Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020430a.jpg" width="353">
Chain store sales in the latest week retraced all of their surge the prior period, falling 1.7% according to BTM-UBSW.
April sales, with only one partial week to go, are 1.0% below the March average.
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">4/27/02</th>
<th scope="col">4/20/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>399.3</td>
<td>406.3</td>
<td>3.3%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
Consumer Confidence Down Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 30, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020430b.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence fell slightly in April, about as expected. March&#39;s level was little revised 
The 1.7% m/m decline in the Conference Board measure was in line with modest drop in the University of Michigan Consumer sentiment survey. 
The decline in confidence reflected a slight drop in consumer expectations and a moderate drop in the reading regarding the present situation. 
The Conference Board&#39;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
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<td class="firstcol">Consumer Confidence</td>
<td>108.8</td>
<td>110.7</td>
<td>-1.0%</td>
<td>106.6</td>
<td>139.0</td>
<td>135.3</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 30, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020430c.jpg" width="353">
The Chicago Purchasing Manager&#146;s Index of Business activity fell as expected in April, but remained at a level consistent with positive factory sector growth. 
Indexes of new orders, inventories and production fell. 
The prices paid index rose to the highest level since May of last year. The vendor delivery speed index rose slightly. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Barometer</td>
<td>54.7</td>
<td>55.7</td>
<td>39.2</td>
<td>41.4</td>
<td>51.8</td>
<td>56.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>55.4</td>
<td>51.2</td>
<td>55.2</td>
<td>50.5</td>
<td>65.6</td>
<td>57.6</td>
</tr>
</tbody>
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Chain store sales in the latest week retraced all of their surge the prior period, falling 1.7% according to BTM-UBSW. April sales, with only one partial week to go, are 1.0% below the March average. During the last ten years there [...]

Chain Store Sales Disappointing

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020429a.jpg" width="353">
Personal income and spending in March rose as expected. The gains followed strong increases in February that were little revised. 
Wage and salary disbursements rose 0.2% (1.8% y/y) in March following a 0.4% gain the month earlier. 
Personal spending rose moderately, up 5.0% (AR) for the quarter. PCE in chained dollars rose 3.5% in 1Q. 
Disposable income rose 0.5% (4.7% y/y) in March following a 0.7% February gain. 
The PCE price deflator rose 0.2%, its strongest gain since October. Less food and energy the price deflator rose 0.1% for the third straight month.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Personal Income</td>
<td>0.4%</td>
<td>0.6%</td>
<td>2.8%</td>
<td>4.9%</td>
<td>7.0%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.6%</td>
<td>4.2%</td>
<td>5.0%</td>
<td>7.7%</td>
<td>6.7%</td>
</tr>
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<td class="firstcol">Savings Rate</td>
<td>2.2%</td>
<td>2.1%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>1.0%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>0.2%</td>
<td>0.1%</td>
<td>0.8%</td>
<td>1.9%</td>
<td>2.7%</td>
<td>1.6%</td>
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Personal income and spending in March rose as expected. The gains followed strong increases in February that were little revised. Wage and salary disbursements rose 0.2% (1.8% y/y) in March following a 0.4% gain the month earlier. [...]

Personal Income and Spending Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020426a.jpg" width="353">
GDP surged more than expected last quarter owing to a reduced rate of inventory liquidation and surprising resiliency in domestic final demand.
The rate of inventory liquidation eased to $36.2B from $119.3B, adding 3.1 percentage points to GDP growth. Production must be raised in order to slow the rate of inventory decline if demand remains high.
Nevertheless, trade sector deterioration sapped considerably from GDP growth as exports, up 6.8% (AR), lagged imports which rose 15.5%. Service imports surged. 
Domestic final demand growth was more resilient than expected, rising at about the same rate as in 4Q. Real PCE rose 3.5% (AR) versus 6.1% in 4Q. Residential investment surged 15.7% after a 4Q decline and fixed capital investment declined 0.5%, the most moderate rate of decline in six quarters. 
Inflation was tame rising at half the rate expected by Consensus. The PCE deflator rose 0.6% while fixed investment prices fell.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained &#39;96 $, % AR</a></th>
<th scope="col">1Q &#39;02 (Advance)</th>
<th scope="col">4Q &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">GDP</td>
<td>5.8%</td>
<td>1.7%</td>
<td>1.6%</td>
<td>1.2%</td>
<td>4.1%</td>
<td>4.1%</td>
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<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>3.1%</td>
<td>-2.2%</td>
<td>0.0%</td>
<td>-1.1%</td>
<td>-0.2%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.6%</td>
<td>3.8%</td>
<td>1.6%</td>
<td>2.3%</td>
<td>4.3%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.2%</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-0.9%</td>
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<td class="firstcol">Domestic Final Demand</td>
<td>3.7%</td>
<td>3.9%</td>
<td>2.0%</td>
<td>2.3%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>2.3%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Fell Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 26, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020426b.jpg" width="353">
The April reading of Consumer Sentiment from the University of Michigan fell unexpectedly versus March.
Deterioration in sentiment apparently continued throughout the month.
The University of Michigan survey is not seasonally adjusted.
During the past five years there has been a 37% correlation between the level of consumer sentiment and the 3-month % change in real PCE.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">Univ. of Michigan</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Consumer Sentiment</td>
<td>93.0</td>
<td>95.7</td>
<td>5.2%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
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GDP surged more than expected last quarter owing to a reduced rate of inventory liquidation and surprising resiliency in domestic final demand. The rate of inventory liquidation eased to $36.2B from $119.3B, adding 3.1 percentage [...]

1Q GDP Stronger Than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020425a.jpg" width="353">
The employment cost index rose as expected last quarter. This 1Q report was virtually identical in substance to the 4Q report: higher unemployment rates have constrained growth in wages and benefits.
Quarterly gains in compensation peaked in early 2000 when benefits rose 1.9% and wages &amp; salaries rose 1.1%. Since then, quarterly gains in benefit costs have been stable in the 1.1-1.4% range and wages have been in the 0.7-1.0% range. 
Compensation gains in service industries have accelerated moderately during the period while gains in the goods producing sector have slowed considerably.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></th>
<th scope="col">1Q&#39;02</th>
<th scope="col">4Q&#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Compensation</td>
<td>0.9%</td>
<td>1.0%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>4.4%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.9%</td>
<td>0.9%</td>
<td>3.6%</td>
<td>3.7%</td>
<td>3.9%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>1.1%</td>
<td>1.3%</td>
<td>4.9%</td>
<td>5.1%</td>
<td>5.7%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020425b.jpg" width="353">
Initial claims for unemployment insurance fell more than expected as fewer people filed for extended benefits. The prior week&#39;s level was revised up. 
Continuing claims for unemployment insurance, which are unaffected by extended benefits, fell after surging the week prior which was revised down slightly.
The four-week moving average of claims rose to 452,500. 
The insured rate of unemployment fell to 2.9%.

<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">04/20/02</th>
<th scope="col">04/13/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<td class="firstcol">Initial Claims</td>
<td>421.0</td>
<td>452.0</td>
<td>3.7%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,714</td>
<td>34.5%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
Existing Home Sales Fell More than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020425c.jpg" width="353">
Sales of existing single family homes fell more than expected last month, down 8.3% versus February which was revised up slightly. Sales had set a record in January.
Home sales were down sharply in each of the country&#146;s four regions.
The median price of an existing home rose to $153,000 (6.7% y/y). February figures were revised slightly lower.
The figures reflect closings of past sales. 
The average rate on a conventional 30-year mortgage rose to 7.01% last month from 6.89% in February.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;5,400</td>
<td>&nbsp;5,890</td>
<td>-0.7%</td>
<td>5,291</td>
<td>5,159</td>
<td>5,193</td>
</tr>
</tbody>
</table>
Help Wanted Advertising Stayed Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020425d.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising fell slightly in March and remained in the low range it has tracked since October. 
During the past ten years there has been a 75% correlation between the level of help-wanted advertising and the three-month % change in nonfarm payrolls. 
By region, job opportunities improved little across the nation. 
The figures are seasonally adjusted.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Mar&#39;02</th>
<th scope="col">Feb&#39;02</th>
<th scope="col">Mar &#39;01</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nat&#39;l Help Wanted Index</td>
<td>46</td>
<td>47</td>
<td>67</td>
</tr>
</tbody>
</table>
</body>
</html>

The employment cost index rose as expected last quarter. This 1Q report was virtually identical in substance to the 4Q report: higher unemployment rates have constrained growth in wages and benefits. Quarterly gains in compensation [...]

Employment Cost Index Up Moderately

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020424a.jpg" width="353">
Durable goods orders fell unexpectedly last month following a February gain that was revised up.
The report excludes semiconductors because many chip makers declined to supply data. Semiconductors were removed from the January and February figures in order to make comparisons with those months possible. In February, semiconductors accounted for roughly 3 percent of durables orders.
Orders for defense goods surged 17.8% following a 94.2% gain in February. Excluding defense, durable orders fell 1.2% and are down 3.4% since December, but these results exclude semis.
Orders for electrical equipment fell 2.3%, the third sharp decline in four months. Orders for transportation equipment fell 1.6% after higher aircraft orders boosted February 11.2%.
Durable shipments were unchanged after having been down in three of the prior four months.
Durable inventories fell 1.1% and have fallen in each of the last fourteen months.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<td class="firstcol">Durable Goods Orders</td>
<td>-0.6%</td>
<td>2.7%</td>
<td>-6.7%</td>
<td>-12.0%</td>
<td>6.3%</td>
<td>5.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>-2.8%</td>
<td>4.6%</td>
<td>-18.4%</td>
<td>-17.2%</td>
<td>14.4%</td>
<td>3.5%</td>
</tr>
</tbody>
</table>
New Home Sales Down in March 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 24, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020424b.jpg" width="353">
Sales of new single family homes fell slightly last month but February sales were revised higher.
Sales of 880,000 were expected.
Sales were down in each of the country&#146;s regions except the West.
The median price of a new home fell 3.4% to $176,700, +6.3% y/y. February was revised up.
The new home sales data reflect current sales versus the existing home sales figure which reflects closings on past sales. 

<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/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>878</td>
<td>906</td>
<td>-7.9%</td>
<td>909</td>
<td>881</td>
<td>879</td>
</tr>
</tbody>
</table>
</body>
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Durable goods orders fell unexpectedly last month following a February gain that was revised up. The report excludes semiconductors because many chip makers declined to supply data. Semiconductors were removed from the January and [...]

Durable Goods Orders Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020423a.jpg" width="353">
Chain store sales jumped 1.4% last week according to BTM-UBSW, the first meaningful weekly gain since February. Despite the surge, April sales to date are 0.7% below the March average.
Weakness in April sales through the prior week is supported by the Redbook sales figures. Redbook same store sales gains slowed to 2.3% in April from 4.7% in March.
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

<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/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">4/20/02</th>
<th scope="col">4/13/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>406.3</td>
<td>400.8</td>
<td>6.0%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
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Chain store sales jumped 1.4% last week according to BTM-UBSW, the first meaningful weekly gain since February. Despite the surge, April sales to date are 0.7% below the March average. Weakness in April sales through the prior week is [...]

Weekly Chain Store Sales Jump

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<center></center>
The Weekly Leading Index of the US economy, published by the Economic Cycle Research Institute (ECRI), rose slightly in the latest week and is up sharply from the lows set last Fall.
The index is designed to signal turning points in the US economy and is &quot;real time,&quot; i.e. weekly, and not subject to significant revision.
Construction of the ECRI Leading Index is quite different from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
The components of the index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM">ECRI WEEKLY</a></th>
<th scope="col">4/05/02</th>
<th scope="col">3/29/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">ECRI Weekly Leading Index</td>
<td>121.6</td>
<td>121.3</td>
<td>3.1%</td>
<td>-4.5%</td>
<td>0.8%</td>
<td>2.4%</td>
</tr>
</tbody>
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The Weekly Leading Index of the US economy, published by the Economic Cycle Research Institute (ECRI), rose slightly in the latest week and is up sharply from the lows set last Fall. The index is designed to signal turning points in [...]

ECRI Weekly Leading Index Signals Recovery

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020418b.jpg" width="353">
The Composite Index of Leading Economic Indicators rose last month by slightly less than expected. February was little revised. 
60% of the component series contributed to the increase. The breadth of component series gain, itself a leading indicator of the leading indicator series, has narrowed from 90% in December. The six-month diffusion index improved to 75%, its highest since December 1999.
Weekly hours, stock prices, the yield curve and consumer expectations contributed meaningfully to the leaders rise while jobless claims and building permits had large negative contributions.
The Leading index is based on eight previously reported economic data series and two that are estimated.

<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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.1%</td>
<td>0.0%</td>
<td>3.3%</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.2%</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.4%</td>
<td>-0.5%</td>
<td>-5.6%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020418c.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions rose modestly in April, as expected, and remained positive for the fourth consecutive month.
New orders, shipments and unfilled orders rose while delivery lead times eased. Inventories continued to fall. 
The business conditions index reflects a separate survey question, not the components. 
Pricing pressure firmed further versus its low last October.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>12.3</td>
<td>11.4</td>
<td>-11.3</td>
<td>-17.3</td>
<td>8.2</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>7.5</td>
<td>3.0</td>
<td>6.6</td>
<td>-1.0</td>
<td>27.1</td>
<td>10.0</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Surge 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020418a.jpg" width="353">
Initial claims for unemployment insurance rose more than expected from the prior week&#39;s level that was revised up. 
The initial claims figure is for the BLS April survey period, but because folks already receiving unemployment benefits are technically required to re-file for extended benefits, the initial claims figure is artificially raised. 
Continuing claims for unemployment insurance nevertheless surged to the highest level since 1983. This figure is not distorted by filings for extended benefits, except that the rise does indicate that the rate of new job creation is not high. The prior week&#39;s level was revised down slightly.
Correlations between the monthly change in initial jobless claims and nonag payrolls are higher than between continuing claims and payrolls.
The four-week moving average of claims rose sharply to 448,750. 
The insured rate of unemployment rose to 3.0%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">04/13/02</th>
<th scope="col">04/06/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>445.0</td>
<td>444.0</td>
<td>11.8%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,839</td>
<td>46.1%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
</body>
</html>

The Composite Index of Leading Economic Indicators rose last month by slightly less than expected. February was little revised. 60% of the component series contributed to the increase. The breadth of component series gain, itself a [...]

Leading Indicators Up Slightly

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

US consumers much more optimistic than those in the Euro area and the UK

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

There are still 1.4 job openings for every unemployed person in the US

US PCE inflation over the past six months has slowed to the Fed's 2% target

FOMC think rate hikes are done and looks for 75bps of decline in 2024

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

Blue Chip forecasters think Fed will be tighter for longer

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% (+2.7% y/y) during the four weeks ended May 3, 2024, after exhibiting strength since December. The index remained 20.1 % below the cycle peak in the second week of March 2022. During most of that period of time, U.S. factory output has been little changed.

Prices in the miscellaneous group fell 4.9% during the last four weeks and weakened 0.7% y/y. Plywood prices fell 14.4% and by 4.8% y/y. The cost of natural rubber fell 11.2% in four weeks but rose by nearly one-third y/y.

Textile group prices declined 2.5% (-0.7% y/y) in the latest four weeks but had been rising since their low in the second week of November. Cotton prices decreased 15.7% (-9.3% y/y) in the last four weeks but the cost of burlap rose 1.8% (8.0% y/y) in four weeks.

Prices in the crude oil & benzene group weakened 2.1% (+6.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 4.2% in four weeks to $81.28 per barrel, up 11.5% y/y. Prices hit a low of $70.42 in the third week of December. The cost of the petro-chemical benzene, used for making plastics & synthetic fibers, declined 2.7% (+13.4% y/y) in four weeks. Excluding crude oil, the industrial commodity price index rose 0.2% (2.1% y/y) in the latest four-week period.

Offsetting these declines, metals group prices increased 9.8% (7.9% y/y) over the most recent four weeks. Zinc prices rose 17.6% (8.7% y/y) while tin prices improved 15.1% in four weeks, up 20.4% y/y. Copper scrap prices increased 10.4% (15.2% y/y) in the last four weeks and aluminum prices improved 9.6%, rising9.0% y/y. Lead prices improved 8.2% (0.9% y/y) in four weeks while the cost of steel scrap rose 0.3% (-4.2% y/y).

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Lumber & rubber costs have fallen sharply. 
- Cotton prices show protracted decline. 
- Crude oil prices weaken for three weeks.
- Metals price increase, paced by zinc and tin.

FIBER: Industrial Commodity Prices Slip in Latest Four Weeks

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Nonfarm payrolls increased 175,000 (1.8% y/y) in April after rising 315,000 in March, revised from 303,000, and 236,000 in February, revised from 270,000. Expectations had been for a 250,000 rise in the Action Economics Forecast Survey. The three-month average change of 242,000 is the slowest since December of	 last year.

Average hourly earnings increased 0.2% in April after an unrevised 0.3% March gain and a 0.1% uptick in February, revised from 0.2%. The 3.9% y/y earnings increase remains below the 5.9% high in March 2022. It is the weakest rise since June 2021.

The unemployment rate, measured in the household survey, rose to 3.9% and reversed its decline to 3.8% in March. An unchanged 3.8% had been expected. Household employment rose 25,000 after increasing 498,000 in March. The labor force rose 87,000 after a 469,000 March gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons edged up to 7.4%. It was the highest rate since November 2021.

In the **payroll survey**, private-sector employment increased 167,000 (1.7% y/y) in April after rising 243,000 in March. Construction sector employment increased 9,000 (3.3% y/y) last month following a 40,000 March gain. Factory sector jobs rose 8,000 (0.1% y/y) after falling 4,000. Mining & logging sector jobs fell 3,000 (+0.3% y/y) during April after rising 3,000 in March.

Private service-producing sector employment improved 153,000 in April (1.7% y/y) after a 204,000 March rise. Increases varied greatly amongst service sector categories. Education & health service jobs rose 95,000 (4.3% y/y) after rising 88,000 in March while leisure & hospitality employment rose 5,000 (2.3% y/y) after a 53,000 gain. Trade, transportation & utilities employment gained 52,000 (0.7% y/y) after rising 31,000 while financial activities jobs rose 6,000 (0.5% y/y) after rising 5,000 in March. Information sector employment fell 8,000 (-1.4% y/y) following a 4,000 gain and professional & business service jobs decreased 4,000 (0.5% y/y) after a 10,000 March rise. Within that category, the number of temporary jobs fell 16,400 (-6.0% y/y) and have fallen consistently since a March 2022 high.

Government sector payrolls improved a negligible 8,000 last month (2.8% y/y) after increasing 72,000 in March. Local government jobs held steady (2.4% y/y) after rising 51,000 in March and state government employment rose 6,000 (3.7% y/y) after an 11,000 gain. The number of federal government jobs increased 2,000 (2.9% y/y) following a 10,000 rise.

The 0.2% rise in private-sector average hourly earnings reflected a 0.2% gain (5.1% y/y) in the goods-producing sector which followed a 0.6% improvement in March. Earnings in construction strengthened 0.6% (5.2% y/y) while factory sector earnings eased 0.1% (+4.8% y/y). In the private services-sector, earnings rose 0.2% last month (3.7% y/y) after a 0.3% gain. Information sector earnings edged 0.1% higher (3.4% y/y) following a 0.4% improvement. Financial sector earnings increased 0.4% (6.0% y/y) for the third straight month. Private education & health services earnings rose slightly (2.8% y/y) after holding steady in March. Trade, transportation and utilities pay rose 0.1% (3.4% y/y) in April after a 0.2% rise.

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The length of the average workweek in the private sector eased to 34.3 hours in April after rising to 34.4 hours in March. The workweek in the goods-producing sector fell to 39.7 hours, down from a five-month high of 39.9 hours in March. The construction sector average workweek fell to 38.7 hours from 39.3. The factory sector workweek held steady at 40.0 hours for the third straight month while the average workweek in the private service sector was 33.3 hours, also for the third consecutive month. The aggregate weekly hours index in the private sector, a key indicator of production and income, eased 0.1% in April (1.7% y/y) after rising 0.4% in both of the prior two months.

In the **household survey**, the jobless rate climbed to 3.9% as the size of the labor force rose more quickly than employment. The labor force participation rate held steady at 62.7%. The rate for teenagers declined to 37.6%, while for individuals aged 20-24 it rose to 72.4%. For rate for workers aged 25-54, it edged higher to 83.5% but for workers 55 and over, it fell slightly to 38.4 hours.

The employment/population ratio for all workers slipped to 60.2% in April, standing slightly below where it was twelve months earlier. It remained below its high of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Job increase slows to weakest in just over one year.
- Earnings increase moderates.
- Jobless rate moves up as employment increase is negligible.

U.S. Payroll Employment & Wage Growth Moderate in April; Jobless Rate Edges Up

Andrew Cates

**Consensus interest rate forecasts**
Despite heightened concerns about the potential for lower US interest rates in the coming months, recent forecasts still show a broad consensus that an easing cycle will unfold in the period ahead across most major economies. The latest Blue Chip Financial Forecasts survey, for instance, indicates that policy rate reductions of approximately 100 basis points are anticipated from the Fed over the next 12 months. Additionally, the European Central Bank and the Bank of England are expected to implement cumulative cuts of 166 and 111 basis points, respectively, during the same timeframe. In contrast, Japan is expected to see further rate hikes, specifically an increase of 17 basis points over the year ahead.

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**US data surprises and 2 year bond yields**
The anxiety in financial markets about the Fed’s scope to lower interest rates can be largely traced to the US economy’s resilience – and its tight labour market in particular – together with sticky inflation. The former, however, namely economic resilience, has arguably being challenged in recent days by some, though by no means all, US data releases. These include, for example, a weaker-than expected consumer confidence report and ISM survey of manufacturing. Citigroup’s US growth surprise index has, against that backdrop, turned sharply lower.

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**US and euro area data surprises versus the euro**
A corresponding trend has also unfolded in the FX market. While US data have been a little more disappointing this contrasts with euro area data, which have been more resilient. Yet, thanks to still-firm US/Europe yield differentials, the US dollar has remained fairly resilient versus the euro (see chart 3).

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**Japan’s economy**
This week’s disappointing retail sales data from Japan could call into question the scope for further policy rate hikes from the Bank of Japan (BoJ) in the coming months. Retail sales specifically slowed to 1.2% y/y in March from 4.7% in February. That slowdown, moreover, was broadly-based, with reduced sales activity seen across various product categories.

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**Airport traffic in China**
The latest monthly dataflow from China have been a little more upbeat but that was not the message from this week’s official PMI surveys for April. Other less widely monitored data are also yielding sobering messages about the current economic environment. For instance, while aircraft movements at Beijing Airport have risen from their low points, they still remain well below pre-COVID pandemic levels (see chart 5). Similarly, specific data on cargo volumes and passenger traffic lead to the same conclusion.

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**Global warming and water levels**
Finally, on more structural matters, climate change continues to generate profound shifts in the economic landscape, influencing everything from agricultural productivity to energy markets and global supply chains. One manifestation of these shifts is low water levels in many areas and for example, in the Panama Canal. More specifically Gatun Lake has seen prolonged drought conditions, exacerbated by the El Niño phenomenon and broader climate change anomalies. The drought has resulted in lower-than-average rainfall and delayed rainy seasons, leading to reduced water availability not only for canal operations but also for over half of Panama's population relying on this water source. To that supply chain point above, the canal has also had to reduce the number of ships it can accommodate per day.

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Lingering concerns about the US Fed's inclination to lower interest rates in coming months have continued to unsettle financial markets over the past few days. That said, comments from Fed Chair Powell after this week’s FOMC meeting have calmed some of those nerves. In our charts this week we delve into the latest Blue Chip consensus on policy rates across the world’s major economies (chart 1). We also compare market expectations for US policy rates, inferred from 2-year Treasury yields, with a trend toward more negative US data surprises in recent days (chart 2). In addition we contrast that more negative US growth trend with the relative resilience of the euro area dataflow and some recent downward pressure on the EUR/USD exchange rate (chart 3). Turning to Asia, we assess Japan's economy with a focus on some recent disappointing retail sales data (chart 4), and provide insights into China's economic activity through aircraft movements at Beijing Airport (chart 5). Finally, and with a nod to climate change and its impact, we look at reduced water levels on the Panama Canal and how these contrast with above-average land and sea temperatures over the past few years (chart 6).

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/1UGzrkribMM4URLI6yDhWG?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Policy Surprises Versus Data Surprises

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The U.S. trade deficit in goods and services (BOP basis) of $69.4 billion in March compared to a $69.5 billion in February, revised from $68.9 billion, and an unrevised $67.6 billion in January, according to the U.S. Census Bureau. The deficit remained nearly the largest since April 2023 which was $72.2 billion. A $69.1 billion deficit had been expected in the Action Economics Forecast Survey. Exports fell 2.0% and were roughly unchanged y/y, reversing a 2.2% February rise. Imports declined 1.6% (+3.1% y/y) in March, following three straight months of moderate gain.

The deficit in goods trade (BOP basis) increased to $92.5 billion in March from $91.7 billion in February. Goods exports fell 2.9% (-2.8% y/y) after rising 2.8% in February. Imports of goods declined 1.6% (+2.5% y/y) following three straight monthly increases. The services trade surplus increased to $23.1 billion in March from $22.2 billion in February but remained down from a peak surplus of $25.2 billion last August. Services exports eased 0.2% (+6.0% y/y) following four consecutive monthly increases. Services imports declined 1.7% (+5.4% y/y) after rising 4.7% in February.

The real (inflation-adjusted) goods trade deficit (customs value; chained 2017 dollars), widened to $88.6 billion in March, the largest deficit since April of last year, from $87.4 billion in February. Real exports of goods declined 3.2% (-0.7% y/y) after rising 2.0% in February. Real imports of goods fell 1.5% (+2.5% y/y) after three straight monthly increases. In the first quarter of this year, a widening of the trade deficit (net exports) subtracted 0.86 percentage points from GDP growth after adding 0.25 percentage points to growth in Q4 2023.

The customs value goods trade deficit widened to $91.5 billion in March from $90.5 billion in February. The latest figure compared to a $91.8 billion deficit in the advance report released on April 25. Customs value exports fell 3.0% (-1.7% y/y) in March after a 2.8% February increase. Automotive vehicles, parts & engines rose 0.6% (-1.7% y/y) while nonfood consumer goods excluding autos declined 1.8% (-5.1% y/y). Capital goods exports excluding autos weakened 3.7% (+3.1% y/y) while exports of industrial supplies & materials fell 3.0% (-4.1% y/y). Foods, feeds & beverages exports were off 8.2% (-1.5% y/y).

Customs value imports of goods declined 1.6% (+2.6% y/y) in March after increasing for three straight months. Automotive vehicles, parts & engines imports fell 11.1% (+6.1% y/y) while capital goods imports excluding autos rose 0.1% (7.4% y/y). Foods, feeds & beverage imports declined 3.5% (+5.2% y/y). Imports of industrial supplies & materials fell 2.9% (-7.0% y/y) but nonfood consumer goods excluding autos rose 4.8% (4.1% y/y). Meanwhile, petroleum imports declined 2.5% and were unchanged y/y in March, following a 1.6% February rise. Nonpetroleum imports weakened 1.5% (+2.8% y/y) following three straight monthly increases.

The rise in services exports reflected a 0.7% increase (12.4% y/y) in personal, cultural & recreational services and a 1.3% decline (+24.9% y/y) in travel services exports. Exports of construction services declined 1.3% (+2.6% y/y) while government goods & services exports declined 0.9% (-23.0% y/y). The increase in services imports was due to construction services imports which rose 1.0% (35.1% y/y) but travel services imports fell 2.6% (+21.7% y/y). Imports of transport services declined 5.8% (-0.1% y/y) while charges for the use of intellectual property eased 0.1% (+3.2 y/y) in March.

The U.S. goods trade deficit with China widened to a seasonally adjusted $24.1 billion in March from $21.9 billion in February. Exports fell 3.6% (-10.3% y/y) while imports rose 4.8% (unchanged y/y). The goods trade deficit with the European Union deepened to $19.5 billion from $17.6 billion in February as exports fell 3.4% (-6.4% y/y), off for the third straight month, and imports rose 1.8% (4.2% y/y). The trade deficit with Japan narrowed to a seasonally adjusted $5.3 billion in March after narrowing to $6.2 billion in the previous month. Exports declined 1.9% (+3.0% y/y) while imports fell 8.7% (-2.2% y/y).

The international trade data, including relevant data on oil prices, can be found in Haver's **USECON** database. Detailed figures on international trade are available in the **USINT** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Exports and imports both fall.
- Adjusted for inflation, goods trade deficit increases to eleven-month high.
- Goods trade deficits with China & Europe deepen.

U.S. Trade Deficit Deepens in March

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The Commerce Department reported that inventories in the factory sector remained unchanged (0.6% y/y) during March after a 0.2% February rise. Transportation equipment inventories held steady (6.9% y/y). Furniture inventories increased 0.3% (-4.4% y/y) while electrical equipment inventories dropped 0.4% (-0.5% y/y). Amongst nondurable goods industries, petroleum inventories were 0.5% higher (2.6% y/y) and plastics & rubber inventories rose 0.2% (-4.8% y/y). These changes were accompanied by a 0.5% rise (-1.7% y/y) in apparel. Basic chemical inventories were unchanged (-0.6% y/y) for a second consecutive month while paper product inventories gained 0.2% (-2.6% y/y).

Orders to all manufacturers improved 1.6% (1.7% y/y) in March following a 1.2% February rise. The gain was led by a 2.6% rise (1.2% y/y) in durable goods orders, as commercial aircraft surged 30.6% (-50.9% y/y) in. New orders excluding transportation gained 0.5% (1.6% y/y). Orders for nondurable goods (which equal shipments) rose 0.6% (2.1% y/y). The rise reflected a 1.5% increase (4.9% y/y) in shipments from oil refineries and a 0.7% gain (2.1% y/y) in basic chemicals. Orders for textile products declined 1.4% (-1.7% y/y) and apparel orders fell 0.2% (-1.9% y/y). Orders for food products rose 0.2% (-0.3% y/y). Paper product shipments held steady (-2.0% y/y).

Unfilled orders improved 0.4% in March (9.1% y/y) and, excluding the transportation sector, they eased 0.1% (-0.9% y/y). Backlogs of electrical equipment slipped 0.1% (+0.7% y/y). Unfilled orders in the machinery sector eased 0.3% (-3.9% y/y) and unfilled orders for transportation equipment rose 0.7% (15.5% y/y). Unfilled orders of furniture rose 0.6% (-5.6% y/) and fabricated metals backlogs were off 0.1%, unchanged y/y.

The factory sector figures are available in Haver's **USECON** database.

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- Inventories levels are flat.
- Order improvement led by aircraft.
- Unfilled orders rise.

Economy in Brief: April 2002

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