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/040930f.jpg" width="353">
The business climate is improving in France. Seen easily in the chart alongside and the table below, French businesses are experiencing a rising production trend and improving order books. The price situation has also shifted markedly over the past six months.
INSEE&#39;s Business survey for September, published today, highlights the &quot;business climate index&quot; at 106, its highest since April 2001 and the 11th successive month above its long-term average (100). An upturn in the general trend of industrial production is a main contributing factor, reaching +12 in September, a third month of positive readings after a dip in the spring. Order books, while still diminishing on balance, are much less weak than they were just six months ago. Foreign manufacturing orders, especially, are approaching a steady position; averaging -6 in the third quarter, they are maintaining their least unfavorable levels since early 2001.
The price situation appears somewhat murky. The assessment of &quot;general industrial prices&quot; is now highly positive, +23 for the last three months running. A year ago, it stood at -9. We&#39;d surmise that the shift in the euro earlier this year from its long uptrend to a more neutral pattern, along with the surge in energy prices, is the major swing factor in this price behavior. Sales price expectations are also firmer than they were a year ago, as slightly more firms believe they can raise prices than not. Even so, this measure of selling prices continues to exhibit much less strength than the general price index, a hint that a price and profit squeeze may be developing for French industry. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted Balance (except as noted)</th>
<th scope="col">Sep 2004</th>
<th scope="col">Aug 2004</th>
<th scope="col">Jul 2004</th>
<th scope="col">Sep 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">Business Climate Index*</td>
<td>106</td>
<td>105</td>
<td>105</td>
<td>94</td>
<td>95</td>
<td>97</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">Industrial Production Trend</td>
<td>12</td>
<td>7</td>
<td>3</td>
<td>-25</td>
<td>-29</td>
<td>-22</td>
<td>-23</td>
</tr>
<tr class="odd">
<td class="firstcol">Factory Order Books</td>
<td>-11</td>
<td>-11</td>
<td>-12</td>
<td>-30</td>
<td>-26</td>
<td>-22</td>
<td>-7</td>
</tr>
<tr>
<td class="firstcol">Factory Order Books -- Foreign</td>
<td>-5</td>
<td>-6</td>
<td>-6</td>
<td>-23</td>
<td>-21</td>
<td>-17</td>
<td>-10</td>
</tr>
<tr class="odd">
<td class="firstcol">General Industrial Prices</td>
<td>23</td>
<td>23</td>
<td>23</td>
<td>-9</td>
<td>-7</td>
<td>3</td>
<td>12</td>
</tr>
<tr>
<td class="firstcol">Likely Sales Prices</td>
<td>1</td>
<td>-2</td>
<td>-4</td>
<td>-10</td>
<td>-7</td>
<td>-5</td>
<td>-1</td>
</tr>
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The business climate is improving in France. Seen easily in the chart alongside and the table below, French businesses are experiencing a rising production trend and improving order books. The price situation has also shifted markedly [...]

French Industry's Outlook Improves

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930e.jpg" width="353">
The National Index of Help-Wanted Advertising published by the Conference Board remained at 37 in August after the decline in July to the lowest level of the year.
During the last ten years there has been a 91% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls. The stall in help wanted indicates that most, if not all, of the y/y improvement in non-farm payroll growth has been due to fewer job losses, not improved hiring.
The proportion of labor markets with rising want-ad volume rose to 49% from a depressed 41% in July.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
&quot;Why Did the Average Duration of Unemployment Become So Much Longer?&quot; from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr194.html"> here</a>. 

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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"> Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;03</th>
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</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>37</td>
<td>37</td>
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The National Index of Help-Wanted Advertising published by the Conference Board remained at 37 in August after the decline in July to the lowest level of the year. During the last ten years there has been a 91% correlation between the [...]

Help-Wanted Advertising Remained Depressed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930a.jpg" width="353">
Initial claims for unemployment insurance surged another 18,000 last week to 369,000 after a 15,000 gain the prior week. Consensus expectations had been for 335,000 claims. Prior years&#39; figures were slightly revised.
The US Labor Department indicated that last week&#39;s claims number primarily reflected hurricanes Charley, Frances and Ivan. The largest increase in initial claims for the week ending Sept. 18 was in Florida (+8,797).
The 4-week moving average of initial claims rose to 343,500 (-14.2% y/y). During the last ten years there has been an 81% (negative) correlation between the monthly average of initial claims and the y/y change in payroll employment.
Continuing claims for unemployment insurance fell 3,000.
The insured rate of unemployment remained at 2.3% where it has hovered since the end of April.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 09/25/04</th>
<th scope="col"> 09/18/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
<tbody>
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<td class="firstcol">Initial Claims</td>
<td>369</td>
<td>351</td>
<td>-7.8%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,873</td>
<td>-20.0%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
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Initial claims for unemployment insurance surged another 18,000 last week to 369,000 after a 15,000 gain the prior week. Consensus expectations had been for 335,000 claims. Prior years' figures were slightly revised. The US Labor [...]

Initial Claims for Jobless Insurance Again Raised by Hurricanes

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930d.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for September recovered just over half of the prior month&#39;s decline with a 4.0 point gain to 61.3. Consensus expectations had been for a lesser rise to 57.5.
During the last ten years there has been a 73% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output. That correlation has risen to 85% during the last five years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930c.jpg" width="353">
The new orders index jumped to 68.7, recovering all of the 10.7 drop in August. The employment index at 53.9, added 2.8 points to the 5.5 rise. 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 remained quite firm at 86.4. During the last ten years there has been a 77% correlation between the Chicago price index and the y/y change in the &quot;core&quot; intermediate goods PPI.

<table border="0" cellspacing="0" width="100%">
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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"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept&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>61.3</td>
<td>57.3</td>
<td>53.0</td>
<td>54.7</td>
<td>52.7</td>
<td>41.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>68.7</td>
<td>58.0</td>
<td>54.8</td>
<td>58.0</td>
<td>56.2</td>
<td>42.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>86.4</td>
<td>86.6</td>
<td>53.0</td>
<td>55.8</td>
<td>56.9</td>
<td>50.4</td>
</tr>
</tbody>
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The Chicago Purchasing Managers Business Barometer for September recovered just over half of the prior month's decline with a 4.0 point gain to 61.3. Consensus expectations had been for a lesser rise to 57.5. During the last ten years [...]

Chicago Purchasing Agents' Index Rebounded

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930b.jpg" width="353">
Personal income grew a moderate 0.4% last month following the 0.2% uptick in July that was revised slightly up. Consensus expectations had been for a 0.5% increase.
Wages &amp; salaries rose 0.4% (+4.6% y/y) and earlier months&#39; figures were revised higher. Manufacturing wages jumped 0.8% (2.6% y/y) while wages in private service producing industries rose 0.3% (5.4% y/y).
Personal disposable income rose 0.4% (3.7% y/y) and inflation adjusted disposable income rose the same 0.4% (1.6% y/y).
&quot;Labor&#39;s Share&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20040801/cover.pdf"> here</a>.
Consumer spending was unchanged following the upwardly revised 1.1% jump in July. Durables purchases fell due to lower light vehicle sales. Purchases of non-durable goods and services both rose a modest 0.2%. 
The PCE chain price index fell slightly for the second consecutive month. Prices less food &amp; energy also fell (+1.4% y/y) as durables prices (-0.5% m/m, -2.1% y/y) continued lower. Services prices rose just 0.1% (2.5% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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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">Aug</th>
<th scope="col">July</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>0.2%</td>
<td>5.0%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.0%</td>
<td>1.1%</td>
<td>5.1%</td>
<td>5.2%</td>
<td>4.6%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.9%</td>
<td>0.5%</td>
<td>2.2%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.0%</td>
<td>-0.0%</td>
<td>2.1%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
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Personal income grew a moderate 0.4% last month following the 0.2% uptick in July that was revised slightly up. Consensus expectations had been for a 0.5% increase. Wages & salaries rose 0.4% (+4.6% y/y) and earlier months' figures [...]

U.S. Personal Income Up Moderately

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930b.jpg" width="353">
Personal income grew a moderate 0.4% last month following the 0.2% uptick in July that was revised slightly up. Consensus expectations had been for a 0.5% increase.
Wages &amp; salaries rose 0.4% (+4.6% y/y) and earlier months&#39; figures were revised higher. Manufacturing wages jumped 0.8% (2.6% y/y) while wages in private service producing industries rose 0.3% (5.4% y/y).
Personal disposable income rose 0.4% (3.7% y/y) and inflation adjusted disposable income rose the same 0.4% (1.6% y/y).
&quot;Labor&#39;s Share&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20040801/cover.pdf"> here</a>.
Consumer spending was unchanged following the upwardly revised 1.1% jump in July. Durables purchases fell due to lower light vehicle sales. Purchases of non-durable goods and services both rose a modest 0.2%. 
The PCE chain price index fell slightly for the second consecutive month. Prices less food &amp; energy also fell (+1.4% y/y) as durables prices (-0.5% m/m, -2.1% y/y) continued lower. Services prices rose just 0.1% (2.5% y/y).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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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">Aug</th>
<th scope="col">July</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>0.2%</td>
<td>5.0%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.0%</td>
<td>1.1%</td>
<td>5.1%</td>
<td>5.2%</td>
<td>4.6%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.9%</td>
<td>0.5%</td>
<td>2.2%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.0%</td>
<td>-0.0%</td>
<td>2.1%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Rebounded 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930d.jpg" width="353">
The Chicago Purchasing Managers Business Barometer for September recovered just over half of the prior month&#39;s decline with a 4.0 point gain to 61.3. Consensus expectations had been for a lesser rise to 57.5.
During the last ten years there has been a 73% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output. That correlation has risen to 85% during the last five years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930c.jpg" width="353">
The new orders index jumped to 68.7, recovering all of the 10.7 drop in August. The employment index at 53.9, added 2.8 points to the 5.5 rise. 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 remained quite firm at 86.4. During the last ten years there has been a 77% correlation between the Chicago price index and the y/y change in the &quot;core&quot; intermediate goods PPI.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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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"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept&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>61.3</td>
<td>57.3</td>
<td>53.0</td>
<td>54.7</td>
<td>52.7</td>
<td>41.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>68.7</td>
<td>58.0</td>
<td>54.8</td>
<td>58.0</td>
<td>56.2</td>
<td>42.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>86.4</td>
<td>86.6</td>
<td>53.0</td>
<td>55.8</td>
<td>56.9</td>
<td>50.4</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Remained Depressed 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930e.jpg" width="353">
The National Index of Help-Wanted Advertising published by the Conference Board remained at 37 in August after the decline in July to the lowest level of the year.
During the last ten years there has been a 91% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls. The stall in help wanted indicates that most, if not all, of the y/y improvement in non-farm payroll growth has been due to fewer job losses, not improved hiring.
The proportion of labor markets with rising want-ad volume rose to 49% from a depressed 41% in July.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
&quot;Why Did the Average Duration of Unemployment Become So Much Longer?&quot; from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr194.html"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
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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"> Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;03</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>37</td>
<td>37</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Again Raised by Hurricanes 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 30, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040930a.jpg" width="353">
Initial claims for unemployment insurance surged another 18,000 last week to 369,000 after a 15,000 gain the prior week. Consensus expectations had been for 335,000 claims. Prior years&#39; figures were slightly revised.
The US Labor Department indicated that last week&#39;s claims number primarily reflected hurricanes Charley, Frances and Ivan. The largest increase in initial claims for the week ending Sept. 18 was in Florida (+8,797).
The 4-week moving average of initial claims rose to 343,500 (-14.2% y/y). During the last ten years there has been an 81% (negative) correlation between the monthly average of initial claims and the y/y change in payroll employment.
Continuing claims for unemployment insurance fell 3,000.
The insured rate of unemployment remained at 2.3% where it has hovered since the end of April.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 09/25/04</th>
<th scope="col"> 09/18/04</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>369</td>
<td>351</td>
<td>-7.8%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,873</td>
<td>-20.0%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040929c.jpg" width="353">
Industrial product prices in Canada were basically unchanged in August, rising just 0.1% from July. This not-seasonally-adjusted index is up 4.9% from August 2003 and seems to be moderating a bit after a substantial run-up during the spring and early summer.
Petroleum is an obvious culprit in the sharp upturn in this wholesale price index. As seen in the table below, petroleum and coal prices have surged more than 21% in the last 12 months. Large as this increase is, it is noticeably smaller than the peak year-on-year gain of 31% in May.
Petroleum products are not the only source of upward pressure on the array of industrial prices. Metals too have risen sharply. Beginning in June and July of last year, all the various metals prices turned very much higher. Nickel products began to rise in June 2003, copper, aluminum and &quot;other&quot; (mostly tin and lead) in July, and iron and steel products this past January. For Canada, these developments carry more weight than in the US. Mining and durable goods manufacturing in Canada account for approximately 14% of gross value added in the economy. In the US, by comparison, these two sectors comprise about 9-1/2% of GDP. These share calculations were done in chained dollars and are rough, since such shares are not technically additive in chained terms. But they give a general impression of the significance of these price movements to the two countries: nearly one-seventh of the Canadian economy is directly impacted by the oil and metal product prices, but less than one-tenth of the US economy. Notably, however, most metals prices began to slow in April and May. This eases cost pressures for some industries in Canada, but also pares revenue growth for the metals producers, making this sector a two-edged sword for the Canadian economy. 

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol">Year/Year % Change</th>
<th scope="col">Aug 2004</th>
<th scope="col">Jul 2004</th>
<th scope="col">Jun 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">Industrial Product Price Index</td>
<td>4.9</td>
<td>5.2</td>
<td>6.9</td>
<td>-3.5</td>
<td>2.8</td>
<td>-2.4</td>
</tr>
<tr>
<td class="firstcol">ex Petroleum &amp; Coal</td>
<td>3.8</td>
<td>3.9</td>
<td>5.6</td>
<td>-3.6</td>
<td>1.6</td>
<td>-0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Petroleum &amp; Coal</td>
<td>21.1</td>
<td>25.2</td>
<td>27.4</td>
<td>-2.4</td>
<td>26.2</td>
<td>-29.3</td>
</tr>
<tr>
<td class="firstcol">Primary Metals</td>
<td>22.4</td>
<td>24.3</td>
<td>23.7</td>
<td>0.7</td>
<td>8.5</td>
<td>-7.6</td>
</tr>
</tbody>
</table>
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Industrial product prices in Canada were basically unchanged in August, rising just 0.1% from July. This not-seasonally-adjusted index is up 4.9% from August 2003 and seems to be moderating a bit after a substantial run-up during the [...]

Canadian Industrial Product Prices Appear to Peak Out Following Surges in Petroleum & Metals

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040929a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association jumped 4.9% last week. The average for mortgage applications in September is 7.4% ahead of August.
The effective interest rate on a conventional 30-year mortgage ticked lower to 5.91% versus 6.04% averaged in August. In May, 30-year financing averaged 6.53%. The effective rate on a 15-year mortgage fell to 5.33%, down from 5.97% averaged in May.
Applications to refinance added 7.7% to the prior week&#39;s 4.1% gain and for September are 12.9% ahead of August. Purchase applications rose 2.7% and for September are 3.5% higher than in August.
During the last ten years there has been a 60% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
&quot;Federal Government Debt and Interest Rates&quot; from the American Enterprise Institute can be found <a href="http://www.aei.org/publications/pubID.20885/pub_detail.asp"> here</a>.
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><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">09/24/04</th>
<th scope="col">09/17/04</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 class="odd">
<td class="firstcol">Total Market Index</td>
<td>724.7</td>
<td>690.7</td>
<td>2.5%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>469.1</td>
<td>456.6</td>
<td>17.9%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,211</td>
<td>2,052.5</td>
<td>-11.8%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of mortgage applications compiled by the Mortgage Bankers Association jumped 4.9% last week. The average for mortgage applications in September is 7.4% ahead of August. The effective interest rate on a conventional 30-year [...]

Again, Lower Rates Raised Mortgage Refinancing

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

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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.

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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**.

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- 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

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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**.

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

Personal Income, Consumption, and Prices in March

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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

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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.

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- 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

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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.

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- 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: September 2004

Jump to:

French Industry's Outlook Improves

Help-Wanted Advertising Remained Depressed

Initial Claims for Jobless Insurance Again Raised by Hurricanes

Chicago Purchasing Agents' Index Rebounded

U.S. Personal Income Up Moderately

U.S. Personal Income Up Moderately

Canadian Industrial Product Prices Appear to Peak Out Following Surges in Petroleum & Metals

Again, Lower Rates Raised Mortgage Refinancing