Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020514b.jpg" width="353">
Total retail sales rose more than expected last month due to higher auto sales. March sales were revised down slightly. Excluding autos also rose more than expected but March was revised down slightly. 
Higher gasoline prices boosted sales at gasoline service stations by 2.0%. Excluding gasoline, nonauto retail sales rose 0.9% following no change in March.
Sales of furniture, home furnishings and electronics fell 0.7%, the third monthly decline this year. 
Sales at clothing and accessory stores rose 0.7% following a 0.3% dip in March.
Sales at general merchandise stores jumped 1.2%, the second strong monthly gain this year.
Unit sales of domestic and imported light vehicles rose 5.6% in April to 17.36M units (SAAR). 

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<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.2%</td>
<td>0.1%</td>
<td>4.0%</td>
<td>3.8%</td>
<td>6.7%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.0%</td>
<td>0.3%</td>
<td>4.1%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Chain Store Sales Fell Early in May 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020514a.jpg" width="353">
Chain store sales in the latest week gave up some of the prior week&#39;s surge. Sales fell 0.5% according to BTM-UBSW during the first full week of May.
Despite the weekly decline, May sales are up 1.1% so far versus the April average.
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

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<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">5/11/02</th>
<th scope="col">5/04/02</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">Total Weekly Retail Chain Store Sales</td>
<td>405.8</td>
<td>407.7</td>
<td>4.2%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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</tbody>
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Total retail sales rose more than expected last month due to higher auto sales. March sales were revised down slightly. Excluding autos also rose more than expected but March was revised down slightly. Higher gasoline prices boosted [...]

Retail Sales Strength Fueled by Gasoline and Autos

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020513a.jpg" width="353">
The Manpower Employment Outlook Survey for 3Q02 contained an index of net hiring that rose to its highest level since 2Q01.
The raw survey results indicated that 27% of firms plan to add employees in 3Q compared to 21% in 2Q. 8% planned to cut payrolls in 3Q compared to 10% in 2Q.
Over the last 25 years there has been an 81% correlation between the Manpower survey net hiring figure and the change in nonfarm payrolls. That correlation fell to 52% during the most recent ten years.
Manpower surveys nearly 16,000 public &amp; private firms in 477 US markets.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S302/@S302.HTM">Manpower Employment Outlook Survey</a></th>
<th scope="col">3Q02</th>
<th scope="col">2Q02</th>
<th scope="col">3Q01</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">All Industries: Net Higher (SA, %)</td>
<td>14</td>
<td>9</td>
<td>13</td>
<td>17</td>
<td>24</td>
<td>21</td>
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The Manpower Employment Outlook Survey for 3Q02 contained an index of net hiring that rose to its highest level since 2Q01. The raw survey results indicated that 27% of firms plan to add employees in 3Q compared to 21% in 2Q. 8% [...]

Manpower Survey Suggests Improved Hiring

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020510a.jpg" width="353">
Finished producer prices fell vs. Consensus expectations for a 0.5% gain. It was the first decline since last December. Core finished goods prices rose an expected 0.1% (-0.2% YTD, AR)
Food prices fell a surprising 3.2%, a drop surpassed only by a 3.3% decline in June 1974. Price declines amongst most food items were large.
Energy prices continued their upward trend rising 2.5% following a 5.5% spurt in March. Market gasoline prices in early May are down slightly from April.
Core finished consumer goods prices rose 0.3% (0.2% YTD), the strongest gain since December. Core nondurable goods prices rose 0.7% (1.2% YTD) but durable goods prices fell 0.2%, the third decline this year. Capital goods prices dropped 0.1% (-0.6% YTD). 
Intermediate goods prices were strong for the second month due to higher energy prices, up 4.4%. Core intermediate prices also were strong. 
Crude goods prices rose, reflecting a 22.4% pop in energy prices which followed a 15.2% March gain. Core crude prices also were strong in part reflecting higher metals prices.

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<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">April</th>
<th scope="col">Mar</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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</thead>
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<td class="firstcol">Finished Goods</td>
<td>-0.2%</td>
<td>1.0%</td>
<td>-2.0%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.9%</td>
<td>1.0%</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>0.2%</td>
<td>0.3%</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>5.5%</td>
<td>4.0%</td>
<td>-18.9%</td>
<td>0.3%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>3.6%</td>
<td>-0.7%</td>
<td>-0.6%</td>
<td>-9.9%</td>
<td>7.3%</td>
<td>-4.7%</td>
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</tbody>
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Finished producer prices fell vs. Consensus expectations for a 0.5% gain. It was the first decline since last December. Core finished goods prices rose an expected 0.1% (-0.2% YTD, AR) Food prices fell a surprising 3.2%, a drop [...]

Producer Prices Fell Unexpectedly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020509b.jpg" width="353">
Prices for imported commodities rose more than expected last month. Consensus estimates were for a 0.5% gain. March figures were little revised.
Petroleum import prices repeated the double digit gain of the prior month. So far in May the price of WTI crude oil is roughly unchanged from April and gasoline prices are down.
Nonpetroleum import prices were unexpectedly strong rising the most since January of last year. The rise was fueled by higher food prices, the third strong gain in four months.
Prices for capital goods, nonauto consumer goods and autos ranged from plus or minus 0.1%.
Export prices were strong for the second consecutive month, again due mostly to higher prices for industrial materials. Capital goods, nonauto consumer goods and autos were weak or down.

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<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">April</th>
<th scope="col">Mar</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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</thead>
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<td class="firstcol">Import - All Commodities</td>
<td>1.4%</td>
<td>1.2%</td>
<td>-3.9%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>12.1%</td>
<td>14.5%</td>
<td>-2.2%</td>
<td>-17.2%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.4%</td>
<td>0.1%</td>
<td>-3.3%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.4%</td>
<td>0.3%</td>
<td>-1.9%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Down, Rehiring Weak 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 9, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020509a.jpg" width="353">
Initial claims for unemployment insurance fell as expected in the latest week. The prior week&#39;s level was revised up slightly. A small number of filings for extended benefits is still in the initial claims tally. 
Continuing claims for unemployment insurance rose strongly, reflecting firms&#39; hesitancy to hire, after a strong gain the week prior which was revised up.
The four-week moving average of claims fell to 428,000. 
The insured rate of unemployment rose to 3.0%, back to its high of early April.

<table border="0" cellspacing="0" width="100%">
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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">5/4/02</th>
<th scope="col">4/27/02</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>411.0</td>
<td>422.0</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>3,803</td>
<td>37.7%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
</body>
</html>

Prices for imported commodities rose more than expected last month. Consensus estimates were for a 0.5% gain. March figures were little revised. Petroleum import prices repeated the double digit gain of the prior month. So far in May [...]

Import Price Gains Limited to Oil & Food

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020508a.jpg" width="353">
Consumer borrowing rose slightly less than expected in March. February figures were little revised. 
Revolving credit rose by a modest 0.2% m/m following two months of similarly small gain. Year-to-year growth in revolving credit is the lowest since 1980.
Unadjusted revolving credit by most issuers has been falling steadily in recent months, usual for early in the year.
Nonrevolving credit also rose weakly. The 0.3% gain was the smallest since last July.

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E103/@E10308/@E10308.HTM">Consumer Credit Outstanding</a></th>
<th scope="col">Mar m/m</th>
<th scope="col">Feb m/m</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>$4.6B</td>
<td>$7.0B</td>
<td>5.6%</td>
<td>6.8%</td>
<td>10.2%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$1.5B</td>
<td>$0.8B</td>
<td>2.4%</td>
<td>5.2%</td>
<td>11.5%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonrevolving</td>
<td>$3.1B</td>
<td>$6.3B</td>
<td>8.1%</td>
<td>8.1%</td>
<td>9.2%</td>
<td>8.4%</td>
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</tbody>
</table>
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Consumer borrowing rose slightly less than expected in March. February figures were little revised. Revolving credit rose by a modest 0.2% m/m following two months of similarly small gain. Year-to-year growth in revolving credit is [...]

Consumer Credit Growth Moderate in March

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020507b.jpg" width="353">
Nonfarm labor productivity was quite strong last quarter rising at the fastest rate since 2Q83. Consensus estimates were for a 7.0% rate of growth.
Output in the nonfarm business sector rose 6.3% (AR) as compared to a 5.8% rate of GDP growth. Hours worked fell at a 2.0% rate, the seventh decline in eight quarters.
Unit Labor costs fell sharply for the second consecutive quarter, again at the fastest rate since 2Q83. Compensation growth was moderate, up slightly from 4Q01 but down sharply from the 7-9% rates of growth in 2000. 
Inflation was benign with the price deflator for the nonfarm business sector declining 1.0%, the second consecutive quarterly drop. Not since 1949 has the price deflator declined for two consecutive quarters. 
Despite lower prices the price-to-unit labor cost ratio, a key measure of corporate profitability, rose.
Manufacturing sector productivity growth rose at a 9.7% rate, the fastest gain since 4Q99. Unit labor costs fell at a 6.6% rate.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR)</th>
<th scope="col">1Q &#39;02</th>
<th scope="col">4Q &#39;01</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">Output per Hour</td>
<td>8.6%</td>
<td>5.5%</td>
<td>4.2%</td>
<td>1.9%</td>
<td>3.3%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>2.6%</td>
<td>2.3%</td>
<td>3.3%</td>
<td>5.8%</td>
<td>6.6%</td>
<td>4.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>-5.3%</td>
<td>-3.0%</td>
<td>-0.9%</td>
<td>3.8%</td>
<td>3.1%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>
Chain Store Sales Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020507a.jpg" width="353">
Chain store sales in the latest week recovered all of their plunge during the prior period, and then some. Sales rose 2.1% according to BTM-UBSW during the week which straddled April and May.
For all of April, sales fell 1.0% from the March average.
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<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">5/4/02</th>
<th scope="col">4/27/02</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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</thead>
<tbody>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>407.3</td>
<td>399.3</td>
<td>6.0%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
</body>
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Nonfarm labor productivity was quite strong last quarter rising at the fastest rate since 2Q83. Consensus estimates were for a 7.0% rate of growth. Output in the nonfarm business sector rose 6.3% (AR) as compared to a 5.8% rate of GDP [...]

Nonfarm Productivity Robust

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020506a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose to its highest level in a month, continuing an uptrend that began last Fall.
The index is designed to signal turning points in the US economy and is &quot;real time,&quot; i.e. weekly, and not subject to significant revision.
Construction of the ECRI Leading Index is quite different 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.

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<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">4/26/02</th>
<th scope="col">4/19/02</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">ECRI Weekly Leading Index</td>
<td>122.2</td>
<td>121.7</td>
<td>2.8%</td>
<td>-5.0%</td>
<td>0.8%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
The Dollar & Commodity Prices: Mixed Signals 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 6, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020506b.jpg" width="353">
The trade weighted value of the US dollar fell nearly 1% last week as mixed economic news convinced US markets that Fed tightening was not near at hand. The dollar is down roughly 1.5% from its February highs. 
Commodity prices, another &quot;market based indicator&quot; of monetary policy, also fell. The JoC-ECRI Industrial Materials Price Index is down 2.4% from the highs set in early April. Crude oil prices are down 5.5% from the high and metal and textile prices also are down.
Versus this past Fall, the dollar is up 2+% and commodity prices are up 9+%.

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The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose to its highest level in a month, continuing an uptrend that began last Fall. The index is designed to signal turning points in [...]

ECRI Weekly Leading Index Rose Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020503a.jpg" width="353">
The unemployment rate surged to the highest level since August 1994. Household employment rose a modest 82,000 (-1.1% y/y) but the labor force jumped 565,000 (0.6% y/y).
Further indication of labor market weakness was the less than expected rise in nonfarm payrolls and the downward revision to March&#39;s previously reported gain.
Downward revisions to March employment were across the board in the service producing industries, but were large for basic services.
A glimmer of improvement was the rise in the one-month diffusion index for nonfarm payrolls. This breadth of change measure rose to 50.7, the first month above 50 since last March.
Factory sector jobs continued to fall, though job losses were most notable in the nondurable as well as transportation industries. The one month diffusion index for the factory sector improved to 47.1%, its highest level since July 2000.
Construction sector jobs fell for the third month this year. 
Employment in the service sector rose 134,000 (0.1% m/m) due to small increases in several industries. 
The index of aggregate hours worked (employment times hours worked) fell 0.2% and started 2Q below the 1Q average. 
Average hourly earnings rose an expected 0.1% and March was unrevised.
The employment figures for nonfarm payrolls are based on reports provided to the US Labor Department by businesses, while the figures from which the unemployment rate is derived are based on a survey of US households.

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<colgroup><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">April</th>
<th scope="col">Mar</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">Payroll Employment</td>
<td>43,000</td>
<td>-21,000</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-19,000</td>
<td>-38,000</td>
<td>-6.6%</td>
<td>-4.2%</td>
<td>-0.5%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>34.1</td>
<td>34.2</td>
<td>34.2</td>
<td>34.2</td>
<td>34.4</td>
<td>34.5</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>4.2%</td>
<td>3.8%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>6.0%</td>
<td>5.7%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>4.2%</td>
</tr>
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ISM Nonmanufacturing Index Again Falls Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 3, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020503b.jpg" width="353">
The Institute for Supply Management business activity index of the nonmanufacturing sector fell to the low end of expectations last month. 
New orders, employment and imports all rose. The not seasonally adjusted price index rose for the fourth month in a row to its highest level since last May. 
Business activity for the nonmanufacturing sector is a question separate from the components mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components. 
During the last four years, there has been a 43% correlation between the level of the NAPM nonmanufacturing index and quarterly growth in real GDP in the service sector.
ISM surveys more than 370 purchasing managers in more than 62 industries, including construction, law firms, hospitals, government and retailers. The nonmanufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">April</th>
<th scope="col">Mar</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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</thead>
<tbody>
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<td class="firstcol">Business Activity Index</td>
<td>55.3</td>
<td>57.3</td>
<td>47.8</td>
<td>49.0</td>
<td>59.2</td>
<td>59.1</td>
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The unemployment rate surged to the highest level since August 1994. Household employment rose a modest 82,000 (-1.1% y/y) but the labor force jumped 565,000 (0.6% y/y). Further indication of labor market weakness was the less than [...]

April Job Rise Too Small to Keep Unemployment Rate from Rising

Retail gasoline price still well above pre-conflict level and now rising again

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

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Winnie Tapasanun

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The Empire State Manufacturing Index of General Business Conditions rose to a higher-than-expected 15.6 in July following a 13.9-point drop to 5.7 in June, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. A reading of 8.6 for July had been expected in the Action Economics Forecast Survey. The positive July figure indicated that the business activity in New York State expanded for the fourth consecutive month and at a faster pace; it was a sharp improvement from 3.1 in July 2025 and a low of -29.7 in January 2024, though still below its most recent high of 19.6 in May and a high of 16.8 in November 2024. The percentage of respondents reporting an increase in general business conditions was 39.0% in July, up from 28.9% in June; the percentage reporting a decrease was 23.4%, up from June’s 23.2%. The latest survey was conducted between July 2 and July 10.

The headline index reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index increased to 57.5 in July following a 4.6-point decline to 53.4 in June, representing the seventh straight expansion; it was modestly up from 54.1 in July 2025 and well above a low of 43.0 in January 2024. The index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories, with equal weights (20% each).

In the latest survey, the new orders index jumped to 22.2 in July after a 19.2-point drop to 3.5 in June, marking the seventh consecutive expansion and a sharp improvement from a low of -30.7 in January 2024. The shipments index advanced to 24.4 in July, the highest level since April 2022, following a 10.3-point decrease to 8.6 in June; it was well above a low of -21.7 in April 2024. The unfilled orders index held at 5.0 in July and June after 4.9 in May, indicating unfilled orders expanded for the sixth straight month; the index reached its recent high of 10.8 in March and a low of -24.2 in January 2024. The inventories index increased to 4.0 in July following a 9.7-point decline to 0.0 in June, signaling inventories rose slightly this month after being unchanged. Meanwhile, the delivery times index rose to 13.0 in July from 11.9 in June, with 20.0% of respondents reporting longer delivery times and 7.0% reporting shorter times, indicating that delivery times continued to lengthen.

On the labor front, the number of employees index rose to 11.4 in July after a 1.3-point rebound to 9.6 in June, indicating that employment expanded for the sixth successive month and reached its highest level since December 2022. The index remained well above a low of -9.3 in December 2023 but below a peak of 24.9 in February 2022. In July, a higher 20.9% of respondents reported an increase in employment while 9.6% reported a decline. The average workweek index fell to 2.8 in July from 5.1 in June, remaining positive for the sixth straight month, albeit at a four-month low.

Inflation pressures eased in July but remained elevated. The prices paid index fell to 52.3 in July, the lowest level since April, after a 1.6-point decline to 61.0 in June. Although well below a peak of 84.9 in April 2022, the index remained above a low of 25.9 in December 2024 and a low of 20.8 in December 2023. In July, 55.4% of respondents reported higher prices paid while only 3.1% reported lower prices paid. The prices received index slid to 27.6 in July, a three-month low, from 31.4 in June. The index was above a low of 7.5 in December 2024 and a low of 7.7 in July 2023 but far below a high of 51.9 in March 2022. In July, 31.3% of respondents reported higher prices received while 3.6% reported lower prices received.

Firms remained fairly optimistic about the future business outlook in the latest survey. The index for future business conditions eased to 27.9 in July, the lowest level since April, after a 3.4-point decrease to 30.1 in June, with 49.9% of respondents expecting business conditions to improve over the next six months. Future new orders edged up to 33.2 in July, the highest level since February, from 32.5 in June, while future shipments slipped to 30.6 from 32.2. Growth in future employment slowed to 14.4, the lowest reading since December, from June’s 20.9. Capital spending plans remained positive for the ninth consecutive month in July, with the future capital expenditures index rising to 15.0 from June’s 10.9. Expected prices paid fell to 53.0 in July, the lowest level since March, from 59.4 in June, and expected prices received fell to 41.9, the lowest level since April, from 51.6.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- General Business Conditions Index up 9.9 pts. to 15.6 in July; fourth straight expansion.
- Shipments (24.4), highest since Apr. ’22; new orders (22.2); unfilled orders (5.0); inventories (4.0).
- Employment (11.4), a solid reading and highest since Dec. ’22.
- Prices paid (52.3) and prices received (27.6) both at three-month lows.
- Firms fairly optimistic: Future Business Conditions Index down to a still-positive 27.9; future prices paid at a four-month-low 53.0.

U.S. Empire State Manufacturing Index Rebounds Strongly in July

Sandy Batten

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The Producer Price Index for final demand fell 0.3% m/m (+5.5% y/y) in June following a downwardly revised 0.6% (6.0%y/y) gain in May (previously 1.1% m/m, 6.5% y/y) according to the Bureau of Labor Statistics (BLS). This was the first monthly decline in the headline index since August 2025 and the largest decline since April 2025. The Action Economics Forecast Survey expected an unchanged reading in June. Producer prices excluding food, energy and trade services edged up 0.1% m/m (+5.1% y/y) in June after having jumped 0.8% m/m (5.1% y/y) in May. The PPI excluding food and energy (the previous core index) rose 0.2% m/m (4.7% y/y) in June versus a 0.1% m/m (4.6% y/y) increase in May. A 0.1% m/m increase was expected.

The June decline in the index for final demand was attributable to a 1.4% m/m decline (+7.9% y/y) in prices for final demand goods following a 2.3% monthly rise in May. The index for final demand services increased 0.2% m/m (4.6% y/y) in June after a 0.1% monthly decline in May.

The 1.4% m/m decline in final demand goods prices was the largest since July 2022. Leading the decline in June, prices for final demand energy dropped 6.4% m/m. A 12.0% m/m decline in gasoline prices accounted for two-thirds of the decline in final demand goods prices in June. The index for final demand foods moved down 0.6% m/m, the first monthly decline in three months. Conversely, prices for final demand goods less food and energy increased 0.2% m/m (+5.1% y/y). The indexes for diesel fuel, jet fuel, fresh vegetables (except potatoes), crude petroleum, and thermoplastic resins and materials fell. In contrast, prices for plastic products advanced 1.6% m/m. The indexes for residential electric power and for potatoes also increased.

The index for final demand services rose 0.2% m/m (4.6% y/y) in June after falling 0.1% m/m in May. Over 60% of the advance in June can be attributed to margins for final demand trade services, which moved up 0.4% m/m after a 2.3% m/m decline in May. (Trade indexes measure changes in margins received by wholesalers and retailers.) Prices for final demand services less trade, transportation, and warehousing increased 0.1% m/m. Conversely, the index for final demand transportation and warehousing services declined 0.1% m/m. The indexes for securities brokerage, dealing, and investment advice; furniture retailing; apparel, jewelry, footwear, and accessories retailing; loan services (partial); and inpatient care rose. In contrast, margins for machinery and vehicle wholesaling declined 8.4%. The indexes for food and alcohol wholesaling and for deposit services (partial) also fell.

Final demand construction costs edged up 0.1% m/m (3.5% y/y) in June, the same monthly increase as in May. Construction prices for private capital investment also edged up 0.1% (3.4% y/y) in June, the same monthly gain as in May.

Prices for intermediate demand processed goods fell 1.2% m/m (+11.1% y/y) in June, the first monthly decline since October 2025 and the largest monthly decline since December 2022. Processed energy goods prices slumped 7.3% m/m, the first monthly decline since January. Processed foods prices edged up 0.1% m/m following a 0.6% m/m jump in May. Prices of processed goods excluding foods and energy rose 0.6% m/m, down markedly from 1.7% monthly gains in both April and May.

The PPI data are published by the Bureau of Labor Statistics and can be found in Haver’s **USECON** database. Further detail is contained in **PPI** and **PPIR**. The expectations figures are available in the **AS1REPNA** database.

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- Led by a 6.4% m/m decline in energy prices, the PPI for final demand fell 0.3% m/m in June.
- Goods prices fell 1.4% m/m, the first monthly decline since January, while services prices rose 0.2% m/m.
- Excluding food, energy and trade margins, the new core measure edged up 0.1% m/m while the old core (excluding just food and energy) rose 0.2% m/m in June.

U.S. Producer Prices Fell in June

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.

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- 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

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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

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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.