Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004a.jpg" width="353">
During the last week of September, initial claims for unemployment insurance rose 16,000 to 317,000. The latest was the highest level since the first week of last month. The Labor Department indicated that there were no special factors that distorted these readings.
The gain exceeded expectations for a lesser rise to 310,000 but left the average level of claims last month at 313,000. That was down 10,000 from August.
The trend in initial jobless insurance claims still is down from the August peak level of 325,000. That is suggestive that fewer individuals are losing their jobs, although the accompanying chart from the Labor Department&#39;s Household Employment survey indicates a rising layoff rate.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims fell to 312,750 (-0.7% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004b.jpg" width="353">
Continuing claims for unemployment insurance fell 10,000 to 2,541 and reversed all of the increase during the prior week. Continuing claims have stabilized at a level off the August peak of 2,597, suggesting that the pace of rehiring may have picked up. That also is suggested by the accompanying chart which shows that the recent rise in the duration of unemployment has stabilized.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment was stable at 1.9%, off the peaks in August of 2.0% held for two consecutive weeks at month- end.
Will Monetary Policy Become More of a Science? from Federal Reserve Board Governor Frederic S. Mishkin can be found <a href="http://www.federalreserve.gov/pubs/feds/2007/200744/200744pap.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">09/29/07 </th>
<th scope="col">09/22/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;317</td>
<td>301</td>
<td>2.3%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,541</td>
<td>4.1%</td>
<td>2,545</td>
<td>3.3%</td>
<td>2,459</td>
</tr>
</tbody>
</table>
</body>
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During the last week of September, initial claims for unemployment insurance rose 16,000 to 317,000. The latest was the highest level since the first week of last month. The Labor Department indicated that there were no special [...]

U.S. Initial Jobless Insurance Claims Up, Perhaps Rehiring as Well

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004a.jpg" width="353">
During the last week of September, initial claims for unemployment insurance rose 16,000 to 317,000. The latest was the highest level since the first week of last month. The Labor Department indicated that there were no special factors that distorted these readings.
The gain exceeded expectations for a lesser rise to 310,000 but left the average level of claims last month at 313,000. That was down 10,000 from August.
The trend in initial jobless insurance claims still is down from the August peak level of 325,000. That is suggestive that fewer individuals are losing their jobs, although the accompanying chart from the Labor Department&#39;s Household Employment survey indicates a rising layoff rate.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
The four-week moving average of initial claims fell to 312,750 (-0.7% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004b.jpg" width="353">
Continuing claims for unemployment insurance fell 10,000 to 2,541 and reversed all of the increase during the prior week. Continuing claims have stabilized at a level off the August peak of 2,597, suggesting that the pace of rehiring may have picked up. That also is suggested by the accompanying chart which shows that the recent rise in the duration of unemployment has stabilized.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment was stable at 1.9%, off the peaks in August of 2.0% held for two consecutive weeks at month- end.
Will Monetary Policy Become More of a Science? from Federal Reserve Board Governor Frederic S. Mishkin can be found <a href="http://www.federalreserve.gov/pubs/feds/2007/200744/200744pap.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">09/29/07 </th>
<th scope="col">09/22/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;317</td>
<td>301</td>
<td>2.3%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,541</td>
<td>4.1%</td>
<td>2,545</td>
<td>3.3%</td>
<td>2,459</td>
</tr>
</tbody>
</table>
U.S. Pending Home Sales Collapse 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 4, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004c.jpg" width="353">
In yet another sign of weakness in the U.S. housing market, the National Association of Realtors indicated that the August level of pending home sales fell 6.5% from July and 21.5% from one year earlier.
The latest monthly figure is 31.2% below the peak average level during 2005. The data date back only to 2001. These are home sales under contract but not yet closed.
In further confirmation of the slow rate of home sales, the Realtors indicated in an earlier report that the number of homes on the market and available for sale rose slightly in August to a level 19.2% above the year earlier level.
In the Western part of the nation, the down trend in pending home sales is most severe with a 27.1% drop.
Despite that relative severity out West, the drop in pending home sales is large and pervasive. In the Northeast, pending home sales are down 19.3%. That decline compares to an 18.0% decline in the Midwest and a 21.3% drop in the South.
The pending home sales data are available in Haver&#39;s PREALTOR database and the number of homes on the market are in the REALTOR database.
Whose part is it? Measuring domestic content of vehicles from the Federal Reserve bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cfloctober2007_243.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Pending Home Sales (2001=100) </a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total</td>
<td>85.5</td>
<td>91.4</td>
<td>-21.5%</td>
<td>112.1</td>
<td>124.2</td>
<td>120.5</td>
</tr>
</tbody>
</table>
Housing Starts by State: Weak, Yes, But Gains in August Where You Wouldn't Expect 
by <a href="/comment/Stone.html">Carol Stone</a> October 4, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004d.jpg" width="353">
It&#39;s widely known that the housing market has been in a deep slump. And it&#39;s also said that the impact is not uniform across the country, but is concentrated in a number of select states. Some evidence for that arrived this morning in the form of housing starts data by state.
Ah, but the Census Bureau doesn&#39;t produce starts data for states, you argue. Indeed. But the researchers at Bank of Tokyo-Mitsubishi UFJ compile surrogates from the Census Bureau&#39;s building permits data and from the starts data for regions and their seasonal factors. The BOT-Mitsubishi series are available in Haver&#39;s REGIONAL database. The underlying building permits are in Haver&#39;s collection of state, county and metro area PERMITS databases.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004e.jpg" width="353">
In August, then, total national housing starts fell 36,000 units (SAAR) or 2.6% from July. They are 41.9% below their peak in January 2006. The regions are all quite distinct from the national total and from each other. In the Northeast, the Census data show that starts had moderate erosion until this last month; a 37.8% drop in that one month put them 60.2% below their peak, which was also in January 2006. This is now the biggest decline from peak of any region. In the West, starts fell 18.4% in August; they are now 53.5% below their peak, which occurred back in August 2005. In the other two regions, the South and the Midwest, starts rose in August. In the South, they were up 11.4%, and 4.2% in the Midwest. The South&#39;s activity level is 38.1% below its peak in January 2006 and the Midwest&#39;s, 44.5% below its peak in February 2005.
It is actually the Midwest that is perhaps most interesting.Recent mortgage delinquency data show a concentration of difficulties in this area, with Michigan and Ohio both experiencing significantly worse performances than most other states. But in both cases, construction of new houses has started to move higher. According to the Bank of Tokyo-Mitsubishi calculations, starts in Michigan, seen in the second graph, have risen from a mere 12,600 (seasonally adjusted annual rate) six months ago to 30,110 in August. This is still quite low by historical comparison, but the climb has been steady and progressive through the spring and summer. In Ohio, starts are up just moderately, but they have remained higher all year long since an apparent trough in January. The bottom in Illinois is more recent, April, but the pattern since then gives signs of stability.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071004f.jpg" width="353">
The performances in other states indicate wide divergence. An easy comparison is between the two big Southern states, Florida and North Carolina. Both are well down in the last 18 months or so, but the plunge in Florida housing activity has been far steeper, 62% from a peak in February 2006. North Carolina&#39;s starts have held up relatively better, with a 25% decline since January 2006. Both states saw modest increases in August, but their monthly changes are erratic enough to keep us from concluding that there&#39;s an outright upturn in the works. The sudden drop in the Northeast occurred in New York, where starts plunged from 62,000 in July to just 29,000 in August; one state in the region saw an increase, New Jersey, but only modestly.
August starts were down in nearly every state in the West. California is perhaps most notable, but others, even those that had been hovering in a narrow range, saw their activity decline in the month. Ironically, one state we&#39;ve heard a lot about from a mortgage quality standpoint, Nevada, actually saw its housing starts increase, reaching their best level since April. Even so, the pace there, at 23,000 annual rate in August, is still only about half what it was two years before.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts, 000, SAAR</th>
<th scope="col">Aug 2007</th>
<th scope="col">July 2007</th>
<th scope="col">June 2007</th>
<th scope="col">Peak</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total US</td>
<td>1,331</td>
<td>1,367</td>
<td>1,468</td>
<td>2,292 (Jan 2006</td>
<td>1,801</td>
<td>2,068</td>
<td>1,956</td>
</tr>
<tr>
<td class="firstcol">Northeast</td>
<td>96</td>
<td>154</td>
<td>156</td>
<td>241 (Jan 2006)</td>
<td>167</td>
<td>190</td>
<td>175</td>
</tr>
<tr class="odd">
<td class="firstcol">Midwest</td>
<td>248</td>
<td>238</td>
<td>232</td>
<td>446 (Feb 2005)</td>
<td>28</td>
<td>357</td>
<td>356</td>
</tr>
<tr>
<td class="firstcol">South</td>
<td>716</td>
<td>643</td>
<td>726</td>
<td>1,156</td>
<td>910</td>
<td>996</td>
<td>908</td>
</tr>
<tr class="odd">
<td class="firstcol">West</td>
<td>271</td>
<td>332</td>
<td>354</td>
<td>583</td>
<td>444</td>
<td>525</td>
<td>516</td>
</tr>
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Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003h.jpg" width="353">
Retail sales in Australia extended their recent surge through a third month in August as they recovered from a dip in April-May. They were up 0.7% in August alone and 3.2% over the last three months, the strongest 3-month gain since late in 2003. At least one forecast survey looked for only half as much increase in August.
In a number of other countries, we have noted recently that consumer spending has been lagging. Germany is a prime example, with a 1.4% drop in August, and the entire Euro-Area saw a minuscule 0.7% rise in August. This does not seem to be the case in Australia. The country&#39;s economy is benefiting from the commodity boom and also is experiencing a growing surplus in its balance of trade in services. Further, it seems not to have been hit with a downturn in the housing market. Lending for home purchase looks fairly steady and significantly, prices of established homes are rising, especially in Melbourne, Brisbane and Adelaide. So the environment for consumer spending is favorable.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003i.jpg" width="353">
The upturn in reported retail sales in the last few months has occurred in several categories. All the reported categories were stronger in the June-August period than in the prior three months. But the biggest turns were in clothing, from a decline of 1.7% in February-May to a gain of 6.3% in the later span. The &quot;other&quot; retailing sector similarly went from a decrease of 0.6% to a gain of 4.7%. Household goods were basically flat from February through May, but then grew 3.1% from May through August.
So the retail sector in Australia is firm with a diversity of gains. One wire service said today (Wednesday in New York) that this would add to evidence that the Reserve Bank would want to raise rates soon. The mere expression of such sentiments at this time also sets the Australia economy and its policymakers apart from those in other parts of the world.
All of these data are included in Haver&#39;s ANZ database with some summary items in G10. Note that retail sales data in Australia do not include motor vehicles or motor fuel.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Australia: Retail Sales, SA</th>
<th scope="col">Aug 2007*</th>
<th scope="col">July 2007*</th>
<th scope="col">Aug/- May</th>
<th scope="col">May/- Feb</th>
<th scope="col" colspan="3">Monthly Averages</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol" colspan="5">&nbsp;</td>
<td>2006</td>
<td>2005</td>
<td>2004</td>
</tr>
<tr>
<td class="firstcol">Total, Mil.A$</td>
<td>19684</td>
<td>19542</td>
<td>--</td>
<td>--</td>
<td>18161</td>
<td>17144</td>
<td>16680</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Yr/Yr % Chg</td>
<td>8.3</td>
<td>7.2</td>
<td>--</td>
<td>--</td>
<td>5.9</td>
<td>2.8</td>
<td>7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mo/Mo % Chg</td>
<td>0.7</td>
<td>0.8</td>
<td>3.2</td>
<td>0.7</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">Food</td>
<td>1.0</td>
<td>0.7</td>
<td>3.1</td>
<td>1.5</td>
<td>6.8</td>
<td>3.6</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">Clothing/Soft Goods</td>
<td>-0.1</td>
<td>1.0</td>
<td>6.3</td>
<td>-1.7</td>
<td>4.4</td>
<td>5.2</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">Household Goods</td>
<td>2.4</td>
<td>-0.6</td>
<td>3.1</td>
<td>0.2</td>
<td>5.7</td>
<td>5.5</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&quot;Other&quot; Retailing</td>
<td>1.5</td>
<td>1.5</td>
<td>4.7</td>
<td>-0.6</td>
<td>5.9</td>
<td>-4.1</td>
<td>5.9</td>
</tr>
<tr>
<td class="firstcol">Hospitality</td>
<td>1.2</td>
<td>-0.6</td>
<td>2.1</td>
<td>0.8</td>
<td>8.3</td>
<td>2.6</td>
<td>7.7</td>
</tr>
</tbody>
</table>
</body>
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Retail sales in Australia extended their recent surge through a third month in August as they recovered from a dip in April-May. They were up 0.7% in August alone and 3.2% over the last three months, the strongest 3-month gain since [...]

Australia Retail Sales Show Some Vigor Through August

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003g.jpg" width="353">
Retail volumes grew by just 0.1% in the Euro area 13 in August. This follows an upwardly-revised +0.4% in July. That is not an auspicious start to the quarter. However since Q2 ended on such a strong note, again of 0.6% that has sent Q3 off on a relatively firm note so that the gains so far in the quarter have been helped by that momentum. As a result, quarter-to-date growth in EMU is strong. Sales volumes overall are expanding at a 3% pace with food expenditures up at a pace of 0.6%; nonfood spending is expanding at a pace of 4% all annualized at the two-month market in the new quarter.
Still the individual country results are disparate. For Germany, sales are up at just a 2.1% pace in the quarter; for the UK the pace is a very hefty 8.1%. French figures are not yet available but France has been tracking on the high side. Still for EMU as a whole the pace of retail sales seems to be slowing. What the EMU post for the quarter will still depend importantly on what consumers do in September.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th colspan="7" scope="col">Euro Area 13 Retail Sales Volume</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>3-Mo</td>
<td>6-MO</td>
<td>12-Mo</td>
</tr>
<tr>
<td class="firstcol">Euro Area 13 Total</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>4.5%</td>
<td>1.9%</td>
<td>0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food</td>
<td>0.2%</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>2.0%</td>
<td>0.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">Nonfood</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>1.1%</td>
<td>5.6%</td>
<td>2.2%</td>
<td>0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Textiles</td>
<td>#N/A</td>
<td>0.8%</td>
<td>2.9%</td>
<td>0.6%</td>
<td>5.6%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">HH Goods</td>
<td>#N/A</td>
<td>0.2%</td>
<td>1.4%</td>
<td>4.9%</td>
<td>3.3%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Books news, etc</td>
<td>#N/A</td>
<td>0.2%</td>
<td>1.6%</td>
<td>3.9%</td>
<td>3.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Pharmaceutical</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.2%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Other Nonspecified</td>
<td>#N/A</td>
<td>-0.1%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>3.4%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">Mail order</td>
<td>#N/A</td>
<td>0.9%</td>
<td>-0.1%</td>
<td>9.3%</td>
<td>9.5%</td>
<td>1.6%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">Nonfood Country Detail Volume</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.9%</td>
<td>-0.5%</td>
<td>3.0%</td>
<td>14.5%</td>
<td>2.1%</td>
<td>-2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.4%</td>
<td>1.3%</td>
<td>7.9%</td>
<td>6.5%</td>
<td>5.8%</td>
</tr>
<tr>
<td class="firstcol">Italy (Total; Value)</td>
<td>#N/A</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>-1.1%</td>
<td>-1.6%</td>
<td>-1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK (EU)</td>
<td>0.7%</td>
<td>0.7%</td>
<td>1.0%</td>
<td>10.2%</td>
<td>7.5%</td>
<td>7.0%</td>
</tr>
<tr class="grey2">
<td colspan="7" class="firstcol">Shaded areas calculated on a one-month lag due to lagging data</td>
</tr>
<tr class="odd">
<td colspan="7" class="firstcol">The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain.</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail volumes grew by just 0.1% in the Euro area 13 in August. This follows an upwardly-revised +0.4% in July. That is not an auspicious start to the quarter. However since Q2 ended on such a strong note, again of 0.6% that has sent [...]

European Retail Sales Remained Mixed, Weak in August but Solid in Q3

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003f.jpg" width="353">
Service sector slows across EMU -- The Reuters/NTC EU indexes on the services sector show widespread weakness in September. For the Euro area 13, the index has dropped a sharp 3-plus points in September and the reading now resides only just above the midpoint of its range since May of 2000. In Germany, the reading holds in the 55th percentile of its range. For the other featured EMU countries the reading has dropped below the range midpoint. All readings remain above 50 and thus show continuing expansion in the sector. The UK index is relatively strong by comparison.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
<th colspan=7 scope="col">NTC Services Indexes</th>
</tr>
</thead>
<tbody>
<tr class="grey2">
<td class="firstcol">&nbsp;</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro area 13</td>
<td>54.22</td>
<td>58.04</td>
<td>56.87</td>
<td>57.20</td>
<td>57.26</td>
<td>54.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>53.09</td>
<td>59.76</td>
<td>57.11</td>
<td>57.58</td>
<td>57.25</td>
<td>55.4%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>56.79</td>
<td>58.40</td>
<td>58.04</td>
<td>58.28</td>
<td>58.67</td>
<td>48.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>53.86</td>
<td>56.18</td>
<td>56.17</td>
<td>56.15</td>
<td>55.66</td>
<td>45.3%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>52.37</td>
<td>53.51</td>
<td>54.07</td>
<td>54.65</td>
<td>56.38</td>
<td>42.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>54.76</td>
<td>56.98</td>
<td>55.98</td>
<td>56.31</td>
<td>58.46</td>
<td>41.9%</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan=7>EU only</td>

</tr>
<tr>
<td class="firstcol">UK</td>
<td>56.69</td>
<td>57.55</td>
<td>57.09</td>
<td>57.24</td>
<td>58.10</td>
<td>72.9%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Percentile is over range since May 2000</td>

</tr>
</tbody>
</table>
</body>
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Service sector slows across EMU -- The Reuters/NTC EU indexes on the services sector show widespread weakness in September. For the Euro area 13, the index has dropped a sharp 3-plus points in September and the reading now resides [...]

Service Sector Weakens in Europe

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003c.jpg" width="353">
The ADP National Employment Report, reported by the payroll processor, found that private nonfarm payrolls rose a somewhat improved 58,000 during September versus just a 27,000 rise during August.
The U.S. Bureau of Labor Statistics employment figure for September will be published this Friday.
Last month, ADP&#39;s measure of private nonfarm payrolls for August indicated a revised 27,000 increase in jobs that was followed by a small 24,000 increase in private nonfarm payrolls.
The sub-index for large payrolls improved to a lesser rate of decline. Nevertheless, the index fell to its lowest level on record. 
The sub-index for small payrolls, conversely, rose an improved 53,000. 
According to ADP and Macro Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical data go back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/PDF/FINAL_NER_August2007_Report.pdf">here</a>, and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.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/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nonfarm Private Payroll Employment (m/m Chg.)</td>
<td>58,000</td>
<td>27,000</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>1.3%</td>
</tr>
</tbody>
</table>


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The ADP National Employment Report, reported by the payroll processor, found that private nonfarm payrolls rose a somewhat improved 58,000 during September versus just a 27,000 rise during August.

ADP Report: Private Payroll Growth Smallest Since 2003

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003d.jpg" width="353">
According to the Institute for Supply Management, the nonmanufacturing sector Business Activity Index for September dipped to 54.8 versus August which was unchanged from July. The dip was in line with Consensus expectations for a decline to 55.0.
Since the series&#39; inception in 1997 there has been a 44% correlation between the level of the Business Activity Index and the Q/Q change in real GDP for services plus construction.
The new orders sub index provided much of the downward drift to the Business Activity Index and fell to 53.4 from 57.0 in August. The latest reading is near the lowest level since 2003.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003e.jpg" width="353">
The employment sub index, however, recovered most of the declines during the prior two months with a rise to 52.7, back signaling positive jobs growth. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power improved and recovered most of the declines during the prior three months. 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 nonmanufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average of five components. 

<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">September</th>
<th scope="col">August</th>
<th scope="col">September &#39;06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>54.8</td>
<td>55.8</td>
<td>54.6</td>
<td>58.0</td>
<td>60.2</td>
<td>62.5</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>66.1</td>
<td>58.6</td>
<td>58.2</td>
<td>65.2</td>
<td>68.0</td>
<td>68.8</td>
</tr>
</tbody>
</table>


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According to the Institute for Supply Management, the nonmanufacturing sector Business Activity Index for September dipped to 54.8 versus August which was unchanged from July. The dip was in line with Consensus expectations for a [...]

U.S. ISM Nonmanufacturing Index Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003a.jpg" width="353">
U.S. sales of light vehicles during September were roughly flat with August at a 16.23M unit annual selling rate. The September performance followed a 6.5% m/m rebound during August, according to the Autodata Corporation. Sales were better than expectations for a 5.9M selling rate.
Though gasoline prices have fallen somewhat since the May peak of $3.22 per gallon, the 21% gain last month versus September of 2006 appeared to impact those buyers searching for fuel efficiency.
Domestically made vehicle sales fell 1.5% m/m to 12.38M (-2.8% y/y). Sales of domestic light trucks fell 3.5% m/m to a 7.28M selling rate. In addition, for this year, sales of domestically assembled light trucks are down 3.1% versus the average of 2006 and sales last year fell 8.7% versus 2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071003b.jpg" width="353">
Conversely, sales of U.S. made cars rose 1.4% m/m to 5.10M units last month (-1.9% y/y) after a firm 6.2% August rise. The domestic auto business continued to be under pressure, however, as the selling rate so far this year is down 5.4% from 2006 and sales last year fell 1.7% y/y.
Sales of the relatively fuel efficient imported light vehicles posted a 4.1% m/m rise to 3.85M units (-0.3% y/y). Notable, however, was that gain was due to a 7.9% m/m gain in light truck sales which this year are up 7.5% from 2006, a year when sales of imported light trucks rose 14.2% from 2005.
Sales of imported cars rose 1.8% last month to 2.35M (-4.0% y/y) though the y/y decline is versus a very strong 2006 when sales rose 9.1% from 2005. 

<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/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">&nbsp;September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.23</td>
<td>16.27</td>
<td>-2.2%</td>
<td>16.55</td>
<td>16.96</td>
<td>16.87</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.45</td>
<td>7.34</td>
<td>-2.6%</td>
<td>7.77</td>
<td>7.65</td>
<td>7.49</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>5.10</td>
<td>5.03</td>
<td>-1.9%</td>
<td>5.31</td>
<td>5.40</td>
<td>5.36</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>2.35</td>
<td>2.31</td>
<td>-4.0%</td>
<td>2.45</td>
<td>2.25</td>
<td>2.14</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.77</td>
<td>8.93</td>
<td>-2.0%</td>
<td>8.78</td>
<td>9.32</td>
<td>9.37</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>7.28</td>
<td>7.54</td>
<td>-3.5%</td>
<td>7.42</td>
<td>8.12</td>
<td>8.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.50</td>
<td>1.39</td>
<td>6.3%</td>
<td>1.37</td>
<td>1.20</td>
<td>1.23</td>
</tr>
</tbody>
</table>
</body>
</html>

U.S. sales of light vehicles during September were roughly flat with August at a 16.23M unit annual selling rate. The September performance followed a 6.5% m/m rebound during August, according to the Autodata Corporation. Sales were [...]

U.S. Vehicle Sales Flat; Truck Sales Down, Cars 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

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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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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

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

U.S. Wholesale Inventories & Sales Increase in March

250508N2.jpg

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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.

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- 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

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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**.

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

U.S. Housing Affordability Improves Slightly in March

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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.

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- 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: October 2007

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U.S. Initial Jobless Insurance Claims Up, Perhaps Rehiring as Well

U.S. Initial Jobless Insurance Claims Up, Perhaps Rehiring as Well

Australia Retail Sales Show Some Vigor Through August

European Retail Sales Remained Mixed, Weak in August but Solid in Q3

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