Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030627a.jpg" width="353">
Personal income rose an expected 0.3% last month. The gain followed an upwardly revised 0.2% increase in April.
The PCE price deflator fell 0.1% in May for the second consecutive monthly decline. Less food and energy, the price deflator was unchanged (1.2% y/y) in May and at an annual rate is up 0.7% YTD.
Recent increases in personal income were powered by strong gains in proprietors income, up 1.0% (7.8% y/y) in May and up 1.1% in April. Growth in wages and salaries has been tepid, up 0.1% (2.0% y/y) following no change in April.
Disposable personal income rose 0.3% (3.7% y/y) following 0.2% gains in the prior three months. Personal tax payments are down 0.2% YTD.
Personal consumption expenditures rose by 0.1% for the second consecutive month. The gain was versus Consensus expectations for a 0.2% rise. Spending on durable goods fell 0.7% (5.2% y/y) as light vehicle sales fell moderately. Another drop in gasoline prices pulled nondurable spending down for the second month. Spending on services rose 0.5% (4.6% y/y), the strongest monthly gain since January.
Proceedings of a conference sponsored by the Federal Reserve Bank of New York in May 7, 1999 titled &quot;Unequal Incomes, Unequal Outcomes? Economic Inequality and Measures of Well-Being&quot; can be found <a href="http://www.newyorkfed.org/rmaghome/econ_pol/1999.htm">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</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>
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</thead>
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<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>0.2%</td>
<td>3.4%</td>
<td>2.7%</td>
<td>3.3%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.1%</td>
<td>0.1%</td>
<td>4.6%</td>
<td>4.5%</td>
<td>4.5%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>3.5%</td>
<td>3.4%</td>
<td>4.1%</td>
<td>3.7%</td>
<td>2.3%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>1.7%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.5%</td>
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Consumer Sentiment Down but Firmer Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 27, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030627b.jpg" width="353">
The final June reading of Consumer Sentiment from the University of Michigan was 89.7, down 2.6% versus May. That was firmer than the mid-month reading of 87.2 and firmer than Consensus expectations for a reading of 88.0.
The June drop in Consumer Sentiment contrasted with the reading of Consumer Confidence from the Conference Board that was virtually unchanged m/m. Through June, both measures were up 3.5% YTD.
The index of consumer expectations fell 5.5% m/m versus a mid-month reading that showed a 7.9% decline. The index of current conditions rose 1.6% m/m versus the mid-month read of a 1.3% drop.
Over the last ten years there has been a 64% correlation between the level of consumer sentiment and the y/y change in real PCE. The correlation over the last five years has been 82%.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">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">Consumer Sentiment</td>
<td>89.7</td>
<td>92.1</td>
<td>-5.6%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
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Personal income rose an expected 0.3% last month. The gain followed an upwardly revised 0.2% increase in April. The PCE price deflator fell 0.1% in May for the second consecutive monthly decline. Less food and energy, the price [...]

Personal Income & Spending Rose, Prices Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030626a.jpg" width="353">
Real GDP growth in 1Q03 was revised lower to 1.4% (AR) from the preliminary estimate of 1.9% growth. The downward revision was greater than Consensus expectations for 1.9% growth.
Revisions to most components were minor including a downward revision to inventory investment and an upward revision to imports. Spending on equipment and software was revised up.
Inflation as measured by the GDP chain price deflator was revised down slightly to 2.4% (AR). The chain price deflator for domestic final demand rose at a 3.5% rate versus a 1.3% gain last year. The acceleration primarily reflected higher energy prices and a strong 7.4% rate of gain in the residential investment price deflator.
Corporate profits w/adjustment for inventory valuation and depreciation grew at a revised 10.7% rate (2.4% y/y) versus the initial estimate of 4.0% growth. The tax liability on profits surged 30.7% and was revised up. Nevertheless, after tax operating profits grew at a 3.5% rate versus the initial estimate of a 3.3% decline.
Corporate profits of nonfinancial corporations w/IVA and CCA, a figure derived from the income side of NIPA, grew at a 10.6% rate (7.5% y/y) in 1Q03.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained &#39;96 $, % AR</a></th>
<th scope="col">1Q&#39;03 (Final)</th>
<th scope="col">1Q&#39;03 (Prelim.)</th>
<th scope="col">4Q&#39;02</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">GDP</td>
<td>1.4%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>3.8%</td>
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<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-0.5%</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>-1.2%</td>
<td>0.1%</td>
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<td class="firstcol">Final Sales</td>
<td>2.3%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>3.7%</td>
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<td class="firstcol">&nbsp; Trade Effect</td>
<td>0.8%</td>
<td>0.9%</td>
<td>-1.6%</td>
<td>-0.4%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>-0.6%</td>
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<td class="firstcol">Domestic Final Demand</td>
<td>1.4%</td>
<td>1.4%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>4.3%</td>
</tr>
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<td class="firstcol">Chained GDP Price Deflator</td>
<td>2.4%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>1.6%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
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Initial Jobless Insurance Claims down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030626b.jpg" width="353">
Initial claims for unemployment insurance fell 5.2% last week to 404,000. The w/w decline was much greater than Consensus expectations for claims of 418,000. Claims in the prior week were revised up.
Jobless claims are down 12.0% from the weekly peak in late April.
The four-week moving average of initial claims fell to 428,250 (+9.3% y/y).
Continuing claims for unemployment insurance rose 1.2% w/w. The prior week&#39;s level was revised down slightly.
During the last ten years there has been a 84% (inverse) correlation between the level of continuing claims for unemployment insurance and the y/y change in nonfarm payrolls.
The insured rate of unemployment rose to 3.0% from 2.9%.

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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">6/21/03</th>
<th scope="col">6/14/03</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">Initial Claims</td>
<td>404.0</td>
<td>426.0</td>
<td>4.1%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,741</td>
<td>3.2%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
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Help Wanted Advertising Still Depressed 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 26, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030626c.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising remained unchanged in May at the 42 year low.
During the last ten years there has been a 71% correlation between the level of help-wanted advertising and the monthly change in nonfarm payrolls. The correlation with the y/y change in employment has been 92%.
The proportion of labor markets with rising want-ad volume rose to a still low 37% after the collapse in April to 20%. The three month moving average of this indicator fell to 35%.
All of the figures mentioned above are seasonally adjusted.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month.
Visit the <a href="http://www.conference-board.org/economics/index.cfm">Conference Board</a> for more information.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;02</th>
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<td class="firstcol">National Help Wanted Index</td>
<td>36</td>
<td>36</td>
<td>44</td>
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Real GDP growth in 1Q03 was revised lower to 1.4% (AR) from the preliminary estimate of 1.9% growth. The downward revision was greater than Consensus expectations for 1.9% growth. Revisions to most components were minor including a [...]

1Q GDP Revised Down, Profits Stronger

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030625a.jpg" width="353">
Durable goods orders slipped 0.3% in May versus the Consensus expectation for a 1.0% rise. April figures were little revised.
Sharp declines in orders for transportation equipment, off 1.6%, and electrical equipment, down 2.2%, were offset by gains in orders for computers and electronic products. Excluding the transportation sector altogether, durable orders fell 0.4% (-3.3% y/y.
Nondefense capital goods orders fell 0.9% and have been virtually flat since early last year. Excluding aircraft and parts, nondefense capital goods orders fell 0.5% (-0.1% y/y).
During the last ten years there has been a 74% correlation between the y/y change in orders for durable goods and the change in industrial production of durable goods.
Shipments of durable goods fell 0.3% (-4.0% y/y) and it was the third monthly decline this year.
Durable inventories fell 0.2% (-1.4% y/y) for the fifth consecutive monthly decline.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">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">Durable Goods Orders</td>
<td>-0.3%</td>
<td>-2.4%</td>
<td>-2.7%</td>
<td>-0.1%</td>
<td>-11.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>-0.9%</td>
<td>0.0%</td>
<td>-1.5%</td>
<td>-5.3%</td>
<td>-16.5%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
Mortgage Applications Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030625b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell 8.7% last week. The decline pulled the index to the lowest level in five weeks.
Applications to refinance fell 10.5% w/w and are down 17.8% from the peak in late May.
Applications for home purchase fell 1.9% w/w and are down 10.7% from the late May peak. Nevertheless, applications so far in June are about even with the record May level.
During the last ten years there has been a 52% 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 ticked higher w/w with the effective rate at 5.43% versus 6.13% averaged in December. The effective rate on a 15-year mortgage also rose slightly w/w to 4.87% 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">6/20/03</th>
<th scope="col">6/13/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<tbody>
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<td class="firstcol">Total Market Index</td>
<td>1,554.5</td>
<td>1,701.7</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>411.2</td>
<td>419.1</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
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<td class="firstcol">&nbsp; Refinancing</td>
<td>8,204.6</td>
<td>9,162.7</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
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New Home Sales Surge 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030625d.jpg" width="353">
Sales of new single family homes in May jumped 12.5% m/m to 1.157M, a new record. The surge followed generally sideways movement during the prior nine months. Consensus expectations were for a 1.035M May sales rate.
Sales strength was concentrated in the West where sales rose 19.7% (20.9% y/y) and in the South where sales rose 15.9% (25.1% y/y).
Elsewhere in the country sales where mixed: down 9.0% (-1.4% y/y) in the Northeast and up 1.6% (3.4% y/y) in the Midwest.
The median price of a new home rose to $195,200 (7.8% y/y) and the prior month was revised up.
The new home sales data reflect current sales versus the existing home sale figures which reflect closings on past sales.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">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">New Single-Family</td>
<td>1,157</td>
<td>1,028</td>
<td>17.9%</td>
<td>977</td>
<td>907</td>
<td>880</td>
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Existing Home Sales Stronger Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030625c.jpg" width="353">
Sales of existing single family homes rose 1.2% last month to 5.920M. The gain pulled sales close to the record level set this past January. Consensus expectations were for 5.84M.
Home sales in May were mixed across the country&#39;s regions: up in the Northeast and up in the Midwest but down just slightly in the South and the West.
The median price of an existing home rose to $167,000 (+7.7% y/y).
The figures reflect closings of past home sales.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">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">Existing Single-Family</td>
<td>&nbsp;5,920</td>
<td>&nbsp;5,850</td>
<td>4.4%</td>
<td>5,598</td>
<td>5,282</td>
<td>5,158</td>
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Fed Funds Rate Cut a Quarter Point by FOMC 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030625e.jpg" width="353">
The Federal Reserve lowered the target rate for federal funds 25 basis points to 1.00%, the lowest level since 1958. The discount rate also was lowered by a quarter point to 2.00%.
The action was less aggressive than expected by most economists and it was not unanimous. San Francisco Bank President Parry preferred a 50 basis point reduction.
The press release which accompanied the Fed&#146;s action contained the following statement. &quot;The economy ... has yet to exhibit sustainable growth. With inflationary expectations subdued, the Committee judged that a slightly more expansive monetary policy would add further support for an economy which it expects to improve over time.&quot;
With regard to the risks to the economic outlook, the Fed stated that &quot;the upside and downside risks to the attainment of sustainable growth are roughly equal.&quot; The Fed statement added that &quot;the probability, though minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation from its already low level.&quot;
<a href="http://www.federalreserve.gov/BoardDocs/Press/monetary/2003/20030625/default.htm">Here</a> is the complete text of the Fed&#39;s latest press release.
A paper presented by Federal Reserve Board Governor Donald L. Kohn and Senior Economist Brian P. Sack titled &quot;Central Bank Talk: Does it Matter and Why?&quot; can be found <a href="http://www.federalreserve.gov/boarddocs/speeches/2003/20030620/default.htm">here</a>.
&quot;Why Predict Past FOMC Actions&quot; from the Federal Reserve Bank of St. Louis is found <a href="http://research.stlouisfed.org/publications/mt/20030601/cover.pdf">here</a>.

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Durable goods orders slipped 0.3% in May versus the Consensus expectation for a 1.0% rise. April figures were little revised. Sharp declines in orders for transportation equipment, off 1.6%, and electrical equipment, down 2.2%, were [...]

Durable Goods Orders Slip

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030624c.jpg" width="353">
Contrary to consensus estimates of improvement, consumer confidence in Italy continued to fall in June and is currently at its lowest point since November, 1996. The seasonally adjusted index was 104.9 (1980=100), 0.66% below May and 10.19% below June of 2002. The survey, conducted by the ISAE (Instituto de Studi e Analisi Economica), is the first of the monthly indicators of confidence issued by the countries of the Euro Zone.
Underlying data in the June survey reveal that only 17% of consumers expect improvement in the general economic situation and only 13% expect unemployment to fall over the next twelve months. Except for a small portion that are unsure, the others expect conditions to remain about the same or worsen. These conditions suggest that consumers may be restrained in their spending and dampen or even reduce overall economic growth.

<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">Italy</th>
<th scope="col">June2003</th>
<th scope="col">May2003</th>
<th scope="col">June2002</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>
<td class="firstcol">Consumer Confidence (1980=100, SA)</td>
<td>104.9</td>
<td>105.6</td>
<td>116.8</td>
<td>-0.66</td>
<td>-10.19</td>
<td>-55.56</td>
<td>2.71</td>
<td>2.04</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Italy: Expectations Over Next 12 Months</th>
<th scope="col">June2003</th>
<th scope="col">&nbsp;</th>
<th scope="col">June2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Economic Situation</td>
<td>% of Respondents</td>
<td>Unemployment</td>
<td>% of Respondents</td>
</tr>
<tr>
<td class="firstcol">Improving</td>
<td>17</td>
<td>Sharply Increasing</td>
<td>6</td>
</tr>
<tr class="odd">
<td class="firstcol">Stable</td>
<td>44</td>
<td>Slightly Increasing</td>
<td>31</td>
</tr>
<tr>
<td class="firstcol">Worsening</td>
<td>33</td>
<td>Stable</td>
<td>43</td>
</tr>
<tr class="odd">
<td class="firstcol">Unsure</td>
<td>6</td>
<td>Falling</td>
<td>13</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>100</td>
<td>Unsure</td>
<td>7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Total</td>
<td>100</td>
</tr>
</tbody>
</table>
</body>
</html>

Contrary to consensus estimates of improvement, consumer confidence in Italy continued to fall in June and is currently at its lowest point since November, 1996. The seasonally adjusted index was 104.9 (1980=100), 0.66% below May and [...]

Italian Consumer Confidence Continues to Slide

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030624b.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence was about flat in June. The index fell 0.1% m/m to 83.5. Consensus expectations were for a decline to 82.5.
Since the low of this past March, Confidence has risen 36.0%. That rise is versus a 12.4% gain in the University of Michigan&#39;s Consumer Sentiment during the same period.
The slip in confidence in June reflected a 3.6% decline in the present situation index, down for the second consecutive month. The index of expectations rose 1.5% for the third monthly gain this year.
Jobs were viewed as hard to get by 32.0% of survey respondents, down slightly from the record 32.9% in May. Expectations for employment opportunities in six months improved to the highest level in twelve months.
During the last five years there has been a 75% correlation between the level of Consumer Confidence and the y/y change in real consumer spending. 
The Conference Board&#39;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">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">Consumer Confidence</td>
<td>83.5</td>
<td>83.6</td>
<td>-21.4%</td>
<td>96.6</td>
<td>106.6</td>
<td>139.0</td>
</tr>
</tbody>
</table>
Chain Store Sales Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 24, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030624a.jpg" width="353">
Chain store sales added 0.6% last week to the 0.3% gain of the week prior according to the BTM-UBSW survey.
Sales so far in June are 0.1% above the May average.
During the last five years there has been a 59% 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 rose 0.4% in the second week of June and continued the improving trend begun in early May.
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%">
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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">6/21/03</th>
<th scope="col">6/14/03</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>419.4</td>
<td>417.0</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Conference Boards Index of Consumer Confidence was about flat in June. The index fell 0.1% m/m to 83.5. Consensus expectations were for a decline to 82.5. Since the low of this past March, Confidence has risen 36.0%. That rise is [...]

Consumer Confidence About Flat

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030623a.jpg" width="353">
Inflation, as measured by consumer prices, generally continues to be subdued in the Pacific Rim countries. Even Indonesia, which experienced consumer price increases of approximately 12% in 2001 and 2002, reported a 0.5% increase in May. Price increases have also declined significantly in the Philippines. In Malaysia, Singapore and Thailand consumer prices increases have been under 2% over the last three years.
Instead of inflation, deflation has been the worry in Hong Kong, China and Taiwan. The problem is most acute in Hong Kong. Consumer prices in Hong Kong declined 1.1% in May from April and were 2.5% below May of 2002. Prices have been declining since mid-1998. Consumer prices declined 0.12% in May in Taiwan and are only 0.3% above a year ago. Mainland China appears to have reversed a deflationary trend with consumer prices rising in each month of the current 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">Consumer Prices</th>
<th scope="col">May2003</th>
<th scope="col">Apr2003</th>
<th scope="col">May 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">Hong Kong (10/99-9/00=100)</td>
<td>92.6</td>
<td>93.6</td>
<td>95.0</td>
<td>-1.07</td>
<td>-2.53</td>
<td>-3.01</td>
<td>-1.59</td>
<td>-3.75</td>
</tr>
<tr>
<td class="firstcol">Singapore (11/97-10/98=100)</td>
<td>101.9</td>
<td>102.5</td>
<td>101.9</td>
<td>-0.59</td>
<td>0.00</td>
<td>-0.46</td>
<td>1.01</td>
<td>1.36</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan (2001=100)</td>
<td>100.0</td>
<td>100.1</td>
<td>99.7</td>
<td>-0.12</td>
<td>0.30</td>
<td>-0.20</td>
<td>0.00</td>
<td>1.26</td>
</tr>
<tr>
<td class="firstcol">Thailand (1998=100)</td>
<td>106.2</td>
<td>105.8</td>
<td>104.2</td>
<td>0.38</td>
<td>1.92</td>
<td>0.30</td>
<td>1.67</td>
<td>1.54</td>
</tr>
<tr class="odd">
<td class="firstcol">Malaysia (1994=100)</td>
<td>104.1</td>
<td>104.0</td>
<td>103.1</td>
<td>0.10</td>
<td>0.97</td>
<td>1.80</td>
<td>1.41</td>
<td>1.53</td>
</tr>
<tr>
<td class="firstcol">Philippines (1994=100)</td>
<td>171.1</td>
<td>170.7</td>
<td>166.5</td>
<td>0.23</td>
<td>2.76</td>
<td>3.12</td>
<td>6.12</td>
<td>4.29</td>
</tr>
<tr class="odd">
<td class="firstcol">Indonesia (1996=100)</td>
<td>277.1</td>
<td>277.0</td>
<td>259.2</td>
<td>0.50</td>
<td>6.92</td>
<td>11.88</td>
<td>11.51</td>
<td>3.71</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>May2003</td>
<td>Apr2003</td>
<td>Mar2003</td>
<td>Feb2003</td>
<td>Jan2003</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr class="odd">
<td class="firstcol">China (Percent Change)</td>
<td>0.7</td>
<td>1.0</td>
<td>0.9</td>
<td>0.2</td>
<td>0.4</td>
<td>-0.8</td>
<td>-0.7</td>
<td>0.4</td>
</tr>
</tbody>
</table>
</body>
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Inflation, as measured by consumer prices, generally continues to be subdued in the Pacific Rim countries. Even Indonesia, which experienced consumer price increases of approximately 12% in 2001 and 2002, reported a 0.5% increase in [...]

Inflation and Deflation in the Pacific Rim

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030620b.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions matched Consensus expectations for improvement to 4.0, up nearly nine points from May.
The m/m improvement was the most since November of last year and moved the index into positive territory for the first time since February.
Gains amongst the sub indexes were broad based, although the level of new orders, shipments, and delivery times each remained negative. The 15.3 rise in unfilled orders and the 14.5 point rise in inventories, both to positive readings, were the largest sub index increases. The employment index fell further into negative territory.
During the last twenty years there has been a 67% correlation between the level of the Philadelphia Fed Business Conditions Index and quarterly growth in real GDP. The correlation with quarterly growth in factory sector industrial production has been 79%.
The business conditions index reflects a separate survey question, not the components.
A separate survey of expected business conditions in six months rose to 52.8, the first reading above 50 since December.
The prices paid index fell to 5.8, the lowest level since March of last year.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Fed can be found <a href="http://www.phil.frb.org/media/newsreleases/061903.html">here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</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">General Activity Index</td>
<td>4.0</td>
<td>-4.8</td>
<td>20.4</td>
<td>7.7</td>
<td>-17.2</td>
<td>8.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>5.8</td>
<td>8.9</td>
<td>19.2</td>
<td>12.2</td>
<td>-0.9</td>
<td>27.2</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deepened   
by <a href="/comment/Moeller.html">Tom Moeller</a> June 20, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030620a.jpg" width="353">
The US Government budget deficit deepened in May versus last year as growth in revenues continued to lag outlays.
Consensus expectations had been for a May deficit of $90.0B.
The Federal government&#39;s deficit totaled $292.1B through the first eight months of this fiscal year, double last year&#39;s deficit.
Net receipts for the first eight months of FY03 fell 4.8% versus last year. Individual tax payments fell 7.9% and corporate income taxes were down 26.7%. Social insurance contributions rose 2.0% and excise taxes rose 0.2%. 
Federal net expenditures rose 6.4% versus last fiscal year&#39;s first eight months led by higher defense spending which rose 14.7%. Spending on health programs also was strong, up 10.2%, and spending on education rose 16.6%. Spending on income security rose 8.4% and Medicare outlays rose 8.2%. Social Security outlays rose just 4.1% and interest expense fell 6.1% y/y.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;02</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
<th scope="col">FY2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-90.5B</td>
<td>$51.0B</td>
<td>$-80.6B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
<td>$236.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$103.4B</td>
<td>$231.2B</td>
<td>0.9%</td>
<td>-6.9%</td>
<td>-1.7%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$193.9B</td>
<td>$180.1B</td>
<td>5.9%</td>
<td>7.9%</td>
<td>4.2%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Philadelphia Feds index of general business conditions matched Consensus expectations for improvement to 4.0, up nearly nine points from May. The m/m improvement was the most since November of last year and moved the index into [...]

Philadelphia Fed Index Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030619a.jpg" width="353">
Initial claims for unemployment insurance fell 3.0% last week to 421,000. The decline was from an upwardly revised level the prior week. Claims were slightly higher than Consensus expectations for 425,000. Weekly jobless claims are down 8.3% from the peak in late April.
The latest figure is for the June survey period for nonfarm payrolls and it is down slightly from the May period.
The four-week moving average of initial claims fell slightly to 432,000 (+8.8% y/y).
During the last ten years there has been a 70% (inverse) correlation between the level of initial jobless insurance claims and the m/m change in nonfarm payrolls.
Continuing claims for unemployment insurance fell 1.6% w/w but the prior week&#39;s level was revised down slightly.
The insured rate of unemployment fell to 2.9% from 3.0%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">6/14/03</th>
<th scope="col">6/07/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>421.0</td>
<td>434.0</td>
<td>5.5%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,721</td>
<td>0.8%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
U.S. Current Account Deficit Deeper in 1Q 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030619b.jpg" width="353">
The US current account deficit deepened somewhat less than expected last quarter, but set a new record. The deficit in 2002 was revised shallower. 
The deficit in goods trade deteriorated to $544.0B (AR) in 1Q03 versus a $482.9B deficit for all of last year and $427.2B in 2001. Exports of merchandise rose 1.4% following a 5.1% decline last year and a 6.9% drop in 2001. Goods imports rose 2.0% vs. a 1.6% rise last year.
The surplus on services fell to $57.7B (AR) last quarter but that was down from an upwardly revised surplus of $64.8B last year. The peak services surplus was $91.1B in 1997.
Analysis from the Federal Reserve Bank of Dallas titled &quot;The Fruits of Free Trade&quot; can be found here <a href="http://www.dallasfed.org/fed/annual/2002/ar02b.pdf">http://www.dallasfed.org/fed/annual/2002/ar02b.pdf</a>

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<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">1Q &#39;03</th>
<th scope="col">4Q &#39;02</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">Current Account Deficit</td>
<td>$136.1B</td>
<td>$128.6B</td>
<td>$106.7B</td>
<td>$480.9B</td>
<td>$393.7B</td>
<td>$411.5B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % of GDP</td>
<td>5.1%</td>
<td>4.9%</td>
<td>4.1%</td>
<td>4.6%</td>
<td>3.9%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$119.0B</td>
<td>$113.2B</td>
<td>$90.8B</td>
<td>$422.0B</td>
<td>$347.1B</td>
<td>$355.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>5.0%</td>
<td>-4.3%</td>
<td>-9.3%</td>
<td>12.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>1.6%</td>
<td>0.4%</td>
<td>11.1%</td>
<td>1.2%</td>
<td>-7.9%</td>
<td>18.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$17.1B</td>
<td>$15.4B</td>
<td>$15.9B</td>
<td>$58.9B</td>
<td>$46.6B</td>
<td>$55.7B</td>
</tr>
</tbody>
</table>
Leading Indicators Surge 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030619c.jpg" width="353">
The Conference Board reported that the Composite Index of Leading Economic Indicators rose 1.0% last month, much more than expected. Prior months&#39; figures were unrevised.
Gains amongst the leaders&#39; component series surged to 80%, the broadest breadth of one month gain since December 2001. The percentage of leading components rising over a six month period rose to 40%.
A higher money supply and higher consumer expectations had the largest positive influences on theMay leading index. Higher stock prices and lower claims for jobless insurance also made significant contributions. A narrower yield curve made a negative contribution.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose slightly following two months unchanged.
The ratio of coincident-to-lagging indicators rose 0.2% to a new high. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<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/BCI/BCI.HTM">Business Cycle Indicators</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 class="odd">
<td class="firstcol">Leading</td>
<td>1.0%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.1%</td>
<td>-0.9%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-2.0%</td>
<td>-4.4%</td>
<td>-1.3%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance fell 3.0% last week to 421,000. The decline was from an upwardly revised level the prior week. Claims were slightly higher than Consensus expectations for 425,000. Weekly jobless claims are [...]

Initial Jobless Insurance Claims Slipped

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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Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

251106Z1.jpg

**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

251106Z2.jpg

**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

251106Z3.jpg

**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

251106Z4.jpg

**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

251106Z5.jpg

**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

251106Z6.jpg

Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

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Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

251106C8.jpg

251106D8.jpg

- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

U.S. Initial Unemployment Insurance Claims Decline in Latest Week

251105N12.jpg

251105O12.jpg

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.

251105P12.jpg

251105Q12.jpg

- 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 Rebounds in October; Price Index Advances

251105J5.jpg

251105K5.jpg

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.

251105L5.jpg

251105M5.jpg

- 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

251105A.jpg

251105B.jpg

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.

Economy in Brief: 2003

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