Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050228a.jpg" width="353">
Personal income dropped last month 2.3% following the 3.7% jump in December which was driven by Microsoft&#39;s dividend payment. Consensus expectations had been for a 2.6% decline. Excluding the dividend effect personal income increased 0.5% last month after a 0.6% rise in December. Figures from July through December were revised
Wage &amp; salary income rose 0.6% (5.8% y/y) in January after an upwardly revised 0.5% December gain. Factory sector wages inched 0.1% higher but rose 4.8% y/y. Earlier figures were revised up sharply
Personal disposable income fell 2.6% (5.8% y/y) after the 4.1% surge in December. Adjusted for price inflation disposable income fell 2.8% m/m but rose 3.5% y/y.
Personal consumption fell slightly after the 0.8% surge in December and spending was lightly short of Consensus expectations for a 0.1% rise. Durable goods spending fell 4.3% and reversed a like gain in December due to lower motor vehicle sales. Spending on nondurables rose 0.8% despite the decline in gasoline prices last month and services spending rose 0.4% (5.3% y/y).
The PCE chain price index rose 0.2% in January. The 0.3% rise in the price index less food &amp; energy was the steepest since December 2002.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>-2.3%</td>
<td>3.7%</td>
<td>6.0%</td>
<td>5.6%</td>
<td>3.2%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>-0.0%</td>
<td>0.8%</td>
<td>5.7%</td>
<td>6.0%</td>
<td>5.2%</td>
<td>4.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>1.0%</td>
<td>3.6%</td>
<td>1.1%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2%</td>
<td>-0.0%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>1.9%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.3%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
New Home Sales Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 28, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050228b.jpg" width="353">
Sales of new single-family homes fell a sharp 9.2% in January to 1.106M but the previously reported slight gain in December was revised to a 5.6% increase. Consensus estimates had been for sales of 1.125M.
The decline in sales last month was led by a 40.3% drop in the Midwest (-33.2% y/y). In the Northeast sales fell 17.1% (-33.7% y/y) and in the South sales also fell by 3.3% (+1.3% y/y). In the West sales rose 5.6% in January (+16.6% y/y).
The median price of a new single family home fell to $199,400 (-4.8% y/y).
The figures from the Census Department reflect homes sold as opposed to the figures on existing home sales from the National Association of Realtors which reflect closings of sales in earlier months. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>1,106</td>
<td>1,218</td>
<td>-4.2%</td>
<td>1,196</td>
<td>1,089</td>
<td>976</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 28, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050228c.jpg" width="353">
The Chicago Purchasing Managers Business Barometer rose for the second month and increased to 62.7 in February, beating Consensus expectations for a decline to 60.2.
During the last ten years there has been a 67% correlation between the level of the Chicago Business Barometer and the three month change in factory sector industrial output. That correlation has risen to 82% during the last five years.
The employment index surged 4.9 points to 57.7, the highest level since November. During the last ten years there has been a 78% correlation between the level of the employment index and the three month change in factory sector employment. The new orders index rose to the highest level since October.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050228d.jpg" width="353">
The index of prices paid fell sharply to the lowest level in nearly a year. During the last ten years there has been an 86% correlation between the Chicago price index and the three month change in the &quot;core&quot; intermediate goods PPI.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb&nbsp;&#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Business Barometer</td>
<td>62.7</td>
<td>62.4</td>
<td>64.7</td>
<td>62.9</td>
<td>54.6</td>
<td>52.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>68.5</td>
<td>65.8</td>
<td>66.4</td>
<td>67.0</td>
<td>58.0</td>
<td>56.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>70.1</td>
<td>76.5</td>
<td>67.7</td>
<td>80.1</td>
<td>55.8</td>
<td>56.9</td>
</tr>
</tbody>
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Personal income dropped last month 2.3% following the 3.7% jump in December which was driven by Microsoft's dividend payment. Consensus expectations had been for a 2.6% decline. Excluding the dividend effect personal income increased [...]

U.S. Personal Income Down

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/050225c.jpg" width="353">
Labor markets in disparate countries presently face disparate employment conditions. In data reported today, France, for instance, saw its January unemployment rate touch 10%, following more than a year hovering around 9.9%. Rates rose for both men and women and for adults both over and under age 50. Obviously, a one-decimal move is not much, but it still signals that the French economy struggles, along with most of its neighbors, to find improvement for its labor force.
Hungary has a similar concern, as its unemployment rate rose to 6.6% in January, the highest since these data started monthly publication in 2001 (they are reported as 3-month moving averages, however, and are contiguous with the separate quarterly series also maintained in Haver&#39;s EMERGECW database). While some of this latest monthly change is seasonal, weakness in Hungarian employment is clearly the major source of the unemployment problem. A brief spurt in employment occurred in 2003 and kept the unemployment rate steady, but that played out last year, as seen in the table below.
Norway has somewhat the opposite situation, as a modest recovery in employment last year helped to keep the unemployment rate low and steady. In December, it remained at 4.4%, the same as the average for 2004 overall and off a mid-2003 peak of 4.7%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225d.jpg" width="353">
Brazil calculates its unemployment rate based on both the total working-age population and the &quot;economically active&quot; population. With a large segment not involved in commercial activity, the participation rate is about 57%, so there is considerable difference in the two unemployment measures. The unemployment count in 2004 was 2.49 million; this is 6.6% of the total working-age population and 11.5% of the &quot;economically active&quot; population. &quot;Working age&quot; in Brazil begins at age 10, and last year was 38.06 million people. Data for Brazil are shown in Haver&#39;s EMERGELA database.
Whichever unemployment rate base is used, the unemployment rate in Brazil has come down substantially in the last nine months or so. Following some weakness in 2003 and early last year, employment has rebounded and unemployment has fallen sharply. Thus, the unemployment rate relative to the economically active population (what we&#39;d call the &quot;labor force&quot;) has fallen from a recent peak of 13.1% in April 2004 to 10.2% in January 2005. Brazil&#39;s hesitant recovery continues.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">Unemployment Rates &amp; Related Data</th>
<th scope="col">Jan 2005</th>
<th scope="col">Dec 2004</th>
<th scope="col">Nov 2004</th>
<th scope="col">Year Ago</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France (seas adj)</td>
<td>10.0</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.9</td>
<td>9.7</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">Hungary*</td>
<td>6.6</td>
<td>6.3</td>
<td>6.3</td>
<td>5.8</td>
<td>6.1</td>
<td>5.8</td>
<td>5.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (12-mo&nbsp; % change)</td>
<td>-0.7</td>
<td>-1.1</td>
<td>-1.4</td>
<td>--</td>
<td>-0.6</td>
<td>-1.3</td>
<td>0.1</td>
</tr>
<tr>
<td class="firstcol">Norway (seas adj)</td>
<td>--</td>
<td>4.4</td>
<td>4.4</td>
<td>4.6</td>
<td>4.4</td>
<td>4.5</td>
<td>3.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Employment (12-mo&nbsp; % change)</td>
<td>--</td>
<td>0.8</td>
<td>0.7</td>
<td>--</td>
<td>0.3</td>
<td>-0.7</td>
<td>0.3</td>
</tr>
<tr>
<td class="firstcol">Brazil: % of Working Age Population**</td>
<td>5.7</td>
<td>5.4</td>
<td>6.1</td>
<td>6.6</td>
<td>6.6</td>
<td>7.0</td>
<td>6.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; % of Economically Active Population</td>
<td>10.2</td>
<td>9.6</td>
<td>10.6</td>
<td>11.7</td>
<td>11.5</td>
<td>12.3</td>
<td>11.7</td>
</tr>
</tbody>
</table>
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Labor markets in disparate countries presently face disparate employment conditions. In data reported today, France, for instance, saw its January unemployment rate touch 10%, following more than a year hovering around 9.9%. Rates [...]

January Unemployment Rates Up in France and Hungary, Down in Norway and Brazil

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225b.jpg" width="353">
Sales of existing single family homes fell for the second month and earlier sales estimates were revised down. January sales of 5.94M fell 0.5% from December which fell 2.8% from November. Consensus expectations had been for December sales of 6.75M.
Improved methodology and better modeling led to monthly revisions back through 1999. The figures reflect closings of home sales in earlier months.
Sales were mixed m/m across the country&#39;s regions. In the Northeast sales fell 3.7% (+6.8% y/y) and in the Midwest sales fell 5.8% (+9.2% y/y). In the South sales rose 3.0% (+13.3% y/y) and in the West sales ticked 0.7% higher (+17.7% y/y).
The median price of an existing home single family home fell m/m to $186,900 (+9.8% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/EHSJan05?OpenDocument"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;5,940</td>
<td>&nbsp;5,970</td>
<td>12.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
</tr>
</tbody>
</table>
</body>
</html>

Sales of existing single family homes fell for the second month and earlier sales estimates were revised down. January sales of 5.94M fell 0.5% from December which fell 2.8% from November. Consensus expectations had been for December [...]

U.S. Existing Home Sales Fell Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225a.jpg" width="353">
US real GDP growth in 4Q04 was revised up to 3.8% (AR), about the same rate of growth as in the prior quarter. The Consensus expectation had been for 3.6% growth in 4Q.
Trade sector deterioration is now estimated to have subtracted less from GDP growth; 1.43 percentage points versus 1.73 points estimated earlier. Statistics Canada corrected a $1.4B underestimation of U.S. exports to Canada during November. The correction contributed to a revision in total US goods exports to a 1.9% rate of growth (6.6% y/y) from -6.8% estimated in the advance report. Imports of goods rose 15.3% (11.4% y/y), revised from 12.2%.
An upward revision to inventory accumulation indicated that production increases to raise inventories added 0.6 percentage points to GDP growth versus 0.4 percentage points estimated earlier.
Domestic demand growth also was revised up slightly to 4.5% as growth in business fixed investment in equipment &amp; software was raised to 18.0% (14.4% y/y) from 14.9%. Residential investment growth also was raised to 2.1% (6.2% y/y) from 0.3% but growth in PCE was lowered to 4.2% (3.7% y/y) from 4.6%.
Price inflation was revised up slightly to 2.1%. The price index for domestic demand grew 2.7% (2.9% y/y) driven by an upwardly revised 5.4% (4.9% y/y) increase in the state &amp; local government price index.
Corporate profits for 4Q will be released on March 30th and will incorporate the effects of thespecial dividend paid to shareholders by Microsoft Corporation.
<a href="http://www.federalreserve.gov/pubs/feds/2005/200502/200502pap.pdf">The Reform of 1979: How It Happened and Why</a> is from the Research &amp; Statistics and Monetary Affairs Division of the US Federal Reserve Board.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">4Q &#39;04 (Prelim.</th>
<th scope="col">4Q &#39;04 (Advance)</th>
<th scope="col">3Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.8%</td>
<td>3.1%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.6%</td>
<td>0.4%</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.2%</td>
<td>2.7%</td>
<td>5.0%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.4%</td>
<td>-1.7%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>4.5%</td>
<td>4.3%</td>
<td>4.9%</td>
<td>4.2%</td>
<td>4.4%</td>
<td>3.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

US real GDP growth in 4Q04 was revised up to 3.8% (AR), about the same rate of growth as in the prior quarter. The Consensus expectation had been for 3.6% growth in 4Q. Trade sector deterioration is now estimated to have subtracted [...]

US GDP Growth Revised Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225a.jpg" width="353">
US real GDP growth in 4Q04 was revised up to 3.8% (AR), about the same rate of growth as in the prior quarter. The Consensus expectation had been for 3.6% growth in 4Q.
Trade sector deterioration is now estimated to have subtracted less from GDP growth; 1.43 percentage points versus 1.73 points estimated earlier. Statistics Canada corrected a $1.4B underestimation of U.S. exports to Canada during November. The correction contributed to a revision in total US goods exports to a 1.9% rate of growth (6.6% y/y) from -6.8% estimated in the advance report. Imports of goods rose 15.3% (11.4% y/y), revised from 12.2%.
An upward revision to inventory accumulation indicated that production increases to raise inventories added 0.6 percentage points to GDP growth versus 0.4 percentage points estimated earlier.
Domestic demand growth also was revised up slightly to 4.5% as growth in business fixed investment in equipment &amp; software was raised to 18.0% (14.4% y/y) from 14.9%. Residential investment growth also was raised to 2.1% (6.2% y/y) from 0.3% but growth in PCE was lowered to 4.2% (3.7% y/y) from 4.6%.
Price inflation was revised up slightly to 2.1%. The price index for domestic demand grew 2.7% (2.9% y/y) driven by an upwardly revised 5.4% (4.9% y/y) increase in the state &amp; local government price index.
The release of corporate profits for 4Q was delayed until March 30th to incorporate the effects of thespecial dividend paid to shareholders by Microsoft Corporation.
<a href="http://www.federalreserve.gov/pubs/feds/2005/200502/200502pap.pdf">The Reform of 1979: How It Happened and Why</a> is from the Research &amp; Statistics and Monetary Affairs Division of the US Federal Reserve Board.

<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/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">4Q &#39;04 (Prelim.</th>
<th scope="col">4Q &#39;04 (Advance)</th>
<th scope="col">3Q &#39;04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.8%</td>
<td>3.1%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>4.4%</td>
<td>3.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.6%</td>
<td>0.4%</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.2%</td>
<td>2.7%</td>
<td>5.0%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.4%</td>
<td>-1.7%</td>
<td>-0.1%</td>
<td>-0.7%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>4.5%</td>
<td>4.3%</td>
<td>4.9%</td>
<td>4.2%</td>
<td>4.4%</td>
<td>3.4%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.1%</td>
<td>2.0%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 25, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050225b.jpg" width="353">
Sales of existing single family homes fell for the second month and earlier sales estimates were revised down. January sales of 5.94M fell 0.5% from December which fell 2.8% from November. Consensus expectations had been for December sales of 6.75M.
Improved methodology and better modeling led to monthly revisions back through 1999. The figures reflect closings of home sales in earlier months.
Sales were mixed m/m across the country&#39;s regions. In the Northeast sales fell 3.7% (+6.8% y/y) and in the Midwest sales fell 5.8% (+9.2% y/y). In the South sales rose 3.0% (+13.3% y/y) and in the West sales ticked 0.7% higher (+17.7% y/y).
The median price of an existing home single family home fell m/m to $186,900 (+9.8% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/EHSJan05?OpenDocument"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;5,940</td>
<td>&nbsp;5,970</td>
<td>12.5%</td>
<td>5,913</td>
<td>5,441</td>
<td>4,995</td>
</tr>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224g.jpg" width="353">
After a pause in Q3, capital spending in Australia rebounded in Q4, in data released this morning by the Australian Statistics Bureau in Canberra.* New capital expenditures of private business grew 5.7% (seasonally adjusted quarterly rate) compared with a minimal 0.6% gain the prior period. The data are reported in chained Australian dollars referenced in the 2002-2003 fiscal year.
By type of expenditure, growth in the latest quarter was stronger in purchases of equipment, up 6.5%. Outlays for buildings and structures gained 3.5%. At the same time, this construction work remains firm relative to total capital expenditures. Structures had ratcheted lower as a portion of the total from the mid-1987 inception of these data to mid-2002. Since then, they have risen modestly, as seen in the second graph. This doesn&#39;t necessarily mean that construction activity was &quot;weak&quot; in an absolute sense, but that equipment and machinery tended to grow more rapidly.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224h.jpg" width="353">
Further, the shift between structures and equipment outlays represents a shift in the structure of Australian industry. Mining and manufacturing were much more significant in 1987 when the Australian Bureau of Statistics began to collect these data. The mining sector did falter and carried down with it the construction of mine shafts and other associated structures. By contrast, &quot;other selected industries&quot; -- mostly business services, trade and travel -- expanded markedly, with a consequent spur to demand for business equipment. Once the adjustment in mining moderated, structures began to strengthen in both growth rate and share of total capital outlays.
[These data cover business-oriented industries; they exclude public services such as education, health and all government. For the relevant sectors, these capital expenditures are source data for fixed capital formation in GDP, but those national accounts data include more industries and types of outlays, such as net purchases of used assets.]

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/ANZ/@A1/@A1.HTM">Australia Business Capital Spending</a></th>
<th scope="col">Q4 2004</th>
<th scope="col">Q3 2004</th>
<th scope="col">Q4 2004/ Q4 2003</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Capital Expenditures</td>
<td>5.7</td>
<td>0.6</td>
<td>9.9</td>
<td>6.6</td>
<td>12.4</td>
<td>15.5</td>
</tr>
<tr>
<td class="firstcol">Buildings &amp; Structures</td>
<td>3.5</td>
<td>0.5</td>
<td>10.3</td>
<td>11.6</td>
<td>17.8</td>
<td>9.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Equipment, Plant and Machinery</td>
<td>6.5</td>
<td>0.6</td>
<td>9.7</td>
<td>4.9</td>
<td>10.6</td>
<td>17.6</td>
</tr>
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After a pause in Q3, capital spending in Australia rebounded in Q4, in data released this morning by the Australian Statistics Bureau in Canberra.* New capital expenditures of private business grew 5.7% (seasonally adjusted quarterly [...]

Renewed Strength in Australian Business Capital Spending

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The average price for unleaded regular gasoline rose to $1.91 per gallon last week and the average price this month of $1.90 is up versus the low of $1.83 in January.
The price of oil firmed even more with the price of West Texas Intermediate crude rising over $50.00 per barrel.
Wholesale natural gas prices moderated last week to $6.02/mmbtu (+11.1% y/y).
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224e.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224f.jpg" width="353">

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D306.HTM">Energy Prices</a></th>
<th scope="col">02/21/05</th>
<th scope="col">12/31/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">US Retail Gasoline, Regular ($/Gal.)</td>
<td>$1.91</td>
<td>$1.79</td>
<td>12.9%</td>
<td>$1.85</td>
<td>$1.56</td>
<td>$1.35</td>
</tr>
<tr>
<td class="firstcol">Domestic Spot Market Price: West Texas Intermediate ($/Barrel)</td>
<td>$51.16</td>
<td>$41.78</td>
<td>41.8%</td>
<td>$41.78</td>
<td>$32.78</td>
<td>$31.23</td>
</tr>
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The average price for unleaded regular gasoline rose to $1.91 per gallon last week and the average price this month of $1.90 is up versus the low of $1.83 in January. The price of oil firmed even more with the price of West Texas [...]

Energy Prices Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050224d.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising rose to 41 in January, the highest level in nearly two years.
During the last ten years there has been an 88% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume held at a high 71%, indicative of broad based gains.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
The latest help wanted report from the Conference Board is available <a href="http://www.conference-board.org/economics/helpwanted.cfm">here</a>.
Help-Wanted Advertising and Job Vacancies from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2005/el2005-02.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Jan&nbsp; &#39;04</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">National Help Wanted Index</td>
<td>41</td>
<td>38</td>
<td>38</td>
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The Conference Board's National Index of Help-Wanted Advertising rose to 41 in January, the highest level in nearly two years. During the last ten years there has been an 88% correlation between the level of help-wanted advertising [...]

Help-Wanted Advertising: An Upside Breakout

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

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Kathleen Stephansen, CBE

260402A5.jpg

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Initial claims for unemployment insurance declined by 9,000 to 202,000 in the week ending March 28, from 211,000 in the week ending March 21, revised from 210,000. The four-week average declined 3,000 to 207,750 in the week ending March 28, from 210,750 the March 21 week, revised from 210,500. The Forecast Survey looked for 212,000 claims to have been filed.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—rose by 25,000 to 1.841 million in the week ending March 21, from 1.816 million in the week ending March 14. The four-week moving average declined to 1.839 million in the latest week from 1.846 million in the March 14 week. This is the lowest level for this average since September 28, 2024 when it was 1.834 million. The insured unemployment rate remained at 1.2% in the week of March 21. It has remained at that level since the week of November 29, 2025.

The insured unemployment rate varied greatly across individual states and territories. In the week ending March 14, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.73%), Massachusetts (2.66%), Washington (2.39%), Minnesota (2.31%), California (2.17%), and New York (2.01%). The lowest rates were in Florida (0.31%), Louisiana (0.32%), Arkansas (0.36%), Alabama (0.38%), and North Carolina (0.40%). Rates in other notable states include Illinois (1.99%), Connecticut (1.82%), Pennsylvania (1.72%), and Texas (1.07%). 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.

260402C5.jpg

260402D5.jpg

- New claims declined by 9,000 to 202,000.
- Continuing claims rose by 25,000 to 1.841 million.
- The insured unemployment rate remained at 1.2%.

U.S. Initial Unemployment Claims Edged Down in the Week of March 28

Robert Brusca

260402E.jpg

The S&P manufacturing PMIs for March showed improvements in 44.4% of the 18 reporters. The median reading for the month was at 50.9, indicating that expanding output was the median reading through the period. The median change showed a small step back of 0.1 diffusion points month-to-month.

Sequentially, looking at average yearly activity compared to a year ago, six months compared to 12 months, and three months compared to six months, we see progress in train. For three months compared to six months, the proportion of reporters showing improvement is 72.2%. For these reporters, over six months compared to 12 months, there is a 61.1% improvement proportion, while for 12 months compared to 12 months ago, there is only a 27.8% improvement.

The median reading over three months on average is 50.7, while the median reading over six months is 50.0 and the median reading over 12 months is 49.4. These readings show a very slow but steady improvement in manufacturing over this horizon.

In addition, we calculate the queue percentile standings for each reporter—that is, the level of the current diffusion index compared to all of the observations back to January 2022, expressing the final number as the percentile standing for the current month in that queue. On that basis, the median percentile standing for this group of reporters is 76.5%. It tells us that the median standing is in the top 25 percentile of all the readings since January 2022 to date. That's a reasonably good result. For the euro area, the queue percentile standing is at the 89.8 percentile, while for Germany it's at its 91.8 percentile. For the Monetary Union and for Germany, the current numbers are some of the best we've seen during this period. However, that doesn't mean that they're necessarily stellar readings.

**PMI diffusion vs. PMI rank standings**
German diffusion in manufacturing is 52.2 in March; for the EMU it is 51.6. Germany posts the fourth-highest PMI rank standing and the fifth highest raw standing in March. The highest standing among all reporters is 52.6 from South Korea. This is a period in which no country was posting very strong manufacturing results. In fact, the United States, with a manufacturing PMI rank standing of 79.6, has a diffusion reading in March just a tick below Germany’s whose queue standing at 91.8 seems miles ahead of the U.S.—but it isn’t. Remember that the queue standings are about relative positioning.

Looking at the details, we see that below-median rank readings were logged by Mexico, Russia, India, Brazil, Indonesia, and Turkey. The Asian markets and developing economies seem to have a harder time working up to the standards achieved by other countries.

We also have averages by certain groups of countries. For example, the U.S., the U.K., the Monetary Union, Canada, and Japan—an expanded G10 groping—had an average reading of 51.3 in March, and for that group of countries, the improvements have been steady from 12 months to six months to three months. For the BRIC countries in March, the average standing was 50.4, and for that group there has been a very slight ongoing erosion. For the Asian group, on average, the March reading is 51.2, and there has been a progression to stronger readings from 49.9 over 12 months to 50.5 over six months and to 50.8 over three months.

260402.jpg

On balance, manufacturing was quite uneven in March; however, there's a progression of improvement that is still in place. But with rising oil prices, war in Iran, and lots of knock-on effects to supply trains, it's likely that these readings are going to fall on harder times in the months ahead—unless the Iran war can be wrapped up in very, very, short order. According to the Baltic Dry index, there hasn't been much reduction in global shipping of dry goods. That index excludes oil and other wet goods shipments that clearly have been impeded. However, giving it more time, we may see that the dry index begins to show some difficulties.

Global Manufacturing PMIs Stall—Will It Get Worse?

Andrew Cates

**Global shipping costs**
The Baltic Dirty Tanker Index has surged to multi-year highs, reflecting a sharp tightening in global oil shipping markets. The primary driver is the escalation in Middle East tensions, particularly the effective disruption to flows through the Strait of Hormuz—a critical artery for roughly a fifth of global oil trade. Heightened security risks, including missile and drone attacks on vessels and port infrastructure, have forced rerouting, increased insurance premia and reduced effective tanker supply. At the same time, longer voyage distances—especially for Gulf exports diverted around the Cape—are tying up capacity and amplifying rate pressures. The result is a classic squeeze: constrained supply of available ships meeting elevated demand for transport, pushing freight costs sharply higher.

260401Z1.jpg

**Supply Chain Bottlenecks**
Flash PMI data point to a renewed build-up of supply chain pressures across the major economies. Supplier delivery times—where readings below 50 indicate slower deliveries—have deteriorated in both the US and UK, with the latter showing a particularly sharp decline. The euro area, while more stable, is also drifting in the same direction. This broad-based softening suggests that the disruptions visible in energy and shipping markets are now feeding into the real economy. Longer delivery times are typically an early indicator of tightening supply conditions, rising input costs and, ultimately, renewed pipeline inflation pressures. While not yet at the extremes seen during the pandemic, the direction of travel is clear: supply chains are becoming less efficient just as geopolitical risks intensify.

260401Z2.jpg

**Policy Uncertainty Versus Market Volatility**
A striking divergence is emerging between policy uncertainty and financial market volatility. The US Economic Policy Uncertainty Index has risen sharply, reflecting the intensifying geopolitical backdrop, trade disruptions and an increasingly complex policy environment. By contrast, the VIX—while off its lows—remains relatively contained by historical standards. This gap suggests that financial markets may be underpricing the scale and persistence of current risks. Either uncertainty begins to recede, or market volatility has further to rise. For now, the message is clear: policymakers are operating in a far more uncertain world than markets appear to be discounting.

260401Z3.jpg

**Oil Prices and Monetary Policy** 
The sharp rise in oil prices is once again feeding directly into short-term interest rate expectations, with a strong positive correlation evident between WTI and US 2-year Treasury yields. As energy prices surge, markets are reassessing the near-term inflation outlook and the likely policy response, pushing yields higher. This reflects a familiar dynamic: energy shocks tighten financial conditions not just directly, but via expectations of more restrictive monetary policy. That said, there are important caveats. Medium-term market-based inflation expectations remain relatively well contained, suggesting credibility in central banks’ ability to anchor inflation over time. Moreover, recent communication from Fed Chair Powell indicates that the Federal Reserve is in no immediate hurry to raise rates, pointing instead to a more cautious, data-dependent approach in the face of heightened uncertainty.

260401Z4.jpg

**Loose Labour Markets**
Wage growth across the US, UK and euro area continues to moderate, pointing to a gradual loosening in labour market conditions. The sharp post-pandemic surge in wage pressures—particularly pronounced in the US—has clearly faded, with all three regions now on a downward trajectory. This matters in the current context: while the oil shock is pushing headline inflation higher and complicating the near-term outlook, easing wage dynamics reduce the risk of persistent second-round effects. In turn, this lessens the urgency for central banks to respond aggressively with tighter policy. The result is a more nuanced policy backdrop—one where energy-driven inflation pressures are rising, but underlying domestic cost pressures are moving in the opposite direction.

260401Z5.jpg

**Headline Inflation in Advanced Economies**
Despite the recent energy shock, broader inflation dynamics across advanced economies remain relatively well behaved. The euro area HICP flash estimate rose from 1.9% in February to 2.5% in March, driven largely by higher energy prices. However, core inflation edged down to 2.3% from 2.4%, suggesting that pass-through into underlying price pressures remains limited for now. More generally, inflation across many advanced economies continues to hover close to central bank targets—a marked contrast to the peaks seen in 2022. While higher oil prices will almost certainly continue to lift headline inflation in the near term, and the risk is clearly tilted toward further upside, the broader picture for now remains one of relatively contained underlying pressures. This suggests the current shock is more likely to complicate the disinflation process—potentially slowing or interrupting it—rather than decisively reversing it, though the balance of risks has become less favourable.

260401Z6.jpg

Amid tentative signs of de-escalation from the US administration over the past 48 hours—including suggestions that the conflict with Iran could conclude relatively quickly—financial markets have begun to retrace some of last week’s sharp repricing of Middle East risk. Oil prices have come off their highs, while equities and bonds have rallied as risk premia ease. That said, the earlier phase of the week saw a decisive adjustment: oil surged, front-end yields moved higher, and uncertainty rose as investors grappled with the implications of disrupted energy flows. Even now, the overall adjustment has been uneven—volatility has picked up, but not to levels typically associated with sustained geopolitical stress—raising questions about how fully markets are internalising both the risks and the rapidly shifting outlook. Our charts this week capture these cross-currents. Tanker rates have spiked as shipping routes are disrupted and capacity tightens (chart 1), while PMI delivery times point to early signs of supply chain strain feeding into the real economy (chart 2). At the same time, the divergence between elevated policy uncertainty and relatively contained market volatility suggests there could have been a degree of complacency (chart 3). The rise in oil prices is already feeding into higher short-term yields, though this is being tempered by cooling labour markets, anchored inflation expectations and more cautious central bank signalling (charts 4 and 5). Meanwhile, euro area flash CPI has picked up, but core inflation remains relatively benign, suggesting underlying price pressures are still contained for now (chart 6).

Charts of the Week: Strait Stress

Sandy Batten

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Total retail sales rebounded in February, rising a larger-than-expected 0.6% m/m (+3.7% y/y) following an upwardly revised 0.1% monthly decline in January (previously -0.2% m/m), according to data from the U.S. Census Bureau. The Action Economics Forecast Survey expected a 0.4% monthly increase. Excluding autos, other sales were up 0.5% m/m (+3.6% y/y), the first monthly increase in three months. The Action Economics Forecast Survey looked for a 0.3% m/m increase.

The control group of sales (those categories that the BEA uses to construct PCE in the national accounts) increased 0.5% m/m in February following a 0.2% increase in January. The January/February average for this variable is 2.1% annualized above the Q4 average. In Q4, the control group rose 2.8% saar from Q3. So, today’s figures point to a slight slowdown in PCE growth in the first quarter. Note, however, that the data released today predates the escalation of the conflict between the US/Israel and Iran which has led to a marked rise in gasoline/energy prices. The increase in energy prices to date, if maintained, could stress household finances and thereby significantly slow consumer spending ahead.

Sales of motor vehicles and parts jumped 1.2% m/m in February, their first monthly gain in three months and their largest monthly increase since last July. Furniture sales declined 1.0% m/m in February while sales of electronics and appliances rose 0.5% m/m. Sales of building materials increased 0.4% m/m, their fourth consecutive monthly gain. Sales at health and personal care stores jumped 2.3% m/m, their first monthly gain in five months. Sales at gasoline stations rose 0.9% m/m in February, their third monthly gain in the past four months, ahead of the sharp price increases that occurred in March. Clothing store sales jumped 2.0% m/m, their first monthly increase in three months. Department store sales gained 3.0% m/m, their first monthly increase in four months. Food sales slumped 1.0% m/m in February, their first monthly decline in three months. Sales of nonstore retailers increased 0.7% m/m in February on top of a 1.4% m/m jump in January. Eating out sales rose 0.4% m/m, their first monthly gain in three months.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Total sales increased 0.6% m/m after a 0.1% m/m decline in January
- Excluding autos, sales increase 0.5% m/m in February after having been unchanged in January.
- Sales of the retail control group that is used to construct PCE rose 0.5% m/m in February.

U.S. Retail Sales Rebounded in February

Winnie Tapasanun

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U.S. nonfarm private sector payrolls rose a larger-than-expected 62,000 (0.3% y/y) in March after increases of 66,000 in February (+63,000 initially) and 11,000 in January (unrevised), according to the ADP National Employment Report. The three-month average change was +46,000 in March, up from +38,000 in February and +41,000 in January. The Action Economics Forecast Survey expected a 40,000 increase in March.

Small business hiring (less than 50 employees) climbed a solid 85,000 (0.7% y/y) in March—the ninth straight m/m increase and the largest since August—after a 61,000 gain in February (+60,000 initially), with employment in very small firms (1-19 employees) surging 112,000, the strongest m/m rise since February 2024, and employment in small firms (20-49 employees) down 27,000. Employment at medium-sized firms (50-499 employees) fell 20,000 (-0.4% y/y) in March following a 6,000 decline in February (-7,000 initially) and two consecutive m/m increases. Large business hiring (500+ employees) slipped 4,000 (+1.0% y/y) after an 11,000 February rebound (+10,000 initially).

Service-producing jobs rose 32,000 (0.5% y/y) in March, the 10th straight m/m gain, on top of a 50,000 advance in February (+47,000 initially). March’s rise was led by education & health services (+58,000), followed by information (+16,000), leisure & hospitality (+7,000), financial activities (+4,000), other services (+4,000), and professional & business services (+1,000). To the downside, m/m employment fell in trade, transportation & utilities (-58,000).

Goods-producing employment advanced 30,000 (-0.4% y/y) in March, the biggest m/m increase since October 2022, after a 16,000 rise in February (unrevised). March’s gain was led by construction (+30,000) and natural resources & mining (+11,000), while manufacturing (-11,000) continued to decline.

By region, nonfarm private payroll employment rose m/m in March in the South (+101,000; +0.5% y/y) and West (+16,000; +0.4% y/y). In contrast, employment fell m/m in the Northeast (-29,000; +0.4% y/y) and Midwest (-26,000; -0.1% y/y).

Wage growth for job changers accelerated to a three-month-high 6.6% y/y in March from 6.3% y/y in February, remaining well below a high of 16.1% in April 2022. Wage growth for job stayers held steady at 4.5% y/y for the third consecutive month in March, holding in a narrow 4.4%-4.5% range since April 2025. Pay growth also remained steady in major industries, including financial activities (5.2% y/y), manufacturing (4.9% y/y), construction (4.7% y/y), leisure & hospitality (4.6% y/y), education & health services (4.3% y/y), and professional & business services (4.3% y/y).

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

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- Private payrolls +62K in March, ninth straight m/m gain.
- Hiring increase driven by small businesses (+85K), strongest since August.
- Service-sector jobs up (+32K), led by education & health svs. (+58K) and information (+16K), partly offset by trade, transp. & utilities (-58K).
- Goods-producing jobs up (+30K), driven by construction (+30K).
- Wage growth accelerates y/y for job changers (6.6%, a three-month high) but steady for job stayers (4.5%).

Economy in Brief

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