Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020930a.jpg" width="353">
Personal income (4.7% AR, YTD) rose slightly less than expected last month. July&#39;s figure was unrevised. Consensus expectations were for a 0.5% gain.
Wage and salary disbursements (2.7% AR, YTD) rose 0.5% and recouped the 0.3% July decline. Gains amongst industries were widespread though manufacturing wages remained down 2.9% versus last year. Personal transfer payments have risen at a 11.4% annual rate so far this year.
Personal consumption expenditures rose less than expected. Durable goods purchases rose 1.4%, but purchases of nondurables and services were weak, both rising just 0.2%.
Disposable income rose 0.4% (9.6% AR, YTD). Personal tax payments fell for the seventh month this year. 
The PCE price deflator rose 0.2% following a 0.1% rise in July which was revised down. Prices were up 2.3% (AR, YTD). Less food and energy, the price deflator rose 0.3% (1.9% AR, YTD), the strongest monthly gain since April. 

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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">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.4%</td>
<td>0.0%</td>
<td>3.5%</td>
<td>3.3%</td>
<td>8.0%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.3%</td>
<td>1.0%</td>
<td>5.1%</td>
<td>4.5%</td>
<td>7.0%</td>
<td>6.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>3.6%</td>
<td>3.5%</td>
<td>4.5%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.5%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Below 50 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 30, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020930b.jpg" width="353">
The Chicago Purchasing Manager&#146;s Index of Business activity dropped more than expected in September. Consensus estimates were for slight decline to 53.0. 
It was the first month since January the business activity index dropped below 50, the cutoff between expanding and contracting activity. An 87% correlation between the Chicago PMI and the ISM Composite Index suggests that index may be weak when released tomorrow.
The indexes of new orders, production, order backlogs, inventories and delivery speeds all fell. Employment rose. 
The prices paid index fell sharply to the lowest level since April.

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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">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>48.1</td>
<td>54.9</td>
<td>44.9</td>
<td>41.4</td>
<td>51.8</td>
<td>56.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>57.6</td>
<td>63.6</td>
<td>42.0</td>
<td>50.5</td>
<td>65.6</td>
<td>57.6</td>
</tr>
</tbody>
</table>
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Personal income (4.7% AR, YTD) rose slightly less than expected last month. July's figure was unrevised. Consensus expectations were for a 0.5% gain. Wage and salary disbursements (2.7% AR, YTD) rose 0.5% and recouped the 0.3% July [...]

Personal Income and Spending Moderate

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020927a.jpg" width="353">
GDP growth last quarter was revised slightly higher due to lessened deterioration in the trade deficit. Revisions elsewhere were minor.
Domestic final demand growth of 1.3% was unrevised. Growth in consumer spending (1.8%) and capital spending on equipment (3.3%) were little revised and offset another sharp decline in business spending on structures (-17.6%).
Trade sector deterioration was lessened due to a raised estimate of exports (14.3%, AR). Imports surged 22.2%.
Production increases to slow the rate of inventory decumulation were little revised. 
Corporate profits with IVA and CCA adjustments fell 6.2% (AR) and were little revised. It was the second consecutive quarterly decline near that rate. After tax profits rose 6.9% (AR), strong for the second consecutive quarter.
Estimated inflation was little revised at half last year&#39;s pace.
For a report from the St. Louis Fed on measuring recession severity, click <a href="http://research.stlouisfed.org/publications/mt/2002/cover9.pdf">here</a>.
For another St. Louis Fed report which asks whether it was a recession, click <a href="http://research.stlouisfed.org/publications/net/2002/cover8.pdf">here</a>.

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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">2Q&#39;02 (Final)</th>
<th scope="col">2Q&#39;02 (Prelim.)</th>
<th scope="col">1Q&#39;02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">GDP</td>
<td>1.3%</td>
<td>1.1%</td>
<td>5.0%</td>
<td>2.2%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>1.3%</td>
<td>1.4%</td>
<td>2.6%</td>
<td>0.6%</td>
<td>-1.2%</td>
<td>0.1%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>3.7%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.4%</td>
<td>-1.7%</td>
<td>-0.8%</td>
<td>-0.6%</td>
<td>-0.1%</td>
<td>-0.6%</td>
<td>-0.9%</td>
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<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.3%</td>
<td>1.3%</td>
<td>3.0%</td>
<td>2.2%</td>
<td>1.6%</td>
<td>4.3%</td>
<td>5.2%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>1.2%</td>
<td>1.1%</td>
<td>1.3%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
 Consumer Sentiment Down in September 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 27, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020927b.jpg" width="353">
Consumer Sentiment for all of September month according to the University of Michigan came in near the mid-month reading. Sentiment fell 1.7% (m/m) and that was the sixth monthly decline this year.
Indexes of consumer expectations and current conditions fell. Both are down roughly 3% YTD. 
The University of Michigan survey is not seasonally adjusted.
For a discussion of consumer confidence and sentiment in the aftermath of September 11th click <a href="http://www.kc.frb.org/Publicat/econrev/er02q2.htm#consumer">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Sept.</th>
<th scope="col">Aug</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>86.1</td>
<td>87.6</td>
<td>5.3%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
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</tbody>
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GDP growth last quarter was revised slightly higher due to lessened deterioration in the trade deficit. Revisions elsewhere were minor. Domestic final demand growth of 1.3% was unrevised. Growth in consumer spending (1.8%) and capital [...]

2Q GDP Growth Revised Up Slightly to 1.3%

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020926a.jpg" width="353">
Durable goods orders fell a slight 0.6% last month. Consensus expectations were for a steep 3.0% decline following an 8.6% July jump that was little revised.
Much of the recent volatility in orders has been due to the transportation sector where aircraft (defense and nondefense) orders fell sharply in June, then more than doubled in July but fell just slightly last month. Orders excluding transportation equipment fell 0.9% last month but have worked 2.2% higher YTD.
Orders for nondefense capital goods surged for the second straight month. Excluding aircraft and parts orders added 0.6% to a 7.0% July gain.
Orders for computers and electronic products fell 0.3% (-0.8% YTD) following a 3.6% July surge. Machinery orders fell 2.5% after a sharp 10.4% July rise. Orders for electrical equipment rose for the first month in four (-1.3% YTD).
Orders for defense goods jumped 28.9% (14.8% YTD). Excluding defense, durable orders rose 0.6% (6.0% YTD) following a 7.0% July spurt.
Shipments of durable goods fell 1.3% (3.2% YTD), the third decline in four months.
Durable inventories fell 0.2% (-4.1% YTD), the nineteenth consecutive monthly decline.

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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">Aug</th>
<th scope="col">July</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">Durable Goods Orders</td>
<td>-0.6%</td>
<td>8.6%</td>
<td>4.4%</td>
<td>-11.4%</td>
<td>3.3%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>5.9%</td>
<td>12.5%</td>
<td>6.4%</td>
<td>-16.5%</td>
<td>7.9%</td>
<td>3.9%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Fall 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 26, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020926b.jpg" width="353">
Initial claims for unemployment insurance were lower than expected in the latest week, falling 24,000 from the prior week which was revised higher.
The four-week moving average fell slightly to 419,000, up 10.1% from the recent low set in early August.
Continuing claims for unemployment insurance rose a sharp 2.5%, the third consecutive weekly rise but the prior week&#39;s level was revised down. Continuing claims have risen 5.8% since the weekly low of this past July.
The weekly insured rate of unemployment rose to 2.9%, the highest level since June.

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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">9/21/02</th>
<th scope="col">9/14/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Initial Claims</td>
<td>406.0</td>
<td>430.0</td>
<td>-11.2%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,678</td>
<td>12.3%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
New Home Sales Another Record 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 26, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020926c.jpg" width="353">
Sales of new single family homes last month were stronger than Consensus expectations for a 980,000 sales rate. July figures were revised sharply lower leaving August as the new record sales rate.
Sales were mixed across the country&#146;s regions. Sales rose sharply in the West and modestly in the South. Sales fell in the Northeast (for the fifth month this year, down 19.7% from the peak) and were unchanged in the Midwest.
The median price of a new home rose 1.6% to $175,300 (0.9% y/y). Prices in July were revised up slightly.
The new home sales data reflect current sales versus the existing home sales figure which reflect closings on past sales. 

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<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">Aug</th>
<th scope="col">July</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">New Single-Family</td>
<td>996</td>
<td>977</td>
<td>14.4%</td>
<td>908</td>
<td>880</td>
<td>879</td>
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</tbody>
</table>
Help Wanted Advertising Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 26, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020926d.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising in August continued the recent slide. The index has fallen materially in four of the last six months and was down 6 points, or 12.8%, from yearend 2001.
The proportion of labor markets with rising want-ad volume fell to 18%, the lowest level since October.
During the last five years there has been a 77% correlation between the level of help-wanted advertising and the monthly change in nonfarm payrolls. 
Job opportunities deteriorated in each of the regions of the country except the West South Central where they improved slightly m/m but remained depressed YTD.
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">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;01</th>
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</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>41</td>
<td>44</td>
<td>53</td>
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</tbody>
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Durable goods orders fell a slight 0.6% last month. Consensus expectations were for a steep 3.0% decline following an 8.6% July jump that was little revised. Much of the recent volatility in orders has been due to the transportation [...]

Durable Goods Orders Down Just Slightly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020925b.jpg" width="353">
Sales of existing single family homes were weaker than expected in August. July&#39;s solid gain was revised up slightly. Sales have fallen in five months of this year, and August sales were 12.7% below the record pace set in January.
Sales through August were 4.3% above sales during the first eight months of 2001.
Home sales in each of the country&#146;s regions fell except the West.
The median price of an existing home rose 0.7% to $163,600 (6.4% y/y).
The figures reflect closings of past sales. 
The average rate on a conventional 30-year mortgage fell to 6.29% last month versus 6.97% averaged during all of last year.

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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">Aug</th>
<th scope="col">July</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">Existing Single-Family</td>
<td>&nbsp;5,280</td>
<td>&nbsp;5,370</td>
<td>0.6%</td>
<td>5,291</td>
<td>5,159</td>
<td>5,193</td>
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Sales of existing single family homes were weaker than expected in August. July's solid gain was revised up slightly. Sales have fallen in five months of this year, and August sales were 12.7% below the record pace set in January. [...]

Existing Home Sales Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020924b.jpg" width="353">
Chain store sales slumped 1.7% last week according to the BTM-UBSW survey. The week-to-week drop in sales was the largest since one in late April. It followed two weeks during which sales were virtually unchanged.
Sales in the first three weeks of September were 0.6% below the August average. August sales fell 0.9% versus July.
During the last five years there has been a 44% correlation between the year-to-year percent change in chain store sales as reported by BTM-UBSW and the level of consumer confidence as reported by the Conference Board.

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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">9/21/02</th>
<th scope="col">9/14/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>404.2</td>
<td>411.2</td>
<td>2.7%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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</tbody>
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Consumer Confidence Down Modestly 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 24, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020924c.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence fell slightly less than expected in September, to 93.3. Consensus expectations were for a reading in the 92.0-93.0 range. August&#39;s level was revised up to 94.5 from 93.5 reported last month.
The decline reflected a lower reading of the present situation, which fell for the sixth month this year. The expectations component of confidence rose 1.0%, the first gain since a slight 0.1% up tick in May.
The decline in Consumer Confidence was in line with the 1.6% m/m decline in the Consumer Sentiment reading from the University of Michigan. 
During the last five years there has been an 88% correlation between the level of Consumer Confidence and the y/y percent change in payroll employment. 
The Conference Board&#39;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</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">Consumer Confidence</td>
<td>93.3</td>
<td>94.5</td>
<td>-18.0%</td>
<td>106.6</td>
<td>139.0</td>
<td>135.3</td>
</tr>
</tbody>
</table>
Fed Leaves Interest Rates Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 24, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020924d.jpg" width="353">
The Federal Reserve left the Federal Funds Target Rate unchanged at 1.75%, as expected. 
The press release, which accompanied the Fed&#146;s action, contained the following statement. &quot;Over time, the current accommodative stance of monetary policy, coupled with still robust underlying growth in productivity, should be sufficient to foster an improving business climate. However, considerable uncertainty persists about the extent and timing of the expected pickup in production and employment owing in part to the emergence of heightened geopolitical risks.&quot;
The complete text of the Fed&#39;s latest press release can be viewed <a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2002/20020924/default.htm">here</a>.

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Chain store sales slumped 1.7% last week according to the BTM-UBSW survey. The week-to-week drop in sales was the largest since one in late April. It followed two weeks during which sales were virtually unchanged. Sales in the first [...]

Weekly Chain Store Sales Slump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020923a.jpg" width="353">
The Composite Index of Leading Economic Indicators, reported by the Conference Board, fell as expected last month. It was the third decline in as many months and the fourth decline in the last five. July figures were revised to show less of a decline versus the previously reported 0.4% decline.
Only 30% of the leaders&#39; component series rose last month versus 50% that rose in July and June. It was the weakest breadth-of-gain since September and pulled the six-month diffusion index to 55%. Higher claims for jobless insurance, weaker vendor performance, lower orders for capital goods and a narrower yield curve had the largest negative influences on the leading index. Stock prices and the money supply rose.
The ratio of coincident-to-lagging indicators rose, reversing all of a July decline. The ratio is an indicator of excess relative to actual economic performance.
The coincident indicators rose for the sixth consecutive month and the six-month rate of change was a positive 1.2%. The lagging indicators resumed a decline that began in late 2000. The lagging index is down 7.3% since its peak.
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">Aug</th>
<th scope="col">July</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>-0.2%</td>
<td>-0.1%</td>
<td>2.0%</td>
<td>-0.7%</td>
<td>1.1%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>3.4%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>-3.8%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
</body>
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The Composite Index of Leading Economic Indicators, reported by the Conference Board, fell as expected last month. It was the third decline in as many months and the fourth decline in the last five. July figures were revised to show [...]

Leading Indicators Down For Third Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020920a.jpg" width="353">
Oil prices recently have leveled off just below the $30.00 per barrel level for West Texas Intermediate crude, but strength in the energy market still is apparent in the more than 60% rise in prices since the end of last year.
Wholesale gasoline prices have risen a similar amount this year, and very recent gains have brought the year to date rise in fuel oil prices to near 60%.
Through August, the CPI for energy had risen 8.8% YTD. Piped gas and electricity costs as measured in the CPI were down year to date, but wholesale natural gas prices were up 65% from the weekly low in late 2001.

<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/daily/@D3/@D306/@D30604/@D30604.HTM">Daily Crude Oil Prices</a></th>
<th scope="col">9/13/02</th>
<th scope="col">8/9/02</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">West Texas Intermediate Crude Oil</td>
<td>$29.58</td>
<td>$26.78</td>
<td>3.1%</td>
<td>$25.97</td>
<td>$30.34</td>
<td>$19.34</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deepened in August 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020920b.jpg" width="353">
The August US budget deteriorated as expected. A monthly deficit of $55.0B had been expected versus last year&#39;s August deficit of $80.0B. Deficits are typical for August. Nevertheless, the August fiscal year-to-date deficit was the deepest since 1994. 
Receipts fell m/m for the second straight month and continued on a pace toward a double-digit decline for the year. Individual tax payments fell 16.0% versus last fiscal YTD. Fiscal YTD corporate tax receipts fell 18.4%. Social Insurance taxes rose 0.9% fiscal YTD but the growth rate has slowed from a norm of 6-7% logged as recently as last fiscal year. 
Federal expenditures rose sharply m/m, up 6.9% versus last fiscal YTD. Defense spending continued strong rising 13.8% versus last fiscal YTD. Transportation spending also rose a strong 18.8% and spending on education surged 20.7%. Spending on health programs rose 13.7% and income security was up 15.1%. Spending fell 15.9% for interest and fell 1.7% for Social Security.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Fiscal YTD</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">Budget Balance</td>
<td>$-54.7B</td>
<td>$-29.2B</td>
<td>$-200.2B</td>
<td>$127.1B</td>
<td>$236.4B</td>
<td>$125.5B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$124.6B</td>
<td>$134.4B</td>
<td>-9.4%</td>
<td>-1.7%</td>
<td>10.8%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$179.3B</td>
<td>$163.6B</td>
<td>6.9%</td>
<td>4.2%</td>
<td>5.1%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Oil prices recently have leveled off just below the $30.00 per barrel level for West Texas Intermediate crude, but strength in the energy market still is apparent in the more than 60% rise in prices since the end of last year. [...]

Crude Oil Prices Strong

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020919a.jpg" width="353">
Housing starts were weaker than expected last month. Total starts fell 2.2% from July which was revised slightly lower due to lowered single-family starts. It was the third consecutive monthly decline in starts. 
Housing starts were down 10.0% versus the recent peak in February.
Single family starts fell 4.4% from the previous month and fell during five of the last six months. Single-family starts were down 14.% from the February peak. 
Multi-family starts rose after two months of decline. Versus a March peak, multi-family starts were down 5.3%. 
Building permits fell 2.5%, down for the first month since March. Permits for single family homes rose for the fourth month in five. Permits for 5-or-more-unit structures slumped 18.5% m/m.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,609</td>
<td>1,645</td>
<td>3.0%</td>
<td>1,603</td>
<td>1,573</td>
<td>1,647</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,252</td>
<td>1,309</td>
<td>-1.7%</td>
<td>1,273</td>
<td>1,232</td>
<td>1,306</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>357</td>
<td>336</td>
<td>24.0%</td>
<td>330</td>
<td>341</td>
<td>341</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Fell Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020919b.jpg" width="353">
Initial claims for unemployment insurance were higher than expected in the latest week, though they declined slightly from the prior week which was revised higher.Claims fell 9,000 versus the prior week but they have risen 15.8% versus the weekly low of this past July.
The four-week moving average rose to 418,500, up 10.0% from the recent low.
Continuing claims for unemployment insurance rose 2.0% but the prior week&#39;s level was revised down. Continuing claims have risen 4.0% since the weekly low of this past July.
The weekly insured rate of unemployment was stable at 2.8% for the fourth consecutive week.

<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">9/14/02</th>
<th scope="col">9/07/02</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>424.0</td>
<td>433.0</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>3,615</td>
<td>11.9%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020919c.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions for September improved about as expected, but only slightly.
New orders and shipments turned positive after the one month drops to negative in August, but unfilled orders remained negative for the third straight month. Inventories continued to run off after a one month turn to positive in August.
The business conditions index reflects a separate survey question, not the components. 
The prices paid index fell modestly, but remained quite positive as it has since March.

<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">Sept</th>
<th scope="col">Aug</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>2.3</td>
<td>-3.1</td>
<td>-8.8</td>
<td>-17.3</td>
<td>8.2</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>19.6</td>
<td>23.9</td>
<td>-13.3</td>
<td>-1.0</td>
<td>27.1</td>
<td>10.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Housing starts were weaker than expected last month. Total starts fell 2.2% from July which was revised slightly lower due to lowered single-family starts. It was the third consecutive monthly decline in starts. Housing starts were [...]

Housing Starts Fell Again

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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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.

240503C4.jpg

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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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240503F4.jpg

- 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.

240502Z1.jpg

**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.

240502Z2.jpg

**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).

240502Z3.jpg

**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).

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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.

U.S. Factory Inventories Hold Steady While Orders Rise in March

Kathleen Stephansen, CBE

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Nonfarm business sector productivity increased 0.3% (SAAR) during Q1’24, following upwardly revised gains of 3.5% in Q4’23 and 4.6% in Q3’23. The rises in productivity were originally reported as being 3.4% in Q4 and 4.4% in Q3. Expectations had been for a 0.8% rise in the Action Economics Forecast Survey. On a year-on-year comparison, Q1 productivity rose 2.9%, up from 2.7% in Q4 and 2.4% in Q3. The y/y gain was the quickest since 2020. Real value-added output rose 1.3% (SAAR) (3.2% y/y) in Q1 from a 3.8% (3.3% y/y) gain in Q4.

Hours-worked in the nonfarm business sector rose 1.0% (0.3% y/y) in Q1 from a 0.2% (0.6% y/y) rise in Q4. Nonfarm hourly compensation increased 5.0% (4.7% y/y) in Q1 from a 3.5% gain (5.2% y/y) in Q4. Adjusted for price inflation, real compensation per hour rose 1.1% (1.5% y/y) in Q1, following a 0.8% (1.9% y/y) rise in Q4.

Weaker productivity brought an acceleration in unit labor costs to 4.7% (1.8% y/y) in Q1 after a 0.0% (2.4%) rise in Q4. The Action Economics Forecast Survey called for a 2.3% quarterly rise in unit labor costs.

In the manufacturing sector, real output per hour slowed to a rise of 0.2% (1.2% y/y) last quarter after a gain of 2.4% (0.9% y/y) in Q4. Manufacturing output was unchanged over the quarter (-0.1% y/y) after declining 1.0% (-0.2% y/y) in Q4. Hours-worked declined 0.2% (-1.3% y/y) in Q1 after a drop of 3.3% (-1.1% y/y) in Q4.

Compensation per hour in manufacturing slowed to a gain of 3.4% (6.3% y/y) last quarter following a rise of 6.8% (6.7% y/y) in Q4. Real compensation declined 0.4% (3.0% y/y) in Q1, after a rise of 4.0% (3.4% y/y) in Q4. Unit labor costs in manufacturing slowed to a rise of 3.2% (5.0% y/y) in Q1 following a gain of 4.2% (5.8% y/y) the prior quarter.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Productivity slows in Q1.
- Unit labor costs rise sharply.
- Slowdown in factory productivity and unit labor cost growth.

Economy in Brief: September 2002

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