Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030827a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell last week to the lowest level since June of last year. The index of all mortgage applications fell 13.3% last week pulling the average for this month so far down 51.6% from the monthly peak in late May.
Applications to refinance continued to plummet. They fell 21.3% last week and are down 78.3% from the weekly peak in late May.
Purchase applications also have fallen, but not as drastically. Last week mortgage applications for home purchase fell 3.6%. For the month so far purchase applications are down 5.8% from the July average which was the peak.
During the last ten years there has been a 55% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Interest rates on a conventional 30-Year mortgage were about steady last week at 6.48%. That was versus a low for 30-Year financing of 5.31% in the second week of June. The effective rate on a 15-year mortgage was 5.86%.
The average size of mortgage applications has been falling. Purchase application size fell to $193,600 last week versus the weekly peak of $201,200 in mid-May. The average size of a mortgage refinancing fell to $166,700, down 14.3% from the peak of $194,600.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders.
Visit the Mortgage Bankers Association site at <a href="http://www.mbaa.org/">www.mbaa.org.</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">8/22/03</th>
<th scope="col">8/15/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>638.6</td>
<td>736.7</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>375.5</td>
<td>389.5</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,169.0</td>
<td>2,756.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
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The index of mortgage applications compiled by the Mortgage Bankers Association fell last week to the lowest level since June of last year. The index of all mortgage applications fell 13.3% last week pulling the average for this month [...]

Mortgage Applications Fell Further

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030826e.jpg" width="353">
The IFO index that measures overall business confidence in West Germany rose from 89.3 in Julyto 90.8 in August, the highest level since June, 2002. Businesses reported improved confidence in their current situation and in the expectations for the next six months.. Businesses in East Germany also reported an improvement in overall confidence--the result of an increase in confidence regarding current conditions, and a slight decline in confidence regarding expectations for the next six months.. The rise in the confidence of investors reported earlier this month in the ZEW measure and now the improvement in business confidence as reflected in the IFO indexes suggest that business activity in Germany may be about to pick up after declines of 0.2% and 0.1% in GDP the first and second quarters of this year. In addition to low interest rates and the proposed income tax reductions scheduled for 2004 that have contributed to the improved economic atmosphere, the recent decline in the Euro by almost 10% from its May 27 peak is another bright spot.

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<th scope="col" class="firstcol"></th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
Percent Change
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
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</thead>
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<td class="firstcol"></td>
<td>Aug 03</td>
<td>July 03</td>
<td>Aug 02</td>
<td>M/M</td>
<td>Y/Y</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
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<td class="firstcol">West Germany</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">&nbsp;Business Climate</td>
<td>90.8</td>
<td>89.3</td>
<td>88.6</td>
<td>1.68</td>
<td>2.48</td>
<td>89.1</td>
<td>89.8</td>
<td>99.3</td>
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<td class="firstcol">&nbsp;Current Conditions</td>
<td>79.9</td>
<td>78.7</td>
<td>77.2</td>
<td>1.52</td>
<td>3.50</td>
<td>77.6</td>
<td>85.1</td>
<td>93.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Business Expectations</td>
<td>102.1</td>
<td>100.2</td>
<td>100.3</td>
<td>1.90</td>
<td>1.79</td>
<td>101.0</td>
<td>94.7</td>
<td>105.6</td>
</tr>
<tr>
<td class="firstcol">East Germany</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">&nbsp;Business Climate</td>
<td>104.1</td>
<td>103.1</td>
<td>98.9</td>
<td>0.97</td>
<td>5.26</td>
<td>98.6</td>
<td>101.3</td>
<td>106.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Current Conditions</td>
<td>123.3</td>
<td>121.1</td>
<td>115.3</td>
<td>1.82</td>
<td>6.94</td>
<td>114.3</td>
<td>120.7</td>
<td>124.2</td>
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<td class="firstcol">&nbsp; Business Expectations</td>
<td>85.9</td>
<td>86.2</td>
<td>83.3</td>
<td>-0.35</td>
<td>3.12</td>
<td>83.7</td>
<td>83.1</td>
<td>88.7</td>
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The IFO index that measures overall business confidence in West Germany rose from 89.3 in Julyto 90.8 in August, the highest level since June, 2002. Businesses reported improved confidence in their current situation and in the [...]

West German IFO Index Rises to 14-Month High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030826a.jpg" width="353">
Durable goods orders added another 1.0% in July to the upwardly revised 2.6% gain in June. The gain matched Consensus expectations for a 1.0% rise.
A 5.5% jump for motor vehicles &amp; parts powered the July orders gain. However, for the transportation sector as a whole orders fell 0.8% due to a 14.6% drop in aircraft orders which reversed a 10.9% jump in June. Excluding the transportation sector, durable orders rose 1.7% (1.7% y/y) following a little revised 1.5% gain in June.
Nondefense capital goods orders added 1.2% to the 3.8% June gain. Excluding aircraft and parts, nondefense capital goods orders rose 0.4% (5.0% y/y). That followed a 2.1% gain in June, revised up from 0.6% reported initially.
During the last nine years there has been an 86% correlation between the y/y change in nondefense capital goods orders and the change in nonresidential investment in equipment &amp; software. There has been a 96% correlation between the change in shipments of these capital goods and investment.
Orders for computers &amp; electronic products were robust for the fifth month this year, up 1.9% (9.3% y/y) in July. Orders for computers &amp; related products surged 2.4% (24.3% y/y). Machinery orders advanced 1.8% (-2.1% y/y) for the second consecutive strong monthly gain.
Shipments of durable goods jumped 2.6% (-0.1% y/y) on top of an upwardly revised 1.7% gain in June. Durable goods shipments were up 4.9% YTD.
Durable inventories fell sharply again, last month down 0.9% (-3.2% y/y). Inventory decumulation was across the board.

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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">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">Durable Goods Orders</td>
<td>1.0%</td>
<td>2.6%</td>
<td>-2.0%</td>
<td>-1.7%</td>
<td>-10.5%</td>
<td>3.2%</td>
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<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>1.2%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>-7.2%</td>
<td>-15.5%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030826b.jpg" width="353">
Chain store sales rose 0.2% last week according to the BTM-UBSW survey, partially recovering a 0.5% decline the week earlier.
The level of sales in August, with the just one week left to tally, is 0.9% above the July average. July sales rose 1.4% from June.
During the last five years there has been a 62% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM-UBSW retail chain-store sales index is constructed from the sales results reported by seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

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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">8/23/03</th>
<th scope="col">8/16/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>426.9</td>
<td>426.2</td>
<td>4.5%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
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New Home Sales Slip But Top Estimates 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030826d.jpg" width="353">
Sales of new single family homes slipped 2.9% in July. That followed an 8.3% surge in June which was nearly double the initial estimated gain. July sales were the second highest on record at a 1.165M unit rate and slightly beat Consensus expectations for 1.150M.
In the Northeast, sales fell 20.8% (0.0% y/y) from a downwardly revised June level. In the West sales fell 16.3% (19.8% y/y) from a June level that was revised up.
Elsewhere sales rose last month. In the Midwest sales rose 17.3% (21.1% y/y) following an 18.1% June gain that was nearly doubled. Sales in the South rose 1.1% (24.9% y/y).
The median price of a new home rose to $191,500 (9.1% y/y). The prior month&#39;s figure was revised down slightly.
The new home sales data reflect current sales versus the existing home sale figures 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">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">New Single-Family</td>
<td>1,165</td>
<td>1,200</td>
<td>21.2%</td>
<td>977</td>
<td>907</td>
<td>880</td>
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</tbody>
</table>
Consumer Confidence Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030826c.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence in August gained back most of a moderate decline in July. The index rose 5.6% to 81.3 versus Consensus estimates for a reading of 80.0.
The rise in Confidence contrasted with the mid-month read of consumer sentiment from the University of Michigan which fell 0.8% versus July.
The August gain in Confidence reflected a 9.4% (-1.2% y/y) rise in the index of consumer expectations.Consumers&#39; read of the present situation fell for the sixth month this year, down 2.2% (-33.8% y/y).
Consumers&#146; appraisal of current business conditions deteriorated as jobs were viewed as hard to get by 34.1% of respondents, the highest level in nearly 10 years. Despite this gloom consumers&#39; plans for purchasing a home and major appliances improved. Plans to buy carpet or an automobile fell and have been trending lower.
The Conference Board&#146;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">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">Consumer Confidence</td>
<td>81.3</td>
<td>77.0</td>
<td>-14.0%</td>
<td>96.6</td>
<td>106.6</td>
<td>139.0</td>
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Durable goods orders added another 1.0% in July to the upwardly revised 2.6% gain in June. The gain matched Consensus expectations for a 1.0% rise. A 5.5% jump for motor vehicles & parts powered the July orders gain. However, for the [...]

U.S. Durable Goods Orders Rose Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030825b.jpg" width="353">
Both the Netherlands and Belgium reported slight increases in business confidence, however, the levels of confidence remain at historically low levels. In the Netherlands, the balance of of opinion among producers in manufacturing rose 0.4 percentage points from a minus 7.4% to a minus 7.0%. In Belgium the rise in industry opinion as reported in the BNB (Banque Nationale de Belgique) survey was 3.8 percentage points from minus 16% in July to minus 12.2% in August.. Consumer confidence also increased. In the Netherlands, consumer confidence after having declined in July to its lowest level since the survey began in 1986, rose 6 percentage points in August, recovering to the levels prevailing in the first half of the year. In Belgium, consumer confidence has held up better than in the Netherlands, but remains relatively weak. It rose 2 percentage points from minus 13% in July to minus 11% in August

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<th scope="col" class="firstcol">Measures of Confidence</th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
% Change
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;(Percent Balance)</td>
<td>Aug 03</td>
<td>July 03</td>
<td>Aug 02</td>
<td>M/M</td>
<td>Y/Y</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Business</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">Netherlands</td>
<td>-7.0</td>
<td>-7.4</td>
<td>1.3</td>
<td>0.4</td>
<td>-8.3</td>
<td>-1.6</td>
<td>-1.1</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">Belgium</td>
<td>-12.2</td>
<td>-16</td>
<td>-6.3</td>
<td>3.8</td>
<td>-5.6</td>
<td>-7.9</td>
<td>-9.4</td>
<td>4.2</td>
</tr>
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<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">Consumer</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td class="firstcol">Netherlands</td>
<td>-34</td>
<td>-40</td>
<td>-28</td>
<td>6</td>
<td>-6</td>
<td>-20</td>
<td>-1</td>
<td>24</td>
</tr>
<tr>
<td class="firstcol">Belgium</td>
<td>-11</td>
<td>-13</td>
<td>-3</td>
<td>2</td>
<td>-8</td>
<td>-2</td>
<td>-0</td>
<td>13</td>
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Both the Netherlands and Belgium reported slight increases in business confidence, however, the levels of confidence remain at historically low levels. In the Netherlands, the balance of of opinion among producers in manufacturing [...]

Measures of Business and Consumer Confidence Rise in Belgium and the Netherlands but Remain Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030825a.jpg" width="353">
Sales of existing single family homes surged to a record high of 6.12M last month and beat Consensus expectations for sales of 5.90M. July sales jumped 5.0%, the largest m/m increase since January 2002, and were up 13.8% y/y. Sales in past months were unrevised.
The figures reflect closings of past home sales.
The Realtors&#39; Association chief economist David Lereah indicated that &quot;When mortgage interest rates first began to rise from record lows, it appears some buyers jumped into the market to take advantage of good affordability conditions before interest rates moved even higher.&quot;
Sales rose in each of the country&#39;s regions. In the Northeast sales jumped 7.7% m/m (11.1% y/y) and in the South sales rose 7.0% (14.4% y/y). More moderate gains were logged in the West, up 1.9% (14.8% y/y), and in the Midwest where sales rose 3.9% (12.6% y/y).
The median price of an existing home surged to $182,100 (+12.1% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/pages/JulyEHS03?OpenDocument">here</a>.

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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">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,120</td>
<td>&nbsp;5,830</td>
<td>13.8%</td>
<td>5,595</td>
<td>5,292</td>
<td>5,158</td>
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Sales of existing single family homes surged to a record high of 6.12M last month and beat Consensus expectations for sales of 5.90M. July sales jumped 5.0%, the largest m/m increase since January 2002, and were up 13.8% y/y. Sales in [...]

Existing Home Sales Surged

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030822b.jpg" width="353">
Similar to a number of other nations, growth in South Korea has diminished in early 2003. And similar to other countries, exports are at least partially to blame. Total GDP (in 1995 won) for the second quarter was up just 1.9% from a year ago, more notably including outright quarter-to-quarter declines in the two latest periods. Second quarter exports were down 0.9% from the first, breaking a string of six quarters of gains, some running at 5%-6% quarterly rates, which began as the US recession was ending in late 2001. For Korea, the slowing in export volume is no small matter: in that nation, exports constitute 57% of real GDP and they are larger than private consumption.
Other segments of the Korean economy also weakened, most especially investment in equipment and consumption expenditures. These latter were down in both the first two quarters of 2003, contributing, along with the slowdown in exports, to the two-quarter decline in total GDP.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GDP &amp; Selected Components (% Changes)</th>
<th scope="col">2nd Quarter 2003 &nbsp;(Q/Q)</th>
<th scope="col">1st Quarter 2003 &nbsp;(Q/Q)</th>
<th scope="col">Year/Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Total GDP</td>
<td>-0.7</td>
<td>-0.4</td>
<td>1.9</td>
<td>6.8</td>
<td>3.5</td>
<td>5.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Private Consumption</td>
<td>-1.4</td>
<td>-2.2</td>
<td>-2.2</td>
<td>4.3</td>
<td>7.2</td>
<td>3.9</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>-1.7</td>
<td>1.9</td>
<td>3.5</td>
<td>6.8</td>
<td>4.9</td>
<td>2.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>-0.9</td>
<td>0.2</td>
<td>10.3</td>
<td>24.2</td>
<td>-1.9</td>
<td>14.3</td>
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Similar to a number of other nations, growth in South Korea has diminished in early 2003. And similar to other countries, exports are at least partially to blame. Total GDP (in 1995 won) for the second quarter was up just 1.9% from a [...]

Korean Economy Weakening

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The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) slipped the week of August 8th, but the 0.8% w/w decline did little to dent the strong series uptrend in place since the middle of March. During that period the leading index has risen roughly 8%.
The uptrend has raised the six-month growth rate of the weekly index to 13.2%, the highest growth rate since 1983.
Higher stock prices, lower claims for jobless insurance and higher commodity prices figure large in the leader&#39;s uptrend.
During the last five years there has been a 59% correlation between growth in the leading index and next quarter&#39;s growth in real GDP.
Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been a 77% correlation between the y/y percent change in the two series over the last 20 years.
The components of the ECRI weekly leading 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, and 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.
For more on ECRI and the Weekly Leading Index go to <a href="http://businesscycle.com">businesscycle.com</a>.

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM">ECRI Leading Index</a></th>
<th scope="col">8/08/03</th>
<th scope="col">8/01/03</th>
<th scope="col">Growth Rate</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Weekly</td>
<td>127.5</td>
<td>128.5</td>
<td>13.2%</td>
<td>1.2%</td>
<td>-5.3%</td>
<td>-0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>July</td>
<td>June</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Monthly</td>
<td>127.2</td>
<td>124.7</td>
<td>10.8%</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
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The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) slipped the week of August 8th, but the 0.8% w/w decline did little to dent the strong series uptrend in place since the middle of [...]

ECRI Weekly Leading Indicators Slip, Uptrend Strong

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The German Federal Statistics Office reported the details of second quarter GDP Thursday. As highlighted in the preliminary release a week ago, adverse developments in exports exerted a major drag on growth. They fell 2.3% following a 0.3% decrease in the first quarter, and stood 1.5% below a year ago. Consumption was virtually flat for the latest quarter, while fixed investment was mixed. Equipment outlays declined slightly, but expenditures on construction projects and other fixed assets turned higher. Nonetheless, three quarters have now passed since GDP in Germany has shown any increase, and commentators are starting to say the country&#146;s economy has fallen back into recession. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GDP &amp; Selected Components (% Changes)</th>
<th scope="col">2nd Quarter 2003 &nbsp;(Q/Q)</th>
<th scope="col">1st Quarter 2003 &nbsp;(Q/Q)</th>
<th scope="col">Year/Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Total GDP</td>
<td>-0.1</td>
<td>-0.2</td>
<td>-0.6</td>
<td>0.5</td>
<td>0.5</td>
<td>1.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>0.0</td>
<td>0.5</td>
<td>0.8</td>
<td>-0.6</td>
<td>1.3</td>
<td>1.1</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation</td>
<td>.2</td>
<td>-1.2</td>
<td>-2.4</td>
<td>-5.1</td>
<td>-6.0</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>-2.3</td>
<td>-0.3</td>
<td>-1.5</td>
<td>5.4</td>
<td>0.1</td>
<td>15.8</td>
</tr>
</tbody>
</table>
U.K. Industry, Consumer Demand Show Firming Tendencies 
by <a href="/comment/Stone.html">Carol Stone</a> August 21, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030821c.jpg" width="353">
The UK seems to be managing some hesitant improvement. The August Industrial Trends Survey conducted by the Confederation of British Industry (CBI) remains in negative territory, with its order book reading at -24. But that recovered from July&#146;s -37 and achieved the best reading since November of last year. This could well be due to growing retail demand. Retail sales over the three months to July showed a fourth month of decent trend growth after a pause during the winter. These sales decreased 0.4% on a month-to-month basis, but that followed a sizable 2.0% increase in June. The more commonly followed three-month moving average maintained a 0.4% pace, similar to the prior three months.
At the same time, the UK too is suffering a drag from exports, as those orders in the CBI survey for August remained at July&#146;s -32 level, similar to the showings of several recent months. The pound has weakened against the euro, which would ordinarily suggest gains in UK exports. But possibly the slowing impact on the UK&#146;s biggest trading partners of the very strong euro has pulled down their demand curve for UK products at any exchange rate.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">U.K.</th>
<th scope="col">August 2003 </th>
<th scope="col"> July 2003 </th>
<th scope="col">August 2002</th>
 Annual Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"> 2002 </td>
<td> 2001 </td>
<td> 2000 </td>
</tr>
<tr>
<td class="firstcol">CBI Survey (% Balance)</td>
<td>-24</td>
<td>-37</td>
<td>-24</td>
<td>-27</td>
<td>-26</td>
<td>-15</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Sales Volume (3-Mo % Change)</td>
<td>4.7 (Annual Rate)</td>
<td>9.0 (Annual Rate)</td>
<td>4.4 (Y/Y)</td>
<td>5.4</td>
<td>5.9</td>
<td>4.5</td>
</tr>
</tbody>
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The German Federal Statistics Office reported the details of second quarter GDP Thursday. As highlighted in the preliminary release a week ago, adverse developments in exports exerted a major drag on growth. They fell 2.3% following a [...]

German GDP Detail Confirms Export Drag

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

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

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

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

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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Retail gasoline prices for all grades slipped to $3.15 per gallon (-1.3% y/y), on average, in the week ended November 3 after rising to $3.16 in the previous week. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. Haver Analytics seasonally adjusts the retail prices of regular grade gasoline. That price held at $3.05 last week versus $3.05 in the previous week.

The price of West Texas Intermediate crude oil rose to $60.70 per barrel (-11.2% y/y) in the week ended October 31 after improving to $59.43 per barrel in the prior week. It was the highest price in three weeks but prices remained below a recent high of $74.17 during the third week of June. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $61.05 per barrel. The price of European Brent crude increased to $65.02 per barrel (-10.5% y/y) in the week of October 31 after rising to $63.22 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. Yesterday, the price was $65.79 per barrel.

Natural gas prices rose to an average $3.43/mmbtu (88.5% y/y) in the week ended October 31 after rising to $3.25/mmbtu in the prior week. The rise left prices at the highest level since the second week of April and well above the low of $1.40/mmbtu in the week of March 15, 2024. Yesterday, the price was $3.37 per mmbtu.

Gasoline demand declined 4.2% y/y in the four weeks ending October 24, following a 3.6% y/y decline in the prior four weeks. Demand for all petroleum products weakened 0.9% y/y in the four weeks ending October 24, after slipping 0.1% y/y in the previous four-week period. Crude oil input to refineries declined 1.7% y/y in the four weeks ending October 24, after a 0.3% y/y gain in the prior four weeks.

Gasoline inventories ease 0.1% y/y in the week ending October 24 following a 1.5% y/y gain in the prior week. Residual fuel oil inventories fell 10.0% y/y in the October 24 week after falling 13.0% y/y in the prior week. Working higher, crude oil inventories rose 1.7% y/y in the week of October 24 after rising 2.6% y/y in the previous week.

Measured in days’ supply, gasoline inventories fell to 24.3 days in the week of October 24. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held steady at 26.7 days in the week of October 24. The supply remained below a recent high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** and **USENERGY** databases.

- Gasoline prices are minimally changed.
- Crude oil costs rise further.
- Natural gas prices strengthen.

U.S. Energy Prices Are Mixed in Latest Week

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U.S. light vehicle sales dove 6.9% (-4.5% y/y) in October to 15.48 million units (SAAR) after holding steady at 16.62 million units in September. Sales fell broadly. 

Light truck sales slid 6.9% (-1.4% y/y) in October to 12.90 million units, after rising 0.9% in September. Purchases of domestically-made light trucks fell 7.9% (+1.4% y/y) to 10.10 million units, the lowest level since February, after rising 3.4% in September. Sales of imported light trucks fell 2.8% (-10.3% y/y) to 2.80 million units, following a 7.4% September decline.

Trucks’ 83.3% share of the light vehicle market last month was steady with September and compared to 82.6% in August, and to 80.7% in October of last year. The share has averaged 82.4% so far this year versus 56.5% ten years earlier.

Passenger car sales declined 6.9% (-17.6% y/y) last month to 2.58 million, after falling 4.8% in September. Purchases of domestically-produced cars fell 7.2% (-16.5% y/y) last month to 1.93 million units, after weakening 7.1% in September. Imported auto sales declined 4.5% (-22.0% y/y) to 0.64 million units after holding steady in September.

Imports' 22.2% share of the U.S. light vehicle market rose from 21.4% in September. These compared to a high of 26.3% in November of 2023. Imports' share of the passenger car market edged up to 24.8% last month from 24.2% in September. It reached a high of 38.1% in September 2021. Imports' share of the light truck market increased to 21.7% last month from 20.8% in September.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

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- Light truck sales and auto purchases decline m/m.
- Total sales decline sharply y/y.
- Imports' market share declines.

U.S. Light Vehicle Sales Fall Sharply in October

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Factory sector activity remains under pressure. The ISM U.S. manufacturing PMI declined to 48.7 in October after rising to 49.1 during September from 48.7 in August, according to the Institute for Supply Management. These figures are below the 50 expansion-contraction dividing line. As a result, they continue to indicate that the U.S. manufacturing sector weakened for the eighth consecutive month. The reading remained remain above, however, a low of 46.9 in October of last year. A November index of 49.4 had been expected in the Action Economics Forecast Survey.

The production component declined to 48.2 last month after rising to 51.0 in September. It remained increased from an April low of 44.0. A lessened 27.3% (NSA) of respondents reported higher production while an increased 22.0% reported lower output levels. The inventory reading fell to a 12-month low of 45.8 from 47.7 in September. A lessened 13.2% (NSA) of respondents raised inventories while a higher 21.7% shed them.

Working higher, the new orders index rose to 49.4 during October from 48.9 in September. An increased 20.4% (NSA) of respondents reported new orders improvement while 26.0% reported a decline. The employment index increased to a five-month high of 46.0 last month after rising to 45.3 in September. An increased 13.1% (NSA) of respondents more hiring while 22.3% reported less. The supplier delivery index rose to 54.2 in October from 52.6 in September. Twelve percent (NSA) of respondents reported slower product delivery speeds while 3.2% reported a quickening.

The prices index weakened to 58.0 (NSA) during October from 61.9 in September. It was below a high of 69.8 in April, and well above its low of 39.4 in December 2022. A lessened 27.3% of respondents reported higher prices, a nine month low, while an increased 8.7% reported lower.

In other series, the export orders index rose to a seasonally adjusted 44.5 in October after falling sharply to 43.0 in September. It remained up from 40.1 May low. The imports index edged up to 45.2 last month from 44.7 in September. The index is below a high of 52.6 in February.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- Decline reverses all of September increase.					
- Lower production offsets new orders rise.
- Price index falls to nine-month low.

U.S. ISM Manufacturing PMI Eases in October; Price Index Declines Sharply

Tian Yong Woon

This week, we review a wave of key developments across Asia following US President Trump’s tour of the region last week. A central theme concerned countries courting closer ties with the US to avoid harsher actions, while also boosting regional cooperation amid trade barriers and scrutiny of China. This push for closer ties has manifested through new and updated trade agreements—ironically driven by ongoing uncertainty in global trade and supply chains, with US–China relations at the core. A major outcome of Trump’s trip was the new US–China trade agreement, which included the US halving tariffs on Chinese fentanyl-related products to 10%, while China suspended rare earth export controls and resumed soybean purchases vital to the US (chart 1). Perhaps more importantly, the deal signalled a small conciliatory shift and avoided a potentially worse outcome. Beyond the US–China agreement at the APEC Summit in South Korea, the US–South Korea trade deal also gained more clarity. Under the deal, US auto tariffs on South Korea has fallen to 15%, matching the rate applied to Japan and likely providing relief for South Korean automakers (chart 2).

Trump’s visit to Japan was another highlight. Relations with new Prime Minister Takaichi got off to a strong start, and further details emerged on Japan’s previously cited $550 billion investment commitment in the US—substantial even relative to Japan’s existing direct investment there (chart 3). However, specifics on the timing and implementation of the investment remain limited. Meanwhile, at the ASEAN Summit earlier in the week, aside from Trump’s engagements, the bloc officially welcomed its 11th member—Timor-Leste—the first new member in decades—granting it access to the bloc’s mechanisms and potentially supporting a catch-up in economic development (chart 5). Looking ahead, the focus on China and Japan is likely to continue, with China set to release its October trade (chart 6) and CPI data, and Japan scheduled to report employee wages and household spending.

**The APEC summit**
The US and China made a modest but meaningful step forward on trade following the Trump–Xi meeting at the APEC Summit in South Korea. The US lowered tariffs on Chinese fentanyl-related products to 10% from 20% and suspended enforcement of rules targeting subsidiaries of blacklisted firms—previous points of contention for Beijing. In return, China pledged stronger efforts to curb fentanyl flows, paused rare earth export controls for a year, and resumed purchases of US soybeans—significant given its historically large share of US export demand (chart 1). While not a comprehensive reset, these moves eased immediate tensions and helped avert more severe outcomes, including Trump’s previously threatened 100% tariff hike. The tone of the meeting also suggests a more conciliatory shift, though relations remain fragile and the risk of renewed escalation is still material.

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Beyond the headline-grabbing US–China trade deal, the APEC Summit in South Korea also saw the US reach a trade agreement with South Korea. Under the deal, US tariffs on South Korean autos and auto parts have fallen to 15% from 25%, matching the US tariff rate on Japanese autos and providing relief to South Korea’s sizable automotive export sector (chart 2). The agreement also clarified South Korea’s supposed $350 billion investment in the US: $200 billion in cash, capped at $20 billion per year to avoid currency market distortions, with the remaining $150 billion directed toward shipbuilding cooperation. While also not a major breakthrough, the deal represents incremental progress, addressing prior uncertainties and signalling steps toward a more favourable trade framework.

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**US President Trump’s Japan Visit**
Turning to US President Trump’s visit to Japan last week, new Prime Minister Takaichi appears to have gotten off to a strong start, with Trump hailing US–Japan relations as entering a “NEW GOLDEN AGE.” The two countries signed several agreements, including a Technology Prosperity Deal, and deepened cooperation on critical minerals and rare earths. Japan’s previously vague $550 billion investment commitment in the US is now somewhat clearer: up to $332 billion will support critical US infrastructure, $30 billion will target AI, and $15 billion will go toward electronics and supply chains, among other areas. While the headline figure is substantial—even relative to Japan’s already significant direct investment assets in the US (chart 3)—the open-ended nature of the commitment and the lack of a clear timeline leave its actual impact uncertain.

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**The ASEAN summits**
Whilst US President Trump’s attendance at the ASEAN–US Summit in Malaysia dominated headlines, there were also several other notable developments at last week’s ASEAN meetings in Kuala Lumpur. Most prominently, Timor-Leste was officially admitted as ASEAN’s eleventh member, following a two-decade accession process during which the country actively aligned its political and economic frameworks with ASEAN standards. Membership grants Timor-Leste access to the bloc’s broader security and economic mechanisms and could open further avenues for trade, investment, and development cooperation. Nonetheless, the country still has considerable ground to make up relative to its new ASEAN peers, particularly in terms of both GDP and GDP per capita (chart 4).

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The accession of Timor-Leste into ASEAN aside, last week’s summits also brought a number of economic developments for the bloc. More concretely, ASEAN and China signed an upgrade to their free trade agreement last week, bringing the deal to so-called version 3.0. The upgraded deal (ACFTA 3.0) introduces commitments in new areas such as Digital Economy, Green Economy, and Supply Chain Connectivity, among other themes. And notably, just as the US and ASEAN have found common ground to collaborate in fields such as those relating to rare earths, given how the US has seen vulnerabilities arising from this space given China’s dominance in the field, China has taken the year’s US-China frictions to foster closer ties with its neighbours in the region, including the collectively sizable ASEAN bloc. Just by the trade dimension alone, China-ASEAN-11 trade has growth significantly this year (chart 2), although the economies’ total trade with the US also rose, and at a more significant pace, despite tariff measures.

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Looking ahead, investors will focus on a series of China-related releases this week, notably the Caixin PMI readings, as well as October trade and CPI inflation data. These indicators will help gauge the economy’s performance under ongoing US tariffs and assess domestic demand and supply conditions, all in the broader context of recent US–China interactions during Trump’s Asia tour. In Japan, attention will turn to updated data on employee wages and household spending, which—together with developments in the external environment—will shape expectations for the Bank of Japan’s future policy stance. Elsewhere in the region, investors will watch interest rate decisions from Australia and Malaysia, where rates are expected to remain unchanged, as well as GDP readings from Indonesia and the Philippines.

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Asia

Economic Letter from Asia: Come Together

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) improved 0.3% during the four weeks ended October 31, 2025 after holding steady in the prior four week period. The index increased 0.8% y/y.

**Metals** group prices increased 4.3% (6.1% y/y) in the last four weeks as the cost of aluminum rose 7.0% (9.5% y/y). Copper scrap prices improved 6.5% (16.4% y/y) while zinc prices strengthened 6.8% in four weeks (3.0% y/y). Steel scrap prices rose 2.3% (-6.6% y/y) and tin prices increased 2.2% (16.1% y/y). Lead prices improved 1.1% (unchanged y/y) in four weeks.

Prices in the **Textile** group increased 1.2% during the last four weeks, and rose 2.4% y/y. The cost of burlap strengthened 14.5% in the last four weeks while surging 37.6% over the last year. Offsetting this rise, cotton prices fell 1.2% and declined 5.8% y/y.

**Miscellaneous** group prices weakened 3.0% in the last four weeks, unchanged y/y, as framing lumber prices fell 6.5% (+4.1% y/y). The cost of tallow, used for frying & baking, declined 13.1% (+11.2% y/y) in four weeks. Offsetting this weakness, natural rubber prices held steady (-10.1% y/y).

Prices in the **crude oil & benzene** group declined 1.7% (-9.3% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 3.1% in four weeks to $60.80 per barrel and declined 11.7% y/y. The price was increased from a low of $58.47 in the third week of the month. The price of the petro-chemical benzene fell 2.9% (-23.3% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index rose 0.5% (1.6% y/y) over the last four weeks, the same as during the prior four weeks.

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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- Metals and textile prices strengthen.
- Framing lumber costs backpedal.
- Crude oil prices weaken.

Economy in Brief: 2003

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