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/040430d.jpg" width="353">
A couple of weeks ago, we commented on Japanese industry employment data that showed some improvement through February, although the gain was narrowly focused on the service sector. Today, the comprehensive labor force survey for March, along with separate wage and hour data, shows a similar pattern of scattered advance.
Improvement in the unemployment picture is unequivocal. The rate dropped from 5.0% in February to 4.7% in March, the lowest since March 2001. This accompanied a rise in total employment of 0.3% from February. However, while unemployment rate is well down from its peak of 5.5% in early 2003, employment seems not to have much of a growth trend in place yet.
A good sign of promise is contained in the hours data. This is a separate survey of companies with 5 or more employees conducted by the Ministry of Health, Labor and Welfare. Hours worked at these companies surged in March by 4.2% to 102.2, the highest level since May 1997, nearly seven years ago. But other results of that survey are not as strong, as cash earnings for March actually fell. This could suggest that jobs growth is in lower-paying sectors or positions.
Thus, despite the better look of some of the labor market data, household spending has yet to respond definitively. In data for March also released today, workers&#39; household expenditures decreased 6.7%, more than erasing the gains in January and February. Several of these measures, then -- employment, earnings and spending -- look to be forming a base toward expansion, but are not yet climbing with any resolve.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Selected Indicators for Japan</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
<th scope="col">Jan 2004</th>
<th scope="col">Year Ago</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Employment* (millions)&nbsp;</td>
<td>63.40</td>
<td>63.21</td>
<td>63.22</td>
<td>63.28</td>
<td>63.17</td>
<td>63.30</td>
<td>64.10</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>+0.3</td>
<td>-0.0</td>
<td>+0.1</td>
<td>+0.2</td>
<td>-0.2</td>
<td>-1.2</td>
<td>-0.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate* (%)</td>
<td>4.7</td>
<td>5.0</td>
<td>5.0</td>
<td>5.4</td>
<td>5.3</td>
<td>5.4</td>
<td>5.0</td>
</tr>
<tr>
<td class="firstcol">Hours Worked** (2000=100)</td>
<td>102.2</td>
<td>98.1</td>
<td>99.4</td>
<td>97.8</td>
<td>98.0</td>
<td>98.0</td>
<td>99.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Cash Earnings** (2000=100)</td>
<td>93.5</td>
<td>96.5</td>
<td>96.2</td>
<td>96.0</td>
<td>95.2</td>
<td>96.0</td>
<td>98.7</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Workers&#39; Household Spending* (2000=100)</td>
<td>94.4</td>
<td>101.2</td>
<td>98.4</td>
<td>95.0</td>
<td>95.6</td>
<td>97.0</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % Change</td>
<td>-6.7</td>
<td>2.8</td>
<td>4.1</td>
<td>-0.6</td>
<td>-1.5</td>
<td>-1.3</td>
<td>-1.7</td>
</tr>
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A couple of weeks ago, we commented on Japanese industry employment data that showed some improvement through February, although the gain was narrowly focused on the service sector. Today, the comprehensive labor force survey for [...]

More Japanese Labor Data Extend Mixed Improvement

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040430a.jpg" width="353">
Personal income rose 0.4% (+4.9% y/y) last month following an upwardly revised 0.5% gain in February. Consensus expectations had been for a 0.4% rise.
Wage &amp; salary growth cooled to 0.2% (+3.7% y/y) after 0.5% and 0.7% gains in the prior two months. A modest decline in manufacturing wages (1.8% y/y) was accompanied by a slower 0.2% (4.4% y/y) rise in service industry wages.
Personal disposable income rose 0.4% (5.7% y/y) following a 0.5% February increase. Tax payments rose 0.4% (-1.1% y/y).
Consumer spending rose the same 0.4% in March as during the month prior. A 0.7% gain in PCE had been the Consensus expectation. Services PCE slowed to a modest 0.2% (5.5% y/y) versus 0.4% and 0.8% gains in the prior two months. Durable spending rose 0.4% (6.0% y/y) as unit light vehicle sales rose 1.7% (2.9% y/y). 
The PCE chain price index rose 0.3%. Less food &amp; energy prices rose 0.2% (1.4% y/y) in March. Since October monthly increases in the core PCE price index have been either 0.1% or 0.2%. 
The savings rate held steady at 1.9%. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM"> Disposition of Personal Income</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4%</td>
<td>0.5%</td>
<td>4.9%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.4%</td>
<td>5.9%</td>
<td>5.0%</td>
<td>4.8%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>1.9%</td>
<td>1.9%</td>
<td>2.0%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.3%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>1.8%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
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</table>
U.S. Consumer Sentiment Improved Late in April, But Fell For The Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040430b.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index for the full month of April fell to 94.2 from 95.8 in March. The reading about equaled Consensus expectations and represented an improvement from the mid-month reading of 93.2.
During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE. That correlation has risen to 82% during the last five years.
Perceptions of current economic conditions slipped 1.7% in April to 105.0. The expectations index fell 1.7% to 87.3. Both figures were slightly improved from the mid-month readings.
The figures contrasted with the moderate improvement in Consumer Confidence in April reported earlier by the Conference Board. During the last ten years there has been an 84% correlation between the y/y change in the two measures.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
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<td class="firstcol">Consumer Sentiment</td>
<td>94.2</td>
<td>95.8</td>
<td>9.5%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>105.0</td>
<td>106.8</td>
<td>8.9%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>87.3</td>
<td>88.8</td>
<td>10.1%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Strong 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040430c.jpg" width="353">
The April Chicago Purchasing Managers Business Barometer rose to 63.9 from 57.6 in March. The increase beat Consensus expectations for a gain to 61.0 and was to a level just short of the ten year high in January.
During the last ten years there has been an 83% correlation between the level of the Chicago Business Barometer and quarterly growth in factory sector industrial output. There has been a 48% correlation with growth in real GDP.
The new orders index jumped to 65.1 from 60.4, recovering much of the 7.1 point drop in March. Production rose 5.7 points to 64.8 but this index still is well off the January high of 76.5.
Employment improved modestly to 50.9 versus 49.2 in March and versus 50.8 in 1Q. During the last twenty years there has been a 71% correlation between the level of this employment index and the y/y change in factory sector payroll employment.
The index of prices paid was again firm and rose to 76.1.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM"> Chicago Purchasing Managers Index, SA</a></th>
<th scope="col"> April</th>
<th scope="col">Mar</th>
<th scope="col">April&nbsp; &#39;03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>63.9</td>
<td>57.6</td>
<td>47.3</td>
<td>54.7</td>
<td>52.7</td>
<td>41.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>65.1</td>
<td>60.4</td>
<td>44.0</td>
<td>58.0</td>
<td>56.2</td>
<td>42.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>76.1</td>
<td>75.7</td>
<td>54.9</td>
<td>55.8</td>
<td>56.9</td>
<td>50.4</td>
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Personal income rose 0.4% (+4.9% y/y) last month following an upwardly revised 0.5% gain in February. Consensus expectations had been for a 0.4% rise. Wage & salary growth cooled to 0.2% (+3.7% y/y) after 0.5% and 0.7% gains in the [...]

U.S. Personal Income & Spending Rose Moderately

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040429e.jpg" width="353">
Business leaders in France and Italy tend to think alike, as suggested by the chart at left. The French &quot;General Outlook&quot; index for production has a 75% correlation with the Business Confidence Indicator in Italy.
However, in recent months, these gauges have had opposing moves. In France, a firm recovery in business sentiment during much of 2003 looks to be fading, as the INSEE outlook measure for April slipped back below zero. In Italy, though, improvement persists after a brief setback right at year-end 2003. The &quot;business outlook indicator&quot; sits at 96.5, its highest since May 2002. The accompanying measure of the current assessment of orders for total industry gained from -17 in February and March to -12 in April, also the best reading since the spring of 2002.
Possibly, these divergent movements -- and they&#39;re not dramatic, so we shouldn&#39;t make too much of them -- are tied to currently uncertain prospects for prices. In France, the &quot;general industrial price level trend&quot; jumped in April to +18 from +6 in both prior months, but expectations for selling prices deteriorated to -6, the weakest in seven months. We can surmise that rising commodity prices, especially for energy, are pushing up input prices, but clearly businesses in France are not optimistic about being able to pass those through to their customers.
In Italy, though, forecast sales prices remain firm. At +11 in both March and April, this is the most favorable outlook for pricing in over three years. Thus, it looks that a better market tone is keeping Italian business executives relatively more upbeat than those in France.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">% Balance, except where noted</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
<th scope="col">Year Ago</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France INSEE Survey: Outlook for Production Trend</td>
<td>-10</td>
<td>5</td>
<td>11</td>
<td>-60</td>
<td>-29</td>
<td>-22</td>
<td>-23</td>
</tr>
<tr>
<td class="firstcol">Price Trend</td>
<td>18</td>
<td>6</td>
<td>6</td>
<td>1</td>
<td>-7</td>
<td>3</td>
<td>12</td>
</tr>
<tr class="odd">
<td class="firstcol">Likely Sales Price</td>
<td>-6</td>
<td>-3</td>
<td>-1</td>
<td>-6</td>
<td>-7</td>
<td>-5</td>
<td>-1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy ISAE Survey: Business Confidence Indicator (1995=100)</td>
<td>96.5</td>
<td>93.6</td>
<td>92.7</td>
<td>90.5</td>
<td>92.4</td>
<td>93.9</td>
<td>91.9</td>
</tr>
<tr>
<td class="firstcol">Total Industry Assessment of Orders</td>
<td>-12</td>
<td>-17</td>
<td>-17</td>
<td>-23</td>
<td>-19</td>
<td>-15</td>
<td>-14</td>
</tr>
<tr class="odd">
<td class="firstcol">Production Forecast</td>
<td>20</td>
<td>19</td>
<td>18</td>
<td>11</td>
<td>14</td>
<td>16</td>
<td>13</td>
</tr>
<tr>
<td class="firstcol">Selling Prices</td>
<td>11</td>
<td>11</td>
<td>9</td>
<td>8</td>
<td>6</td>
<td>6</td>
<td>8</td>
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</tbody>
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Business leaders in France and Italy tend to think alike, as suggested by the chart at left. The French "General Outlook" index for production has a 75% correlation with the Business Confidence Indicator in Italy. However, in recent [...]

Business Sentiment Up in Italy, Down in France

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040429a.jpg" width="353">
US real GDP grew a less than expected 4.2% last quarter, about the same as in 4Q03. During the last four quarters GDP growth of 4.9% is an improvement from 0.0% at the end of 2001 and the fastest since 1984. The Consensus expectation was for 5.0% growth in 1Q.
Personal consumption expenditures grew at a 3.8% (4.3% y/y) rate, up a bit from 3.2% growth in 4Q. The increase was held back by a 4.7% decline in durables spending, down due to lower light vehicle sales.
Nonresidential fixed investment rose 7.2% (AR, 9.4% y/y), down slightly from the 10.9% and 12.8% growth during the prior two quarters. Structures investment fell for the third straight quarter but equipment &amp; software investment held firm at 11.4% (12.9% y/y).
Residential investment growth was light at 2.1% (8.8% y/y), down from 7.9% and 21.9% growth in the prior two quarters. The rise actually was a bit better than suggested by the monthly reports on construction.
Government spending rose at only a 2.0% rate due to a 2.6% (-0.5% y/y) decline in state &amp; local. Federal spending jumped 10.1% (8.5% y/y) on a 15.1% (13.5% y/y) rise in defense spending.
Additional investment in inventories added 0.3 percentage points to GDP growth, half the contribution in 4Q.
Trade sector improvement added marginally to GDP growth as exports grew 3.2% (7.8% y/y) and imports rose 2.0% (6.9% y/y).
Corporate profits for 4Q03 were unrevised. Operating profits rose 7.2% (29.0% y/y) following a 9.9% jump in 3Q. &quot;Recent Revisions to Corporate Profits: What We Know and When We Knew It&quot; from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/newsevents/news/research/2004/rp040323.html"> here</a>.
Prices rose at the fastest clip since 2Q 2001. The 2.5% rise in the chain price index was goosed by a 3.2% rise in the PCE price index. Non-durable prices surged 5.3% on higher gasoline prices. Durable goods prices have been falling since 1995 though the rate of decline was a modest 0.3% in 1Q. Business equipment &amp; software prices fell 0.5% (-0.0% y/y). <table border="1" cellpadding="0" cellspacing="0" width="100%"><tr><td valign="top" width="211"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"> Chained 2000$, % AR</a></td><td align="center" valign="top" width="118"> 1Q &#39;04 (Advance)</td><td align="center" valign="top" width="86"> 4Q &#39;03 (Final)</td><td align="center" valign="top" width="60"> Y/Y</td><td align="center" valign="top" width="60">2003</td><td align="center" valign="top" width="60">2002</td><td align="center" valign="top" width="60">2001</td></tr><tr><td valign="top" width="211">GDP</td><td align="center" valign="top" width="118">4.2%</td><td align="center" valign="top" width="86">4.1%</td><td align="center" valign="top" width="60">4.9%</td><td align="center" valign="top" width="60">3.1%</td><td align="center" valign="top" width="60">2.2%</td><td align="center" valign="top" width="60">0.5%</td></tr><tr><td valign="top" width="211"> Inventory Effect</td><td align="center" valign="top" width="118">0.3%</td><td align="center" valign="top" width="86">0.7%</td><td align="center" valign="top" width="60">0.2%</td><td align="center" valign="top" width="60">-0.1%</td><td align="center" valign="top" width="60">0.4%</td><td align="center" valign="top" width="60">-0.9%</td></tr><tr><td valign="top" width="211">Final Sales</td><td align="center" valign="top" width="118">3.9%</td><td align="center" valign="top" width="86">3.4%</td><td align="center" valign="top" width="60">4.7%</td><td align="center" valign="top" width="60">3.2%</td><td align="center" valign="top" width="60">1.8%</td><td align="center" valign="top" width="60">1.4%</td></tr><tr><td valign="top" width="211"> Trade Effect</td><td align="center" valign="top" width="118">0.0%</td><td align="center" valign="top" width="86">-0.3%</td><td align="center" valign="top" width="60">0.0%</td><td align="center" valign="top" width="60">-0.2%</td><td align="center" valign="top" width="60">-0.6%</td><td align="center" valign="top" width="60">-0.2%</td></tr><tr><td valign="top" width="211">Domestic Final Demand</td><td align="center" valign="top" width="118">3.7%</td><td align="center" valign="top" width="86">3.6%</td><td align="center" valign="top" width="60">4.7%</td><td align="center" valign="top" width="60">3.4%</td><td align="center" valign="top" width="60">2.4%</td><td align="center" valign="top" width="60">1.6%</td></tr><tr><td valign="top" width="211">Chained GDP Price Index</td><td align="center" valign="top" width="118">2.5%</td><td align="center" valign="top" width="86">1.5%</td><td align="center" valign="top" width="60">1.7%</td><td align="center" valign="top" width="60">1.7%</td><td align="center" valign="top" width="60">1.5%</td><td align="center" valign="top" width="60">2.4%</td></tr></table>

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"> Chained 2000$, % AR</a></th>
<th scope="col"> 1Q &#39;04 (Advance)</th>
<th scope="col"> 4Q &#39;03 &nbsp; &nbsp;(Final)</th>
<th scope="col"> Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>4.2%</td>
<td>4.1%</td>
<td>&nbsp;4.9%</td>
<td>3.1%</td>
<td>2.2%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.3%</td>
<td>0.7%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.9%</td>
<td>3.4%</td>
<td>4.7%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.7%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>3.4%</td>
<td>2.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.5%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
Benefits Drove 1Q'04 Employment Cost Index 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040429c.jpg" width="353">
The employment cost index for workers in private industry jumped 1.1% last quarter, ahead of Consensus expectations for a 0.9% gain.
Benefit costs in private industry surged 2.6% in 1Q, the fastest quarterly increase since 1982. The gain was driven by a rise in payments by companies to defined benefit pension plans. Health insurance benefit inflation cooled slightly to 9.3% y/y from 10.5% in 2003.
Wages and salaries, which account for roughly 70% of the compensation index, grew 0.6% last quarter versus 0.5% gain in 4Q.

<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/@EB08/@EB08.HTM"> ECI- Private Industry Workers</a></th>
<th scope="col"> 1Q&#39;04</th>
<th scope="col">4Q&#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>1.1%</td>
<td>0.8%</td>
<td>3.9%</td>
<td>4.0%</td>
<td>3.2%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.6%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>3.0%</td>
<td>2.7%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>2.6%</td>
<td>1.4%</td>
<td>7.0%</td>
<td>6.4%</td>
<td>4.7%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
Jobless Claims Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040429d.jpg" width="353">
Initial claims for jobless insurance fell 18,000 last week to 338,000, the lowest level in three weeks. Consensus expectations had been for a decline to 345,000 claims. Claims during the prior week were revised up slightly.
The 4-week moving average of initial claims fell slightly to 346,500 (-20.0% y/y).
Continuing claims for unemployment insurance rose 3,000 but the prior week&#39;s jump was revised down to 43,000.
The insured rate of unemployment was unchanged at 2.4% for the eighth consecutive week. This unemployment rate averaged 2.8% during 2002 and 2003.

<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"> 4/24/04</th>
<th scope="col">4/17/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 338</td>
<td>356</td>
<td>-23.0%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>3,013</td>
<td>-17.3%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040429b.jpg" width="353">
The Conference Board&#146;s National Index of Help-Wanted Advertising ticked lower to 39 last month versus 40 in February. Despite the drop, the 1Q average improved slightly versus most of last year.
Improvement in the Manpower Employment Outlook Survey for 2Q04 portends a gain in the help wanted index. During the last ten years there has been a 74% correlation between the help wanted index and the Manpower Survey.
There has been a 93% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
A note of caution came as the proportion of labor markets with rising want-ad volume fell sharply to 22% from over 60% in January &amp; February.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;03</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>40</td>
<td>39</td>
</tr>
</tbody>
</table>
</body>
</html>

US real GDP grew a less than expected 4.2% last quarter, about the same as in 4Q03. During the last four quarters GDP growth of 4.9% is an improvement from 0.0% at the end of 2001 and the fastest since 1984. The Consensus expectation [...]

Q1 2004 GDP Light at 4.2%

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040428b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) slipped in March to 0.17 from 0.47 in February. The latest was the lowest reading since October.
The three-month moving average of the CFNAI was about unchanged at 0.35.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
During the last twenty years there has been a 75% correlation between the level of the CFNAI and quarterly growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders.
The latest release of the Chicago Fed&#39;s National Activity Index is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_april2004.pdf"> here</a>.
Comments from Michael H. Moskow, President &amp; CEO of the Federal Reserve Bank of Chicago, on the U.S. Economic Outlook can be found <a href="http://www.chicagofed.org/news_and_conferences/speeches/2004-04-23_economic_outlook.cfm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM"> Chicago Fed</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>0.17</td>
<td>0.47</td>
<td>-0.66</td>
<td>-0.11</td>
<td>-0.40</td>
<td>-1.18</td>
</tr>
</tbody>
</table>
Gasoline Prices at Record 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 28, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040428a.jpg" width="353">
The US average retail gasoline price for all formulations settled last week at $1.81 per gallon versus an average of $1.74 in March and $1.65 February.
Relative to all consumer prices for non-energy goods &amp; services, gasoline prices are back to the highs of a year ago. The current level of relative gasoline prices is up nearly 50% from the low in late 2001 and it is up 60% from the 1999 low.
Despite these gains, relative gasoline prices are down 40% versus the peak in early 1981 and versus disposable personal income (purchasing power) retail gasoline prices are down roughly two-thirds during that period.
Wholesale natural gas prices last week averaged 5.56/mmbtu (+0.9% y/y) and have meandered this year between 5.14 &amp; 6.67/mmbtu.
Crude oil prices have moved higher this year with the price of West Texas Intermediate crude at $37.25 (+47.6% y/y) yesterday.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.
Federal Reserve Chairman Alan Greenspan&#39;s testimony yesterday on energy is available <a href="http://www.federalreserve.gov/BoardDocs/Speeches/2004/20040427/default.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/weekly/@W4/@W403/@W40303/@W40303.HTM"> US Retail Gasoline Prices</a></th>
<th scope="col">04/26/04</th>
<th scope="col">12/29/03</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Formulations ($/Gal.)</td>
<td>$1.81</td>
<td>$1.48</td>
<td>16.4%</td>
<td>$1.56</td>
<td>$1.34</td>
<td>$1.42</td>
</tr>
</tbody>
</table>
Mortgage Applications Ticked Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 28, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040428c.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association ticked 0.5% (-28.8% y/y) higher last week following four weeks of sharp decline.
The increase was fueled by a 6.8% w/w rise in purchase applications (+30.2% y/y). So far in April purchase applications are 1.9% ahead of the March average.
During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance dropped another 5.8% (-52.8% y/y), the fifth consecutive steep weekly decline.
The effective interest rate on a conventional 30-Year mortgage jumped to 6.27% from 6.11% the week prior and from 5.65% averaged in March. The effective rate on a 15-year mortgage rose to 5.63% from 5.49% the week prior and from 5.00% in March.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">04/23/04</th>
<th scope="col">04/16/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>748.0</td>
<td>744.5</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>463.5</td>
<td>434.1</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,403.0</td>
<td>2,550.3</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The Chicago Fed National Activity Index (CFNAI) slipped in March to 0.17 from 0.47 in February. The latest was the lowest reading since October. The three-month moving average of the CFNAI was about unchanged at 0.35. A zero value of [...]

Chicago Fed Nat'l Activity Index Slipped in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040428d.jpg" width="353">
Yesterday, the US Conference Board reported a jump in US consumer confidence in April. The comparable survey in Japan, also issued yesterday, was favorable as well. Today, three smaller economies in Europe all reported that their consumers &quot;feel better&quot; -- or at least, less bad.
In the Czech Republic, April&#39;s consumer survey shows a marked improvement from the very low levels of the prior two months. But at -16, this result remains below readings of a year ago and the averages for all of the past three years. Notably, this survey, which is not quite four years old, has never had a reading above zero. Thus, Czech consumers have shown some degree of uneasiness throughout the last four years.
In neighboring Slovakia, the net consumer sentiment reading is also negative. However, positive movements in both March and April appear to mark a real break-out from much recent experience, as the overall index reached its highest (least negative) since September 2002.
Finally, in Sweden, the readings are in positive territory, although their month-to-month swings made April&#39;s gain from 5.1 to 9.1 look less convincing as a indication of a sustainable uptrend in consumer optimism.
Reasons for these moves are not consistent in all of these countries. Industry sentiment weakened in Slovakia, although recent industrial production data and the Slovak stock market both look better. Industry sentiment in the Czech Republic rose in February and March, but flattened in April. Unemployment remains high there and not improved. However, industrial production and stock prices are maintaining uptrends. In Sweden, the unemployment picture is the same, unimproved, and employment itself is even down somewhat on a year ago. Stock prices are edging higher, however.
Thus, stock prices look to be the common element in the consumer sentiment picture in each country. Better equity markets buoy consumers, and hopefully will translate into more consumer spending.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Balance</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">Feb 2004</th>
<th scope="col">Year Ago</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp; Czech Republic</td>
<td>-16</td>
<td>-23</td>
<td>-26</td>
<td>-11</td>
<td>-15</td>
<td>-7</td>
<td>-5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Slovakia</td>
<td>-25.1</td>
<td>-28.3</td>
<td>-35.9</td>
<td>-34.9</td>
<td>-34.8</td>
<td>-30.2</td>
<td>-32.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Sweden</td>
<td>+9.1</td>
<td>+5.1</td>
<td>+9.1</td>
<td>-6.9</td>
<td>+0.9</td>
<td>+7.2</td>
<td>+3.5</td>
</tr>
</tbody>
</table>
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Yesterday, the US Conference Board reported a jump in US consumer confidence in April. The comparable survey in Japan, also issued yesterday, was favorable as well. Today, three smaller economies in Europe all reported that their [...]

Consumer Sentiment Gains in Czech Republic, Slovakia & Sweden

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040427d.jpg" width="353">
Consumer confidence in Japan, as reported by the Economic and Social Research Institute, rose to 42.5% in the first quarter of this year, the highest level since the fourth quarter of 2000.
All of the components of the total index, except for prices, rose sharply in the first quarter and were well above the levels of the first quarter of 2003. The sharpest quarter-to-quarter rise took place in consumers&#39; appraisal of the job outlook over the next six months. This component was up 7.69% in the quarter and 66.67% above the first quarter of 2003.
Even the price index that showed a decline is a positive indicator for Japan. A price diffusion index below 50% and going down means an expectation of a general upward trend in prices at a faster rate. Any sign of rising prices in Japan is a welcome sign in view of the deflation that has plagued the country over the past several years.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Japan:&nbsp; Diffusion Indexes of Consumer Sentiment %</th>
<th scope="col">Q1 O4</th>
<th scope="col">Q4 O3</th>
<th scope="col">Q1 O3</th>
<th scope="col">Q/Q %</th>
<th scope="col">Y/Y %&nbsp;</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>42.5</td>
<td>40.6</td>
<td>36.2</td>
<td>4.68</td>
<td>17.40</td>
<td>38.4</td>
<td>38.8</td>
<td>38.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Standard of living</td>
<td>42.8</td>
<td>40.2</td>
<td>36.9</td>
<td>6.47</td>
<td>15.99</td>
<td>38.8</td>
<td>39.0</td>
<td>39.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Change in income</td>
<td>&nbsp;39.9</td>
<td>38.0</td>
<td>35.6</td>
<td>5.00</td>
<td>12.08</td>
<td>36.8</td>
<td>37.4</td>
<td>38.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Job prospects</td>
<td>42.0</td>
<td>39.0</td>
<td>25.2</td>
<td>7.69</td>
<td>66.67</td>
<td>31.7</td>
<td>27.7</td>
<td>25.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Prices</td>
<td>41.0</td>
<td>41.2</td>
<td>42.0</td>
<td>-0.49</td>
<td>-2.38</td>
<td>41.4</td>
<td>46.3</td>
<td>47.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Timing and willingness to buy durable goods</td>
<td>47.2</td>
<td>45.7</td>
<td>41.6</td>
<td>3.28</td>
<td>13.46</td>
<td>43.6</td>
<td>43.8</td>
<td>42.6</td>
</tr>
</tbody>
</table>
</body>
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Consumer confidence in Japan, as reported by the Economic and Social Research Institute, rose to 42.5% in the first quarter of this year, the highest level since the fourth quarter of 2000. All of the components of the total index, [...]

Japanese Consumer Confidence Rises Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040427b.jpg" width="353">
Sales of existing single family homes reported by the National Association of Realtors jumped 5.7% last month to a 6.48M annual rate. The previously reported decline in February sales was revised to show a 2.2% increase. Consensus expectations had been for March sales 6.20M.
The figures reflect closings of home sales in earlier months.
Sales rose in most regions of the nation. In the West sales surged 10.2% (18.1% y/y) and sales in the Midwest rose 6.3% (+7.1% y/y). In the South sales rose 3.6% (+12.2% y/y) but in the Northeast sales were flat (10.8% y/y).
The median price of an existing home rose 3.6% m/m to $174,100 (+7.4% y/y) but the prior month&#39;s figure was revised down.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/MarchEHS04?OpenDocument">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/@E9/@E905/@E90501/@E90501.HTM"> Existing Home Sales (000, AR)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,480</td>
<td>&nbsp;6,130</td>
<td>12.7%</td>
<td>6,098</td>
<td>5,593</td>
<td>5,290</td>
</tr>
</tbody>
</table>
Consumer Confidence Jumped On Improved Assessment of Job Market 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 27, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040427a.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence for April jumped 5.0% from March to 92.9. The latest is the highest Confidence reading since January and the jump passed Consensus expectations for a rise to 88.5.
Jobs were viewed as hard to get by 27.6% of respondents, the lowest level since November 2002.
Expectations for business conditions in six months improved moderately in April and 18.2% of respondents expected there to be more jobs in six months, the highest percentage since January.
The improvement in April Confidence contrasted with the deterioration in Consumer Sentiment reported earlier by the University of Michigan.
During the last ten years there has been a 67% correlation between the level of consumer confidence and the y/y % change in real PCE.
The present situation reading surged 7.3% to 90.6 (+20.5% y/y), the highest level since August of 2002. The index of consumer expectations also advanced 3.5% (+11.4% y/y), the first m/m increase since December.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<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/@EF14/@EF1401/@EF1401.HTM"> Conference Board</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>92.9</td>
<td>88.5</td>
<td>14.7%</td>
<td>79.8</td>
<td>96.6</td>
<td>106.6</td>
</tr>
</tbody>
</table>
Chain Store Sales Slip 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 27, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040427c.jpg" width="353">
Chain store sales slipped 0.5% last week following a 1.0% jump the prior week, according to the International Council of Shopping Centers (ICSC)-UBS survey.
With one week left to tally the level of sales in April is up 0.1% from March.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the last ten years there has been a 51% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and consumer sentiment.

<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">04/24/04</th>
<th scope="col">04/17/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>438.2</td>
<td>440.3</td>
<td>7.1%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Sales of existing single family homes reported by the National Association of Realtors jumped 5.7% last month to a 6.48M annual rate. The previously reported decline in February sales was revised to show a 2.2% increase. Consensus [...]

Existing Home Sales Jumped to Second Highest on Record

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

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New orders for durable goods rose 0.5% (7.2% y/y) in September after a 3.0% jump, which followed a 2.8% July decline. A 1.0% shortfall had been expected in the Action Economics Forecast Survey.

A 0.4% (15.8% y/y) rise in transportation sector orders followed an 8.0% August surge, led by commercial aircraft orders. Motor vehicle & parts orders rose 0.4% (4.0% y/y) after increasing 0.8% in August. Orders excluding transportation rose 0.6% (3.1% y/y) after a 0.5% gain. Machinery orders edged 0.1% higher (6.1% y/y) in September after a 2.2% rise. Orders for computers & electronic products rose 0.5% (3.3% y/y) following a 1.1% decline while electrical equipment & appliance orders strengthened 1.5% (6.6% y/y), the strongest of six consecutive increases. Orders for fabricated metal products increased 0.5% (0.8% y/y) for a second month while primary metals orders surged 1.4% (5.4% y/y) after a 0.5% rise.

Shipments of all manufacturing industries eased 0.1% in September (+2.3% y/y) after falling 0.3% in August. Shipments of durable goods edged 0.1% higher (4.8% y/y) after easing 0.1%. Nondefense capital goods shipments excluding aircraft, an indicator of equipment investment in the national accounts, rose 0.9% (4.1% y/y) in September after falling 0.1% in August. Machinery shipments increased 1.4% (4.6% y/y) after easing 0.1% while computer & electronic product shipments were off 0.1% (+4.9% y/y) following a 0.2% dip. Electronic equipment, appliances & components shipments rose 0.4% (4.1% y/y) after rising 0.1%. Motor vehicle & parts shipments rose 0.5% (3.9% y/y) during September following a 0.6% rise. Nondurable goods shipments eased 0.2% (-0.1% y/y) after 0.4% decline.

Unfilled durable goods orders increased 0.7% (8.2% y/y) in September for the second month in a row. Excluding a 1.0% surge in transportation, unfilled increased a steady 0.2% (0.9% y/y). Total factory sector inventories eased 0.1% (+1.4% y/y). Durable goods inventories slipped 0.1% (+1.9% y/y) for the second consecutive month. Excluding the transportation sector, durable goods inventories rose 0.2% (2.3% y/y). Nondurable goods inventories were roughly stable (+0.6% y/y) for the second straight month.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Broad-based orders improvement follows August jump.
- Durable shipments gain reverses prior month’s dip.
- Order backlogs grow for second month; inventories ease.

U.S. Advance Durable Goods Orders Unexpectedly Increase in September

Sandy Batten

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Initial claims for unemployment insurance fell to 216,000 (unchanged y/y) in the week ended November 22 from a slightly upwardly revised 222,000 in the prior week (previously 220,000). This was the lowest weekly reading since April and was tied for the lowest since February. The Action Economics Forecast Survey expected 226,000 initial claims for last week. The four-week moving average of initial claims edged down to 223,750 from 224,750.

Federal government workers filed 1,724 claims in the week ended November 15, the fourth consecutive weekly decline from a recent high of 10,062 in the week of October 18.

Continuing claims (previous claims filers who are still receiving unemployment benefits) continued to edge higher, rising to 1.960 million in the week of November 15 from a downwardly revised 1.953 million in the prior week (previously 1.974 million). While new claims have been well contained recently, continuing claims have risen persistently since midyear, indicating that while the pace of layoffs has not increased meaningfully, hiring has slowed. Consequently, those unemployed are having more difficulty finding new jobs and hence are receiving unemployment benefits for longer, a sign that labor market conditions are softening.

Federal government employees continuing benefits fell to 33,083 in the week of November 8, the first weekly decline since the end of August, from 38,867 in the previous week.

In the week ending November 15, the insured rate of unemployment (the number of beneficiaries as a percent of covered employment) was unchanged at 1.3%. It has been at this rate since the end of May.

The insured unemployment rate varied greatly across individual states and territories. In the week ended November 8, the highest unemployment rates were in New Jersey (2.30%), Washington (2.20%), Massachusetts (1.90%), District of Columbia (1.90%), and California (1.80%). The lowest were in South Dakota (0.30%), Florida (0.30%), North Carolina (0.40%), and Louisiana (0.40%). Rates in other notable states include Pennsylvania (1.40%), Illinois (1.50%), New York (1.60%), Texas (1.10%), Michigan (1.40%) and Ohio (0.80%). 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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- Initial unemployment claims fell to 216,000, the lowest weekly figure since April.
- Continued claims edged up to 1.96 million, indicating that the unemployed are still having increasing difficulty finding a job.

U.S. Initial Unemployment Insurance Claims Fell in Latest Week

Kathleen Stephansen, CBE

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The number of weekly mortgage loans rose 0.2% (52.7% y/y) during the week ended November 21 after declining 5.2% (+62.0% y/y) during the week ended November 14, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house surged 7.6% (18.8% y/y) in the latest week after declining 2.3% (+24.0% y/y) in the prior week. Applications for loan refinancing declined 5.7% (+117.3% y/y) in the week ended November 21, following a decline of 7.3% (+124.7% y/y) in the week ended November 14.

The effective interest rate on a 30-year fixed-rate mortgage increased 3bps to 6.58% in the week ended November 21 from 6.55% during the prior week. The rate on a 15-year fixed rate loan eased 2bps to 5.98% in the latest week from 6.00%, while interest rates on a 30-year JUMBO loan rose 14bps to 6.65% from 6.51%. Rates on a 5-year ARM dropped 31bps to 5.64% from 5.95%. The November 14 rate was the highest rate since the first week of September.

Loans to refinance an existing mortgage fell to 53.4% of total applications in the week ended November 21 from 55.4% in the prior week. The percentage of total loans that were ARMs rose to 7.9% from 7.5% one week earlier.

The average loan size rose 0.2% w/w to $395,600 in the week ended November 21 from $394,900 the prior week. The size of conventional purchase loans declined 1.4% w/w to $427,200 from $433,400, while the size of refinanced loans rose 1.1% w/w to $368,000 from $363,900 one week earlier.

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

- Applications for loans to purchase surged, while those for refinancing declined.
- Interest rates on 30-year fixed-rate mortgage inched up for the fourth consecutive week.
- Average loan size rose in the latest week.

U.S. Weekly Mortgage Applications Inched Up in The Latest Week

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The Conference Board's Index of Consumer Confidence fell 7.1% in November to 88.7. A level of 92.5 had been expected this month in the Action Economics Forecast Survey. The decline in Consumer Confidence was the fourth consecutive monthly drop. It followed a 0.1% October easing (revised -1.0%) and an unrevised 2.2% September shortfall. The index was 21.4% below its peak last November.

The Present Situation index declined 3.3% (-10.3% y/y) after rising 2.9% in October, revised from 1.4%, and falling an unrevised 3.7% in September. The Expectations Index weakened 12.0% (-32.6% y/y) after falling 3.5% in October, revised from -3.9%, after easing an unrevised 0.4% in September.

The percentage of respondents assessing business conditions as “good” fell to 20.1% in November after rising to 20.7% in October. It was the weakest reading since April. The percentage assessing conditions as “bad” rose to 16.9% from 14.5% in October, the most in over a year. The appraisal of labor market conditions weakened as a lessened 27.6% described “jobs plentiful” versus 28.6% in October. That remained below a high of 56.7% in March of 2022. Jobs were viewed as “hard to get” by a lessened 17.9% of respondents this month, but that was increased from a low of 10.5% in February 2023. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) declined to 9.7% compared to 10.3% in October and 8.7% in September. This measure remained below a high of 47.1% in March 2022. It has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions continued to deteriorate this month as a lessened 15.9% of respondents expect conditions to improve over the next six months, after 18.9% did so in October. A higher 27.7% expect them to worsen, after rising from 22.2% in October. On employment, 14.6% expect the number of jobs to increase over the next six months versus 15.8% in October. The percentage expecting the number of jobs to decline in the next six months fell to 27.5% after rising to 28.8% in October	. A lessened 15.3% of respondents expect income to increase in six months, down from 18.2% in October. That remained off a high of 20.7% in November of last year and compares to a 13.8% who expect income to decrease, up from 11.8% in October.

The expected rate of price inflation over the next twelve months held steady at 5.7% after falling from 5.8% in September and 6.1% in August. These remain up from a low of 5.0% last November. Fifty percent of respondents expect interest rates to rise this year, up from a low of 47.2% October of 2024. The percentage of respondents expecting equity prices to increase over the next twelve months declined to 48.1%, down from 50.3% in October. The percentage expecting a decline in stock prices eased to 28.5% after falling to 28.8% in October.

The percentage of respondents planning to buy a home fell to 4.9% this month down from a high of 6.7% in May. Plans to purchase an automobile declined sharply to 10.9% of respondents this month, down from 13.15 averaged in the fourth quarter of last year. These readings, nevertheless, remain up from a low of 10.6% in April.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Confidence level moves to lowest since April.
- Present situation index and expectations decline.
- Inflation expectations are contained.

U.S. Consumer Confidence Weakens in November; Inflation Expectations Steady

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Total retail sales increased 0.2% (4.3% y/y) in September following an unrevised 0.6% August rise and a 0.6% July improvement. The gain compared to a 0.4% increase expected in the Action Economics Forecast Survey. Sales gains were spotty last month. Sales excluding autos increased 0.3% (4.1% y/y) in September after rising 0.6% in August, revised from 0.7% after gaining an unrevised 0.4% in July. A 0.4% gain had been expected.

Sales in the retail control group, which excludes autos, building materials, gasoline and food services, dipped 0.1% (+4.1% y/y) after increasing 0.6% in August, revised from 0.7% after an unrevised 0.5% July gain. These sales are used in the construction of personal consumption expenditures in the NIPA accounts.

Motor vehicle & parts dealer sales declined 0.3% (+5.1% y/y) during September after rising 0.6% in August and improving 1.6% during July. This compares to unchanged unit sales of motor vehicles last month which followed a 0.6% August decline. Gasoline service station sales rose 2.0% (3.1% y/y) in September after rising 0.4% in August. Gasoline prices rose fell 0.7% (-1.7% y/y) during September after rising 0.8% in August. Sales of building materials & garden equipment edged 0.2% higher (-2.4% y/y) after rising 0.3% in August.

Elsewhere, sales were lackluster in September. Nonstore retail sales declined 0.7% (+6.0% y/y) after increasing 1.6% in August. Clothing store sales were off 0.7% (+6.7% y/y) following a 1.0% increase. Sporting goods & hobby shop sales declined 2.5% (-0.2% y/y) after strengthening 1.0%. Sales at electronics & appliance stores weakened 0.5% (+6.3% y/y) after easing 0.3% in August. General merchandise store sales improved 0.1% (1.6% y/y) as they did in July, while department store sales weakened 0.7% (-3.3% y/y) after falling 0.9%. Furniture & home furnishings store sales rose 0.6% (1.2% y/y) in September following a 2.0% decline. Miscellaneous store sales rose 2.9% (8.2% y/y) and reversed a 2.9% decline in August.

In the nondiscretionary sales sector, food & beverage store sales rose 0.2% (2.7% y/y) during September following a 0.6% August rise. Health & personal care store sales strengthened 1.1% (5.6% y/y) after slipping 0.1% in August.

Restaurant & drinking establishment sales rose 0.7% (6.7% y/y) in September after rising 1.0% in August.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economic Forecast Survey in **AS1REPNA**.

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- Auto sales decline; rise in nonauto sales is restrained.
- Sales ease in retail control group.
- Clothing & nonstore sales decline.

Economy in Brief: April 2004

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