Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040907a.jpg" width="353">
The Job Openings &amp; Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics suggests US job creation has picked up, albeit moderately. The hires rate rose to 3.3% in June versus a monthly low of 3.0% last Spring and 3.1% during all of last year. The latest hires rate is down from the March high of 3.5% but it equals the rate averaged so far this year.
This year&#39;s improvement in the hires rate has been paced by job growth in the manufacturing and construction industries.
The survey dates only to December 2000 but has since followed closely the movement in nonfarm payrolls.
The job openings rate also is up this year versus last but it has been stuck at 2.3% since December.

<table border="0" cellspacing="0" width="100%">
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<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">June</th>
<th scope="col">May</th>
<th scope="col">June &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Job Openings Rate: Total</td>
<td>2.3%</td>
<td>2.3%</td>
<td>2.3%</td>
<td>2.1%</td>
<td>2.2%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">Hires Rate: Total</td>
<td>3.3%</td>
<td>3.2%</td>
<td>3.1%</td>
<td>3.1%</td>
<td>3.2%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
Mass Layoffs Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 7, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040907b.jpg" width="353">
Mass layoffs in the US as reported to the Bureau of Labor Statistics jumped 52% in July from an elevated June level which rose 40% from May. The increases reversed all of improvement which had occurred through May.
These mass layoffs generated 253,929 initial claims for unemployment insurance, up 12.1% y/y.
Since the series inception in 1995 there has been a (negative) 46% correlation between the number of initial claims generated by mass layoffs and the one month change in non-farm payrolls.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period. Extended mass layoff numbers (issued quarterly) are from a subset of such establishments--where private sector non-farm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF10/@EF1001/@EF1001.HTM">Mass Layoffs</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Number of Events: All Industries</td>
<td>2,094</td>
<td>1,379</td>
<td>0.3%</td>
<td>18,963</td>
<td>20,277</td>
<td>21,467</td>
</tr>
</tbody>
</table>
</body>
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The Job Openings & Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics suggests US job creation has picked up, albeit moderately. The hires rate rose to 3.3% in June versus a monthly low of 3.0% last Spring and 3.1% [...]

JOLTS Indicates Improved Hiring in the US

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/040903c.jpg" width="353">
The Euro-Zone Purchasing Managers Index for the service industries edged down in August to 54.47 from 55.31 in July. A narrow range from 54.40 to 55.76 has prevailed for six months now, tracing a steady moderate growth path for service sector activity. These international PMI surveys are conducted by NTC-Research for Reuters, Inc.
Most individual countries have also seen minimal swings in these service industry gauges. That in Germany, a few points lower than most, has crept higher the last few months. In Italy, the opposite is true: its index was over 58 in June, but has slowed to 56.5 in August. Components for the Euro-Zone Total show that employment is picking up while new orders are showing a bit less growth. Expectations have been virtually unchanged over the summer months. Input prices, as seen in the first graph, continue to move ahead.
NTC-Research compiles purchasing manager indexes for the Euro-Zone and other countries for the manufacturing, construction and service sectors of each economy. The firm recently introduced a set of &quot;GDP Indicators&quot; which combines these three sectoral indexes into a weighted average of the three diffusion indexes. NTC analysts then use regression models to scale the index to GDP growth rates.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903d.jpg" width="353"> 
For the Euro-Zone, the index eased too in August, although it stands several percentage points above year-ago levels. For assessing year-to-year growth prospects, the NTC PMI-based indicator&#39;s translation to year-to-year growth aligns fairly well with GDP performance and has a high correlation ratio of 93%. The indicator level runs a 79% correlation with quarterly changes in Euro-Zone GDP. The recent moves in the indicator suggest a further gain in Euro-Zone GDP of 0.5 to 0.6% this quarter and year-on-year expansion of about 2-1/4%, that is, at least maintaining its recent growth rates.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Purchasing Managers Index Percent (&gt;50 = expansion;&nbsp; &lt;50 = contraction)</th>
<th scope="col">Aug 2004</th>
<th scope="col">July 2004</th>
<th scope="col">June 2004</th>
<th scope="col">Aug 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Services:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Euro Zone Total</td>
<td>54.47</td>
<td>55.31</td>
<td>55.31</td>
<td>51.99</td>
<td>51.36</td>
<td>51.58</td>
<td>51.63</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Germany</td>
<td>53.54</td>
<td>53.87</td>
<td>52.30</td>
<td>51.78</td>
<td>48.49</td>
<td>48.62</td>
<td>48.87</td>
</tr>
<tr>
<td class="firstcol">United Kingdom</td>
<td>56.91</td>
<td>56.22</td>
<td>56.77</td>
<td>57.00</td>
<td>54.84</td>
<td>54.37</td>
<td>51.41</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">GDP Indicator: </td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-Zone Total</td>
<td>54.5</td>
<td>55.5</td>
<td>55.0</td>
<td>50.8</td>
<td>50.6</td>
<td>51.3</td>
<td>50.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Year/Year % Change</td>
<td>2.2</td>
<td>2.2</td>
<td>2.3</td>
<td>0.4</td>
<td>0.8</td>
<td>1.0</td>
<td>1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Actual GDP Growth, Year/Year</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>0.5</td>
<td>0.9</td>
<td>1.6</td>
</tr>
</tbody>
</table>
</body>
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The Euro-Zone Purchasing Managers Index for the service industries edged down in August to 54.47 from 55.31 in July. A narrow range from 54.40 to 55.76 has prevailed for six months now, tracing a steady moderate growth path for [...]

Euro-Zone Services Activity Maintains Steady Growth

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903b.jpg" width="353">
Nonfarm payrolls grew 144,000 last month following upwardly revised gains in both July &amp; June which averaged 84,500 each month. Consensus expectations had been for a 150,000 job gain in August.
The fall in the unemployment rate to 5.4% from the separate household survey continued to suggest moderate labor market improvement. Employment growth eased to 21,000 (1.4% y/y) following a 629,000 rise the prior month and the labor force fell 152,000 (+0.7% y/y). The labor force participation rate slipped back to 66.0% from 66.2% in July.
Hiring in private service producing industries recovered modestly last month with an 84,000 (1.7% y/y) gain versus an upwardly revised 45,000 July rise, however, these gains are a fraction of the growth during the prior several months. Hiring in the financial sector did recover 18,000 m/m (0.8% y/y), but jobs in information services fell 10,000 (-0.3% y/y) and another 11,300 (+0.8% y/y) retailing jobs were lost. Hiring in professional &amp; business services grew 32,000 (3.4% y/y) and temporary help services jobs rose 9,800 (8.9% y/y).
Factory sector payrolls grew 22,000 (0.1% y/y) following a downwardly revised gain in July. Construction sector hiring grew 15,000 (2.8% y/y).
The breadth of increase amongst private non-farm payrolls confirmed modest job growth at 54.5% versus an upwardly revised 54.9 in July. The three month diffusion index of hiring fell to 57.9 versus a high of 74.5 in May.
The index of aggregate hours worked (employment times hours worked) grew 0.2% following an upwardly revised 0.7% July rise. The index so far in the third quarter is 2.8% (AR) above 2Q which rose a revised 2.2% (AR) versus 1Q.
Average hourly earnings rose 0.3% (2.3% y/y) following an upwardly revised 0.4% July gain.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>144,000</td>
<td>73,000</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>22,000</td>
<td>6,000</td>
<td>0.1%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.6</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.4%</td>
<td>5.5%</td>
<td>6.1%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls grew 144,000 last month following upwardly revised gains in both July & June which averaged 84,500 each month. Consensus expectations had been for a 150,000 job gain in August. The fall in the unemployment rate to [...]

U.S. Job Growth Recovered Some, Unemployment Rate Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903a.jpg" width="353">
The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0.
Since the series&#39; inception in 1997 there has been a 60% correlation between the Business Activity Index and the q/q change in GDP services plus construction.
Despite the decline in the Business Index, the employment index recovered 2.5 points of the sharp 7.4 point July drop. Higher employment was reported by the same 18% of firms as in July. Since the series&#39; inception in 1997 there has been a 61% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
The new orders index slipped to 58.6 from the record high of 66.4 in July.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
The seasonally adjusted prices index fell to 70.0 versus 73.1 in July and the record high of 74.6 sin June.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<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">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>58.2</td>
<td>64.8</td>
<td>63.8</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.0</td>
<td>73.1</td>
<td>56.2</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</td>
</tr>
</tbody>
</table>


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The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0. Since the series' [...]

ISM Nonmanufacturing Index Slipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903b.jpg" width="353">
Nonfarm payrolls grew 144,000 last month following upwardly revised gains in both July &amp; June which averaged 84,500 each month. Consensus expectations had been for a 150,000 job gain in August.
The fall in the unemployment rate to 5.4% from the separate household survey continued to suggest moderate labor market improvement. Employment growth eased to 21,000 (1.4% y/y) following a 629,000 rise the prior month and the labor force fell 152,000 (+0.7% y/y). The labor force participation rate slipped back to 66.0% from 66.2% in July.
Hiring in private service producing industries recovered modestly last month with an 84,000 (1.7% y/y) gain versus an upwardly revised 45,000 July rise, however, these gains are a fraction of the growth during the prior several months. Hiring in the financial sector did recover 18,000 m/m (0.8% y/y), but jobs in information services fell 10,000 (-0.3% y/y) and another 11,300 (+0.8% y/y) retailing jobs were lost. Hiring in professional &amp; business services grew 32,000 (3.4% y/y) and temporary help services jobs rose 9,800 (8.9% y/y).
Factory sector payrolls grew 22,000 (0.1% y/y) following a downwardly revised gain in July. Construction sector hiring grew 15,000 (2.8% y/y).
The breadth of increase amongst private non-farm payrolls confirmed modest job growth at 54.5% versus an upwardly revised 54.9 in July. The three month diffusion index of hiring fell to 57.9 versus a high of 74.5 in May.
The index of aggregate hours worked (employment times hours worked) grew 0.2% following an upwardly revised 0.7% July rise. The index so far in the third quarter is 2.8% (AR) above 2Q which rose a revised 2.2% (AR) versus 1Q.
Average hourly earnings rose 0.3% (2.3% y/y) following an upwardly revised 0.4% July gain.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>144,000</td>
<td>73,000</td>
<td>1.3%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>22,000</td>
<td>6,000</td>
<td>0.1%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.6</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.4%</td>
<td>5.5%</td>
<td>6.1%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Slipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 3, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040903a.jpg" width="353">
The Business Activity Index for the non-manufacturing sector from the Institute for Supply Management slipped to 58.2 in August from 64.9 in July. Consensus expectations had been for a more moderate decline to 63.0.
Since the series&#39; inception in 1997 there has been a 60% correlation between the Business Activity Index and the q/q change in GDP services plus construction.
Despite the decline in the Business Index, the employment index recovered 2.5 points of the sharp 7.4 point July drop. Higher employment was reported by the same 18% of firms as in July. Since the series&#39; inception in 1997 there has been a 61% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
The new orders index slipped to 58.6 from the record high of 66.4 in July.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.
The seasonally adjusted prices index fell to 70.0 versus 73.1 in July and the record high of 74.6 sin June.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<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">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>58.2</td>
<td>64.8</td>
<td>63.8</td>
<td>58.1</td>
<td>55.1</td>
<td>48.9</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.0</td>
<td>73.1</td>
<td>56.2</td>
<td>56.7</td>
<td>53.9</td>
<td>51.5</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/040902f.jpg" width="353">
The German Federal Statistics Office and the Bundesbank today reported continuing lackluster labor market conditions in that nation. Employment in June edged down by 1,000, while unemployment rose in August by 24,000. The August unemployment rate for Germany as a whole held at July&#39;s 10.6% as the rate in West Germany ticked up to 8.6%, a new high in the current cycle. The rate in East Germany remained at 18.5% for a fourth straight month. 
About ten days ago in this space, Louise Curley described the labor reforms presently in process in Germany. She argued that these extensive structural changes, desirable though they are for the long-run health of the German economy, had likely been a restraint on domestic demand there in the second quarter. The still lower employment figures for June seem to underscore that tendency, and the behavior of the unemployment rates so far in the third quarter suggest that things have not improved much over the summer. One might take heart in the minimal size of the employment decrease in June and see it as a sign that jobs are stabilizing. In fact, some market forecasts had looked for a larger decline. At the same time, a larger forecast survey had pointed to a much smaller increase in August unemployment than occurred. This development, along with higher energy costs, makes it difficult to be optimistic about renewed vigor in the German economy anytime soon. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Jun 04</th>
<th scope="col">May 04</th>
<th scope="col">Jun 03 &nbsp;</th>
<th scope="col">M/M &nbsp;</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment (thous, SA) &nbsp; </td>
<td>38204 &nbsp; </td>
<td>38205 </td>
<td>38293 </td>
<td>-1K &nbsp; </td>
<td>-89K &nbsp; </td>
<td>38316 &nbsp; </td>
<td>38699 &nbsp; </td>
<td>38923 &nbsp; </td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rates (%, SA)</td>
<td>Aug 04</td>
<td>Jul 04</td>
<td>Aug 03</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">All Germany &nbsp; </td>
<td>10.6</td>
<td>10.6</td>
<td>10.6</td>
<td>+24K*</td>
<td>+11K*</td>
<td>10.5</td>
<td>9.8</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td class="firstcol">West Germany &nbsp; </td>
<td>8.6</td>
<td>8.5</td>
<td>8.4</td>
<td>+18K*</td>
<td>+26K*</td>
<td>8.4</td>
<td>7.7</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">East&nbsp; Germany &nbsp; </td>
<td>18.5</td>
<td>18.5</td>
<td>18.5</td>
<td>+6K*</td>
<td>-15K*</td>
<td>18.5</td>
<td>17.7</td>
<td>17.3</td>
</tr>
</tbody>
</table>
</body>
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The German Federal Statistics Office and the Bundesbank today reported continuing lackluster labor market conditions in that nation. Employment in June edged down by 1,000, while unemployment rose in August by 24,000. The August [...]

German Labor Market Remains in the Doldrums

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040902d.jpg" width="353">
Initial claims for unemployment insurance jumped 19,000 to 362,000 last week on the heels of a 10,000 rise the week prior. Roughly half of both week&#39;s increases were due to the impact of Hurricane Charley on claims in Florida, according to the Labor Department. The Consensus forecast had beenfor 335,000 claims.
The 4-week moving average of initial claims rose to 343,000 (-14.4% y/y).
Continuing claims for unemployment insurance fell 5,000 following a downwardly revised 5,000 decline the week prior.
The insured rate of unemployment remained at 2.3%, where it has hovered since the end of April.

<table border="0" cellspacing="0" width="100%">
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<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">08/28/04</th>
<th scope="col">08/21/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>362</td>
<td>343</td>
<td>-12.6%</td>
<td>399</td>
<td>403</td>
<td>403</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,882</td>
<td>-19.4%</td>
<td>3,516</td>
<td>3,564</td>
<td>2974</td>
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Initial claims for unemployment insurance jumped 19,000 to 362,000 last week on the heels of a 10,000 rise the week prior. Roughly half of both week's increases were due to the impact of Hurricane Charley on claims in Florida, [...]

Initial Jobless Insurance Claims Again Raised Hurricane Charley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040902c.jpg" width="353">
Inventory accumulation in the factory sector is in high gear. Total inventories jumped 0.8% in July and the prior month&#39;s strong 0.7% gain was revised to 1.0%. Year to year growth of 3.9% is the strongest since early 2001.
Inventory accumulation has been widespread but notable amongst machinery (5.6% y/y) manufacturers as well as primary (5.9% y/y) &amp; fabricated metals (7.6% y/y) producers.
Unfilled orders again were strong rising 1.2% but the ratio of unfilled orders to shipments ticked up only slightly and remained well below the highs of 2001.
Factory orders surged 1.3% following an upwardly revised 1.2% gain in June. Durable goods orders jumped 1.6% versus the advance report of a 1.7% rise.Non-durable goods orders (which equal shipments) rose 1.0% (11.8% y/y).
Factory shipments surged 0.6% following an upwardly revised 1.1% jump in June. Excluding the transportation sector shipments added 1.3% (12.2% y/y) to the 1.2% June spike.

<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">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.8%</td>
<td>1.0%</td>
<td>3.9%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>1.3%</td>
<td>1.2%</td>
<td>11.8%</td>
<td>3.7%</td>
<td>-1.9%</td>
<td>-6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.6%</td>
<td>1.1%</td>
<td>10.0%</td>
<td>2.6%</td>
<td>-2.0%</td>
<td>-5.4%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>1.2%</td>
<td>0.6%</td>
<td>9.8%</td>
<td>4.2%</td>
<td>-6.1%</td>
<td>-5.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Inventory accumulation in the factory sector is in high gear. Total inventories jumped 0.8% in July and the prior month's strong 0.7% gain was revised to 1.0%. Year to year growth of 3.9% is the strongest since early 2001. Inventory [...]

Factory Inventories Up

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

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Andrew Cates

**The global business cycle** 
The recent sharp decline in the Future Output Balance in the global composite PMI survey reflects a sudden deterioration in global business expectations. The sweeping tariffs, introduced in April 2025, have generated heightened uncertainty around trade policy and sparked fears of retaliatory actions from key trading partners. As a result, businesses worldwide are scaling back their expectations for future output, wary of rising costs, disrupted demand flows, and a broader shift toward protectionism that could undermine global economic momentum.

250507Z1.jpg

Note: The extreme declines in the Future Output Balance that were recorded in the early months of 2020 (at the height of the COVID pandemic) have been removed from this chart.

**Global supply chain pressures**
Still, despite the marked deterioration in global business expectations, this second chart below provides a reassuring counterpoint: as of now, there is little evidence that global supply chain pressures have materially intensified. Both the New York Fed’s Global Supply Chain Pressure Index and the Baltic Exchange Dry Index remain relatively subdued, especially compared to the pandemic-era spikes of 2020–2022. While there has been heightened concern following the April 2025 US tariff announcements, these trade policy shifts have yet to translate into measurable physical disruption in logistics or freight rates. The stability of these indices suggests that although sentiment has taken a hit, global shipping networks and supply flows are, for now, absorbing the shock. However, this calm may prove fragile if the policy environment hardens further or retaliatory trade actions begin to compound the strain.

250507Z2.jpg

**Expectations for central banks’ policy rates** 
Adding to the picture of mounting economic caution, the latest Blue Chip Financial Forecasts survey reveals that expectations for policy easing over the next 12 months have become even more pronounced than in previous months. While earlier surveys had already pointed to a further extension of the global rate-cutting cycle, the latest results suggest forecasters now anticipate a deeper and more aggressive round of monetary easing—most notably from the US Federal Reserve, which is now expected to deliver nearly a full percentage point in rate cuts over the next 12 months. The sharp deterioration in business sentiment is reshaping the macro narrative: central banks are no longer simply guiding inflation lower, but are instead preparing to confront the risk of a deeper, demand-driven slowdown.

250507Z3.jpg

**Energy prices and inflation** 
Adding further context to the growing expectations for policy easing, oil prices have dropped sharply in recent weeks—driven by mounting concerns over global growth, as reflected in weakening business sentiment and softer demand indicators. The chart below provides a longer-run perspective on why this matters: energy prices have historically played a central role in shaping the global inflation trajectory. The strong positive correlation (r = 0.83) between median world energy price inflation and median core consumer price inflation underscores the powerful pass-through effects energy costs can have on broader price dynamics. While core inflation tends to be stickier, this historical relationship makes clear that sustained declines in energy prices often foreshadow broader disinflationary trends.

250507Z4.jpg

**Intangibles versus tangibles** 
Shifting focus from short-term cyclical risks to longer-term structural dynamics, the next chart below underscores a fundamental transformation in the composition of US investment: the economy has increasingly been built on intangibles. Over the past several decades, investment in intangible assets—such as software, intellectual property, R&D, and brand equity—has steadily climbed and, since the mid-2010s, has overtaken investment in both structures and equipment as a share of GDP. This shift reflects the rise of a knowledge-based, innovation-driven economy, but it also introduces new forms of vulnerability. Unlike physical capital, intangible assets rely heavily on trust, reputation, legal protections, and global openness. In this context, escalating trade frictions and a more confrontational US economic stance—as signalled by the recent tariff wave—risk eroding the goodwill and institutional credibility that underpin much of the value created by intangibles. If geopolitical uncertainty undermines the perceived reliability of US intellectual property protections or weakens global collaboration, it could pose a deeper structural challenge to future growth than any immediate cyclical downturn.

250507Z5.jpg

**Investment in Artificial Intelligence**
The centrality of intangibles to the US growth model is nowhere more evident than in the explosion of private investment in artificial intelligence. As this chart illustrates, global AI investment has surged over the past decade—reaching new highs in 2024—and the United States has consistently accounted for the lion’s share of that spending. This reflects not only America’s previous leadership in frontier technologies but also its dependence on intangible capital, from algorithms and data infrastructure to human expertise and institutional trust. However, this dominance also underscores the strategic stakes of current policy choices. In an environment of rising trade tensions and potential fragmentation, the foundations of US leadership in AI—cross-border collaboration, data openness, and global market access—could be at risk.

250507Z6.jpg

Financial market sentiment has rebounded in recent weeks, buoyed by signs of de-escalation in the US-led trade war and growing confidence that central banks—particularly the Federal Reserve—will step in with more rate cuts to cushion any fallout. Yet beneath the surface, a more sobering picture of the global economy persists. For example, latest PMI surveys reveal that global business expectations have slumped to their lowest levels since the pandemic, reflecting widespread unease about the growth outlook (chart 1). While supply chain pressures have so far remained contained, suggesting no repeat of the logistical chaos seen during the pandemic (chart 2), the latest Blue Chip Financial Forecasts survey reveals that forecasters are now pencilling in deeper and more widespread monetary easing than previously anticipated—an acknowledgment that demand is faltering (chart 3). Falling oil prices further reinforce this view: they are both a symptom of weakening global demand and a potential source of disinflation, reducing the urgency for central banks to maintain tight policy (chart 4). At the structural level, the US economy's increasing reliance on intangible assets—ranging from intellectual property to reputation—has made it more vulnerable to geopolitical frictions and the erosion of global trust (chart 5). This risk is compounded by America's dominant role in AI investment, a sector symbolic of both its economic strengths and its exposure to international perceptions (chart 6). The longer-term challenge, then, is not just navigating the current downturn, but ensuring that the institutional goodwill and cross-border openness that support the modern US economy are not sacrificed in a more fragmented and uncertain global order.

Charts of the Week: Relief Rally Meets Recession Risk

250507J1.jpg

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At today’s meeting of the Federal Open Market Committee, the target range for the Fed funds rate was left unchanged at 4.25% to 4.50%. This followed reductions at three consecutive meetings in the fall of 2024. Rates remain below the high of 5.25% to 5.50% in place in mid-September. Today’s target range matched expectations in the Action Economics Forecast Survey.

The statement following the meeting indicated that, “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook has increased further. The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

“The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

The Fed continued, “The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage backed securities.”

250507L1.jpg

250507M1.jpg

- FOMC holds funds rate target at late-December level.
- Risk assessments include higher unemployment & inflation.

FOMC Targeted Funds Rate Range Is Unchanged; Increased Risks Acknowledged

Kathleen Stephansen, CBE

250507F4.jpg

250507G4.jpg

Consumer credit outstanding rose $10.2 billion (1.9% y/y) during March after declining by $0.6 billion (+1.7% y/y) during February, revised from a decline of $0.8 billion (+1.7% y/y. A $10.0 billion rise had been expected in the Action Economics Forecast Survey. As a percentage of disposable personal income, consumer credit was 22.4% in March, compared to 22.9% one year earlier.

Nonrevolving credit outstanding rose $8.3 billion (1.5% y/y) in March after easing $0.3 billion (1.3% y/y) in February. Nonrevolving credit held by depository institutions declined 7.8% y/y in March after declining 9.0% y/y in February. Finance company debt holdings rose 0.8% y/y, while credit union holdings eased 1.9% y/y in March. Nonrevolving debt held by the federal government rose 3.4% y/y.

In March, revolving credit outstanding, which includes credit cards, rose $1.9 billion (2.9% y/y) following a decline of $0.3 billion (2.9% y/y) in February. Revolving credit outstanding held by depository institutions fell 1.5% y/y. Revolving credit held by finance companies dropped 12.2% y/y, while that held by credit unions rose 3.7% y/y.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

250507H4.jpg

250507I4.jpg

- Consumer credit rises close to expectations.
- Nonrevolving and revolving credit rise.


U.S. Consumer Credit Rebounded in March

250507A20.jpg

250507B20.jpg

Mortgage applications increased 11.0% (26.0% y/y) in the week ended May 2, after declining 4.2% in the week ended April 25, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications to purchase a home rose 11.1% (12.9% y/y) in the week ended May 2 after declining 4.4% in the previous week. Loan applications to refinance a home loan also increased 11.1% (51.0% y/y) in the latest week after falling 3.7% in the prior week.

The effective interest rate on a 30-year fixed rate loan of 7.03% in the week ended May 2 compared to 7.08% in the prior week. The effective rate on a 15-year fixed rate loan of 6.34% in the week ended May 2 followed 6.36% in the prior week. The rate on a 30-year jumbo loan declined to 6.99% in the latest week from 7.06% in the prior week, while the rate on a 5-year ARM eased	to 6.08% in the week ended May 2 from 6.12% in the prior week.

The share of applications to refinance an existing mortgage slipped to 37.1% in the week ended May 2 from 37.3% in the prior week. The share of loans with an adjustable rate rose to 8.3% in the latest week from 7.4% one week earlier.

The average size of a mortgage loan rose 4.2% (3.8% y/y) to $400,200 in the week ended May 2, after slipping 0.7% to $384,100 in the prior week. The average size of a loan to purchase a home increased 1.0% (0.2% y/y) to $444,300 in the latest week from $440,100 in the week prior. The average size of a loan to refinance an outstanding mortgage increased 12.3% (27.6% y/y) last week to $325,400 from $289,800 one week earlier.

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.

- Purchase & refinancing loan applications jump.
- Effective interest rates remain range-bound.
- Average loan size increases.

Mortgage Applications Surge as Interest Rates Ease Last Week

250506J8.jpg

250506K8.jpg

The U.S. trade deficit in goods and services (BOP basis) in March grew to $140.5 billion after narrowing slightly to $123.2 billion in February, revised from $122.7 billion, after widening to $130.7 billion in January according to the U.S. Census Bureau. A $136.7 billion deficit was expected by the Action Economics Forecast Survey. Exports rose 0.2% (6.7% y/y) in March after increasing 2.8% in February. This was accompanied by a 4.4% rise (27.1% y/y) rise in imports which came after m/m stability in February. In Q1’25, the deficit grew to an average $131.4 billion, after rising to an average $83.3 billion in Q4’24.

The trade deficit in goods (BOP basis) widened to a record $163.2 billion in March from $147.9	 billion in February, revised from $147.0 billion. Goods exports (customs value) rose 1.4% (7.0% y/y) in March, after increasing 3.6% in February. The latest increase reflected an 8.2% (8.4% y/y) surge in auto exports which came after a 12.7% strengthening. A 3.5% (4.0% y/y) gain occurred in industrial supplies & materials exports which followed a 5.1% rise. Foods, feeds & beverage exports rose 6.6% (1.4% y/y) after declining in four of the prior five month. Working lower, capital goods exports fell 2.5% (+13.9% y/y) in March after a 4.	8% increase and nonauto consumer goods exports were off 1.1% (+3.4% y/y) in March after a 2.4% gain.

Imports of goods increased 5.5% (31.4% y/y) in March after a 0.2% February easing. Imports of nonauto consumer goods imports surged 27.9% (56.0% y/y) following a 3.1% February gain. Auto imports rose 6.6% (8.7% y/y) after a 1.2% rise. Capital goods imports rose 4.2% (22.5% y/y) following a 1.1% rise. Foods, feeds & beverage imports eased 0.4% (+11.1% y/y) following a 2.0% weakening. Industrial supplies & materials imports declined 12.4% (+39.5% y/y) after weakening 4.6% in February. Petroleum imports by end-use fell 4.1% (-10.2% y/y) after a 2.9% decline. Nonpetroleum imports increased 6.0% (34.8% y/y) after holding steady in February.

The inflation-adjusted goods trade deficit (customs value) deepened to $150.9 billion in March from $136.9 billion in February. Real exports rose 1.6% (5.3% y/y) after a 3.0% February increase, while real imports rose 5.8% (29.8% y/y) in March following a 0.5% February slip.

The services trade surplus narrowed to $23.0 billion in March after decreasing to $23.8 billion in February. It reached a peak of $25.7 billion in November of last year. Service exports fell 0.9% (+5.7% y/y) after a 0.8% decline in February. Construction services exports rose 1.0% (37.7% y/y) after increasing 2.6% in February. Travel services exports fell 7.1% (-3.7% y/y) and financial exports increased 0.9% (7.3% y/y). Transport exports rose 3.1% (2.4% y/y). Service imports eased 0.1% (+10.8% y/y) in March following a 0.8% gain. Maintenance & repair services declined 1.5% (+32.1% y/y) while imported transport services increased 1.2% (1.7% y/y). Imported travel services fell 2.2% (5.3% y/y) while charges for use of intellectual property rose 1.0% (13.6 y/y).

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $24.8 billion in March from $26.6 billion in February. Exports to China declined 8.2% (-10.5% y/y) while imports weakened 7.2% (-2.7% y/y). The deficit with the European Union deepened to a record $48.3 billion in March from $30.9 billion in February. Exports rose 10.9% (14.5% y/y) while imports soared 34.0% (65.4% y/y). The deficit with Japan deepened to $5.8 billion from $5.2 billion in February. Exports rose 1.8% (8.8% y/y) and imports rose 6.4% (9.9% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver’s **USECON** database. Detailed figures on international trade are available in the **USINT** and **USTRADE** databases. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

250506L8.jpg

250506M8.jpg

- Goods deficit grows as imports surge ahead of tariff imposition.
- Exports edge higher, led by autos.
- Petroleum product imports fall as crude oil prices decline.

Economy in Brief: September 2004

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JOLTS Indicates Improved Hiring in the US

Euro-Zone Services Activity Maintains Steady Growth

U.S. Job Growth Recovered Some, Unemployment Rate Fell

ISM Nonmanufacturing Index Slipped

U.S. Job Growth Recovered Some, Unemployment Rate Fell

German Labor Market Remains in the Doldrums

Initial Jobless Insurance Claims Again Raised Hurricane Charley

Factory Inventories Up