Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051007a.jpg" width="353">
Non-farm payrolls declined 35,000 in September. The decline very much reflected the effects of Hurricane Katrina, then Hurricane Rita which made landfall during the week the employment surveys were taken. The m/m decline in payrolls was the first in over two years, although several factors dampened its economic significance. 1) Consensus expectations had been for a for a deeper 168,000 decline. 2) August &amp; July payrolls were revised up. 3) The less affected employment tally from the Household survey fell just 17,000.
The upward revisions to earlier months&#39; payrolls pulled the 3Q gain in the index of aggregate hours worked (employment times hours worked) to a respectable 0.4% (1.9% y/y). Hours worked in 2Q increased 0.7% from 1Q05.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051007b.jpg" width="353">
Perhaps 200,000 jobs were lost in September due to storms and in October payrolls may be reduced by another 150,000 due to the hurricanes.
Factory sector payrolls felt the brunt of the September storms and fell 27,000 following a 9,000 worker decline in August which was less than initially estimated.
Private service producing industries also were hard hit as indicated by a 67,000 (+2.0% y/y) decline in payrolls. Retail jobs fell 88,000 (+0.9% y/y) as a number of shopping malls along the Gulf Coast were leveled while jobs in trade, transportation and utilities fell 94,000 (+1.2% y/y). The leisure &amp; hospitality industries shed 80,000 (+1.9% y/y) jobs.
On the plus side, professional &amp; business services jobs rose 52,000 (3.3% y/y) while financial sector jobs rose 11,000 (2.1% y/y).Education &amp; health services jobs rose 49,000 (2.7% y/y) and construction jobs increased 23,000 (4.1% y/y).
The unemployment rate from the household survey rose as expected to 5.1%. Employment fell 17,000 (+2.1% y/y) after a 373,000 gain in August and the labor force rose 252,000 (1.7% y/y).
Average hourly earnings increased a moderate, expected 0.2% and reflected a 1.7% y/y gain in factory earnings.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-35,000</td>
<td>211,000</td>
<td>1.6%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-27,000</td>
<td>-9,000</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>-4.9%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>2.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.1%</td>
<td>4.9%</td>
<td>5.4%</td>
<td>5.5%</td>
<td>6.0%</td>
<td>5.8%</td>
</tr>
</tbody>
</table>
</body>
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Non-farm payrolls declined 35,000 in September. The decline very much reflected the effects of Hurricane Katrina, then Hurricane Rita which made landfall during the week the employment surveys were taken. The m/m decline in payrolls [...]

Decline in U.S. Payrolls Dampened

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051007a.jpg" width="353">
Non-farm payrolls declined 35,000 in September. The decline very much reflected the effects of Hurricane Katrina, then Hurricane Rita which made landfall during the week the employment surveys were taken. The m/m decline in payrolls was the first in over two years, although several factors dampened its economic significance. 1) Consensus expectations had been for a for a deeper 168,000 decline. 2) August &amp; July payrolls were revised up. 3) The less affected employment tally from the Household survey fell just 17,000.
The upward revisions to earlier months&#39; payrolls pulled the 3Q gain in the index of aggregate hours worked (employment times hours worked) to a respectable 0.4% (1.9% y/y). Hours worked in 2Q increased 0.7% from 1Q05.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051007b.jpg" width="353">
Perhaps 200,000 jobs were lost in September due to storms and in October payrolls may be reduced by another 150,000 due to the hurricanes.
Factory sector payrolls felt the brunt of the September storms and fell 27,000 following a 9,000 worker decline in August which was less than initially estimated.
Private service producing industries also were hard hit as indicated by a 67,000 (+2.0% y/y) decline in payrolls. Retail jobs fell 88,000 (+0.9% y/y) as a number of shopping malls along the Gulf Coast were leveled while jobs in trade, transportation and utilities fell 94,000 (+1.2% y/y). The leisure &amp; hospitality industries shed 80,000 (+1.9% y/y) jobs.
On the plus side, professional &amp; business services jobs rose 52,000 (3.3% y/y) while financial sector jobs rose 11,000 (2.1% y/y).Education &amp; health services jobs rose 49,000 (2.7% y/y) and construction jobs increased 23,000 (4.1% y/y).
The unemployment rate from the household survey rose as expected to 5.1%. Employment fell 17,000 (+2.1% y/y) after a 373,000 gain in August and the labor force rose 252,000 (1.7% y/y).
Average hourly earnings increased a moderate, expected 0.2% and reflected a 1.7% y/y gain in factory earnings.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-35,000</td>
<td>211,000</td>
<td>1.6%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-27,000</td>
<td>-9,000</td>
<td>-0.8%</td>
<td>-1.2%</td>
<td>-4.9%</td>
<td>-7.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>2.7%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.1%</td>
<td>4.9%</td>
<td>5.4%</td>
<td>5.5%</td>
<td>6.0%</td>
<td>5.8%</td>
</tr>
</tbody>
</table>
Canadian Jobs Slip in September; Declining Participation Holds Down Unemployment 
by <a href="/comment/Stone.html">Carol Stone</a> October 7, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051007c.jpg" width="353">
Both jobs and unemployment edged down in Canada in September. The number of jobs eased by 2,300 while the unemployment rate ticked down to 6.7% from 6.8% in August. A gradual but persistent decline in labor force participation is what produces these seemingly contradictory movements in employment and unemployment.
The jobs decrease was actually quite minor on the month. An outsized drop in finance, 29,000, actually looks a bit peculiar for that sector; other jobs decreases occurred in manufacturing, business services, wholesale and retail trade, accommodation and food services and public administration. But these job losses were almost entirely offset by a 20,000 gain in information industries, plus increases in &quot;other&quot; services, professional and technical services, education and health care. Employment had gained 27,500 in August, but overall, the trend in jobs growth has been slowing.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051007d.jpg" width="353">
The unemployment rate returned to 6.7% after two months at 6.8%. The 6.7% level is the lowest since the same in May and June of 2000, and hadn&#39;t been undercut before that for just over 25 years. However, as we have explained a couple of times earlier this year in discussing the Canadian labor data, this low rate doesn&#39;t suggest that these labor markets are tight. The labor force also decreased marginally in September and continues to exhibit a 12-month growth rate at or below 1%. The labor force participation rate fell again. Its current 67.1% is the lowest since August 2002; it reflects a slight decrease in participation above age 25 and a bigger decline in younger people&#39;s participation. The unemployment rate for young workers is hovering around 12.5%, having come down from well over 14% just two years ago. But it is reduced participation of this age group that has helped its recent unemployment picture. Employment opportunities for them have been almost completely flat for about three years.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">CanadaAge 15 and over</th>
Mo/Mo Change, 000s
<th scope="col">Yr/Yr %&nbsp; Sept </th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Sept 2005</td>
<td>Aug 2005</td>
<td>2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Employment</td>
<td>-2.3</td>
<td>27.5</td>
<td>1.2%</td>
<td>1.5%</td>
<td>1.9%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods- Producing</td>
<td>-14.5</td>
<td>24.6</td>
<td>0.4%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>6.3%</td>
</tr>
<tr>
<td class="firstcol">Service- Producing</td>
<td>12.2</td>
<td>2.8</td>
<td>1.5%</td>
<td>1.2%</td>
<td>2.6%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force</td>
<td>-7.4</td>
<td>-30.8</td>
<td>0.7%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>Sept 2005</td>
<td>Aug 2005</td>
<td>Sept 2004</td>
<td colspan="3">Annual Average</td>
</tr>
<tr class="odd">
<td class="firstcol">6.8%</td>
<td>7.0%</td>
<td>7.3%</td>
<td>7.2%</td>
<td>7.7%</td>
<td>7.7%</td>
</tr>
<tr>
<td class="firstcol">Participation Rate</td>
<td>77.8%</td>
<td>78.0%</td>
<td>78.3%</td>
<td>78.2%</td>
<td>78.1%</td>
<td>77.4%</td>
</tr>
</tbody>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051006b.jpg" width="353">
UK industrial production sank in August by 0.9% from July, mainly reflecting a further plunge in oil and gas extraction, but also including decreases in several manufacturing industries. Forecasters had expected a modest increase, perhaps thinking that the oil and gas sector would rebound after two successive sizable decreases. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051006c.jpg" width="353">
Oil and gas extraction is subject to two trends, a long-run decrease as North Sea reserves dwindle, and a short-run maintenance shutdown that took longer than normal this summer. Regarding the first, output of North Sea petroleum and gas has been ratcheting lower since late 1999. The industrial production index for oil and gas extraction averaged 81.5 (index, 2002=100) during the first half of this year, compared with a peak of about 112.0 in early 2000, a total reduction of roughly 27.5%. Then each year, output is also reduced for maintenance. This slowdown occurs in late spring and summer, but the exact timing varies. Analysts apparently believed output would pick up quickly in August, although previous year&#39;s patterns indicate that it can remain relatively sluggish even through September. That said, the current drop has been very steep -- and it probably isn&#39;t helping the tight world supply situation.
Among manufacturing industries, there was a mix of ups and downs in August production. Food, textiles and paper products weakened, but furniture, chemicals and electronics gained. Notably, while production of crude oil and gas at the well have declined, refining activity has been firm in recent months. At least one press report indicated concern that oil producers weren&#39;t increasing supply in the face of rising prices. Perhaps not yet, but refiners appear to have been doing so.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">United Kingdom:</a> % Chg*</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.7</td>
<td>-0.5</td>
<td>-2.5</td>
</tr>
<tr>
<td class="firstcol">Oil &amp; Gas Extraction </td>
<td>-7.7</td>
<td>-4.0</td>
<td>-4.0</td>
<td>-19.4</td>
<td>-8.4</td>
<td>-5.6</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing </td>
<td>-0.2</td>
<td>0.1</td>
<td>0.2</td>
<td>1.9</td>
<td>1.8</td>
<td>0.1</td>
<td>-3.1</td>
</tr>
</tbody>
</table>
</body>
</html>

UK industrial production sank in August by 0.9% from July, mainly reflecting a further plunge in oil and gas extraction, but also including decreases in several manufacturing industries. Forecasters had expected a modest increase, [...]

UK Industrial Production Falls in August as Oil Production Lags

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051006a.jpg" width="353">
Initial filings for unemployment insurance outpaced Consensus expectations for 365,000 claims and rose 21,000 to 390,000 last week. The prior week&#39;s decline was lessened to 66,000.
The Labor Department indicated that last week 74,000 initial claims were linked to Hurricanes Katrina &amp; Rita and totaled 363,000 during September.
The four-week moving average of initial claims rose to 404,500 (17.2% y/y) from 388,750 during the prior four weeks.
Continuing claims for unemployment insurance surged 118,000 following a downwardly revised 129,000 increase during the prior week.
The insured rate of unemployment rose to 2.3% from 2.2% the week prior. The low in early September was 2.0%.
Hurricane Katrina and the Employment Situation report for September 2005 from the US Bureau of Labor Statistics can be found <a href="http://www.bls.gov/katrina/empsitbrief.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">09/31/05</th>
<th scope="col">09/24/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>390</td>
<td>369</td>
<td>14.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Hurricane Related Claims (000, NSA)</td>
<td>74</td>
<td>70</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,905</td>
<td>2.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial filings for unemployment insurance outpaced Consensus expectations for 365,000 claims and rose 21,000 to 390,000 last week. The prior week's decline was lessened to 66,000. The Labor Department indicated that last week 74,000 [...]

Hurricanes Lifted Initial Jobless Insurance Claims

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051006a.jpg" width="353">
Initial filings for unemployment insurance outpaced Consensus expectations for 365,000 claims and rose 21,000 to 390,000 last week. The prior week&#39;s decline was lessened to 66,000.
The Labor Department indicated that last week 74,000 initial claims were linked to Hurricanes Katrina &amp; Rita and totaled 363,000 during September.
The four-week moving average of initial claims rose to 404,500 (17.2% y/y) from 388,750 during the prior four weeks.
Continuing claims for unemployment insurance surged 118,000 following a downwardly revised 129,000 increase during the prior week.
The insured rate of unemployment rose to 2.3% from 2.2% the week prior. The low in early September was 2.0%.
Hurricane Katrina and the Employment Situation report for September 2005 from the US Bureau of Labor Statistics can be found <a href="http://www.bls.gov/katrina/empsitbrief.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">09/31/05</th>
<th scope="col">09/24/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>390</td>
<td>369</td>
<td>14.4%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Hurricane Related Claims (000, NSA)</td>
<td>74</td>
<td>70</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,905</td>
<td>2.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
UK Industrial Production Falls in August as Oil Production Lags 
by <a href="/comment/Stone.html">Carol Stone</a> October 6, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051006b.jpg" width="353">
UK industrial production sank in August by 0.9% from July, mainly reflecting a further plunge in oil and gas extraction, but also including decreases in several manufacturing industries. Forecasters had expected a modest increase, perhaps thinking that the oil and gas sector would rebound after two successive sizable decreases. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051006c.jpg" width="353">
Oil and gas extraction is subject to two trends, a long-run decrease as North Sea reserves dwindle, and a short-run maintenance shutdown that took longer than normal this summer. Regarding the first, output of North Sea petroleum and gas has been ratcheting lower since late 1999. The industrial production index for oil and gas extraction averaged 81.5 (index, 2002=100) during the first half of this year, compared with a peak of about 112.0 in early 2000, a total reduction of roughly 27.5%. Then each year, output is also reduced for maintenance. This slowdown occurs in late spring and summer, but the exact timing varies. Analysts apparently believed output would pick up quickly in August, although previous year&#39;s patterns indicate that it can remain relatively sluggish even through September. That said, the current drop has been very steep -- and it probably isn&#39;t helping the tight world supply situation.
Among manufacturing industries, there was a mix of ups and downs in August production. Food, textiles and paper products weakened, but furniture, chemicals and electronics gained. Notably, while production of crude oil and gas at the well have declined, refining activity has been firm in recent months. At least one press report indicated concern that oil producers weren&#39;t increasing supply in the face of rising prices. Perhaps not yet, but refiners appear to have been doing so.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/UK.HTM">United Kingdom:</a> % Chg*</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>-0.9</td>
<td>-0.4</td>
<td>-0.2</td>
<td>-0.5</td>
<td>0.7</td>
<td>-0.5</td>
<td>-2.5</td>
</tr>
<tr>
<td class="firstcol">Oil &amp; Gas Extraction </td>
<td>-7.7</td>
<td>-4.0</td>
<td>-4.0</td>
<td>-19.4</td>
<td>-8.4</td>
<td>-5.6</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing </td>
<td>-0.2</td>
<td>0.1</td>
<td>0.2</td>
<td>1.9</td>
<td>1.8</td>
<td>0.1</td>
<td>-3.1</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051005f.jpg" width="353">
Labor costs in France have maintained a steady trend over the last several months, rising at about a 2-1/2% pace, year-on-year.These hourly data are reported for selected sectors of French industry, with mechanical/electrical manufacturers running just above 2.5% and business services just below that rate. Labor costs in the textile industry have seen a pickup this year to 3.2% in June from 2.3% in December 2004, while clothing and leather have risen slightly faster this year at 2.15% compared with 1.77%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051005e.jpg" width="353">
For workers, the flatter trends in machinery and services since last autumn would be a welcome development after several years of progressively slower gains. In addition, as noted in the table below, consumer prices through June had also slowed noticeably. In this comparison, we chose the CPI for urban workers, which may reflect more closely than the overall CPI the group covered by the labor cost data. The combination of the labor cost and CPI figures shows that through the first half of this year, the real purchasing power of hourly compensation picked up to about 1% for both mechanical equipment and service workers from only about 0.5% across last year. This is evident in the second graph.
Since June the CPI has begun rising more rapidly, with a 1.7% year-on-year increase in August. So the improvement in workers&#39; purchasing power may have ended. But at least any slowing would be from a faster rate than had prevailed last year, and in the service sector, 2003 as well.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/FRANCE/FRANCE.HTM">France: Hourly Labor Costs</a> (NSA, yr/yr % chg)</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Mechanical/Electrical Industries</td>
<td>2.53</td>
<td>2.53</td>
<td>2.41</td>
<td>3.49</td>
<td>4.07</td>
</tr>
<tr class="odd">
<td class="firstcol">Business Services Industries</td>
<td>2.47</td>
<td>2.56</td>
<td>2.52</td>
<td>2.84</td>
<td>4.08</td>
</tr>
<tr>
<td class="firstcol">CPI: Urban Workers</td>
<td>1.53</td>
<td>1.53</td>
<td>2.01</td>
<td>2.43</td>
<td>2.39</td>
</tr>
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Labor costs in France have maintained a steady trend over the last several months, rising at about a 2-1/2% pace, year-on-year.These hourly data are reported for selected sectors of French industry, with mechanical/electrical [...]

Labor Costs in France Stabilize After Slowdown, an Aid to Workers' Purchasing Power

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051005a.jpg" width="353">
The total number of mortgage applications fell 1.1% last week following the sharp 6.6% drop the prior week, according to the Mortgage Bankers Association. In September, applications did rise 0.2% from August but the average level was down 6.7% from a recent peak in June.
Purchase applications fell for the third consecutive week. A 1.9% decline reduced the gain in September to 1.0% versus August. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051005b.jpg" width="353">
Mortgage applications to refinance were roughly unchanged w/w after the 10.5% plunge the prior week. For September, refis fell 0.7% m/m following a 10.6% drop in August.
The effective interest rate on a conventional 30-year mortgage rose to 6.18% from 6.09% the week prior and the effective rate on a 15-year mortgage rose to 5.83%. The interest rate on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10 year Treasury securities.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
House Prices and Monetary Policy: A Cross-Country Study from the Board of Governors of the Federal Reserve System is available <a href="http://www.federalreserve.gov/pubs/ifdp/2005/841/ifdp841.pdf"> here</a>.
Yesterday&#39;s speeches from several Federal Reserve Board officials contained comments on the economic outlook, the business cycle and Fed Policy. Dallas Fed President Fisher&#39;s comments can be found <a href="http://www.dallasfed.org/news/speeches/fisher/fs051004.html"> here</a>, St. Louis Fed President Poole&#39;s speech is <a href="http://www.stlouisfed.org/news/speeches/2005/10_04_05.htm"> here</a> and Philadelphia Fed President Santomero&#39;s comments are available <a href="http://www.philadelphiafed.org/publicaffairs/speeches/2005_santomero10.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">09/30/05</th>
<th scope="col">09/23/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>713.5</td>
<td>721.2</td>
<td>-1.6%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>473.8</td>
<td>483.1</td>
<td>3.2%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,107.4</td>
<td>2,106.6</td>
<td>-7.2%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications fell 1.1% last week following the sharp 6.6% drop the prior week, according to the Mortgage Bankers Association. In September, applications did rise 0.2% from August but the average level was [...]

Mortgage Applications Fell With Fewer New Purchases

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/051005c.jpg" width="353">
Challenger, Grey &amp; Christmas reported that job cut announcements rose a slight 1.8% in September to 71,836 following a 31.5% m/m drop during August. The three month average of job cut announcements fell 13.8% to 81,793 (-2.5% y/y).
During the last ten years there has been an 84% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Moderate increases in job cut announcements were scattered throughout industry but large m/m increases in retail (688.4% y/y), consumer goods (-21.3% y/y) and electronics (72.8% y/y) were offset by declines in insurance (20.4% y/y), telecommunications (-91.3% y/y) and pharmaceuticals (67.5% y/y).
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans fell sharply m/m (-3.1% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>71,836</td>
<td>70,571</td>
<td>-33.4%</td>
<td>1,039,175</td>
<td>1,236,426</td>
<td>1,431,052</td>
</tr>
</tbody>
</table>
</body>
</html>

Challenger, Grey & Christmas reported that job cut announcements rose a slight 1.8% in September to 71,836 following a 31.5% m/m drop during August. The three month average of job cut announcements fell 13.8% to 81,793 (-2.5% y/y). [...]

Challenger Layoffs Up Slightly

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

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The Consumer Price Index increased 0.2% in July after rising 0.3% in June and 0.1% in May. The July increase matched the forecast in the Action Economics Forecast Survey. The 2.7% y/y increase in the headline CPI in July held steady with June, but was increased from 2.3% in April. It remained below the 9.1% peak in June 2022. The CPI excluding food & energy increased an expected 0.3% last month after a 0.2% June rise and a 0.1% uptick in May. The 3.1% y/y July rise compared to 2.8% from March through May, still well below the 6.6% peak in September 2022.

Energy prices declined 1.1% (-1.6% y/y) last month after rising 0.9% in June. Gasoline prices weakened 2.2% (-9.5% y/y) after rising 1.0% in June. Fuel oil prices improved 1.8% (-2.9% y/y) after rising 1.3% in May. Natural gas prices fell 0.9% (+13.8% y/y) following a 0.5% gain, and electricity prices eased 0.1% (5.5% y/y) after rising 1.0% in June.

Food prices held steady in July (+2.9% y/y) following two straight 0.3% increases. Egg prices fell 3.9% (+16.4% y/y), off for the fourth straight month. Meat, poultry & fish prices rose 0.7% (4.6% y/y) after increasing 0.8%, while dairy product prices gained 0.7% (1.5% y/y), after easing in four of the last five months. Cereal & bakery product costs eased 0.2% (+1.0% y/y) for the second straight month while fruit & vegetable prices held steady (0.2% y/y), following a 0.9% gain. Nonalcoholic beverage prices declined 0.5% (+3.6% y/y) in July after rising 1.4% in June.

Goods prices less food and energy rose 0.2% in July for the second straight month. The 1.2% y/y price gain is up from slight y/y declines in the first three months of this year. Prices of used cars and trucks rose 0.5% (+4.8% y/y) last month, after falling 0.7% in June, while new vehicle costs held steady (+0.4% y/y) after falling 0.3% for two consecutive months. Apparel prices edged 0.1% higher (-0.2% y/y) in July after rising 0.4%. Appliance prices fell 0.9% (-0.3% y/y), after strengthening 1.9%. Home furnishings prices increased 0.7% (2.4% y/y) after rising 1.0%. Recreation product costs rose 0.4% (-0.1% y/y) in July, after a 0.8% increase. Education & communication product costs declined 1.3% (-4.3% y/y) after holding steady in June. Medical care goods prices rose 0.1% (NSA, 0.1% y/y) for the second straight month.

Services prices less energy strengthened 0.4% (3.6% y/y) after rising 0.3% in June. Shelter prices rose 0.2% (3.7% y/y), the same as in June, as owners’ equivalent rent of primary residences increased 0.3% (4.1% y/y) for the third straight month. The cost of lodging away from home declined 1.0% (-3.5% y/y), the fifth straight month of decline. Rents of primary residences gained 0.3% (3.5% y/y), after two consecutive 0.2% increases. Transportation service prices jumped 0.8% (3.5% y/y) after gaining 0.2% and the cost of motor vehicle insurance edged up 0.1% (5.3% y/y) in July, the same as in June. Public transportation costs increased 3.0% (0.7% y/y) after rising 0.4% during June. The cost of medical services increased 0.8% (4.3% y/y) after a 0.6% rise, and the cost of recreation services rose 0.4% (3.9% y/y) after rising 0.2% in June. Education & communication services prices rose 0.2% (1.1% y/y) after edging 0.1% higher in June.

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

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- Decline in energy & stable food prices reduce overall strength.
- Core inflation picks up with tariff effects.
- Core goods prices strengthen but core services inflation steadies.

U.S. Consumer Price Inflation Eases in July

Winnie Tapasanun

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The NFIB Small Business Optimism Index increased to 100.3 in July, the highest level since February, from 98.6 in June and 98.8 in May, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. This was the third consecutive month that the index was above the 52-year average of 98. The index was down from its recent peak of 105.1 in December but up from 93.7 in July 2024 and a low of 88.5 in March 2024. Six of the 10 index components rose, two fell, and two were unchanged. Amid high uncertainty (with tariffs, inflation, and international conflicts), the NFIB Small Business Uncertainty Index rose to 97 in July, the highest reading in five months, after a five-point decline to 89 in June. The index, while down from its record high of 110 in October, was above its recent low of 86 in December and a low of 65 in November 2023.

The outlook for business conditions in the next six months remained positive for the ninth straight month in the latest survey. The net balance of respondents expecting the economy to improve rose to 36% in July, the highest level since February, following a three-point decline to 22% in June; thus, having remained significantly above a record low of -61% in June 2022. Expected real sales slipped to a net 6% in July after a three-point decrease to 7% in June, posting the lowest of three successive positive readings. The latest figure was above its recent low of -18% in August 2024. A net -9% of respondents reported higher nominal sales in the past three months, down from -5% in June. The latest result was below the most recent positive reading of 1% in May 2022 and a peak of 9% in June 2021.

Plans to expand the business rose to 16% in July, the highest reading since January, from 11% in June; the latest figure, while down from its most recent high of 20% in December, was up from a low of 2% in March 2023. Plans to make capital outlays rebounded to 22% in July following a one-point dip to 21% in June; these numbers were down from their recent high of 28% in November and a high of 31% in October 2021. Meanwhile, expected credit conditions registered at -4% for the third consecutive month in July; this steady reading was slightly below its recent high of -2% in December but above a low of -11% in November 2023.

On the labor front, forty-eight percent of respondents reported that qualified workers to fill job openings were hard to find in July, down from 50% in June. These numbers were below their recent high of 56% in August 2024, a high of 57% in September 2023, and a peak of 62% in September 2021. A net 14% planned to increase employment in July, slightly up from 13% in June and posting the highest reading since February; it was above its recent low of 11% in March 2024 but below a high of 26% in May 2022 and a peak of 32% in August 2021. Notably, 33% reported positions not able to be filled in July, down from 36% in June and registering the lowest reading since January 2021; these figures remained below a high of 51% in May 2022.

Overall earnings trends had remained in negative territory since December 2019. The figure held at -22% in July and June, a poor reading, following a five-point drop to -26% in May. These readings, while up from a low of -37% in August 2024, remained below a high of -18% in March 2023 and a high of -5% in June 2021.

On the pricing front, actual and expected selling prices, while trending down, remained at an inflationary level; thus, suggesting continued inflationary pressures. The net percent of firms raising their average selling prices fell to 24% in July, the lowest reading since January, after a four-point rise to 29% in June. These numbers were up from 22% in July 2024 but well below a high of 66% in March 2022. The percentage planning to raise prices fell to a three-month-low 28% in July following a one-point increase to 32% in June; these figures were above 24% in July 2024 but below a high of 33% in March 2024 and a high of 52% in March 2022.

Wage inflation, while relatively high, eased in the July survey. A net 27% of respondents raised compensation during the last three months, down from 33% reported in the June survey. It was down from a high of 46% in February 2023 and a peak of 50% in January 2022. A net 17% of firms planned to raise worker compensation in the next three months, down from 19% reported in June and posting the lowest reading in three months; these numbers were below a high of 28% in November, a high of 30% in November 2023, and a high of 32% in October 2022.

The quality of labor was reported as the single most important problem facing small businesses, as reported by 21% of NFIB members in July, up five points from 16% in June; it registered the highest reading since August 2024 and the biggest m/m increase since August 2022. Taxes were reported as the next most important problem, with 17% reported in July vs. 19% in June. Inflation continued to be a problem facing small businesses, as reported by 11% in July and June, the lowest reading since September 2021; the figure was well below a peak of 37% in July 2022. Other concerns (in July vs. June) included poor sales (11% vs. 10%), the cost of labor (9% vs. 10%), government requirements (8% vs. 9%), insurance cost/availability (8% vs. 8%), and competition from large businesses (6% vs. 7%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- July NFIB Small Business Optimism Index up 1.7 pts. to 100.3.
- Uncertainty Index up 8 pts. to a 5-month-high 97.
- Expectations for economy up 14 pts. to 36%, the highest since Feb.
- Plans to expand business up 5 pts. to 16%, the highest since Jan.
- Expected real sales down 1 pt. to 6%, still positive for the third straight month.
- Percent of firms raising avg. selling prices down 5 pts. to a 6-month-low 24%.
- Quality of labor (21%), taxes (17%), and inflation (11%) are the top three business concerns.

U.S. NFIB Small Business Optimism Rises in July; Highest Level Since February

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Retail gasoline prices for all grades, on average, dipped to $3.24 per gallon (-8.1% y/y) last week after rising to $3.27 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.75 per gallon (+1.3% y/y) in the week of August 11 after easing to $3.80 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $64.71 per barrel (-14.6% y/y) in the week ended August 8 from $68.50 in the prior week. The drop left prices at the lowest level since the first week of June. Prices, nonetheless, remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $68.17 per barrel (-13.5% y/y) in the week of August 8, after rising to $70.09 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $67.36 per gallon yesterday.

Natural gas prices slipped to an average $2.99/mmbtu (+59.0% y/y) in the week ended August 8, after falling to an average $3.03/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $3.05 per mmbtu.

Gasoline demand declined 2.2% y/y in the four weeks ending August 1, following a 3.0% y/y decline in the prior four weeks. Demand for all petroleum products rose 1.6% y/y in the four weeks ending August 1, after a 1.5% y/y increase in the previous four-week period. Crude oil input to refineries rose 2.9% y/y in the four weeks ending August 1, after a 1.7% y/y gain in the prior four weeks.

Gasoline inventories rose 0.9% y/y in the week ending August 1 after a 2.1% y/y in the prior week. Residual fuel oil inventories fell 25.8% y/y in the week of August 1, after a 22.5% y/y fall in the prior week. Crude oil inventories rose 2.7% y/y in the week of August, after a 2.6% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories held at 25.5 days in the week of August 1. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil eased to 25.0 days in the week of August 1 from 25.2 days in the prior week and remained below a high of 31.9 days in the week of March 3, 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** database.

- Gasoline prices weaken.
- Crude oil prices decline sharply.
- Natural gas prices ease.


U.S. Energy Prices Fall in Latest Week

Robert Brusca

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**Macro-expectations-** The ZEW financial experts registered disappointment this month in the tariff deal that the European Community struck with the United States. Macroeconomic expectations in August for Germany were slashed back to a reading of 34.7 in August from 52.7 in July; for the United States, expectations also were cut to -41.2 from -34.2. These two sets of reductions brought German expectations to a 60.8 percentile standing, leaving them still above their median on data back to the early 1990s. The U.S. reading has a much lower, 9.3 percentile standing on the same timeline. Despite the ZEW experts’ opinion that the tariff deal is bad for Europe, it apparently doesn't boost expectations for the U.S. at all. This, of course, makes me wonder to what extent the forecast has a bit of sour grapes to it.

**The economic situation-** The economic situation also deteriorates this month with the euro area assessment falling to -31.2 from -24.2 in July. Germany's assessment falls to -68.6 from -59.5 as the tariff deal weighs on Europe and Germany. The current situation for the U.S. improves marginally to +0.1 in August from -5.9 in July. These new readings leave the euro area economic situation reading with a ranking in its 46.9 percentile, Germany ranks in its 22.2 percentile, and the U.S. stands in its 35.1 percentile.

**Inflation expectations-** Inflation expectations in Europe remain low but increased to some extent in the U.S. where they were already high. The European readings for the euro area fell back to -6.7 in August from -5.8 in July. For Germany, the reading was little changed at -5.1 in August from -5.2 in July. The U,S, rating moved up to +74.5 in August from +64.3 in July. The queue standings for these metrics show the euro area inflation expectations standing in its 27th percentile, the same as for Germany, but for the United States inflation expectations are up to their 95.9 percentile! This is an extremely interesting angle from the ZEW financial experts because we have the Fed in the U.S. poised to cut interest rates. We have the President pushing the Fed to cut interest rates more quickly and more deeply than it wants to do it. And despite the fact that inflation has run over target for four and a quarter years in the U.S., we have the Fed seemingly ready to cut interest rates, perhaps twice by the end of the year, even with the potential for inflation from tariffs knocking at the door. The ZEW experts ‘take’ on the U.S. and its financial situation seems to be quite different from how it's being analyzed in the United States.

**Short-term interest rates-** Short-term interest rate expectations for the euro area show less of an inclination for rates to fall with the -35.7 reading in August compared to -49.7 in July. For the U.S., the -61.5 reading is lower than July's -43.8, indicating that expectations for rate cuts in the U.S. are growing. The euro area short-term rate expectation has an 18.4 percentile standing whereas in the U.S. the standing is at its 10.4 percentile.

**Long-term rate expectations-** Long-term interest rates found reductions both in Germany and the U.S. in August. German expectations fell to an index reading of 19.0 from 26.1 in July. In the U.S., the reading fell to 26.4 from 38.7. The queue standings for the German rate are in their 25.5 percentile, below the U.S. where the percentile standing is at its 32nd percentile. In both cases, the expectations for long rates indicate a good deal of moderation. Queue standings well below their respective median readings for both Germany and the U.S. (remembering that the medians for ranked data occur at the 50th percentile mark).

**Stocks-** Stock market expectations were slightly weaker in Europe with the euro area falling to 18.1 in August from 22.4 in July. The German reading fell back to 18.5 from 24.6, while the U.S. reading is little changed at 8.4 compared to 8.6 in July. The standings for all of these readings are around the 15th percentile; there are small differences among the different reporters, but nothing of significance.

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**Summing up**
On balance, the ZEW participants seemed to be quite upset by the tariff agreement that was struck, and they see worse conditions ahead for Europe without clear gains being made for the U.S. They did not see tariffs as a zero-sum game. However, there are other things in the mix to affect the outlook. There's still the war in Ukraine, the unsettled conditions in the Middle East, and jittery geopolitical circumstances out in the Pacific Rim. There is a major meeting between President Trump and Russian leader Putin set to occur in Alaska. All eyes are on that for its potential geopolitical ramifications.

For the moment, economic expectations have been reduced, but based on the earlier NATO agreement there is going to be some step up in military spending and even with these new tariffs put in place it's not clear yet how much economic activity is going to be impacted or even how much inflation is going to be affected. This could not be made clearer than by looking at the assessments of the ZEW experts concerning the U.S. inflation situation and the expectations of U.S. economists and the outlook for fed policy garnered from looking at the exact same inflation data. The prospect for Central Bank rate cuts, like beauty, apparently is in the eye of the beholder.

ZEW Survey Shows Reduced Expectations on Tariff Deal

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The **Industrial Materials Price Index** from the Foundation for International Business and Economic Research (FIBER) declined 0.5% (+2.5% y/y) during the latest four-week period, after rising 0.7% in the prior four weeks. It was the first decline since early-May and accompanied a sideways movement in factory sector production.

**Crude Oil & Benzene** group prices moved 1.6% lower (-11.2% y/y) in the latest four week period. The cost of West Texas Intermediate crude oil declined 3.3% to $65.39 per barrel and remained 11.9% lower y/y. It had fallen to a low of $58.50 per barrel in the second week of May. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, weakened 1.9% (-30.8% y/y). Excluding crude oil, the industrial commodity price index eased 0.3% (+3.4% y/y) during the last four weeks.

Prices in the **Metals** group, prices fell 1.0% (+6.2% y/y) over the most recent four weeks. Lead prices declined 4.7% (+0.4% y/y) while copper scrap prices weakened 3.0% (+9.9% y/y). Aluminum prices slipped 0.3% in four weeks (+17.3% y/y), and tin prices fell 0.7% (+12.5% y/y). Working higher, the cost of zinc rose 2.2% (7.8% y/y), and steel scrap costs gained 1.3% (-7.7% y/y) over four weeks.

**Miscellaneous** group prices were little changed (+6.6% y/y) in the latest four week period. The price of natural rubber fell 7.4% (-11.4% y/y) in four weeks, but framing lumber prices gained 5.8% (33.6% y/y). Tallow costs (used in the soap industry) rose 2.4% (32.5% y/y) in four weeks.

Prices in the **Textile** group edged 0.1% higher (2.3% y/y) during the last four weeks. Burlap costs improved 3.6% in four weeks (3.1% y/y), but cotton prices fell 1.6% (+5.9% y/y) in that same period.

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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- Decline is first in three months.
- Crude oil and metals prices move lower.
- Lumber prices improve while textile costs steady.

Economy in Brief: October 2005

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