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/031028d.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence in October rose and recovered most of the prior month&#39;s moderate decline. The index rose 5.3% from September to 81.1. That was versus Consensus estimates for a reading of 79.0.
The expectations index rose to 90.7 (11.8% y/y) from a revised 88.5 in September. The reading of the present situation rose to 66.8 (-13.5% y/y) from 59.7.
The rise in Confidence was somewhat greater than the 1.9% October gain in Consumer Sentiment reported by the University of Michigan.
Jobs were viewed as hard to get by 33.8% of respondents, down slightly from 35.1% in September but up from 27.3% last October. Expectations about job opportunities in six months improved.
The Conference Board&#146;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM"> Conference Board</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>81.1</td>
<td>77.0</td>
<td>1.9%</td>
<td>96.6</td>
<td>106.6</td>
<td>139.0</td>
</tr>
</tbody>
</table>
U.S. Durable Goods Orders Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 28, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028c.jpg" width="353">
Durable goods orders rose 0.8% in September. The previously reported 0.9% decline in August was revised to a decline of just 0.1%. Consensus expectations had been for a 1.2% gain in September.
Excluding the volatile transportation sector, durable orders rose 1.2% (5.6% y/y) following a 0.7% gain in August, revised from a 0.3% decline reported initially.
Orders for the transportation sector as a whole dropped 2.2% as orders for both motor vehicles and aircraft fell.
Capital goods orders were quite strong, rising 3.4%. Excluding aircraft and parts, nondefense capital goods orders surged 3.9% (13.5%) and a 0.8% decline in August was lessened to -0.1%.
Orders for computers &amp; electronic products jumped another 2.6% (18.4% y/y) and orders in August were revised up substantially. Orders for computers &amp; related products fell 0.4% (9.2% y/y) but orders for communication equipment were strong. Electrical equipment orders firmed notably in three of the last four months.
Shipments of durable goods jumped 2.5%, led higher by aircraft shipments. Excluding transportation shipments rose 1.2% (2.5% y/y).
Durable inventories fell 0.7% last month (-3.7% y/y) and decumulation reported for earlier months was deepened.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM"> NAICS Classification</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Durable Goods Orders</td>
<td>0.8%</td>
<td>-0.1%</td>
<td>6.2%</td>
<td>-1.7%</td>
<td>-10.5%</td>
<td>3.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>3.4%</td>
<td>-1.5%</td>
<td>14.6%</td>
<td>-7.2%</td>
<td>-15.5%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
FOMC Left Fed Funds Rate Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 28, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028g.jpg" width="353">
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 unanimous action was as expected by economists.
The press release which accompanied the Fed&#146;s action contained the following statement. &quot;The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, and the labor market appears to be stabilizing. Business pricing power and increases in core consumer prices remain muted.&quot;
The above reference to a stabilizing labor market is a change from the last FOMC statement which characterized the labor market as &quot;weakening.&quot;
The press release also indicated that &quot;The Committee judges that, on balance, the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period.&quot;
The complete text of the Fed&#39;s latest press release can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2003/20031028/default.htm"> here</a> .
&quot;Monetary Policy and Learning: Some Implications for Policy &amp; Research&quot; from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=59128295-7160-46B3-B963F9A123AB9F26&amp;method=display_body#tallman">here</a> .

</body>
</html>

The Conference Boards Index of Consumer Confidence in October rose and recovered most of the prior month's moderate decline. The index rose 5.3% from September to 81.1. That was versus Consensus estimates for a reading of 79.0. The [...]

Consumer Confidence Up

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/031027a.jpg" width="353">
Data on the balance of payments for the the period January through August for the Euro-zone showed a marked decline in the current account to 2,500 million Euros from 35,600 million in the corresponding period of last year. The slowdown in global demand earlier this year and the appreciation in the Euro were major factors in the decline.
Net direct investment by the Euro-zone resulted in a small capital outflow of 300 million euros in contrast to the sizeable outflow of 29,200 million in the January-August period of 2002. Net portfolio investment, however, resulted in an outflow 24,300 million so far this year in contrast to a net inflow of 40,600 million euros in the same period of 2002 and &quot;other investments,&quot; largely short-term, also resulted in substantial capital outflows.
The errors and omission item in the balance of payments is a reflection of the difficulty of measuring accurately the various accounts, particularly capital flows. The 60,600 million euro errors and omissions in the January-August period of this year reflects current or capital inflows that have not been accounted for.

<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">Millions of Euros</th>
<th scope="col">Jan-Aug 2003</th>
<th scope="col">Jan-Aug 2002</th>
<th scope="col">Year 2002&nbsp;</th>
<th scope="col">Year 2002&nbsp;</th>
<th scope="col">Year 2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>2500</td>
<td>35600</td>
<td>67100</td>
<td>-14100</td>
<td>-78000</td>
</tr>
<tr>
<td class="firstcol">Capital Account</td>
<td>6300</td>
<td>7500</td>
<td>11000</td>
<td>6800</td>
<td>11800</td>
</tr>
<tr class="odd">
<td class="firstcol">Financial Account</td>
<td>-69200</td>
<td>-42400</td>
<td>-97200</td>
<td>-24300</td>
<td>74200</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Direct Investment</td>
<td>-300</td>
<td>-29100</td>
<td>-41400</td>
<td>-102400</td>
<td>-17180</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Portfolio Investment</td>
<td>-24300</td>
<td>40600</td>
<td>103300</td>
<td>68100</td>
<td>-102800</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Financial Derivatives</td>
<td>-10300</td>
<td>-8300</td>
<td>-10100</td>
<td>-1600</td>
<td>-3100</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Other Investments</td>
<td>-50200</td>
<td>-48400</td>
<td>-146700</td>
<td>-6600</td>
<td>18200</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Change in Reserves</td>
<td>15800</td>
<td>3000</td>
<td>-2200</td>
<td>18000</td>
<td>14700</td>
</tr>
<tr class="odd">
<td class="firstcol">Errors &amp; Omissions</td>
<td>60600</td>
<td>-700</td>
<td>19200</td>
<td>-8400</td>
<td>32200</td>
</tr>
</tbody>
</table>
</body>
</html>

Data on the balance of payments for the the period January through August for the Euro-zone showed a marked decline in the current account to 2,500 million Euros from 35,600 million in the corresponding period of last year. The [...]

A Smaller Current Account and Larger Capital Outflows in the January-August Eurozone Balance of Payments

<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/030925c.jpg" width="353">
Sales of new single family homes fell just 0.2% in September to 1.145M (AR) and beat Consensus estimates for a decline to 1.125M. Sales in August were revised down slightly but July and June sales were revised up.
Sales of new homes last month were the third highest on record.
Sales in the Northeast rose 26% m/m (3.2% y/y) to the fastest pace since January 1997. In the West sales gained 12.4% (21.4% y/y), but sales fell 18% (6.1% y/y) in the Midwest and were down 2.5% m/m (2.9% y/y) in the South.
The median price of a new home was about unchanged at $187,400 (5.6% y/y). Prior month&#39;s figures were revised up.
These new home sales data from the US Census Department reflect current sales versus the existing home sale figures which reflect closings on past sales.

<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/@E904/@E90401/@E90401.HTM"> Homes Sales (000s, AR)</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>1,145</td>
<td>1,147</td>
<td>12.2%</td>
<td>977</td>
<td>907</td>
<td>880</td>
</tr>
</tbody>
</table>
Existing Home Sales Surprisingly to Another Record 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 27, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031028e.jpg" width="353">
Sales of existing single family homes reported by the National Association of Realtors rose to another record in September, for the second month outpacing Consensus expectations for a decline.
The 3.6% m/m gain in sales last month to 6.69M was versus expectations for a decline to 6.25M. Sales in August were revised up.
The figures from the reflect closings of past home sales.
Regionally, sales in the Northeast rose 7.0% in September to 760,000 units (18.8% y/y). In the West sales increased 5.1% to 1.85M (26.7% y/y). Sales in the Midwest sold at a rate of 1.43M (17.2% y/y). Sales in the South rose to 2.64M (18.4% y/y). Each of these selling rates was a record.
The median price of an existing home fell m/m to $172,300 (+9.1% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/PublicAffairsWeb.nsf/Pages/SeptEHSRpt03?OpenDocument">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/@E9/@E905/@E90501/@E90501.HTM"> Existing Home Sales (000, AR)</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,690</td>
<td>&nbsp;6,460</td>
<td>20.8%</td>
<td>5,595</td>
<td>5,292</td>
<td>5,158</td>
</tr>
</tbody>
</table>
</body>
</html>

Sales of new single family homes fell just 0.2% in September to 1.145M (AR) and beat Consensus estimates for a decline to 1.125M. Sales in August were revised down slightly but July and June sales were revised up. Sales of new homes [...]

New Home Sales Dip

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/031023c.jpg" width="353">
Gains in stock prices and signs of economic recovery in Japan helped lift the Japanese Consumer Sentiment Index by 2.7 points in Q3, to 40.0, the highest level in over two years. This survey of about 5,000 Japanese households was taken September 15. The Nikkei 225 stock price index stood at 10712 the Friday before, up almost 20% from 8981 on June 13, the Friday before the previous survey, and up 40% from the cycle low of 7608 on April 28. Recent consolidation in the stock market has shaved this overall increase to 35%, but it&#39;s still a quite substantial gain.
Job market conditions are perceived much less negatively than in the prior quarters. Indeed, the increase in the &quot;job situation&quot; component, 8.9 points, is the second largest rise in the 21-year history of these data. Interestingly, actual employment looks less vigorous than might inspire such a large rise; while off its lows, employment has moved up very erratically, and businesses&#39; assessments of jobs actually deteriorated in the Bank of Japan&#39;s third quarter TANKAN report, issued about three weeks ago. In contrast, unemployment is somewhat reduced, as the unemployment rate decreased 0.2 percentage point in August to 5.1%, its lowest since August 2001.
In interpreting these figures, it&#39;s important to point out that, while we use the words &quot;improve&quot; and &quot;gain&quot;, they are only relative. These diffusion indexes remain below 50%, so pessimists still outnumber optimists. But the &quot;pessimism margin&quot; is narrowing, a necessary step for outright advances to develop.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Japan: Consumer Behavior Survey</th>
<th scope="col">Q3 2003</th>
<th scope="col">Q2 2003</th>
<th scope="col">&nbsp;Q1&nbsp; 2003</th>
<th scope="col">Q3 2002</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment Index</td>
<td>40.0</td>
<td>37.3</td>
<td>36.1</td>
<td>39.4</td>
<td>38.8</td>
<td>38.7</td>
<td>43.0</td>
</tr>
<tr>
<td class="firstcol">Job Situation</td>
<td>36.2</td>
<td>27.3</td>
<td>25.0</td>
<td>28.8</td>
<td>27.7</td>
<td>25.2</td>
<td>38.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Standard of Living</td>
<td>40.6</td>
<td>37.7</td>
<td>36.7</td>
<td>39.5</td>
<td>39.0</td>
<td>39.4</td>
<td>43.6</td>
</tr>
<tr>
<td class="firstcol">Nikkei-225 Stock Price Index*</td>
<td>10712</td>
<td>8980</td>
<td>8003</td>
<td>9243</td>
<td>10103</td>
<td>12126</td>
<td>17061</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate - %**</td>
<td>5.1</td>
<td>5.4</td>
<td>5.2</td>
<td>5.5</td>
<td>5.4</td>
<td>5.0</td>
<td>4.7</td>
</tr>
</tbody>
</table>
</body>
</html>

Gains in stock prices and signs of economic recovery in Japan helped lift the Japanese Consumer Sentiment Index by 2.7 points in Q3, to 40.0, the highest level in over two years. This survey of about 5,000 Japanese households was [...]

Japanese Consumers' Outlook Gains in Q3

<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/031023a.jpg" width="353">
Initial claims for jobless insurance fell 4,000 to 386,000 last week. The modest decline reported initially for last week was revised to a slight increase. Consensus expectations had been for claims of 385,000.
The latest figure covers the October survey period for non-farm payrolls. Versus the September survey period claims fell 15,000 (3.7%). during the last ten years there has been a 72% correlation (negative) between the level of initial claims and the m/m change in non-farm payrolls.
The four-week moving average of initial claims fell to 392,250 (-5.5% y/y), the lowest level since early February.
Continuing claims for unemployment insurance fell 84,000 and the increase of 58,000 initially reported for the prior week was lessened to 13,000.
The insured rate of unemployment fell to 2.8% following six months at 2.9%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">10/18/03</th>
<th scope="col">10/11/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>386.0</td>
<td>390.0</td>
<td>-7.2%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,542</td>
<td>-0.9%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
New Figures On Household Indebtedness 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 23, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031023b.jpg" width="353">
The Federal Reserve released new figures on the Household Sector Debt Service Ratio. The changes resulted in a slight downward revision to the ratio of debt service to disposable income for 1Q03 to 13.29% from 13.99%. Figures for 2Q03 indicate a ratio of 13.30%. Earlier movement in the series is roughly unchanged.
Recent developments in credit markets necessitated changing some of the sources used to calculate the ratio.There are new sources for the distribution of loan types and for student loans, as well as updated sources for loan maturities and interest rates. 
With the addition of recurring obligations such as rent, auto leasing, homeowners insurance and property taxes to the debt service ratio, total Financial Obligations are shown to be 18.09% of disposable income. The financial obligations ratio is broken down to show the Homeowners&#39; and Renters&#39; financial obligations ratio.

<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/@E103/@E10310/@E10310.HTM"> Household Obligation Ratio</a></th>
<th scope="col">2Q03</th>
<th scope="col">1Q03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>18.1%</td>
<td>18.1%</td>
<td>18.2%</td>
<td>18.2%</td>
<td>18.7%</td>
<td>18.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Homeowners</td>
<td>14.1%</td>
<td>14.1%</td>
<td>14.1%</td>
<td>14.1%</td>
<td>14.5%</td>
<td>14.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Renters</td>
<td>28.8%</td>
<td>28.9%</td>
<td>29.1%</td>
<td>29.0%</td>
<td>29.6%</td>
<td>27.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance fell 4,000 to 386,000 last week. The modest decline reported initially for last week was revised to a slight increase. Consensus expectations had been for claims of 385,000. The latest figure [...]

Initial Claims for Jobless Insurance Down

<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/031022b.jpg" width="353">
Trade balances in three emerging countries, Poland, the Czech Republic and Turkey, which all reported data today, have been fairly stable in recent months. But those nations, which all have very &quot;open&quot; economies, are showing strong growth in both exports and imports.
Of these, Turkey, interestingly, has the largest economy, with GDP in Q2 of $58.7 billion (quarterly rate). Its merchandise trade accounts have seen deficits of $1.7 billion each in July and August. While this might be interpreted as a deterioration from $1.0 billion in August 2002, the huge 25.2% year-on-year growth in exports would suggest that a trade imbalance is not one of Turkey&#39;s main problems. Imports are growing as rapidly though, 26.2% in August over August 2002. These merchandise trade flows represent roundly 20%-25% of Turkey&#39;s GDP.
In Poland, the trade deficit inched wider in August to $1.5 billion from $1.3 billion in July and $1.1 billion in August 2002. Poland&#39;s exports softened in August, breaking a string of 12-month advances running 25%-40%. Imports also slowed, with &quot;only&quot; 10.1% growth in August, following 20.4% in July and as much as 30% in May. Poland&#39;s GDP is about 10% smaller than Turkey&#39;s, and its trade flows constitute a somewhat larger portion of GDP than in Turkey, thus indicating that more industrialized Poland is a more open economy than Turkey.
However, it is the Czech Republic&#39;s economy that is the most interactive with the rest of the world, as exports and imports both account for more than half of GDP. Trade is nearly in balance there, with a mere $400 million trade deficit in September, following $100 million in August. For the third quarter as a whole, exports and imports were both up about 20% from a year ago. GDP is the smallest of these three countries, &quot;just&quot; $21.4 billion in the second quarter, but exports are about the same size as those of the other two nations. Imports are only marginally smaller. Thus, while it has the smallest GDP of these nations, its active trade with other countries is likely one reason it also has the highest standard of living among these nations: $5,700 of per capita real GDP in 2002, compared with $4,325 in Poland and roughly $3,000 for Turkey.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">All figures in billions of US$ (except where noted)</th>
<th scope="col">GDP (Q2&#39;03)</th>
August 2003
</tr>
</thead>
<tbody>
<tr>
<td colspan="3">Exports</td>
<td colspan="3">Imports</td>
</tr>
<tr>
<td class="firstcol">Value</td>
<td>Y/Y</td>
<td>% of GDP</td>
<td>Value</td>
<td>Y/Y</td>
<td>% of GDP</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Turkey</th>
<th scope="col"><center></center></th>
<th scope="col">$58.7</th>
<th scope="col">$11.8*</th>
<th scope="col">25.2%</th>
<th scope="col">18.8%</th>
<th scope="col">$16.9*</th>
<th scope="col">26.7%</th>
<th scope="col">27.7%</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><center></center></td>
</tr>
<tr>
<td class="firstcol">Poland</td>
<td><center></center></td>
<td>$52.4</td>
<td>$10.5*</td>
<td>1.6%</td>
<td>25.8%</td>
<td>$15.1*</td>
<td>10.1%</td>
<td>31.9%</td>
</tr>
<tr class="odd">
<td class="firstcol"><center></center></td>
</tr>
<tr>
<td class="firstcol">Czech Republic</td>
<td>$21.4</td>
<td>$12.4**</td>
<td>20.7%</td>
<td>56.1%</td>
<td>$13.1**</td>
<td>19.6%</td>
<td>58.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Trade balances in three emerging countries, Poland, the Czech Republic and Turkey, which all reported data today, have been fairly stable in recent months. But those nations, which all have very "open" economies, are showing strong [...]

Foreign Trade Active in "Transition" Economies

<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/031022a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association ticked up 0.5% (-42.1% y/y) last week following the 20.5% plunge the week prior.
Purchase applications gained back 7.5% of the prior week&#39;s 18.6% decline. Purchase applications last week were up 6.8% y/y but the level in early October is down 3.6% versus September.
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 added another 5.8% to the 22.1% w/w slide of the prior week. Applications to refinance are down nearly two-thirds y/y and the level in early October is down 1.9% versus September.
The effective interest rate on a conventional 30-Year mortgage rose w/w to 6.25%. The effective rate on a 15-year mortgage also rose w/w to 5.61%.
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>.
The Federal Reserve Bank of San Francisco&#39;s Economic Letter titled &quot;Mortgage Refinancing&quot; is available <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-29.html"> 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">10/17/03</th>
<th scope="col">10/10/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>652.8</td>
<td>649.6</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>386.1</td>
<td>359.0</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,204.1</td>
<td>2,340.1</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of mortgage applications compiled by the Mortgage Bankers Association ticked up 0.5% (-42.1% y/y) last week following the 20.5% plunge the week prior. Purchase applications gained back 7.5% of the prior week's 18.6% decline. [...]

Mortgage Applications Remained Down

<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/031021c.jpg" width="353">
For the month of September, retail sales in China were 397.18 billion Yuan (approximately $49 billion at the current exchange rate). As retail sales are not seasonally adjusted, year to year percent changes are more meaningful than month to month changes.
The year to year change in September was 9.5%, lower than the 9.9% in August, but well above the 4.3% in May which may have represented the greatest impact of SARS (severe acute respiratory syndrome) on the level of retail sales.
Because of the impact of SARS, however, retail sales for the year may fall short of the 10% plus rate of increase of the past two years. Through September, aggregate retail sales averaged 334.5 billion Yuan or 8.6% above the average sales of the comparable period of 2002..

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Retail Sales&nbsp;</th>
<th scope="col">Aug 2003</th>
<th scope="col">Jul 2003</th>
<th scope="col">Jun 2003&nbsp;</th>
<th scope="col">M/M&nbsp; %</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col">2002 Monthly Average</th>
<th scope="col">2001 Monthly Average</th>
<th scope="col">2000 Monthly Average</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Billions of Yuan</td>
<td>397.18</td>
<td>360.92</td>
<td>362.72</td>
<td>10.03</td>
<td>9.50</td>
<td>349.23</td>
<td>313.29</td>
<td>284.61</td>
</tr>
<tr>
<td class="firstcol">Y/Y %&nbsp;</td>
<td>9.5</td>
<td>9.9</td>
<td>15.13</td>
<td>-0.4</td>
<td>-5.7</td>
<td>11.5</td>
<td>10.1</td>
<td>9.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Billions&nbsp; US$</td>
<td>47.98</td>
<td>43.61</td>
<td>43.82</td>
<td>10.03</td>
<td>9.50</td>
<td>42.19</td>
<td>37.85</td>
<td>34.38</td>
</tr>
</tbody>
</table>
</body>
</html>

For the month of September, retail sales in China were 397.18 billion Yuan (approximately $49 billion at the current exchange rate). As retail sales are not seasonally adjusted, year to year percent changes are more meaningful than [...]

Retail Sales in China Continue to Recover from SARS

PMIs showing widespread revival of global economy

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

Surging orders for computers and electronics propelling durable goods orders

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

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

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. 

New York

London

Singapore

Tokyo

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

Tian Yong Woon

In this week's Letter, we examine the underbelly of the AI boom, the risks that sit beneath its optimism. Start with the public mood: American concern about AI has grown alongside adoption over the past three to four years (chart 1). Those worries span mass job displacement, misuse of top-end models by bad actors, and fears of being left behind. The first of these is already surfacing: in June, AI was again the most cited reason for announced US layoffs, with year-to-date AI-linked cuts above 100,000 (chart 2). Technology led all sectors in overall cuts, though the data do not isolate how many were AI-driven. Among those hit, the young are arguably the most exposed to these labour effects. They enter a labour pool swollen by displaced professionals, just as AI masters the entry-level tasks where they would start. India and Indonesia illustrate the stakes on youth NEET, the share not in education, employment, or training, both above 20% and among Asia's highest (chart 3). Beyond the labour market, the same optimism reshapes asset prices. The rally has lifted AI-related valuations to historic highs and concentrated a few names in cap-weighted indexes (chart 4). That raises correlation and the risk of a sharper index fall should the rally unravel. The same concentration runs through economies via exports, from Taiwan's advanced chips to South Korea's memory (chart 5). Its footprint is physical too, and cuts both ways: data-centre investment has lifted growth in Johor, Malaysia (chart 6) while straining local power and water. None of this argues against riding the AI wave, which still promises real productivity and welfare gains. Rather, these are caveats that investors and policymakers must keep in view, since the story is not all upside.

**AI-related concerns**
AI adoption has exploded over the past three to four years, and Americans' concerns have risen alongside it (chart 1). That is understandable, given how advanced and broad AI's proven applications have become. They now span everyday tasks and subject-specific work across fields such as finance and production, as well as tech and development, the sector AI was born in. Major concerns run from mass AI-induced job displacement to a more recent fear, that top-end models fall into the wrong hands and are used by bad actors. A further worry is distributional: AI advances are powerful and could deliver leaps in productivity, yet they may also leave many people behind. Those most exposed include workers already displaced from their jobs and people facing scarcer basic resources as AI demand competes for them. Others simply lack equitable access to AI tools or their benefits.

260713T1.jpg

**AI-driven job displacement**
Some of the fears US workers first had about AI-driven job displacement are already playing out. In June, AI was again the most cited reason for announced job cuts in the US (chart 2). That pushed year-to-date job cuts attributed to AI above 100,000, more than half of all AI-tagged cuts since AI became a selectable reason in 2023. The data come from the latest survey by Challenger, Gray & Christmas. This likely reflects AI's disproportionately heavy impact on certain industries such as technology, which again led all sectors in cuts. At the same time, announced hiring plans stayed subdued, leaving laid-off workers with limited opportunities to find new roles. All of this is occurring even as market valuations remain elevated on the broader wave of AI optimism.

260713T2.jpg

**AI and youth unemployment**
Arguably among those bearing the brunt of these labour-related effects are the youth. Many have graduated on a curriculum built largely for a pre-AI era. They now enter a labour pool swollen by experienced professionals whom AI has displaced. At the same time, AI is proving especially capable at the entry-level tasks on which young workers usually start. An elevated youth unemployment rate only intensifies the competition young people face for gainful employment. On the broader NEET measure, which also captures youth who are neither working nor studying, India and Indonesia stand out. On the latest available WDI data, both have youth NEET rates above 20%, among the highest in Asia and above the global average (chart 3). Should employers in these economies adopt AI aggressively across processes and production, including physical AI such as humanoid robots, the problem could worsen. Yet firms that stay purely labour-intensive risk losing out to rivals using more efficient, and perhaps cheaper, AI-driven methods.

260713T3.jpg

**Concentration risk**
The recent wave of AI optimism has pushed the equity valuations of major AI developers and AI-related goods producers to historically high levels. These gains are partly backed by strong earnings and upbeat forward guidance. Most major indexes are weighted by market capitalisation, so a counter's weight tracks its price. As these counters have outperformed their peers (chart 4), their index weight has risen close to mechanically, when holding the number of shares constant. This raises concentration risk, since a small group of counters now carries more of the index and moves it more closely. So, if the rally in these counters were to unravel deeply, it would drag the broader index down more heavily with it.

260713T4.jpg

AI-related concentration risk is not confined to equity indexes; it also shows up in the growth of major economies. In Asia, that risk usually runs through a country's exports. Take Taiwan, the world's largest advanced semiconductor exporter, as an example. As chart 5 shows, its recent export growth has come more than entirely from integrated circuits and from infocomm and audiovisual equipment. Other goods categories have often contributed negatively in recent months. This is good news for the Taiwanese economy, which sits right at the centre of the global AI boom. Yet it is also a source of concentration risk, should AI-related goods demand collapse or substantial alternative supply emerge elsewhere. A similar story applies to South Korea, through its role in supplying high-end memory chips.

260713T5.jpg

**Data centres, energy, and water**
Finally, rapidly advancing AI promises major productivity gains and broad improvements to daily life. Yet AI infrastructure rests on resource-intensive inputs: the energy needed for data centre compute, and the water needed to cool those centres. Both may deprive real people of the very resources they need to survive. One recent hotspot is Malaysia, which has courted a wave of foreign direct investment to expand its data centre footprint in the state of Johor. These capital inflows are welcome, and have lifted state-level growth through the construction sector (chart 6). But they have also raised concerns about straining local grids and water supplies, possibly leaving less for residents. Among estimates, a recent one puts data centres at around 40% of Johor's electricity demand by 2035. That is pressuring the state to expand generation capacity and grid access to match the data centre pipeline already in place. Its neighbour Singapore faced similar strains earlier, and has since repositioned itself as a hub for the most advanced and efficient data centres, partly because of its severe land constraints. 

260713T6.jpg

Asia

Economic Letter from Asia: The AI Underbelly

Robert Brusca

260714E.jpg

Industrial output in Norway fell by 1% in May after rising by 0.6 in April and falling by 1.1% in March. The seesaw act for output continues. Over broader horizons, however, output is falling. It falls by 0.1% over 12 months, falls at a 1.1% annual rate over six months, and falls at a 6.2% annual rate over three months, giving us a clear sequential trend toward falling and decelerating output. Utilities output has chaotic trends, as do mining and quarrying; however, manufacturing shows a clear trend toward output acceleration, with a 2.1% output increase over 12 months, a 2.6% annual rate rise over six months, and a 9% annual rate increase over three months.

Manufacturing sectors show consumer goods output increasing in May, also showing secular acceleration from 12 months to six months to three months. Durable goods, however, are the fly in the ointment, with output up 2.2% over 12 months, accelerating over six months, and then dropping at a 20.4% annual rate over three months. However, consumer nondurables show growth and acceleration, with a 12-month gain of 1.8%, rising to a 3.6% annual rate increase over six months and a 10.9% annual rate increase over three months. Intermediate goods output trends return to more difficult times and show declines over 12 months, six months, and three months, but not a clear path of deceleration. Capital goods output is up 5.4% over 12 months and at an 8.5% annual rate over three months, but there is an intervening soft spot with output up at only a 3.4% annual rate over six months.

Against this background, inflation in Norway showed solid increases in May, rising by 0.2% overall and by 0.3% for the core HICP. However, sequentially inflation gains 3% over 12 months, rises at a 3.8% annual rate over six months, and then backs down to a 1.2% annual rate over three months. The core HICP is steadier, with a 3.4% gain over 12 months, rising to a 3.8% annual rate over six months, and then backing down to 3.2% at an annual rate over three months. That's a set of growth rates that are more stable than either accelerating or decelerating.

In the quarter-to-date (QTD) basis, industrial production is falling 4.6%; this is two months into the second quarter. On the other hand, manufacturing output is rising QTD at a 4.9% annual rate, with consumer nondurables showing strong positive growth along with intermediate goods output. There is a solid gain of 3.1% at an annual rate from capital goods. The QTD inflation trends remain somewhat mixed, with a weak headline showing a 1.6% annual rate, against a core HICP at a 3.4% annual rate rise, the latter gain being well in step with its sequential results.

The far right-hand column compares industrial production over the broad period from just before COVID (in January 2020) looking at the ratio of the level of output in May 2026 to its index value in January 2020. Remember that IP data are inflation-adjusted, so these are real data. Over this span, industrial production excluding construction is up by approximately 10%, with utilities output up at about 21%, mining and quarrying up about 5%, and manufacturing up a little more than 7%. This is a 5½-year period. Consumer goods output is up by 2.7%, led by consumer nondurables which rise 4.1% on the period and against durable goods output where there is a decline of about 13% on that timeline. Intermediate goods output drops slightly on the timeline by less than half a percentage point, while capital goods output is up at a solid and strong 23% gain. Looking at prices over the same period, the headline HICP is higher by 27% while the core is higher by 24%.

The weakened output shows the stresses and strains of the period, with weak gains in place over the last 5½ years and with the consumer showing considerable wear and tear, leaving consumer goods output lower on balance over this 5½-year span. It hasn't been such a bad time for capital goods, where output rose by 23% over the period. Inflation got out-of-the-box and grew quite strongly. The headline HICP grew by 27% at a time when sticking to its target would have implied a gain in the price level of only 11.5%.

**Ongoing overshooting**
Even now central banks are trying to decide how to come to grips with the inflation pressures from that. Pressures continue to linger and threaten the economies. Of course, there are some new factors in place, but that's the nature of inflation: if it's not one thing, it's something else. And failing to respond to the one thing means that you're going to get hit even worse when it becomes something else. This is the lesson the central banks haven't learned during this period. 

**Have central banks learned their lesson?**
Noting that inflation is over target and then forecasting that it's going to come back down to target over some period ahead puts the inflation performance at risk to whatever happens between now and the end of that period ‘ahead.’ If that forecast isn't perfectly right and if there's something else that disturbs the path of prices, what will happen is that an inflation that is already over the top of the target will push even farther over the top of the target and the dilemma faced by the central bank will become even worse. This is why kicking the can down the road generally is not a very good strategy, but it's one that virtually all the central banks pursued in the wake of COVID. So, will central bankers come to see inflation that is here and now as a here-and-now problem to be addressed here and now, or as a candidate for tomorrow land? The ECB seems to be changing, and the Fed has formed task forces. What about Norway and the rest of the world? Norway did push its target rate up as the ECB hiked. But what is its plan?

260713.jpg

Norway

Norwegian IP Struggles, but Manufacturing Shows Some Strength

260710E.jpg

Manufacturing output in the countries of the European Monetary Union continues to underperform. The median change for the 11 countries reporting on the table is a 0.5% decline in May following a 0.3% increase in April. However, only 41.7% of the reporters are accelerating in May, compared to 25% in April, although in March over half of the reporters had showed some acceleration, with output at 61.5%.

In May, of these eleven early reporters, seven showed month-to-month declines in output. This compares to four showing declines in April and four showing declines in March.

**Sequential trends**
Over 12 months, output is declining in four of these eleven countries: Germany, Luxembourg, Ireland, and Portugal. Over six months, output declines in five of the eleven countries. Over three months, output declines in four of the eleven countries. Over these broader sequential periods, output is increasing in most cases; only one country, Ireland, shows consistent declines in output over three months, six months, and 12 months. However, among EMU countries, only Italy shows output expanding on all three timelines, although Sweden, an EU member country, also shows output increasing in all three periods.

Amid the output weakness in May, the quarter-to-date calculation for industrial production growth is also broadly weak. In May, seven of the eleven quarter-to-date changes in industrial production are negative. Positive results, increases in the quarter-to-date, are registered by Germany, Luxembourg, Greece, and Portugal.

The ranking of the year-over-year growth rates shows seven countries with output growth rate rankings below 50%, marking them as below their respective medians. The comparisons for output growth are taken back to 2006, a period of about 20 years.

Four EMU countries rank above their twenty-year medians: France, Italy, Luxembourg, and Greece.

The snapshot of industry in the monetary union is consistent, showing little momentum, little strength, and relatively low rankings for current growth rates; only a minority of reporters show an acceleration in growth in May compared to April. With the situation in the Strait of Hormuz deteriorating again, the outlook for industrial production has to remain guarded.

260710.jpg

Europe

Industrial Sector Remains Under Pressure in EMU

Andrew Cates

**Growth Surprises Continue to Underpin Equity Resilience**
Global equity markets have proved remarkably resilient in recent weeks, shrugging off intermittent bouts of geopolitical and policy uncertainty to grind higher. Chart 1 below helps explain why: it tracks the relationship between global growth-versus-inflation surprises and world equity markets, and on that measure the recent run of global growth data has continued to surprise on the upside relative to inflation outturns — a combination that has historically been supportive for risk assets. Whether that resilience persists will depend on whether the growth-surprise advantage evident in the chart below can be sustained in the face of the inflationary pressures explored below.

260709Z1.jpg

**PMIs Confirm a Broadly Solid Global Expansion**
This week's final composite PMI readings for June reinforced the broader impression of resilient global growth. As chart 2 below shows, most major economies posted readings comfortably in expansionary territory, with India continuing to lead the pack and the US not far behind. Even the laggards in the sample are hovering close to the expansion threshold rather than falling decisively below it, suggesting stabilisation rather than outright contraction (and with the UK a notable exception).

260709Z2.jpg

**Inflation Surprises Are Creeping Back, and Bond Yields Are Taking Notice**
The US growth picture painted by Haver's surprise indices broadly echoes the message from the global PMI data. Chart 3 below shows the combined growth-and-inflation surprise index drifting higher this week, and closer inspection suggests growth is doing most of that work, with activity data continuing to outperform expectations. That is, on the face of it, good news. But it has not stopped bond markets from taking notice: short-dated Treasury yields have remained elevated in recent weeks, as stronger growth keeps alive the possibility that the Federal Reserve holds rates higher for longer or even lifts them in coming weeks.

260709Z3.jpg

**Supply Chains Are Tightening** 
Latest data show that global supply chain pressures tightened by less in June than they had the month before, likely reflecting the easing of Middle East tensions through much of the period. Chart 4 below shows that pressures troughed in the middle of last year and have been building gradually since, though June's slower pace of tightening suggests that easing had started to feed through. Still, today's flare-up threatens to undo that improvement, particularly if it affects shipping routes or energy flows through the region once again.

260709Z4.jpg

**Extreme Weather: An Old Supply-Side Risk Returns**
Geopolitics is not the only source of supply-side risk currently in play. Large parts of Europe have been gripped this week by another intense and prolonged heatwave, with temperatures in several major cities running well above seasonal norms. Extreme heat of this kind carries real economic costs: it depresses labour productivity, particularly in outdoor and manufacturing-adjacent sectors, strains electricity grids as air-conditioning demand spikes, and can disrupt agricultural output and river-based transport when water levels fall. Episodes like this have become more frequent in recent years, and while any single heatwave rarely shifts the macro picture on its own, the cumulative effect of more frequent and more severe weather events could start showing up in productivity and inflation data across the advanced economies. It is a reminder that the supply side of the global economy faces structural as well as cyclical challenges, and that climate-related disruption deserves a permanent place alongside geopolitics and demographics in any assessment of medium-term inflation risk.

260709Z5.jpg

**AI Investment: The Other Side of the Supply Equation**
Set against these supply-side headwinds is a genuinely positive structural development: the extraordinary scale of private investment now flowing into artificial intelligence. Chart 6 below shows just how sharply that investment has grown in recent years, reaching a fresh high last year. If even a fraction of that investment translates into genuine productivity gains, it could provide a meaningful long-run offset to the energy, climate and geopolitical constraints highlighted elsewhere in this week's charts. The scale of the bet now being placed on AI is large enough that it is beginning to show up in aggregate investment and capital expenditure data across the advanced economies, and it is likely to remain one of the defining structural themes shaping the global growth outlook over the remainder of this decade.

260709Z6.jpg

Global markets head into this week’s closing stages digesting a mixed set of signals. Last week's US non-farm payrolls report undershot expectations, adding to questions about the durability of the US labour market even as broader activity data have continued to hold up well. Compounding that picture, news broke today of renewed instability in the Middle East, reintroducing a geopolitical risk premium into markets just as investors had begun to look past it. Global equity markets have nonetheless remained resilient, continuing to track the broadly encouraging tone of incoming activity data (chart 1). That resilience was reinforced by a solid set of global PMIs across most major economies over the past few days (chart 2). Haver's surprise indices tell a similar story of positive growth momentum in the US, but with an important caveat: incoming inflation data have also been surprising to the upside, driven largely by higher oil prices (chart 3). These inflation risks could persist moreover, as global supply chain pressures have picked up in recent months and today's flare-up in the Middle East threatens to add further strain (chart 4). The world economy remains vulnerable to other supply-side shocks too, such as the extreme heat gripping much of Europe this week (chart 5). Still, on the other side of the ledger the enormous scale of investment now flowing into artificial intelligence could be a genuine source of supply-side potential (chart 6).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/0dl4LKZaL1oTC5UPIaqrA9?utm_source=generator&si=7aa69345dbfd4ac4" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Growth Holds Firm

Winnie Tapasanun

260709F57.jpg

260709G57.jpg

Existing home sales unexpectedly fell 2.4% m/m (+2.8% y/y) to 4.09 million units (SAAR) in June, the first monthly decline since March, following an upwardly revised 3.7% increase to 4.19 million in May (previously +3.2%; 4.17 mil.), according to the National Association of Realtors (NAR). The Action Economics Forecast Survey had expected June sales of 4.20 million units. Sales remained 36.4% below a high of 6.43 million in January 2022 and 38.0% below a peak of 6.60 million in January 2021. The June decline coincided with a rise in the average 30-year fixed mortgage rate to 6.49% in June, the highest since August 2025, after increasing to 6.44% in May, according to Freddie Mac. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales fell 2.4% (+3.3% y/y) to 3.73 million units in June, the first m/m fall in three months, following a 4.1% gain to 3.82 million in May, remaining 34.6% below a high of 5.70 million in January 2022. Sales of condos and co-ops decreased 2.7% (-2.7% y/y) to 360,000 in June, the lowest level since May 2025, after being unchanged m/m for the third successive month at 370,000, remaining 50.7% below a high of 730,000 in January 2022.

Regionally, June existing home sales declined m/m in all regions except the Northeast. Sales in the South dropped 3.6% (+3.8% y/y) to 1.89 million in June, a three-month low, after a 3.2% rise in May, and sales in the Midwest slid 3.0% (+2.1% y/y) to 980,000 following a 7.4% May advance; both posted the first m/m decrease in three months. Sales in the West fell 1.3% (+2.8% y/y) to 740,000, the lowest level since January, after being flat m/m at 750,000 in May. In contrast, sales in the Northeast increased 2.1% (0.0% y/y) to 480,000 after a 4.4% May gain. Notably, the South remained the dominant region, accounting for 46.2% of total U.S. existing home sales.

The median price of all existing homes (NSA) rose 2.2% (1.8% y/y) to $440,600 in June, the fifth consecutive m/m rise, on top of an upwardly revised 3.3% increase to $431,200 in May ($429,300 previously). Prices were 22.1% above a low of $360,800 in January 2023. The median price of an existing single-family home climbed 2.3% (1.8% y/y) to $446,400 in June, the fifth straight m/m increase, after a 3.4% advance to $436,400 in May. The median price of condos and co-ops, up for the sixth time in seven months, grew 0.6% (1.6% y/y) to $380,000 following a 1.0% May gain to $377,800. Regionally, overall prices rose m/m and y/y in June in the Northeast (+5.6%; +3.9% y/y), Midwest (+2.1%; +2.7% y/y), South (+1.0%; +0.9% y/y), and West (+0.8%; +0.9% y/y). All these price series were at their record highs.

Inventories of homes for sale fell m/m in June for the first time since December. The number of existing homes for sale (NSA) declined 0.6% (+1.3% y/y) to 1.56 million units following an upwardly revised 4.7% May rise to 1.57 million (the highest level since November 2019). The supply of homes on the market at the current selling rate (NSA) increased to 4.6 months in June from 4.5 months in May and April, matching the highest level since August 2025. A record low in supply of 1.6 months was in January 2022.

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

260709H57.jpg

260709I57.jpg

- June sales -2.4% m/m to 4.09 mil., first drop in three mths.; +2.8% y/y, third straight y/y rise.
- Sales m/m down in the South (-3.6%), Midwest (-3.0%), and West (-1.3%); up in the Northeast (+2.1%).
- Sales y/y up in all regions except the Northeast w/ a flat reading.
- Median sales price +2.2% (+1.8% y/y) to $440,600, a record high.
- Unsold inventory -0.6% (+1.3% y/y) to 1.56 mil. units, first m/m decline since Dec.; 4.6 months' supply, highest since Aug. ’25.