Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021219a.jpg" width="353">
Initial claims for unemployment insurance fell less than expected last week from the elevated level of the week prior. Claims in the prior week were revised slightly higher.
The latest figure is for the survey period for December nonfarm payrolls. The sharp 13.4% rise in claims from the November survey period probably overstates the degree of recent weakening in the labor market.
The four-week moving average of initial claims rose to 400,750, down 6.2% y/y.
Continuing claims for unemployment insurance rose a sharp 7.0% w/w. That followed sharp declines in the prior two weeks. The level of claimants in the prior week was revised down.
The insured rate of unemployment rose back to 2.7% and remained down slightly from the average of the prior four months.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">12/14/02</th>
<th scope="col">12/07/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Initial Claims</td>
<td>433.0</td>
<td>444.0</td>
<td>9.6%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,497</td>
<td>-2.1%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
Leading Indicators Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021219c.jpg" width="353">
The Composite Index of Leading Economic Indicators, reported by the Conference Board, rose more than expected last month. The prior month&#39;s unchanged reading was revised up slightly.
The breadth-of-gain amongst the leaders&#39; component series fell slightly to 55%, but the last two months represent marked improvement from 3Q.
Lower claims for jobless insurance, higher stock prices, a higher money supply, a steeper yield curve and higher consumer expectations had large, and roughly equal, positive influences on the leading index in November.
The ratio of coincident-to-lagging indicators rose after having been unchanged in October. The ratio is an indicator of excess relative to actual economic performance.
The coincident indicators have moved sideways since July.
The Leading index is based on eight previously reported economic data series and two that are estimated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Leading</td>
<td>0.7%</td>
<td>0.1%</td>
<td>2.0%</td>
<td>-0.7%</td>
<td>1.1%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.9%</td>
<td>-0.5%</td>
<td>3.4%</td>
<td>3.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.2%</td>
<td>0.0%</td>
<td>-3.7%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.7%</td>
</tr>
</tbody>
</table>
Chicago Fed National Activity Index Improved Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021219b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) improved last month and just reversed the decline of the prior month. Nevertheless, the latest level is just about equal to the depressed levels of this past Summer.
The improvement left the three-month moving average of the CFNAI at -0.57, a level consistent with roughly 2% growth in real GDP.. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth.
During the last ten years there has been a 72% correlation between the level of the CFNAI and quarterly growth in real GDP.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, mfg. &amp; trade sales, and inventories &amp; orders.
For a complete discussion of the Chicago Fed&#39;s National Activity Index click <a href="http://www.chicagofed.org/economicresearchanddata/national/index.cfm">here</a>.
A discussion of the CFNAI and its role as a business cycle indicator can be found <a href="http://www.chicagofed.org/publications/economicperspectives/2002/3qepart2.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;01</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">CFNAI</td>
<td>-0.51</td>
<td>-0.73</td>
<td>-1.34</td>
<td>-1.10</td>
<td>-0.18</td>
<td>0.27</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021219e.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions rose last month, adding to the meaningful improvement of the prior month. The Business Activity Index rose to 7.2, the highest level since June. A reading of 5.0 had been expected.
The improvement mirrored the surprising, modest rise reported Monday in the Empire State General Conditions Index for December.
Amongst the sub indexes new orders, shipments and employment fell versus November. Inventories, unfilled orders and delivery lead times improved.
The business conditions index reflects a separate survey question, not the components. 
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
During the last ten years there has been a 71% correlation between the level of the General Activity Index and the level of the ISM Composite Index.
For a discussion of the Philadelphia Fed&#39;s Business Outlook Survey click <a href="http://www.phil.frb.org/files/bos/brso98mt.pdf">here</a>. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">General Activity Index</td>
<td>7.2</td>
<td>6.1</td>
<td>-12.6</td>
<td>7.6</td>
<td>-17.3</td>
<td>8.2</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>15.1</td>
<td>13.0</td>
<td>-11.8</td>
<td>12.2</td>
<td>-1.0</td>
<td>27.1</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit As Expected in November 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021219f.jpg" width="353">
The US budget last month came in near Consensus expectations for a $60 bil. deficit. The Fiscal 2003 YTD deficit was $113.1B, nearly double the deficit in the first two months of Fiscal 2002.
Receipts fell 3.6% m/m following a sharp m/m decline in October. Calendar distortions probably aggravated the shortfall due to the weak economy. Individual tax payments fell 18.7% m/m and were down 8.6% in October and November versus last fiscal year to date. The gain in payroll taxes has slowed to a fraction of its 6.3% in FY 2001. 
Federal expenditures rose slightly m/m following a surge in October. Fiscal YTD outlays were up 5.1% y/y. Defense spending was up 10.4% y/y. Spending on health (11.1%) and education (13.0%) programs continued strong.
For a discussion of the economic effects of long-term fiscal discipline by the Brookings Institution click <a href="http://www.brook.edu/dybdocroot/views/papers/gale/20021217.pdf">here</a>.

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<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
<th scope="col">FY2000</th>
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<td class="firstcol">Budget Balance</td>
<td>$-59.1B</td>
<td>$-54.0B</td>
<td>$-54.3B</td>
<td>$-158.5B</td>
<td>$127.1B</td>
<td>$125.5B</td>
</tr>
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<td class="firstcol">&nbsp; Revenues</td>
<td>$120.0B</td>
<td>$124.6B</td>
<td>-1.0%</td>
<td>-6.9%</td>
<td>-1.7%</td>
<td>10.8%</td>
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<td class="firstcol">&nbsp; Outlays</td>
<td>$179.1B</td>
<td>$178.5B</td>
<td>2.1%</td>
<td>7.9%</td>
<td>4.2%</td>
<td>5.1%</td>
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Initial claims for unemployment insurance fell less than expected last week from the elevated level of the week prior. Claims in the prior week were revised slightly higher. The latest figure is for the survey period for December [...]

Initial Jobless Insurance Claims Remained High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021218a.jpg" width="353">
The U.S. foreign trade deficit improved more than expected in October. September&#39;s deficit was revised lower due to lessened imports. Consensus expectations had been for a October deficit of $36.5B. Declines in exports and imports likely were influenced by the dock workers strike.
Exports fell for the third consecutive month due to across the board component declines. Capital goods exports plunged 2.5% (5.4% AR, YTD). Exports of foods, feeds and beverages fell a hefty 4.0%, the third consecutive monthly decline. Auto exports fell for the fourth month in five. Nonauto consumer goods exports rose following two months of decline (1.1% AR, YTD).
Imports fell for the third month in four also due to across the board component declines. Capital goods imports fell a huge 6.0% (-1.7% AR, YTD), the fourth consecutive monthly decline. Imports of nonauto consumer goods also plunged, down 4.9% for the third monthly decline in four. Imports of industrial supplies and materials rose despite a decline in the refiner&#39;s acquisition cost of imported crude oil. The cost of crude oil fell to $26.74 in October from $27.14 in September.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Trade Deficit</td>
<td>$35.1B</td>
<td>$37.1B</td>
<td>$30.8B(10/01)</td>
<td>$358.3B</td>
<td>$378.7B</td>
<td>$262.2B</td>
</tr>
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<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-1.0%</td>
<td>-0.4%</td>
<td>5.7%</td>
<td>-6.2%</td>
<td>11.2%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.4%</td>
<td>-1.1%</td>
<td>8.0%</td>
<td>-6.0%</td>
<td>18.3%</td>
<td>10.9%</td>
</tr>
</tbody>
</table>
Mortgage Applications Back Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021218b.jpg" width="353">
The index of mortgage applications, compiled by the Mortgage Bankers Association, last week recovered all of the prior week&#39;s sharp decline.
Mortgage applications to refinance surged as interest rates fell for the second consecutive week.
The recent contract rate on a conventional 30 year mortgage was 5.91% versus 6.09% at the end of November.
Mortgage applications for home purchase surged and recovered most of the prior week&#39;s decline.

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<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">12/13/02</th>
<th scope="col">11/08/02</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total Market Index</td>
<td>985.5</td>
<td>992.3</td>
<td>625.6</td>
<td>322.7</td>
<td>352.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>379.9</td>
<td>333.3</td>
<td>304.9</td>
<td>302.7</td>
<td>275.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>4,507.6</td>
<td>4,825.6</td>
<td>2,491.0</td>
<td>438.8</td>
<td>795.2</td>
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The U.S. foreign trade deficit improved more than expected in October. September's deficit was revised lower due to lessened imports. Consensus expectations had been for a October deficit of $36.5B. Declines in exports and imports [...]

U.S. Trade Deficit Improved

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021217f.jpg" width="353">
Inflation in the United Kingdom as measured by the Retail Price index rose 2.7% in November from a year ago, the sharpest rise since January 2001. Prices of housing expenditures, which rose 6.4%, and gasoline and oil, which rose 4.1%, accounted for much of the increase. 
In conducting its monetary policy, the Bank of England focuses on the less volatile &#147;all items less mortgage interest&#148; component of the index. The Bank&#146;s current target rate for this measure is 2.5%. The &#147;all items less mortgage interest&#148; index rose 2.8% in November from a year ago and was the sharpest rise since November 1997. It was also the first time since January 2002 that the rise exceeded the target rate. In its latest quarterly report on inflation, the Bank predicted that inflation would remain above its target for most of next year, suggesting that any changes in the current base rate of 4% are more likely to be on the upside.

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<th scope="col" class="firstcol">Retail Price Index (Annual % Changes)</th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">All items</td>
<td>2.0%</td>
<td>2.0%</td>
<td>2.7%</td>
<td>1.8%</td>
<td>2.9%</td>
<td>1.6%</td>
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<td class="firstcol">All items ex mortgage interest</td>
<td>2.8%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>2.1%</td>
<td>2.1%</td>
<td>2.3%</td>
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Inflation in the United Kingdom as measured by the Retail Price index rose 2.7% in November from a year ago, the sharpest rise since January 2001. Prices of housing expenditures, which rose 6.4%, and gasoline and oil, which rose 4.1%, [...]

Inflation in the U.K. and Implications for Monetary Policy

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021217b.jpg" width="353">
The Consumer Price Index (CPI-U) rose just 0.1% last month. The gain was as expected. Excluding food and energy, prices also rose as expected and the rise was equal to the YTD average.
Tobacco prices (-0.0%) fell for the second consecutive month. The core CPI less tobacco rose 0.2% (2.0% y/y).
Price discounting was widespread last month. Household furnishings and operation prices fell 0.1%, the sixth monthly decline this year. Apparel prices also fell (-0.4%) after being unchanged the month prior. New and used vehicle prices were down for the second consecutive month.
Services prices were mixed. Shelter prices rose 0.3% following the 0.2% gain in the prior month. Public transportation prices rose 0.9% following two months of decline. Medical care services prices rose 0.6%, just below the elevated October reading. Education prices were flat for the second month. Recreation prices were flat for the second month in three.
Energy prices fell last month led by a 0.2% decline in gasoline prices, the first since May. Fuel and utility prices were unchanged owing to a decline in piped gas &amp; electricity prices
For analysis of health care costs and coverage by the St. Louis Federal Reserve click <a href="http://research.stlouisfed.org/publications/net/2002/cover11.pdf">here</a>.

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<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Total&nbsp;</td>
<td>0.1%</td>
<td>0.3%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>3.4%</td>
<td>2.2%</td>
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<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.0%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
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<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>-1.6%</td>
<td>0.3%</td>
<td>0.5%</td>
<td>0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.5%</td>
<td>3.7%</td>
<td>3.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-0.2%</td>
<td>1.9%</td>
<td>8.1%</td>
<td>3.7%</td>
<td>16.9%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.2%</td>
<td>3.1%</td>
<td>2.3%</td>
<td>2.1%</td>
</tr>
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<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>-0.1%</td>
<td>0.2%</td>
<td>1.9%</td>
<td>2.1%</td>
<td>2.0%</td>
<td>NA</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.5%</td>
<td>1.9%</td>
<td>&nbsp;1.4%</td>
<td>NA</td>
</tr>
</tbody>
</table>
Housing Starts Rose More Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021217d.jpg" width="353">
Housing starts rose slightly more than expected last month. The 2.4% m/m rise partially recouped an 8.4% October decline that was revised slightly shallower. Total starts were up 7.2% versus last December.
Single family starts rose a modest 0.9% m/m following a 5.1% October decline. Year to date, single family starts were up 7.4% versus last December. 
Multi-family starts rose 10.0% following two months of sharp decline. Year to date, multi family starts were up 6.2% versus last December.
Building permits reversed all of the prior month&#39;s gain and fell 2.7% m/m. The decline was all due to lower multi family permits. Single family permits rose a slight 0.1% following three months of strong gain. The level of single family permits was near the record high of this past February.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,697</td>
<td>1,657</td>
<td>5.8%</td>
<td>1,603</td>
<td>1,573</td>
<td>1,647</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,390</td>
<td>1,378</td>
<td>12.0%</td>
<td>1,273</td>
<td>1,232</td>
<td>1,306</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>307</td>
<td>279</td>
<td>-15.4%</td>
<td>330</td>
<td>341</td>
<td>341</td>
</tr>
</tbody>
</table>
Industrial Production Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021217c.jpg" width="353">
Industrial production rose just slightly last month versus Consensus expectations for a 0.2% gain. It was the first monthly rise in output since July. October&#39;s decline was lessened and prior month&#39;s figures were revised up. Production was up 2.5% (AR) year to date.
Output in the manufacturing sector rose 0.1% following two months of decline. Factory production was up 2.3% (AR) year to date.
Output of motor vehicles and parts (5.2% AR, YTD) rose 3.9% for the first gain in four months. Output of appliance, furniture &amp; carpeting rose 0.8%, but it was only the second monthly rise since May. Apparel output rose 0.4% but was down 4.2% (AR) year to date. 
Output of business equipment fell 0.5% (-3.0% AR, YTD), the fourth decline in five months. Output of information processing equipment rose for the second consecutive month (-1.1% AR, YTD). 
Capacity utilization rose slightly and is off the lows of late last year, but remains down considerably from prior years. Capacity again rose 0.1%(1.1% AR, YTD) as it has since early last year.

<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/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>1.8%</td>
<td>-3.5%</td>
<td>4.7%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.6%</td>
<td>75.5%</td>
<td>75.1%(11/01)</td>
<td>77.3%</td>
<td>82.7%</td>
<td>82.4%</td>
</tr>
</tbody>
</table>
Chain Store Sales Recovered Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021217a.jpg" width="353">
Chain store sales surged 1.9% last week according to the BTM-UBSW survey. The gain recovered most, but not all, of the prior week&#39;s 2.3% plunge.
Since early October, weekly sales have been volatile but essentially have moved sideways.
December sales so far were 1.0% below the November average.
The BTM Leading Indicator of chain store sales collapsed in early December and was 1.6% (-1.2% y/y) below November.
During the last ten years there has been a 48% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales. That correlation rose to 63% during the last five years.

<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">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">12/14/02</th>
<th scope="col">12/07/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>400.1</td>
<td>392.8</td>
<td>4.5%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
Crude Oil Prices Surge to $30.00 per Barrel 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021217e.jpg" width="353">
Prices have surged $5.00/bbl for West Texas Intermediate crude oil since the mid-November lows. A labor strike in Venezuela has crippled the country&#39;s oil output.
Wholesale gasoline prices have similarly surged, rising nearly $0.15 per gallon, or 19%, since late November. Fuel oil prices also have risen sharply.
Wholesale natural gas prices have more than doubled this year.

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D30604/@D30604.HTM">Daily Crude Oil Prices</a></th>
<th scope="col">12/16/02</th>
<th scope="col">11/18/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">West Texas Intermediate Crude Oil</td>
<td>$30.13</td>
<td>$26.73</td>
<td>56.7%</td>
<td>$25.97</td>
<td>$30.34</td>
<td>$19.34</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) rose just 0.1% last month. The gain was as expected. Excluding food and energy, prices also rose as expected and the rise was equal to the YTD average. Tobacco prices (-0.0%) fell for the second [...]

CPI Weak, As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021216a.jpg" width="353">
The Empire State Manufacturing Survey reported that the index of general business conditions improved in December and was positive for a second month. Modest deterioration had been expected by some forecasts.
Diffusion indexes for new orders, shipments and the length of the average employee workweek improved sharply. The index of prices paid fell for the second month.
The survey includes measures of business expectations, six months ahead. The diffusion index for general business conditions fell to the lowest level since January. Expectations for orders and shipments fell sharply.
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 the latest Empire State Manufacturing Survey report, click <a href="http://www.newyorkfed.org/rmaghome/regional/mfg_survey/12_2002.pdf">here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
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<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">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</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>10.60</td>
<td>9.70</td>
<td>-1.83</td>
<td>6.96</td>
<td>-14.97</td>
</tr>
</tbody>
</table>
NAHB Housing Index Firm Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 16, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021216b.jpg" width="353">
The National Association of Home Builders index of new home sales rose for December although the strong reading for November was revised slightly lower. The latest rise was to the highest level since November 2000.
Surveys of market conditions for current sales rose slightly but expected conditions in six months fell slightly. 
Traffic of prospective buyers fell moderately to the midpoint of the range prevailing this year.
For a description of the housing market index from the National Association of Home Builders, visit the <a href="http://www.nahb.org/generic.aspx?sectionID=134&amp;genericContentID=532">NAHB website</a>.

<table border="0" cellspacing="0" width="100%">
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<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">Dec</th>
<th scope="col">Nov</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">Composite Housing Market Index</td>
<td>65</td>
<td>64</td>
<td>57</td>
<td>61</td>
<td>56</td>
<td>62</td>
</tr>
</tbody>
</table>
</body>
</html>

The Empire State Manufacturing Survey reported that the index of general business conditions improved in December and was positive for a second month. Modest deterioration had been expected by some forecasts. Diffusion indexes for new [...]

Empire State Factory Survey Improved Further in December

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021213b.jpg" width="353">
Finished producer prices were weaker than expected last month and fell 0.4%. Consensus expectations were for no change. It was the first decline in prices since July.
Excluding food and energy prices also were weaker than expectations for no change. The 0.3% decline similarly was the first drop since July. Core producer prices were down 0.1% (AR, YTD).
Finished energy prices fell for the first month since June (11.6% AR, YTD). Gasoline prices fell 11.6% (54.1% AR), reversing all of the prior month&#39;s jump, and fuel oil prices slumped 10.7% (45.1% AR, YTD). Residential gas prices also were strong for the second consecutive month (8.1% AR, YTD). These energy product price series are NSA.
Core finished consumer goods prices fell 0.3% (0.2% AR, YTD). Consumer durables prices fell 0.7% and reversed all of the October jump as prices for passenger cars and household appliances fell. Other consumer durables prices were tame. Core nondurable goods prices rose 0.1% (1.3% AR, YTD. Capital goods prices fell 0.2% (-0.5% AR, YTD) as computer prices continued to decline.
Food prices rose 0.3%, but it was only the second monthly rise since mid-year.
Intermediate goods prices fell for the first month since February as energy prices fell. Core intermediate prices rose just 0.1% for the third consecutive month (1.8% AR, YTD). 
Crude goods prices were again strong (26.0% AR, YTD) reflecting higher energy prices. Other commodities prices reflected in the core crude price measure were strong reflecting higher scrap copper and aluminum prices. Steel scrap prices fell sharply for the second consecutive 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/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>-0.4%</td>
<td>1.1%</td>
<td>0.9%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.3%</td>
<td>0.5%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-0.1%</td>
<td>0.7%</td>
<td>2.4%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>5.1%</td>
<td>3.4%</td>
<td>14.7%</td>
<td>0.3%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.4%</td>
<td>0.9%</td>
<td>11.6%</td>
<td>-9.9%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Business Inventory Accumulation Continued 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 13, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021213c.jpg" width="353">
Total business inventories rose as expected in October. September&#39;s gain in inventories was revised up slightly due to raised figures for retail inventories.
Retail inventories (7.4% YTD, AR) were strong for the second consecutive month led by a 3.0% jump in motor vehicle inventories, the second strong gain in a row.
Nonauto retail inventories (1.8% YTD, AR) fell for the first monthly decline since March. Inventories of furniture &amp; home furnishings were unchanged following earlier strength (10.1% YTD, AR). Inventories at apparel stores slumped 1.2% (1.7% YTD, AR). At general merchandise stores inventories rose a modest 0.2% (-0.9% YTD, AR) for the second consecutive month.
Overall business sales rose 0.4% (4.2% YTD, AR).
The inventory-to-sales ratio fell slightly to 1.36 from an upwardly revised September level. 

<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/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>0.6%</td>
<td>-0.6%</td>
<td>-6.3%</td>
<td>5.6%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.7%</td>
<td>1.3%</td>
<td>5.3%</td>
<td>-5.0%</td>
<td>6.1%</td>
<td>7.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>-0.4%</td>
<td>0.7%</td>
<td>0.7%</td>
<td>-2.0%</td>
<td>4.1%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>-3.0%</td>
<td>-5.5%</td>
<td>6.6%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.0%</td>
<td>0.2%</td>
<td>-4.4%</td>
<td>-8.0%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Up in Early December 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 13, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021213a.jpg" width="353">
The preliminary December reading of Consumer Sentiment from the University of Michigan rose more than Consensus expectations for a rise to 85.0. Sentiment has rebounded 7.9% during the last two months.
Indexes of current conditions and expectations both rose.
Over the last 10 years there has been a 40% correlation between the annual change in consumer sentiment and the change in stock prices.That correlation rose to 62% during the last five years
The University of Michigan survey is not seasonally adjusted.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Prelim. Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>87.0</td>
<td>84.2</td>
<td>-2.0%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices were weaker than expected last month and fell 0.4%. Consensus expectations were for no change. It was the first decline in prices since July. Excluding food and energy prices also were weaker than expectations [...]

Producer Prices Fall

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021212a.jpg" width="353">
Retail sales rose last month in line with Consensus expectations for a 0.4% gain. October sales were revised up due to slightly stronger gains in auto and nonauto sales. Total retail sales were up at a 2.7% annual rate YTD through November.
Sales excluding motor vehicles and parts dealers rose quite a bit more than expectations for a 0.2% gain. Year to date nonauto retail sales were up at a 4.9% annual rate through November.
Furniture and home furnishing store sales rose 1.6% (3.4% YTD, AR) following strong results in the prior four months which were revised higher. The November gain reflected a huge 2.3% rise in furniture sales and a 0.9% rise in electronics and appliances sales.
Sales at general merchandise stores rose 0.3% adding to a 1.2% gain in October. Year to date sales were up at a 4.5% rate through November.
Apparel store sales fell a sharp 1.3% (1.1% AR, YTD) following a huge 5.5% gain in October.
Motor vehicle dealers&#39; sales fell a slight 0.1%, the third monthly decline in a row. The decline may have reflected price discounting. Unit sales of light vehicles rose 3.8% last month to 16.04 mil.
Sales at gasoline service stations rose 0.4%.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</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>0.4%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>3.9%</td>
<td>6.7%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.5%</td>
<td>0.8%</td>
<td>5.0%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">

</table>
Import Prices Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021212c.jpg" width="353">
Prices for imported commodities fell much more than Consensus expectations for a 0.1% decline. October figures were little revised.
Petroleum import prices fell sharply and by the most since back to back double digit declines last Fall. Still, petroleum prices are up at a 51.6% rate since December. So far in December the price of Arab Light crude oil has run slightly higher than the $22.20/bbl averaged in November.
Nonpetroleum import prices rose slightly following the slight October drop (0.3% YTD, AR).
Prices of imported capital goods were unchanged following two down months. Nonauto consumer goods prices fell for the second month in three and imported motor vehicle prices also were down.
Export prices rose slightly (1.3% YTD, AR). Food prices rose strongly, reversing the prior month&#39;s steep drop. Other export prices either fell or were tame.

<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>-1.0%</td>
<td>0.0%</td>
<td>2.4%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-10.0%</td>
<td>0.3%</td>
<td>37.5%</td>
<td>-17.2%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021212b.jpg" width="353">
Initial claims for unemployment insurance surged more than expected last week. Aberrant seasonal adjustment factors were cited by the Labor Department as the reason for recent volatility.
The four-week moving average of initial claims rose to 387,250, down 10.9% y/y.
Continuing claims for unemployment insurance fell a sharp 4.8% w/w following a like decline the prior week.
The insured rate of unemployment fell to 2.6%, the lowest level since September 2001.

<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">12/07/02</th>
<th scope="col">11/30/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>441.0</td>
<td>358.0</td>
<td>7.3%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,284</td>
<td>-10.2%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
3Q Current Account Deficit Narrowed 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021212d.jpg" width="353">
The US current account deficit came in slightly below expectations last quarter, but remained near a record level. The deficit in 2Q was revised shallower. 
The deficit in goods, services and income trade eased slightly but remained near the record. The deficit in goods and services trade deteriorated to a new record. The deficit in the income balance eased slightly.
Foreign ownership of assets in the US rose by $148.5B versus a gain of $204.3B in 2Q and a peak rate of $302.5B early last year. Direct investment into the US improved slightly last quarter but remained at a level not seen since the mid-1990s.

<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/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">3Q &#39;02</th>
<th scope="col">2Q &#39;02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$127.0B</td>
<td>$127.6B</td>
<td>$91.3B</td>
<td>$393.4B</td>
<td>$410.3B</td>
<td>$292.9B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % of GDP</td>
<td>4.8%</td>
<td>4.9%</td>
<td>3.6%</td>
<td>3.8%</td>
<td>4.5%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Deficit on Gds, Serv &amp; Income</td>
<td>$113.8B</td>
<td>$114.6B</td>
<td>$79.0B</td>
<td>$343.9B</td>
<td>$356.9B</td>
<td>$244.1B</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.5%</td>
<td>4.8%</td>
<td>1.1%</td>
<td>-9.6%</td>
<td>13.6%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>1.6%</td>
<td>8.3%</td>
<td>9.8%</td>
<td>-8.4%</td>
<td>18.9%</td>
<td>10.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$13.2B</td>
<td>$13.0B</td>
<td>$12.4B</td>
<td>$49.5B</td>
<td>$53.4B</td>
<td>$48.8B</td>
</tr>
</tbody>
</table>
Mortgage Refinancing Drops 
by <a href="/comment/Moeller.html">Tom Moeller</a> December 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021212e.jpg" width="353">
The index of mortgage applications, compiled by the Mortgage Bankers Association, plunged last week. The decline reversed the run-up in early November and dropped total applications 35% below the early October high.
Mortgage applications to refinance collapsed, leaving them 45% below the early October high yet still up versus last year.
Mortgage applications for home purchase have remained relatively firm.. The recent contract rate on a conventional 30 year mortgage was 5.95%, up modestly from the low.

<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/SURVEYS/@S5/@S503/@S503.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">12/06/02</th>
<th scope="col">11/01/02</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>862.7</td>
<td>1,030.5</td>
<td>625.6</td>
<td>322.7</td>
<td>352.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>358.8</td>
<td>369.5</td>
<td>304.9</td>
<td>302.7</td>
<td>275.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,793.8</td>
<td>4,875.1</td>
<td>2,491.0</td>
<td>438.8</td>
<td>795.2</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales rose last month in line with Consensus expectations for a 0.4% gain. October sales were revised up due to slightly stronger gains in auto and nonauto sales. Total retail sales were up at a 2.7% annual rate YTD through [...]

Retail Sales Rose Moderately

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021211a.jpg" width="353">
The Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose 1.5% last month, more than recovering the prior two month&#39;s declines.
At the end of last month, the level of the weekly leading index was up to its highest level since July. The indicator&#39;s six-month growth rate rose to-1.8% versus -4.5% hit in October.
Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
The components of the index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.
For more on ECRI and the Weekly Leading Index click <a href="http://www.businesscycle.com/">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/weekly/@W8/@W801/@W801.HTM">ECRI</a></th>
<th scope="col">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Leading Index</td>
<td>118.8</td>
<td>117.0</td>
<td>1.8%</td>
<td>-5.1%</td>
<td>0.9%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose 1.5% last month, more than recovering the prior two month's declines. At the end of last month, the level of the weekly leading index [...]

ECRI Leading Indicators Recover

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

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Michael J. Moran

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Most analysts were looking for a dip in the CPI because of a likely retreat in gasoline prices, but the published decline of 0.4% in the headline index was noticeably softer than the consensus estimate of -0.1%. Gasoline prices did not disappoint, with a drop of 9.7% offsetting approximately one-quarter of the cumulative surge in the prior three months. Prices of fuel oil fell almost as much as gasoline prices, and electricity charges contributed to the softness with a decline of 1.0%. The price of natural gas services was the only major energy item to increase in June (0.5%). All told, the energy component of the CPI fell 5.7% after climbing 19.6% in the prior three months.

The drop in energy prices was notable, but the core component provided a bigger surprise by posting a decline, the first since a series of three consecutive decreases during the pandemic. Before the pandemic-related retreat, the core component fell only twice from 1990 to 2019. The drop in June was minuscule (-0.02%), but the fact that it carried a minus sign was striking.

Both the goods and services components of the core index contributed to the restraint. Prices of goods other than food and energy fell 0.1%. The Bureau of Labor Statistics publishes six key subcategories of core goods, and five of them fell in June. Apparel prices stood out with a decline of 0.6%. Prices of core services were nearly unchanged at 0.03%, restrained by declines in medical services and motor vehicle insurance. Airfares, which showed upward pressure from rising fuel prices in the prior three months, posted a nondescript increase of 0.2%. The modest increase in the prices of core services led to a dip in the 12-month average increase after stepping up in April and May. The trend in core goods prices continued its gradual deceleration (chart, below right).

Food prices in June rose 0.2%, a reading comfortably within the range of the past few years.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

260714C.jpg

260714D.jpg

- The energy component retraced a portion of its surge in the prior three months.
- Prices excluding food and energy provided a surprise by posting a rare decline.

June CPI: Cooling Energy Prices and a Restrained Core Component

Winnie Tapasanun

260714T36.jpg

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The NFIB Small Business Optimism Index rose to 97.4 in June, the highest level since February, after a 0.6-point decline to 95.3 in May, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. The index was slightly below its 52-year average of 98.0 for the fourth consecutive month and down from a peak of 105.1 in December 2024, albeit above a low of 88.5 in March 2024. Seven of the 10 index components rose, while three fell. Meanwhile, the NFIB Small Business Uncertainty Index edged down to 89 in June following a three-point increase to 91 in May, remaining well above its historical average of 68. The index was below its record high of 110 in October 2024 but above its recent low of 84 in December 2025 and a low of 65 in November 2023.

The outlook for business conditions in the next six months remained positive for the 20th straight month in the latest survey. The net balance of respondents expecting the economy to improve advanced to 13% in June, a four-month high, following a one-point decline to 3% in May; these readings were far below a high of 52% in December 2024 but significantly above a record low of -61% in June 2022. Expected real sales climbed to a net 9% in June, a five-month high, from 1% in May; the latest figure was below a high of 22% in December 2024 but above a low of -18% in August 2024. A net -4% of respondents reported higher nominal sales in the past three months, up from -5% in May and marking the highest reading in four months; the latest result remained above a low of -20% in October 2024 but below the recent positive reading of 1% in February and a peak of 9% in June 2021.

Plans to expand the business inched up to 8% in June from 7% in May and April; the latest figure was down from a high of 20% in December 2024 but up from a low of 2% in March 2023. Plans to make capital outlays rebounded to 20% in June from 16% in May; these numbers were still below a high of 28% in November 2024 and a peak of 31% in October 2021. Expected credit conditions slipped to -5% in June, a three-month low, from -3% in May; this result was slightly below a high of -2% in December 2024 but above a low of -11% in November 2023. Meanwhile, a net 0% of respondents viewed current inventory stocks as “too low” in June, up from -4% in May and matching the highest reading since August 2025 (also 0%); the positive reading of 1% was recorded in May 2025.

On the labor front, 51% of respondents reported that qualified workers to fill job openings were hard to find in June, up from 46% in May and registering the highest level since September 2024. These numbers were above a low of 43% in August 2025 but below a high of 56% in August 2024 and a peak of 62% in September 2021. A net 11% planned to increase employment in June, up from 9% in May; it matched a low of 11% in March 2024 but remained below its recent high of 19% in November 2025 and a peak of 32% in August 2021. Notably, 32% reported positions not able to be filled in June, up from 29% in May (the lowest level since May 2020); these figures remained below a high of 51% in May 2022.

Overall earnings trends had remained in negative territory since December 2019. The measure fell to -20% in June, the lowest level in three months, following a four-point increase to -15% in May. These readings were below the most recent high of -14% in February and a high of -5% in June 2021 but above a low of -37% in August 2024,

On the pricing front, actual and expected selling prices remained at an inflationary level, indicating continued inflationary pressures. The net percent of firms raising their average selling prices rose to 38% in June, the highest reading since February 2023, after a six-point increase to 36% in May. The latest reading was up from a low of 20% in August 2024 but well below a peak of 66% in March 2022. The percentage planning to raise prices eased to a still-elevated 32% in June following a seven-point rise to 34% in May (the highest level since November 2023); these readings remained above a low of 21% in April 2023.

Wage inflation remained relatively high in the June survey. A net 28% of respondents raised compensation during the last three months, down from 31% in May and marking the lowest since November 2025. It was also below a high of 46% in February 2023 and a peak of 50% in January 2022. A net 17% of firms planned to raise worker compensation in the next three months, slightly down from 18% in May and matching the lowest reading since July 2025; this remained below highs of 28% in November 2024, 30% in November 2023, and 32% in October 2022.

Inflation was cited as the single most important problem facing small businesses, as reported by 21% of NFIB members in June, up from 18% in May and representing the highest since October 2024; these readings were well below a peak of 37% in July 2022. Taxes ranked second as the next most important problem (alongside labor quality), as reported by 19% of respondents in June, unchanged from May. Labor quality also remained a key challenge for small businesses, as reported by 19% of respondents in June—the highest since December—compared with 13% in May (the lowest level since December 2016). Other concerns (in June vs. May) included labor costs (8% vs. 14%), government requirements (8% vs. 10%), insurance cost/availability (8% vs. 8%), poor sales (7% vs. 7%), and competition from large businesses (5% vs. 6%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- Uncertainty Idx down 2 pts. to 89, remaining well above the historical avg. of 68.
- Expectations for economy up 10 pts. to 13%, a four-month high.
- Expected real sales up 8 pts. to 9%, a five-month high.
- Plans to expand business up 1 pt. to 8%, highest in three mths.
- Firms raising avg. selling prices up 2 pts. to 38%, highest since Feb. ’23.
- Top three business concerns: inflation (21%), taxes (19%), and labor quality (19%).

U.S. NFIB Small Business Optimism Rebounds in June to a Four-Month High

Robert Brusca

260714E.jpg

Industrial production in Japan fell by 0.5% in May after rising by 0.7% in April and declining by 0.2% in March. Manufacturing output rose by 0.1% in May after rising by 0.4% in April and declining by 0.3% in March. Total industrial output shows a 0.7% gain over 12 months, a 3.4% annual rate gain over six months, and zero change in output over three months. For manufacturing, 12-month output is up 0.7%; over six months, output is up at a 6.1% annual rate; and over three months, output is up by 0.8% at an annual rate.

These trends show that output continues to grow for manufacturing as well for total industry, but not by a great margin. In fact, there are still a number of industries still fighting off negative trends, such as textiles, where output falls over three months, six months, and 12 months, as well as investment goods and mining, both of which show declines over three months, six months and 12 months. One year ago, all of these sectors were showing year-over-year declines except for manufacturing, which was up by 0.5% over 12 months. Manufacturing output is now up by 0.7% year-over-year, with consumer goods up by 1.8%, intermediate goods output up by 2%, and investment goods falling by 3%. Japan is currently trying to fight off a legacy of weakness. The strength of the rebound is being borne by consumer goods and intermediate goods, with investment goods undergoing significant contractive effects.

Manufacturing is showing gains on all three sequential horizons. Utilities output is showing growth on each horizon, and actually shows gathering strength, rising by 0.9% over 12 months, at a 1.4% annual rate over six months, and at a very strong 7.9% annual rate over three months.

In the quarter-to-date (QTD) basis, most of these sectors are losing the battle against weakness, with most industry or sectors showing declines two months into the new quarter. Overall output declines at a 0.2% annual rate. Manufacturing output falls at a 2.2% annual rate, intermediate goods output falls at a 0.2% annual rate, and investment goods output falls at a 7.2% annual rate. The only exception is consumer goods output, which is rising at a solid 5.3% annual rate, but that's not strong enough to drag all of industrial output or even manufacturing into the plus column.

Manufacturing output currently is at about 87.7% of its past peak. Activity in electric and gas utilities are at 90.4% of their past peak, while mining is only at 59.6% of its past peak of activity. Comparing levels of output to where they were in January 2020, manufacturing is at 94% of that value, with total industry also at 94% of that value. Consumer goods are at 98% of that value, intermediate goods at 92%, and investment goods at 93%. Mining is only at 74% of its January 2020 value, while electric and gas utilities have moved beyond the January 2020 level and are 3.3% higher than they were and early 2020.

Since 2020, it has been a relatively difficult time for the global economy. The Japanese statistics show only one sector that has managed to create positive growth compared to its level in January 2020. The current month is a mix of plus-and-minus activity changes. Sequential trends generally show more positives than negatives, but there are still a lot of negatives in train that keep Japanese manufacturing from reaching clearly solid footing. When the Strait of Hormuz opened, it appeared that Japan would be in a position to build on its recovery, but now, with the failed peace agreement and failed ceasefire, the strait once again has been closed and the outlook is shrouded in negativity.

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Japan

Japan’s IP Is Fighting Off Weak Trends

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% since January 2020, a duration of time during which, 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?

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Norway

Norwegian IP Struggles, but Manufacturing Shows Some Strength

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.

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**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.

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**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.

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**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.

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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.

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**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. 