Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205h.jpg" width="353">
Six of the countries in the emerging markets data base EMERGEPR, which covers the Pacific Rim, have reported January data for the Consumer Price Index. The inflation picture that arises from these data (Defining inflation as the year to year change in the Consumer Price Index) covers a wide span from 2.96% in Taiwan to 14.0% in Vietnam. The first chart shows the headline inflation for Indonesia, Vietnam and the Philippines, the three relatively high inflation countries. The second chart shows the headline inflation for Taiwan, South Korea and Thailand, three relatively low inflation countries. All six countries show a rising trend for inflation over the past six months.
Core inflation rates, excluding food and energy, are available for Thailand since January &#39;91, for South Korea, since January &#39;76 and for Taiwan since January &#39;92 and are shown in the third chart. Core rates of inflation in Korea and Thailand are rising more slowly than the headline series, but in Taiwan, the core rate has spiked in recent months.
Core inflation rates for the Philippines are available only from June, 2004 and for Indonesia, from December 2005. There are no core rates for Vietnam. The rationale for excluding food and energy prices from the Consumer Price index was based on the historical evidence that in industrialized countries these items tended to rise and fall around a fairly trend less norm. It was never clear that the concept should be applied to emerging countries. Recent history, however, suggests that the long term trend in food and energy prices, even in highly developed countries is no longer trend less but definitely rising, casting doubts about the usefulness of the core inflation concept. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205i.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205j.jpg" width="353"> 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">INFLATION IN THE PACIFIC RIM&nbsp;</th>
<th scope="col">Jan 08</th>
<th scope="col">Dec 07&nbsp;</th>
<th scope="col">Nov 07&nbsp;</th>
<th scope="col">Oct 07&nbsp;</th>
<th scope="col">Sep 07&nbsp;</th>
<th scope="col">Aug 07</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Year to Year Change in CPI</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Indonesia&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>7.36</td>
<td>6.59</td>
<td>6.71</td>
<td>6.88</td>
<td>6.95</td>
<td>6.51</td>
</tr>
<tr>
<td class="firstcol">Vietnam&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>14.09</td>
<td>12.57</td>
<td>10.04</td>
<td>9.35</td>
<td>8.80</td>
<td>8.55</td>
</tr>
<tr>
<td class="firstcol">Philippines</td>
<td>4.86</td>
<td>3.94</td>
<td>3.23</td>
<td>2.73</td>
<td>2.61</td>
<td>2.37</td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>4.26</td>
<td>3.21</td>
<td>3.03</td>
<td>2.51</td>
<td>2.09</td>
<td>1.13</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>3.89</td>
<td>3.61</td>
<td>3.52</td>
<td>3.02</td>
<td>2.32</td>
<td>2.04</td>
</tr>
<tr>
<td class="firstcol">Taiwan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>2.96</td>
<td>3.33</td>
<td>4.80</td>
<td>5.33</td>
<td>3.11</td>
<td>1.61</td>
</tr>
<tr class="odd">
<td class="firstcol">Year to Year Change in CORE</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Thailand</td>
<td>1.23</td>
<td>1.24</td>
<td>1.14</td>
<td>1.05</td>
<td>0.76</td>
<td>0.67</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>2.82</td>
<td>2.44</td>
<td>2.44</td>
<td>2.45</td>
<td>2.35</td>
<td>2.25</td>
</tr>
<tr>
<td class="firstcol">Taiwan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>2.71</td>
<td>2.57</td>
<td>2.36</td>
<td>2.27</td>
<td>1.98</td>
<td>1.62</td>
</tr>
</tbody>
</table>
</body>
</html>

Six of the countries in the emerging markets data base EMERGEPR, which covers the Pacific Rim, have reported January data for the Consumer Price Index. The inflation picture that arises from these data (Defining inflation as the year [...]

Inflation in the Pacific Rim

Robert Brusca

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205g.jpg" width="353">
EMU retail sales are doing badly. German sales look worse than they are in the yr/yr graph due to the comparison with the December base in 2006 just ahead of the introduction of the VAT hike in 2007. That pushed activity into Dec of 2006 and robbed it from early 2007. Still on shorter horizons Euro retail sales are not doing well as the growth rate in the table reminds us. Moreover German sales are doing really poorly even without suing a year/year comparison. 
For the quarter-to-date EMU retail sales volumes are dropping at a 4.3% annual rate. Food is off at a 3.1% pace, and no food purchases are falling at a 4.5% pace. Germany leads this quarter&#150;to-quarter weakness with a sales volume drop for nonfoods of 10.5%. That compares to a rise at a 2.6% pace in France and a rise in the UK (an EU, not EMU, country) of 3.1%. 
What is worst is that the progressive growth rates (12-Mo to 6-Mo to 3-Mo) show that a slowing is underway in the Euro Area as well as in Germany, in Italy, in the UK and partly for France. 
While the raw results for December and the fourth quarter are disquieting, the ongoing trend decline in retail sales volumes is even more disturbing. We cannot yet tell if the manufacturing sector will remain strong enough to hold growth aloft or if this weakness in the consumer sector is enough to drag the EMU economics lower. 
It is hard to tell how much special factors like the strong euro or the weak finical sector or whatever drove the January services PMI lower might be responsible. What is clear is that there is more weakness in train than we had previously thought and it is showing up in various places at slightly different times. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Ezone (13) Retail Sales Volume
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>Oct-07</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Euro Area (13) Total</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-0.6%</td>
<td>-5.4%</td>
<td>-1.8%</td>
<td>-1.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Food</td>
<td>0.0%</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>-5.3%</td>
<td>-1.6%</td>
<td>-1.6%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Non food</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-0.8%</td>
<td>-5.3%</td>
<td>-2.0%</td>
<td>-1.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Textiles</td>
<td>#N/A</td>
<td>-0.5%</td>
<td>-3.1%</td>
<td>-6.3%</td>
<td>3.9%</td>
<td>-0.2%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Household goods</td>
<td>#N/A</td>
<td>-0.7%</td>
<td>-0.5%</td>
<td>-9.9%</td>
<td>-1.2%</td>
<td>-2.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Books news, etc</td>
<td>#N/A</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>-1.6%</td>
<td>2.8%</td>
<td>0.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Pharmaceuticals</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.3%</td>
<td>4.2%</td>
<td>3.7%</td>
<td>3.7%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Other Nonspecial goods</td>
<td>#N/A</td>
<td>-0.6%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>1.0%</td>
<td>-1.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Mail Order</td>
<td>#N/A</td>
<td>-1.1%</td>
<td>-1.1%</td>
<td>-8.2%</td>
<td>-4.1%</td>
<td>-2.3%</td>
</tr>
<tr class="grey2">
<td colspan="7">Non-food Country detail: Volume</td>
</tr>
<tr class="grey1">
<td class="firstcol">Germany</td>
<td>0.7%</td>
<td>-1.0%</td>
<td>-2.4%</td>
<td>-10.2%</td>
<td>-4.7%</td>
<td>-6.3%</td>
</tr>
<tr class="grey3">
<td class="firstcol">France</td>
<td>0.7%</td>
<td>-0.2%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>4.0%</td>
<td>3.8%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Italy (Total, Value)</td>
<td>#N/A</td>
<td>-1.0%</td>
<td>0.6%</td>
<td>-4.0%</td>
<td>-2.5%</td>
<td>-2.9%</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK(EU)</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>3.4%</td>
<td>4.0%</td>
</tr>
<tr class="grey3">
<td colspan="7">Shaded areas calculated on a one-month lag due to lagging data</td>
</tr>
<tr class="grey3">
<td colspan="7">The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body>
</html>

EMU retail sales are doing badly. German sales look worse than they are in the yr/yr graph due to the comparison with the December base in 2006 just ahead of the introduction of the VAT hike in 2007. That pushed activity into Dec of [...]

EMU Retail Sales Sink…Again

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205e.jpg" width="353">
Factory inventories rose 0.8% during December. That gain followed a 0.7% increase during November and pulled the three month increase in inventories to 1.6%, up from a low of 0.2% in August. Nevertheless the 3.6% rise in inventories last year was well below the 6.4% increase during 2006.
Excluding the volatile transportation sector, inventories rose 0.4% in December and the three month average rate of accumulation of 0.4% is up from 0.1% decumulation in August. The civilian aircraft industry very much dominated the factory sector figures last year with a 7.1% gain in inventories over the year&#39;s final three months and a 23.2% gain y/y.
A 2.3% rise in total factory orders during December also was dominated by an 11.7% (28.4% y/y) surge in orders for civilian aircraft. It followed a 28.6% November jump. Overall, a 5.0% rise in orders for durable goods was reduced only slightly from the advance report of a 5.2% increase.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205d.jpg" width="353">
The aircraft industry just couldn&#39;t keep shipments up with the inflow of new orders. Unfilled orders of civilian aircraft &amp; parts surged 4.2% in December (42.7% y/y) and the average change during the final three months of 2007 was 10.1%. Excluding the transportation sector altogether unfilled orders rose 1.3% in December and the three month average growth rate was a still firm 2.5%. That rate of increase has been fairly steady of late.
Factory shipments fell 0.3% in December after gains of 1.3% and 1.2% during the prior two months. Excluding transportation shipments fell 0.1% after gains of 1.6% and 1.4%.
Publishing FOMC Economic Forecasts from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-01.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">December</th>
<th scope="col">November</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>0.8</td>
<td>0.7</td>
<td>3.6</td>
<td>3.6</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>2.3</td>
<td>1.7</td>
<td>6.1</td>
<td>1.4</td>
<td>5.1</td>
<td>11.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>0.7</td>
<td>1.5</td>
<td>5.9</td>
<td>1.2</td>
<td>5.4</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Shipments</td>
<td>-0.3</td>
<td>1.3</td>
<td>4.1</td>
<td>1.1</td>
<td>4.3</td>
<td>10.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>2.5</td>
<td>1.2</td>
<td>18.2</td>
<td>18.2</td>
<td>20.0</td>
<td>15.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>1.3</td>
<td>0.5</td>
<td>9.1</td>
<td>9.1</td>
<td>14.1</td>
<td>8.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Factory inventories rose 0.8% during December. That gain followed a 0.7% increase during November and pulled the three month increase in inventories to 1.6%, up from a low of 0.2% in August. Nevertheless the 3.6% rise in inventories [...]

U.S. Factory Numbers Dominated by Aircraft Industry

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205f.jpg" width="353">
So much for de-coupling&#133; The US and Europe, arguably, have never been more in sync (or maybe I should say &#145;sink&#146;) than they are right now. Europe&#146;s MFG PMI is holding up as is the MFG index in the US. Oddly, in both countries, it is the non-MFG index that is falling sharply. In the US Manufacturing tends to be the most directional of these two sorts of surveys, while in Europe they have tended to move more in concert. Still, the rise in the manufacturing PMI in Europe for January as the service index sinks lower is unconventional. 
Across the Euro Area there is plenty of evidence of service sector weakness with Spain&#145;s index on an all-time low and Italy&#146;s near the bottom of its all-time range. Germany&#146;s Service sector is below the midpoint of its normal range. France&#146;s absolute reading is strong but it is also eroding with a new sense of urgency. 
There is something unique about this cycle if a down leg is being featured. It is that it is being led by services&#133; AND that services weakness seems to be leading weakness even in the job market where that sector makes a much more than a proportionate contribution. 
As a cyclical signal, these PMI readings are the worst in the US and in Europe while other gauges like consumer spending and consumer confidence are lower, they are only lower and not &#145;signaling&#146; anything. It is unusual for the PMIs to lead the parade of weakness lower. In Europe the fall is sharp in January. In the US drop off is more dramatic and clearly recessionary in nature. These are clearly variables whose trends we will want to watch; we will also want to watch to see if Manufacturing PMI&#146;s eventually succumb to this weakness or not. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
NTC Services Indices for EU/EMU
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro-13</td>
<td>50.56</td>
<td>53.14</td>
<td>54.14</td>
<td>52.61</td>
<td>54.32</td>
<td>55.97</td>
<td>27.3%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>49.17</td>
<td>51.24</td>
<td>53.09</td>
<td>51.17</td>
<td>53.57</td>
<td>55.74</td>
<td>33.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>56.60</td>
<td>58.89</td>
<td>59.15</td>
<td>58.21</td>
<td>58.05</td>
<td>58.41</td>
<td>46.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>47.86</td>
<td>49.71</td>
<td>50.77</td>
<td>49.45</td>
<td>52.28</td>
<td>54.23</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>44.24</td>
<td>50.99</td>
<td>50.69</td>
<td>48.64</td>
<td>50.71</td>
<td>53.31</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td>51.90</td>
<td>53.53</td>
<td>52.81</td>
<td>52.75</td>
<td>54.41</td>
<td>56.39</td>
<td>29.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">EU only</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">UK</td>
<td>52.46</td>
<td>52.36</td>
<td>51.95</td>
<td>52.26</td>
<td>54.02</td>
<td>55.69</td>
<td>43.2%</td>
</tr>
<tr>
<td colspan="8">percentile is over range since May 2000</td>
</tr>
</tbody>
</table>
</body>
</html>

So much for de-coupling The US and Europe, arguably, have never been more in sync (or maybe I should say sink) than they are right now. Europes MFG PMI is holding up as is the MFG index in the US. Oddly, in both countries, it is [...]

Europe’s Service Index Drops as US ‘Service’ Index Collapses

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205c.jpg" width="353">
Chain store sales last week recovered the prior period&#39;s loss with a 1.7% rise, according to the International Council of Shopping Centers (ICSC)-UBS. The gain followed a 1.2% decline at the end of January. Sales for all of January fell 0.3% from the December average.
The latest week&#39;s increase was enough to lift sales 0.8% above the January average level.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the last week of January the leading indicator of chain store sales from ICSC-UBS collapsed by 1.8% w/w after a 0.3% decline during the prior week. For all of January the leading indicator fell 0.1%, the third consecutive slight m/m decline.
Monday&#39;s speech, Protecting Homeowners and Sustaining Home Ownership, by Federal Reserve Board Governor Kroszner is available <a href="http://www.federalreserve.gov/newsevents/speech/kroszner20080204a.htm"> here</a> .

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">02/02/08</th>
<th scope="col">01/26/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>490.6</td>
<td>482.6</td>
<td>1.6 %</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales last week recovered the prior period's loss with a 1.7% rise, according to the International Council of Shopping Centers (ICSC)-UBS. The gain followed a 1.2% decline at the end of January. Sales for all of January [...]

U.S. Chain Store Sales in Modest Uptrend

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205a.jpg" width="353">
The January Business Activity Index for the non-manufacturing sector, from the Institute for Supply Management, fell out of bed to 41.9 from 54.4 in December. A figure above 50 indicates rising activity and the latest was quite a bit lower than Consensus expectations for a reading of 52.5.
Since the series&#39; inception in 1997 there has been a 44% correlation between the level of the Business Activity Index in the non-manufacturing sector and the Q/Q change in real GDP for the services and the construction sectors. The correlation of the factory sector ISM index with the change in real GDP less just services is a higher 57%, though over the last ten years it only has been 34%.
The January level was the lowest since October 2001 and it was the first below 50 since 2003. October 2001 was about the end of that year&#39;s economic recession. The 12.5 point drop in the index from December was a record m/m decline.
The new orders sub index dropped ten points m/m to a reading of 43.5, the lowest since 2001. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080205b.jpg" width="353">
The employment sub index similarly fell sharply to its lowest level since 2002. Since the series&#39; inception in 1997 there has been a 56% 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.
Pricing power eased slightly m/m for the second month. Since 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.
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 back to July 1997.
The Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the ISM manufacturing sector composite index is a weighted average of five components.
Released yesterday, The Budget Message of the President can be found <a href="http://www.whitehouse.gov/omb/budget/fy2009/pdf/budget/message.pdf"> here</a> and The Nation&#39;s Fiscal Outlook is available <a href="http://www.whitehouse.gov/omb/budget/fy2009/pdf/budget/outlook.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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">January</th>
<th scope="col">December</th>
<th scope="col">January &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>41.9</td>
<td>54.4</td>
<td>57.9</td>
<td>56.0</td>
<td>58.0</td>
<td>60.2</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.7</td>
<td>71.5</td>
<td>56.1</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>


</html>

The January Business Activity Index for the non-manufacturing sector, from the Institute for Supply Management, fell out of bed to 41.9 from 54.4 in December. A figure above 50 indicates rising activity and the latest was quite a bit [...]

U.S. ISM Non-Manufacturing Index Down Sharply, Lowest Since 2001

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
.odd{
background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
}
.grey2{
background-color:#e2e2e2;
}
.grey3{
background-color:#d4d4d4;
}
.grey4{
background-color:#c6c6c6;
}
.grey5{
background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080204h.jpg" align="left" border="0" height="265" width="353">
Both the Australian and New Zealand dollars have rebounded, if
somewhat irregularly, since the U. S. Federal Reserve Board started to
lower interest rates in September, as can be seen in the first chart,
showing the daily values of the two currencies for the past year or so.
A longer term perspective is shown in the second chart where the broad
J. P. Morgan effective nominal trade weighted indexes are shown. This
chart shows not only that the appreciations of these currencies have
been underway since the beginning of this decade, but it also shows
that the appreciations have been widespread and not simply with the U.
S. dollar.
While interest rate differentials are not the only factor in
the relative value of one country vis-à-vis another, they are among the
more important. The third chart shows the yield on a 2-year government
security in the three countries. Interest rates in Australia and New
Zealand have been substantially above those in the U. S and steady
while those in the U. S. have dropped sharply since the Fed began to
cut rates. As of January of this year the differential between the
2-year security in Australia and the U. S. was 4.25 points and in New
Zealand and the U. S. security, 4.73 points.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080204g.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080204f.jpg" height="265" width="312">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">AUSTRALIA
AND NEW ZEALAND&nbsp;</th>
<th scope="col">Jan 31, 2008</th>
<th scope="col">Sep 7, 2007&nbsp;</th>
<th scope="col">Jul 24, 2007&nbsp;</th>
<th scope="col">Jan 31, 2007</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Australian $&nbsp;
(U. S.$)</td>
<td>.8968</td>
<td>.8259</td>
<td>.8841</td>
<td>.7740</td>
</tr>
<tr class="odd">
<td class="firstcol">New Zealand $ (U. S.$)</td>
<td>.7884</td>
<td>.6889</td>
<td>.8069</td>
<td>.6856</td>
</tr>
<tr class="grey3">
<td class="firstcol"></td>
<td>Jan 2008</td>
<td>Sep 2007&nbsp;</td>
<td>Jan 2007&nbsp;</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Australian Trade
Weighted 2000=100</td>
<td>129.6</td>
<td>128.7</td>
<td>122.7</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol"> New Zealand Trade
Weighted (2000=100)</td>
<td>140.4</td>
<td>135.1</td>
<td>135.9</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey3">
<td class="firstcol" colspan="5">2-Year
Government
Security&nbsp;&nbsp;(EOP) %</td>
</tr>
<tr class="odd">
<td class="firstcol">Australia</td>
<td>6.63</td>
<td>6.43</td>
<td>6.15</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">New
Zealand&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
<td>7.21</td>
<td>6.97</td>
<td>9.57</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">U. S.</td>
<td>2.48</td>
<td>3.97</td>
<td>4.88</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

Both the Australian and New Zealand dollars have rebounded, if somewhat irregularly, since the U. S. Federal Reserve Board started to lower interest rates in September, as can be seen in the first chart, showing the daily values of [...]

Currencies in Australia and New Zealand Continue to Strengthen

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250509A1.jpg

250509C1.jpg

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.6% (-3.6% y/y) during the four weeks ended May 9, 2025. The improvement followed sharp declines in April.

Miscellaneous group prices increased 2.4% (5.9% y/y) over the last four weeks. Natural rubber price soared 13.9% (11.7% y/y). The price of tallow (used in the soap industry) rose 10.6% (41.3% y/y) in four weeks but the cost of framing lumber declined 5.6%, but rose 7.3% y/y.

Prices in the Metals group edged 0.2% higher (-7.3% y/y) over the most recent four weeks. Variation in pricing was wide. Copper scrap prices rose 7.4% (-3.3% y/y) while lead costs rose 4.0% in four weeks (-11.1% y/y). The cost of aluminum increased 2.3% in four weeks, off 4.4% y/y. Working lower, the cost of steel scrap declined 8.1% (-11.6% y/) in four weeks while tin prices followed with a 4.9% decline (-2.9% y/y). Zinc prices eased 0.7% in four weeks and declined 10.3% y/y.

Crude Oil & Benzene group prices edged 0.1% higher (-19.4% y/y) in four weeks. The cost of West Texas Intermediate crude oil weakened 4.0% to $58.50 per barrel and was 25.6% lower y/y. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 8.5% (-41.8% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 0.9% (-2.1% y/y) during the last four weeks.

Textile group prices edged 0.9% lower (-0.5% y/y) during the last four weeks. Burlap costs declined 14.3% (+7.4% y/y) but the cost of cotton rose 4.5% (-7.7% y/y) over four weeks.

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

250509D1.jpg

250509B1.jpg

- Metals prices are mixed.
- Crude oil prices fall sharply.
- Textile prices ease.

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

250509L1.jpg

250509M1.jpg

Wholesale trade inventories increased 0.4% (2.2% y/y) during March after rising 0.5% in February, revised from 0.3% after a 0.8% January rise. The increase compared to expectations for a 0.5% rise in the Informa Global Markets Survey and compared to a 0.6% gain in the advance report issued two weeks ago.

Durable goods inventories rose 0.6% in March (1.5% y/y) after rising 0.5% in February. Machinery inventories, the largest sector, increased 0.6% (1.7% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 1.2% (0.8% y/y). Furniture inventories strengthened 2.7% (6.8% y/y) while electrical equipment inventories declined 1.0% (-3.1% y/y). Inventories of nondurable goods edged 0.1% higher (3.4% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 1.0% (4.6% y/y). Grocery inventories, the second largest category, rose 0.4% (8.3% y/y). Apparel inventories fell 0.8% (-6.5% y/y) and chemical inventories rose 2.1% both m/m and y/y. Petroleum inventories increased 0.7% (0.3% y/y).

Sales at the wholesale level rose 0.6% (6.1% y/y) in March after rising 2.0% in February and falling 0.9% in January. A 0.9% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales rose 1.0% (8.5% y/y) in March after strengthening 3.2% in February. Sales of electrical equipment & electronic goods, the largest sector, rose 2.5% (20.9% y/y), after a 2.3% rise. Professional and commercial equipment sales, which includes computers, rose 1.2% (11.9% y/y), while vehicle sales declined 1.0% (1.1% y/y). Sales of machinery improved 0.7% (4.2% y/y). Nondurable product sales rose 0.3% (3.9% y/y) in March after gaining 0.9% in February. Drug store sales, the largest category, increased 2.8% (13.4% y/y), while grocery store sales eased 0.2% (+4.3% y/y). Sales of apparel weakened 0.8% (+3.5% y/y) while paper sales declined 1.7% (0.5% y/y). Petroleum product sales fell 4.6% both m/m and y/y.

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.30 in March and has been moving lower for the last two years.

The wholesale I/S ratio for durable goods eased to 1.69 in March and also has been trending lower. The machinery ratio fell to 2.92 while motor vehicles rose to 1.78. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.02 early in 2023. The drug industry ratio eased to 0.94. Apparel's I/S ratio held at 2.06, but remained below its 2.28 level one year earlier, and has been declining since early 2023. The petroleum industry I/S ratio rose to 0.33.

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

**Assessing Maximum Employment** from Federal Reserve Governor Adriana D. Kugler is available [here](https://www.federalreserve.gov/newsevents/speech/kugler20250509a.htm).

250509N1.jpg

250509O1.jpg

- Inventories trend higher y/y.
- Sales increase broadly.
- Inventory-to-sales ratio steadies.

U.S. Wholesale Inventories & Sales Increase in March

250508N2.jpg

250508O2.jpg

Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24, revised from 1.5%. A 0.6% decline had been expected in the Action Economics Forecast Survey. It was the first productivity decline since Q2’22. The y/y increase during Q1 fell to 1.4% from 2.1% in Q4. It was below a 3.3% high in the first quarter of last year. Productivity fell as real value-added output dropped 0.3% last quarter (+2.2% y/y) after increasing 2.5% in Q4, and hours worked lengthened 0.6% (0.8% y/y) following a 0.8% gain.

Compensation per hour increased 4.8% last quarter following a 3.7% Q4 rise. Despite the strength of these last two increases, y/y growth decelerated to 2.7% from a 6.8% high one year earlier. Nevertheless, the productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. It followed a 2.0% gain during Q4 and was the strongest quarterly increase in a year.

Factory sector productivity surged 4.5% (1.5% y/y) during Q1’25 following three consecutive increases of roughly 0.5%. This strength was accompanied by a 6.2% rise (2.2% y/y) in hourly compensation which came after two consecutive increases of approximately 4.1%. The strength in productivity lowered the rise in unit labor costs to 1.6% from 3.8% in Q4. The y/y gain fell to 0.7% from 2.0% in Q4 and stood below the 6.2% y/y increase in Q1’24.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

250508P2.jpg

250508Q2.jpg

- Productivity declines with lower output.
- Compensation surge exacerbates labor market stress.
- Factory sector productivity surge lessens cost pressure.

U.S. Productivity Declines in Q1’25; Unit Labor Costs Surge

250508F0.jpg

250508G0.jpg

The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) rose 0.6% (3.2% y/y) in March to 103.2 after rising 0.9% to 102.6 in February and rising 0.8% in January to 101.7. The level of home affordability has risen 14.8% from its low of 89.9 in October 2023. It remains 42.4% below the high of 179.2 in April 2020.

The rise in affordability in March occurred as the median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 which was offset by a decline in mortgage rates to 6.73% from 6.92% in February. The price compared to the record $432,900 in June 2024. The decline in mortgage rates compared to a recent low of 6.26% in September of last year and a 7.70% high during October of 2023. It remained well above a December 2020 low of 2.73%. These changes lowered the principal & interest payment by 0.2% (+1.1% y/y) to $2,113 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 24.2% of income during March. They remained up from a low of 14.0% of income in April 2020.

The rise in housing costs in March was accompanied by improvement in median family income. It increased 0.4% (4.4% y/y) to a record $104,705 after rising 0.4% in February and 0.7% in January.

Housing affordability improved m/m across the country in March. The index edged 0.1% higher (2.8% y/y) to 134.5 in the Midwest. It remains the most affordable region of the country. In the South, the index 0.9% (5.4% y/y) to 106.6 and the affordability index in the Northeast increased 2.1% (-2.6% y/y) to 95.7. In the West, where homes are the least affordable, the index rose 0.8% (3.3% y/y) to 71.8 in March.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

250508H0.jpg

250508I0.jpg

- Home prices rise but mortgage rates decline.
- Median income improves.
- Affordability increases across the country.

U.S. Housing Affordability Improves Slightly in March

Carol Stone, CBE

250508A5.jpg

250508B5.jpg

Initial claims for unemployment insurance were 228,000 seasonally adjusted in the week ended May 3, down from 241,000 in the previous week, which was unrevised. For the latest week, the Action Economics Forecast Survey had expected a smaller decline to 233,000.

In the week ended April 26, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – was 1.879 million, down from 1.908 million in the April 19 week.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, returned to its longstanding rate of 1.2% in the April 26 week; this rate has held that amount since continuously since the week of January 6, 2024, except for the prior week’s 1.3%.

As we do highlight in every week’s discussion, economic conditions vary widely across individual states and territories. In the week ended April 19, the highest unemployment rates were in New Jersey and Rhode Island (both at 2.48%), California (2.26%), Washington (2.14%) and New York (1.85%). The lowest were in Florida (0.36%), South Dakota (0.37%), Alabama (0.41%), Virginia (0.45%) and Nebraska (0.47%). Rates in other notable states include Illinois (1.78%), Pennsylvania (1.53%) and Texas (1.14%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250508C5.jpg

250508D5.jpg

- Continued claims for unemployment insurance decreased 29, 000 in the week ended April 26.
- Insured unemployment rate returns to longstanding 1.2%.
- Across the states, the insured unemployment rate ranges from 0.36% to 2.48%.

Economy in Brief: February 2008

Jump to:

Inflation in the Pacific Rim

EMU Retail Sales Sink…Again

U.S. Factory Numbers Dominated by Aircraft Industry

Europe’s Service Index Drops as US ‘Service’ Index Collapses

U.S. Chain Store Sales in Modest Uptrend

U.S. ISM Non-Manufacturing Index Down Sharply, Lowest Since 2001

U.S. ISM Non-Manufacturing Index Down Sharply, Lowest Since 2001

Currencies in Australia and New Zealand Continue to Strengthen