Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030821a.jpg" width="353">
Initial claims for unemployment insurance fell to 386,000 but the prior week&#39;s level was revised up slightly to 403,000. Consensus expectations had been for claims of 395,000.
The Labor Department indicated that last week&#39;s power outage had &quot;minimal&quot; effects on the figures.
The latest initial claims figure was for the survey week for August payrolls. Claims were down 29,000 (7.0%) from the July survey period.
The four-week moving average of initial claims fell just slightly to 394,250 (+1.1% y/y).
Continuing claims for unemployment insurance rose 41,000 (1.1%) w/w. The prior week&#39;s level was revised lower. Continuing claims have risen in three of the last four weeks.
The insured rate of unemployment was stable at 2.9%.

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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">8/16/03</th>
<th scope="col">8/09/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>386.0</td>
<td>403.0</td>
<td>-2.5%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,673</td>
<td>4.5%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Leading Indicators Rose Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 21, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030821d.jpg" width="353">
The Conference Board reported that the Composite Index of Leading Economic Indicators rose for the fourth consecutive month in July. The 0.4% gain was as expected but the prior month&#39;s increase was revised up to 0.3% from 0.1% reported last month.
Gains amongst the leaders&#39; component series fell to 50% but the diffusion of the prior month&#39;s gain was revised up to 70% from 55%. The percentage of leading components rising over a six month period rose to 60%, the highest level in a year.
A steeper yield curve had the largest positive influence on theJuly leading index. That added to significant positive contributions from a higher money supply and lower claims for unemployment insurance. The largest negative influences came from shorter weekly hours worked, lower building permits and lower consumer expectations.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose but just slightly for the second month in three.
The ratio of coincident-to-lagging indicators was unchanged at a record high level. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</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>
</tr>
</thead>
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<td class="firstcol">Leading</td>
<td>0.4%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>2.1%</td>
<td>-0.9%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.1%</td>
<td>-0.8%</td>
<td>-2.4%</td>
<td>-4.4%</td>
<td>-1.3%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 21, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030821e.jpg" width="353">
The Philadelphia Fed&#146;s August index of general business conditions rose quite a bit more than expected to the highest level since June 1998. The rise to 22.1 from 8.3 in July was versus Consensus expectations for a reading of 10.0.
August was the third consecutive positive reading for the general business conditions index following three months negative.
Gains amongst the sub indexes were broad based except that the employment index retraced virtually all of the prior month&#39;s improvement and returned to negative territory. New orders &amp; shipments were strong and inventories continued to rise for the third consecutive month.
During the last twenty years there has been a 67% correlation between the level of the Philadelphia Fed Business Conditions Index and quarterly growth in real GDP. The correlation with quarterly growth in factory sector industrial production has been 77%.
The business conditions index reflects a separate survey question, not the sub indexes.
A separate survey of expected business conditions in six months rose to 62.0, the highest reading since June 1992.
The prices paid index surged to 16.0, the highest level since April.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0803.html">here</a>.

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<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">Aug</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">General Activity Index</td>
<td>22.1</td>
<td>8.3</td>
<td>-0.3</td>
<td>7.7</td>
<td>-17.2</td>
<td>8.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>16.0</td>
<td>-6.5</td>
<td>22.1</td>
<td>12.2</td>
<td>-0.9</td>
<td>27.2</td>
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Initial claims for unemployment insurance fell to 386,000 but the prior week's level was revised up slightly to 403,000. Consensus expectations had been for claims of 395,000. The Labor Department indicated that last week's power [...]

Initial Claims for Jobless Insurance Fell

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/030820d.jpg" width="353">
French GDP decreased in the second quarter, dragged down by weakness in business capital spending and exports. Household consumption also declined. Only government consumption and investment showed any notable gains. This sluggish overall result for the quarter cut the year-on-year performance to virtually zero, the first non-positive outcome since the end of 1993.
Forecasters had anticipated a flat result on the quarter, so this number undercut expectations. As in Germany, the weakness in exports suggests that the strong euro is at least partly to blame. In turn, foreign exchange markets have already begun to reflect the associated growth slowdown in Europe; the euro had fallen more than 6% by August 19 to $1.1117 from an early June peak of $1.1870.

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<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
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<td class="firstcol">2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Total GDP</td>
<td>-0.3</td>
<td>0.2</td>
<td>0.0</td>
<td>1.4</td>
<td>0.7</td>
<td>3.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>-0.2</td>
<td>0.5</td>
<td>1.1</td>
<td>1.5</td>
<td>2.6</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">Gross Fixed Capital Formation: &nbsp; Nonfinancial Companies</td>
<td>-0.6</td>
<td>0.0</td>
<td>-3.2</td>
<td>9.5</td>
<td>-0.7</td>
<td>-4.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>-0.6</td>
<td>-1.8</td>
<td>-2.6</td>
<td>3.8</td>
<td>-4.8</td>
<td>13.9</td>
</tr>
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French GDP decreased in the second quarter, dragged down by weakness in business capital spending and exports. Household consumption also declined. Only government consumption and investment showed any notable gains. This sluggish [...]

French Economy Declines Unexpectedly in Second Quarter

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030820b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell another 10.7% last week following the 16.1% drop the week prior. Since the peak in late May mortgage applications are down by almost two-thirds.
Purchase applications have weakened. Last week mortgage applications for home purchase fell 4.9% and that added to a 10.3% decline the week prior. Since the peak in late May purchase applications have fallen 15.4%.
During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance continued to plummet. They fell 14.9% last week and by nearly one third in just the last two weeks. Refinancings were down 72.4% from the peak in late May.
Interest rates on a conventional 30-Year mortgage moved back up, rising 24 basis points w/w to 6.52%. 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 rose to 5.91%, up 29 basis points w/w.
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.
For the August Senior Loan Officer Survey on Bank Lending Practices from the Federal Reserve Board, click <a href="http://www.federalreserve.gov/boarddocs/snloansurvey/200308/default.htm">here</a>.
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">8/15/03</th>
<th scope="col">8/08/03</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">Total Market Index</td>
<td>736.7</td>
<td>824.6</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>389.5</td>
<td>409.6</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,756.8</td>
<td>3,238.4</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deepened in July 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 20, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030820a.jpg" width="353">
The U.S. Government budget deficit deepened last month to $54.2B. That was versus of deficit of $29.2B in July &#39;02. The deficit was slightly deeper than most analysts had expected.
The Federal government&#39;s deficit totaled $320.4B through the first ten months of this fiscal year. That is versus a deficit of $145.5B through the first ten months of FY2002.
Net receipts for the first ten months of FY03 fell 3.9% versus last year. Individual tax payments fell 6.9% and corporate income taxes were down 14.8%. Social insurance contributions rose 1.7% and excise taxes also rose just slightly. 
Federal net expenditures rose 7.1% versus last fiscal year&#39;s first ten months. Defense spending surged 15.9% to 18.4% of the Federal budget. Spending on health programs was strong as well, up 11.3%, and spending on education surged 17.0% to 3.8% of the budget. Spending on income security rose 8.1% to 16.0% of the Federal budget and Medicare outlays rose 8.3% to 11.5% of the budget. Social Security outlays rose 4.1% to 21.9% of the budget. Interest expense fell 10.0% y/y.
For a report titled &quot;Understanding State Budget Troubles&quot; from the Federal Reserve Bank of San Francisco click <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-23.html">here</a>.

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<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">July</th>
<th scope="col">June</th>
<th scope="col">June &#39;02</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
<th scope="col">FY2000</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Budget Balance</td>
<td>$-54.2B</td>
<td>$21.2B</td>
<td>$-29.2B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
<td>$236.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$123.6B</td>
<td>$193.1B</td>
<td>-8.1%</td>
<td>-6.9%</td>
<td>-1.7%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$177.8B</td>
<td>$171.8B</td>
<td>8.7%</td>
<td>7.9%</td>
<td>4.2%</td>
<td>5.1%</td>
</tr>
</tbody>
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The index of mortgage applications compiled by the Mortgage Bankers Association fell another 10.7% last week following the 16.1% drop the week prior. Since the peak in late May mortgage applications are down by almost two-thirds. [...]

Mortgage Applications Down

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030820c.jpg" width="353">
The ZEW Center for European Economic Research in Germany reported that its index of investor confidence rose to 52.5 in August, up from 41.9 in July. The increase follows a July increase that almost doubled the June level of 21.3. August was the first month since October, 2002 that the index showed a year-to-year increase.
The index, based on a survey of 310 analysts and institutional investors, tends to forecast business activity six months ahead.
Investors&#39; confidence has been strengthened by the rise in the stock market--the Morgan Stanley Capital Market Index of German Stocks on August 18th, has increased almost 54% since its low on March 12th,--and by corporate earnings reports that have exceeded expectations. In addition, both monetary and fiscal policy have become easier. The European Central Bank reduced its benchmark rate to 2% from 2.5% on June 5.and the Government has brought forward some 22 billion Euros ($25 billion) of tax reductions to early 2004.
Although it is based on a small sample, the ZEW index has a good reputation of anticipating the results of the broader IFO index that is widely regarded as an important leading indicator of the economy. The IFO index will be available later in the month.

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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>
</tr>
</thead>
<tbody>
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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>
</tr>
<tr>
<td class="firstcol">ZEW</td>
<td>52.5</td>
<td>41.9</td>
<td>43.4</td>
<td>10.6</td>
<td>9.1</td>
<td>45.3</td>
<td>2.8</td>
<td>59.1</td>
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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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The ZEW Center for European Economic Research in Germany reported that its index of investor confidence rose to 52.5 in August, up from 41.9 in July. The increase follows a July increase that almost doubled the June level of 21.3. [...]

German Investor Confidence Strengthening

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030819b.jpg" width="353">
Housing starts were stronger than expected last month, rising 1.5% m/m to 1.87 mil. units. Consensus expectations had been for starts of 1.78 mil. July was the highest level of starts since April 1986. Starts had surged in May and June and the June level was revised up.
Single family starts rose 1.9% m/m to the highest level since November 1978. So far this year single family starts are up 4.5% from the 2002 average. June starts were revised up. 
Multi-family starts fell 0.6% last month for the second consecutive monthly decline. June multi family starts were revised up. Multi-family starts this year are down 4.3% versus 2002.
Building permits fell 2.4%, the first m/m decline in four months. Permits for 5 or more structures fell 12.2% (-22.2% y/y) while single family permits were off a slight 0.3% (8.5% y/y).

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<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">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">Total</td>
<td>1,872</td>
<td>1,845</td>
<td>12.4%</td>
<td>1,711</td>
<td>1,601</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,521</td>
<td>1,492</td>
<td>14.4%</td>
<td>1,364</td>
<td>1,272</td>
<td>1,232</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>351</td>
<td>353</td>
<td>4.2%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,780</td>
<td>1,823</td>
<td>2.2%</td>
<td>1,750</td>
<td>1,637</td>
<td>1,598</td>
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U.S. Consumer Sentiment Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030819a.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index dipped a slight 0.8% in mid-August to 90.2 versus 90.9 in July. A reading of 91.0 had been expected by the Consensus of economists.
A 1.6% decline versus July in the reading for Current Economic Conditions led the dip in the overall Sentiment index. Nevertheless, that reading was up 2.0% y/y.
Consumer Expectations fell by a lesser 0.1% (3.7% y/y) but it was the third consecutive monthly decline.
Over the last ten years there has been a 69% correlation between the level of consumer sentiment and the y/y change in real PCE. The correlation over the last five years has been 82%.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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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/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Mid-August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>90.2</td>
<td>90.9</td>
<td>89.7</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Stall 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030819c.jpg" width="353">
Chain store sales fell 0.5% last week according to the BTM-UBSW survey. The decline followed a slight uptick the prior week and a 0.8% surge in the opening week of the month.
Despite the latest dip, the level of sales so far this month were 1.0% 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.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">8/16/03</th>
<th scope="col">8/9/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>426.2</td>
<td>428.3</td>
<td>4.0%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
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Housing starts were stronger than expected last month, rising 1.5% m/m to 1.87 mil. units. Consensus expectations had been for starts of 1.78 mil. July was the highest level of starts since April 1986. Starts had surged in May and [...]

Housing Starts Highest Since 1986

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The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index rose in August to the highest level since January 2000. The index jumped 6 points from July to 71 and was up 29.9% from August of last year.
During the last fifteen years there has been a 68% correlation between the y/y change in the NAHB index and the change in new home sales.
The index of current market conditions for home sales rose to 77 (30.5% y/y) as the percentage of builders indicating &quot;good&quot; conditions rose to 61% from 51%.
The index which measures expected home sales in six months rose modestly to 78 (18.2% y/y) versus an average of 69 during all of last year.
Traffic of prospective buyers again rose sharply to the highest level since July 1999.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the National Association of Home Builders at <a href="http://www.nahb.org/">www.nahb.org</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</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>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>71</td>
<td>65</td>
<td>55</td>
<td>61</td>
<td>56</td>
<td>62</td>
</tr>
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The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index rose in August to the highest level since January 2000. The index jumped 6 points from July to 71 and was up 29.9% from August of last [...]

Housing Market Index Much Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030818b.jpg" width="353">
The Consumer Price Index (CPI-U) rose an expected 0.2% in July following a like increase in June.
The CPI less food and energy also rose 0.2%. That rise was stronger than Consensus expectations for a 0.1% increase. A 1.2% jump in tobacco prices and an uptick in services prices accounted for the surprise.
Continued deflation in the goods sector was led by lower prices for new and used vehicles (-2.3% y/y) and lower prices for household furnishings and operation (-1.9% y/y). Apparel prices were unchanged m/m but still are down 2.0% y/y.
Core services prices managed a moderate 0.3% gain following the weak 0.1% rise in June. Education and communication prices surged 0.5% (1.3% y/y) following four consecutive months of decline. A sharper increase in August may follow warned the Bureau of Labor Statistics. Shelter prices recovered 0.3% (2.4% y/y) versus the slight June decline. Medical care services prices rose 0.4% for the second month (4.3% y/y).Public transportation prices were strong, rising for the fifth straight month (3.3 y/y).
Energy prices increased moderately. Gasoline prices, up 1.2%, were strong for the second month and they have risen by more than double that degree so far in August. Fuel oil prices recovered 1.0% following three months of decline.
The chained CPI which adjusts for shifts in consumer buying behavior was unchanged m/m and during the last four months has fallen 0.3%. It is similar to the PCE price deflator. The core price measure rose 0.1% after the 0.2% drop in June.
Analysis from the Federal Reserve Bank of St. Louis titled &quot;Deflation, Corrosive and Otherwise&quot; can be found <a href="http://research.stlouisfed.org/publications/net/20030701/netpub.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-1.8%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>0.4%</td>
<td>0.8%</td>
<td>9.1%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>0.0%</td>
<td>0.1%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>1.0%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
 Industrial Production Gain Boosted By Hot Weather 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 15, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030818c.jpg" width="353">
Industrial production in July rose more than Consensus expectations for a 0.2% gain. The 0.5% gain was boosted by a 3.8% surge in utility output which was only the second m/m increase since February. Modest May &amp; June gains in total output were revised down.
Output in the manufacturing sector rose a modest 0.2% (-1.3% y/y). The previously reported 0.5% surge in June was revised lower to 0.3%.
Output in selected high-technology industries rose strongly last month as it has all year. The 0.8% (9.3% y/y) gain was powered by a 1.6% (21.9% y/y) surge in computers and peripheral equipment output. Output of semiconductors and related equipment (15.9% y/y) also has been strong.
Excluding high-tech, factory output rose 0.1% (-2.0% y/y) in July. Motor vehicle output jumped 2.9% (-0.9% y/y) output of electrical equipment and appliances sagged 0.7% (-3.8% y/y). Output of furniture rose 2.3% (-2.3% y/y) but a 1.0% June gain was revised to a 0.8% decline. Output of nondurable goods fell 0.4% (-3.0% y/y)
Total capacity utilization rose slightly to 74.5%. Factory sector utilization rose to 72.8%. Growth in capacity remained slow at 1.1% y/y versus 1.5% growth last year and 3.2% growth in 2001. Growth in factory sector capacity has been an even slower 0.7% y/y versus 1.3% growth last year.
The influence of trend output growth on the US economy&#39;s &quot;speed limit&quot; is discussed by the Federal Reserve Bank of San Francisco <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-14.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</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>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.5%</td>
<td>0.0%</td>
<td>-1.4%</td>
<td>-0.8%</td>
<td>-3.5%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>74.5%</td>
<td>74.2%</td>
<td>76.4%(7/02)</td>
<td>75.6%</td>
<td>77.3%</td>
<td>82.7%</td>
</tr>
</tbody>
</table>
Empire State Factory Survey Fell in August 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 15, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030818a.jpg" width="353">
The Empire State Index of General Business Conditions fell unexpectedly for August. The NY Fed&#39;s Manufacturing Survey indicated that the index fell to 9.98 this month versus Consensus expectations for a reading of 20.0.
Declines in the inventory and in the unfilled orders indexes may have accounted for much of the lower overall index. New orders fell just moderately while shipments and employment improved, the latter meaningfully.
The index of prices paid fell to a low 4.08. That&#39;s less than half the average reading so far this year.
The survey includes measures of business expectations six months ahead. This diffusion index improved substantially to 59.47 though expectations for capital expenditures fell.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For the latest Empire State Manufacturing Survey report, click <a href="http://www.newyorkfed.org/rmaghome/regional/mfg_survey/index.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</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>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General business conditions (diffusion index)</td>
<td>9.98</td>
<td>20.83</td>
<td>3.41</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) rose an expected 0.2% in July following a like increase in June. The CPI less food and energy also rose 0.2%. That rise was stronger than Consensus expectations for a 0.1% increase. A 1.2% jump in [...]

CPI Up As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030814d.jpg" width="353">
Growth in the Euro-Zone remained sluggish in the second quarter, according to the &quot;Flash&quot; estimate released by Eurostat on August 14. A flat quarter-on-quarter result pulled the year-to-year growth rate down to 0.4% from 0.9% in the first quarter. As seen in the accompanying chart, Germany experienced a modest outright decrease, which, along with a decline in the Netherlands, worked against a strong rise in Greece and a modest increase in Italy.. This lackluster performance are perhaps at least partially a consequence of the strong euro; for the entire first half of 2003, it was more than 20% higher than a year ago. And the Federal Statistics Office in Germany informs that the second quarter&#146;s weakness there was due to a reduction in exports. Numerical details will be reported August 21; meanwhile the Statistics Office press release explains that growth in domestic demand was insufficient to offset the shrinking export surplus.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">(Percent Changes)</th>
<th scope="col">Qtr/Qtr</th>
<th scope="col">Qtr/Qtr</th>
<th scope="col">Year/Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td>2nd Qtr 2003</td>
<td>1st Qtr 2003 &nbsp;</td>
<td></td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Euro-zone</td>
<td>0.0</td>
<td>0.1</td>
<td>0.4</td>
<td>1.2</td>
<td>0.6</td>
<td>2.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-.01</td>
<td>-0.2</td>
<td>-0.6</td>
<td>0.3</td>
<td>0.4</td>
<td>0.9</td>
</tr>
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Growth in the Euro-Zone remained sluggish in the second quarter, according to the "Flash" estimate released by Eurostat on August 14. A flat quarter-on-quarter result pulled the year-to-year growth rate down to 0.4% from 0.9% in the [...]

Flash GDP Estimates Show Decline in Germany, Weak Growth in Euro-Zone

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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