight 0.6%, the first gain in two years. Spending on equipment rose 6.5% and was paced by a 13.0% rise in spending on information processing equipment & software, the third consecutive quarterly gain. Business spending on structures fell sharply (-16.0%) for the sixth quarter in seven.

· Trade sector deterioration was negligible due to only slight gains in exports (2.2%) and imports (2.5%).

· Production was barely negative in it's effect on inventory accumulation.

· Estimated inflation has been about stable in the first three quarters of this year.

Chained '96 $, % AR	3Q'02 (Advance)	2Q'02 (Final)	Y/Y	2001	2000	1999
GDP	3.1%	1.3%	3.0%	0.3%	3.8%	4.1%
Inventory Effect	-0.1%	1.3%	0.6%	-1.2%	0.1%	-0.2%
Final Sales	3.2%	-0.1%	2.4%	1.5%	3.7%	4.3%
Trade Effect	-0.1%	-1.4%	-0.5%	-0.1%	-0.6%	-0.9%
Domestic Final Demand	3.2%	1.3%	2.9%	1.6%	4.3%	5.2%
Chained GDP Price Deflator	1.1%	1.2%	0.8%	2.4%	2.1%	1.4%

Employment Cost Index Eased

October 31, 2002

By Tom Moeller

· The employment cost index rose less than Consensus expectations for a 0.9% gain. It was the weakest quarterly gain in the ECI since 1Q 1999.

· The gain in wages & salaries eased sharply even as the unemployment rate fell last quarter. The gain in benefit costs also dropped to the lowest since 3Q 1999.

· Compensation gains in service occupations rebounded from the sharp deceleration last quarter. Compensation gains in the goods producing sector decelerated sharply.

· For a discussion by the San Francisco Fed of the Phillips Curve and inflation, click here.

ECI- Private Industry Workers	3Q'02	2Q'02	Y/Y	2001	2000	1999
Compensation	0.6%	1.1%	3.7%	4.2%	4.4%	3.4%
Wages & Salaries	0.4%	1.0%	3.2%	3.8%	3.9%	3.5%
Benefit Costs	1.0%	1.4%	4.8%	5.1%	5.6%	3.4%

Claims for Jobless Insurance Rose

October 31, 2002

By Tom Moeller

· Initial claims for unemployment insurance rose slightly more than expected in the latest week. Claims in the prior week were revised up slightly.

· The four-week moving average of initial claims fell to 401,750, down 14.4% y/y.

· Continuing claims for unemployment insurance rose 2.1%, reversing about half of prior week's sharp decline. The prior week's level was revised down.

· The weekly insured rate of unemployment was stable at 2.8%.

Unemployment Insurance (000s)	10/26/02	10/19/02	Y/Y	2001	2000	1999
Initial Claims	410.0	394.0	-13.9%	405.8	299.8	297.7
Continuing Claims	--	3,620	0.6%	3,021	2,114	2,186

Chicago Purchasing Agents' Index Dropped Again

October 31, 2002

By Tom Moeller

· The Chicago Purchasing Manager’s Index of Business activity was weaker than expected in October. Consensus estimates were for slight rise to 49.5.

· It was the second consecutive decline in the business activity index and the second month below 50, the cutoff between expanding and contracting activity.

· An 86% correlation over the last ten years between the Chicago PMI and the ISM Composite Index suggests the ISM index may be weak when released tomorrow.

· The indexes of new orders, production, order backlogs, and employment all fell. Delivery speeds and inventories were up.

· The prices paid index rose and reversed most of its September decline.

· Visit the Chicago Purchasing Managers website at www.napm-chicago.org.

Chicago Purchasing Managers Index, SA	Oct	Sept	Y/Y	2001	2000	1999
Business Barometer	45.9	48.1	44.6	41.4	51.8	56.5
Prices Paid	62.0	57.6	40.1	50.5	65.6	57.6

Help Wanted Advertising Up Slightly

October 31, 2002

By Tom Moeller

· The Conference Board's National Index of Help-Wanted Advertising in September recouped half of its sharp drop the prior month. Nevertheless, the index remained down 4 points, or 8.5%, from yearend 2001.

· The proportion of labor markets with rising want-ad volume improved sharply to 76%, the second highest level since 1999.

· During the last five years there has been a 76% correlation between the level of help-wanted advertising and the monthly change in nonfarm payrolls. The correlation with the y/y change in employment has been 98%

· Job opportunities improved in most of the regions of the country.

·The figures are seasonally adjusted.

Conference Board	Sept	Aug	Sept '01
National Help Wanted Index	43	41	53

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