Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030708a.jpg" width="353">
The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) reported in June that &quot;... the U.S. economy continues to experience growth in income and output but employment continues to decline. Because of the divergent behavior of various indicators, the NBER&#39;s Business Cycle Dating Committee believes that additional time is needed before interpreting the movements of the economy over the past two years.&quot; 
Despite the uncertainties, there is much to suggest that the most recent recession ended late in 2001. Its duration was roughly nine months.
For purposes of shading the economic cycles, Haver Analytics will commence ending the last recession in November 2001 in all of its charts. The fourth quarter of 2001 will be recession shaded since growth that quarter was a sub par 2.7% (AR). Our reasons for picking late 2001 as the cycle trough include:<ol><li>The Index of Coincident Indicators compiled by the Economic Cycle Research Institute (ECRI) touched bottom in November 2001. It has since risen 1.8% and has been 0.1% above its prior peak in December 2000.</li><li>Monthly real GDP as compiled by Macroeconomic Advisers troughed in September 2001. It has since risen 4.5% and is 2.7% above its prior peak in February 2001.</li><li>The Index of Coincident Indicators compiled by the Conference Board touched bottom in November 2001. It has since risen 0.8% but it has not yet surpassed its prior peak in December 2000.</li></ol>
Each of these monthly indicators recently has failed to exhibit much strength which is consistent with a US economy growing below its trend rate of about 3.5%. The National Activity Index from the Chicago Federal Reserve supports this point as it has consistently since early 2000. This indicator touched bottom in September 2001.
Below-trend economic growth is characterized by unused productive capacity. The recently rising unemployment rate and the falling capacity utilization rate indicate that economic slack is building. This pattern repeats that of the &quot;jobless recovery&quot; of 1992.
September 2001 was not chosen as the trough date for the last recession. The events of 9/11 greatly depressed economic activity but were unrelated to the normal business cycle.
Click <a href="http://nber.com/cycles/recessions.html"> here</a> for &quot;The NBER&#39;s Recession Dating Procedure.&quot;

Chain Store Sales Jump 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 8, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030708b.jpg" width="353">
Chain store sales jumped 0.7% last week according to the BTM-UBSW survey. The rise recovered all of a 0.5% decline the week prior.
Sales started July 0.6% ahead of June which were barely changed from May.
During the last five years there has been a 61% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM leading indicator of chain store sales fell 0.1% in the last week of June. That was the fourth decline in the last five weeks for this indicator.
The BTM-UBSW retail chain-store sales index is constructed from the sales results reported by seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

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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">7/5/03</th>
<th scope="col">6/28/03</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">Total Weekly Retail Chain Store Sales</td>
<td>420.1</td>
<td>417.3</td>
<td>1.1%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
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The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) reported in June that "... the U.S. economy continues to experience growth in income and output but employment continues to decline. Because of the [...]

Looks Like The Recession Ended Late in 2001

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030707a.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) improved in May to -0.39 from a downwardly revised reading of -1.04 in April. . A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of over 3% p.a.
The improvement in May followed three months of readings which together were the weakest since late 2001.
The three-month moving average of the CFNAI improved to -0.69, still the second lowest level since late 2001 and consistent with negligible or negative real GDP growth.
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 latest 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">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">CFNAI</td>
<td>-0.39</td>
<td>-1.04</td>
<td>-0.10</td>
<td>-0.33</td>
<td>-1.19</td>
<td>-0.13</td>
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The Chicago Fed National Activity Index (CFNAI) improved in May to -0.39 from a downwardly revised reading of -1.04 in April. . A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth [...]

Chicago Fed National Activity Index Up in May

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030703a.jpg" width="353">
The unemployment rate jumped to 6.4% in June, further than Consensus expectations for a rise to 6.2%. It was the highest rate of unemployment since April 1994. Employment did rise 251,000 (+1.0% y/y) but that gain was outpaced by a 611,000 (+1.5% y/y) worker surge in the labor force.
Nonfarm payrolls fell 30,000 in June versus Consensus expectations for no change. The decline in May payrolls was revised deeper to 70,000 from 17,000 reported last month.
The one month diffusion index for nonfarm payrolls was little changed at 43.3, suggesting poor hiring prospects. The three month diffusion index fell to 43.9. By measuring the breadth of hiring increases, these indexes are leading indicators of job growth.
Where Jobs Fell: The number of factory sector jobs fell 56,000 (-0.4% m/m, -4.2% y/y) and are down 2.2% year to date. The one-month diffusion index for the factory sector rose slightly to 32.1. That is versus 19.0 in February and 9.5 in December 2001. Retail hiring fell 12,800 (-0.6% y/y). Professional &amp; business services jobs fell 3,000 (-0.3% y/y).
Where Jobs Rose: Construction jobs rose 16,000 (1.1% y/y) for the fourth consecutive monthly gain. Jobs in the financial industries rose 9,000 (1.9% y/y for the tenth consecutive monthly gain. Leisure &amp; hospitality jobs rose 22,000 (1.2% y/y). The number of government sector jobs nudged up 1,000 (-0.0% y/y) following three months of decline.
The index of aggregate hours worked (employment times hours worked) was unchanged (-1.7% y/y). Hours worked last quarter fell 0.4% from 1Q.
Over the last ten years there has been a 61% correlation between the quarterly change in aggregate hours worked and real GDP. That correlation is down from 87% in the 1980s due to the recent acceleration in productivity growth.
Average hourly earnings rose 0.2% and in 2Q rose only 0.5%, the slimmest quarterly increase since 1Q 2002.
The nonfarm payroll employment figures 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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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">June</th>
<th scope="col">May</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">Payroll Employment</td>
<td>-30,000</td>
<td>-70,000</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
<td>2.2%</td>
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<td class="firstcol">&nbsp; Manufacturing</td>
<td>-56,000</td>
<td>-44,000</td>
<td>-4.2%</td>
<td>-6.9%</td>
<td>-4.8%</td>
<td>-0.3%</td>
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<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>34.0</td>
<td>33.9</td>
<td>34.0</td>
<td>34.3</td>
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<td class="firstcol">Average Hourly Earnings</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.9%</td>
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<td class="firstcol">Unemployment Rate</td>
<td>6.4%</td>
<td>6.1%</td>
<td>5.8%</td>
<td>5.8%</td>
<td>4.8%</td>
<td>4.0%</td>
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</tbody>
</table>
Initial Jobless Insurance Claims Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 3, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030703c.jpg" width="353">
Initial claims for unemployment insurance rose 21,000 (5.1%) last week to 430,000. The level of claims was higher than Consensus expectations for 413,000. Claims in the prior week were revised up.
The four-week moving average of initial claims fell to 425,000 (+8.4% y/y).
Continuing claims for unemployment insurance rose 0.9% w/w although the prior week&#39;s level was revised down.
During the last ten years there has been a 79% (inverse) correlation between the level of initial claims for unemployment insurance and the y/y change in nonfarm payrolls.
The insured rate of unemployment rose to 3.0% from a downwardly revised 2.9% the week prior.

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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">6/28/03</th>
<th scope="col">6/21/03</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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</thead>
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<td class="firstcol">Initial Claims</td>
<td>430.0</td>
<td>409.0</td>
<td>10.3%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
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<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,751</td>
<td>2.4%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 3, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030703b.jpg" width="353">
The Institute for Supply Management reported that its nonmanufacturing sector business activity index surged to 60.6 last month, the highest level since September 2000. The Consensus expectation was for a much smaller rise to 55.0.
The 6.1 point m/m rise was the sharpest since November 2001.
During the last five years, there has been a 65% correlation between the level of the Business Activity Index from the ISM nonmanufacturing survey and quarterly growth in real GDP in the service sector plus structures.
The seasonally adjusted new orders index rose to 57.5, its highest level since October 2000. The employment index rose to 50.3, only the second month above 50 since early 2001.
Business activity for the nonmanufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
The seasonally adjusted prices index rose to 51.4, still the second lowest level since March 2002.
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. 

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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">June</th>
<th scope="col">May</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">Business Activity Index</td>
<td>60.6</td>
<td>54.5</td>
<td>57.4</td>
<td>55.1</td>
<td>49.0</td>
<td>59.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>51.4</td>
<td>49.6</td>
<td>52.5</td>
<td>53.9</td>
<td>51.6</td>
<td>63.5</td>
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</tbody>
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The unemployment rate jumped to 6.4% in June, further than Consensus expectations for a rise to 6.2%. It was the highest rate of unemployment since April 1994. Employment did rise 251,000 (+1.0% y/y) but that gain was outpaced by a [...]

Unemployment Rate Surged, Payrolls Down Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030702c.jpg" width="353">
Unit sales of light vehicles rose 1.9% m/m in June to an annual rate of 16.43 million units. Consensus expectations were for sales of 16.1 mil. units.
The increase in June sales recovered virtually all of the decline in May. It continued the erratic sideways movement of sales in place for the last two and one half years.
Sales of cars rose 4.0% m/m for the first gain since March. Truck sales were about flat month to month.
Since the peak in early 1997, the CPI for new vehicles has fallen 4.7%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col">June</th>
<th scope="col">May</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">Total</td>
<td>16.43</td>
<td>16.12</td>
<td>0.5%</td>
<td>16.81</td>
<td>17.26</td>
<td>17.40</td>
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<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.56</td>
<td>7.27</td>
<td>-4.9%</td>
<td>8.07</td>
<td>8.48</td>
<td>8.83</td>
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<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>8.87</td>
<td>8.86</td>
<td>5.5%</td>
<td>8.74</td>
<td>8.78</td>
<td>8.56</td>
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</tbody>
</table>
Mortgage Applications Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030702b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 5.2% last week and recouped most of the prior week&#39;s decline. For all of June, mortgage applications rose 6.5%.
Applications to refinance rose 4.8% w/w and jumped 8.1% last month to a new monthly record.
Applications for home purchase surged 6.6% w/w and added 1.3% in all of June to the 11.6% gain in May.
During the last ten years there has been a 51% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Interest rates on a conventional 30-Year mortgage moved higher for the second week with the effective rate at 5.52% versus 6.13% averaged in December. The effective rate on a 15-year mortgage also rose to 4.97% versus 5.55% averaged in December.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders.
Visit the Mortgage Bankers Association site at <a href="http://www.mbaa.org/">www.mbaa.org.</a>

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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">6/27/03</th>
<th scope="col">6/20/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<td class="firstcol">Total Market Index</td>
<td>1,635.5</td>
<td>1,554.5</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>438.4</td>
<td>411.2</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>8,599.1</td>
<td>8,204.6</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
Factory Inventories Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030702d.jpg" width="353">
Manufacturing inventories fell 0.1% in May, down for the third consecutive month. The steep drop in the June ISM inventory index suggests further decumulation, although the rate of decline has slowed since 2001.
Inventories fell across the board in May with computers and electronic products down 1.0% (-9.1% y/y). Electrical equipment inventories fell a slight 0.1% (-6.1% y/y) but machinery inventories fell 0.3% (-4.3% y/y). Furniture inventories fell 0.3% m/m but are up 1.5% y/y.
Nondurable goods inventories were unchanged for the second month (+4.3% y/y).
Factory shipments rose 0.4% (-0.7% y/y). Shipments of petroleum and coal rose 9.3% m/m following the 19.4% plunge in April.
Factory orders rose 0.4%. Durable goods orders fell 0.4%, little revised from the advance report.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">May</th>
<th scope="col">April</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">Inventories</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>0.7%</td>
<td>-1.9%</td>
<td>-8.0%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>0.4%</td>
<td>-3.0%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-7.2%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>0.4%</td>
<td>-2.3%</td>
<td>-0.7%</td>
<td>-1.1%</td>
<td>-5.3%</td>
<td>4.4%</td>
</tr>
</tbody>
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Unit sales of light vehicles rose 1.9% m/m in June to an annual rate of 16.43 million units. Consensus expectations were for sales of 16.1 mil. units. The increase in June sales recovered virtually all of the decline in May. It [...]

U.S. Light Vehicle Sales Up Slightly

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030701c.jpg" width="353">
According to the Bank of Japan&#39;s quarterly survey of business conditions--the Tankan--sentiment among executives of large manufacturing companies in Japan rose in June to minus 5 from minus 10 in March. This was better than consensus estimates and the best showing since March 2001. These executives expect that sentiment will continue at this level in the next quarter. Rising stock prices in recent months and the lessening of concerns over the impact of SARS on trade as the World Health Organization lifted travel advisories for Singapore, Hong Kong and Beijing in May and June may have been factors in the improvement of sentiment.
Sentiment in the nonmanufacturing sector improved but to a lesser extent than in manufacturing. It rose to minus 13 from minus 14 in March.
Large companies in all industries plan to increase spending on fixed investment in the current fiscal year, ending March 2004, by 4.9% over fiscal 2003. In the March Tankan, executives had estimated a decline of 0.8% in investment spending for the current fiscal year.

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</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Current Business Conditions</th>
<th scope="col">June Q 2003</th>
<th scope="col">March Q 2003</th>
<th scope="col">June Q&nbsp; 2002</th>
<th scope="col">Q/Q</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">Large Manufacturing Companies</td>
<td>-5</td>
<td>-10</td>
<td>-18</td>
<td>5</td>
<td>13</td>
<td>-20</td>
<td>-23</td>
<td>4</td>
</tr>
<tr>
<td class="firstcol">Large Nonmanufacturing&nbsp; Companies&nbsp;</td>
<td>-13</td>
<td>-14</td>
<td>-16</td>
<td>1</td>
<td>3</td>
<td>-17</td>
<td>-16</td>
<td>-12</td>
</tr>
</tbody>
</table>
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According to the Bank of Japan's quarterly survey of business conditions--the Tankan--sentiment among executives of large manufacturing companies in Japan rose in June to minus 5 from minus 10 in March. This was better than consensus [...]

Japanese Tankan Shows Good Improvement in Sentiment of Large Manufacturing Companies

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030701a.jpg" width="353">
Chain store sales gave back last week virtually all of the prior week&#39;s gain according to the BTM-UBSW survey. The 0.5% w/w decline followed a 0.6% gain the week prior and continued the erratic sales performance of the last two months.
Sales in June rose 0.1% versus May. May sales rose 2.0% from April due only to a 2.1% increase in the first week of that month.
During the last five years there has been a 61% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM leading indicator of chain store sales fell 0.1% in the third week of June, the second decline in three weeks.
The BTM-UBSW retail chain-store sales index is constructed from the sales results reported by seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">6/28/03</th>
<th scope="col">6/21/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>417.3</td>
<td>419.4</td>
<td>1.1%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
ISM Factory Index Rose Less Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030701b.jpg" width="353">
The ISM Composite Index of manufacturing sector activity rose to 49.8 last month from 49.4 in May. The gain was less than Consensus expectations for a rise to 51.0 and left the index below 50 for the fourth consecutive month.
During the last ten years there has been a 52% correlation between the level of the ISM index and the month to month change in factory sector industrial production.
New orders (52.2), production (52.9) and employment (46.2) each improved but the moderate gains were offset by lower inventories and vendor performance.
The index of export orders improved to 54.4, the highest level since February.
A separate index of inflation pressure recovered a bit of the sharp declines of the prior two months. Up five points, the index had fallen 18.5 points during April and May. This index is not seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">June</th>
<th scope="col">May</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 Index</td>
<td>49.8</td>
<td>49.4</td>
<td>55.2</td>
<td>52.4</td>
<td>44.0</td>
<td>51.7</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>56.5</td>
<td>51.5</td>
<td>66.5</td>
<td>57.6</td>
<td>42.9</td>
<td>64.8</td>
</tr>
</tbody>
</table>
Challenger Layoffs Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030701d.jpg" width="353">
According to Challenger, Gray &amp; Christmas, announced job cuts fell sharply for the second consecutive month in June. Layoff announcements fell 13.0% last month. That added to a 53.1% decline in May and dropped planned layoffs to the lowest level since November 2000.
The three month moving average of job cut announcements fell to its lowest level since last September.
Job cut announcements differ from layoffs in that many are achieved through attrition or just never occur.
During the last ten years there has been a 72% correlation between the y/y change in announced job cuts and the y/y percent change in initial claims for jobless insurance. Like claims, job cut announcements indicate little about new hiring activity.
Announcements of job cuts fell broadly although there were significant increases in several industries including apparel, automotive, chemical, food, media, pharmaceutical and retail.

<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/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>59,715</td>
<td>68,623</td>
<td>-37.0%</td>
<td>1,431,052</td>
<td>1,956,876</td>
</tr>
</tbody>
</table>
Construction Spending Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030702a.jpg" width="353">
The value of construction put in place fell 0.5% (+0.7% y/y) in May versus Consensus expectations for a 0.3% gain.
The figures reflect benchmark revisions. In addition, the Census Department will cease publication of values real terms with the release of June data next month. Census also will cease publication of the data according to the old classification system and will report only using a new system based on end use.
Residential building expenditures fell for the fourth consecutive month (+6.4% y/y).
Office construction fell 3.7% (-16.4% y/y, down sharply for the third month in four. Manufacturing construction fell 2.1% (-25.9% y/y) and highways &amp; streets dropped 1.9% (-5.3% y/y) for the fourth consecutive sharp decline.

<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/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Total</td>
<td>-0.5%</td>
<td>-0.3%</td>
<td>0.7%</td>
<td>1.1%</td>
<td>2.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>-0.3%</td>
<td>-0.5%</td>
<td>5.6%</td>
<td>8.8%</td>
<td>3.7%</td>
<td>6.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales gave back last week virtually all of the prior week's gain according to the BTM-UBSW survey. The 0.5% w/w decline followed a 0.6% gain the week prior and continued the erratic sales performance of the last two [...]

Chain Store Sales Slump

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030630b.jpg" width="353">
The European Commission reported a slight improvement in the June measures of overall economic sentiment and confidence in the industrial and consumer sectors. The overall measure of economic sentiment was up 0.16% to 98.2 in June from May, but was still 1.31% below a year ago.
Industrial and consumer confidence measures are reported as the percent balance between the optimists and the pessimists. The pessimists have outweighed the optimists since early 2001 in both sectors. Both balances improved after the September 11, 2001 shock until mid 2002, but continued in the negative. Industrial confidence has since shown little trend, but consumer confidence has declined sharply and although it has improved in the last few months, it is still well below the lows reached in late 2001.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">June 2003</th>
<th scope="col">May 2003</th>
<th scope="col">June 2002</th>
<th scope="col">M/M</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Overall Economic Sentiment(1995=100)</td>
<td>98.2</td>
<td>98.1</td>
<td>99.5</td>
<td>0.16</td>
<td>-1.31</td>
<td>99.0</td>
<td>100.9</td>
<td>103.4</td>
</tr>
<tr>
<td class="firstcol">Industrial Confidence (% balance)</td>
<td>-12</td>
<td>-13</td>
<td>-10</td>
<td>1</td>
<td>-2</td>
<td>-11</td>
<td>-8</td>
<td>5</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence (% balance)</td>
<td>-19</td>
<td>-20</td>
<td>-8</td>
<td>1</td>
<td>-11</td>
<td>-11</td>
<td>-5</td>
<td>1</td>
</tr>
</tbody>
</table>
</body>
</html>

The European Commission reported a slight improvement in the June measures of overall economic sentiment and confidence in the industrial and consumer sectors. The overall measure of economic sentiment was up 0.16% to 98.2 in June [...]

A Slight Improvement in Confidence in the Eurozone

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030630a.jpg" width="353">
The Chicago Purchasing Manager&#146;s Business Barometer Index improved for the second consecutive month in June to 52.5. The reading was right on Consensus estimates for 52.5.
The improvement lagged the dramatic increase in the Empire State Manufacturing survey but was about in line with the rise in the Philadelphia Fed survey, both reported earlier this month.
Over the last five years there has been a 62% correlation between the Chicago PMI and the month to month change in factory sector industrial production.
The most dramatic gains in the sub-indexes of the Chicago PMI survey were in inventories and vendor deliveries. The orders (54.8) and employment (43.8) indexes rose just slightly and the production index (56.5) fell. 
The prices paid index fell to the lowest level since January of last year.
The latest report on the Chicago Purchasing Managers Business Barometer is available <a href="http://napm-chicago.org/current.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">June</th>
<th scope="col">May</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">Business Barometer</td>
<td>52.5</td>
<td>52.2</td>
<td>55.8</td>
<td>52.7</td>
<td>41.4</td>
<td>51.8</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>49.1</td>
<td>53.7</td>
<td>58.4</td>
<td>56.9</td>
<td>50.4</td>
<td>65.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The Chicago Purchasing Managers Business Barometer Index improved for the second consecutive month in June to 52.5. The reading was right on Consensus estimates for 52.5. The improvement lagged the dramatic increase in the Empire [...]

Chicago Purchasing Agents' Index Improved

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

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

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

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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Business in the service sector recovered last month. The Services PMI rose to 52.4 during October after falling to 50.0 in September, following a rise to 52.0 in August, according to the Institute for Supply Management. The index hit a recent high of 55.8 in October of last year and remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected a reading of 50.9 in October.

The ISM Composite Index, developed by Haver Analytics, combines the services index and the ISM manufacturing index released on Monday. This index rose to 52.0 in October, the highest level since February, after declining to 49.9 in September.

Most components of the services index increased last month. The business activity index rose to 54.3 last month after falling to 49.9 in September. It remained below its high of 70.9 in both October & November of 2021. Twenty-three percent (NSA) of respondents reported improved activity while 15.3% reported decline. The new orders index surged to a twelve month high of 56.2 after falling to 50.4 in September. Twenty-eight percent (NSA) of respondents reported improved orders while a 16.3% reported decline. Also working higher, the employment series rose to 48.2, its highest level in five months, after rising to 47.2 in September. A higher 14.3% (NSA) of respondents reported increased employment while 17.9% reported declines. Working lower, the supplier delivery series fell to 50.8 in October after rising to 52.6 in September. A lessened 3.5% of respondents (NSA) reported faster delivery speeds while a much lower 5.1% reported slower speeds.

On the inflation front, the prices index rose to a three-year high of 70.0 in October after rising to 69.4 in September. The index has increased from its March 2024 low of 53.5. An increased 43.2% (NSA) of respondents reported higher prices while 5.4% reported lower prices.

Additionally, the new export orders index rose to 47.8 (NSA) in October following a decline to 46.5 in September. A higher 14.1% of survey respondents reported higher exports while a steady 18.6% reported decline. The imports index fell to 43.7 last month after falling to 49.2 in September. A lessened 6.9% of respondents reported higher imports while an increased 19.6% reported decline. The inventory change index rose to 49.5 after falling to 47.8 and the order backlog index declined sharply to 40.8 and reversed its September rise. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries.

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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- Total services index is highest since February.
- Business activity, new orders and employment increase.
- Prices index continues upward trend from 2024 low.

U.S. ISM Services PMI Rebounda in October; Price Index Advances

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The ADP National Employment Report indicated that nonfarm private sector payrolls during October increased 42,000 (0.7% y/y) after declining 29,000 in September, revised from -32,000, and dipping an unrevised 3,000 in August. The three-month average change of 3,000 compares to 24,000 in Q3’25, 22,000 in Q2 and 139,000 in Q1. The Action Economics Forecast Survey expected a 25,000 increase in October.

Small business hiring (less than 50 employees) fell 10,000 (+0.1% y/y) after declining 34,000 in September, revised from -40,000. Employment at medium-sized firms (50-499 employees) weakened 22,000 (+0.7% y/y) after declining 30,000 in September, revised from a 20,000 fall. Large business hiring (500+ employees) offset these declines and rose 74,000 (2.2% y/y) after increasing 31,000 in September, revised from 33,000. It was the largest gain in twelve months.

Service-producing jobs increased 32,000 (0.7% y/y) in October after falling 21,000 in September, revised from -28,000. Changes amongst industry sectors were mixed. Trade, transportation & utilities employment rose 47,000 (0.3% y/y) after falling 6,000. Financial activities employment improved 11,000 (1.9% y/y) following a 9,000 decline in September. Education & health services rose 25,000 (0.2% y/y) after increasing 32,000 in September. Working lower, leisure & hospitality employment declined 5,000 (+2.4% y/y) after falling 16,000 in September. Professional & business jobs fell 15,000 (+0.1% y/y) following a 6,000 decline. Information sector employment weakened 17,000 (-0.0% y/y) after rising 1,000 in September.

Goods-producing employment moved up by 9,000 (1.0% y/y) in October, following a 7,000 decrease, revised from a 3,000 decline. Construction jobs rose 5,000 (1.8% y/y) after falling 4,000. Manufacturing jobs fell 3,000 (+0.2% y/y) following a 2,000 increase. Natural resources and mining jobs increased 7,000 (2.7% y/y) after declining 5,000 in September.

By region, in the Midwest employment rose 9,000 (0.8% y/y) last month after falling 55,000 in September. In the West, the number of jobs improved 39,000 (0.6% y/y) following a 16,000 increase. In the South, employment rose 5,000 (0.7% y/y) following a 17,000 September increase. Working lower, the number of jobs fell 12,000 (+0.9% y/y) in the Northeast in October after falling 5,000 in September.

Wage growth for job-changers in October held steady at 6.7% y/y, well below a high of 16.1% in April 2022. Wage growth for job-stayers advanced 4.5% y/y, unchanged from September and the slowest increase since June 2021. Across major industries, wage growth for job-stayers was reduced.

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

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- Gain in private payrolls is first in three months.
- Service-sector & construction hirings move up, but factory jobs decline.
- Wage growth steadies.

U.S. ADP Employment Recovers in October

Winnie Tapasanun

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Mortgage applications fell 1.9% w/w (+73.6% y/y) in the week ending October 31 following a 7.1% gain in the week ending October 24, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading was the fifth w/w fall in six weeks to the index level of 332.3. Applications for loans to purchase a house declined 0.6% (+24.8% y/y) in the October 31 week, down for the fifth week in six, after a 4.5% increase in the previous week. Applications for loan refinancing dropped 2.8% (+151.4% y/y) in the October 31 week, down for the first week in three, following a 9.3% advance in the October 24 week.

The effective interest rate on a 30-year fixed-rate loan edged up to 6.48% in the week ending October 31 after declining to 6.47% in the week ending October 24; it was up from a low of 6.29% in the week of September 20, 2024 but down from a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages slipped to 5.81% in the October 31 week, the lowest since the September 12 week, after decreasing to 5.82% in the previous week; it was up from a low of 5.60% in the week of September 20, 2024 but down from a high of 7.44% in the week of October 27, 2023. The rate on 30-year jumbo loans rose 4bps to a three-week-high 6.52% in the October 31 week after declining to 6.48% in the prior week; however, it was slightly down from a low of 6.57% in the week of September 13, 2024 and below a high of 7.99% in the week of October 27, 2023. The rate on a 5-year ARM rose 4bps to 5.88% in the October 31 week, the highest since the September 26 week, after rising to 5.84% in the previous week; it was above a low of 5.84% in the week of September 13, 2024 but below a high of 7.31% in the week of October 27, 2023.

The share of applications for refinancing an existing loan edged down to 57.0% of total applications in the week ending October 31 after rising to a five-week-high 57.1% in the week ending October 24; those numbers remained below a peak of 60.2% in the week of September 19. The adjustable-rate mortgage (ARM) share of activity fell to 8.7% in the October 31 week, the lowest reading since the September 26 week, after falling to 8.9% in the prior week; it was below its recent peak of 12.9% in the September 12 week and a high of 9.6% in the April 11 week but up from a low of 4.7% in the January 3 week.

The average size of a mortgage loan, up for the third week in four, increased 0.6% w/w (7.3% y/y) to $414,900 in the October 31 week, the highest level since the September 19 week, reversing a 0.6% drop to $412,300 in the October 24 week. The average size of a purchase loan fell 0.4% (-2.3% y/y) to $435,100 in the October 31 week on top of a 0.5% decline to $436,800 in the prior week, marking the fourth weekly fall in five weeks and the lowest level since the October 10 week. The average size of a loan to refinance a mortgage rose 1.5% (34.0% y/y) to $399,700 in the October 31 week after a 0.4% decline to $393,900 in the previous week, registering the third weekly rise in four weeks and the highest level since the September 19 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Purchase applications -0.6% w/w; refinancing loan applications -2.8% w/w.
- Effective interest rate on 30-year fixed loans ticks up to 6.48% despite ongoing downward trend.
- Average loan size rebounds to the highest level since the September 19 week.

U.S. Mortgage Applications Drop 1.9% in the October 31 Week After Previous Gain

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Retail gasoline prices for all grades slipped to $3.15 per gallon (-1.3% y/y), on average, in the week ended November 3 after rising to $3.16 in the previous week. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. Haver Analytics seasonally adjusts the retail prices of regular grade gasoline. That price held at $3.05 last week versus $3.05 in the previous week.

The price of West Texas Intermediate crude oil rose to $60.70 per barrel (-11.2% y/y) in the week ended October 31 after improving to $59.43 per barrel in the prior week. It was the highest price in three weeks but prices remained below a recent high of $74.17 during the third week of June. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $61.05 per barrel. The price of European Brent crude increased to $65.02 per barrel (-10.5% y/y) in the week of October 31 after rising to $63.22 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. Yesterday, the price was $65.79 per barrel.

Natural gas prices rose to an average $3.43/mmbtu (88.5% y/y) in the week ended October 31 after rising to $3.25/mmbtu in the prior week. The rise left prices at the highest level since the second week of April and well above the low of $1.40/mmbtu in the week of March 15, 2024. Yesterday, the price was $3.37 per mmbtu.

Gasoline demand declined 4.2% y/y in the four weeks ending October 24, following a 3.6% y/y decline in the prior four weeks. Demand for all petroleum products weakened 0.9% y/y in the four weeks ending October 24, after slipping 0.1% y/y in the previous four-week period. Crude oil input to refineries declined 1.7% y/y in the four weeks ending October 24, after a 0.3% y/y gain in the prior four weeks.

Gasoline inventories ease 0.1% y/y in the week ending October 24 following a 1.5% y/y gain in the prior week. Residual fuel oil inventories fell 10.0% y/y in the October 24 week after falling 13.0% y/y in the prior week. Working higher, crude oil inventories rose 1.7% y/y in the week of October 24 after rising 2.6% y/y in the previous week.

Measured in days’ supply, gasoline inventories fell to 24.3 days in the week of October 24. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held steady at 26.7 days in the week of October 24. The supply remained below a recent high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** and **USENERGY** databases.

- Gasoline prices are minimally changed.
- Crude oil costs rise further.
- Natural gas prices strengthen.

U.S. Energy Prices Are Mixed in Latest Week

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U.S. light vehicle sales dove 6.9% (-4.5% y/y) in October to 15.48 million units (SAAR) after holding steady at 16.62 million units in September. Sales fell broadly. 

Light truck sales slid 6.9% (-1.4% y/y) in October to 12.90 million units, after rising 0.9% in September. Purchases of domestically-made light trucks fell 7.9% (+1.4% y/y) to 10.10 million units, the lowest level since February, after rising 3.4% in September. Sales of imported light trucks fell 2.8% (-10.3% y/y) to 2.80 million units, following a 7.4% September decline.

Trucks’ 83.3% share of the light vehicle market last month was steady with September and compared to 82.6% in August, and to 80.7% in October of last year. The share has averaged 82.4% so far this year versus 56.5% ten years earlier.

Passenger car sales declined 6.9% (-17.6% y/y) last month to 2.58 million, after falling 4.8% in September. Purchases of domestically-produced cars fell 7.2% (-16.5% y/y) last month to 1.93 million units, after weakening 7.1% in September. Imported auto sales declined 4.5% (-22.0% y/y) to 0.64 million units after holding steady in September.

Imports' 22.2% share of the U.S. light vehicle market rose from 21.4% in September. These compared to a high of 26.3% in November of 2023. Imports' share of the passenger car market edged up to 24.8% last month from 24.2% in September. It reached a high of 38.1% in September 2021. Imports' share of the light truck market increased to 21.7% last month from 20.8% in September.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

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- Light truck sales and auto purchases decline m/m.
- Total sales decline sharply y/y.
- Imports' market share declines.

Economy in Brief: 2003

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