Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105a.jpg" width="353">
According to the Institute for Supply Management, the October Business Activity Index for the non-manufacturing sector increased one point to 55.8. The rise made up the one point m/m decline in September and was a better reading than Consensus expectations for a slight decline to 54.
Since the series&#39; inception in 1997 there has been a 44% correlation between the level of the Business Activity Index in the non-manufacturing sector and the Q/Q change in real GDP for the services and the construction sectors. The correlation of the factory sector ISM index with the change in real GDP less just services is a higher 57%, though over the last ten years it only has been 34%.
The new orders sub index of the Business Activity Index recovered most of its September decline and rose to 55.7, still down from last year&#39;s average level of 57.1. So far this year the orders index has averaged 55.3<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105b.jpg" width="353">
The employment sub index, conversely, fell slightly to 51.8. It has averaged 52.1 this year versus 53.8 last year. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Pricing power fell lightly m/m and for the year so far the index has averaged 61.7 versus 65.2 for all of 2006. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
The Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the ISM manufacturing sector composite index is a weighted average of five components.
Financial Instability and Monetary Policy is Federal Reserve Board GovernorFrederic S. Mishkin&#39;s speech and it is available <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20071105a.htm"> here</a>.
What Are the Chances? from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20071101/cover.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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October &#39;06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>55.8</td>
<td>54.8</td>
<td>57.4</td>
<td>58.0</td>
<td>60.2</td>
<td>62.5</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.5</td>
<td>66.1</td>
<td>52.6</td>
<td>65.2</td>
<td>68.0</td>
<td>68.8</td>
</tr>
</tbody>
</table>


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According to the Institute for Supply Management, the October Business Activity Index for the non-manufacturing sector increased one point to 55.8. The rise made up the one point m/m decline in September and was a better reading than [...]

U.S. ISM Non-manufacturing Index Improved Slightly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105a.jpg" align="left" border="0" height="265" width="353">
According to the Institute for Supply Management, the October
Business Activity Index for the non-manufacturing sector increased one
point to 55.8. The rise made up the one point m/m decline in September
and was a better reading than Consensus expectations for a slight
decline to 54.
Since the series' inception in 1997 there has been a 44%
correlation between the level of the Business Activity Index in the
non-manufacturing sector and the Q/Q change in real GDP for the
services and the construction sectors. The correlation of the factory
sector ISM index with the change in real GDP less just services is a
higher 57%, though over the last ten years it only has been 34%.
The new orders sub index of the Business Activity Index
recovered most of its September decline and rose to 55.7, still down
from last year's average level of 57.1. So far this year the orders
index has averaged 55.3<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105b.jpg" align="right" border="0" height="265" width="353">
The employment sub index, conversely, fell slightly to 51.8.
It has averaged 52.1 this year versus 53.8 last year. Since the series'
inception in 1997 there has been a 56% correlation between the level of
the ISM non-manufacturing employment index and the m/m change in
payroll employment in the service producing plus the construction
industries.
Pricing power fell lightly m/m and for the year so far the
index has averaged 61.7 versus 65.2 for all of 2006. Since inception
ten years ago, there has been a 60% correlation between the price index
and the q/q change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62
industries including construction, law firms, hospitals, government and
retailers. The non-manufacturing survey dates back to July 1997.
The Business Activity Index for the non-manufacturing
sector reflects a question separate from the subgroups mentioned above.
In contrast, the ISM manufacturing sector composite index is a weighted
average of five components.
Financial Instability and Monetary Policy
is Federal Reserve Board GovernorFrederic S. Mishkin's speech and it is
available <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20071105a.htm">
here</a>.
What Are the Chances? from the Federal
Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20071101/cover.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/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October '06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>55.8</td>
<td>54.8</td>
<td>57.4</td>
<td>58.0</td>
<td>60.2</td>
<td>62.5</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.5</td>
<td>66.1</td>
<td>52.6</td>
<td>65.2</td>
<td>68.0</td>
<td>68.8</td>
</tr>
</tbody>
</table>
Signs of Cooling in the BritishEconomy 
by <a href="/comment/Curley.html">Louise
Curley</a> November 5, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105c.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105d.jpg" height="265" width="312">

Industrial production in the United Kingdom declined 0.50% in
September to 99.1 (2003=100) from 99.6 in August and was 0.30% below
September, 2006. Energy, which has been in a down trend for the past
three years was the only major sector to increase. The production of
consumer non durable and durable goods, capital goods and intermediate
goods were all down, as can be seen in the first chart.
The Purchasing Managers Index of manufacturing activity for
October, published last week suggests continued weakness in the
manufacturing sector. The index, while still in the expansion phase
(above 50), declined 3.25% from September to 52.4% in October.
Much more important, the October Purchasing Managers Index for
services was released today. Services account for almost 75% of the
Gross Domestic Product, while manufacturing accounts for about 15%. The
service index showed a decline, almost twice as large as that of the
manufacturing sector--6.37%--to 53.08%. The two PMI's are shown in the
second chart.

<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;INDUSTRIAL
PRODUCTION 2003=100&nbsp;</th>
<th scope="col">Sep 07</th>
<th scope="col">Aug 07&nbsp;</th>
<th scope="col">Sep 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>99.1</td>
<td>99.6</td>
<td>99.4</td>
<td>-0.50</td>
<td>-0.30</td>
<td>98.8</td>
<td>98.8</td>
<td>100.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer
Durables</td>
<td>106.0</td>
<td>107.6</td>
<td>103.7</td>
<td>-1.49</td>
<td>2.22</td>
<td>104.3</td>
<td>102.9</td>
<td>104.1</td>
</tr>
<tr>
<td class="firstcol">Consumer
Nondurables</td>
<td>98.5</td>
<td>98.8</td>
<td>99.8</td>
<td>-0.30</td>
<td>-1.30</td>
<td>99.2</td>
<td>99.2</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">Capital
Goods </td>
<td>108.9</td>
<td>109.4</td>
<td>108.7</td>
<td>-0.46</td>
<td>0.18</td>
<td>107.1</td>
<td>103.2</td>
<td>103.6</td>
</tr>
<tr>
<td class="firstcol">
Intermediate Goods</td>
<td>102.2</td>
<td>103.3</td>
<td>101.6</td>
<td>-1.06</td>
<td>0.59</td>
<td>101.2</td>
<td>100.1</td>
<td>102.3</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>85.2</td>
<td>84.6</td>
<td>85.9</td>
<td>0.71</td>
<td>-0.81</td>
<td>86.2</td>
<td>91.5</td>
<td>96.4</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102f.jpg" align="left" border="0" height="265" width="353">
Is the thrill gone?EMU indexes stand more or less mid range. 
 

In October the MFG PMIs are losing momentum. The chart on the
left shows the year-over-year percentage drops in the levels of the
index for key EMU countries. Although the various nations are at
different levels in terms of their respective MFG indexes they are all
declining in a very sympathetic bunched fashion. 
 

The big countries - Germany, France, Italy and Spain &#8211; all
have indexes clustered just north of their 50 breakeven marks. Spain
has slipped below 50, the breakeven point for expansion/contraction. In
terms of their respective range of values we find France and Spain are
lower in their range percentiles. France&#8217;s raw reading of 50.54 is in
the bottom 38 percentile of its range even though that PMI reading is
above 50. The MFG PMI in France has simply tended to be stronger than
in other countries. 
 

Some of the smaller countries (Ireland, Greece, Austria and
the Netherlands) have PMI ratings that are much higher in their
respective ranges with raw PMI scores as high as 56. Greece has a PMI
reading that ranks in the top 79th percentile of its range. Right now,
the small countries of Europe are the ones pressing the advance for MFG
for EMU as a region. 
 

The UK, an EU member but not an EMU member, has a raw PMI
score of 52.93, higher than any large EMU county and a range reading of
68.8% showing that the UK is also strong in its range of values. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> NTC MFG Indexes</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td style="color: red;">51.52</td>
<td style="color: red;">53.21</td>
<td style="color: red;">53.02</td>
<td style="color: red;">54.09</td>
<td style="color: red;">54.96</td>
<td>52.2%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">51.67</td>
<td style="color: red;">54.87</td>
<td>54.17</td>
<td>55.44</td>
<td>56.67</td>
<td>55.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>50.54</td>
<td style="color: red;">50.51</td>
<td>51.20</td>
<td>52.50</td>
<td>53.27</td>
<td style="color: red;">38.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">51.34</td>
<td style="color: red;">52.39</td>
<td>52.45</td>
<td>53.28</td>
<td>53.74</td>
<td>56.1%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td style="color: red;">49.58</td>
<td style="color: red;">50.80</td>
<td>50.85</td>
<td>52.35</td>
<td>54.27</td>
<td style="color: red;">44.7%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td style="color: red;">52.77</td>
<td>55.37</td>
<td>54.21</td>
<td>54.00</td>
<td>55.24</td>
<td>60.8%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>55.27</td>
<td>53.83</td>
<td>54.22</td>
<td>54.03</td>
<td>53.13</td>
<td>79.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">52.27</td>
<td>54.35</td>
<td>53.66</td>
<td>53.33</td>
<td>52.94</td>
<td>67.9%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td style="color: red;">56.15</td>
<td>56.36</td>
<td>56.23</td>
<td>56.98</td>
<td>56.72</td>
<td>78.6%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td style="color: red;">52.93</td>
<td style="color: red;">54.73</td>
<td>54.54</td>
<td>54.75</td>
<td>54.21</td>
<td>68.8%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">percentile is over range since March
2000</td>
</tr>
</tbody>
</table>
</body></html>

Is the thrill gone?EMU indexes stand more or less mid range. In October the MFG PMIs are losing momentum. The chart on the left shows the year-over-year percentage drops in the levels of the index for key EMU countries. Although the [...]

PMIs in MFG are All Losing Momentum… but Still Showing Growth

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102e.jpg" align="left" border="0" height="265" width="353">
Car registrations rose in the EU by 1.9% in August, their
second monthly gain in a row. Still, sales trends are uncertain after
some real volatility from February through July. Except for a real
spike in July flanked by two severe months of declines, car
registrations have been downbeat. The EU numbers today are completed by
release of the French car registration figures that show a decline in
August. With two months gone in the third quarter, car registrations
are dropping at a 14% annual rate in France. For the EU, car
registrations are up at a 10% pace in Q3. For August, a rebound in
Germany and strength in Italy have helped to push the registration
numbers up for EMU in face of declines in the UK and France. On the
whole, though, car sales are as irregular as ever and hard to count on.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">EU Car
Registrations </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Month-to-month</td>
<td colspan="3">Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Total</td>
<td>1.9%</td>
<td>1.8%</td>
<td>-7.5%</td>
<td>-15.3%</td>
<td>11.5%</td>
<td>0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">from 3Mo Moving average</td>
<td>-1.4%</td>
<td>2.6%</td>
<td>-0.6%</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Country detail</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>6.3%</td>
<td>3.0%</td>
<td>-4.7%</td>
<td>18.0%</td>
<td>56.5%</td>
<td>-2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>-3.9%</td>
<td>3.2%</td>
<td>-1.4%</td>
<td>-8.8%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>10.5%</td>
<td>-10.5%</td>
<td>-5.2%</td>
<td>-22.9%</td>
<td>4.7%</td>
<td>7.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>5.3%</td>
<td>-2.4%</td>
<td>-6.2%</td>
<td>-13.6%</td>
<td>10.5%</td>
<td>-2.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>-20.0%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>-54.4%</td>
<td>-29.4%</td>
<td>1.3%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">All SA
France also working day
adjusted</td>
</tr>
</tbody>
</table>
</body></html>

Car registrations rose in the EU by 1.9% in August, their second monthly gain in a row. Still, sales trends are uncertain after some real volatility from February through July. Except for a real spike in July flanked by two severe [...]

EU Registrations Up in August but Still with Challenged Trend

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102c.jpg" width="353">
U.S. sales of light vehicles last month fell 1.1% from September to a 16.06M unit annual selling rate. That followed the slight 0.3% decline during September, according to the Autodata Corporation.
Domestically made vehicle sales fell 2.5% m/m to 12.08M (-2.1% y/y). Sales of domestic light trucks again seemed to show the effects of higher gas prices and were down 2.9% m/m to a 7.07M selling rate (-3.4% y/y. Meanwhile, sales of U.S. made cars more than reversed the September increase with a 1.9% decline to 5.06M units last month (-0.4% y/y).
Sales of the relatively fuel efficient imported light vehicles posted another gain. The 3.4% rise to 3.88M units (0.1% y/y) was to near the average level of sales during the record year of 2006. Sales look to be rising another 5% this year. Imported light truck sales rose 1.3% last month (-0.8% y/y) and sales of imported autos rose 4.7% to 2.46M units (0.7% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102d.jpg" width="353">
Import&#39;s share of the U.S. light vehicle market rose to 24.8% versus an average 23.1% for all of last year.
The statement accompanying this week&#39;s FOMC meeting can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20071031a.htm"> 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/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">&nbsp;October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.05</td>
<td>16.23</td>
<td>-1.6%</td>
<td>16.55</td>
<td>16.96</td>
<td>16.87</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.47</td>
<td>7.45</td>
<td>0.0%</td>
<td>7.77</td>
<td>7.65</td>
<td>7.49</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>5.06</td>
<td>5.10</td>
<td>-0.4%</td>
<td>5.31</td>
<td>5.40</td>
<td>5.36</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>2.46</td>
<td>2.35</td>
<td>0.7%</td>
<td>2.45</td>
<td>2.25</td>
<td>2.14</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.59</td>
<td>8.77</td>
<td>-2.9%</td>
<td>8.78</td>
<td>9.32</td>
<td>9.37</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>7.07</td>
<td>7.28</td>
<td>-3.4%</td>
<td>7.42</td>
<td>8.12</td>
<td>8.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.52</td>
<td>1.50</td>
<td>-0.8%</td>
<td>1.37</td>
<td>1.20</td>
<td>1.23</td>
</tr>
</tbody>
</table>
</body>
</html>

U.S. sales of light vehicles last month fell 1.1% from September to a 16.06M unit annual selling rate. That followed the slight 0.3% decline during September, according to the Autodata Corporation. Domestically made vehicle sales fell [...]

U.S. Vehicle Sales Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102a.jpg" width="353">
Nonfarm payrolls increased 166,000 last month. The gain was double the rise expected by the consensus of economists, although the increase in September jobs was revised slightly downward to 96,000 from the 110,000 reported last month.
An increase in private service sector jobs in October added nearly all of the heft to last month&#39;s job gain. The increase of 154,000 was provided by a 65,000 (2.1% y/y) rise in professional &amp; business service jobs and a 7,500 (3.1% y/y) rise in jobs in the education sector. Additionally, 35,100 (3.2% y/y) jobs were added in the health care sector and the leisure industry added 56,000 (3.3% y/y) workers. These gains offset weak or negative growth elsewhere in service sector jobs.
In what is perhaps a positive sign for future growth in jobs, employment in the temporary help industry rose 20,200 (-1.6% y/y) and offset all of the prior month&#39;s decline.
Employment in the government sector also rose a respectable 36,000 (1.0% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102b.jpg" width="353">
Factory sector payrolls fell another 21,000, adding to a decline that began early last year. Again, these declines are at odds with the recent ISM reports of job growth in manufacturing. Construction employment fell by 5,000 last month after a 14,000 worker decline during September.
Average hourly earnings increased 0.2% and the prior month&#39;s gain was revised down slightly. Factory sector earnings rose 0.1% (2.9% y/y) and private service-providing earnings rose 0.2% (3.9% y/y).
The unemployment rate held steady at 4.7% last month. Household employment fell 250,000 (+0.5% y/y) and offset about half of the prior month&#39;s surge while the labor force fell 211,000 (+1.8% y/y) after jumping 573,000 in September. The labor force participation rate fell slightly to 65.9% and that was down from 66.2% during all of last year. 

<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> : 000s</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>166</td>
<td>96</td>
<td>93</td>
<td>1.2%</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>110</td>
<td>93</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-21</td>
<td>-17</td>
<td>-45</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-5</td>
<td>-14</td>
<td>-29</td>
<td>-1.4%</td>
<td>4.8%</td>
<td>5.2%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.8</td>
<td>33.9 (Oct &#39;06)</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.7%</td>
<td>4.6%</td>
<td>4.4% (Oct &#39;06)</td>
<td>4.6%</td>
<td>5.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls increased 166,000 last month. The gain was double the rise expected by the consensus of economists, although the increase in September jobs was revised slightly downward to 96,000 from the 110,000 reported last month. [...]

U.S. Payrolls Rose Double Expectations

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102a.jpg" align="left" border="0" height="265" width="353">
Nonfarm payrolls increased 166,000 last month. The gain was
double the rise expected by the consensus of economists, although the
increase in September jobs was revised slightly downward to 96,000 from
the 110,000 reported last month.
An increase in private service sector jobs in October added
nearly all of the heft to last month's job gain. The increase of
154,000 was provided by a 65,000 (2.1% y/y) rise in professional
&amp; business service jobs and a 7,500 (3.1% y/y) rise in jobs in
the education sector. Additionally, 35,100 (3.2% y/y) jobs were added
in the health care sector and the leisure industry added 56,000 (3.3%
y/y) workers. These gains offset weak or negative growth elsewhere in
service sector jobs.
In what is perhaps a positive sign for future growth in jobs,
employment in the temporary help industry rose 20,200 (-1.6% y/y) and
offset all of the prior month's decline.
Employment in the government sector also rose a respectable
36,000 (1.0% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102b.jpg" align="right" border="0" height="265" width="353">
Factory sector payrolls fell another 21,000, adding to a
decline that began early last year. Again, these declines are at odds
with the recent ISM reports of job growth in manufacturing.
Construction employment fell by 5,000 last month after a 14,000 worker
decline during September.
Average hourly earnings increased 0.2% and
the prior month's gain was revised down slightly. Factory sector
earnings rose 0.1% (2.9% y/y) and private service-providing earnings
rose 0.2% (3.9% y/y).
The unemployment rate held steady at 4.7%
last month. Household employment fell 250,000 (+0.5% y/y) and offset
about half of the prior month's surge while the labor force fell
211,000 (+1.8% y/y) after jumping 573,000 in September. The labor force
participation rate fell slightly to 65.9% and that was down from 66.2%
during all of last year. 


<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>
: 000s</th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>166</td>
<td>96</td>
<td>93</td>
<td>1.2%</td>
<td>1.9%</td>
<td>1.7%</td>
<td>1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Previous</td>
<td>--</td>
<td>110</td>
<td>93</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-21</td>
<td>-17</td>
<td>-45</td>
<td>-1.4%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-1.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-5</td>
<td>-14</td>
<td>-29</td>
<td>-1.4%</td>
<td>4.8%</td>
<td>5.2%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.8</td>
<td>33.8</td>
<td>33.8</td>
<td>33.9 (Oct '06)</td>
<td>33.8</td>
<td>33.8</td>
<td>33.7</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>3.9%</td>
<td>2.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>4.7%</td>
<td>4.7%</td>
<td>4.6%</td>
<td>4.4% (Oct '06)</td>
<td>4.6%</td>
<td>5.1%</td>
<td>5.5%</td>
</tr>
</tbody>
</table>
U.S. Vehicle Sales Down 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 2, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102c.jpg" align="left" border="0" height="265" width="353">
U.S. sales of light vehicles last month fell 1.1% from
September to a 16.06M unit annual selling rate. That followed the
slight 0.3% decline during September, according to the Autodata
Corporation.
Domestically made vehicle sales fell 2.5% m/m to
12.08M (-2.1% y/y). Sales of domestic light trucks again
seemed to show the effects of higher gas prices and were down 2.9% m/m
to a 7.07M selling rate (-3.4% y/y. Meanwhile, sales of U.S. made cars
more than reversed the September increase with a 1.9% decline to 5.06M
units last month (-0.4% y/y).
Sales of the relatively fuel efficient imported
light vehicles posted another gain. The 3.4% rise to 3.88M units (0.1%
y/y) was to near the average level of sales during the
record year of 2006. Sales look to be rising another 5% this year.
Imported light truck sales rose 1.3% last month (-0.8% y/y) and sales
of imported autos rose 4.7% to 2.46M units (0.7% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102d.jpg" align="right" border="0" height="265" width="353">
Import's share of the U.S. light vehicle
market rose to 24.8% versus an average 23.1% for all of last year.
The statement accompanying this week's FOMC
meeting can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20071031a.htm">
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/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">&nbsp;October</th>
<th scope="col">September</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.05</td>
<td>16.23</td>
<td>-1.6%</td>
<td>16.55</td>
<td>16.96</td>
<td>16.87</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.47</td>
<td>7.45</td>
<td>0.0%</td>
<td>7.77</td>
<td>7.65</td>
<td>7.49</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>5.06</td>
<td>5.10</td>
<td>-0.4%</td>
<td>5.31</td>
<td>5.40</td>
<td>5.36</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>2.46</td>
<td>2.35</td>
<td>0.7%</td>
<td>2.45</td>
<td>2.25</td>
<td>2.14</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>8.59</td>
<td>8.77</td>
<td>-2.9%</td>
<td>8.78</td>
<td>9.32</td>
<td>9.37</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>7.07</td>
<td>7.28</td>
<td>-3.4%</td>
<td>7.42</td>
<td>8.12</td>
<td>8.15</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.52</td>
<td>1.50</td>
<td>-0.8%</td>
<td>1.37</td>
<td>1.20</td>
<td>1.23</td>
</tr>
</tbody>
</table>
EU Registrations Up in August
butStill with Challenged Trend 
by&nbsp;<a href="/comment/Brusca.html">Robert
Brusca</a> November 2, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102e.jpg" align="left" border="0" height="265" width="353">
Car registrations rose in the EU by 1.9% in August, their
second monthly gain in a row. Still, sales trends are uncertain after
some real volatility from February through July. Except for a real
spike in July flanked by two severe months of declines, car
registrations have been downbeat. The EU numbers today are completed by
release of the French car registration figures that show a decline in
August. With two months gone in the third quarter, car registrations
are dropping at a 14% annual rate in France. For the EU, car
registrations are up at a 10% pace in Q3. For August, a rebound in
Germany and strength in Italy have helped to push the registration
numbers up for EMU in face of declines in the UK and France. On the
whole, though, car sales are as irregular as ever and hard to count on.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">EU Car
Registrations </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Month-to-month</td>
<td colspan="3">Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Total</td>
<td>1.9%</td>
<td>1.8%</td>
<td>-7.5%</td>
<td>-15.3%</td>
<td>11.5%</td>
<td>0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">from 3Mo Moving average</td>
<td>-1.4%</td>
<td>2.6%</td>
<td>-0.6%</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Country
detail</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>6.3%</td>
<td>3.0%</td>
<td>-4.7%</td>
<td>18.0%</td>
<td>56.5%</td>
<td>-2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>-3.9%</td>
<td>3.2%</td>
<td>-1.4%</td>
<td>-8.8%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>10.5%</td>
<td>-10.5%</td>
<td>-5.2%</td>
<td>-22.9%</td>
<td>4.7%</td>
<td>7.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>5.3%</td>
<td>-2.4%</td>
<td>-6.2%</td>
<td>-13.6%</td>
<td>10.5%</td>
<td>-2.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>-20.0%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>-54.4%</td>
<td>-29.4%</td>
<td>1.3%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">All SA
France also working day
adjusted</td>
</tr>
</tbody>
</table>
PMIs in MFG are All Losing
Momentum&#8230; but Still Showing Growth 
by&nbsp;<a href="/comment/Brusca.html">Robert
Brusca</a> November 2, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102f.jpg" align="left" border="0" height="265" width="353">
Is the thrill gone?EMU indexes stand more or less mid range. 
 

In October the MFG PMIs are losing momentum. The chart on the
left shows the year-over-year percentage drops in the levels of the
index for key EMU countries. Although the various nations are at
different levels in terms of their respective MFG indexes they are all
declining in a very sympathetic bunched fashion. 
 

The big countries - Germany, France, Italy and Spain &#8211; all
have indexes clustered just north of their 50 breakeven marks. Spain
has slipped below 50, the breakeven point for expansion/contraction. In
terms of their respective range of values we find France and Spain are
lower in their range percentiles. France&#8217;s raw reading of 50.54 is in
the bottom 38 percentile of its range even though that PMI reading is
above 50. The MFG PMI in France has simply tended to be stronger than
in other countries. 
 

Some of the smaller countries (Ireland, Greece, Austria and
the Netherlands) have PMI ratings that are much higher in their
respective ranges with raw PMI scores as high as 56. Greece has a PMI
reading that ranks in the top 79th percentile of its range. Right now,
the small countries of Europe are the ones pressing the advance for MFG
for EMU as a region. 
 

The UK, an EU member but not an EMU member, has a raw PMI
score of 52.93, higher than any large EMU county and a range reading of
68.8% showing that the UK is also strong in its range of values. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col"> NTC MFG
Indexes</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td style="color: red;">51.52</td>
<td style="color: red;">53.21</td>
<td style="color: red;">53.02</td>
<td style="color: red;">54.09</td>
<td style="color: red;">54.96</td>
<td>52.2%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">51.67</td>
<td style="color: red;">54.87</td>
<td>54.17</td>
<td>55.44</td>
<td>56.67</td>
<td>55.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>50.54</td>
<td style="color: red;">50.51</td>
<td>51.20</td>
<td>52.50</td>
<td>53.27</td>
<td style="color: red;">38.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">51.34</td>
<td style="color: red;">52.39</td>
<td>52.45</td>
<td>53.28</td>
<td>53.74</td>
<td>56.1%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td style="color: red;">49.58</td>
<td style="color: red;">50.80</td>
<td>50.85</td>
<td>52.35</td>
<td>54.27</td>
<td style="color: red;">44.7%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td style="color: red;">52.77</td>
<td>55.37</td>
<td>54.21</td>
<td>54.00</td>
<td>55.24</td>
<td>60.8%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>55.27</td>
<td>53.83</td>
<td>54.22</td>
<td>54.03</td>
<td>53.13</td>
<td>79.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">52.27</td>
<td>54.35</td>
<td>53.66</td>
<td>53.33</td>
<td>52.94</td>
<td>67.9%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td style="color: red;">56.15</td>
<td>56.36</td>
<td>56.23</td>
<td>56.98</td>
<td>56.72</td>
<td>78.6%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td style="color: red;">52.93</td>
<td style="color: red;">54.73</td>
<td>54.54</td>
<td>54.75</td>
<td>54.21</td>
<td>68.8%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">percentile
is over range since March
2000</td>
</tr>
</tbody>
</table>
</body></html>

Carol Stone, CBE

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101g.jpg" class="large" align="left">The deficit in Australia's trade in goods and
services
increased further in September as exports declined and an accompanying
decline in imports was smaller. The overall deficit was A$1,862
million, up from A$1,665 million in August (seasonally adjusted). The
year-ago figure was A$761 million.
We have highlighted here before (See May 4, 2007 commentary)
the role of raw materials, particularly mineral resources, in
Australia's international trade. The SITC 3 categories, "crude
materials, inedible, ex fuels" and "mineral fuels, etc" together
constitute about half of the nation's total goods exports. These
exports have brought considerable revenue into the Australian economy.
Australia's economy has been strong recently. Indeed, today, a report
of September retail trade shows a gain of 0.9% in that month, extending
a trend of notable growth in consumer spending.
However, the commodities markets are priced in US dollars. The
Australian dollar, perhaps bolstered by the vigorous economy, has risen
markedly. Yesterday, according to the New York Federal Reserve Bank, it
was priced at US$0.9271, the highest month-end value since March 1984.
[In fact, a retail purchase in New York City yesterday came right at
par.] This rapid increase in the exchange rate means that world
commodities, with US dollar prices, bring relatively fewer Australian
dollars than before. Thus, it is not surprising to see a moderation in
the value of these key Australian exports, which have averaged over the
last six months only 0.5% above a year ago.
This point is more clearly made in the commodity price index
compiled by the Reserve Bank of Australia; the RBA publishes this in
both US$ and A$. See the difference in the third graph. Flexible
currency values are, of course, one of the important transmission
mechanisms for global trade adjustment and for monetary policy. The
strong Australian dollar can help restrain inflation in Australia and
by slowing the Australian-dollar value of tradable goods, it can also
modulate economic activity, an "automatic stabilizer". Still, today's
strong retail trade report brought further talk the the RBA might raise
interest rates at its next policy meeting. This talk too can bring more
strength to the currency -- at least until it is evident that that very
strength is restraining the economy.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101h.jpg" class="small"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101i.jpg" class="small">


 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">AUSTRALIA
(Mil.A$)</th>
<th scope="col">Sept 2007</th>
<th scope="col">Aug 2007</th>
<th scope="col">Jul 2007</th>
<th scope="col">Sept 2006</th>
<th scope="col" colspan="3">Monthly Averages</th>
</tr>
<tr>
<th scope="col" class="firstclass" colspan="5"></th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Balance on Goods
&amp; Services</td>
<td>-1,862</td>
<td>-1,665</td>
<td>-1,011</td>
<td>-761</td>
<td>-969</td>
<td>-1,399</td>
<td>-1,985</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods Credits
(Exports)</td>
<td>13,764</td>
<td>14,558</td>
<td>14,200</td>
<td>14,009</td>
<td>13,809</td>
<td>11,690</td>
<td>9,881</td>
</tr>
<tr>
<td class="firstcol">Goods Debits
(Imports)</td>
<td>15,848</td>
<td>16,408</td>
<td>15,408</td>
<td>14,908</td>
<td>14,871</td>
<td>13,147</td>
<td>11,922</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Services</td>
<td>223</td>
<td>185</td>
<td>190</td>
<td>138</td>
<td>93</td>
<td>58</td>
<td>58</td>
</tr>
<tr>
<td class="firstcol">Raw Material Exports* (NSA)</td>
<td>6,404</td>
<td>7,077</td>
<td>6,681</td>
<td>6,556</td>
<td>6,544</td>
<td>5,475</td>
<td>3,908</td>
</tr>
</tbody>
</table>
</body></html>

The deficit in Australia's trade in goods and services increased further in September as exports declined and an accompanying decline in imports was smaller. The overall deficit was A$1,862 million, up from A$1,665 million in August [...]

Australian Economy Remains Strong, But Strong A$ May Already Be Generating Some Restraint

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

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

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Retail gasoline prices for all grades, on average, rose to $3.30 per gallon (-3.2% y/y) last week after rising to $3.27 one week earlier. Prices had been moving sideways for two months. Gasoline prices are above their low of $3.13 in the week of December 9. 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. The retail price for on-highway diesel fuel edged up to $3.73 per gallon (3.0% y/y) last week after holding steady at $3.71 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil increased to $64.16 per barrel (-15.5% y/y) in the week ended August 29 after falling in the prior week to $63.23 per barrel. Prices remained below a high of a $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 $65.59 per barrel. The price of European Brent crude eased to $67.59 per barrel (-16.4% y/y) in the week of August 29 from $67.82 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. The price yesterday was $68.09 per barrel.

Natural gas prices were unchanged at an average $2.85/mmbtu (+46.9% y/y) in the week ended August 22, after falling from an average $2.94/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.70 per mmbtu.

Gasoline demand declined 1.1% y/y in the four weeks ending August 22, following a 1.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.5% y/y in the four weeks ending August 22, after a 3.3% y/y increase in the previous four-week period. Crude oil input to refineries rose 3.0% y/y in the four weeks ending August 22, after a 4.1% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 22 after a 1.3% y/y in the prior week. Residual fuel oil inventories fell 23.8% y/y in the week of August 22, after falling 25.5% y/y in the prior week. Crude oil inventories rose 2.4% y/y in the week of August 22 after a 2.6% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 24.6 days in the week of August 22 versus 24.8 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil eased to 24.5 days in the week of August 22 from 24.6 days in the prior week and remained below a 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** & **USENERGY** database.

- Gasoline prices increase to highest level in four weeks.
- Crude oil prices recover after earlier declines.
- Natural gas prices at early-June low.

U.S. Gasoline & Crude Oil Prices Rise Last Week

Kathleen Stephansen, CBE

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Mortgage applications declined by 1.2% (+18.2% y/y) in the week ending August 29, after easing 0.5% (+21.6% y/y) in the week ending August 22, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans dropped 3.1% (+16.6% y/y) last week, following a gain of 2.2% (24.3% y/y) in the prior week. Applications to refinance a home loan edged up 0.9% (20.1% y/y) last week, after declining 3.5% (+18.6% y/y) in the week of August 22.

The effective interest rate on a 30-year fixed-rate loan edged down 5bps to 6.81% in the week ending August 29 from 6.86% in the week ending August 22. It had been at 6.86% for three consecutive weeks. The recent high of 7.28% was reached in the second week of January. The rate on 15-year fixed-rate mortgages declined by 18bps to 6.04% in the latest week from 6.22% in the prior week. The rate on 30-year Jumbo loans dropped 11bps to 6.69% in the week ending August 29 from 6.80% one week earlier. The rate on a 5-year ARM fell 16bps to 6.03% in the latest week from 6.19% in the week of August 22.

The share of applications for refinancing an existing loan rose to 46.9% of total applications in the week ending August 29 after easing to 45.3% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity rose to 8.80% in the latest week from 8.40% in the week of August 22.

The average size of a mortgage loan rose 0.5% (1.8% y/y) to $384,800 in the week ending August 29, after falling 1.2% (+2.9% y/y) to $383,000 in the week of August 22. The average size of a purchase loan fell 1.6% (-0.2% y/y) to $426,400 in the latest week after rising 1.0% (1.5% y/y) to $433,400 in the prior week. The average size of a loan to refinance a mortgage rose 4.8% (5.1% y/y) to $337,700 in the week ending August 29 after falling 5.2% (+4.2% y/y) to $322,200 in the prior week. It was increased from a low of $277,900 in the last week of May.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Purchase applications dropped while loan refinancing edged up.
- Fixed-interest rate on 30-year loan holds at a 4-month low.
- Average loan size edged up.

U.S. Mortgage Applications Declined in Latest Week

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The ISM U.S. manufacturing PMI improved to 48.7 in August after falling to 48.0 during July, according to the Institute for Supply Management. The June	 reading was 49.0. These figures are below the 50 expansion-contraction dividing line. As a result, they indicate U.S. manufacturing sector contraction for the sixth consecutive month. They remain above, however, a low of 46.9 in October of last year. An August reading of 48.8 had been expected in the Action Economics Forecast Survey.

The new orders component improved to 51.4 last month after rising to 47.1 in July. It was increased from a March low of 45.2. A higher 24.7% (NSA) of respondents reported higher new orders while a lessened 22.7% reported lower. The employment reading edged up to 43.8 from 43.4. Nine percent (NSA) of respondents reported more hiring while 22.4% reported less. The supplier deliveries component rose to 51.3 after falling to 49.3 in July. Nine percent (NSA) of respondents indicated slower delivery speeds while 6.6% reported faster speeds. The inventories index increased to 49.4 from 48.9. It was the highest level in four months, up from a 46.7 May low. An increased 19.5% of respondents indicated higher inventories while 18.6% reported lower.

Offsetting these increases, the production index fell to 47.8 in August from 51.4 in July. It remained up, however, from a 44.0 April low. Seventeen percent (NSA) of respondents indicated higher production while 21.1% reported lower. The order backlog index fell to 44.7 (NSA) after rising to 46.8 in July. A lessened 16.3% of respondents reported higher order backlogs while 27.0% indicated lower.

The prices index eased to 63.7 last month from 64.8 in July, remaining below a high of 69.8 in April, but above its low of 39.4 in December 2022. A lessened 33.5% of respondents reported higher prices while a slightly increased 6.1% reported lower.

In other series, the export orders index rose to a seasonally adjusted 47.6 in August from 46.1 in July. It was the highest level in five months, up from a 40.1 May low. The imports index fell to 46.0 last month from 47.6 in July. 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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- Improvement fails to recover all of July decline.
- New orders gain offsets production decline.
- Price index falls to six-month low.

U.S. ISM Manufacturing PMI Increases in August; Prices Ease

Winnie Tapasanun

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The value of construction put in place dipped 0.1% m/m in July after declines of 0.4% in June (unrevised) and 0.2% in May (-0.4% previously), data from the U.S. Census Bureau showed. The July reading was the third successive m/m fall and the eighth in nine months. A 0.2% m/m July decline had been expected in the Action Economics Forecast Survey. The year-on-year rate was -2.8% July following -2.7% in June, registering the sixth consecutive y/y decline. The latest y/y number compared to a positive 5.5% in July 2024; thus, having remained well below its recent high of 12.9% in December 2023 and a peak of 18.4% in April 2022.

Private construction fell 0.2% (-4.6% y/y) in July, the 11th straight m/m fall, after decreases of 0.5% in June (unrevised) and 0.3% in May (-0.6% previously). Residential private construction edged up 0.1% (-5.3% y/y) in July, the first m/m rise since December, following a 0.6% decline in June (-0.7% initially). Single-family building increased 0.1% (-2.1% y/y), up for the first time since February, after a 1.2% June decrease; it was 47.3% of the residential private construction. Home improvement building ticked up 0.1% (-7.6% y/y), the third m/m gain in four months, following a 0.3% June drop; it was 40.0% of the residential private construction. Meanwhile, multi-family building slid 0.4% (-9.4% y/y), the third m/m slide in four months, reversing a 0.1% June uptick; it was 12.8% of the residential private construction.

Nonresidential private construction fell 0.5% (-3.7% y/y) in July, the third straight m/m fall and the fourth in five months, on top of a 0.4% decline in June (-0.3% initially). The July fall reflected m/m declines in the following nonresidential private constructions. These included amusement & recreation (-1.0%; +0.6% y/y), commercial (-0.9%; -9.9% y/y), manufacturing (-0.7%; -6.7% y/y), utilities (-0.7%; +2.6% y/y), religious (-0.3%; +19.2% y/y), and office (-0.2%; -0.4% y/y). To the upside, the following nonresidential private constructions rose m/m in July: transportation (0.6%; -2.8% y/y), health care (0.3%; -1.3% y/y), lodging (0.3%; -5.1% y/y), and educational (0.2%; -5.7% y/y). Meanwhile, communication private construction was virtually unchanged (-0.8% y/y) in July following two successive m/m increases.

The value of public construction rose 0.3% (3.4% y/y) in July, up for the fourth month in five, after holding steady in June (+0.1% initially), reflecting rises of 1.8% (17.4% y/y) in residential public construction and 0.3% (3.1% y/y) in nonresidential public construction. The following nonresidential public construction subcategories rose m/m in July. These included conservation & development (1.8%; 5.7% y/y), utilities (1.7%; -2.1% y/y), health care (1.3%; 14.2% y/y), office (1.3%; 0.3% y/y), water supply (1.2%; 2.8% y/y), amusement & recreation (0.4%; 3.8% y/y), transportation (0.3%; 6.2% y/y), commercial (0.1%; 27.0% y/y), and public safety (0.1%; 3.0% y/y). In contrast, sewage & waste disposal public construction (-0.3%; +11.2% y/y) and educational public construction (-0.1%; -1.2% y/y) declined m/m in July. Notably, spending on highways & streets, which made up 27.7% of public construction spending, eased 0.1% (+0.9% y/y) in July following a 0.3% rebound in June.

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

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- Headline: -0.1% m/m, the third straight m/m fall; -2.8% y/y, the sixth straight y/y slide.
- Residential private construction +0.1% m/m, up for the first time since December.
- Nonresidential private construction -0.5% m/m, the third consecutive m/m decline.
- Public sector construction +0.3% m/m, led by a 1.8% rebound in residential public building.


U.S. Construction Spending Eases in July

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Inflation in August was well behaved; the headline series with the monetary union posted a gain of 0.2% after 0.3% gains in each of the previous months. Still those increases mean that the three-month inflation rate is at 3% compared to 2.1% over 12 months. Stop headline inflation has grown moderately hot in the monetary union.

Across countries the largest EMU members has so well-behaved inflation in August, with Germany up 0.2%, France up 0.1%, and Italy and Spain both unchanged. However, inflation in the previous two months was a bit stronger leaving three-month inflation rates for France, Italy, and Spain over 2%. Over six months only Italy is over 2% and that's barely, and over 12 months only Spain is substantially above the 2% mark.

Core inflation in the monetary union is where the elusiveness and stubbornness is for the three large economies that report core inflation. Germany actually reports ex-energy inflation. Italy and Spain report core inflation. They're all showing increases of 0.3 and 0.2 over the last two months. Over three months German ex-energy inflation is running at a 2.4% annual rate with Italy's core at 2.7% and Spain's core at 3.8%. Over 12 months German ex-energy inflation is up at a 2.6% annual rate, compared to a 2.4% annual rate for Spain’s core and Italy’s core that that is nearly on the money at a 2.1% annual rate.

The 12-monht inflation rate is marginally worse for headline and core rates across this group of countries in August compared to July. For the EMU, the headline is the same at 2.1%. Even though shorter measures show some pressure building, 12-month inflation is marginally lower in August 2025 than in August 2024 for headline and core measures in the large countries.

However, there has been no sense of controlled inflation recently as all averages are clearly excessive with the average five-year reading at a low of 3% for core inflation in Italy to a five-year average high of 4.5% in Germany. This legacy for inflation is still a problem for some although central bankers around the world are trying to dismiss it as a past event; however, no one's quite sure whether inflation is really over the hump and going back to normal for good.

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This keeps monetary policy somewhat complicated; at the same time the global geopolitical scene is in turmoil, and it's always hard to make monetary and fiscal policy when there are national security risks especially when there's a war percolating at your border. Internationally the goods sectors – manufacturing- remain weak although there's evidence that global trade has showed some spunk at least in terms of the Baltic dry index which is undergoing some moderate firmness. In the United States, despite the fact that the Fed has not hit its inflation target in 4 ¼ years, the central bank still seems to be finding its way to rate cuts possibly as soon as this month. All that simply points out that it's a very different world than what it has been with central banks willing to cut rates with inflation over the top of the target having been over the top of its target for an extended period of time. This suggests to me that central bank credibility means something different or possibly that there is such a perception of the global economic environment that investors don't really feel that central banks are that important… sort of like deciding that your neighborhood is so safe; it doesn't matter if you lock the doors at night until of course it does matter. But then it’s too late.

Economy in Brief: 2007

Jump to:

U.S. ISM Non-manufacturing Index Improved Slightly

U.S. ISM Non-manufacturing Index Improved Slightly

PMIs in MFG are All Losing Momentum… but Still Showing Growth

EU Registrations Up in August but Still with Challenged Trend

U.S. Vehicle Sales Down

U.S. Payrolls Rose Double Expectations

U.S. Payrolls Rose Double Expectations

Australian Economy Remains Strong, But Strong A$ May Already Be Generating Some Restraint