Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904a.jpg" align="left" border="0" height="265" width="353">
The August jobs figures from the Bureau of Labor Statistics
gave conflicting signals. Suggesting some improvement in the labor
market was payroll employment which declined the least of any month in
a year, although the declines during the prior two months were revised
deeper. Working the other way were the household survey figures. The
unemployment rate, at 9.7%, jumped to its highest level since 1982.
Together, the data hardly suggest that the recession is over, though
downward momentum seems to have eased.
The length of the average workweek was stable m/m and q/q at
33.1. So far in the third quarter, aggregate hours worked (employment
times hours) have fallen at a 2.6% annual rate after a 7.8% decline
during 2Q.
Nonfarm payrolls fell 216,000 during August. That was less
than the expected 228,000 decline however declines during the prior two
months were revised deeper by a collective 49,000. The latest decline
was the least since August of last year. Nevertheless, so far during
this recession, employment has fallen by a total of 6.9 million, the
record by far for a 20-month period. In percentage terms jobs are down
5.0% since the 2007 peak, also a record. Most recently, the payroll
decline moderated to an average 318,000 over the last three months
versus a peak three-month rate of 701,000 this past winter.
The jump in the unemployment rate to 9.7% from 9.4% compared
with expectations for a smaller rise to 9.5%. The rate's cycle low of
4.4% occurred in October 2006. This level of the official unemployment
rate pales, however, in comparison to the rate which includes
"marginally attached workers" and those who are working part-time for
economic reasons. It rose to 16.8%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904b.jpg" align="right" border="0" height="265" width="353">
The increase in the overall jobless rate was due to a 392,000
(-3.9% y/y) fall in employment. That was easier than the worst monthly
declines of this past winter but in-line with those of the last several
months. It was accompanied by a modest 73,000 (-0.2% y/y) increase in
the labor force after two months of sharp decline. The latest increase
also saw a slight 38,000 decline in the number of "discouraged workers"
after four months of increase. Also from the household survey, the
median duration of unemployment slipped m/m to 15.4 weeks but that
still was up from 8.3 weeks one year ago. The ranks of the long-term
unemployed, however, rose slightly to 4.988 million.
From the payroll survey, the moderation in the rate of job
loss continued to stem from smaller declines in both factory sector and
private service payrolls. Manufacturing sector jobs fell 63,000 last
month after a 43,000 July decline. These shortfalls compare to an
average 161,000 monthly decline during the prior nine months.
Employment in the private service sector dropped 62,000 last month
(-3.2% y/y) after a 126,000 July drop. Here again the declines are
easier than 289,000 average during the prior nine months. Finally, job
cuts in the construction sector also have moderated, but to a lesser
extent. Employment here fell a reduced 65,000 last month after a 73,000
July decline and an average 100,000 during the nine months ended June.
In the government sector employment continued down as budgets
shrank with lower tax revenues. Government jobs fell 18,000 (-0.3% y/y)
after a downwardly-revised 28,000 July drop. Jobs with the federal
government fell 5,000 (+1.9% y/y) for the third decline in the last
four months. The number of state gov't jobs fell 5,000 (-1.1% y/y) and
local gov't payrolls fell 8,000 (-0.5% y/y for the third consecutive
down month. Should the federal government bail out the
states? Lessons from past recessions from the Federal Reserve
Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2009_265.pdf">here</a>.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904c.jpg" align="left" border="0" height="265" width="353">
Average hourly earnings rose 0.3% during August for the second
consecutive month. The 0.5% three-month growth rate is up off its low
but compares to roughly 4% growth from 2006 to 2008. Earnings in the
factory sector rose 0.2% and the three-month growth rate rose to 0.5%.
Growth durable sector's earnings rose to 0.7%. Earnings in the private
service sector recovered to 0.4% during the last three months.
The figures referenced above are available in Haver's USECON
database. Additional detail can be found in the LABOR and
in the EMPL databases.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Employment:
000s</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-216</td>
<td>-276</td>
<td>-463</td>
<td>-4.3%</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>-247</td>
<td>-443</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-63</td>
<td>-43</td>
<td>-123</td>
<td>-12.1%</td>
<td>-3.3%</td>
<td>-2.0%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-65</td>
<td>-73</td>
<td>-79</td>
<td>-15.1%</td>
<td>-5.5%</td>
<td>-0.8%</td>
<td>4.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing</td>
<td>-80</td>
<td>-154</td>
<td>-251</td>
<td>-2.6%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.1</td>
<td>33.1</td>
<td>33.0</td>
<td>33.7 (Aug. '08)</td>
<td>33.6</td>
<td>33.8</td>
<td>33.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>9.7%</td>
<td>9.4%</td>
<td>9.5%</td>
<td>6.2% (Aug. '08)</td>
<td>5.8%</td>
<td>4.6%</td>
<td>4.6%</td>
</tr>
</tbody>
</table>
 Italy's Trade Trends Turn 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 4, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090904d.jpg" align="left" border="0" height="265" width="353">
Both Italy&#8217;s exports and imports are beginning to turn their
plunging growth rates higher. The Yr/Yr trend has begun to turn (see
chart) for both exports and imports. The balance did swing to surplus a
month ago but it still shows a reduced deficit in the current month
compared to earlier months. Over three months the export rate of
decline has been cut to an annual rate of about -8% compared to -18%
for imports. 
 

For exports transportation equipment, capital goods and other
goods are still showing outsized Yr/Yr declines of -20% or more. Food
exports and consumer goods exports are dropping at a slower pace of
less than 10%. 
 

Imports are showing Yr/Yr declines of 16% for capital goods
and 44% for other goods. Transport equipment imports are declining at
an 8.6% pace compared to foods and beverages with a drop of 0.7% and
consumer goods imports that are advancing Yr/Yr. services imports are
declining rapidly Yr/Yr as well. 
 

The more rapid drop in imports cuts the flow of an item that
diminishes growth since imports siphon off domestic demand to foreign
producers. Italy&#8217;s exports in contrast have held up better and are
maintaining their levels better than imports. In this way trade is
helping to prop up Italian GDP. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Italy's
Trade Trends</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/mo % monthly rate</td>
<td colspan="4">Period Specified saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">Seasonally Adjusted</td>
<td>Jun-09</td>
<td>May-09</td>
<td>Apr-09</td>
<td>3-MO</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr class="grey2">
<td class="firstcol">Current Account Bal</td>
<td>&#8364;&#8364; (2,378)</td>
<td>&#8364;&#8364; 470</td>
<td>&#8364;&#8364; (2,959)</td>
<td>&#8364;&#8364; (1,622)</td>
<td>&#8364;&#8364; (2,919)</td>
<td>&#8364;&#8364; (3,907)</td>
<td>&#8364;&#8364; (3,700)</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Goods Balance</td>
<td>&#8364;&#8364; 939</td>
<td>&#8364;&#8364; 1,662</td>
<td>&#8364;&#8364; 1,096</td>
<td>&#8364;&#8364; 1,232</td>
<td>&#8364;&#8364; 544</td>
<td>&#8364;&#8364; 1</td>
<td>&#8364;&#8364; 267</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Exports</td>
<td>-2.6%</td>
<td>-4.4%</td>
<td>5.1%</td>
<td>-8.2%</td>
<td>-30.9%</td>
<td>-23.7%</td>
<td>-4.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imports</td>
<td>0.5%</td>
<td>-7.0%</td>
<td>1.7%</td>
<td>-18.3%</td>
<td>-36.2%</td>
<td>-27.6%</td>
<td>0.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Services Balance</td>
<td>&#8364;&#8364; (788)</td>
<td>&#8364;&#8364; (429)</td>
<td>&#8364;&#8364; (1,061)</td>
<td>&#8364;&#8364; (759)</td>
<td>&#8364;&#8364; (822)</td>
<td>&#8364;&#8364; (814)</td>
<td>&#8364;&#8364; (488)</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Exports</td>
<td>3.6%</td>
<td>-5.5%</td>
<td>0.6%</td>
<td>-6.0%</td>
<td>-22.9%</td>
<td>-14.8%</td>
<td>5.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Imports</td>
<td>9.3%</td>
<td>-13.7%</td>
<td>0.5%</td>
<td>-19.3%</td>
<td>-12.2%</td>
<td>-8.2%</td>
<td>-1.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Not Seasonally Adjusted</td>
<td colspan="7">All Yr/Yr</td>
</tr>
<tr class="grey2">
<td class="firstcol">Exports</td>
<td>Jun-09</td>
<td>&nbsp;</td>
<td>Jun-08</td>
<td>&nbsp;</td>
<td>Jun-07</td>
<td>&nbsp;</td>
<td>Jun-06</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Food&amp;Bev</td>
<td>-1.8%</td>
<td>&nbsp;</td>
<td>3.9%</td>
<td>&nbsp;</td>
<td>5.9%</td>
<td>&nbsp;</td>
<td>10.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Capital Gds</td>
<td>-21.9%</td>
<td>&nbsp;</td>
<td>-3.7%</td>
<td>&nbsp;</td>
<td>15.1%</td>
<td>&nbsp;</td>
<td>10.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Transport</td>
<td>-29.6%</td>
<td>&nbsp;</td>
<td>2.3%</td>
<td>&nbsp;</td>
<td>11.4%</td>
<td>&nbsp;</td>
<td>8.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Consumer Gds</td>
<td>-9.4%</td>
<td>&nbsp;</td>
<td>-8.8%</td>
<td>&nbsp;</td>
<td>8.8%</td>
<td>&nbsp;</td>
<td>7.3%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Other Gds</td>
<td>-32.0%</td>
<td>&nbsp;</td>
<td>-10.2%</td>
<td>&nbsp;</td>
<td>13.7%</td>
<td>&nbsp;</td>
<td>17.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Imports</td>
<td>Jun-09</td>
<td>&nbsp;</td>
<td>Jun-08</td>
<td>&nbsp;</td>
<td>Jun-07</td>
<td>&nbsp;</td>
<td>Jun-06</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Food&amp;Bev</td>
<td>-0.7%</td>
<td>&nbsp;</td>
<td>-1.9%</td>
<td>&nbsp;</td>
<td>3.3%</td>
<td>&nbsp;</td>
<td>7.2%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Capital Gds</td>
<td>-16.1%</td>
<td>&nbsp;</td>
<td>-10.9%</td>
<td>&nbsp;</td>
<td>7.3%</td>
<td>&nbsp;</td>
<td>1.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Transport</td>
<td>-8.6%</td>
<td>&nbsp;</td>
<td>-15.3%</td>
<td>&nbsp;</td>
<td>11.0%</td>
<td>&nbsp;</td>
<td>-0.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Consumer Gds</td>
<td>1.3%</td>
<td>&nbsp;</td>
<td>-3.3%</td>
<td>&nbsp;</td>
<td>1.7%</td>
<td>&nbsp;</td>
<td>12.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp; Other Gds</td>
<td>-44.9%</td>
<td>&nbsp;</td>
<td>18.0%</td>
<td>&nbsp;</td>
<td>0.0%</td>
<td>&nbsp;</td>
<td>45.5%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Balances
in Mlns of euros</td>
</tr>
</tbody>
</table>
</body></html>

The August jobs figures from the Bureau of Labor Statistics gave conflicting signals. Suggesting some improvement in the labor market was payroll employment which declined the least of any month in a year, although the declines during [...]

U.S. Payroll Decline Eases But TheUnemployment Rate Jumps To 26-Year High

Robert Brusca

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903h.jpg" align="left" border="0" height="265" width="353">
The Markit PMIs turned higher in August. Across the main
reporting Markit economics we find MFG PMIs are over the break-even
mark of 50 in two of seven EU nations. Three others have readings with
a &#8216;49&#8217; handle. Italy back-slid in August and has the second weakest MFG
reading at 44.24; Ireland&#8217;s MFG PMI rose this month but stands at a
weaker level than Italy&#8217;s gauge, at 43.98. Still, all the countries in
the table sport PMI readings that reside in the upper 50% of their
range except Italy and Ireland. Country level readings are in the 60th
percentile or better. Greece and France post the highest relative
readings, in the 70th percentile of their respective ranges or better,
For EMU the current reading is 48.24 and that stands in the 60th
percentile, or in the top 40% of its range. 
 

The services readings for August also show widespread
improvement. The jump this month was very large for EMU and the gains
for services spread across all major individually reporting countries
in our six large-country sample. 
 

With both manufacturing and the services sectors are making
strong gains they are boosting the overall EMU composite index which
moved up above the mark of 50, signaling growth. For its part, the OECD
sees an end to the global recession. But it is warning of continued
difficulties and strong head winds. The outlook has improved but the
degree of improvement remains shrouded in caution. No agency is
sticking its neck out to look for strong growth, even though most are
now citing improvement and calls that say the recession is over are
becoming commonplace 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">NTC/Markit MFG Indices</th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Aug-09</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro-13</td>
<td>48.24</td>
<td>46.25</td>
<td>42.62</td>
<td>45.70</td>
<td>41.43</td>
<td>39.34</td>
<td>60.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>49.17</td>
<td>45.65</td>
<td>40.88</td>
<td>45.23</td>
<td>40.51</td>
<td>38.81</td>
<td>62.5%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>50.78</td>
<td>48.13</td>
<td>45.86</td>
<td>48.26</td>
<td>44.12</td>
<td>41.10</td>
<td>71.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>44.25</td>
<td>45.36</td>
<td>42.69</td>
<td>44.10</td>
<td>40.87</td>
<td>39.24</td>
<td>42.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>47.20</td>
<td>47.33</td>
<td>42.76</td>
<td>45.76</td>
<td>40.78</td>
<td>36.57</td>
<td>65.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Austria</td>
<td>49.95</td>
<td>46.46</td>
<td>42.01</td>
<td>46.14</td>
<td>41.73</td>
<td>40.07</td>
<td>65.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Greece</td>
<td>51.13</td>
<td>48.82</td>
<td>47.67</td>
<td>49.21</td>
<td>45.46</td>
<td>44.48</td>
<td>75.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Ireland</td>
<td>43.98</td>
<td>43.66</td>
<td>42.47</td>
<td>43.37</td>
<td>40.11</td>
<td>39.27</td>
<td>48.6%</td>
</tr>
<tr class="grey1">
<td colspan="8">EU</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>49.71</td>
<td>50.25</td>
<td>46.78</td>
<td>48.91</td>
<td>45.97</td>
<td>41.69</td>
<td>68.8%</td>
</tr>
<tr class="grey3">
<td colspan="8" class="firstcol">percentile is over range since March
2000</td>
</tr>
</tbody>
</table>
</body></html>

The Markit PMIs turned higher in August. Across the main reporting Markit economics we find MFG PMIs are over the break-even mark of 50 in two of seven EU nations. Three others have readings with a ‘49’ handle. Italy back-slid in [...]

Markit MFG PMIs Turn Higher; Gains Are Widespread

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<body>
 




<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903e.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity regained its legs last month. The Composite
Index for the nonmanufacturing sector from the Institute for Supply
Management (ISM) rose to 48.4 last month after having slipped to 46.4
during July. The latest level was the highest since September of last
year and the figure about matched Consensus expectations for a reading
of 48.0. A level of the ISM index below 50 indicates declining
activity. Since the series' inception in 1997 there has been a 65%
correlation between the level of the business activity index in the
nonmanufacturing sector and the Q/Q change in real GDP for the services
and the construction sectors.
ISM surveys more than 370 purchasing
managers in more than 62 industries including law firms, hospitals,
government and retailers. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903f.jpg" align="right" border="0" height="265" width="353">
The nonmanufacturing survey dates back to
July 1997. The figures are available in Haver's USECON database.
The improvement in the August index was broad-based amongst
the
component series. The business activity index for the service sector
broached the break-even level for the first time since last September
with a rise to 51.3. The new orders series neared that break-even level
with an increase to 49.9, up from November's low of 35.6. Finally, the
employment index rose to 43.5 and that was the highest level since
September. Since the series' inception in 1997 there has been a 56%
correlation between the level of the ISM nonmanufacturing employment
index and the m/m change in payroll employment in the service-producing
plus the construction industries.
 The rise in service sector
activity powered a sharp improvement in pricing power. The 21.8 point
m/m jump in the price index to 63.1&nbsp; placed the index at its
highest level since last September. Twenty-three percent of firms
reported higher prices while a significantly reduced 6%&nbsp;
reporting lower prices.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903g.jpg" align="right" border="0" height="265" width="353">
Since its inception ten years ago, there has
been a 60% correlation between the price index and the q/q change in
the GDP services chain price index.
Beginning with the
January 2008 Nonmanufacturing <cite>Report On Business</cite> &#174;,
the composite index is calculated as an indicator of the overall
economic condition for the non-manufacturing sector. It is a composite
index based on the diffusion indices of four of the indicators
(business activity, new orders, employment and supplier deliveries)
with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ismreport/mfgrob.cfm">here.</a>
Changes in the Use of Electronic Means of Payment:
1995-2007 also from the Federal Reserve Bank of Philadelphia
is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_changes-in-electronic-payment.pdf">here.</a>&nbsp;
<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/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>48.4</td>
<td>46.4</td>
<td>50.4</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>51.3</td>
<td>46.1</td>
<td>50.8</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>43.5</td>
<td>41.5</td>
<td>45.6</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.1</td>
<td>41.3</td>
<td>74.1</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

</body></html>

Improvement in service sector activity regained its legs last month. The Composite Index for the nonmanufacturing sector from the Institute for Supply Management (ISM) rose to 48.4 last month after having slipped to 46.4 during July. [...]

U.S. ISM Nonmanufacturing Index Improves While Prices Jump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903d.jpg" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas indicated that job cut announcements returned last month to near this cycle&#39;s low. They fell to 76,456 after having ticked up during July. The figures remain well below this cycle&#39;s peak level of layoffs which occurred this past January when there were 241,749 cuts.
During the last ten years there has been a 67% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment. Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
The problem with the reduction in job cuts is that, while hiring plans are up 34.1% from last year, the level remains low.
The Challenger figures are available in Haver&#39;s SURVEYS database.
The Exchange Rate: What&#39;s in It for Prices? from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>76,456</td>
<td>97,373</td>
<td>-13.8%</td>
<td>1,223,993</td>
<td>768,264</td>
<td>839,822</td>
</tr>
<tr>
<td class="firstcol">Announced Hiring Plans</td>
<td>13,100</td>
<td>17,183</td>
<td>34.1</td>
<td>118,600</td>
<td>365,753</td>
<td>276,525</td>
</tr>
</tbody>
</table>
</body>
</html>

The outplacement firm of Challenger, Grey & Christmas indicated that job cut announcements returned last month to near this cycle's low. They fell to 76,456 after having ticked up during July. The figures remain well below this [...]

Challenger Layoffs Approach Recent Low

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903a.jpg" align="right" border="0" height="265" width="353">Initial
claims for unemployment insurance indicate that the labor market
improved just modestly. For last week, the Labor Department indicated
that claims fell a scant 4,000 to 570,000. Though the decline was the
second in a row, the average for last month rose slightly to 571,000
from 559,000 during July. A decline in weekly claims to 560,000 had
been expected.
The Labor Department indicated that the
largest increases in initial claims for the week ending August 22 were
in California (+8,632, +35.5% y/y), Ohio (+2,018, 52.5% y/y), New
Hampshire (+1,237, +117.9% y/y), Wisconsin (+906, +58.0% y/y), and
Minnesota (+664, +64.1% y/y), while the largest decreases were in
Michigan (-2,968, +3.2% y/y), Florida (-1,653, +31.8% y/y),
Pennsylvania (-1,288, +60.9% y/y), New Jersey (-1,271, -2.9% y/y), and
Alabama (-1,266, +9.5% y/y).
Continuing claims for unemployment
insurance during the latest week rose and reversed most of the prior
period's decline. They remained down by nearly 10% from their late-June
high, a decline which probably owes to the exhaustion of benefits.
Continuing claims provide an indication of workers' ability to find
employment and the level of <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903b.jpg" align="right" border="0" height="265" width="353">
6,234,000 claims is up sharply
from the year-ago level.&nbsp; The four-week average of
continuing claims fell modestly to 6,216,750, near the lowest since
late-April. The series dates back to 1966.
Extended
benefits for unemployment insurance have risen sharply indicating that
worker rehiring continued weak. Though they fell in the latest week,
through mid-August extended benefits averaged 446,974 versus 416,630
during July. The insured rate of unemployment ticked up to 4.7%, but
that still was near the lowest level since mid-April. The rate reached
a high of 5.2% during late-June. During the last ten years, there has
been a 93% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903c.jpg" align="right" border="0" height="265" width="353">The
highest insured unemployment rates in
the week ending August 15 were in Puerto Rico (7.3 percent), Oregon
(6.0), Pennsylvania (6.0), Nevada (5.7), Michigan (5.5), Wisconsin
(5.4), Connecticut (5.3), California (5.2), New Jersey (5.2), and North
Carolina (5.0). The lowest rates were in South Dakota (1.3) and North
Dakota (1.5), Virginia (2.4), Wyoming (2.8), Texas (2.9), Maine (3.0),
Colorado (3.2), Maryland (3.5), Minnesota (3.6), New York (4.2),
Mississippi (4.2), Georgia (4.2), and Florida (4.3).
 The unemployment
insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.
 The minutes from the latest FOMC meeting can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20090812.pdf">here.</a>&nbsp;
<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">08/29/09</th>
<th scope="col">08/22/09</th>
<th scope="col">08/15/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>570</td>
<td>574</td>
<td>580</td>
<td>26.7%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,234</td>
<td>6,142</td>
<td>80.9%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.7</td>
<td>4.6</td>
<td>2.6 (08/2008)</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>


</body></html>

Initial claims for unemployment insurance indicate that the labor market improved just modestly. For last week, the Labor Department indicated that claims fell a scant 4,000 to 570,000. Though the decline was the second in a row, the [...]

U.S. Weekly Claims For Jobless Insurance Slip Modestly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903a.jpg" align="right" border="0" height="265" width="353">Initial
claims for unemployment insurance indicate that the labor market
improved just modestly. For last week, the Labor Department indicated
that claims fell a scant 4,000 to 570,000. Though the decline was the
second in a row, the average for last month rose slightly to 571,000
from 559,000 during July. A decline in weekly claims to 560,000 had
been expected.
The Labor Department indicated that the
largest increases in initial claims for the week ending August 22 were
in California (+8,632, +35.5% y/y), Ohio (+2,018, 52.5% y/y), New
Hampshire (+1,237, +117.9% y/y), Wisconsin (+906, +58.0% y/y), and
Minnesota (+664, +64.1% y/y), while the largest decreases were in
Michigan (-2,968, +3.2% y/y), Florida (-1,653, +31.8% y/y),
Pennsylvania (-1,288, +60.9% y/y), New Jersey (-1,271, -2.9% y/y), and
Alabama (-1,266, +9.5% y/y).
Continuing claims for unemployment
insurance during the latest week rose and reversed most of the prior
period's decline. They remained down by nearly 10% from their late-June
high, a decline which probably owes to the exhaustion of benefits.
Continuing claims provide an indication of workers' ability to find
employment and the level of <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903b.jpg" align="right" border="0" height="265" width="353">
6,234,000 claims is up sharply
from the year-ago level.&nbsp; The four-week average of
continuing claims fell modestly to 6,216,750, near the lowest since
late-April. The series dates back to 1966.
Extended
benefits for unemployment insurance have risen sharply indicating that
worker rehiring continued weak. Though they fell in the latest week,
through mid-August extended benefits averaged 446,974 versus 416,630
during July.
 The insured rate of unemployment ticked up to 4.7%, but
that still was near the lowest level since mid-April. The rate reached
a high of 5.2% during late-June. During the last ten years, there has
been a 93% correlation between the level of the insured unemployment
rate and the overall rate of unemployment published by the Bureau of
Labor Statistics.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903c.jpg" align="right" border="0" height="265" width="353">The
highest insured unemployment rates in
the week ending August 15 were in Puerto Rico (7.3 percent), Oregon
(6.0), Pennsylvania (6.0), Nevada (5.7), Michigan (5.5), Wisconsin
(5.4), Connecticut (5.3), California (5.2), New Jersey (5.2), and North
Carolina (5.0). The lowest rates were in South Dakota (1.3) and North
Dakota (1.5), Virginia (2.4), Wyoming (2.8), Texas (2.9), Maine (3.0),
Colorado (3.2), Maryland (3.5), Minnesota (3.6), New York (4.2),
Mississippi (4.2), Georgia (4.2), and Florida (4.3).
 The unemployment
insurance claims data is available in Haver's WEEKLY
database and the state data is in the REGIONW
database.
 The minutes from the latest FOMC meeting can be found <a 
 href="http://www.federalreserve.gov/newsevents/press/monetary/fomcminutes20090812.pdf">here.</a>&nbsp;
<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
 <th scope="col">08/29/09</th>
 <th scope="col">08/22/09</th>
 <th scope="col">08/15/09</th>
 <th scope="col">Y/Y</th>
 <th scope="col">2008</th>
 <th scope="col">2007</th>
 <th scope="col">2006&nbsp;</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol">Initial Claims</td>
 <td>570</td>
 <td>574</td>
 <td>580</td>
 <td>26.7%</td>
 <td>420</td>
 <td>321</td>
 <td>313</td>
 </tr>
 <tr>
 <td class="firstcol">Continuing Claims</td>
 <td>--</td>
 <td>6,234</td>
 <td>6,142</td>
 <td>80.9%</td>
 <td>3,342</td>
 <td>2,552</td>
 <td>2,459</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">Insured Unemployment Rate (%)</td>
 <td>--</td>
 <td>4.7</td>
 <td>4.6</td>
 <td>2.6 (08/2008)</td>
 <td>2.5</td>
 <td>1.9</td>
 <td>1.9</td>
 </tr>
 </tbody>
</table>


Challenger Layoffs Approach Recent
Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903d.jpg" align="left" border="0" height="265" width="353">
The outplacement firm of Challenger, Grey &amp; Christmas
indicated that job cut announcements returned last month to near this
cycle's low. They fell to 76,456 after having ticked up during July.
The figures remain well below this cycle's peak level of layoffs which
occurred this past January when there were 241,749 cuts.
During the last ten years there has been a 67% (inverse)
correlation between the three month moving average of announced job
cuts and the three month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through
attrition, early retirement or just never occur.
The problem with the reduction in job cuts is that, while
hiring plans are up 34.1% from last year, the level remains low.
The Challenger figures are available in Haver's SURVEYS
database.
The Exchange Rate: What's in It for Prices? from the Federal
Reserve Bank of Philadelphia is available <a 
 href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_exchange-rate.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/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
 <th scope="col">August</th>
 <th scope="col">July</th>
 <th scope="col">Y/Y</th>
 <th scope="col">2008</th>
 <th scope="col">2007</th>
 <th scope="col">2006</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol">Announced Job Cuts</td>
 <td>76,456</td>
 <td>97,373</td>
 <td>-13.8%</td>
 <td>1,223,993</td>
 <td>768,264</td>
 <td>839,822</td>
 </tr>
 <tr>
 <td class="firstcol">Announced Hiring Plans</td>
 <td>13,100</td>
 <td>17,183</td>
 <td>34.1</td>
 <td>118,600</td>
 <td>365,753</td>
 <td>276,525</td>
 </tr>
 </tbody>
</table>
U.S. ISM Nonmanufacturing Index
Improves While Prices Jump 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 3, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903e.jpg" align="right" border="0" height="265" width="353">Improvement
in service sector activity regained its legs last month. The Composite
Index for the nonmanufacturing sector from the Institute for Supply
Management (ISM) rose to 48.4 last month after having slipped to 46.4
during July. The latest level was the highest since September of last
year and the figure about matched Consensus expectations for a reading
of 48.0. A level of the ISM index below 50 indicates declining
activity. Since the series' inception in 1997 there has been a 65%
correlation between the level of the business activity index in the
nonmanufacturing sector and the Q/Q change in real GDP for the services
and the construction sectors.
ISM surveys more than 370 purchasing
managers in more than 62 industries including law firms, hospitals,
government and retailers. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903f.jpg" align="right" border="0" height="265" width="353">
The nonmanufacturing survey dates back to
July 1997. The figures are available in Haver's USECON database.
The improvement in the August index was broad-based amongst
the
component series. The business activity index for the service sector
broached the break-even level for the first time since last September
with a rise to 51.3. The new orders series neared that break-even level
with an increase to 49.9, up from November's low of 35.6. Finally, the
employment index rose to 43.5 and that was the highest level since
September. Since the series' inception in 1997 there has been a 56%
correlation between the level of the ISM nonmanufacturing employment
index and the m/m change in payroll employment in the service-producing
plus the construction industries.
 The rise in service sector
activity powered a sharp improvement in pricing power. The 21.8 point
m/m jump in the price index to 63.1&nbsp; placed the index at its
highest level since last September. Twenty-three percent of firms
reported higher prices while a significantly reduced 6%&nbsp;
reporting lower prices.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903g.jpg" align="right" border="0" height="265" width="353">
Since its inception ten years ago, there has
been a 60% correlation between the price index and the q/q change in
the GDP services chain price index.
Beginning with the
January 2008 Nonmanufacturing <cite>Report On Business</cite> &#174;,
the composite index is calculated as an indicator of the overall
economic condition for the non-manufacturing sector. It is a composite
index based on the diffusion indices of four of the indicators
(business activity, new orders, employment and supplier deliveries)
with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ismreport/mfgrob.cfm">here.</a>
Changes in the Use of Electronic Means of Payment:
1995-2007 also from the Federal Reserve Bank of Philadelphia
is available <a href="http://www.philadelphiafed.org/research-and-data/publications/business-review/2009/q3/brq309_changes-in-electronic-payment.pdf">here.</a>&nbsp;
<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/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>48.4</td>
<td>46.4</td>
<td>50.4</td>
<td>47.4</td>
<td>53.5</td>
<td>55.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business
Activity</td>
<td>51.3</td>
<td>46.1</td>
<td>50.8</td>
<td>47.4</td>
<td>56.0</td>
<td>58.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Employment</td>
<td>43.5</td>
<td>41.5</td>
<td>45.6</td>
<td>43.8</td>
<td>52.0</td>
<td>53.8</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.1</td>
<td>41.3</td>
<td>74.1</td>
<td>66.0</td>
<td>63.8</td>
<td>65.3</td>
</tr>
</tbody>
</table>

Markit MFG PMIs Turn Higher; Gains
Are Widespread 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 3, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090903h.jpg" align="left" border="0" height="265" width="353">
The Markit PMIs turned higher in August. Across the main
reporting Markit economics we find MFG PMIs are over the break-even
mark of 50 in two of seven EU nations. Three others have readings with
a ‘49’ handle. Italy back-slid in August and has the second weakest MFG
reading at 44.24; Ireland’s MFG PMI rose this month but stands at a
weaker level than Italy’s gauge, at 43.98. Still, all the countries in
the table sport PMI readings that reside in the upper 50% of their
range except Italy and Ireland. Country level readings are in the 60th
percentile or better. Greece and France post the highest relative
readings, in the 70th percentile of their respective ranges or better,
For EMU the current reading is 48.24 and that stands in the 60th
percentile, or in the top 40% of its range. 
 

The services readings for August also show widespread
improvement. The jump this month was very large for EMU and the gains
for services spread across all major individually reporting countries
in our six large-country sample. 
 

With both manufacturing and the services sectors are making
strong gains they are boosting the overall EMU composite index which
moved up above the mark of 50, signaling growth. For its part, the OECD
sees an end to the global recession. But it is warning of continued
difficulties and strong head winds. The outlook has improved but the
degree of improvement remains shrouded in caution. No agency is
sticking its neck out to look for strong growth, even though most are
now citing improvement and calls that say the recession is over are
becoming commonplace 


<table border="0" cellspacing="0" width="100%">
 <colgroup></colgroup>
 <thead><tr>
 <th colspan="8" scope="col">NTC/Markit
MFG Indices</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey4">
 <td class="firstcol">&nbsp;</td>
 <td>Aug-09</td>
 <td>Jul-09</td>
 <td>Jun-09</td>
 <td>3Mo</td>
 <td>6Mo</td>
 <td>12Mo</td>
 <td>Percentile</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol">Euro-13</td>
 <td>48.24</td>
 <td>46.25</td>
 <td>42.62</td>
 <td>45.70</td>
 <td>41.43</td>
 <td>39.34</td>
 <td>60.9%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">Germany</td>
 <td>49.17</td>
 <td>45.65</td>
 <td>40.88</td>
 <td>45.23</td>
 <td>40.51</td>
 <td>38.81</td>
 <td>62.5%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">France</td>
 <td>50.78</td>
 <td>48.13</td>
 <td>45.86</td>
 <td>48.26</td>
 <td>44.12</td>
 <td>41.10</td>
 <td>71.4%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">Italy</td>
 <td>44.25</td>
 <td>45.36</td>
 <td>42.69</td>
 <td>44.10</td>
 <td>40.87</td>
 <td>39.24</td>
 <td>42.2%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">Spain</td>
 <td>47.20</td>
 <td>47.33</td>
 <td>42.76</td>
 <td>45.76</td>
 <td>40.78</td>
 <td>36.57</td>
 <td>65.2%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">Austria</td>
 <td>49.95</td>
 <td>46.46</td>
 <td>42.01</td>
 <td>46.14</td>
 <td>41.73</td>
 <td>40.07</td>
 <td>65.4%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">Greece</td>
 <td>51.13</td>
 <td>48.82</td>
 <td>47.67</td>
 <td>49.21</td>
 <td>45.46</td>
 <td>44.48</td>
 <td>75.8%</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">Ireland</td>
 <td>43.98</td>
 <td>43.66</td>
 <td>42.47</td>
 <td>43.37</td>
 <td>40.11</td>
 <td>39.27</td>
 <td>48.6%</td>
 </tr>
 <tr class="grey1">
 <td colspan="8">EU</td>
 </tr>
 <tr class="grey2">
 <td class="firstcol">UK</td>
 <td>49.71</td>
 <td>50.25</td>
 <td>46.78</td>
 <td>48.91</td>
 <td>45.97</td>
 <td>41.69</td>
 <td>68.8%</td>
 </tr>
 <tr class="grey3">
 <td colspan="8" class="firstcol">percentile
is over range since March
2000</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/090902i.jpg" width="353">
Inventories still are being shed, but at a somewhat slower rate. That is a part of the recent improvement in the level of factory sector output. Manufactures&#39; inventories during July fell 0.7% after a June decline that was revised deeper to 1.1%. These still-significant declines are behind an easing of the decumulation rate to 10.0% from 15.9% this past Winter. Much of that deceleration is due, however, to lower oil prices. Nevertheless, excluding oil, factory inventories fell at a 12.2% three-month rate that was a slight moderation from 14.3% earlier.
The moderation in inventory decumulation rates continues spotty amongst various industries. Inventories of electrical equipment &amp; appliances have fallen at a reduced 14.7% rate and machinery inventories fell at a still-firm 18.7% rate. Conversely, steep production cuts lowered furniture inventories at a 25.7% rate which was only slightly reduced. Inventories of primary metals also fell at a fairly stable 31.3% pace and computer inventory decumulation accelerated to a 18.1% rate during the last three months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902j.jpg" width="353">
Factory shipments have started to rise moderately. On a three-month basis they&#39;re up at a 7.0% rate after the 40% plus rates of decline last Winter. The rate of decline in the machinery industry slowed to 3.1% after dropping at a 52.7% rate in March While in the electrical equipment sector the rate of decline slowed to 7.1% from 48.8%. Most elsewhere the rates of decline in shipments moderated substantially.
Finally, new orders have improved. The 1.3% increase during July was the fifth increase this year. It reflected a sharp monthly rise both in primary metals (-45.0% y/y) and electrical equipment (-20.2% y/y). Unfilled orders also fell at a sharply reduced 4.4% rate through July.
The Manufacturers&#39; Shipments, Inventories and Orders (MSIO) data is available in Haver&#39;s USECON database.
Cross-Country Causes and Consequences of the 2008 Crisis: Early Warning from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-17bk.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/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-0.7</td>
<td>-1.1</td>
<td>-10.0</td>
<td>2.1</td>
<td>3.7</td>
<td>8.2&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-1.1</td>
<td>-1.4</td>
<td>-13.1</td>
<td>-0.6</td>
<td>2.7</td>
<td>7.9</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.3</td>
<td>0.9</td>
<td>-23.2</td>
<td>0.1</td>
<td>1.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.7</td>
<td>2.7</td>
<td>-23.2</td>
<td>3.1</td>
<td>1.2</td>
<td>7.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-0.0</td>
<td>1.8</td>
<td>-22.2</td>
<td>1.7</td>
<td>1.2</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>-0.1</td>
<td>1.9</td>
<td>-22.4</td>
<td>3.7</td>
<td>1.5</td>
<td>6.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>-0.0</td>
<td>-0.8</td>
<td>-10.1</td>
<td>3.5</td>
<td>17.1</td>
<td>15.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>-0.3</td>
<td>-0.1</td>
<td>-14.9</td>
<td>-1.0</td>
<td>8.2</td>
<td>16.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Inventories still are being shed, but at a somewhat slower rate. That is a part of the recent improvement in the level of factory sector output. Manufactures' inventories during July fell 0.7% after a June decline that was revised [...]

U.S. Factory Inventory Decumulation Rate Eases Further

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902g.jpg" align="left" border="0" height="265" width="353">
Revisions to the figures on 2Q worker productivity were small
and as a result cost pressures continue to show a sharp easing. Labor
productivity growth in the nonfarm business sector was revised up
slightly to 6.6% (AR) from the initial report of a 6.4% surge. It was
the strongest increase since the third quarter of 2003 and the gain
beat Consensus expectations for no change in estimated growth.
Compensation costs, however, were revised down sharply. They
barely rose at a 0.3% rate after a 4.7% 1Q decline. It was revised down
versus the initial report of a 2.4% drop. The recent weak figures leave
the y/y increase at just 0.7% which continues the downtrend from
roughly 4.0% growth back to 2001.
Last quarter, the surge in productivity and the moderation in
labor cost growth combined to drop unit labor costs. The 5.9% q/q
decline was slightly deeper than reported initially and lowered the y/y
change to -1.2%, the first material negative reading since early-2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902h.jpg" align="right" border="0" height="265" width="353">
Worker productivity growth in the factory sector was, however,
revised down somewhat to 4.9% and that still was the first quarterly
increase in over one year. A benefit to workers was seen in a 5.1% rise
in 2Q compensation but downward revision to earlier figures lowered the
y/y growth to 5.2% from 6.0% reported initially. Nevertheless, the y/y
gain was the strongest since late-2003. The combination of strong
productivity and firm compensation left the quarterly increase in unit
labor cost at a downwardly-revised 0.2%. Still, year-to-year, growth of
6.7% y/y remains a multiple of last year's 2.2% growth.
The productivity &amp; cost figures are available in
Haver's USECON database.
Growth Accounting, Potential Output and the Current
Recession from the Federal Reserve Bank of San Francisco is
available <a href="http://www.frbsf.org/publications/economics/letter/2009/el2009-26.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/USECON/@EC/@EC02/@EC02.HTM">Nonfarm
Business Sector</a> (SAAR, %)</th>
<th scope="col">2Q '09</th>
<th scope="col">1Q '08</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>6.6</td>
<td>0.3</td>
<td>1.9</td>
<td>1.8</td>
<td>1.9</td>
<td>0.9</td>
</tr>
<tr>
<td class="firstcol">Compensation per Hour</td>
<td>0.3</td>
<td>-4.7</td>
<td>0.7</td>
<td>2.8</td>
<td>4.2</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>-5.9</td>
<td>-5.0</td>
<td>-1.2</td>
<td>1.0</td>
<td>2.3</td>
<td>2.8</td>
</tr>
</tbody>
</table>
</body></html>

Revisions to the figures on 2Q worker productivity were small and as a result cost pressures continue to show a sharp easing. Labor productivity growth in the nonfarm business sector was revised up slightly to 6.6% (AR) from the [...]

Jump In 2Q U.S. Worker Productivity Revised Up Slightly & Cost Pressures Eased

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

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

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Mortgage applications fell 1.4% (+22.7% y/y) in the week ending August 15 after rising 10.9% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans edged 0.1% higher (22.7% y/y) last week, following a 1.4% gain in the prior week. Applications to refinance a home loan fell 3.1% (+22.8% y/y) last week, following a 23.0% rise in the week of August 8.

The effective interest rate on a 30-year fixed-rate loan held steady at 6.86% in the week ending August 15 after falling from 6.94% in the first week of August. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages rose to 6.13% in the latest week from 6.09% in the week of August 8. Conversely, the rate on 30-year Jumbo loans decreased to 6.82% last week from 6.86% one week earlier. The rate on a 5-year ARM rose to 6.24% in the week of August 15 and reversed the prior week’s decline to 6.05%.

The share of applications for refinancing an existing loan eased to 46.1% of total applications in the week ending August 15 after rising to 46.5% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity declined to 8.60% in the latest week after rising to 9.60% in the week of August 8.

The average size of a mortgage loan fell 2.7% (+4.1% y/y) to $387,800 in the week of August 15, following a 4.5% rise in the prior week. The average size of a purchase loan edged 0.5% higher (0.6% y/y) to $429,000 in the latest week after falling 1.2% in the week ending August 8. The average size of a loan to refinance a mortgage fell 7.3% (+9.5% y/y) to $339,800 last week, after rising 18.3% to $366,400 in the prior week. It was increased from $277,900 in the last week of May.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

**Tracking Labor Market Stress** from the Federal Reserve Bank of San Francisco is available [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/08/tracking-labor-market-stress/).

- Purchase applications edge higher while loan refinancing declines.
- Effective fixed-interest rate on 30-year loans remains at four-month low.
- Average loan size declines.

U.S. Mortgage Applications Decline Last Week as Interest Rates Steady

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

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Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 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 $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 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 $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices 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 $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 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 $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/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 $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, 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.

U.S. Energy Prices Are Mixed in Latest Week

Tian Yong Woon

This week, we examine recent developments in US-China trade and assess the broader implications of US trade actions for the BRIC bloc—Brazil, Russia, India, and China. Last week, the US and China extended their tariff truce by 90 days, a move welcomed by equity markets (chart 1). While this pause eased fears of renewed trade tensions, it remains temporary and fragile, with no durable resolution in sight.

As for China’s economy, July data disappointed: retail sales, industrial production, and fixed-asset investment all missed expectations (chart 2). This may signal that tariffs are beginning to bite, as earlier growth drivers—such as some front-loading of imports and one-off consumption boosts like China’s durable-goods subsidy—are fading (chart 3). Newer measures, including loan-interest subsidies, may provide some interim relief. Meanwhile, the property sector remains under heavy strain, with further price and investment declines evidenced in July (chart 4).

In the broader regional context, US trade measures may inadvertently push trading partners closer together, complicating Washington’s bilateral strategy. The BRIC bloc shows tentative signs of greater alignment, though this has yet to appear in data for trade flows (chart 5). China and India, however, are warming toward one another: Foreign Minister Wang Yi’s visit to India this week—focused on the Himalayan border among other issues—suggests an improving dialogue. Separately, discussions at the national level to restart direct flights between the two countries also signal a thaw. Full economic integration remains distant, but the scale of both economies suggests significant potential if relations continue to improve (chart 6).

**The US-China tariff truce**
Last week, the US and China announced a 90-day extension to their mutual tariff truce. Although largely expected, the move still generated further equity market gains (see chart 1). This contrasts sharply with worst-case scenarios earlier this year, when tensions peaked and Washington imposed sweeping tariffs of 145% on Chinese imports — levels that would have severely disrupted global trade and growth if sustained. Instead, both sides agreed to keep additional tariffs at 10% until November 10, allowing more time to pursue a durable trade deal. Still, this is merely a pause rather than progress. 

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**The China docket**
In the meantime, China’s latest monthly data releases were watched closely and offered valid reasons for caution despite earlier signs of resilience. More specifically, retail sales, industrial production, and fixed-asset investment (chart 2) all missed expectations, suggesting US tariff and non-tariff measures are beginning to weigh on growth alongside persistent domestic headwinds. Also, China’s unemployment rate inched higher, while property prices continued to decline. If such weakness persists, calls for additional policy support will grow, even though debt-fuelled measures risk merely trading today’s problems for tomorrow’s.

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**China retail sales**
Diving deeper into the individual releases, chart 3 highlights the gradual slowdown in China’s retail sales in recent months, with growth easing to 3.7% y/y in July. By product category, the deceleration reflects weaker automobile sales — amid authorities’ clampdown on carmaker price wars — and softer furniture sales, suggesting a one-off boost from the government’s durable-goods subsidy programme may now be fading. Clearer confirmation could come if sales growth of other subsidized goods, such as home appliances, also begin to weaken. Still, retail spending — and broader consumption activity — may gain fresh support from China’s new loan-interest subsidy programme, which covers both consumer borrowing and eligible service-sector business loans.

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**China property prices and investment**
Moving next to China’s beleaguered property market, the sector has shown no meaningful recovery for several years. Prices remain on a downtrend, and repeated investor attempts to call a bottom have proven futile. The latest data offered no relief: property prices continued to decline, while investment in the sector fell 12% y/y year-to-date in July (chart 4). That said, the pace of price declines has slowed sharply compared with last year. Even so, what was once a major engine of China’s growth continues to shrink into a shadow of its former self.

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**The BRIC bloc**
While recent trade measures appear favourable for the US, lowering partner tariffs and modestly raising Washington’s own rates, significant risks remain. Such moves could push US trading partners closer together, undermining the administration’s strategy of leveraging bilateral negotiations. One potential area of alignment is the BRIC bloc — Brazil, Russia, India, and China. Although hard data have yet to show major shifts (see chart 5), recent headlines suggest small steps toward deeper cooperation. That said, Russia remains constrained by heavy US sanctions and pressure, as reflected in trade flows with its closest partners.

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Digging a little further, China and India have recently begun to ease their decades-long frosty ties, partly in response to this year’s US trade tensions. A key sign of improving relations is China’s Foreign Minister Wang Yi’s high-profile visit to India from Monday to Wednesday this week. The visit focused on, among other topics, the disputed Himalayan border — which, if resolved, would mark a major step in restoring bilateral relations — and trade across the border. Other indicators of a warming relationship include ongoing talks to restart direct flights, suspended during the pandemic. Given the sheer size of their populations and economies, as shown in chart 6, a fully developed China-India economic partnership could unlock immense potential. However, the path to meaningful economic integration remains at an early stage, with numerous hurdles still to navigate.

Economy in Brief: September 2009

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