Tom Moeller

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The Federal Reserve Bank of Philadelphia reported that its Composite Index of Business Conditions rose to -23.2 during March after plunging to -24.3 during February. The index remained near the lowest level since May 2020 and was below its peak of 45.6 in April of 2021. It has been negative for nine of the last ten months. A reading of -14.8 had been expected in the Action Economics Forecast Survey.

The ISM-Adjusted Composite Index, constructed by Haver Analytics, fell to 39.4 this month from 48.6 in February and, remaining below 50, continued to indicate a contraction in overall factory sector activity. It stood well below its high of 65.4 in November 2021.

The component series mostly weakened this month. The new orders series fell to -28.2 from -13.6 in February. A greatly lessened 7.0% of respondents reported orders improvement while a steady 35.2% reported orders deterioration. The shipments index fell sharply to -25.4 this month from +8.7 in February. It remained below 32.1 last May. A greatly lessened 5.8% of respondents reported shipments improvement while a sharply higher 31.2% reported a decline. The delivery times reading dropped to -24.3, indicating faster product delivery speeds. The unfilled orders index remained negative for the tenth straight month. The inventories index plummeted to -11.2 from +15.3, indicating a sharp pull-back in inventories.

On the labor front, the employment index fell to -10.3 in March, the weakest reading since May 2020. It remained well below its April 2022 peak of 38.4 as a greatly lessened 6.1% of respondents reported more hiring and a slightly increased 16.4% reported less. The hours-worked index plunged to -22.0 from -3.2 and remained below its high of +35.3 in March of 2021.

The prices paid index weakened to 23.5 from 26.5 in February. It has fallen from a high of 83.6 in November 2021. A slightly increased 34.8% of respondents reported higher prices while an increased 11.3% reported price declines. The prices received index fell sharply to 7.9 this month from 14.9 in February. It stood at its lowest point in nearly three years, down from a high of 65.8 in November 2021.

The future business conditions index declined to -8.0 this month from +-*/1.7 in February. This was the lowest level since October after rebounding to +4.9 in January. Movement amongst the component series was mixed. The new & unfilled orders, employment and inventories series each weakened while shipments and hours worked improved. The expected prices paid index rebounded after weakening sharply in February, but prices received plunged to a seven-year low.

These diffusion indexes represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The Philadelphia Fed data can be found in Haver's **SURVEYS** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Index edges higher after plunging to lowest level since 2020.
- New orders, shipments and employment readings weaken.
- Prices paid index remains near recent low.


Philadelphia Fed Factory Index Stabilizes in March

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Consumers pulled back spending modestly in February, as overall retail sales fell 0.4% (+5.4% y/y). The decline followed a 3.2% January surge, revised from 3.0% reported last month. The decline matched expectations in the Action Economics Forecast Survey. Sales excluding motor vehicles eased 0.1% (+6.8% y/y) after rising 2.4% in January, revised from 2.3%. Expectations had been for a 0.1% dip. These latest results followed moderate declines in both December & November.

Last month’s sales decline reflected a 1.8% drop (-0.2% y/y) in motor vehicle sales after they surged 7.1% in January. Sales fell sharply in the prior two months. The latest decline compared to a 6.3% weakening in unit vehicle sales which also followed a January surge. Gasoline station sales eased 0.6% (-1.9% Y/Y) as gasoline prices weakened. It was the fourth consecutive monthly decline.

Sales amongst other stores were mixed. Spending in the retail control group, which excludes autos, building materials, gasoline & restaurants, rose 0.5% (7.0% y/y) after strengthening 2.3% in January. Sales here declined in December & November.

Sales of nonstore retailers rose 1.6% (8.5% y/y) last month after a 1.8% increase in January. Electronics and appliance store sales improved 0.3% (-2.8% y/y) after a 6.5% increase. Sales fell in each of the prior eight months. General merchandise store sales improved 0.5% (10.5% y/y) after rising 4.3% in January. However, within that category, department store sales declined 4.0% (+2.5% y/y) after an 18.1% January rise. Also falling were furniture and home furnishing store sales, off 2.5% (+0.1% y/y) after a 5.7% January surge. Apparel sales eased 0.8% (+4.3% y/y) in February following a 2.9% January gain. Sporting goods & hobby shop store sales fell 0.5% (+3.9% y/y) after modest increases in each of the prior four months. Building materials store sales eased 0.1% (+0.6% y/y) after January’s 0.4% gain.

In the nondiscretionary sales categories, health & personal care store sales rose 0.9% (8.0% y/y) after a 3.1% January surge. Food & beverage store sales increased 0.5% last month (5.5% y/y) after two months of moderate decline.

Consumer visits to restaurant & drinking places found them spending 2.2% less in February (+15.3% y/y) after a 5.6% January increase.

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

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- Fewer motor vehicle sales & lower gasoline prices weigh on spending.
- Online sales surge again.
- Sales elsewhere are uneven.

U.S. Retail Sales Are Mixed in February

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The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased 4.8% (-44.3% y/y) to 44 during March following a 20.0% February increase. A reading of 40 had been expected in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 67% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present sales conditions in the housing market rose 4.3% (-43.7% y/y) to 49, up for the third straight month. The index for conditions in six months fell 2.1% (-32.9% y/y) to 47, after three months of strong increase.

Home builders reported that the traffic of prospective home-buyers index increased 10.7% to 31 (-53.0% y/y), the third consecutive monthly gain.

Amongst the regional indexes, the index for the South rose 8.7% (-38.3% y/y) while the Midwest index fell 2.8% (-52.7% y/y). The index for the West weakened 2.7% (-60.4% y/y) and the index for the Northeast held steady (-29.2% y/y).

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions asking builders to rate market conditions as "good," "fair," "poor" or "very high" to "very low." The figure is thus a diffusion index with numerical results six over 50 indicating a predominance of "good" readings. The weights assigned to the individual index components are .5920 for single-family detached sales, present time, .1358 for single-family detached sales, next months and .2722 for traffic of prospective buyers. The results are included in Haver's **SURVEYS** database. The expectations figure is available in Haver's **MMSAMER** database.

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- Current sales drive improvement.
- Regional readings are mixed.

U.S. Home Builder Index Increases in March

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The Consumer Price Index rose	0.4% in February, following a 0.5% increase in January. The 6.0% y/y increase remained below June’s high of 9.1%. Prices excluding food & energy rose 0.5% after increasing 0.4% in each of the prior two months. The 5.5% y/y gain was down from a 6.6% September high. A 0.4% increase in both measures had been expected in the Action Economics Forecast Survey.

The CPI less food, energy and shelter, another measure of core pricing power developed by Haver, increased 0.2% during February for a second month. The 3.7% y/y increase stands below the 7.6% peak in February of last year.

Service costs increased 0.6% (7.3% y/y). Shelter prices rose 0.8% (8.1% y/y) as owners’ equivalent rent of primary residences increased 0.7% (8.0% y/y). Rents rose 0.7% (8.2% y/y), up from 1.9% y/y in 2020. Education & communication prices increased 0.2% (2.9% y/y), while transportation service prices rose 1.1% (14.6% y/y). Recreation service prices improved 1.2% (6.3% y/y), but medical care service costs fell 0.7% (+2.1% y/y) for the second straight month.

Goods prices excluding food & energy eased slightly in February (+1.0% y/y). Used car & truck prices fell 2.8% (-13.6% y/y) but new vehicle prices improved 0.2% (5.8% 	y/y). Home furnishing prices rose 0.8% (6.3	% y/y) while appliance prices rose 0.7% (1.6% y/y). Apparel prices increased 0.8% (3.3% y/y) for a second straight month while recreation product prices rose 0.4% (2.9% y/y). Medical care product prices edged 0.1% higher (3.2% y/y) while sporting goods prices gained 0.2% (1.1% y/y).

Energy prices fell 0.6% last month (+5.2% y/y) following a 2.0% rise. Natural gas prices collapsed 8.0% (+14.3% y/y) following two months of strong gain. Gasoline prices rose 1.0% (-2.0% y/y). Fuel oil costs fell 7.9% (NSA) but rose 9.2% y/y and electricity prices increased 0.5% (12.9% y/y).

Food prices rose 0.4% in February (9.5% y/y) after a 0.5% January rise but egg prices fell 6.7% (+55.4% y/y). Meat, poultry & fish prices rose 0.6% (3.8% y/y) while cereal & bakery product prices rose 0.3% (14.6% y/y). Fruit & vegetable prices improved 0.2% (5.3% y/y) and dairy prices edged 0.1% higher (12.3% y/y). Nonalcoholic beverage prices strengthened 1.0% (12.3% y/y).

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

**A Tight Labor Market Could Keep Rent Inflation Elevated** from the Federal Reserve Bank of Kansas City is available [here](https://www.kansascityfed.org/Economic%20Bulletin/documents/9384/EconomicBulletin23BundickSmithVanderMeer0301.pdf).

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- Energy price decline restrains increase.
- Core goods price inflation is tame; core services prices pick up.
- Energy prices decline; food prices remain strong.


U.S. CPI Gain Eases in February; Core Prices Firm

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Retail gasoline prices rose in the week ended March 13 to $3.46 per gallon (-19.9% y/y) after increasing to $3.39 per gallon in the previous week. Prices remained below the mid-June 2022 peak of $5.01 per gallon but above their late December 2022 low of $3.09. The retail price of diesel fuel slipped to $4.25 per gallon (-19.1% y/y) last week from $4.28 per gallon in the previous week. The price reached a recent peak of $5.81 per gallon in the third week of June 2022.

The average price of West Texas Intermediate crude oil eased to $77.38 per barrel (-31.8% y/y) in the week ended March 10 from $77.58 in the prior week. Prices have been near that level since late-November. Its recent high was $120.46 in the second week of June 2022. Yesterday, the price fell to $74.80 per barrel. The average price of Brent crude oil eased to $82.86 per barrel (-32.2% y/y) last week after rising to $83.69 per barrel in the previous week. The price peaked at $127.40 in mid-June of 2022. Yesterday, the price was $79.67 per barrel.

The price of natural gas slipped to $2.48/mmbtu (-47.3% y/y) from $2.59/mmbtu in the prior week. Prices have fallen from the recent high of $6.78/mmbtu in the third week of December and from $9.56/mmbtu in the last week of August of 2022. The decline is due to unseasonably mild temperatures this winter and improved energy efficiency, which have reduced demand for natural gas. Yesterday, the price was $2.40/mmbtu.

In the four weeks ended March 3 gasoline demand declined 0.2% from a year earlier after having fallen 1.1% y/y in the prior week. These declines compare to 15.2% y/y growth at the end of 2021. Demand for all petroleum products fell 8.4% y/y in the latest four weeks in contrast to the 14.4% annual growth at the end of 2021. Crude oil input to refineries fell 1.5% y/y.

Gasoline inventories declined 2.7% y/y in the week ended March 3, about as they did for four weeks, while crude oil inventories fell 14.1% y/y. Working the other way, inventories of distillate fuel oil increased 7.4% y/y and residual crude oil inventories rose 12.6% y/y.

Measured in days’ supply, gasoline inventories in the week ended March 3 fell to 27.3 days from 27.6 days in the previous week. It was the lowest level since early-January. The supply of crude oil edged higher to 31.9 days from 31.8 days in the prior week. It was increased from a low of 25.3 days at the end of last June.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver’s **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY**.

- Gasoline prices rise.
- Crude oil costs slip.
- Natural gas prices weaken.

U.S. Energy Prices Are Mixed

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) fell 1.8% (-20.3% y/y) during the four weeks ended March 10, continuing the malaise of the last few weeks. The index had been trending sideways since the end of September.

The **miscellaneous** price index declined 3.2% (-24.4% y/y) during the last four weeks. Framing lumber prices declined 12.4% (-67.2% y/y) but natural rubber prices improved 0.2% (-15.2% y/y) in four weeks.

Prices in the **metals** group fell 3.0% (-28.6% y/y) in the last four weeks. Zinc prices declined 6.2% (-25.6% y/y) while aluminum prices fell 6.4% (-36.9% y/y). The cost of scrap copper slipped 1.3% in the last four weeks (-14.3% y/y) and tin prices weakened 13.1% (-49.3% y/y). Lead prices slipped 0.4% (-14.2% y/y) in the last four weeks. Working higher, the cost of steel scrap rose 8.1% (-31.7% y/y).

Prices in the **textile** group slipped 0.4% during the last four weeks and fell 7.2% y/y. Cotton prices declined 2.4% and were off 29.7% y/y. The cost of burlap eased 0.5% (-15.9% y/y) in the last four weeks.

Offsetting these declines, **crude oil & benzene** costs increased 1.3% (-15.4% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil rose 2.3% in four weeks to $78.02 per barrel but fell 32.5% y/y, while the price of the petro-chemical benzene gained 2.4% (-10.0%). Excluding crude oil & benzene, the industrial commodity price index weakened 2.0% (-19.4% y/y) in four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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-	Lumber prices decline.
-	Metals prices fall.
-	Crude oil prices move up.

FIBER: Industrial Commodity Prices Weaken

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Nonfarm payrolls increased 311,000 in February (2.9% y/y) after rising 504,000 in January and 239,000 in December, revised from 517,000 and 260,000, respectively. Expectations had been for a smaller 223,000 rise in the Action Economics Forecast Survey.

Average hourly earnings gained 0.2% last month following an unrevised 0.3% January gain and three consecutive 0.4% increases. A 0.4% February rise had been expected. The y/y earnings increase edged up to 4.6% and remains above its pre-pandemic rise of 2.9% y/y, as competition for labor increased.

The unemployment rate, measured in the household survey, rose to 3.6% in February from 3.4% in January but remained at its roughly 50-year low. Expectations had been for m/m stability. Household employment rose 177,000 (1.7% y/y), the smallest increase in three months. The labor force rose 419,000, half the January increase; its y/y growth of 1.5% stands below the 2.4% high last March. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, rose to 6.8%, a six-month high.

In the **establishment survey**, private-sector employment rose 265,000 in February (3.1% y/y) after a 386,000 January increase. Factory sector jobs eased 4,000 (+2.5% y/y) after a 13,000 gain. Construction sector employment increased 24,000 (3.6% y/y) following rising 35,000 in January.

Private service-producing sector employment increased 245,000 in February (3.1% y/y) after improving 335,000 in January. Increases varied greatly amongst service sector categories. Leisure & hospitality employment rose 105,000 (6.6% y/y). Education & health care jobs rose 74,000 (4.3% y/y). Professional & business services employment rose 45,000 (2.5% y/y) including a 6,800 rise (-3.7 y/y) in temporary help employment. Trade, transportation & utilities hiring firmed 38,000 (1.2% y/y) but financial employment fell 1,000 (+1.3% y/y).

Government sector payrolls rose 46,000 last month (2.0% y/y) after increasing 118,000 in January. Local government jobs increased 37,000 (2.4% y/y). State government employment edged 2,000 higher (1.7% y/y) and federal government payrolls rose 7,000 (0.8% y/y) in February.

Private-sector average hourly earnings rose 0.2% in February. Earnings in the goods-producing sector improved 0.1% (4.4% y/y). Earnings in construction rose 0.3% (5.3% y/y), while factory sector earnings declined slightly (+3.7% y/y). In the private services-sector, earnings rose 0.2% but the y/y increase of 4.7% is greatly reduced from 6.1% in March 2022. Trade, transportation & utilities sector pay increased 0.6% (4.7% y/y) last month. The 0.3% rise (6.9% y/y) in leisure & hospitality earnings left the y/y gain below the 14.0% December 2021 peak. Professional & business sector earnings increased 0.2% (4.8% y/y). Information sector pay increased 0.6% (5.5% y/y) and financial activities earnings rose 0.4% (4.7% y/y) last month.

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The length of the average workweek slipped to 34.5 hours in February from 34.6 hours in January. The workweek in the goods-producing sector fell to 40.0 hours from 40.2 hours. The construction sector average workweek eased to 39.0 hours while the factory sector workweek slipped to 40.3 hours. The average workweek in the private service sector backpedaled to 33.4 hours and remained below the 34.0 hour high in early-2021. Professional & business service hours were stable at 36.6 hours but leisure & hospitality hours slipped to 25.5 hours from 25.8 in January. The aggregate weekly hours index, a key indicator of production and income, eased 0.1% (+2.5% y/y) during February after rising 0.9% in January. It was the third such decline in the last four months.

The **household survey** indicated a rise in the jobless rate to 3.6% in February as the size of the labor force rose. The labor force participation rate edged up to 62.5% last month from 62.4%. It remained below the high of 63.3% early in 2020. The rate for teenagers improved to 37.5%. For workers aged 20-24, the rate increased to 72.0% in February, up from 70.3% low six months earlier. For workers aged 25-54, the rate increased to 83.1% and matched the high in January 2020. For individuals 55 and over, the rate fell to 38.4% in February.

The employment/population ratio for all workers in February held at 60.2% and remained above the 59.8% level twelve months earlier. It is still below its reading of 61.1% in February, 2020 just prior to the pandemic.

The average duration of unemployment fell in February to 19.3 weeks and it remained below a 32.0 week high in June of 2021. The median duration of unemployment declined to 8.3 weeks but stood below its 19.9 week high in June 2021. The ranks of those individuals unemployed for 27 weeks or more fell 4.9%, down 37.5% y/y.				

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Payroll increase slows after January surge.
- Earnings growth moderates unexpectedly.
- Jobless rate increases from 50-year low.


U.S. Employment & Wage Growth Weaken in February, but Jobless Rate Rises

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Initial unemployment insurance claims increased to 211,000 (6.6% y/y) during the week ended March 4 from an unrevised 190,000 in the prior week. Initial claims have risen from a low of 183,000 in the last week of January. Expectations had been for a lesser rise to 194,000 in the Action Economics Forecast Survey. The four-week moving average of initial claims of 197,000 compared to 193,000 in the prior week, and stood at the highest level in six weeks.

In the week ended February 25, the number of continuing weeks claimed for unemployment insurance rose to 1.718 million (3.2% y/y) from 1.649 million in the prior week. These claims were the highest since the third week of December and have risen from a low of 1.630 million in the last week of December. The four-week moving average of continuing claims increased to 1.680 million, the highest level in nine weeks.

The insured rate of unemployment rose to 1.2% after two weeks at 1.1%. It remained above the record low range of 0.9%-to-1.0% in place from April through October of last year.

In the week ended February 18, the total number of continued weeks claimed in all unemployment insurance programs fell 2.0% (+	0.6% y/y) to 1.921 million from 1.960 million in the prior week. This total includes federal employees, newly discharged veterans, extended benefits and other specialized programs and is not seasonally adjusted. Claims in the Pandemic Unemployment Assistance program and Pandemic Emergency Unemployment Compensation are no longer included in the main Labor Department press release, as both programs have expired.

The insured rates of unemployment in regular programs vary across states. The highest insured unemployment rates in the week ending February 18 were in New Jersey (2.65%), Massachusetts (2.34%) California (2.19%), Alaska (2.07%), Illinois (1.99%) and New York (1.91%). The lowest rates were in Alabama (0.26%), Virginia (0.32%), Kansas (0.42%), Nebraska (0.61%) and South Dakota (0.61%). Other major state rates include Pennsylvania (1.76%), Texas (0.95%) and Florida (0.40%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims going back to 1967 are contained in Haver's **WEEKLY** database, and they are summarized monthly in **USECON**. Data for individual states are in **REGIONW**. The expectations figure is from the Action Economics Forecast Survey, carried in the **AS1REPNA** database.

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- Initial claims surge last week to ten-week high.
- Continuing claims also strengthen.
- Insured unemployment rate edges higher.

U.S. Jobless Insurance Claims Jump

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Nonfarm private sector payrolls increased 242,000 during February (2.5% y/y) after rising 119,000 in January, revised from 106,000, and an unrevised 253,000 December gain. January’s increase had been the smallest in early two years. A 205,000 February increase was expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" rose 7.2% y/y, but remained below a September high of 7.8% y/y. These gains compare to a low of 1.6% in March of 2021. The earnings increase was led by 10.1% y/y growth in leisure & hospitality earnings, down from 16.9% y/y growth in March 2022. Financial sector earnings rose a lessened 7.3% y/y. Factory sector pay rose a smaller 7.1% y/y while professional & business service sector earnings rose 6.5% y/y.

Small businesses hiring (1-49 employees) fell 61,000 (0.0% y/y), down for the sixth month in the last seven. Employment at firms with 50-499 employees rose 148,000 (5.1% y/y), about the same as in January. The three-month average increase eased to 191,000. Employment at large-sized firms rose 160,000 (3.3% y/y) last month after increasing roughly 50,000 during each of the prior two months.

By industry group, goods-producing employment rose 52,000 (1.2% y/y) after an 11,000 January gain. The increase was the largest in 12 months. Factory sector jobs rose 43,000 (2.2% y/y) after a 29,000 gain. It also was the largest rise in 12 months. Construction employment fell 16,000 (+0.1% y/y), off for the second straight month. Hiring in the natural resource & mining sector surged 25,000 (-1.3% y/y) following a 3,000 January increase.

Service-producing jobs rose 190,000 last month (2.8% y/y) following a 108,000 January increase. The gain was below most monthly increases during the last year. Leisure & hospitality employment led the gain with an 83,000 increase (7.5% y/y) after rising 68,000 in January. Financial activities employment rose 62,000 (1.0% y/y) after falling 11,000 in January. Education & health care sector employment improved 35,000 (3.1% y/y) after rising 20,000 in January. Information sector jobs edged 9,000 higher (2.2% y/y) after falling 2,000. Trade, transportation & utilities payrolls rose 3,000 (0.2% y/y) following declines in three of the prior four months. Offsetting these gains, professional & business services employment declined 36,000 (+2.8% y/y) after a 31,000 increase. It was the first decline since July 2020.

By Census region, employment in the West increased 128,000 (2.9% y/y) following a 45,000 January decline. In the South, the number of jobs rose 94,000 (2.2% y/y), about the same as in January. Employment in the Northeast improved 37,000 (4.0% y/y) following a 42,000 January gain. To the downside, jobs in the Midwest declined 12,000 (+1.5% y/y), the second decline in three months, as heavy snowfall tempered labor market activity.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

- Stronger-than-expected payroll gain follows January moderation.
- Small-sized firm hiring declines, but growth continues elsewhere.
- Pay gains continue to ease.

ADP Employment Growth Strengthens in February; Earnings Gain Eases

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Mortgage applications increased 7.4% (-59.9% y/y) in the week ended March 3 following declines in the prior three weeks. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

Applications to refinance an existing loan increased 9.4% (-76.1% y/y) after falling 6.1% in the prior week. Applications for purchase rose 6.6% (-42.3% y/y) following five straight weeks of decline.

The percentage of applications for refinancing an existing loan rose to 28.9% in the week ended March 3, up from 30.5% four weeks earlier. The percentage of ARM loans rose to 8.6% but remained down from a recent high of 12.8% in the second week of October.

The effective interest rate on a 30-year fixed-rate loan rose to 7.02% from 6.93%. It was the highest level since the second week of November. The effective rate on 15-year fixed-rate mortgages rose to 6.50% last week from 6.36% in the prior week. The rate on 30-year Jumbo loans increased 6.67%. The rate on a 5-year ARM rose to 6.10% from 6.05% in the prior week.

The average loan size rose 0.7% (0.8% y/y) to $379,200 in the week ended March 3. The series high of $401,900 was reached in the week ended May 6. The average size of a purchase loan held steady (-5.6% y/y) at $425,700. The average loan size to refinance a mortgage rose 3.7% (-11.8% y/y) to $264,500.

The Mortgage Bankers 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.

- Refinancing and purchase applications both rise.
- Mortgage interest rate on a 30-year loan increases.

U.S. Mortgage Applications Rebound

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Wholesale inventories fell 0.4% (+15.8% y/y) during January following an unrevised 0.1% December uptick. The decline matched the change in the advance report issued earlier. Inventory growth has slowed considerably since early last year.

Durable goods inventories eased 0.1% (+18.0% y/y) in January following a 0.7% December gain. Motor vehicle & parts inventories fell 0.5% (+25.1% y/y). Furniture & home furnishings inventories declined 2.7% (+14.1% y/y) while professional equipment inventories fell 1.1% (+6.6% y/y). Electrical equipment inventories rose 0.3% (21.9% y/y) while machinery inventories gained 1.8% (29.8% y/y).

In the nondurable goods sector, inventories declined 0.9% (+12.4% y/y) in January, the same as in December. Petroleum & petroleum product inventories rose 1.3% (13.8% y/y). Chemical inventories declined 1.6% (+10.0% y/y), the fifth straight monthly decline. Apparel inventories declined 5.5% (+36.2% y/y) and grocery product inventories fell 1.0% (+9.1% y/y).

Wholesale sales rose 1.0% (3.6% y/y) in January after declining 0.2% in December. The yearly gain is reduced significantly from the 23.4% rise in January 2022. The Action Economics Forecast Survey expected a 0.8% monthly gain. Durable goods sales rose 0.7% (-0.5% y/y) after a 0.5% December gain. Motor vehicle & parts sales strengthened 1.2% (9.7% y/y). Sales of machinery rose 1.2% (15.8% y/y) while electrical machinery sales increased 2.4% (-4.6% y/y). Professional equipment sales weakened 2.0% (-6.7% y/y), and furniture & home furnishings sales declined 1.7% (+3.2% y/y).

Sales of nondurable goods rose 1.3% (7.4% y/y) in January after declining in five of the previous six months. A 3.5% rise (10.1% y/y) in petroleum sales was accompanied by a 0.6% drop (-8.7% y/y) in apparel sales. Chemical sales weakened 4.0% (-2.1% y/y) and farm product sales eased 0.3% (+17.5% y/y). Paper product sales fell 2.5% (1.0% y/y).

The inventory-to-sales (I/S) ratio fell to 1.34 in January but remained up from a low of 1.19 in July of 2021. The I/S ratio in the durable goods sector fell to 1.79 but compared to a low of 1.48 in July 2021. The I/S ratio for nondurable goods eased to 0.95 but was higher than the 0.91 low in February 2022.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are in the **AS1REPNA** database.

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- Inventory growth continues to weaken y/y.
- Sales rebound m/m; trend gain slows significantly.
- Inventory-to-sales ratio remains elevated.

U.S. Wholesale Inventories Decline in January

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Retail gasoline prices rose in the week ended March 6 to $3.39 per gallon (-17.4% y/y) after falling to $3.34 per gallon in the previous week. Prices remained below the mid-June 2022 peak of $5.01 per gallon but above their late December 2022 low of $3.09. The retail price of diesel fuel eased to $4.28 per gallon (-13.7% y/y) last week from $4.29 per gallon in the previous week. The price reached a recent peak of $5.81 per gallon in the third week of June 2022.

The average price of West Texas Intermediate crude oil rose to $77.60 per barrel (-27.3% y/y) in the week ended March 3 following a decline to $75.45 in the prior week. Its recent high was $120.46 in the second week of June 2022. Yesterday, the price was $80.46 per barrel. The average price of Brent crude oil rose to $83.82 per barrel (-26.7% y/y) last week after falling to $81.77 per barrel in the previous week. The price peaked at $127.40 in mid-June of 2022. Yesterday, the price was $85.92 per barrel.

The price of natural gas improved to $2.59/mmbtu (-43.3% y/y), the highest level in four weeks. The increase came after declining to $2.18/mmbtu during the prior week, which was the lowest level since October 2020. The latest price was down from $6.78/mmbtu in the third week of December. The most recent peak was $9.56/mmbtu in the last week of August. Yesterday, the price was $2.46/mmbtu.

In the four weeks ended February 24 gasoline demand declined 1.1% from a year earlier after having fallen 1.4% y/y in prior week. These declines compare to 15.2% y/y growth at the end of 2021. Demand for all petroleum products fell 7.4% y/y in the latest four weeks in contrast to the 14.4% annual growth at the end of 2021. Crude oil input to refineries fell 1.1% y/y.

Gasoline inventories declined 2.8% y/y in the week ended February 24 while crude oil inventories slumped 14.3% y/y. Inventories of distillate fuel oil increased 2.5% y/y.

Measured in days’ supply, gasoline inventories in the week ended February 24 fell w/w to 27.6 days from 28.2 days in the previous week. It was the lowest level since early-January. The supply of crude oil edged higher to 31.8 days from 31.7 days in the prior week. It was increased from a low of 25.3 days at the end of last June.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver’s **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY**.
	

- Gasoline prices improve.
- Crude oil prices increase.
- Natural gas prices recover.

U.S. Energy Prices Rise

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