Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040618b.jpg">
The US current account deficit deepened to a record$144.9B in 1Q and totaled 5.1% of GDP, near the record set in 1Q03. Consensus expectations had been for a 1Q deficit of $142.0B.
Exports of goods, services &amp; income in 1Q rose 2.5% (14.5% y/y) led by a 3.8% rise in merchandise exports (11.8% y/y). Imports rose 5.2% led by a 5.6% gain in merchandise imports.
The surplus on services fell moderately to $13.8B. The peak services surplus was $89.9B in 1997.
From the capital account, US assets abroad surged $289.3B. Direct investment abroad rose $57.3B. Foreign assets in the US surged $447.6B. Foreign direct investment rose $18.0B.

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<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;04</th>
<th scope="col">4Q &#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Current Account Deficit</td>
<td>$144.9B</td>
<td>$127.0B</td>
<td>$138.2B</td>
<td>$530.7B</td>
<td>$473.9B</td>
<td>$385.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$124.3B</td>
<td>$109.3B</td>
<td>$121.4B</td>
<td>$463.2B</td>
<td>$414.6B</td>
<td>$339.1B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.5%</td>
<td>6.9%</td>
<td>14.5%</td>
<td>5.8%</td>
<td>-3.9%</td>
<td>-9.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>5.2%</td>
<td>3.9%</td>
<td>11.1%</td>
<td>7.3%</td>
<td>1.5%</td>
<td>-8.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$20.6B</td>
<td>$17.6B</td>
<td>$16.8B</td>
<td>$67.4</td>
<td>$59.4B</td>
<td>$46.6B</td>
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The US current account deficit deepened to a record$144.9B in 1Q and totaled 5.1% of GDP, near the record set in 1Q03. Consensus expectations had been for a 1Q deficit of $142.0B. Exports of goods, services & income in 1Q rose 2.5% [...]

U.S. Current Account Deficit A New Record

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030618a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.0% last week and recovered a piece of the 9.3% drop the prior week.
Applications for home purchase were about unchanged w/w and in June are up slightly from May at a record 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.
Applications to refinance rose 1.3% w/w and in June are up 12.4% from the May average.
Interest rates on a conventional 30-Year mortgage again fell w/w to 5.31% versus 6.13% averaged in December. The effective rate on a 15-year mortgage fell to 4.76% 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">6/13/03</th>
<th scope="col">6/06/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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<td class="firstcol">Total Market Index</td>
<td>1,701.7</td>
<td>1,684.6</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>419.1</td>
<td>418.9</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>9,162.7</td>
<td>9,046.9</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
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The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.0% last week and recovered a piece of the 9.3% drop the prior week. Applications for home purchase were about unchanged w/w and in June are up [...]

Mortgage Applications Up

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617f.jpg" width="353">
Seasonally adjusted Gross Domestic Product in Thailand rose 1.5% in the first quarter of 2003 from the fourth quarter of 2002, or slightly above consensus expectations of 1.3%.
The outbreak of SARS (severe acute respiratory syndrome) in late March had little effect on the first quarter data. Even though Thailand has been less directly affected than China, Hong Kong and Taiwan, it will likely suffer, in the second quarter, from reduced tourism. Nevertheless, the government has raised its estimate of growth for the year as a whole to 5.5%.from 5.0%.
Exports continue to be strong and the government is also counting on increased domestic demand as a result of the measures it has undertaken. Taxes have been reduced and subsidies to rice farmers have been increased. In addition low interest rates are having a positive impact on residential construction and the purchase of durable goods.

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<th scope="col" class="firstcol">Thailand&#39;s GDP (Mil.1998.Baht)</th>
<th scope="col">Q1 2003</th>
<th scope="col">Q4 2002</th>
<th scope="col">Q3&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>
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<td class="firstcol">Private Consumption</td>
<td>458,117</td>
<td>449,918</td>
<td>430,082</td>
<td>1.8</td>
<td>6.5</td>
<td>4.7</td>
<td>3.7</td>
<td>4.9</td>
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<td class="firstcol">Public Consumption</td>
<td>72,111</td>
<td>68,453</td>
<td>76,940</td>
<td>5.3</td>
<td>-6.3</td>
<td>0.5</td>
<td>2.9</td>
<td>2.6</td>
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<td class="firstcol">Fixed Capital Formation</td>
<td>167,081</td>
<td>161,299</td>
<td>157,123</td>
<td>3.6</td>
<td>6.3</td>
<td>6.3</td>
<td>0.9</td>
<td>5.3</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>547,877</td>
<td>529,354</td>
<td>488,716</td>
<td>3.5</td>
<td>12.1</td>
<td>10.9</td>
<td>-4.1</td>
<td>17.2</td>
</tr>
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<td class="firstcol">Imports</td>
<td>-414,909</td>
<td>-402,592</td>
<td>-370,622</td>
<td>3.1</td>
<td>11.9</td>
<td>-11.3</td>
<td>-5.5</td>
<td>27.3</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>839,791</td>
<td>827,143</td>
<td>786,548</td>
<td>1.5</td>
<td>6.8</td>
<td>5.3</td>
<td>1.9</td>
<td>4.7</td>
</tr>
</tbody>
</table>
Evidence of the Impact of SARS in China 
by <a href="/comment/Curley.html">Louise Curley</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617g.jpg" width="353">
The impact of SARS (Sever Acute Respiratory Syndrome) on China&#39;s economy is beginning to show up in recently released data. Retail sales year over year growth fell to 4.3% in May the lowest rate since August,1990. Government measures to control the disease, such as the closing of movie theaters and internet cafes and the prohibition of mass gatherings may well have contributed more to the decline in sales than the direct effects of the disease itself. With the peaking of the disease and the relaxation of restrictions, the worst of the impact on retail sales may have been felt.
The effect on production as measured by the growth rate of industry value added in 1990 prices has been less severe. The rate of growth has been declining since the February, 2003 peak of 17.5% and is now 15.9% .This is still above the rate in January and the average for all of 2002.

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<th scope="col" class="firstcol">Year/Year % Change</th>
<th scope="col">May 2003</th>
<th scope="col">Apr 2003</th>
<th scope="col">Mar 2003</th>
<th scope="col">Feb 2003</th>
<th scope="col">Jan 2003</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">Retail Sales</td>
<td>4.3</td>
<td>7.9</td>
<td>9.3</td>
<td>8.5</td>
<td>10.0</td>
<td>9.8</td>
<td>10.1</td>
<td>11.0</td>
</tr>
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<td class="firstcol">Gross Value Added</td>
<td>15.9</td>
<td>16.4</td>
<td>17.2</td>
<td>17.5</td>
<td>14.8</td>
<td>12.4</td>
<td>9.9</td>
<td>11.0</td>
</tr>
</tbody>
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Seasonally adjusted Gross Domestic Product in Thailand rose 1.5% in the first quarter of 2003 from the fourth quarter of 2002, or slightly above consensus expectations of 1.3%. The outbreak of SARS (severe acute respiratory syndrome) [...]

Thailand’s First Quarter GDP Growth Above Consensus

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617a.jpg" width="353">
The Consumer Price Index (CPI-U) was unchanged last month following a 0.3% drop in April. Consensus expectations had been for a 0.1% decline. Higher prices for most services offset continued price declines for energy and goods.
The CPI less food and energy rose 0.3% last month versus Consensus expectations for a 0.1% rise. It was the strongest m/m gain in core prices since August 2002.
Core services prices led the strength in pricing power last month following three months of little change. So far this year these prices are up 2.6% (AR). Shelter prices rose 0.6% in May (2.3% YTD AR) following three months of no change. Medical care services prices rose 0.5% (2.7% YTD AR).Education and communication prices fell for the third consecutive month. Public transportation prices jumped 2.0% higher (4.5% YTD AR).
Offsetting the strength in services was continued deflation in energy prices which fell 3.1% in May for the second sharp monthly drop. Gasoline prices fell 6.8% but so far in June are flat to up slightly versus May. Fuel oil prices fell 5.6% (28.2% YTD AR). Piped gas &amp; electricity prices rose 0.5% (21.2% YTD AR).
Goods prices continued to deflate. Apparel prices fell 0.3%, down 5.6% YTD AR. New and used vehicle prices fell 0.2%, down 2.2% YTD AR. Prices for household furnishings and operation fell 0.5% (-2.1% YTD AR).
The chained CPI which adjusts for shifts in consumer buying behavior fell 0.2% for the second month. It is similar to the PCE price deflator. The core price measure was unchanged for the second month (1.8% YTD AR).
Analysis by the Federal Reserve Bank of New York titled &quot;Social Security and the Consumer Price Index for the Elderly&quot; can be found <a href="http://www.newyorkfed.org/rmaghome/curr_iss/ci9-5.html">here.</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a></th>
<th scope="col">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>
<tbody>
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<td class="firstcol">Total&nbsp;</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-1.9%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.5%</td>
<td>0.1%</td>
<td>3.0%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-3.1%</td>
<td>-4.6%</td>
<td>9.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>3.1%</td>
<td>2.3%</td>
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<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.0%</td>
<td>1.0%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
 Housing Starts Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617b.jpg" width="353">
Housing starts rose about as expected last month and recovered just about all of the prior month&#39;s decline. Total starts of 1.73 mil. units were up 6.1% from April which was little revised. Consensus expectations had been for starts of 1.70 mil.
Single family starts rose 1.5% m/m following a 2.5% April decline. So far this year single family starts are up 1.9% from the 2002 average. 
Multi-family starts showed strength last month and rose 29.2%, reversing all of the prior month&#39;s drop. Multi-family starts this year are down 6.3% versus 2002.
Building permits added 3.7% in May to the 2.1% gain in April. Single family permits rose just a bit but multi family permits were strong.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">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>
<tbody>
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<td class="firstcol">Total</td>
<td>1,732</td>
<td>1,632</td>
<td>-1.1%</td>
<td>1,711</td>
<td>1,601</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,378</td>
<td>1,358</td>
<td>-0.8%</td>
<td>1,364</td>
<td>1,272</td>
<td>1,232</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>354</td>
<td>274</td>
<td>-2.5%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,788</td>
<td>1,724</td>
<td>3.9%</td>
<td>1,750</td>
<td>1,637</td>
<td>1,598</td>
</tr>
</tbody>
</table>
Industrial Production Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617c.jpg" width="353">
Industrial production rose a slight 0.1% in May following two months of 0.6% decline (revised down). Consensus expectations for no change.
Output in the manufacturing sector rose 0.2% (-1.0% y/y) for the first monthly gain since January.
Output in selected high-technology industries rose 0.8% (8.5% y/y) for the fifth consecutive monthly gain. Excluding high-tech factory output rose 0.2% (-1.7% y/y) in May. Motor vehicle output fell sharply for the fourth straight month but electrical equipment and nondurable factory output rose.
Total capacity utilization was unchanged at 74.3%, the lowest level since July 1983. Factory sector utilization rose slightly to 72.6%. Growth in capacity slowed to 1.0% y/y versus 1.5% growth last year and 3.2% growth in 2001.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</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>
<tbody>
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<td class="firstcol">Industrial Production</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-0.7%</td>
<td>-0.8%</td>
<td>-3.5%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>74.3%</td>
<td>74.3%</td>
<td>75.7%(5/02)</td>
<td>75.6%</td>
<td>77.3%</td>
<td>82.7%</td>
</tr>
</tbody>
</table>
Chain Store Sales Better 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617d.jpg" width="353">
Chain store sales rose 0.3% last week and recovered all of the prior week&#39;s decline according to the BTM-UBSW survey.
Sales so far in June sales are 0.1% below 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 was unchanged following strong gains through most of 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.

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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">6/14/03</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">Total Weekly Retail Chain Store Sales</td>
<td>417.0</td>
<td>415.8</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
U.S. Manpower Hiring Index Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617e.jpg" width="353">
The Manpower employment survey for 3Q indicated that across industries, a seasonally adjusted net 6% of 16,000 employers expect to increase hiring activity.
The latest reading is down from 11% in 2Q and was the lowest since 2Q 1991.
Since 1980 there has been a 74% correlation between the Manpower index and the y/y change in nonfarm payrolls.
The latest press release from Manpower Inc. covering employment prospects in 18 countries can be viewed <a href="http://www.manpower.com/mpcom/files?name=InternationalRLS_3Q03.doc">here</a>.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SC/@SC.HTM">Manpower Employment Survey</a></th>
<th scope="col">3Q03</th>
<th scope="col">2Q03</th>
<th scope="col">3Q02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Industries - Net Higher (SA)</td>
<td>6</td>
<td>11</td>
<td>14</td>
<td>11</td>
<td>17</td>
<td>24</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) was unchanged last month following a 0.3% drop in April. Consensus expectations had been for a 0.1% decline. Higher prices for most services offset continued price declines for energy and goods. The [...]

Consumer Price Index Flat, Core Boosted by Higher Services Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030616a.jpg" width="353">
The Empire State Manufacturing Survey index of general business conditions rose to the highest level in the survey&#39;s brief two year history. The rise to 26.8 in June added 16 points to the even sharper improvement in May.
Consensus expectations for a reading of 10.1. The data were reported by the Federal Reserve Bank of New York.
Diffusion indexes for most subgroups improved with orders, shipments and unfilled orders each moving into positive territory and thus suggesting positive growth. Conversely, the index of employment fell back into negative territory.
The index of prices paid fell sharply for the second month to -2.06, the first negative reading since February 2002.
The survey includes measures of business expectations six months ahead. This diffusion index for general business conditions added to the sharp gains of the prior two months. The rise to 58.4 was to the highest level since June of last year. Expectations for capital expenditures fell and gave back much of the strong May gain.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For the latest Empire State Manufacturing Survey report, click <a href="http://www.newyorkfed.org/rmaghome/regional/mfg_survey/index.html">here</a>.

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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">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">General business conditions (diffusion index)</td>
<td>26.8</td>
<td>10.6</td>
<td>10.31</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
Housing Market Index Rose Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030616b.jpg" width="353">
The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index rose five points in June to 62. The gain added to a five point rise in May and pulled the index back into the lofty range prevalent before the War with Iraq.
During the last fifteen years there has been a 69% correlation between the y/y change in the NAHB index and the change in new home sales.
The index of current market conditions for home sales rose as the percentage of builders indicating &quot;good&quot; conditions rose to 47% from 44%.
The index which measures expected home sales in six months rose to 70 versus an average of 69 during all of last year.
Traffic of prospective buyers again rose sharply to the average of last year.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
For a description of the housing market index from the National Association of Home Builders, visit the <a href="http://www.nahb.org/generic.aspx?sectionID=134&amp;genericContentID=532">NAHB website</a>.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">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 Housing Market Index</td>
<td>62</td>
<td>57</td>
<td>60</td>
<td>61</td>
<td>56</td>
<td>62</td>
</tr>
</tbody>
</table>
</body>
</html>

The Empire State Manufacturing Survey index of general business conditions rose to the highest level in the survey's brief two year history. The rise to 26.8 in June added 16 points to the even sharper improvement in May. Consensus [...]

Empire State Factory Survey Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030613c.jpg" width="353">
Finished producer prices fell 0.3% in May following the record 1.9% April drop. Consensus expectations were for a 0.2% decline.
Finished energy prices fell 2.6% and accounted for virtually all of the decline last month. Gasoline prices fell 6.0% (9.5% y/y). Fuel oil prices fell 11.4% (8.2% y/y). Residential gas prices rose 1.4% (31.5% y/y) following a 4.0% April drop. These energy product price series are NSA.
Excluding food and energy prices rose an expected 0.1%.
Core finished consumer goods prices rose 0.1% (-0.3% y/y) following the 1.3% April decline which largely reflected lower tobacco prices. Passenger car prices also fell 0.3% (-0.5% y/y). Prices for carpets, appliances and home electronic equipment fell but furniture prices rose slightly. Capital goods prices were unchanged (0.2% y/y) following the 0.5% April decline.
Intermediate goods prices dropped for the second month, down 0.8%. Energy prices fell 4.4% as natural gas prices to electric utilities fell 8.0% (39.6% y/y) following a 40.3% April drop. Commercial and industrial natural gas prices also fell, both for the second month. 
Crude goods prices rose 1.7% recovering just some of the record 16.3% decline in April. Higher food and energy prices led the partial recovery even though crude petroleum prices fell. Crude natural gas prices rose 6.6% (71.6% y/y). Core crude prices again tumbled led down by lower metals prices. Iron &amp; steel scrap prices fell 4.5%.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</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">Finished Goods</td>
<td>-0.3%</td>
<td>-1.9%</td>
<td>2.5%</td>
<td>-1.3%</td>
<td>2.0%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-0.8%</td>
<td>-2.2%</td>
<td>4.2%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>2.3%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>1.7%</td>
<td>-16.3%</td>
<td>19.1%</td>
<td>-10.6%</td>
<td>0.3%</td>
<td>22.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.9%</td>
<td>-1.3%</td>
<td>7.2%</td>
<td>3.8%</td>
<td>-10.0%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
U.S. Trade Deficit Deep and As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030613b.jpg" width="353">
The U.S. foreign trade deficit improved just slightly in April to $42.0B versus $42.9B in March. The April deficit was the third deepest on record. Consensus expectations for a deficit of $42.0B. March&#39;s deficit was little revised and revisions to prior years were small.
For the first four months of this year, the trade deficit averaged a $490.9B annual rate.
Imports fell 2.1% in April as the value of petroleum product imports fell 10.4%. The daily quantity of crude petroleum imports rose 8.1% but the average price fell 14.0% to $26.02.
Imports of nonauto consumer goods fell but still are up 11.0% y/y. Auto imports fell 2.3% (0.2% y/y). Capital goods imports rose 3.8% (1.6% y/y).
Exports fell a sharp 2.2% and March was revised to a slight decline.
Lower exports of nonauto consumer goods led the April decline, down 2.1% (0.8% y/y). Capital goods exports also sagged 2.6% (-4.7% y/y) for the second consecutive steep decline.
A report from the Federal Reserve Bank of St. Louis titled &quot;World Trade: Past, Present, and Future&quot; can be found <a href="http://research.stlouisfed.org/publications/iet/20030501/cover.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">April</th>
<th scope="col">Mar</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">Trade Deficit</td>
<td>$42.0B</td>
<td>$42.9B</td>
<td>$34.2B(4/02)</td>
<td>$418.0B</td>
<td>$357.8B</td>
<td>$375.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-2.2%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-3.3%</td>
<td>-5.8%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.1%</td>
<td>3.5%</td>
<td>7.1%</td>
<td>2.0%</td>
<td>-5.5%</td>
<td>18.5%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Sagged Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030613a.jpg" width="353">
The mid-June reading of Consumer Sentiment from the University of Michigan fell 5.3% versus May to 87.2. Consensus expectations were for a reading of 93.5.
The index of consumer expectations fell 7.9% (-4.2% y/y) following sharp gains in the prior two months. The index of current conditions, down 1.3% m/m and off 7.5% y/y, fell for the fourth time this year.
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">Mid-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 Sentiment</td>
<td>87.2</td>
<td>92.1</td>
<td>-5.6%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices fell 0.3% in May following the record 1.9% April drop. Consensus expectations were for a 0.2% decline. Finished energy prices fell 2.6% and accounted for virtually all of the decline last month. Gasoline [...]

Producer Prices Fell Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030612d.jpg" width="353">
Retail sales rose an expected 0.1% in May following a 0.3% April decline. The April decline was revised deeper than the initially reported 0.1% drop due to a lowered number for motor vehicle sales.
Sales excluding motor vehicles and parts dealers rose 0.1%, slightly less than expectations for a 0.3% gain. The April decline of 0.9% was unrevised.
Sales at gasoline service stations fell 4.3%, down sharply for the second consecutive month. Retail gasoline prices fell 5.8% last month and are down another 1.0% so far in June. Excluding gasoline, nonauto retail sales rose 0.6% (+3.4% y/y) following an unrevised 0.4% April decline. So far in 2Q these sales are 2.1% (AR) higher than 1Q.
Sales gains were widespread last month. Furniture, home furnishing and electronics store sales surged 2.0% (3.8% y/y) following a 0.7% April gain, revised from a slight decline. Apparel and accessory store sales jumped 1.0% (2.1% y/y) following a 1.8% April decline that was revised shallower.
Sales at general merchandise stores rose 0.7% (3.6% y/y) following a little revised 0.7% April decline.
Motor vehicle dealers&#39; sales fell 0.2% following sharp gains in the prior two months. Unit sales of light vehicles fell 2.3% last month to 16.12 mil. (AR).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">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>
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<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.1%</td>
<td>-0.3%</td>
<td>5.1%</td>
<td>3.2%</td>
<td>2.9%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>3.5%</td>
<td>3.7%</td>
<td>2.9%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Import Prices Weak 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 12, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030612c.jpg" width="353">
Prices for imported commodities fell 0.3% last month versus Consensus expectations for a 0.2% gain. The April decline in prices was revised deeper to 3.0%.
Petroleum import prices fell 1.1% last month for the third consecutive monthly decline. So far in June the price of Brent Crude Oil has been around $28.00 versus $25.62/bbl averaged in May.
Nonpetroleum import prices fell 0.2%. Price weakness was across the board for the second month. Food prices fell 1.0% (4.1% y/y) and industrial supplies and materials fell 0.7% (+7.2% y/y).
Prices of imported capital goods fell 0.4% (-1.7% y/y). Nonauto consumer goods prices were unchanged (-0.3% y/y) and have been flat since last year. Motor vehicle prices rose 0.1% (0.7% y/y) following two months of unchanged.
Export prices rose 0.1% (1.7% y/y) on the strength of a 3.1% (11.6% y/y) jump in food prices. Most other export prices were either flat or lower.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">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">Import - All Commodities</td>
<td>-0.3%</td>
<td>-3.0%</td>
<td>1.5%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>6.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-1.1%</td>
<td>-18.0%</td>
<td>8.8%</td>
<td>3.0%</td>
<td>-17.2%</td>
<td>66.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>-0.2%</td>
<td>-1.0%</td>
<td>0.7%</td>
<td>-2.4%</td>
<td>-1.5%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>1.7%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Remained High 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 12, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030612a.jpg" width="353">
Initial claims for unemployment insurance fell 3.8% last week but the decline was from an upwardly revised level the prior week. Claims were higher than Consensus expectations for 425,000.
The four-week moving average of initial claims rose to 433,750 (+8.0% y/y).
During the last ten years there has been a 66% (inverse) correlation between the level of initial jobless insurance claims and the m/m change in nonfarm payrolls.
Continuing claims for unemployment insurance jumped 3.3% w/w but the prior week&#39;s level was revised down slightly.
The insured rate of unemployment rose to 3.0% from 2.9%.

<table border="0" cellspacing="0" width="100%">
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<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">6/07/03</th>
<th scope="col">5/31/03</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>430.0</td>
<td>447.0</td>
<td>10.0%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,800</td>
<td>3.4%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Business Inventories Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 12, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030612b.jpg" width="353">
Total business inventories rose a slight 0.1% in April, less than Consensus expectations for a 0.2% gain. March figures were revised down slightly across the board.
Retail inventories rose 0.4%. Inventories of motor vehicles and parts again surged and are up 20.7% y/y.
Nonauto retail inventories fell for the first month since last October. Lower inventories of building materials, clothing and food led the decline. Inventories at general merchandise stores jumped 1.0% (5.4% y/y) following a 1.4% March gain. Inventories of furniture, home furnishings and electronics rose 0.2% (4.3% y/y), the first monthly gain since December.
Overall business sales dropped 1.5% (1.9% y/y) reflecting steep declines across the board.
The inventory-to-sales ratio rose to 1.40 from 1.38 in March and from 1.37 last April. 

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">April</th>
<th scope="col">Mar</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.1%</td>
<td>0.3%</td>
<td>4.2%</td>
<td>2.1%</td>
<td>-5.4%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.4%</td>
<td>0.7%</td>
<td>9.0%</td>
<td>7.6%</td>
<td>-2.9%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>-0.0%</td>
<td>0.4%</td>
<td>3.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>2.8%</td>
<td>0.4%</td>
<td>-4.9%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>0.6%</td>
<td>-1.9%</td>
<td>-8.0%</td>
<td>4.5%</td>
</tr>
</tbody>
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Retail sales rose an expected 0.1% in May following a 0.3% April decline. The April decline was revised deeper than the initially reported 0.1% drop due to a lowered number for motor vehicle sales. Sales excluding motor vehicles and [...]

Retail Sales Up, Less Autos & Gasoline Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030611a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell 9.3% last week. The most recent level was the second highest on record and followed a 13.6% gain the prior week.
During all of May mortgage applications rose 37.6% m/m to nearly triple the prior year&#39;s level.
Applications to refinance fell 9.3% w/w following a 47.9% gain during all of May to a new record.
Applications for home purchase fell 9.0% w/w to the second highest level on record.
Interest rates on a conventional 30-Year mortgage fell w/w to 5.37% versus 6.13% averaged in December. The effective rate on a 15-year mortgage fell to 4.86% 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">6/06/03</th>
<th scope="col">5/30/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>1,684.6</td>
<td>1,856.7</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>418.9</td>
<td>460.5</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>9,046.9</td>
<td>9,977.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
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The index of mortgage applications compiled by the Mortgage Bankers Association fell 9.3% last week. The most recent level was the second highest on record and followed a 13.6% gain the prior week. During all of May mortgage [...]

Mortgage Applications Fell

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.

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**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.

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- 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

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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 Rebounds 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.

Economy in Brief: 2003

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