Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040317b.jpg" width="353">
The Consumer Price Index (CPI-U) rose 0.3% in February, matching Consensus expectations for a 0.3% gain. A 0.2% rise in prices less food &amp; energy was slightly firmer than the 0.1% Consensus expectation.
Prices of core consumer goods rose 0.2%, the firmest one month gain since August 2002. This strength reflected a 0.4% (2.4% y/y) rise in medical care commodities, a 0.4% (4.7% y/y) rise in educational books &amp; supplies and a 0.4% (-0.7% y/y) gain in new vehicle prices. Prices for home furnishings &amp; operation, up 0.2% (-1.6% y/y), also rose for the second consecutive month.
Apparel prices fell another 0.1% (-1.6% y/y) and tobacco prices also were off slightly (-0.0% y/y).
Core services prices rose a modest 0.1% as shelter prices ticked up just 0.1% (2.1% y/y). Prices for medical care services jumped 0.7% (4.7% y/y) but public transportation prices eased slightly (+2.2% y/y).
Energy prices moderated to a 1.7% gain following the 4.7% January spike. Gasoline prices rose 2.5% after the 8.1% jump in January (+2.0% y/y) but are up another 4.7% so far in March. Fuel oil prices rose 1.0% (-0.7% y/y) and piped gas prices rose 0.9% (6.2% y/y).
Food prices rose 0.2% and mostly reflected higher prices for fruits &amp; vegetables, up 1.0% (2.9% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior surged 0.6%. It is similar to the PCE price deflator. The core chain price measure also surged by 0.5%, the strongest gain since February 2002.
&quot;Classical Deflation Theory&quot; from the Federal Reserve Bank of Richmond can be found <a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=191"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM"> Consumer Price Index</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.3%</td>
<td>0.5%</td>
<td>1.7%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.2%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>-2.0%</td>
<td>-2.0%</td>
<td>-1.1%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>1.7%</td>
<td>4.7%</td>
<td>3.9%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.2%</td>
<td>0.0%</td>
<td>3.2%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM"> Chained CPI: Total (NSA)</a></td>
<td>0.6%</td>
<td>0.5%</td>
<td>1.4%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.5%</td>
<td>0.2%</td>
<td>0.8%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
</table>
Mortgage Applications Surged Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 17, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040317a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association jumped 25.6% last week for the fifth consecutive weekly gain.
Applications to refinance surged 39.7% (-46.9% y/y) as interest rates remained low.
The effective interest rate on a conventional 30-Year mortgage rose to 5.62% from 5.61% the week prior, but these rates are the lowest since last June. The effective rate on a 15-year mortgage ticked up to 5.01%.
Purchase applications rose 5.6% w/w (+30.3% y/y) and so far in March are 6.0% ahead of the February average.
During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/12/04</th>
<th scope="col">03/05/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>1,117.1</td>
<td>889.1</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>452.4</td>
<td>428.6</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>4,983.7</td>
<td>3,567.6</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) rose 0.3% in February, matching Consensus expectations for a 0.3% gain. A 0.2% rise in prices less food & energy was slightly firmer than the 0.1% Consensus expectation. Prices of core consumer goods [...]

Consumer Prices Rose Broadly

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316a.jpg" width="353">
Housing starts fell 4.0% last month and added to the 6.3% drop in January. February starts of 1.855M were the lowest since last August. Consensus forecasts had been for 1.93M starts in February.
Single family starts fell 4.1%, the third consecutive monthly decline.
Multi-family starts fell 3.4% and are off 9.9% during the last two months.
Starts were mixed across the country&#39;s regions last month. Housing starts fell hard m/m in the South (+10.5% y/y) and also were down in the West (+4.1% y/y). Starts rose 25.3% m/m in the Northeast (32.4% y/y) and rose in the Midwest (+25.1% y/y), recovering from the January cold snap.
Building permits fell a moderate 1.5% m/m (+6.6% y/y) for the second month.

<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/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col"> Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,855</td>
<td>1,932</td>
<td>13.1%</td>
<td>1,848</td>
<td>1,711</td>
<td>1,601</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,489</td>
<td>1,553</td>
<td>13.5%</td>
<td>1,501</td>
<td>1,364</td>
<td>1,272</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>366</td>
<td>379</td>
<td>11.6%</td>
<td>347</td>
<td>347</td>
<td>330</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,903</td>
<td>1,932</td>
<td>6.6%</td>
<td>1,831</td>
<td>1,750</td>
<td>1,637</td>
</tr>
</tbody>
</table>
Housing Market Index Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316b.jpg" width="353">
The Composite Housing Market Index reported by the National Association of Home Builders (NAHB) was unchanged in March at 64 versus February which was revised down slightly. It was the lowest level for the index since last June.
During the last fifteen years there has been a 79% correlation between the y/y change in the NAHB index and the change in single family housing starts.
The sub index which measures expected home sales in six months fell to the lowest level since June.
The index of current market conditions for home sales fell 2.8% m/m to 69 (+16.9% y/y).
Traffic of prospective buyers rose slightly m/m in March but still was off 12.7% from the August peak.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the National Association of Home Builders using this <a href="http://www.nahb.org">link</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/SURVEYS/@S4/@S4.HTM"> Nat&#39;l Association of Home Builders</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">3 &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>64</td>
<td>64</td>
<td>52</td>
<td>64</td>
<td>61</td>
<td>56</td>
</tr>
</tbody>
</table>
Chain Store Sales Up Modestly 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316c.jpg" width="353">
Chain store sales rose a modest 0.5% last week and recovered all of the prior week&#39;s 0.3% dip, according to the ICSC-UBS survey.
Sales so far in March are up 0.2% versus the February average.
During the last ten years there has been a 59% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">03/13/04</th>
<th scope="col">03/06/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>438.6</td>
<td>436.6</td>
<td>7.0%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Manpower Index of US Hiring Intentions Up Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316d.jpg" width="353">
The Manpower survey of hiring intentions in the US for 2Q04 improved sharply. A seasonally adjusted net 20% of 16,000 employers expect to increase hiring activity. It was the highest level for hiring intentions since 1Q 2001.
The latest reading is up from 13% in 1Q and from 7% in 3Q03. Hiring typically picks up in 2Q, therefore seasonal adjustment factors damped the increase in the seasonally adjusted index.
Since 1980 there has been a 75% correlation between the Manpower index and the y/y change in non-farm payrolls.
The latest press release from Manpower Inc. covering employment prospects in North America can be viewed <a href="http://www.manpower.com/mpcom/viewMeos?name=Americas.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SC/@SC.HTM"> Manpower Employment Survey</a></th>
<th scope="col">2Q04</th>
<th scope="col">1Q04</th>
<th scope="col">2Q03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Industries - Net Higher (SA)</td>
<td>20</td>
<td>13</td>
<td>11</td>
<td>11</td>
<td>11</td>
<td>17</td>
</tr>
</tbody>
</table>
FOMC Left Rates Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316e.jpg" width="353">
As expected, the Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%.
The decision was unanimous.
The press release which accompanied the Fed&#39;s action indicated that &quot;The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace. Although job losses have slowed, new hiring has lagged.&quot;
Regarding inflation, the Fed indicated that &quot;The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation.&quot;
The complete text of the Fed&#39;s latest press release can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2004/20040316/default.htm"> here</a>.
&quot;How the Fed Affects the Economy: A Look at Systemic Monetary Policy&quot; from the Federal Reserve Bank of Philadelphia is available <a href="http://www.phil.frb.org/files/br/brq104md.pdf">here</a> .
&quot;Macroeconomic Principles and Monetary Policy&quot; from J. Alfred Broaddus, Jr., President of the Federal Reserve Bank of Richmond can be found <a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=190"> here</a>.

</body>
</html>

Housing starts fell 4.0% last month and added to the 6.3% drop in January. February starts of 1.855M were the lowest since last August. Consensus forecasts had been for 1.93M starts in February. Single family starts fell 4.1%, the [...]

Housing Starts Fell Again

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040315a.jpg" width="353">
Industrial production rose another 0.7% in February following an upwardly revised 0.8% gain in January. The rise easily outpaced Consensus expectations for a 0.4% increase.
Production in the factory sector jumped 1.0% following the 0.3% January gain (3.2% y/y). Output of utilities fell 0.7% after a revised 5.3% jump in January due to cold weather.
Output in selected high-technology industries again led the factory sector with a 2.1% m/m surge (23.5% y/y). Output of semiconductors &amp; related equipment surged 3.0% (42.6% y/y). Output of computers &amp; peripheral equipment jumped 2.1% (16.7% y/y), the eighth consecutive monthly gain at about that rate, and output of communications equipment rose 0.3% (-1.3% y/y).
Excluding high-tech, factory output jumped 0.9% (1.9% y/y). Higher output of motor vehicles &amp; parts, up 1.6%, led that gain but machinery output also rose a strong 1.7% (6.4% y/y). Non-durables output jumped 0.9% (0.7% y/y) due to across the board strength.
Total capacity utilization rose to 76.6%, the highest level since June &#39;02. Y/Y growth in capacity was a low 1.1%, the slowest since early 1989.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.7%</td>
<td>0.8%</td>
<td>2.7%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>76.6%</td>
<td>76.1%</td>
<td>75.4%(2/03)</td>
<td>74.9%</td>
<td>75.6%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
Empire State Index Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040315b.jpg" width="353">
The March Empire State Index of General Business Conditions fell to 25.33 from the record high in February. The 16.7 point m/m decline was versus a more moderate decline expected by the Consensus and was to the lowest level in six months.
The new orders index dropped sharply to 23.52, also the lowest level in six months. The shipments index fell just slightly after the 15 point slump in January and the employment index slid further to 9.72, a six month low.
The index of prices surged 16.4 points m/m to 50.0, another series&#39; record.
The February index of expectations for business conditions six months ahead fell slightly m/m, the third consecutive monthly decline from the record high in December. Expectations for capital expenditures improved for the second month in a row.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html"> 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/SURVEYS/@S5/@S511/@S511.HTM"> Empire State Manufacturing Survey</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">3/03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col"> 2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>25.33</td>
<td>42.05</td>
<td>-0.35</td>
<td>16.30</td>
<td>7.02</td>
<td>-13.57</td>
</tr>
</tbody>
</table>
</body>
</html>

Industrial production rose another 0.7% in February following an upwardly revised 0.8% gain in January. The rise easily outpaced Consensus expectations for a 0.4% increase. Production in the factory sector jumped 1.0% following the [...]

U.S. Industrial Production Firm Again

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311c.jpg" width="353">
Retail sales rose 0.6% last month and matched the Consensus expectation. The previously reported 0.3% decline in January sales was revised up to a 0.3% increase.
Retail sales excluding motor vehicles &amp; parts dealers were little changed but January sales were revised up to a 1.2% surge from 0.9%. Consensus expectations had been for a 0.5% February increase.
Sales at general merchandise stores jumped another 1.3% (7.2% y/y) after an upwardly revised 1.2% January surge.Sales of furniture/home furnishings &amp; electronics/appliances were unchanged (12.3% y/y) after a 0.7% January gain that was revised from a 0.4% decline. Clothing and accessory store sales rose 0.4% (9.6% y/y) following several months of strong gain.
Motor vehicle dealers&#39; sales rose 2.7% m/m as unit sales of light vehicles rose 1.5% to 16.37M.
Sales of building materials were unchanged (14.7% y/y) following a little-revised 1.0% January drop. Sales at food stores fell 0.5% and gasoline service stations&#39; sales fell 0.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM"> Retail Sales &amp; Food Services</a></td>
<td>0.6%</td>
<td>0.2%</td>
<td>7.9%</td>
<td>5.6%</td>
<td>3.0%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.0%</td>
<td>1.2%</td>
<td>7.3%</td>
<td>5.3%</td>
<td>3.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Import Prices Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311b.jpg" width="353">
Imported commodities prices rose 0.4% in February, just under the Consensus expectation for a 0.5% rise.
Non-petroleum import prices rose 0.4%. The gain mostly reflected a 1.6% (3.9% y/y) jump in food prices. Capital goods prices were unchanged (-0.9% y/y) and as were non-auto consumer goods prices (0.6% y/y). Auto prices rose 0.1% (1.2% y/y).
During the last fifteen years there has been a (negative) 54% correlation between the trade-weighted exchange value of the dollar and the y/y change in non-petroleum import prices
Petroleum prices rose 0.2% last month. So far in March the price of Brent Crude Oil has risen another 13% to $34/bbl.
Export prices rose another 0.6%. Higher prices for food exports, up 2.1% (15.0% y/y), drove the gain. Capital goods export prices rose just 0.2% (-1.0% y/y) and non-auto consumer goods prices fell for the second month (0.4% y/y).
&quot;Import Prices and the Exchange Rate&quot; from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/iet/20040201/cover.pdf"> here</a>.
&quot;A Perspective on U.S. International Trade&quot; from St. Louis Bank President William Poole can be found <a href="http://research.stlouisfed.org/publications/review/04/03/Poole.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM"> Import/Export Prices (NSA)</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.4%</td>
<td>1.5%</td>
<td>0.8%</td>
<td>2.9%</td>
<td>-2.5%</td>
<td>-3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>0.2%</td>
<td>8.2%</td>
<td>-4.9%</td>
<td>20.9%</td>
<td>3.0%</td>
<td>-17.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.4%</td>
<td>0.8%</td>
<td>1.8%</td>
<td>1.1%</td>
<td>-2.4%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.6%</td>
<td>0.6%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>-1.0%</td>
<td>-0.8%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311a.jpg" width="353">
Initial claims for jobless insurance fell 6,000 (-1.7%) to 341,000 last week, near the Consensus expectation for 345,000 claims. The prior week was revised up slightly.
During the last ten years there has been a 77% (negative) correlation between the level of initial claims and the three-month change in non-farm payrolls.
The four-week moving average of initial claims fell to 345,750 (-17.5% y/y).
Continuing claims for unemployment insurance fell 41,000 from the prior week&#39;s level that was revised to show a 17,000 decline.
The insured rate of unemployment was unchanged at 2.4% for the third week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">3/6/04</th>
<th scope="col">2/28/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>341.0</td>
<td>347.0</td>
<td>-18.8%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,032</td>
<td>-12.0%</td>
<td>3,535</td>
<td>3,575</td>
<td>3,022</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deeper 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311f.jpg" width="353">
The U.S. Government budget deficit deepened to $96.7B in February.That about equaled expectations and also about equaled last year&#39;s deficit in February, but for the first five months of FY04 the deficit of $226.8B was 17% larger than last year.
As a percentage of US GDP the Federal deficit is projected to hit 4.5% this year versus 3.5% last year and a peak of 6.0% in 1983.
Net receipts for the first five months of FY04 rose 0.8% versus the first five months of FY03. The gain reflected higher corporate tax receipts, up 46.7% y/y. Contributions for social insurance, estate taxes, and miscellaneous taxes also rose. Individual income tax receipts fell 4.6% y/y.
Federal net expenditures rose 4.2% versus the first five months of last fiscal year. Defense expenditures surged 14.2%. Medicare outlays grew 0.5% and spending on health programs rose 10.0%. Interest expense fell 4.5% y/y.

<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/@E1/@E106/@E10602/@E10602.HTM"> US Government Finance</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;03</th>
<th scope="col">FY2003</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-96.7B</td>
<td>$-1.6B</td>
<td>$-96.7B</td>
<td>$-374.2B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$85.3B</td>
<td>$184.3B</td>
<td>-4.7%</td>
<td>-3.8%</td>
<td>-6.9%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$182.0B</td>
<td>$185.6B</td>
<td>-2.2%</td>
<td>7.2%</td>
<td>7.9%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales rose 0.6% last month and matched the Consensus expectation. The previously reported 0.3% decline in January sales was revised up to a 0.3% increase. Retail sales excluding motor vehicles & parts dealers were little [...]

U.S. Retail Sales Firm

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040310c.jpg" width="353">
Japan&#39;s seasonally adjusted current account surplus widened to a record in January, according to the Bank of Japan/Ministry of Finance report on the nation&#39;s Balance of Payments issued today. The increase over December was &yen;345 billion. Notably this was not due to a larger surplus in merchandise trade. That balance remained exactly the same as in December, &yen;1185.8 billion, as exports and imports rose by equal amounts..
In the month, then, non-trade factors held sway: the deficit on services decreased markedly, and the surplus on income flows widened. It reached a record &yen;849 billion, &yen;154 billion more than the monthly average for all of last year. The January gain, &yen;212 billion, was more than accounted for by a favorable swing in portfolio investment income of &yen;336 billion. The service accounts saw a decrease in imports of &quot;other business services&quot;, that is, excluding financial, communication and computer services.
The picture from these data still shows Japanese merchandise trade with a sizable surplus due to strong exports. But imports have been growing since late 2001 as the Japanese economy works its way out of recession. And other forces tied to capital markets have been at work, so that, as can be seen in the accompanying chart, the current account in Japan no longer moves in lock step with the trade account.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Billion Yen&nbsp; (Months seasonally adjusted)</th>
<th scope="col">Jan 2004</th>
<th scope="col">Dec 2003</th>
<th scope="col">2003 Monthly Average</th>
<th scope="col">2003 Total</th>
<th scope="col">2002 Total</th>
<th scope="col">2001 Total</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>1685.2</td>
<td>1339.9</td>
<td>1315.4</td>
<td>15785.2</td>
<td>14139.7</td>
<td>10652.4</td>
</tr>
<tr>
<td class="firstcol">Trade Balance</td>
<td>1185.8</td>
<td>1185.8</td>
<td>1021.3</td>
<td>12255.0</td>
<td>11733.2</td>
<td>8527.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>4626.8</td>
<td>4545.3</td>
<td>4327.2</td>
<td>51926.1</td>
<td>49479.7</td>
<td>46583.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>3441.0</td>
<td>3359.5</td>
<td>3305.9</td>
<td>39671.3</td>
<td>37746.4</td>
<td>38056.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-318.7</td>
<td>-394.7</td>
<td>-321.4</td>
<td>-3889.1</td>
<td>-5264.3</td>
<td>-5315.1</td>
</tr>
<tr>
<td class="firstcol">Income</td>
<td>848.8</td>
<td>637.3</td>
<td>690.5</td>
<td>8286.0</td>
<td>8266.6</td>
<td>8400.5</td>
</tr>
</tbody>
</table>
</body>
</html>

Japan's seasonally adjusted current account surplus widened to a record in January, according to the Bank of Japan/Ministry of Finance report on the nation's Balance of Payments issued today. The increase over December was ¥345 [...]

Japan Current Account at Record, Bolstered by Services & Income Flows

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040310a.jpg" width="353">
The U.S. foreign trade deficit set a new record in January. It deepened sharply to $43.1B versus December&#39;s deficit of $42.7B which was little revised. Consensus expectations had been for a deficit of $41.5B.
Exports fell a sharp 1.2% (+8.5% y/y) following a 0.6% December decline which was revised slightly. Lower exports of foods, feeds &amp; beverages paced the January decline and fell 7.9% following a 4.6% December drop.
Exports of capital goods fell 0.8% (+12.6% y/y) after the 4.5% December plunge. Non-auto consumer goods exports also fell for the second month, off 2.1% (+5.8% y/y).
Imports fell 0.5% and it was broad based. Capital goods imports dropped for the second consecutive month (+12.6% y/y). Imports of non-auto consumer goods again fell hard versus the November peak (+5.8% y/y).
Non-petroleum imports fell 1.5% (+7.5% y/y). The value of petroleum imports rose another 6.1% (+13.1% y/y) as crude oil prices rose (+3.0% y/y).
By country, the US trade deficit with China deepened to $11.5B ($123.9B in 2003). The US trade deficit with Japan improved m/m to $5.3B ($66.0B in 2003) and the deficit with the European Union fell to a low $5.9B ($94.3B in 2003) as imports plummeted 20.1% m/m.
Exchange rate analysis from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr179.html">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/@EE/@EE03/@EE03.HTM"> Foreign Trade</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$43.1B</td>
<td>$42.7B</td>
<td>$40.0B(1/03)</td>
<td>$489.9</td>
<td>$418.0B</td>
<td>$357.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-1.2%</td>
<td>-0.6%</td>
<td>8.5%</td>
<td>4.6%</td>
<td>-3.3%</td>
<td>-5.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-0.5%</td>
<td>3.1%</td>
<td>8.2%</td>
<td>8.4%</td>
<td>2.0%</td>
<td>-5.5%</td>
</tr>
</tbody>
</table>
Mortgage Applications Spurred by Lower Rates 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 10, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040310b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.2% last week for the fourth consecutive weekly gain.
The effective interest rate on a conventional 30-Year mortgage dropped to 5.61% from 5.75%, the lowest level since last June. The effective rate on a 15-year mortgage fell to 4.92%.
Purchase applications rose 1.4% w/w (+24.2% y/y) and started the month 3.1% ahead of the February average.
During the last ten years there has been a 55% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 1.0% (-60.0% y/y) for the fourth consecutive weekly gain.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">03/05/04</th>
<th scope="col">02/27/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>889.1</td>
<td>878.7</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>428.6</td>
<td>422.6</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,567.6</td>
<td>3,532.2</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit set a new record in January. It deepened sharply to $43.1B versus December's deficit of $42.7B which was little revised. Consensus expectations had been for a deficit of $41.5B. Exports fell a sharp 1.2% [...]

U.S. Trade Deficit Set New Record

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040309c.jpg" width="353">
German Industrial production in January declined 0.1% from December, 2003 as a result of mixed trends in the economy. Construction fell by 7.37%, while total production, excluding construction managed a slight gain of 0.40%. Within the manufacturing sector, capital goods production rose 1.53%, but production of consumer goods declined 0.31%.
The industrial production news follows other recent reports suggesting difficulties on the path to a strong business upturn in Germany. Although retail sales in January actually rose for the first time in three months, manufacturing new orders declined. In February, unemployment rose and business confidence declined.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Recent Reports on the Economic Climate in Germany (2000=100, ex where noted)</th>
<th scope="col">Feb 04&nbsp;</th>
<th scope="col">Jan 04</th>
<th scope="col">Dec 03</th>
<th scope="col">Jan 03</th>
<th scope="col">Feb 03</th>
<th scope="col">M/M %</th>
<th scope="col"> Y/Y&nbsp; %</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Industrial Production&nbsp;</td>
<td>&nbsp;</td>
<td>100.1</td>
<td>100.32</td>
<td>98.8</td>
<td>&nbsp;</td>
<td>-0.10</td>
<td>1.32</td>
<td>98.6</td>
<td>98.3</td>
<td>99.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total excl Construction</td>
<td>&nbsp;</td>
<td>101.6</td>
<td>101.2</td>
<td>99.9</td>
<td>&nbsp;</td>
<td>0.40</td>
<td>1.70</td>
<td>99.6</td>
<td>99.1</td>
<td>100.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>&nbsp;</td>
<td>81.7</td>
<td>88.2</td>
<td>85.2</td>
<td>&nbsp;</td>
<td>-7.37</td>
<td>-4.44</td>
<td>85.1</td>
<td>88.9</td>
<td>92.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital goods</td>
<td>&nbsp;</td>
<td>106.5</td>
<td>104.9</td>
<td>103.0</td>
<td>&nbsp;</td>
<td>1.53</td>
<td>3.40</td>
<td>102.1</td>
<td>101.1</td>
<td>102.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Consumer goods</td>
<td>&nbsp;</td>
<td>96.2</td>
<td>96.5</td>
<td>96.0</td>
<td>&nbsp;</td>
<td>-0.31</td>
<td>0.21</td>
<td>95.3</td>
<td>97.0</td>
<td>99.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing New Orders</td>
<td>&nbsp;</td>
<td>100.7</td>
<td>102.8</td>
<td>99.7</td>
<td>&nbsp;</td>
<td>-2.04</td>
<td>1.00</td>
<td>98.8</td>
<td>98.3</td>
<td>98.3</td>
</tr>
<tr>
<td class="firstcol">Retail Sales</td>
<td>&nbsp;</td>
<td>101.3</td>
<td>99.0</td>
<td>101.5</td>
<td>&nbsp;</td>
<td>2.32</td>
<td>-0.20</td>
<td>101.5</td>
<td>101.4</td>
<td>102.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment (SA %)</td>
<td>10.3</td>
<td>10.2</td>
<td>10.4</td>
<td>10.3</td>
<td>10.5</td>
<td>0.1</td>
<td>-0.2</td>
<td>10.5</td>
<td>9.8</td>
<td>9.4</td>
</tr>
<tr>
<td class="firstcol">Business Confidence (IFO)</td>
<td>96.4</td>
<td>97.5</td>
<td>97.0</td>
<td>87.4</td>
<td>89.3</td>
<td>-1.13</td>
<td>7.95</td>
<td>91.7</td>
<td>89.4</td>
<td>92.1</td>
</tr>
</tbody>
</table>
</body>
</html>

German Industrial production in January declined 0.1% from December, 2003 as a result of mixed trends in the economy. Construction fell by 7.37%, while total production, excluding construction managed a slight gain of 0.40%. Within [...]

German Industrial Production for January Adds to Doubts Over the Strength of the Recovery

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040309a.jpg" width="353">
The ICSC-UBS survey reported that chain store sales fell 0.3% last week following little change the week prior, a result that was revised down slightly. Sales have been lackluster for the last three weeks after a strong start in February.
During the last ten years there has been a 58% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">03/06/04</th>
<th scope="col">02/28/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>436.6</td>
<td>437.8</td>
<td>7.0%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Small Business Optimism Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 9, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040309d.jpg" width="353">
The Small Business Optimism Index published by the National Federation of Independent Business (NFIB) fell 3.0% in February following a 1.0% m/m decline in January.
The m/m decline reflected a sharp drop, to 33%, in the percent of firms expecting the economy to improve. As a result, the percentage of firms planning to raise employment fell to 13%, the lowest level since November. The percentage of firms planning to add to capital expenditures also fell to the lowest since November.
During the last ten years there has been a 47% correlation between the level of the NFIB index and the y/y change in real GDP.
The percent of owners raising average selling prices rose to 13%, the highest level since May 2001.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM"> Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col"> Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>102.6</td>
<td>105.8</td>
<td>6.8%</td>
<td>101.3</td>
<td>101.2</td>
<td>98.4</td>
</tr>
</tbody>
</table>
 Gasoline Prices Near Last Summer's Peak 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 9, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040309b.jpg" width="353">
Retail gasoline prices have risen steadily this year. Last week they settled at $1.74 per gallon versus an average price of $1.65 in February and $1.57 in January.
Wholesale natural gas prices opened the year strong but recently have fallen to $5.26/mmbtu (-32.9% y/y) as temperatures warmed.
Crude oil prices backed up through yesterday to $37.08 for West Texas Intermediate crude versus a low in late September below $27.00.
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>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W4/@W403/@W40303/@W40303.HTM"> US Retail Gasoline Prices</a></th>
<th scope="col">03/08/04</th>
<th scope="col">12/29/03</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Formulations ($/Gal.)</td>
<td>$1.74</td>
<td>$1.48</td>
<td>1.5%</td>
<td>$1.56</td>
<td>$1.34</td>
<td>$1.42</td>
</tr>
</tbody>
</table>
</body>
</html>

The ICSC-UBS survey reported that chain store sales fell 0.3% last week following little change the week prior, a result that was revised down slightly. Sales have been lackluster for the last three weeks after a strong start in [...]

Chain Store Sales Dipped

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

Service Health

A premier time series data platform for the global strategy, research, and quant communities. 

London

Singapore

Tokyo

New York

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Featured Data Additions

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Winnie Tapasanun

260407V35.jpg

260407W35.jpg

New orders for durable goods fell a more-than-expected 1.4% m/m in February, the fourth monthly fall in five months, after decreases of 0.5% in January (0.0% initially) and 0.9% in December (unrevised), according to today’s advance report by the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 1.0% m/m February decline. The year-on-year rate eased to 7.3% in February, the lowest since October, from 9.9% in January, though remaining positive since January 2025. Durable goods orders excluding the transportation sector rose 0.8% (6.0% y/y) in February, the 10th straight m/m rise, after a 0.3% increase in January. Durable goods orders excluding defense fell 1.2% (+7.3% y/y) following a 0.2% January rebound.

The m/m fall in February durable goods orders was led by a 28.6% m/m plunge in orders for nondefense aircraft & parts following decreases of 1.7% in January and 22.7% in December. Orders for defense aircraft & parts fell 3.8% after a 27.2% January slump and an 11.8% December jump. Orders excluding aircraft rose 1.2% (6.6% y/y), the seventh m/m rise in eight months, after a 0.3% January increase.

Durable goods orders for transportation fell 5.4% (+10.1% y/y) in February, the fourth m/m fall in five months, after a 1.9% decline in January. In addition to February m/m drops in nondefense and defense aircraft orders, motor vehicles & parts orders rose 3.1% (7.6% y/y), the third consecutive m/m rise, after a 0.7% January gain. Orders for electrical equipment, appliances & components slipped 0.1% (+5.0% y/y) following a 1.0% January decline, while orders for primary metals advanced 2.2% (10.2% y/y), the third successive m/m increase, after a 1.1% January rise. Machinery orders climbed 1.5% (9.2% y/y), the 10th straight m/m gain, on top of a 0.6% January increase. Orders for fabricated metal products rose 0.5% (5.4% y/y), the seventh m/m rise in eight months, following a flat January reading. Orders for all other durable goods rose 0.5% (1.3% y/y), up for the sixth consecutive month, after a 0.3% January rise. Meanwhile, orders for computers & electronic products were essentially unchanged (+7.5% y/y) after five straight m/m gains.

Capital goods orders fell 6.6% (+11.5% y/y) in February, the fourth m/m fall in five months, after a 3.0% drop in January. Nondefense capital goods orders slid 7.4% (+9.5% y/y), the fifth m/m slide in six months, after a 1.0% January decrease. Core capital goods orders (i.e., nondefense capital goods orders excluding aircraft) rebounded 0.6% (5.1% y/y), the seventh m/m rise in eight months, following a 0.4% January decline. Defense capital goods orders fell 1.1% (+25.1% y/y), down for the fourth time in five months, after a 14.2% January drop. Notably, core capital goods shipments (core capex shipments)—a reliable coincident indicator of business spending on equipment in the national accounts—rose 0.9% (5.7% y/y), the fifth m/m increase in six months, after no change in January.

Shipments of all manufactured goods advanced 1.4% (3.5% y/y) in February, the fourth m/m gain in five months, after a 0.7% increase in January. Durable goods shipments rose 1.3% (6.8% y/y), up for the fifth time in six months, after a 0.9% January gain. Nondurable goods shipments climbed 1.4% (0.1% y/y), the third straight m/m rise, after a 0.5% January increase.

Unfilled orders of durable goods edged up 0.1% (11.1% y/y) in February, the seventh straight m/m gain, after a 0.6% rise in January. Excluding transportation, unfilled orders increased 0.2% (1.9% y/y), also up for the seventh consecutive month, following a 0.3% January rise.

Manufacturing inventories inched up 0.1% (0.8% y/y) in February, the fourth straight m/m increase, after a 0.1% uptick in January. Durable goods inventories edged up 0.1% (1.8% y/y) in February, the fifth consecutive m/m increase, after a 0.2% rise in January, while nondurable goods inventories were virtually unchanged (-0.8% y/y) following two successive m/m declines.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

260407X35.jpg

260407Y35.jpg

- Headline orders -1.4% (+7.3% y/y) in Feb., fourth m/m decline in five mths.
- Nondefense aircraft & parts -28.6% m/m following January’s -1.7%.
- Transportation orders -5.4%, down for the fourth time in five mths.; orders ex transportation +0.8%, 10th straight m/m rise.
- Core capital goods shipments +0.9%, fifth m/m gain in six mths.
- Durable goods shipments +1.3%; unfilled orders +0.1%; inventories +0.1%.

U.S. Durable Goods Orders Fall in February, Led by a Plunge in Nondefense Aircraft Orders

260406N15.jpg

260406O15.jpg

The U.S. ISM Services PMI decreased to 54.0 in March following a 2.3-point rise to 56.1 in February (the highest reading since July 2022), according to today’s report by the Institute for Supply Management, indicating expansion in the services sector for the 21st consecutive month but at a slower pace. The March index, while above 50.8 in March 2025 and a low of 49.4 in June 2024, remained below a high of 55.5 in October 2024 and a record-high 67.5 in November 2021. The 12-month average was 52.3, pointing to continued growth in the U.S. services sector. The Action Economics Forecast Survey had expected 54.9 for March.

Haver Analytics constructs a composite index combining the services index and the manufacturing reading. This index fell to 53.8 in March after a 2.0-point increase to 55.7 in February, signaling expansion for the 10th straight month, albeit at a slower rate. The latest reading was above 50.6 in March 2025 and a low of 49.3 in June 2024, while remaining below a record-high 66.7 in November 2021. These series date back to July 1997.

In the latest services survey, the business activity index declined to 53.9 in March after rising to 59.9 in February, indicating continued expansion in business activity for 21 consecutive months, though at the slowest pace since September. The index was above a low of 50.0 in June 2024 but below a record-high 70.9 in November 2021. In March, 22.8% of respondents (NSA) reported higher activity while 14.6% reported an activity decline. The new orders index rose to 60.6 in March after increasing to 58.6 in February, reflecting expansion in new orders for the 10th straight month and the highest level since February 2023. The index was above its recent low of 47.2 in May 2025 but below a high of 61.0 in February 2023 and a record-high 69.2 in October 2021. In March, 32.0% of respondents (NSA) reported higher new orders while a lessened 12.6% reported declines. Meanwhile, the supplier deliveries index (NSA) increased to 56.2 in March from 53.9 in February, indicating slower supplier delivery performance for the 16th straight month after one month in faster territory in November 2024.

On the labor front, the employment index fell to 45.2 in March after rising to 51.8 in February, showing employment activity in the services sector contracted for the first time since November and at the lowest level since December 2023. The latest reading was above a low of 43.5 in December 2023 but below a high of 54.1 in June 2023 and a high of 58.9 in April 2021. A reduced 10.7% of respondents (NSA) indicated higher employment in March while an increased 18.4% reported declines.

On the inflation front, the prices index jumped to 70.7 in March from 63.0 in February, indicating prices paid by services organizations for materials and services had risen (i.e., above 50) since June 2017 and at the fastest pace since October 2022. The index was above a low of 53.9 in March 2024 and a low of 55.1 in June 2023 but significantly below a peak of 83.7 in March 2022. An increased 45.7% of respondents (NSA) reported higher prices in March while only 1.2% reported price declines.

Additionally, the new export orders index dropped to 50.7 in March from 57.2 in February, showing new export orders expanded for the third time in four months but at a slower rate. The imports index rose to 55.2 in March from 51.8 in February, registering the third expansion in four months and the highest level since January 2024. The inventories index declined to 54.8 in March from 56.4 in February, indicating inventories expanded for the fourth time in five months but at a slower pace. The inventory sentiment index slipped to 54.3 in March from 55.3 in February, showing continued expansion since May 2023. The backlog of orders index fell to 53.6 in March from 55.9 in February, marking the second successive month of expansion following 11 straight months of contraction. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector; below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

260406P15.jpg

260406Q15.jpg

- ISM Services PMI at 54.0 in Mar., down 2.1 pts. from Feb.; below forecasts but above the 12-month avg. of 52.3.
- Business Activity (53.9, 21st straight month of expansion); New Orders (60.6, 10th consecutive month of expansion and fastest since Feb. ’23); Employment (45.2, first contraction since Nov.); Supplier Deliveries (56.2 vs. 53.9).
- Prices Index (70.7) indicates prices rising since June ’17, the fastest pace since Oct. ’22.

U.S. ISM Services PMI Slips in March, Still Indicating Expansion for the 21st Straight Month

Tian Yong Woon

In this week’s Letter, we examine the first-round price impacts of the surge in oil prices stemming from the ongoing Middle East conflict in Asia. Despite recent rhetoric and reports suggesting a potentially swift resolution, the conflict continues to unfold, with a ceasefire hanging in the balance, and with some measures of shipping volumes through the Strait of Hormuz still reduced to a trickle. At the same time, crude oil prices have been whipsawing amid shifting market perceptions about the persistence of the current supply shock (chart 1). The initial effects of higher oil prices are already showing up in hard data, particularly in energy- and fuel-related inflation across Indonesia, South Korea, and Vietnam (chart 2). In response, several governments have rolled out sizeable subsidy programmes to cushion rising energy costs, though these measures come with significant fiscal strain.

We also assess recent consumer inflation expectations in South Korea and Taiwan, which show early signs of edging higher (chart 3), although there is as yet no clear evidence of a meaningful unanchoring. To add further nuance, our latest Blue Chip survey suggests that most panellists expect only a limited and temporary pass-through from higher energy prices to core inflation, though a non-trivial minority anticipate a more persistent effect (chart 4). On the policy front, respondents broadly expect central banks to delay easing while avoiding outright tightening, with outcomes likely to diverge across regions (chart 5). In the near term, upcoming policy decisions in India, New Zealand, and South Korea—alongside other key data releases—will provide a useful test of these expectations (chart 6).

**The Middle East conflict**
The Middle East conflict continues to rage, with IMF-tracked shipping volumes through the Strait of Hormuz still reduced to a trickle. Meanwhile, crude oil prices remain volatile, gyrating alongside shifting perceptions over how soon normal oil flows might resume. In reality, there is still little sign of a substantive resolution, and no agreement to fully reopen the strait appears imminent, suggesting that oil flows are likely to remain constrained at low levels in the near term. That said, some investors are closely monitoring developments following reports of discussions around a potential 45-day ceasefire, which could pave the way toward a more lasting resolution. Until then, and absent any meaningful supply relief, crude oil prices—and by extension, energy-related inflation—are likely to face continued upward pressure, particularly for oil-dependent, importing economies.

260406T1.jpg

**Initial price impacts**
The initial inflation concerns among policymakers and investors stemming from the surge in oil prices are now beginning to show up in the data, as illustrated in chart 2. The latest March readings—capturing the period after the onset of the Middle East conflict—already point to a sharp acceleration in energy-related prices on a year-ago basis. Indonesia’s energy CPI basket has risen by around 9%, while diesel prices in South Korea have jumped 17%. Vietnam’s retail gasoline prices have seen an even more pronounced increase, at roughly 25.6%. Given the scale of these price surges, and their direct impact on everyday essentials—particularly fuel for daily commutes and broader economic activity—governments across Asia have begun rolling out sizeable subsidy programmes. These measures, often implemented at significant fiscal cost, aim to cushion the burden on households and firms. For instance, South Korea’s finance ministry proposed a supplementary budget of around $17.3 billion in late March to support low-income households, youth, and businesses amid higher oil prices, with approval expected by April 10. Meanwhile, Indonesia has allocated approximately $22.4 billion toward energy subsidies and support for selected energy and utilities firms to help keep prices affordable.

260406T2.jpg

**Consumer inflation expectations**
What policymakers are likely to focus on—beyond the immediate price impacts—is how the recent surge in oil prices feeds into inflation expectations. If left unanchored, these expectations could pose a far greater challenge than the supply-driven price shock itself, including reduced monetary policy effectiveness in reining in inflation and the risk of a self-fulfilling inflation cycle—though it is worth noting that such dynamics are not yet close to materialising. So far, there are some early, albeit inconclusive, signs that near-term consumer inflation expectations are beginning to drift higher in certain economies. As shown in chart 3, one-year-ahead inflation expectations edged up to 2.7% in March, while in Taiwan, consumer sentiment regarding domestic price trends over the next six months has turned notably more pessimistic relative to overall confidence.

260406T3.jpg

**The latest Blue Chip survey**
Turning to investor perspectives on how higher energy prices may feed into inflation, our special questions in the latest Blue Chip Financial Forecasts (BCFF) survey offer some useful nuance. As shown in chart 4, around two-thirds of panellists expect only a limited and temporary pass-through from higher oil prices to core inflation. That said, a non-trivial minority (31%) anticipate a more moderate and persistent pass-through. This is notable given the focus on core inflation, and underscores how energy prices can generate second-round effects even in typically non-energy components, reflecting the pervasive role of energy in everyday economic activity—from manufacturing to the upkeep of a wide range of goods and services.

260406T4.jpg

Delving deeper, we also asked panellists about their views on the prospective path of central bank policy should energy-driven inflation prove persistent. As shown in chart 5, responses broadly coalesce around two themes: central banks are likely to delay easing rather than tighten, and policy responses will vary meaningfully across regions. The former is already playing out to some extent in recent central bank decisions across Asia, with several explicitly citing the ongoing Middle East conflict as a reason to remain vigilant on inflation and refrain from easing policy prematurely. As for the latter, there are already signs of divergence in how different central banks are approaching the situation.

260406T5.jpg

**The week ahead**
Looking to the week ahead, there will be ample opportunities to assess whether investor expectations for central bank policy moves play out across Asia, with several rate decisions due—most notably in India, New Zealand, and South Korea. Also on the docket are China’s March CPI print and a range of Japan-related releases. Policymakers are likely to remain focused on balancing inflation control with supporting growth and maintaining currency stability. For now, and absent offsetting domestic factors, expectations for further near-term easing have been tempered by rising inflation risks. In China, recent CPI readings point to a modest pickup, while producer price deflation has begun to ease after a prolonged period of weak or negative inflation.

260406T6.jpg

Asia

Economic Letter from Asia: First-Round Effects

Michael J. Moran

260403A.jpg

260403B.jpg

The report on payroll employment for March was impressive when viewed in isolation. Job growth was strong at 178,000, and the advance was broadly based. The construction and manufacturing sectors both posted solid gains, and the service-producing sector registered its firmest performance in more than a year. However, the gain might be viewed as a continuation of an unusual bout of random volatility. The March advance followed a notable drop in February (-133,000, revised down from -92,000), which followed an upside surprise in January (160,000, revised up from 126,000).

To be sure, statistical noise has been a factor in the past three months, but the results also represent an encouraging shift in job growth from that in the second half of last year, when employment rose only marginally in the third quarter and fell in the fourth. The net change in the past three months seems to signal that job growth is not drying up. The net advance so far this year is far from brisk, but it is clearly in the plus column and noticeably better than results in late 2025.

The unemployment rate also might be viewed as favorable, as it dipped 0.1 percentage point to 4.3%, although it was a “soft” decline. That is, employment as measured by the household survey declined 64,000, but the size of the labor force fell by a larger amount (off 396,000). Still, the jobless rate has climbed only modestly higher since the labor market started to ease in 2023, and it has inched lower in the past few months.

Unemployment has been contained despite modest hiring because layoffs also have been light. Initial claims for unemployment benefits have moved sideways in the past few years, indicating no change in the pace of layoffs. This pattern is confirmed by terminations data in the report on job openings and labor turnover (JOLTs) from the Bureau of Labor Statistics.

A supply-side shift in the labor market also has helped to contain the unemployment rate. Growth in the size of the labor force has slowed, and with fewer individuals seeking employment, those searching are more easily absorbed. Measures of the size of the labor force can be difficult to assess because there are breaks in the series every year. The Bureau of Labor Statistics adjusts the population controls used in its estimating procedure every January without revising past data to align with the new estimates. Thus, every January involves a discontinuity in the series, which will distort year-over-year changes.

However, Haver Analytics maintains a smoothed series originally developed by BLS to eliminate the breaks in the labor force data. As shown in the chart below, the smoothed series on the size of the labor force had been growing at a pace centered on 1.2% through 2022, but it has slowed irregularly since then (an observation for October is not available because of limited data collection during the government shutdown). The overall labor force is still growing, but the slower pace means fewer individuals looking for work, which most likely results in fewer being counted as unemployed.

The BLS collects data every month on both native-born and foreign-born individuals in the labor force. The breaks in these series are an issue, and Haver does not maintain smoothed series. However, the use of moving averages achieves enough smoothing to provide a sense of underlying changes. The native-born labor force has moved erratically in the past couple of years, but it has continued to advance. The foreign-born labor force, in contrast, seems to have peaked in mid-2025 and has generally declined since then.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

260403C.jpg

260403D.jpg

- The jump of 178,000 in payroll employment in March easily exceeded the expected gain of 51,000.
- Following a net gain in January and February, the employment setting seems to have brightened slightly.
- A dip in the unemployment rate continued the recent pattern of marginal changes.

Payroll Employment: Another Surprise in March, The Third Consecutive

Robert Brusca

260403E.jpg

French manufacturing industrial production was flat in February after a January rebound; output rose by 0.2% following a 0.8% decline in December.

The components of industrial production in February showed 2.6% increase in consumer durables, a 0.4% increase in consumer nondurables, flat output from capital goods, and a 0.7% month to month decline in intermediate output.

Sequentially, French output had been growing at a slow, steady pace of 0.8% at an annual rate over both 12 months and six months, but then slipped to a 6.1% contraction at an annual rate over three months. Consumer durable goods output on this span shows consistent increases, but there are no trends to clear acceleration or deceleration. Consumer nondurables trace an accelerating path of moderate means from -1.8% over 12 months, to -0.4% over six months, and then rising at a 5.5% annual rate over three months. Capital goods output is moving in the opposite direction, growing by 3.4% over 12 months, slowing to a 0.7% annual pace over six months, and then contracting at a 9.5% annual rate over three months. Intermediate goods output is falling at 0.8% pace over 12 months, but then it switches to an expansion rate of 0.8% over six months and 0.6% and over three months. There's nothing remarkable about these patterns, except there's some acceleration, some deceleration, and a lot of mulling about at low growth rates.

As a separate item, French auto production is slipping and decelerating, falling by 7.1% at an annual rate over 12 months, falling at a 7.9% pace over six months, and then plunging at a 19.3% annual rate over three months. On these same horizons, motor vehicle registrations fall by 14.7% over 12 months; the weakness pares back to an 11.2% annual rate decline over six months, and then it steps up to a 22.1% decline at an annual rate over three months. French demand for autos is not in good shape.

In the quarter to date—now two months into the first quarter—manufacturing industrial production is falling at a 0.8% annual rate. That pace is boosted by 9.4% annual rate gain in consumer durables output but restrained by just a 0.2% annual rate increase in consumer nondurable goods. Capital goods output is falling at a 1.9% annual rate, while intermediate goods output is falling at a 1% annual rate. Also in the quarter to date, automobile production is plunging at a 24.3% annual rate, while on the demand side, motor vehicle registrations are falling at a 15% annual rate.

French manufacturing data are somewhat confusing. The chart shows that the industrial production trend has been showing consistent increases over 12 months, but it has recently been pulling back relatively sharply. On the other hand, the manufacturing PMI for France has been consistently negative going back to mid-2022 and only in early 2026 has the manufacturing PMI been posting some values above the 50% mark, indicating that output was starting to actually expand. In March, the PMI reading for manufacturing has slipped back by the thinnest margin below the 50% mark.

260403.jpg

Of course, events in the Middle East make everything more speculative, with the war effectively closing the Strait of Hormuz and no certainty about how or when that is going to be sorted out. In the meantime, the potential threat of ongoing oil price pressures has put both the ECB and the Bank of England in a position to be more wary with policy, and they warned markets about the potential for rate hikes as soon as their next meetings are engaged. That also raises questions about the outlook for growth. But we continue to track and chronicle trends in the data. It's also quite clear that we could have events that will play out that could completely undermine these trends before they get a chance to run to conclusion. It's an important time to be wary and watch all developments—a lot is in play.