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/050908c.jpg" width="353">
The Australian economy remains strong, as labor markets show favorable trends and GDP growth in Q2 was the best since late 2003. August&#39;s labor force survey included a gain in employment of 32,600, following July&#39;s 12,100. One forecast survey had expected the number of people employed to be flat in August. Indeed, a quick glance at the graph showing the monthly changes suggests that this would be a logical supposition: this current string of monthly increases is a long one, 12 months. Employment in Australia is characterized by a quite erratic monthly pattern, rather than the currently persisting increases. In fact, the length of this 12-month stretch has not been surpassed since 1980.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908d.jpg" width="353"> 
Other aspects of the data describe general strength in the labor market. Two months ago, we first saw the unemployment rate at 5%, a low for at least 28 years, and that has been maintained now for a third successive month. Further, the participation rate has hit another new high, 64.8%. Sometimes, a low unemployment rate only signals that people have withdrawn from the labor force, that they see few opportunities to work, so they reduce their participation. This is clearly not the case presently in Australia, with record participation, now also sustaining its current historic range for a third month; before this year, the proportion of the population working or wanting to work had only been more than 64% in five individual months since the inception of these data in February 1978.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908e.jpg" width="353">
Australian GDP, reported yesterday (September 7) also showed this strength in Q2. At a 1.3% quarterly increase, it was marginally higher than forecasts, which called for 1.2%. Business investment rebounded after a Q1 decline, with both construction and machinery experiencing large increases. Exports accelerated after slowing somewhat in Q1, while import growth eased, so that the net export deficit was a much smaller drag on growth than it had been in Q1. Consumer spending expanded at about the same 0.8% pace as in Q1. The nation&#39;s economy continues to benefit from the growth in China and from the worldwide increases in commodity prices; the mining sector in particular is seeing vigorous growth, along with petroleum refining and processing of nonmetallic minerals. Finance and parts of the transportation sector are joining in the gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">Aug 2004</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">Employed (thous)</td>
<td>10067.5</td>
<td>10034.9</td>
<td>9664.3</td>
<td>9682.2</td>
<td>9481.4</td>
<td>9270.5</td>
</tr>
<tr>
<td class="firstcol">Change (thous/%)</td>
<td>+32.6</td>
<td>+12.1</td>
<td>4.2</td>
<td>2.1</td>
<td>2.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed (thous)</td>
<td>529.9</td>
<td>524.8</td>
<td>527.0</td>
<td>566.9</td>
<td>610.9</td>
<td>636.1</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>5.0</td>
<td>5.0</td>
<td>5.7</td>
<td>5.5</td>
<td>6.1</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>64.8</td>
<td>64.6</td>
<td>63.4</td>
<td>63.6</td>
<td>63.6</td>
<td>63.4</td>
</tr>
</tbody>
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The Australian economy remains strong, as labor markets show favorable trends and GDP growth in Q2 was the best since late 2003. August's labor force survey included a gain in employment of 32,600, following July's 12,100. One [...]

Australian Employed Continues to Rise; Unemployment Rate Maintains Record Low

Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908b.jpg">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), dipped in July to 2.6% from an upwardly revised June. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. A 102,000 decline in the total number of job openings reversed about half of the prior month&#39;s rise but openings remained up 9.7% y/y.
The hires rate dipped slightly to 3.4% for the second consecutive monthly decline. The hires rate is the number of hires during the month divided by employment.
The job separations rate fell sharply to 3.1%, the lowest level since January 2004. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.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/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.5%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
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The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings & Labor Turnover Survey (JOLTS), dipped in July to 2.6% from an upwardly revised June. The job openings rate is the number of job openings on [...]

JOLTS: U.S. Job Openings & Hires Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908a.jpg" width="353">
Initial claims for unemployment insurance dipped 1,000 last week to 319,000 from the prior week&#39;s unrevised level. Consensus expectations had been for a decline to 315,000.
The figure included about 10,000 disaster-related applications from hurricane-battered Alabama, Louisiana and Mississippi, a number likely to surge in coming weeks.
The four-week moving average of initial claims rose to 318,500 (-6.0% y/y).
Continuing claims for unemployment insurance fell 5,000 in the latest week following a downwardly revised 27,000 increase the week prior.
The insured unemployment rate remained at its four-year low of 2.0% for the eighth consecutive week.
Analysis of the Economic &amp; Budgetary Effects of Hurricane Katrina from the US Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/66xx/doc6627/09-06-ImpactKatrina.pdf">here</a>.
Consumption Taxes: Macroeconomic Effects and Policy Issues from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/Pdf/2Q05garn.pdf">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">09/03/05</th>
<th scope="col">08/27/05</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>
<td class="firstcol">Initial Claims</td>
<td>319</td>
<td>320</td>
<td>-2.1%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,593</td>
<td>-9.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for unemployment insurance dipped 1,000 last week to 319,000 from the prior week's unrevised level. Consensus expectations had been for a decline to 315,000. The figure included about 10,000 disaster-related [...]

Initial Claims for Unemployment Insurance Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908a.jpg" width="353">
Initial claims for unemployment insurance dipped 1,000 last week to 319,000 from the prior week&#39;s unrevised level. Consensus expectations had been for a decline to 315,000.
The figure included about 10,000 disaster-related applications from hurricane-battered Alabama, Louisiana and Mississippi, a number likely to surge in coming weeks.
The four-week moving average of initial claims rose to 318,500 (-6.0% y/y).
Continuing claims for unemployment insurance fell 5,000 in the latest week following a downwardly revised 27,000 increase the week prior.
The insured unemployment rate remained at its four-year low of 2.0% for the eighth consecutive week.
Analysis of the Economic &amp; Budgetary Effects of Hurricane Katrina from the US Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/66xx/doc6627/09-06-ImpactKatrina.pdf">here</a>.
Consumption Taxes: Macroeconomic Effects and Policy Issues from the Federal Reserve Bank of Kansas City can be found <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/Pdf/2Q05garn.pdf">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">09/03/05</th>
<th scope="col">08/27/05</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>
<td class="firstcol">Initial Claims</td>
<td>319</td>
<td>320</td>
<td>-2.1%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,593</td>
<td>-9.6%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
JOLTS: U.S. Job Openings & Hires Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908b.jpg" width="353">
The Bureau of Labor Statistics reported that the job openings rate, from the Job Openings &amp; Labor Turnover Survey (JOLTS), dipped in July to 2.6% from an upwardly revised June. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. A 102,000 decline in the total number of job openings reversed about half of the prior month&#39;s rise but openings remained up 9.7% y/y.
The hires rate dipped slightly to 3.4% for the second consecutive monthly decline. The hires rate is the number of hires during the month divided by employment.
The job separations rate fell sharply to 3.1%, the lowest level since January 2004. Total separations include quits, layoffs, discharges, and other separations as well as retirements. The total separations, or turnover, rate is the total number of separations during the month divided by employment.
The survey dates only to December 2000 but has since followed the movement in nonfarm payrolls.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/jolts.nr0.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/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor Turnover Survey)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.4%</td>
<td>3.5%</td>
<td>3.3%</td>
<td>3.4%</td>
<td>3.2%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>
Australian Employed Continues to Rise; Unemployment Rate Maintains Record Low 
by <a href="/comment/Stone.html">Carol Stone</a> September 8, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908c.jpg" width="353">
The Australian economy remains strong, as labor markets show favorable trends and GDP growth in Q2 was the best since late 2003. August&#39;s labor force survey included a gain in employment of 32,600, following July&#39;s 12,100. One forecast survey had expected the number of people employed to be flat in August. Indeed, a quick glance at the graph showing the monthly changes suggests that this would be a logical supposition: this current string of monthly increases is a long one, 12 months. Employment in Australia is characterized by a quite erratic monthly pattern, rather than the currently persisting increases. In fact, the length of this 12-month stretch has not been surpassed since 1980.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908d.jpg" width="353"> 
Other aspects of the data describe general strength in the labor market. Two months ago, we first saw the unemployment rate at 5%, a low for at least 28 years, and that has been maintained now for a third successive month. Further, the participation rate has hit another new high, 64.8%. Sometimes, a low unemployment rate only signals that people have withdrawn from the labor force, that they see few opportunities to work, so they reduce their participation. This is clearly not the case presently in Australia, with record participation, now also sustaining its current historic range for a third month; before this year, the proportion of the population working or wanting to work had only been more than 64% in five individual months since the inception of these data in February 1978.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050908e.jpg" width="353">
Australian GDP, reported yesterday (September 7) also showed this strength in Q2. At a 1.3% quarterly increase, it was marginally higher than forecasts, which called for 1.2%. Business investment rebounded after a Q1 decline, with both construction and machinery experiencing large increases. Exports accelerated after slowing somewhat in Q1, while import growth eased, so that the net export deficit was a much smaller drag on growth than it had been in Q1. Consumer spending expanded at about the same 0.8% pace as in Q1. The nation&#39;s economy continues to benefit from the growth in China and from the worldwide increases in commodity prices; the mining sector in particular is seeing vigorous growth, along with petroleum refining and processing of nonmetallic minerals. Finance and parts of the transportation sector are joining in the gains.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted</th>
<th scope="col">Aug 2005</th>
<th scope="col">July 2005</th>
<th scope="col">Aug 2004</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">Employed (thous)</td>
<td>10067.5</td>
<td>10034.9</td>
<td>9664.3</td>
<td>9682.2</td>
<td>9481.4</td>
<td>9270.5</td>
</tr>
<tr>
<td class="firstcol">Change (thous/%)</td>
<td>+32.6</td>
<td>+12.1</td>
<td>4.2</td>
<td>2.1</td>
<td>2.3</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed (thous)</td>
<td>529.9</td>
<td>524.8</td>
<td>527.0</td>
<td>566.9</td>
<td>610.9</td>
<td>636.1</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>5.0</td>
<td>5.0</td>
<td>5.7</td>
<td>5.5</td>
<td>6.1</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate (%)</td>
<td>64.8</td>
<td>64.6</td>
<td>63.4</td>
<td>63.6</td>
<td>63.6</td>
<td>63.4</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/050907e.jpg" width="353">
Industrial production in Europe appears to be holding up well, according to data for four countries reported today for July. Month-to-month movements are a bit erratic, but trends are distinctly upward, nonetheless.
As Louise Curley explained here yesterday, Germany&#39;s manufacturing sector is growing, at least for the present. Her commentary on factory sales data cited their 3.8% gain in July. The production behind those sales was up 1.3%, with total industrial output (excluding construction) up 1.1%. This was the second marked increase in a row after a sluggish performance in the winter and spring. The July gains were widespread across individual industries, with only petroleum refining, machinery and electrical equipment experiencing declines; that in machinery followed spike in June.
In Norway, total industrial production was up 1.1% in July after a drop of 6.2% in June. Oil and gas extraction dominates Norwegian industry; that sector rose after two sharp declines, and has been on an extended downtrend. By contrast, Norway&#39;s factories saw a small downtick in July, but prior increases have pushed their year-on-year performance to 4.0% growth, a pick-up after a small increase in 2004 and annual declines running all the way back through 1999. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907f.jpg" width="353">
In Hungary and Slovakia, modest increases in July followed declines in June, but year-on-year gains are substantial, at 5.8% and 4.7%, respectively. These countries&#39; industrial sectors have been expanding vigorously for at least the last four years, and the gains in Hungary for one version of its index go back to 1993.
Thus, as we indicated at the beginning, European industry seems stronger than might have perhaps been expected, given the high level of the euro and the high level of energy prices. However, this latter factor in particular may yet become burdensome for these nations. Louise Curley also pointed out here yesterday that domestic new orders in Germany have already turned flat. So it remains to be seen how long the recent gains in European production can be sustained.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Industrial Production*</th>
<th scope="col">July 2005</th>
<th scope="col">June 2005</th>
<th scope="col">Year/Year</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">Germany</td>
<td>1.1</td>
<td>1.4</td>
<td>0.6</td>
<td>3.0</td>
<td>0.4</td>
<td>-1.0</td>
</tr>
<tr>
<td class="firstcol">Norway</td>
<td>1.1</td>
<td>-6.2</td>
<td>-3.4</td>
<td>2.0</td>
<td>-4.1</td>
<td>0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Oil &amp; Gas Extraction</td>
<td>1.2</td>
<td>-9.5</td>
<td>-5.7</td>
<td>-1.5</td>
<td>-1.7</td>
<td>-1.5</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>-0.1</td>
<td>1.1</td>
<td>4.0</td>
<td>1.5</td>
<td>-4.3</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Hungary</td>
<td>1.2</td>
<td>-1.6</td>
<td>5.8</td>
<td>8.4</td>
<td>6.6</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">Slovakia</td>
<td>0.2</td>
<td>-0.5</td>
<td>4.7</td>
<td>4.2</td>
<td>5.0</td>
<td>6.4</td>
</tr>
</tbody>
</table>
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Industrial production in Europe appears to be holding up well, according to data for four countries reported today for July. Month-to-month movements are a bit erratic, but trends are distinctly upward, nonetheless. As Louise Curley [...]

Industrial Production Gains in Europe: Can That Pattern Be Sustained?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907d.jpg" width="353">
The total number of mortgage applications jumped 6.8% last week and recovered to the highest level since late July, according to the Mortgage Bankers Association.
Mortgage applications to refinance surged 7.7% w/w to the highest level since July as the effective interest rate on a conventional 30-year mortgage fell further to 5.87% from 5.98% the prior week. The effective rate on a 15-year mortgage also fell to 5.47%.
Purchase applications surged 6.1% after two weeks of sharp decline but the average level in August fell 1.3% from July. 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.
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>.

<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">09/02/05</th>
<th scope="col">08/26/05</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>771.6</td>
<td>722.5</td>
<td>11.5%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>499.1</td>
<td>470.6</td>
<td>4.9%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,357.1</td>
<td>2,187.8</td>
<td>20.9%</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 jumped 6.8% last week and recovered to the highest level since late July, according to the Mortgage Bankers Association. Mortgage applications to refinance surged 7.7% w/w to the highest level [...]

Lower Rates Spurred Mortgage Applications

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907c.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales were flat last week following four successive weeks of decline during August. 
The ICSC indicated that &quot;The results for this past week reflect the fallout of Hurricane Katrina as national sales were held back by about one percentage point as stores were closed in the path of the hurricane.&#148;
During the last ten years there has been a 56% correlation between the y/y change in chain store sales and the change in non-auto retail sales less gasoline, as published by the US Census Department. Chain store sales correspond directly with roughly 14% of non-auto retail sales less gasoline.
The leading indicator of chain store sales from ICSC fell in the latest week by 0.1% (+0.2% y/y) following a 0.2% decline the week prior. 
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">09/03/05</th>
<th scope="col">08/27/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>455.4</td>
<td>455.5</td>
<td>3.8%</td>
<td>4.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>


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The International Council of Shopping Centers (ICSC)-UBS survey indicated that chain store sales were flat last week following four successive weeks of decline during August. The ICSC indicated that "The results for this past week [...]

Chain Store Sales Flat

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907a.jpg" width="353">
Non-farm labor productivity last quarter was revised down to 1.8% from 2.2%. Consensus expectations had been for 2.1% growth. Growth in output was lowered to 4.1% from 4.4% reported initially while hours worked were raised to 2.2% from 2.1%.
Unit labor cost growth was revised sharply higher to 2.5% from 1.3% reflecting the reduction in productivity, but compensation costs were raised even more to 4.4% from 3.5%.
Factory sector productivity growth was similarly reduced to 3.6% (4.6% y/y) from 4.1% due to a lowered estimate of output.An upward revision to manufacturing compensation growth to 8.4% from 6.6% raised unit Labor costs sharply to 4.7% (4.3% y/y) from 2.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050907b.jpg" width="353">
Reported for the first time, nonfinancial corporate sector productivity surged 6.8% (6.3% y/y) and the spike lowered unit labor costs by 2.6% (+0.3% y/y). Output rose 9.5% (8.0% y/y). This measure is gleaned from the income side of the National Income &amp; Product Accounts (NIPA) as opposed to the non-farm and manufacturing figures which are derived from the output side. 
Analysis of the Economic &amp; Budgetary Effects of Hurricane Katrina from the US Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/66xx/doc6627/09-06-ImpactKatrina.pdf">here</a>.

<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/USECON/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col">2Q &#39;05 (Revised)</th>
<th scope="col">2Q &#39;05 (Prelim.)</th>
<th scope="col">1Q &#39;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">Output per Hour</td>
<td>1.8%</td>
<td>2.2%</td>
<td>3.2%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>3.8%</td>
<td>4.0%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>4.4%</td>
<td>3.5%</td>
<td>5.5%</td>
<td>6.5%</td>
<td>4.5%</td>
<td>4.0%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>2.5%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>4.2%</td>
<td>1.1%</td>
<td>0.2%</td>
<td>-0.5%</td>
</tr>
</tbody>
</table>


</html>

Non-farm labor productivity last quarter was revised down to 1.8% from 2.2%. Consensus expectations had been for 2.1% growth. Growth in output was lowered to 4.1% from 4.4% reported initially while hours worked were raised to 2.2% [...]

2Q U.S. Productivity Revised Down

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

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

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U.S. light vehicle sales dove 6.9% (-4.5% y/y) in October to 15.48 million units (SAAR) after holding steady at 16.62 million units in September. Sales fell broadly. 

Light truck sales slid 6.9% (-1.4% y/y) in October to 12.90 million units, after rising 0.9% in September. Purchases of domestically-made light trucks fell 7.9% (+1.4% y/y) to 10.10 million units, the lowest level since February, after rising 3.4% in September. Sales of imported light trucks fell 2.8% (-10.3% y/y) to 2.80 million units, following a 7.4% September decline.

Trucks’ 83.3% share of the light vehicle market last month was steady with September and compared to 82.6% in August, and to 80.7% in October of last year. The share has averaged 82.4% so far this year versus 56.5% ten years earlier.

Passenger car sales declined 6.9% (-17.6% y/y) last month to 2.58 million, after falling 4.8% in September. Purchases of domestically-produced cars fell 7.2% (-16.5% y/y) last month to 1.93 million units, after weakening 7.1% in September. Imported auto sales declined 4.5% (-22.0% y/y) to 0.64 million units after holding steady in September.

Imports' 22.2% share of the U.S. light vehicle market rose from 21.4% in September. These compared to a high of 26.3% in November of 2023. Imports' share of the passenger car market edged up to 24.8% last month from 24.2% in September. It reached a high of 38.1% in September 2021. Imports' share of the light truck market increased to 21.7% last month from 20.8% in September.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

251103H4.jpg

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- Light truck sales and auto purchases decline m/m.
- Total sales decline sharply y/y.
- Imports' market share declines.

U.S. Light Vehicle Sales Fall Sharply in October

251103J1.jpg

251103K1.jpg

Factory sector activity remains under pressure. The ISM U.S. manufacturing PMI declined to 48.7 in October after rising to 49.1 during September from 48.7 in August, according to the Institute for Supply Management. These figures are below the 50 expansion-contraction dividing line. As a result, they continue to indicate that the U.S. manufacturing sector weakened for the eighth consecutive month. The reading remained remain above, however, a low of 46.9 in October of last year. A November index of 49.4 had been expected in the Action Economics Forecast Survey.

The production component declined to 48.2 last month after rising to 51.0 in September. It remained increased from an April low of 44.0. A lessened 27.3% (NSA) of respondents reported higher production while an increased 22.0% reported lower output levels. The inventory reading fell to a 12-month low of 45.8 from 47.7 in September. A lessened 13.2% (NSA) of respondents raised inventories while a higher 21.7% shed them.

Working higher, the new orders index rose to 49.4 during October from 48.9 in September. An increased 20.4% (NSA) of respondents reported new orders improvement while 26.0% reported a decline. The employment index increased to a five-month high of 46.0 last month after rising to 45.3 in September. An increased 13.1% (NSA) of respondents more hiring while 22.3% reported less. The supplier delivery index rose to 54.2 in October from 52.6 in September. Twelve percent (NSA) of respondents reported slower product delivery speeds while 3.2% reported a quickening.

The prices index weakened to 58.0 (NSA) during October from 61.9 in September. It was below a high of 69.8 in April, and well above its low of 39.4 in December 2022. A lessened 27.3% of respondents reported higher prices, a nine month low, while an increased 8.7% reported lower.

In other series, the export orders index rose to a seasonally adjusted 44.5 in October after falling sharply to 43.0 in September. It remained up from 40.1 May low. The imports index edged up to 45.2 last month from 44.7 in September. The index is below a high of 52.6 in February.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- Decline reverses all of September increase.					
- Lower production offsets new orders rise.
- Price index falls to nine-month low.

U.S. ISM Manufacturing PMI Eases in October; Price Index Declines Sharply

Tian Yong Woon

This week, we review a wave of key developments across Asia following US President Trump’s tour of the region last week. A central theme concerned countries courting closer ties with the US to avoid harsher actions, while also boosting regional cooperation amid trade barriers and scrutiny of China. This push for closer ties has manifested through new and updated trade agreements—ironically driven by ongoing uncertainty in global trade and supply chains, with US–China relations at the core. A major outcome of Trump’s trip was the new US–China trade agreement, which included the US halving tariffs on Chinese fentanyl-related products to 10%, while China suspended rare earth export controls and resumed soybean purchases vital to the US (chart 1). Perhaps more importantly, the deal signalled a small conciliatory shift and avoided a potentially worse outcome. Beyond the US–China agreement at the APEC Summit in South Korea, the US–South Korea trade deal also gained more clarity. Under the deal, US auto tariffs on South Korea has fallen to 15%, matching the rate applied to Japan and likely providing relief for South Korean automakers (chart 2).

Trump’s visit to Japan was another highlight. Relations with new Prime Minister Takaichi got off to a strong start, and further details emerged on Japan’s previously cited $550 billion investment commitment in the US—substantial even relative to Japan’s existing direct investment there (chart 3). However, specifics on the timing and implementation of the investment remain limited. Meanwhile, at the ASEAN Summit earlier in the week, aside from Trump’s engagements, the bloc officially welcomed its 11th member—Timor-Leste—the first new member in decades—granting it access to the bloc’s mechanisms and potentially supporting a catch-up in economic development (chart 5). Looking ahead, the focus on China and Japan is likely to continue, with China set to release its October trade (chart 6) and CPI data, and Japan scheduled to report employee wages and household spending.

**The APEC summit**
The US and China made a modest but meaningful step forward on trade following the Trump–Xi meeting at the APEC Summit in South Korea. The US lowered tariffs on Chinese fentanyl-related products to 10% from 20% and suspended enforcement of rules targeting subsidiaries of blacklisted firms—previous points of contention for Beijing. In return, China pledged stronger efforts to curb fentanyl flows, paused rare earth export controls for a year, and resumed purchases of US soybeans—significant given its historically large share of US export demand (chart 1). While not a comprehensive reset, these moves eased immediate tensions and helped avert more severe outcomes, including Trump’s previously threatened 100% tariff hike. The tone of the meeting also suggests a more conciliatory shift, though relations remain fragile and the risk of renewed escalation is still material.

251103T1.jpg

Beyond the headline-grabbing US–China trade deal, the APEC Summit in South Korea also saw the US reach a trade agreement with South Korea. Under the deal, US tariffs on South Korean autos and auto parts have fallen to 15% from 25%, matching the US tariff rate on Japanese autos and providing relief to South Korea’s sizable automotive export sector (chart 2). The agreement also clarified South Korea’s supposed $350 billion investment in the US: $200 billion in cash, capped at $20 billion per year to avoid currency market distortions, with the remaining $150 billion directed toward shipbuilding cooperation. While also not a major breakthrough, the deal represents incremental progress, addressing prior uncertainties and signalling steps toward a more favourable trade framework.

251103T2.jpg

**US President Trump’s Japan Visit**
Turning to US President Trump’s visit to Japan last week, new Prime Minister Takaichi appears to have gotten off to a strong start, with Trump hailing US–Japan relations as entering a “NEW GOLDEN AGE.” The two countries signed several agreements, including a Technology Prosperity Deal, and deepened cooperation on critical minerals and rare earths. Japan’s previously vague $550 billion investment commitment in the US is now somewhat clearer: up to $332 billion will support critical US infrastructure, $30 billion will target AI, and $15 billion will go toward electronics and supply chains, among other areas. While the headline figure is substantial—even relative to Japan’s already significant direct investment assets in the US (chart 3)—the open-ended nature of the commitment and the lack of a clear timeline leave its actual impact uncertain.

251103T3.jpg

**The ASEAN summits**
Whilst US President Trump’s attendance at the ASEAN–US Summit in Malaysia dominated headlines, there were also several other notable developments at last week’s ASEAN meetings in Kuala Lumpur. Most prominently, Timor-Leste was officially admitted as ASEAN’s eleventh member, following a two-decade accession process during which the country actively aligned its political and economic frameworks with ASEAN standards. Membership grants Timor-Leste access to the bloc’s broader security and economic mechanisms and could open further avenues for trade, investment, and development cooperation. Nonetheless, the country still has considerable ground to make up relative to its new ASEAN peers, particularly in terms of both GDP and GDP per capita (chart 4).

251103T4.jpg

The accession of Timor-Leste into ASEAN aside, last week’s summits also brought a number of economic developments for the bloc. More concretely, ASEAN and China signed an upgrade to their free trade agreement last week, bringing the deal to so-called version 3.0. The upgraded deal (ACFTA 3.0) introduces commitments in new areas such as Digital Economy, Green Economy, and Supply Chain Connectivity, among other themes. And notably, just as the US and ASEAN have found common ground to collaborate in fields such as those relating to rare earths, given how the US has seen vulnerabilities arising from this space given China’s dominance in the field, China has taken the year’s US-China frictions to foster closer ties with its neighbours in the region, including the collectively sizable ASEAN bloc. Just by the trade dimension alone, China-ASEAN-11 trade has growth significantly this year (chart 2), although the economies’ total trade with the US also rose, and at a more significant pace, despite tariff measures.

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Looking ahead, investors will focus on a series of China-related releases this week, notably the Caixin PMI readings, as well as October trade and CPI inflation data. These indicators will help gauge the economy’s performance under ongoing US tariffs and assess domestic demand and supply conditions, all in the broader context of recent US–China interactions during Trump’s Asia tour. In Japan, attention will turn to updated data on employee wages and household spending, which—together with developments in the external environment—will shape expectations for the Bank of Japan’s future policy stance. Elsewhere in the region, investors will watch interest rate decisions from Australia and Malaysia, where rates are expected to remain unchanged, as well as GDP readings from Indonesia and the Philippines.

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Asia

Economic Letter from Asia: Come Together

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) improved 0.3% during the four weeks ended October 31, 2025 after holding steady in the prior four week period. The index increased 0.8% y/y.

**Metals** group prices increased 4.3% (6.1% y/y) in the last four weeks as the cost of aluminum rose 7.0% (9.5% y/y). Copper scrap prices improved 6.5% (16.4% y/y) while zinc prices strengthened 6.8% in four weeks (3.0% y/y). Steel scrap prices rose 2.3% (-6.6% y/y) and tin prices increased 2.2% (16.1% y/y). Lead prices improved 1.1% (unchanged y/y) in four weeks.

Prices in the **Textile** group increased 1.2% during the last four weeks, and rose 2.4% y/y. The cost of burlap strengthened 14.5% in the last four weeks while surging 37.6% over the last year. Offsetting this rise, cotton prices fell 1.2% and declined 5.8% y/y.

**Miscellaneous** group prices weakened 3.0% in the last four weeks, unchanged y/y, as framing lumber prices fell 6.5% (+4.1% y/y). The cost of tallow, used for frying & baking, declined 13.1% (+11.2% y/y) in four weeks. Offsetting this weakness, natural rubber prices held steady (-10.1% y/y).

Prices in the **crude oil & benzene** group declined 1.7% (-9.3% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 3.1% in four weeks to $60.80 per barrel and declined 11.7% y/y. The price was increased from a low of $58.47 in the third week of the month. The price of the petro-chemical benzene fell 2.9% (-23.3% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index rose 0.5% (1.6% y/y) over the last four weeks, the same as during the prior 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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- Metals and textile prices strengthen.
- Framing lumber costs backpedal.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Edges Higher in Latest Four Weeks

Andrew Cates

**US monetary policy**
This first chart shows that Chair Powell’s cautious tone in the aftermath of this week’s FOMC meeting led markets to scale back expectations for further near-term easing. Fed funds futures for late 2025 through mid-2026 rose slightly, signalling that investors now expect a shallower and slower easing cycle than before. While the rate cut itself confirmed the Fed’s gradual pivot toward easier policy, markets interpreted Powell’s remarks as suggesting that a December move is not guaranteed and that the central bank remains wary of declaring victory on inflation too soon.

251030Z1.jpg

**The global business cycle**
The latest flash PMI surveys for October highlight a still-divergent global picture, with services-led resilience offsetting persistent manufacturing weakness. Activity remains strongest in India and the United States, both comfortably in expansion territory, while Germany has shown one of the clearest signs of improvement within the euro area after a long period of contraction. The broader euro area and UK readings point to modest but positive momentum, suggesting that growth is stabilising rather than accelerating. In contrast, France remains mired below the 50 threshold, signalling continued contraction, and Japan and Australia are treading water with only marginal gains.

251030Z2.jpg

**Consumer confidence in the US and Europe** 
Consumer confidence trends have diverged across major economies in 2025. In the UK, sentiment has improved gradually, supported by easing inflation and lower interest rates. In the euro area, confidence has stabilised after a prolonged downturn, though households remain wary. By contrast, US confidence has slipped further, probably reflecting a softening labour market, slowing wage growth, and heightened concern about job security. Overall, global consumer sentiment remains fragile and uneven, suggesting that household spending could stay subdued even if price pressures recede and monetary policy becomes more accommodative.

251030Z3.jpg

**Credit conditions in the euro area** 
The latest data on Euro Area M3 growth underline that monetary conditions remain mildly restrictive, even after the ECB’s recent rate reductions. Money growth has decelerated sharply over the past year, with only a limited contribution from private-sector credit and little net support from lending to government. The ECB’s Q4 Bank Lending Survey, released this week, suggests that while financing conditions are beginning to ease, credit dynamics remain weak. Banks reported a further net tightening of credit standards for firms, reflecting continued risk aversion, even as loan demand from businesses and households picked up modestly thanks to lower interest rates and improving sentiment.

251030Z4.jpg

**The UK manufacturing sector**
Turning to the UK, the latest CBI Industrial Trends Survey offers little sign of improvement in manufacturing conditions. The balance of firms reporting excess stocks of finished goods has fallen further into negative territory, consistent with efforts to run down inventories amid weak demand and high uncertainty. And on that score, the share of firms citing uncertainty about demand over the next year as a constraint on capital expenditure has shifted up, highlighting persistent caution in investment planning. Together, these indicators point to a sector still struggling to regain momentum after a protracted slowdown—one where firms are prioritising cost control and liquidity preservation over expansion, despite an easing in headline inflation and gradual monetary policy support.

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**Traded goods price inflation**
The Drewry Container Index, which tracks global shipping costs for a standard 40-foot container, has fallen back in recent months from the elevated levels seen in 2024, reflecting softer global trade volumes and a partial unwinding of last year’s supply-chain pressures. Even so, concerns have re-emerged that new US tariff measures and associated logistical bottlenecks could push freight rates and producer price inflation (PPI) higher in the coming months. The final chart below illustrates how closely traded goods price inflation, represented by Haver’s aggregation of PPI inflation for advanced economies, has tended to move with swings in container shipping costs. While traded goods inflation remains subdued for now, any renewed disruptions to global shipping routes or tariff-driven frictions could quickly feed through to higher input costs—especially in manufacturing sectors reliant on long and complex supply chains.

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Global equity markets are once again flirting with record highs, buoyed by renewed optimism that the global economy can achieve a soft landing—and by persistent enthusiasm over the potential productivity gains from AI-related investment. The Federal Reserve’s decision to cut rates by 25bps this week—its second this autumn—initially reinforced expectations that global monetary policy is shifting toward a more accommodative stance. However, Chair Powell’s reminder that a further cut in December was “not inevitable” tempered that optimism and was met with some disappointment in financial markets (chart 1). Even so, the broader tone remains constructive, though it contrasts with a still-fragile macro environment. Renewed conflict in Gaza, the ongoing US government shutdown, and intensifying trade tensions have kept risk sentiment uneven and underscored the fragility of the recovery. The latest flash PMIs (chart 2) show modest global expansion led by services, while manufacturing continues to struggle. Consumer confidence (chart 3) tells a similar story: sentiment has weakened in the US as the labour market softens, stabilised in the euro area, and improved slightly in the UK. In the euro area, sluggish money and credit growth (chart 4) and the ECB’s latest bank-lending survey confirm that financial conditions remain mildly restrictive despite recent rate cuts. The UK CBI Industrial Trends Survey (chart 5) points to manufacturers reducing inventories and deferring investment plans amid demand uncertainty. Externally, the Drewry Container Index (chart 6) has fallen back from 2024’s elevated levels, signalling easing supply-chain pressures and subdued traded-goods inflation—though tariff realignments remain a potential source of friction.

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Economy in Brief: September 2005

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Australian Employed Continues to Rise; Unemployment Rate Maintains Record Low

JOLTS: U.S. Job Openings & Hires Dipped

Initial Claims for Unemployment Insurance Dipped

Initial Claims for Unemployment Insurance Dipped

Industrial Production Gains in Europe: Can That Pattern Be Sustained?

Lower Rates Spurred Mortgage Applications

Chain Store Sales Flat

2Q U.S. Productivity Revised Down