Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020718c.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions for July fell quite a bit more than expected following an outsized June gain.
New and unfilled orders fell sharply along with shipments. Delivery lead times shortened substantially. 
The business conditions index reflects a separate survey question, not the components. 
Pricing pressure fell moderately, the first monthly easing since last October. The pricing index level nevertheless remained elevated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">General Activity Index</td>
<td>6.6</td>
<td>22.2</td>
<td>-12.4</td>
<td>-17.3</td>
<td>8.2</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>17.9</td>
<td>22.9</td>
<td>-5.0</td>
<td>-1.0</td>
<td>27.1</td>
<td>10.0</td>
</tr>
</tbody>
</table>
Leading Indicators Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020718b.jpg" width="353">
The Composite Index of Leading Economic Indicators was unchanged last month, as expected. The May gain was revised up. 
The ratio of coincident to lagging indicators rose for the eighth month in nine. The ratio is an indication that excesses in the economy are falling relative to the economy&#39;s actual performance.
The coincident indicators index was at the same level in June as in January 2001. The lagging indicators fell 7.0% during that period.
60% of the leaders&#39; component series rose last month versus 70% that rose in May. Longer hours worked, a decline in claims for jobless insurance, a rise in the money supply and improved vendor performance had the largest positive influence.
The Leading index is based on eight previously reported economic data series and two that are estimated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<td class="firstcol">Leading</td>
<td>0.0%</td>
<td>0.6%</td>
<td>2.6%</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>3.2%</td>
</tr>
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<td class="firstcol">Lagging</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-5.1%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020718a.jpg" width="353">
Initial claims for unemployment insurance fell more than expected in the latest week. Claims were their lowest since February of last year. The prior week&#39;s level was revised up slightly.
The claims figure is for the July nonfarm payroll survey period. Initial claims were down about 20,000 from the June survey period. 
Continuing claims for unemployment insurance fell slightly but the prior week&#39;s level was revised down sharply. Continuing claims are down 6.3% from the peak in early May.
The four-week moving average of initial claims fell to 391,000, -1.6% y/y. 
The insured rate of unemployment was unchanged at 2.8%.

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<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">7/13/02</th>
<th scope="col">7/6/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Initial Claims</td>
<td>379.0</td>
<td>407.0</td>
<td>6.4%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
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<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,591</td>
<td>17.5%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
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The Philadelphia Feds index of general business conditions for July fell quite a bit more than expected following an outsized June gain. New and unfilled orders fell sharply along with shipments. Delivery lead times shortened [...]

Philadelphia Fed Index Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020717a.jpg" width="353">
Housing starts fell about as expected last month following a strong May gain that was little revised. 
Single-family starts fell 2.9% following a strong 10.2% May gain. During the first six months of 2002 starts were up 5.8% from the first six months of last year. The level of single-family starts during the period was the highest for any six months since the late 1970s.
Multi-family starts fell 6.7% and have moved sideways since last year.
Starts in each of the country&#39;s regions fell except the Northeast where they rose to the highest level since last April.
Building permits rose for the third month in a row.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total</td>
<td>1,672</td>
<td>1,735</td>
<td>2.4%</td>
<td>1,603</td>
<td>1,573</td>
<td>1,647</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,350</td>
<td>1,390</td>
<td>4.4%</td>
<td>1,273</td>
<td>1,232</td>
<td>1,306</td>
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<td class="firstcol">&nbsp; Multi Family</td>
<td>322</td>
<td>345</td>
<td>-5.3%</td>
<td>330</td>
<td>341</td>
<td>341</td>
</tr>
</tbody>
</table>
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Housing starts fell about as expected last month following a strong May gain that was little revised. Single-family starts fell 2.9% following a strong 10.2% May gain. During the first six months of 2002 starts were up 5.8% from the [...]

Housing Starts Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020716b.jpg" width="353">
Industrial production rose more than expected last month, up twice the Consensus expectation for a 0.4% rise. May&#39;s gain was revised slightly higher. Factory sector output rose 0.8% (2.7% YTD) following a 0.6% May gain that was revised up.
Higher output of motor vehicles and parts, up 2.5%, led the June output gain. High tech output also was strong, up 1.7% (13.7% YTD). Excluding high tech, factory output rose 0.7% (2.5% YTD), the sixth monthly gain this year.
Output of consumer goods rose a strong 0.8% following the weak 0.1% May gain. Output of home electronics rose 0.3% following a 4.2% gain in May. Output of appliances and furniture retreated 2.9% following the 2.6% May surge. Nondurable output rose moderately following two months of decline.
Output of business equipment rose modestly for the second month in a row. Gains have been restrained all year by falling output of transportation equipment.
Capacity utilization rose for the sixth month this year, but remained down sharply from the late 1990s.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Industrial Production</td>
<td>0.8%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>-3.7%</td>
<td>4.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>76.1%</td>
<td>75.6%</td>
<td>76.7%(6/01)</td>
<td>76.8%</td>
<td>81.8%</td>
<td>81.4%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Fell Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020716a.jpg" width="353">
Chain store sales fell 0.3% following a 0.7% surge the week prior according to the BTM-UBSW survey.
Early-July sales were 0.2% above the June average.
The leading indicator of chain store sales published by BTM rose in early July and began the month slightly ahead of the June average.
During the last five years there has been a 61% correlation between the year-to-year percent change in monthly chain store sales and the change in sales of general merchandise, apparel and furniture.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">7/13/02</th>
<th scope="col">7/6/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>414.4</td>
<td>415.6</td>
<td>3.5%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
Greenspan Suggests Economy Improving, Inflation Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020716c.jpg" width="353">
In testimony before the Senate Banking Committee, Federal Reserve Chairman Alan Greenspan suggested that the US economy is improving, but rates won&#39;t rise soon with inflation low. 
&quot;... the fundamentals are in place for a return to sustained healthy growth: Imbalances in inventories and capital goods appear largely to have been worked off; inflation is quite low and is expected to remain so; and productivity growth has been remarkably strong, implying considerable underlying support to household and business spending as well as potential relief from cost and price pressures. In considering policy actions this year, the Federal Open Market Committee has recognized that the accommodative stance of policy adopted last year in response to the substantial forces restraining the economy likely will not prove compatible over time with maximum sustainable growth and price stability. But, with inflation currently contained and with few signs that upward pressures are likely to develop any time soon, we have chosen to maintain that stance pending evidence that the forces inhibiting economic growth are dissipating enough to allow the strong fundamentals to show through more fully.&quot;
The complete text of the Chairman&#39;s latest report can be viewed at: <a href="http://www.federalreserve.gov/boarddocs/hh/2002/july/testimony.htm">http://www.federalreserve.gov/boarddocs/hh/2002/july/testimony.htm</a>



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Industrial production rose more than expected last month, up twice the Consensus expectation for a 0.4% rise. May's gain was revised slightly higher. Factory sector output rose 0.8% (2.7% YTD) following a 0.6% May gain that was [...]

Industrial Production Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020715a.jpg" width="353">
Total business inventories rose in May versus consensus expectations for a slight decline. The previously reported decline in April inventories was little revised.
Retail inventories, reported for the first time, rose for the fourth month this year. Nonauto retail inventories also rose and a previously reported April decline was revised to show a gain. Nonauto retail inventories have risen 0.4% YTD. 
Inventory gains were across the board amongst retail industries. Inventories of general merchandise rose for the first month since last August.
Overall business sales fell 0.4% (-0.7% y/y) after a 1.7% April gain that was little revised.
The inventory-to-sales ratio rose slightly to 1.36 but remained near a record low.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>-5.7%</td>
<td>-6.3%</td>
<td>5.6%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>1.0%</td>
<td>0.3%</td>
<td>-1.3%</td>
<td>-5.0%</td>
<td>6.1%</td>
<td>7.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.4%</td>
<td>0.1%</td>
<td>-1.3%</td>
<td>-2.0%</td>
<td>4.1%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>-7.2%</td>
<td>-5.5%</td>
<td>6.6%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-8.6%</td>
<td>-8.0%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
</body>
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Total business inventories rose in May versus consensus expectations for a slight decline. The previously reported decline in April inventories was little revised. Retail inventories, reported for the first time, rose for the fourth [...]

Business Inventories Rose Unexpectedly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020712a.jpg" width="353">
Total retail sales rose more than expected last month due to broadly based gains. May sales were revised down slightly due to a lowered estimate of auto sales. Sales excluding autos rose versus expectations for a 0.5% gain. 
Sales gains were widespread. Sales of motor vehicles rose 3.4% (-2.5% YTD). Apparel sales rose 2.0% (1.1% YTD). General merchandise sales were up 1.1% (2.9% YTD) and furniture &amp; home furnishings sales rose 0.4% (1.1% YTD).
Sales at food stores fell and sales of building materials rose a weak 0.1%.
Unit sales in June of domestic and imported light vehicles rose 5.2% to 16.48M (SAAR).

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<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.1%</td>
<td>-1.1%</td>
<td>3.3%</td>
<td>3.8%</td>
<td>6.7%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.4%</td>
<td>-0.4%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Fell Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020712b.jpg" width="353">
The mid-July reading of Consumer Sentiment from the University of Michigan fell versus Consensus expectations for little change versus June.
Indexes fell for both expectations (down sharply) and current conditions.
The University of Michigan survey is not seasonally adjusted.
During the past five years there has been a 39% correlation between the level of consumer sentiment and the 3-month change in real PCE.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">Univ. of Michigan</a></th>
<th scope="col">Mid-July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Consumer Sentiment</td>
<td>86.5</td>
<td>92.4</td>
<td>-6.4%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
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Total retail sales rose more than expected last month due to broadly based gains. May sales were revised down slightly due to a lowered estimate of auto sales. Sales excluding autos rose versus expectations for a 0.5% gain. Sales [...]

Retail Sales Recover in June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020711a.jpg" width="353">
Finished producer prices rose as expected last month. It was the first increase in prices in three months. Core finished goods prices rose slightly more than expected but are up just 0.1% year to date.
Energy prices were unchanged following a decline in May. Market gasoline prices in early July are up moderately versus June.
Food prices rose slightly for the first increase in three months.
Core finished consumer goods prices rose 0.3%, the second strong increase in three months. Core nondurable goods prices have been strong but durable goods prices rose for just the second month this year. Capital goods prices rose slightly following three months of decline. 
Intermediate goods prices rose moderately. After weakness in May, a firming trend may be developing with core intermediate prices up 0.7% YTD. 
Crude goods prices fell reflecting lower energy prices. Elsewhere, the rebound in factory sector activity has lifted core crude prices 9.1% YTD.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
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<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>-2.0%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.2%</td>
<td>-0.5%</td>
<td>-2.6%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.0%</td>
<td>-1.0%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>-3.6%</td>
<td>1.7%</td>
<td>-11.7%</td>
<td>0.3%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>1.6%</td>
<td>3.4%</td>
<td>6.0%</td>
<td>-9.9%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 11, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020711b.jpg" width="353">
Initial claims for unemployment insurance rose sharply in the latest week, boosted by the annual auto industry shutdowns for plant retooling. The prior week&#39;s level, which had fallen sharply, was revised up slightly.
It was the first increase in initial claims in three weeks. 
Continuing claims for unemployment insurance fell for the seventh week in eight third week and the prior week&#39;s level was revised down.
The four-week moving average of initial claims rose slightly to 395,000, -0.1% y/y. 
The insured rate of unemployment fell slightly to 2.8%.

<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">7/6/02</th>
<th scope="col">6/29/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>403.0</td>
<td>387.0</td>
<td>0.2%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,639</td>
<td>22.7%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
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Finished producer prices rose as expected last month. It was the first increase in prices in three months. Core finished goods prices rose slightly more than expected but are up just 0.1% year to date. Energy prices were unchanged [...]

Producer Prices Up Slightly

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Prices for imported commodities fell much more than expected last month versus May. Consensus estimates were for a 0.2% gain. May figures were little revised.
Petroleum import prices fell for the first month this year. So far in July, the price of Arab Light crude oil has averaged roughly $22.64/bbl versus $22.00 in June.
Nonpetroleum import prices rose slightly for just the third month this year.
Prices for imported capital goods were unchanged and are down 1.1% YTD. Nonauto consumer goods prices were flat for the second consecutive month, down 0.6% YTD and auto prices rose slightly.
Export prices were flat, mostly reflecting a jump in food prices that were offset be sharply lower prices of capital goods.

<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/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>-0.6%</td>
<td>0.1%</td>
<td>-3.9%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-6.6%</td>
<td>1.6%</td>
<td>-7.9%</td>
<td>-17.2%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-2.6%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-1.5%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
OECD Leading Indicators Suggest Positive Growth 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 10, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020710b.jpg" width="353">
Prospects for improved real economic growth recently have improved, according to the OECD Index of Leading Indicators. Since November, the index has been trending higher, although the rate of improvement has slowed somewhat in the last three months
Real economic growth in the Big Seven OECD countries surged 4.4% (AR) in 1Q02. That followed three consecutive negative growth quarters. The surge was due to strong 6.1% growth in the US as well as 5.7% growth in Japan. Growth in the European Union was 0.7% after a 0.5% 4Q decline.
In Japan, industrial production has been climbing steadily since the lows of this past winter. Production gains in Germany also have been positive but moderate.
Inflation in Big Seven countries has been tame, with the Implicit Price deflator up 1.7% y/y. A 2.9% 1Q surge followed a decline in 4Q prices. The CPI in Japan was down 0.9% y/y in May though prices may have showed signs of stabilizing in recent months.

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Prices for imported commodities fell much more than expected last month versus May. Consensus estimates were for a 0.2% gain. May figures were little revised. Petroleum import prices fell for the first month this year. So far in July, [...]

Import Prices Fell Sharply

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Chain store sales jumped 0.7% in the first week of July according to the BTM-UBSW survey. The rise followed a 0.9% decline the prior week.
Early-July sales were 0.4% above the June average.
The leading indicator of chain store sales published by BTM fell in the fourth week of June, reversing all of the gain the prior week.
During the last ten years there has been a 35% correlation between the year-to-year percent change in monthly chain store sales and the change in nonauto retail sales.

<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">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">7/6/02</th>
<th scope="col">6/29/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>415.6</td>
<td>412.9</td>
<td>3.7%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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Chain store sales jumped 0.7% in the first week of July according to the BTM-UBSW survey. The rise followed a 0.9% decline the prior week. Early-July sales were 0.4% above the June average. The leading indicator of chain store sales [...]

Weekly Chain Store Sales Up in Early July

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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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.

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

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

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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).

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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

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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

Carol Stone, CBE

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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: 2002

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