Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041105a.jpg" width="353">
Nonfarm payrolls grew 337,000 last month following upwardly revised gains of 139,000 and 198,000 during the prior two months. Consensus expectations had been for a 175,000 job rise in October.
Construction sector jobs grew 71,000 (3.9% y/y).
Hiring in private service producing industries also was quite strong, up 231,000 (1.8% y/y) following an upwardly revised September increase of 99,000. Hiring in professional &amp; business services rose 97,000 (3.7% y/y) with temporary help services jobs up 47,600 (11.5% y/y). Jobs in the financial sector rose another 17,000 m/m (1.3% y/y) and education &amp; health services jobs rose 62,000 (2.2% y/y). Government payrolls grew 41,000 (0.7% y/y).
Factory sector payrolls fell for the second consecutive month, down 5,000 (+0.3% y/y). Weakness was broad based across industries.
The index of aggregate hours worked (employment times hours worked) rose 0.3% (2.4% y/y) following an upwardly revised 0.4% gain in September. The index began the fourth quarter 2.0% (AR) above the prior quarter after 3.1% growth in 3Q.
Average hourly earnings rose 0.3% (2.6% y/y) after a downwardly revised 0.1% gain in September.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041105b.jpg" width="353">
The unemployment rate from the separate household survey rose to 5.5% as a 298,000 (1.2% y/y) gain in employment lagged labor force growth of 367,000 (0.7% y/y). The labor force participation rate was unchanged at 65.9%. <a name="content"> </a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM"> Employment</a></th>
<th scope="col"> Oct</th>
<th scope="col">Sept</th>
<th scope="col"> Aug</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>337,000</td>
<td>139,000</td>
<td>198,000</td>
<td>1.6%</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Reported last month</td>
<td></td>
<td> 96,000</td>
<td> 128,000</td>
<td> 1.3%</td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-5,000</td>
<td>-14,000</td>
<td>14,000</td>
<td>0.3%</td>
<td>-4.8%</td>
<td>-7.2%</td>
<td>-4.8%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8</td>
<td>34.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>2.6%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>5.5%</td>
<td>5.4%</td>
<td>5.4%</td>
<td>6.0%</td>
<td>6.0%</td>
<td>5.8%</td>
<td>4.8%</td>
</tr>
</tbody>
</table>
</body>
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Nonfarm payrolls grew 337,000 last month following upwardly revised gains of 139,000 and 198,000 during the prior two months. Consensus expectations had been for a 175,000 job rise in October. Construction sector jobs grew 71,000 [...]

U.S. Job Growth Strong, Revisions Positive

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/041104a.jpg" width="353">
Consumer inflation in Chile remains quite mild. Through October, for which data were published this morning, the total CPI was up just 1.9% from October 2003, and the rate excluding food and energy was a mere 0.9%. These rates are actually &quot;high&quot; compared with earlier this year and late in 2003, when year-on-year comparisons showed modest deflation. Food, clothing and home furnishings all show declining prices, though the pace of decline has recently moderated. By inference, energy seems to be the main source of price increase. Housing and transportation costs are erratic, so a trend is hard to characterize. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104b.jpg" width="353">
At the same time, wholesale prices in Chile have been very strong, with October&#39;s level nearly 9% above a year ago. Chile&#39;s industry is dominated by commodity production, particularly copper, and copper prices have exploded. On London metals markets, the spot price averaged $3,010.96/metric ton in October, up a whopping 57% from October 2003. This is apparently demand-driven. It is a accompanied in Chile by rising output; mining production overall was 12.7% higher in the third quarter than a year ago and exports of copper, valued in US$, were up 104% in the second quarter and 88% in the third from the year- earlier amounts. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">% Changes</th>
<th scope="col">Oct 2004</th>
<th scope="col">Sep 2004</th>
<th scope="col">Aug 2004</th>
<th scope="col">Year/Year</th>
December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">CPI (SA)</td>
<td>0.2</td>
<td>-0.3</td>
<td>0.2</td>
<td>1.9</td>
<td>2.8</td>
<td>2.5</td>
<td>3.6</td>
</tr>
<tr class="odd">
<td class="firstcol">CPI ex Food &amp; Energy (SA)</td>
<td>-0.2</td>
<td>-0.1</td>
<td>0.2</td>
<td>0.9</td>
<td>2.3</td>
<td>2.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">WPI (SA)</td>
<td>2.4</td>
<td>-2.3</td>
<td>0.5</td>
<td>8.9</td>
<td>6.6</td>
<td>6.8</td>
<td>7.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Copper*</td>
<td>3.9</td>
<td>1.9</td>
<td>1.3</td>
<td>56.9</td>
<td>14.1</td>
<td>-1.3</td>
<td>-12.9</td>
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Consumer inflation in Chile remains quite mild. Through October, for which data were published this morning, the total CPI was up just 1.9% from October 2003, and the rate excluding food and energy was a mere 0.9%. These rates are [...]

Consumer Prices Quiescent in Chile, but Wholesale Prices Surge

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104f.jpg" width="353">
Last week, initial claims for unemployment insurance again reversed the prior period&#39;s change with a 19,000 decline to 332,000.The Consensus expectation had been for 340,000 claims.
Back and forth weekly gyrations of this order were the rule during October and the average level of initial claims for the month settled at 341,000, down slightly from 344,000 in September.
During the last ten years there has been a (negative) 73% correlation between the level of initial claims and the m/m change in payroll employment.
Continuing claims for unemployment insurance dropped 20,000 and reversed most of the prior week&#39;s gain.
The insured rate of unemployment remained at 2.2% for the fourth week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 10/30/04</th>
<th scope="col"> 10/23/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>332</td>
<td>351</td>
<td>-9.0%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,800</td>
<td>-19.1%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
</body>
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Last week, initial claims for unemployment insurance again reversed the prior period's change with a 19,000 decline to 332,000.The Consensus expectation had been for 340,000 claims. Back and forth weekly gyrations of this order were [...]

Initial Jobless Insurance Claims Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104c.jpg" width="353">
Unit sales of light vehicles dropped 3.1% m/m in October to a 16.96M selling rate. Consensus expectations had been for sales of 16.7M.
Sales of light trucks gave back all of September&#39;s gain with a 7.3% m/m drop as sweetened sales incentives were scaled back and also as gasoline prices breeched $2.00 per gallon. Domestic light truck sales dropped 9.2% m/m but imported light truck sales rose 6.9%.
Total auto sales rose 2.8% m/m for the second consecutive monthly gain on the strength of a 19.4% rise in imported auto sales. Sales of domestic autos fell 3.7%.
Imports&#39; share of the US market for new vehicles ballooned to 22.1%, the highest since early 1991.

<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/@ED/@ED09/@ED0901/@ED0901.HTM"> Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col"> Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.96</td>
<td>17.51</td>
<td>3.1%</td>
<td>16.69</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.53</td>
<td>7.33</td>
<td>-3.9%</td>
<td>7.63</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.43</td>
<td>10.18</td>
<td>8.9%</td>
<td>9.06</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
</body>
</html>

Unit sales of light vehicles dropped 3.1% m/m in October to a 16.96M selling rate. Consensus expectations had been for sales of 16.7M. Sales of light trucks gave back all of September's gain with a 7.3% m/m drop as sweetened sales [...]

U.S. Light Vehicle Sales Fell As Truck Rebates Ended

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104e.jpg" width="353">
In 3Q04, non-farm labor productivity growth slowed to 1.9% but growth in 2Q was revised up to 3.9% from 2.5% estimated earlier. Consensus expectations had been for 2.0% growth in 3Q.
The slowdown reflected improvement in the labor market where growth in hours worked by all persons (employment times hours) accelerated to 2.1% (1.5% y/y) from 0.3% in 2Q. Output grew at a 4.1% rate (4.7% y/y), roughly the same as in 2Q.
Unit labor cost growth accelerated to 1.6% from 1.0% in 2Q due to the productivity slowdown even though compensation also slowed to 3.6% (3.7% y/y) from 4.9%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104d.jpg" width="353">
Productivity in the manufacturing sector slipped sharply to 4.3% (4.6% y/y) from 8.3% in 2Q which was pegged earlier at 6.9%. Unit labor costs in the factory sector grew 0.1% (-2.1% y/y), the first quarterly increase this year.

<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/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col"> 3Q &#39;04</th>
<th scope="col"> 2Q &#39;04 (Revised)</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>1.9%</td>
<td>3.9%</td>
<td>3.1%</td>
<td>4.4%</td>
<td>4.4%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>3.6%</td>
<td>4.9%</td>
<td>3.7%</td>
<td>4.1%</td>
<td>3.3%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>1.6%</td>
<td>1.0%</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>-1.1%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
</body>
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In 3Q04, non-farm labor productivity growth slowed to 1.9% but growth in 2Q was revised up to 3.9% from 2.5% estimated earlier. Consensus expectations had been for 2.0% growth in 3Q. The slowdown reflected improvement in the labor [...]

U.S. Productivity Growth Slowed From Strengthened 2Q Pace

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104e.jpg" width="353">
In 3Q04, non-farm labor productivity growth slowed to 1.9% but growth in 2Q was revised up to 3.9% from 2.5% estimated earlier. Consensus expectations had been for 2.0% growth in 3Q.
The slowdown reflected improvement in the labor market where growth in hours worked by all persons (employment times hours) accelerated to 2.1% (1.5% y/y) from 0.3% in 2Q. Output grew at a 4.1% rate (4.7% y/y), roughly the same as in 2Q.
Unit labor cost growth accelerated to 1.6% from 1.0% in 2Q due to the productivity slowdown even though compensation also slowed to 3.6% (3.7% y/y) from 4.9%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104d.jpg" width="353">
Productivity in the manufacturing sector slipped sharply to 4.3% (4.6% y/y) from 8.3% in 2Q which was pegged earlier at 6.9%. Unit labor costs in the factory sector grew 0.1% (-2.1% y/y), the first quarterly increase this year.

<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/@EC/@EC02/@EC02.HTM">Non-farm Business Sector</a> (SAAR)</th>
<th scope="col"> 3Q &#39;04</th>
<th scope="col"> 2Q &#39;04 (Revised)</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output per Hour</td>
<td>1.9%</td>
<td>3.9%</td>
<td>3.1%</td>
<td>4.4%</td>
<td>4.4%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>3.6%</td>
<td>4.9%</td>
<td>3.7%</td>
<td>4.1%</td>
<td>3.3%</td>
<td>4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>1.6%</td>
<td>1.0%</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>-1.1%</td>
<td>1.5%</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Fell As Truck Rebates Ended 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 4, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104c.jpg" width="353">
Unit sales of light vehicles dropped 3.1% m/m in October to a 16.96M selling rate. Consensus expectations had been for sales of 16.7M.
Sales of light trucks gave back all of September&#39;s gain with a 7.3% m/m drop as sweetened sales incentives were scaled back and also as gasoline prices breeched $2.00 per gallon. Domestic light truck sales dropped 9.2% m/m but imported light truck sales rose 6.9%.
Total auto sales rose 2.8% m/m for the second consecutive monthly gain on the strength of a 19.4% rise in imported auto sales. Sales of domestic autos fell 3.7%.
Imports&#39; share of the US market for new vehicles ballooned to 22.1%, the highest since early 1991.

<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/@ED/@ED09/@ED0901/@ED0901.HTM"> Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col"> Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.96</td>
<td>17.51</td>
<td>3.1%</td>
<td>16.69</td>
<td>16.81</td>
<td>17.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.53</td>
<td>7.33</td>
<td>-3.9%</td>
<td>7.63</td>
<td>8.07</td>
<td>8.48</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>9.43</td>
<td>10.18</td>
<td>8.9%</td>
<td>9.06</td>
<td>8.74</td>
<td>8.78</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 4, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041104f.jpg" width="353">
Last week, initial claims for unemployment insurance again reversed the prior period&#39;s change with a 19,000 decline to 332,000.The Consensus expectation had been for 340,000 claims.
Back and forth weekly gyrations of this order were the rule during October and the average level of initial claims for the month settled at 341,000, down slightly from 344,000 in September.
During the last ten years there has been a (negative) 73% correlation between the level of initial claims and the m/m change in payroll employment.
Continuing claims for unemployment insurance dropped 20,000 and reversed most of the prior week&#39;s gain.
The insured rate of unemployment remained at 2.2% for the fourth week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col"> 10/30/04</th>
<th scope="col"> 10/23/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>332</td>
<td>351</td>
<td>-9.0%</td>
<td>402</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,800</td>
<td>-19.1%</td>
<td>3,531</td>
<td>3,570</td>
<td>3,018</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041103e.jpg" width="353">
Employment in both Germany and Italy is inching forward, according to reports for August issued in the last two days. German employment, according to its labor force survey, has edged ahead each month this year and in August was 0.3% above its year-earlier level. While this appears to be a trivial amount, the accompanying graph suggests that it is a distinct relative improvement from the recent 27-month-long stretch of year-on-year shrinkage in the number of people employed in Germany.
The miniscule employment increases in Germany are, however, not enough to help the unemployment side of this economy. The number of people unemployed continued to rise in October and the unemployment rate remained at the 5-1/2 year high of 10.7% that it reached in September.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041103f.jpg" width="353">
In Italy, employment is still below year-ago levels, but looks over the last several months to be stabilizing and is already growing in some sectors. The employment measure reported yesterday by Istat is a kind of &quot;establishment&quot; concept, an index of employment at large businesses. The total index was unchanged in August at 87.6 on a base where 2000=100. This level is off from 89.6 a year ago, but up 0.2 percentage point from a low in April. Details indicate a distinct, non-trivial improvement in the manufacturing sector, up 1.8 percentage points since its low in April. Services are up from a February low, by 0.7 point. Utilities and construction jobs continue to decline, holding back the advance in total private sector employment at large firms. Our discussion here highlights the data &quot;excluding c.i.g.&quot;, the government-supported positions at these firms which absorb workers who would otherwise be laid off. A measure including those workers is still declining, but at 88.3 in August, has been somewhat steadier in the last few years than the actual number of active workers. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct 2004</th>
<th scope="col">Sept 2004</th>
<th scope="col">Aug 2004</th>
<th scope="col">Jul &nbsp;2004</th>
<th scope="col">Year Ago</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Germany:&nbsp; Employment (millions)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>38.394</td>
<td>38.389</td>
<td>38.286</td>
<td>38.316</td>
<td>38.699</td>
<td>38.750</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>10.7</td>
<td>10.7</td>
<td>10.6</td>
<td>10.6</td>
<td>10.5</td>
<td>10.5</td>
<td>9.8</td>
<td>9.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployed Persons (millions)</td>
<td>4.457</td>
<td>4.445</td>
<td>4.417</td>
<td>4.391</td>
<td>4.377</td>
<td>4.38</td>
<td>4.071</td>
<td>3.858</td>
</tr>
<tr>
<td class="firstcol">Italy: 2000=100</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Employment (SA)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>87.6</td>
<td>87.6</td>
<td>89.6</td>
<td>90.5</td>
<td>93.5</td>
<td>97.6</td>
</tr>
<tr>
<td class="firstcol">Manufacturing (NSA)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>89.6</td>
<td>89.2</td>
<td>91.3</td>
<td>91.3</td>
<td>94.3</td>
<td>98.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Services (SA)</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>99.7</td>
<td>99.6</td>
<td>98.7</td>
<td>98.7</td>
<td>98.5</td>
<td>99.4</td>
</tr>
</tbody>
</table>
</body>
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Employment in both Germany and Italy is inching forward, according to reports for August issued in the last two days. German employment, according to its labor force survey, has edged ahead each month this year and in August was 0.3% [...]

Employment Situation Shows Signs of Stabilization in Major European Economies

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041103b.jpg" width="353">
Mortgage applications jumped 8.2% last week following a slight decline the week earlier, according to the Mortgage Bankers Association (MBA). For the full month of October, applications rose 2.2% from the September average.
Purchase applications surged 12.6% but the monthly average nevertheless fell 1.2% from September. During the last ten years there has been a 60% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose a moderate 3.1% w/w but jumped 6.7% for the month.
The effective interest rate on a conventional 30-year mortgage rose to 5.90% from 5.81% the prior week and averaged 5.92% in October. The effective rate on a 15-year mortgage rose to 5.31%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">10/29/04</th>
<th scope="col">10/22/04</th>
<th scope="col"> Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>761.7</td>
<td>703.9</td>
<td>11.2%</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>496.5</td>
<td>440.9</td>
<td>22.8%</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,303.9</td>
<td>2,233.8</td>
<td>-0.7%</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
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Mortgage applications jumped 8.2% last week following a slight decline the week earlier, according to the Mortgage Bankers Association (MBA). For the full month of October, applications rose 2.2% from the September average. Purchase [...]

Mortgage Applications Jumped

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

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

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250822A2.jpg

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The **Industrial Materials Price Index** from the Foundation for International Business and Economic Research (FIBER) declined 1.7% during the last four weeks, after easing 0.4% in the prior four weeks. Together, these declines left prices unchanged during the last twelve months. During July, factory sector production rose an improved 1.4% y/y.

**Crude Oil & Benzene** group costs led the overall price weakening as they moved 3.3% lower (-12.6% y/y) in the latest four week period. The price of West Texas Intermediate crude oil declined 5.0% to $62.94 per barrel and remained 14.7% lower y/y. It had fallen to a low of $58.50 per barrel in the second week of May. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, weakened 7.0% (-32.3% y/y). Excluding crude oil, the industrial commodity price index weakened 1.5% (+1.0% y/y) during the last four weeks.

Lower **Miscellaneous** group prices followed with a 2.9% weakening in the latest four week period, but prices remained up 4.0% y/y. Lumber prices fell 9.9% (+15.2% y/y) during the last four weeks. Natural rubber prices also were fairly weak as they fell 6.9% (-11.5% y/y) in four weeks. Working higher, tallow costs (used in the soap industry) improved 0.6% (32.9% y/y) over the last four weeks.

**Metals** group prices fell 1.2% (+1.1% y/y) over four weeks. Lead prices declined 2.6% (-4.3% y/y) while copper scrap prices weakened 1.6% (+5.9% y/y). Aluminum prices were off 1.5% in four weeks (+7.5% y/y), and the cost of zinc declined 1.4% (+0.5% y/y). Tin prices eased 0.4% (+4.4% y/y), but steel scrap costs edged 0.2% higher (-6.7% y/y) over four weeks.

Prices in the **Textile** group moved 0.3% higher (2.0% y/y) during the last four weeks. Burlap costs improved 3.9% (15.9% y/y), but cotton prices fell 0.9% (+2.3% y/y) in 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.

**Monetary Policy and the Fed’s Framework Review** is the title of today’s speech by Fed Chair Jerome H. Powell, and it can be found [here](https://www.federalreserve.gov/newsevents/speech/powell20250822a.htm).

250822C2.jpg

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- Decline reverses earlier strength.
- Crude oil costs lead the weakening.
- Lumber & metals prices follow, but textile costs rise.

FIBER: Industrial Commodity Prices Decline Sharply in Latest Four Weeks

Andrew Cates

**The US housing market**
This first chart below highlights the growing downside risks to the US economic outlook stemming from the housing market. The S&P Case-Shiller home price index has slowed sharply from the pandemic-era surge, while the NAHB (National Association of Homebuilders) housing market index has weakened to levels historically associated with falling home prices. Housing matters because it is not just a cyclical sector but also a key transmission channel for the broader economy: consumer confidence, household balance sheets and credit conditions are all heavily influenced by shifts in the housing market.

250821Z1.jpg

**China’s economy**
The latest run of data from China has also reinforced downside risks for the broader world economy. As the Citigroup Economic Surprise Indices show below, China-specific data have more consistently undershot expectations in recent days. China’s July releases in particular disappointed: retail sales growth slowed to just 3.7% y/y, with weakness in autos and furniture hinting that earlier policy-driven boosts are fading. Industrial output and fixed-asset investment also came in below consensus, while property prices continued to fall and retail sector investment contracted by double digits. Even the labour market showed strain, with unemployment edging higher. The worry is not just China’s slowdown in isolation, but the spillovers. Softer Chinese demand feeds directly into global supply chains, commodity markets, and regional trade partners. Combined with tariff and non-tariff headwinds from the US, the risk is that China’s structural challenges spill into weaker global growth momentum.

250821Z2.jpg

**UK inflation** 
Persistently high services inflation remains one of the biggest headaches for UK monetary policy - and the UK is far from unique in that regard. Services are wage- and demand-sensitive, and their stickiness complicates the calibration of monetary policy even as broader disinflation takes hold. This week’s July upside surprise to UK services inflation was driven in no small part by airfares, which spiked 30% month-on-month – the largest July rise on record. While such volatility may prove temporary, it nonetheless lifted year-on-year services inflation to 5.0%, well above comfort levels. Still, the offsets are important: stripping out airfares and other volatile components, underlying services momentum appears to have eased, while broader data on wages, employment, and activity point to cooling demand. Nevertheless, this tension – headline stickiness versus softer underlying trends – underscores why the Bank of England is treading carefully.

250821Z3.jpg

**Inflation expectations and energy**
US medium-term inflation expectations have been unusually decoupling from oil prices in recent weeks. Normally, falling oil prices would help anchor breakevens, yet the 5-year forward inflation rate has edged higher of late even as WTI has slipped. This probably reflects US tariff policies that are shifting inflation dynamics away from energy and toward trade-related costs. At the same time, a weaker dollar has lifted imported prices, and the upward creep in expectations suggests markets may be more actively questioning whether the Fed’s “higher for longer” stance is sufficient to contain medium-term inflation risks.

250821Z4.jpg

**Clean energy**
Pivoting to more structural issues, the stark divergence between the global clean energy equity market index and the broader S&P 500 underlines the mounting challenges facing the renewables sector at present. While US equities have pushed to record highs, clean energy stocks have languished, weighed down by policy uncertainty, higher financing costs, and a more sceptical public mood. In the US, shifting political winds and uneven implementation of green subsidies have clouded the outlook for investment, while globally, resistance to renewables has grown as consumers and businesses grapple with high energy bills. Rising interest rates have further undermined the economics of capital-intensive clean energy projects, eroding returns and delaying investment pipelines. At the same time, bottlenecks in transmission infrastructure, permitting delays, and questions over the pace of the net-zero transition have all dented confidence. The result is a sector underperforming dramatically even as the urgency of the climate challenge grows.

250821Z5.jpg

**Renewables versus non-renewables**
Global energy consumption data show how limited—and in some respects, stalled—the transition away from fossil fuels has become. Oil, gas, and coal still dominate the energy mix, with shares that have proven remarkably resilient over the past several years. In fact, coal use has ticked higher of late as countries turned back to cheaper, more secure supplies amid energy price spikes and supply disruptions. While renewables have grown rapidly in percentage terms, their absolute contribution remains small compared with the scale of fossil fuel demand. Nuclear and hydro have also struggled to gain ground, leaving the overall mix looking more like a story of continuity than transformation. The result is a global transition that has not just slowed but, in key areas, has partially reversed—highlighting the gulf between climate ambitions and energy realities.

250821Z6.jpg

Recent financial market gains have been underpinned by resilient global data, AI-fuelled optimism, and hopes that most central banks will continue to loosen monetary policy. Yet beneath the surface, a more complicated picture may be emerging. In the US, housing indicators are flashing warnings about household balance sheets and credit channels (chart 1), while China’s latest data—covering retail sales, industrial output, and property—underscore persistent weakness (chart 2). In the UK, this week’s data showing sticky services inflation is complicating the Bank of England’s easing path (chat 3), while back in the US, medium-term inflation expectations have been rising despite softer oil prices (chart 4), hinting at a more disruptive role for trade policy. Against this cyclical backdrop sit deeper structural challenges: global energy consumption remains overwhelmingly dependent on fossil fuels, the clean energy sector has lost momentum amid high costs and policy uncertainty, and equity markets have punished renewables even as climate imperatives intensify (charts 5 and 6). Together, these dynamics suggest that while markets continue to trade on optimism, the mix of weak housing signals, patchy Chinese demand, sticky inflation, and an uneven energy transition potentially leaves the global outlook more fragile than headline performance implies.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/1GqSlFq3gfZuMYDWhif8Ht?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Cracks Beneath The Shine

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Existing home sales rose 2.0% (0.8% y/y) to 4.01 million (SAAR) in July after falling 2.7% in June to an unrevised to 3.93 million and rising 1.0% to 4.04 million in May, according to the National Association of Realtors (NAR). The Action Economics Forecast Survey expected 3.91 million unit sales in July. Last month’s sales decline accompanied a decline in the effective 30-year mortgage interest rate to 6.72% from 6.82% in June. The sales figures are based on closings of sales signed over the past couple of months.

Existing single-family home sales rose 2.0% (1.1% y/y) during July to 3.64 million units after a 3.0% decline to 3.57 million in June and a 1.4% May rise to 3.68 million. Sales of condos and co-ops rose 2.8% (-2.6% y/y) to 370,000 after holding steady in June.

Sales were mixed across the country last month. Sales in the Northeast increased 8.7% (2.0% y/y) to 500,000 following an 8.0% June decline. Sales in the South improved 2.2% both m/m and y/y to 1.85 million, after falling 2.2% in June. Sales in the West rose 1.4% (-4.0% y/y) to 720,000 after a 1.4% June gain. Falling by 1.1% (+1.1% y/y) to 940,000 were sales in the Midwest after falling 4.0% in June.

The median price of all existing homes (NSA) in July weakened 2.4% (+0.2% y/y) from the June record to $422,400. The median price of an existing single-family home fell 2.3% (+0.3% y/y) to $428,500 in July, and the median price of condos & co-ops declined 3.1% (-1.2% y/y) to $362,600 last month. Prices for homes in the West declined 1.1% (-1.4% y/y) to $620,700 while prices in the Northeast fell 6.3% (+0.8% y/y) to $509,300. In the South, prices were off 1.8% (-0.6% y/y) to $367,400 while in the Midwest, home prices fell 1.1% (+3.9% y/y) to $333,800.

The number of existing homes for sale (NSA) rose 0.6% (15.7% y/y) to 1.55 million units in July. The supply of homes on the market at the current selling rate (NSA) slipped to 4.6 months, still nearly the highest level in nine years, up from a low of 1.6 months in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

The minutes to the latest **FOMC** meeting can be found [here](https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20250730.pdf).

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- Home sales remain below recent high in December.
- Sales are slightly higher m/m in most of country.
- Median sales price slips from record high.

U.S. Existing Home Sales Rise Slightly in July; Home Prices Decline

Sandy Batten

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The Current Activity Diffusion Index from the latest Manufacturing Business Outlook Survey (MBOS) conducted by the Federal Reserve Bank of Philadelphia, fell more than 16 points to -0.3 in August from 15.9 in July. The index has posted negative readings, which indicate that activity is declining, in four of the previous five months. A reading of +5.0 for August had been expected by the Action Economics Forecast Survey. Nearly 30% of respondents reported an increase in activity in August, down from 31.7% in July, while 30% reported a decline, up markedly from 16% in July. Responses to this month's survey were collected from August 11 to August 18.

The headline index reflects the answer to a single question on activity. Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology employed in constructing the national ISM index. That calculated index fell to 49.1 in August, the first reading below the critical 50 level that separates expansion from contraction since April, from 51.2 in July.

Looking at the component indexes, both new orders and shipments posted significant declines in August with orders plummeting into negative territory at -1.9 versus 18.4 in July. This was the first negative reading for new orders since the tariff-induced plunge in April. Thirty-four percent of respondents reported an increase in orders in August, little changed from 35% in July. In contrast, 36% reported a decline in orders in August, up markedly from 17% in July. Shipments also declined significantly in August although they remained in positive territory at 4.5 versus 23.7 in July. Twenty-nine percent of respondents reported an increase in shipments, down slightly from 32% in July. In contrast, 24% reported a decline, up markedly from 9% in July.

Firms continued to report overall increases in employment, but at a slower pace. The employment index fell 4 points to 5.9 in August from 10.3 in July. Most firms continued to report no change in employment levels (74%), while the share of firms reporting increases (16%) exceeded the share reporting decreases (10%, up from 7% in July). The average workweek index rose from 0.4 in July to 4.7 in August, its highest reading since March.

There was still no indication that increased tariffs have damaged supply chains. The delivery times index slipped further below zero to -5.4 in August, the fourth negative reading in five months indicating that delivery times are shortening, from -4.7 in July. Thirteen percent of respondents reported an increase in delivery times in August, up from 8% in July, while 18% reported a decrease versus 13% in July.

Inflation indicators continued to rise in August. The prices paid index jumped to 66.8 in August, its highest reading since May 2022, from an already elevated 58.8 in July. Nearly 67% of respondents reported an increase in input prices while no respondent reported a decline. The prices received index edged up to 36.1 in August, its highest reading in three months, from 34.8 in July. In the answer to a special question, firms expected a 4.1% increase in the prices of their own products over the coming year, up from 3.8% when this question was last asked in the May survey.

The outlook for the next six months brightened marginally in August with the Future Activity Index rising to 25.0 following an increase to 21.5 in July. Forty-one percent of respondents expect activity to increase over the coming six months, the same as in July, while 16% expect it to decline, down from 20% in July. The pace of increase in both new orders and shipments is expected to pick up. Delivery times are expected to increase only slightly. Employment growth is expected to slow. The outlook for capital expenditures rose markedly to 38.4 in August, the highest reading since January.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The series from the survey dating back to May 1968 can be found in Haver's **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- The headline index fell more than 16 points to -0.3, led by outsized declines in both new orders and shipments.
- The ISM-adjusted composite fell below the critical 50 level for the first time in four months, also pointing to a decline in activity.
- Delivery times shortened further while both prices paid and prices received indexes posted gains.

U.S. Philly Fed Manufacturing Index Dipped Below Zero in August

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Initial claims for unemployment insurance rose to 235,000 during the week ended August 16 after falling to an unrevised 224,000 in the prior week. The Action Economics Forecast Survey expected 226,000 initial claims for last week. The four-week moving average of initial claims increased to 226,250 from 221,750. It was the highest level since the second week of July.

In the week ended August 9, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – rose to 1.972 million from 1.942 million in the prior week, revised from 1.953 million. The four-week moving average rose to 1.955 million, the highest level in five weeks.

In the week ending August 9, the insured rate of unemployment (the number of beneficiaries as a percent of covered employment) was 1.3% for the eleventh straight week.

The insured unemployment rate varied greatly across individual states and territories. In the week ended August 2, the highest unemployment rates were in New Jersey (2.74%), Puerto Rico (2.62%), Rhode Island (2.52%), California (2.14%), Minnesota (2.20%) and Massachusetts (2.15%). The lowest were in South Dakota (0.27%), Florida (0.39%), North Carolina (0.47%), Kansas (0.58%), Georgia (0.59%) and Louisiana (0.61%). Rates in other notable states include Pennsylvania (1.90%), Illinois (1.72%), New York (1.73%), Texas (1.25%) and Michigan (1.17%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims surge to highest level in eight weeks.
- Continuing claims extend upward trend.
- Insured unemployment rate holds steady.

Economy in Brief: 2004

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U.S. Job Growth Strong, Revisions Positive

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Initial Jobless Insurance Claims Down

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