Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040630c.jpg" width="353">
Consumer confidence improved somewhat in Europe in June, as shown in the monthly Euro-Zone survey. The move is not substantial, just reversing May&#39;s 2-point deterioration, but it brought the Indicator back to -14, its lowest since November 2002. This move was driven by 2-point improvements in the components for &quot;General Economic Situation&quot; over both the last 12 months and the next 12 months and in the item, &quot;Unemployment Expectations over the next 12 months&quot;.
This last item is particularly noteworthy for its close correlation with a similar series in the US consumer confidence data. As colleague Tom Moeller pointed out yesterday, a major factor in the jump in the Conference Board&#39;s confidence index for June was the decline in &quot;jobs hard to get&quot; to its lowest reading since September 2002.
It would be no surprise that within the European survey, unemployment expectations have a 99% correlation with overall confidence. But it is remarkable that overall consumer confidence in Europe has a 79% correlation with &quot;jobs hard to get&quot; in the US survey. The two total confidence series have an 87% correlation, as suggested in the accompanying graph, and the two employment series, 81%. World markets are intertwined, and the various regions&#39; populations appear to view those market developments with so much the same perspective that it can be affirmed in simple statistical analysis.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">June 2004</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</th>
<th scope="col">June 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Euro-Zone 12 Consumer Confidence Indicator, % Balance</td>
<td>-14</td>
<td>-16</td>
<td>-14</td>
<td>-19</td>
<td>-18</td>
<td>-11</td>
<td>-5</td>
</tr>
<tr>
<td class="firstcol">Unemployment Expectations Next 12 Months, % Balance</td>
<td>31</td>
<td>33</td>
<td>31</td>
<td>40</td>
<td>38</td>
<td>26</td>
<td>14</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">US Conference Board Consumer Confidence, Index, 1985 =100</td>
<td>101.9</td>
<td>93.1</td>
<td>93.0</td>
<td>83.5</td>
<td>79.8</td>
<td>96.6</td>
<td>106.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Jobs Hard to Get, % Replying</td>
<td>26.5</td>
<td>30.3</td>
<td>28.0</td>
<td>31.9</td>
<td>31.8</td>
<td>24.3</td>
<td>16.2</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer confidence improved somewhat in Europe in June, as shown in the monthly Euro-Zone survey. The move is not substantial, just reversing May's 2-point deterioration, but it brought the Indicator back to -14, its lowest since [...]

Interconnected Global Labor Trends Impact Consumer Confidence

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040630d.jpg" width="353">
As expected, the Federal Reserve raised the target rate for federal funds by 25 basis points to 1.25%. The discount rate also was raised to 2.25%.
The decision was unanimous.
The press release which accompanied the Fed&#39;s action indicated that &quot;The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace and labor market conditions have improved. Although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors.&quot;
The Fed statement continued to indicate that &quot;policy accommodation can be removed at a pace that is likely to be measured.&quot;
<a href="http://www.federalreserve.gov/boarddocs/press/monetary/2004/20040630/default.htm">Here</a> is the complete text of the Fed&#39;s latest press release.
&quot;The Rates They Are A-changin&#39; &quot; from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/Research/ET2004/0604/trends.pdf">here</a>.
&quot;Interest Rates and Monetary Policy: Conference Summary&quot; from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2004/el2004-13.html">here</a>.

Mortgage Applications Slide 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040630b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association slid 4.4% (-64.8% y/y) last week. With a few days remaining to tally, applications in June are running 11.6% below the May average which fell 18.9% from April.
Purchase applications fell 4.2% (-0.7% y/y). For the month purchase applications are down 4.7% from May, the second m/m decline this year.
During the last ten years there has been a 63% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance mortgages fell 4.7% last week (-83.9% y/y) .
The effective interest rate on a conventional 30-Year mortgage was about unchanged at 6.47%. The effective rate on a 15-year mortgage also was roughly stable at 5.96%.
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">06/25/04</th>
<th scope="col">06/18/04</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>575.0</td>
<td>601.2</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>435.4</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,386.9</td>
<td>1,454.6</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Backpedaled 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040630a.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for June gave back its gains in May &amp; April with an 11.6 point decline to 56.4. Consensus expectations had been for a more moderate decline to 64.0.
During the last ten years there has been a 73% correlation between the level of the Chicago Business Barometer and three month growth in factory sector industrial output.
The new orders index declined sharply 56.8, its lowest level since September. Production also fell sharply to 53.9, its lowest since April of last year.
The employment index fell just moderately to 53.6. During the last twenty years there has been an 81% correlation between the level of this employment index and the three month change in factory sector employment.
The index of prices paid rose even further to 84.5 and slightly surpassed the 1995 high.

<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/@EF05/@EF05.HTM"> Chicago Purchasing Managers Index, SA</a></th>
<th scope="col"> June</th>
<th scope="col">May</th>
<th scope="col">June&nbsp; &#39;03</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">Business Barometer</td>
<td>56.4</td>
<td>68.0</td>
<td>52.4</td>
<td>54.7</td>
<td>52.7</td>
<td>41.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>56.8</td>
<td>74.4</td>
<td>55.6</td>
<td>58.0</td>
<td>56.2</td>
<td>42.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>84.5</td>
<td>80.0</td>
<td>49.6</td>
<td>55.8</td>
<td>56.9</td>
<td>50.4</td>
</tr>
</tbody>
</table>
</body>
</html>

As expected, the Federal Reserve raised the target rate for federal funds by 25 basis points to 1.25%. The discount rate also was raised to 2.25%. The decision was unanimous. The press release which accompanied the Fed's action [...]

FOMC Raised Interest Rates; 1st Time Since May 2000

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629e.jpg" width="353">
INSEE&#39;s (Institute Nationale de la Statistiques et les Etudes Economique) composite indicator of French business confidence for June rose to April&#39;s three year high of 105 after having declined to 104 in May.
Although the overall measure of confidence has risen almost steadily since June of 2003, expectations of improving production trends for business in general and business in manufacturing in particular faltered in February, March and April of this year and have only improved in May and June. Even with the improvement, the balance of those expecting improved production trends is still negative, although only slightly so.
Expectations regarding the inflation outlook have changed significantly . Those expecting prices to decline outweighed those expecting prices to increase for much of 2003. The reverse has been true since December of last year. In June, the balance of businessmen in manufacturing expecting prices to rise over those expecting a decline was up to 23, compared with -3 in December.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Indicators of Business Confidence and Expectations</th>
<th scope="col">Jun 04</th>
<th scope="col">May 04</th>
<th scope="col">Jun&nbsp; 03</th>
<th scope="col">M/M &nbsp;Point Chg.</th>
<th scope="col">Y/Y&nbsp; Point Chg.&nbsp;</th>
<th scope="col">2003&nbsp;</th>
<th scope="col">2002&nbsp;&nbsp;</th>
<th scope="col">&nbsp;2001&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite</td>
<td>105</td>
<td>104</td>
<td>90</td>
<td>1</td>
<td>15</td>
<td>95</td>
<td>97</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">Percent Balance</td>
<td>&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">Total Industry</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Production Trend</td>
<td>-2</td>
<td>-5</td>
<td>-34</td>
<td>3</td>
<td>32</td>
<td>-29</td>
<td>-22</td>
<td>-23</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Price Trend</td>
<td>22</td>
<td>19</td>
<td>-17</td>
<td>3</td>
<td>39</td>
<td>-7</td>
<td>3</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>&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">&nbsp; Production Trend</td>
<td>-3</td>
<td>-5</td>
<td>-35</td>
<td>2</td>
<td>38</td>
<td>-29</td>
<td>-24</td>
<td>-24</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Price Trend</td>
<td>23</td>
<td>19</td>
<td>-5</td>
<td>4</td>
<td>41</td>
<td>-8</td>
<td>2</td>
<td>11</td>
</tr>
</tbody>
</table>
</body>
</html>

INSEE's (Institute Nationale de la Statistiques et les Etudes Economique) composite indicator of French business confidence for June rose to April's three year high of 105 after having declined to 104 in May. Although the overall [...]

French Business Turns More Confident on Production Trends, but a Growing Proportion Predict Rising Prices

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629b.jpg" width="353">
Chain store sales fell a huge 1.2% last week, the largest one week decline since late March, according to the International Council of Shopping Centers (ICSC)-UBS.
The decline in this the last full week of June pulled month-to-date sales 0.7% below the May average.
During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
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. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629a.jpg" width="353">
Improvement in sales may be portended by the recent slide in petroleum prices. Brent crude oil dropped yesterday to $33.25 on news of the Iraq power handover. Crude prices are down further today, off 15% from the May peak of $39.07.

<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">06/26/04</th>
<th scope="col">06/19/04</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>434.7</td>
<td>439.8</td>
<td>4.2%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Consumer Confidence Rose to 2-Year High in June 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 29, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629c.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence for June rose 9.5% to 101.9 versus Consensus expectations for a slight rise to 95.0. June was the highest confidence level since June 2002. May was little revised.
During the last ten years there has been a 55% correlation between consumer confidence and the y/y change in nonfarm payrolls.
The present situation index surged 15.8% to 104.8 (+63.2% y/y). The index of consumer expectations also was firm, up 5.5% to 100.0 (+3.7% y/y).
Jobs were viewed as hard to get by 26.5% of respondents. That was down from 30.3% the prior month and was the lowest level since September 2002.
Expectations for business conditions in six months rose further in June following increases in the prior two months.
The June Confidence reading was firmer than the June reading of Consumer Sentiment reported 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 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">June</th>
<th scope="col">May</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>101.9</td>
<td>93.1</td>
<td>22.0%</td>
<td>79.8</td>
<td>96.6</td>
<td>106.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales fell a huge 1.2% last week, the largest one week decline since late March, according to the International Council of Shopping Centers (ICSC)-UBS. The decline in this the last full week of June pulled month-to-date [...]

Chain Store Sales Slide Big

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629d.jpg" width="353">
The latest report on retail sales in Japan suggests that the rise in household consumption in the first quarter Gross Domestic Product may not be sustained in the second quarter. May retail sales were -2.47% below sales of a year ago and April sales were almost 1% below year ago sales. In the first quarter of this year retail sales averaged 0.22% above the average for the first quarter of 2003.
It is important to remember, however, that retail sales are volatile and they are probably affected much more than total consumption by deflation. In the comparison between retail sales and household expenditures in current yen, such expenditures as household maintenance, education, and health, are much less likely to be affected by deflation than items such as food and clothing that make up much of the retail sales series. Chart 2 shows retail sales as a percentage of total household expenditures. Over the past 5 years, the ratio has declined from about 51% to 46%. Thus a decline in retail sales need not portend a similar decline in total consumption.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Retail Sales</th>
<th scope="col">May 04</th>
<th scope="col">Apr 04</th>
<th scope="col">Mar&nbsp; 04</th>
<th scope="col">Feb&nbsp; 04</th>
<th scope="col">Jan&nbsp;04</th>
<th scope="col">2003 %</th>
<th scope="col">2002&nbsp; %</th>
<th scope="col">&nbsp;2001 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Year over year %</td>
<td>-2.79</td>
<td>-0.98</td>
<td>-1.70</td>
<td>1.76</td>
<td>0.92</td>
<td>-194</td>
<td>-394</td>
<td>-1.88</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>Q1 04</td>
<td>&nbsp; Q4 03</td>
<td>&nbsp; Q3 03</td>
<td>Q2 03</td>
<td>&nbsp;Q1 03</td>
<td>2003 %</td>
<td>&nbsp; 2002 %</td>
<td>&nbsp; 2001 %</td>
</tr>
<tr>
<td class="firstcol">Year over year %</td>
<td>1.77</td>
<td>0.18</td>
<td>-1.61</td>
<td>-.072</td>
<td>-.026</td>
<td>-0.60</td>
<td>-0.33</td>
<td>0.44</td>
</tr>
</tbody>
</table>
</body>
</html>

The latest report on retail sales in Japan suggests that the rise in household consumption in the first quarter Gross Domestic Product may not be sustained in the second quarter. May retail sales were -2.47% below sales of a year ago [...]

Retail Sales in Japan Decline in May. Does This Mean a Decline in Second Quarter Total Household Spending?

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040628a.jpg" width="353">
Personal income rose the same 0.6% (+5.8% y/y) last month as in April. Consensus expectations had been for a 0.5% gain.
For the second month the upside surprise was slight. Wages &amp; salaries, however, have been notably firm rising 0.7% (5.1% y/y) in May and 0.6% in April reflecting the recent improvement in jobs growth. Firm wage gains were logged across industries but service industries rose a notable 1.0% (5.8% y/y).
Personal disposable income rose 0.6% for the second consecutive month (6.4% y/y). After accounting for a 2.5% y/y rise in prices, real disposable income rose 3.8%, down some from the recent peaks in the 4-6% range.
Consumer spending surged 1.0% in May as unit light vehicle sales jumped 8.7% m/m. A 0.8% gain in PCE had been expected. Nondurable goods spending also rose a strong 1.2% (9.9% y/y) as gasoline prices jumped and services rose 0.7% (5.5% y/y). 
The PCE chain price index rose 0.5% following an upwardly revised 0.2% April gain. Less food &amp; energy, prices rose 0.2% (1.6% y/y) for the sixth month in the last eight.
The savings rate fell to 2.2% from the upwardly revised 2.6% in April. 

<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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">May</th>
<th scope="col">April</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>0.6%</td>
<td>0.6%</td>
<td>5.8%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>1.0%</td>
<td>0.2%</td>
<td>6.7%</td>
<td>5.0%</td>
<td>4.8%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>2.2%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.5%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Personal income rose the same 0.6% (+5.8% y/y) last month as in April. Consensus expectations had been for a 0.5% gain. For the second month the upside surprise was slight. Wages & salaries, however, have been notably firm rising 0.7% [...]

U.S. Personal Income Firm

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625d.jpg" width="353">
Analysts had projected that Japan&#39;s core CPI for Tokyo would finally stop falling in June. But it did not. It was down, just a little, but still down by 0.1% from a year ago. On the heels of this report, which also included widespread deflation in the national CPI for May, the monetary policy committee of the Bank of Japan voted unanimously to maintain their zero-interest rate policy. It had been thought that some subtle move away from the potentially limitless provision of liquidity that accompanies that rate target might have been forthcoming if the CPI finally stabilized. Such was not the case. And unlike most of the other major economies of the world, Japan is not yet facing a sudden new burden of inflationary pressure.
The deflation in Japan does seem to be dissipating. Clothing prices, for instance, rose sharply in Tokyo and several sectors are experiencing much less downward price pressure than they have been. Press reports indicated that some of the softness in the Tokyo numbers reflected sales promotions in electronics, ahead of the introduction of new models. This could well be just a transitory force, then, with recently firmer demand possibly allowing net price gains to show through &quot;soon&quot;.
The last year-on-year rise in the national &quot;general CPI&quot; was in August 1999. In the headline series, the core rate in the Tokyo area, the last such increase was in August 1998. In the Japanese array of CPI data, the core is defined as the general CPI less fresh food.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Changes</th>
<th scope="col">June 2004</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</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">General CPI, SA, mo/mo</td>
<td>N.A.</td>
<td>-0.2</td>
<td>-0.3</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>N.A.</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-0.4</td>
<td>-0.3</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Core CPI, SA, mo/mo</td>
<td>N.A.</td>
<td>-0.2</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>N.A.</td>
<td>-0.3</td>
<td>-0.2</td>
<td>0.0</td>
<td>-0.7</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Tokyo CPI, SA, mo/mo</td>
<td>+0.2</td>
<td>-0.1</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>-0.1</td>
<td>-0.3</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-0.3</td>
<td>-1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Tokyo Core CPI, SA, mo/mo</td>
<td>-0.1</td>
<td>0.0</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.7</td>
<td>-1.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Analysts had projected that Japan's core CPI for Tokyo would finally stop falling in June. But it did not. It was down, just a little, but still down by 0.1% from a year ago. On the heels of this report, which also included widespread [...]

Consumer Prices Still Weak in Japan

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625a.jpg" width="353">
US real GDP growth in 1Q was revised down to 3.9% (AR) from the preliminary report of 4.4% growth. The Consensus expectation was for little revision. Next month, the GDP figures back to 1Q 2001 will undergo the regular annual revision.
The trade sector is now estimated to have subtracted 0.7 percentage points from 1Q GDP growth. Import growth was revised up to 10.4% (AR, 9.0% y/y) from 5.9%. Export growth of 7.5% (8.9% y/y) also was revised up.
Growth in domestic final demand was little revised as personal consumption expenditures grew 3.8% (AR, 4.3% y/y), though growth in nonresidential fixed investment growth was reduced to 5.3% (AR, 8.9% y/y). Investment in equipment &amp; software was lowered to 9.2% (12.4% y/y) from 9.8%. Residential investment growth was revised up to 4.6% (9.5% y/y).
Growth in before tax corporate profits with inventory valuation adjustment (IVA) &amp; capital consumption adjustment (CCA) was revised slightly higher to 7.1% from 4.9% (AR, 32.3% y/y). Growth in operating profits for nonfinancial corporations grew 6.9% (AR, 38.8% y/y) and was revised up from 3.6%, though profit margins were unrevised. They still show no expansion versus 4Q but are about two thirds higher than in 2001.
Inflation was revised up slightly to 2.8% as the gain in the PCE chain price index was revised up to 3.2% (1.6% y/y). Business equipment &amp; software prices were revised down to a 0.3% decline (0.0% y/y).Less food &amp; energy the GDP chain price index rose 2.4% after the 1.4% rise in 4Q.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<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 (Final)</th>
<th scope="col"> 1Q &#39;04 (Prelim.)</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>3.9%</td>
<td>4.4%</td>
<td>4.1%</td>
<td>&nbsp;4.8%</td>
<td>3.1%</td>
<td>2.2%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.7%</td>
<td>0.8%</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>3.2%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-0.7%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.2%</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>3.8%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>4.8%</td>
<td>3.4%</td>
<td>2.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.8%</td>
<td>2.6%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index for June improved to95.6, up slightly from the mid-month read of 95.2. Consensus expectations had been for 95.0.
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.
Improvement in the expectations sub-index versus the mid-month reading as well as versus May drove the rise in overall consumer sentiment. The index of current economic conditions actually fell versus the mid-month read but was still up 3.0% versus May.
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.

<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/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> June</th>
<th scope="col"> May</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">Consumer Sentiment</td>
<td>95.6</td>
<td>90.2</td>
<td>6.1%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>106.7</td>
<td>103.6</td>
<td>14.1%</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>88.5</td>
<td>81.6</td>
<td>0.6%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
Existing Home Sales Rose To Record High 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625b.jpg" width="353">
The National Association of Realtors reported that sales of existing single family homes in May rose 2.6% to a record high of 6.80M. Consensus expectations had been for sales 6.50M. April sales were revised down slightly.
Sales were mixed across the nation. In the South they rose 3.8% (+19.0% y/y) and in the West sales rose 5.5% (22.9% y/y). However in the Northeast sales fell 1.4% (+7.5% y/y), unchanged since February, and in the Midwest sales fell 0.7% (+6.1% y/y).
The median price of an existing home rose 3.7% m/m to $183,600 (+10.3% y/y).
The figures reflect closings of home sales in earlier months.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/MayEHS04?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">May</th>
<th scope="col">April</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;6,800</td>
<td>&nbsp;6,630</td>
<td>15.8%</td>
<td>6,098</td>
<td>5,593</td>
<td>5,290</td>
</tr>
</tbody>
</table>
Mass Layoffs Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625e.jpg" width="353">
Mass layoffs in the US as reported to the Bureau of Labor Statistics fell sharply in May, continuing a downtrend begun in 2001.
The number of firms reporting mass layoffs in May fell to 988 from 1,458 in April and from a monthly average of 1,580 last year.
These layoffs generated 87,501 initial claims for unemployment insurance in May. That was down from 157,410 initial claims generated each month last year.
Since the series inception in 1995 there has been a (negative) 47% correlation between the number of initial claims generated by mass layoffs and the one month change in non-farm payrolls.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period. Extended mass layoff numbers (issued quarterly) are from a subset of such establishments--where private sector non-farm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.

<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/@EF10/@EF1001/@EF1001.HTM"> Mass Layoffs</a></th>
<th scope="col"> May</th>
<th scope="col"> April</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Number of Events: All Industries</td>
<td>988</td>
<td>1,458</td>
<td>-42.0%</td>
<td>18,963</td>
<td>20,277</td>
<td>21,467</td>
</tr>
<tr>
<td class="firstcol">Numbers of Persons Filing Initial Unemployment Insurance Claim: All Industries</td>
<td>87,501</td>
<td>157,314</td>
<td>-49.8%</td>
<td>1,888,926</td>
<td>2,245,051</td>
<td>2,514,862</td>
</tr>
</tbody>
</table>
</body>
</html>

US real GDP growth in 1Q was revised down to 3.9% (AR) from the preliminary report of 4.4% growth. The Consensus expectation was for little revision. Next month, the GDP figures back to 1Q 2001 will undergo the regular annual [...]

Higher Imports Reduced Estimate of 1Q GDP Growth

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

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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

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


Privacy Policy

Disclaimer

Contact us

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

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

250430N1.jpg

250430O1.jpg

Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

250430P1.jpg

250430Q1.jpg

Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

250430R1.jpg

250430S1.jpg

- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

250430A.jpg

250430B.jpg

High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

250430C.jpg

250430D.jpg

- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

250430F20.jpg

250430G20.jpg

The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

250430F5.jpg

250430G5.jpg

The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

250430H5.jpg

250430I5.jpg

- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

250430J4.jpg

250430K4.jpg

The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

250430L4.jpg

250430M4.jpg

- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: June 2004

Jump to: