Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040224c.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence for February slumped 9.4% versus January to 87.3. Confidence in January was revised down.
The drop in Confidence was much greater than Consensus expectations for a slight decline to 93.0. It roughly matched the 10.3% decline in the preliminary February reading of Consumer Sentiment from the University of Michigan.
During the last ten years there has been a 67% correlation between the level of consumer confidence and the y/y % change in real PCE.
The reading of the present situation fell 7.9% to 73.1 (+15.1% y/y). The index of consumer expectations fell 10.2% m/m to 96.8 (47.3% y/y).
Jobs were viewed as hard to get by 32.1% of respondents. That was versus 31.9% in 2003 and 24.3% in 2002. The low for this series was in 2000 when 11.2% of respondents viewed jobs as hard to get.
Expectations for business conditions in six months fell sharply with only 21.8% expecting conditions to improve, the lowest since September.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

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<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">Feb</th>
<th scope="col">Jan</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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</thead>
<tbody>
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<td class="firstcol">Consumer Confidence</td>
<td>87.3</td>
<td>96.8</td>
<td>34.7%</td>
<td>79.6</td>
<td>96.6</td>
<td>106.6</td>
</tr>
</tbody>
</table>
Chain Store Sales Held the High Ground 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040224a.jpg" width="353">
Chain store sales slipped 0.2% last week following jumps during the prior two weeks of 1.4% and 1.8%, according to the ICSC-UBS survey.
Sales so far during February are up 1.9% versus the average January level.
During the last ten years there has been a 59% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of 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"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">02/21/04</th>
<th scope="col">02/14/04</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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</thead>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>437.9</td>
<td>438.9</td>
<td>8.1%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
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The Conference Boards Index of Consumer Confidence for February slumped 9.4% versus January to 87.3. Confidence in January was revised down. The drop in Confidence was much greater than Consensus expectations for a slight decline to [...]

Consumer Confidence Down Sharply

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040223b.jpg" width="353">
On a seasonally adjusted basis, Japanese exports rose 0.91% in January from December. Imports were up 1.81% at the same time. As a result, the surplus declined from 1.1 trillion yen in December to l.0 trillion in January. The December surplus was the highest since March,1999.
The pattern of Japanese export trade has been changing. Since details regarding the direction of trade are available only on a non-seasonally adjusted basis, year over year changes are more meaningful than month over month changes. The year over year changes in January continue to show the same trends in trade flows that became apparent in 2003. For the year 2003, as a whole, exports to Asia, Western Europe, Eastern Europe and Oceania increased, in some cases dramatically, while exports to North and South America declined.

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<th scope="col" class="firstcol">Japanese Trade&nbsp; (Billion Yen)</th>
<th scope="col">Jan 04</th>
<th scope="col">Dec 03</th>
<th scope="col">Jan 03</th>
<th scope="col">M/M&nbsp; %</th>
<th scope="col"> Y/Y&nbsp; %</th>
<th scope="col">2003 %</th>
<th scope="col">2002 %</th>
<th scope="col">2001 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports SA&nbsp;</td>
<td>4888.0</td>
<td>4844.1</td>
<td>4367.5</td>
<td>0.91</td>
<td>11.92</td>
<td>4.82</td>
<td>6.23</td>
<td>-4.61</td>
</tr>
<tr>
<td class="firstcol">Imports SA&nbsp;</td>
<td>3789.5</td>
<td>3721.9</td>
<td>3650.6</td>
<td>1.81</td>
<td>3.63</td>
<td>5.08</td>
<td>-0.28</td>
<td>3.30</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance SA</td>
<td>1019.5</td>
<td>1122.3</td>
<td>716.9</td>
<td>-2.12</td>
<td>53.23</td>
<td>-35.61</td>
<td>42.07</td>
<td>3.75</td>
</tr>
<tr>
<td class="firstcol">Exports NSA&nbsp;</td>
<td>4277.7</td>
<td>4958.0</td>
<td>3842.7</td>
<td>-13.72</td>
<td>16.32</td>
<td>4.71</td>
<td>6.39</td>
<td>-5.18</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;North America</td>
<td>1053.3</td>
<td>1178.7</td>
<td>1109.7</td>
<td>-10.63</td>
<td>-5.08</td>
<td>-9.65</td>
<td>1.80</td>
<td>-4.04</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Central and South&nbsp; Amer</td>
<td>163.4</td>
<td>140.5</td>
<td>154.704</td>
<td>16.28</td>
<td>5.62</td>
<td>-5.29</td>
<td>-6.09</td>
<td>-4.29</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Western Europe</td>
<td>752.4</td>
<td>801.5</td>
<td>670.6</td>
<td>-6.13</td>
<td>12.20</td>
<td>9.36</td>
<td>-1.95</td>
<td>-7.49</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Eastern Europe inc Russia</td>
<td>52.5</td>
<td>58.7</td>
<td>31.6</td>
<td>-10.50</td>
<td>66.37</td>
<td>52.33</td>
<td>22.65</td>
<td>9.31</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle East</td>
<td>117.5</td>
<td>149.1</td>
<td>102.9</td>
<td>-21.17</td>
<td>14.18</td>
<td>4.67</td>
<td>11.46</td>
<td>21.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Asia</td>
<td>1975.3</td>
<td>2444.7</td>
<td>1635.1</td>
<td>-19.20</td>
<td>20.80</td>
<td>12.87</td>
<td>13.72</td>
<td>-7.16</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Africa</td>
<td>55.3</td>
<td>62.6</td>
<td>42.6</td>
<td>-11.68</td>
<td>29.77</td>
<td>5.09</td>
<td>14.07</td>
<td>-1.06</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Oceania</td>
<td>108.0</td>
<td>122.1</td>
<td>95.5</td>
<td>-11.54</td>
<td>13.05</td>
<td>11.23</td>
<td>12.95</td>
<td>1.57</td>
</tr>
</tbody>
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On a seasonally adjusted basis, Japanese exports rose 0.91% in January from December. Imports were up 1.81% at the same time. As a result, the surplus declined from 1.1 trillion yen in December to l.0 trillion in January. The December [...]

Changing Patterns in Japanese Export Trade

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040223a.jpg" width="353">
Surging prices for industrial metals have pulled the JoC-ECRI index of industrial prices up 10.8% since yearend.
The metals sub index has risen 11.7%. That reflects further strength in steel scrap prices, up nearly one-third this year, and strength in copper prices. Aluminum prices also have firmed, up 7.2% this year (20.7% y/y).
During the last twenty years there has been a 42% correlation between the y/y change in metals prices as measured by the Journal of Commerce/ECRI index and the change in factory sector industrial production.
Meat prices have given back all the gains realized last fall as demand has fallen. This year, steer prices have meandered sideways at levels down one-third from the October &#39;03 highs. In contrast, hog prices have firmed by one quarter since the beginning of this year.
Gold prices at $405.25 have been volatile this year in a tight $400-425 range (+15% y/y).

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D304/@D304.HTM"> Commodity Prices</a></th>
<th scope="col">2/20/04</th>
<th scope="col">12/31/03</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">Gold: Handy &amp; Harman Base Price ($/oz.)</td>
<td>$405.25</td>
<td>$416.70</td>
<td>15.0%</td>
<td>$363.13</td>
<td>$310.05</td>
<td>$271.06</td>
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<td class="firstcol">Stainless Steel Scrap ($/gross ton)</td>
<td>$1,617.00</td>
<td>$1,265.00</td>
<td>88.9%</td>
<td>$953.75</td>
<td>$717.10</td>
<td>$650.52</td>
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<td class="firstcol">Copper: High Grade (COMEX, $/Lb.)</td>
<td>$1.31</td>
<td>$1.04</td>
<td>45.7%</td>
<td>$0.81</td>
<td>$0.72</td>
<td>$0.73</td>
</tr>
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<td class="firstcol">Steers: Cash Price: Texas-Oklahoma Avg. ($/cwt)</td>
<td>$76.75</td>
<td>$75.70</td>
<td>-1.6%</td>
<td>$83.01</td>
<td>$66.54</td>
<td>$71.86</td>
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Surging prices for industrial metals have pulled the JoC-ECRI index of industrial prices up 10.8% since yearend. The metals sub index has risen 11.7%. That reflects further strength in steel scrap prices, up nearly one-third this [...]

Metals Prices Strong, Meats Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040220a.jpg" width="353">
The Consumer Price Index (CPI-U) rose 0.5% in January versus the Consensus expectation for a 0.3% gain. Less food &amp; energy prices rose 0.2%, slightly firmer than the 0.1% Consensus expectation.
Rising energy prices were the source of the upside surprise last month as they jumped 4.7%. Gasoline prices spiked 8.1% (+8.3% y/y) following three months of flat to lower prices. Fuel oil prices also were strong, up 6.8% (9.7% y/y).
Prices of core consumer goods were unchanged following more than a year of deflation. Much of that &quot;firming&quot; came as prices for household furnishings &amp; operation rose 0.4% (-1.6% y/y), only the second monthly increase since February. Apparel prices fell another 0.3% (-1.8% y/y) and new &amp; used motor vehicle prices edged 0.1% lower (-4.0% y/y).
Core services prices were again tame, rising just 0.2%. Shelter prices ticked up only 0.1% (2.0% y/y) and medical care services price inflation eased to 0.3% (4.3% y/y). Public transportation prices rose for the first month in three by 0.2% (2.0% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior rose (0.5%) for the first month since September. It is similar to the PCE price deflator. The core price measure also rose (0.2%) for just the first month in three.
A working paper from the Federal Reserve Bank of Kansas City titled &quot;Disaggregate evidence on the persistence of consumer price inflation&quot; can be viewed <a href="http://www.kc.frb.org/Publicat/Reswkpap/RWP03-11.htm"> 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">Jan</th>
<th scope="col">Dec</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">Total&nbsp;</td>
<td>0.5%</td>
<td>0.2%</td>
<td>2.0%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>2.8%</td>
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<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-2.2%</td>
<td>-2.0%</td>
<td>-1.1%</td>
<td>0.3%</td>
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<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
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<td class="firstcol">&nbsp;Energy</td>
<td>4.7%</td>
<td>0.3%</td>
<td>7.7%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
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<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.0%</td>
<td>0.5%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</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>0.5%</td>
<td>-0.2%</td>
<td>1.6%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>2.3%</td>
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<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>0.8%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
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</tbody>
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The Consumer Price Index (CPI-U) rose 0.5% in January versus the Consensus expectation for a 0.3% gain. Less food & energy prices rose 0.2%, slightly firmer than the 0.1% Consensus expectation. Rising energy prices were the source of [...]

Consumer Prices Boosted by Energy, Core Tame

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040219c.jpg" width="353">
On Tuesday, the US Treasury published its December &quot;TIC&quot; data, the compilation of securities transactions between foreign investors and US residents. [&quot;TIC&quot; is an acronym for Treasury International Capital.] The data are contained in Haver&#39;s USINT database in the section &quot;US International Investment Tables&quot;, shown by security type and country. Net foreign purchases of all kinds of securities were $75.7 billion in December and totaled $707.9 billion for 2003. This total is $133.3 billion larger than the previous record, $574.6 billion, set just in 2002.
In the aggregate, this substantial foreign participation in US securities markets clearly illustrates that those investors were not driven away by concerns over 9/11 or other terrorist threats; there was a brief dip in September 2001, but net purchases bounced back immediately. Nor have highly publicized scandals involving US companies and financial markets since mid-2002 discouraged foreign capital inflows.
One aspect that has undergone change is the mix of securities types. Initially, as seen in the graph, total foreign purchases seemed nearly synonymous with those of Treasury securities. However, since late 1996, the trends in the totals and in Treasuries have diverged. Foreigners diversified their portfolios, as they increased their acquisition of federal agency securities, corporate bonds and stocks. Interest in this last item turned down in 2000, with the general pullback in equity values. But purchases of corporate bonds have remained sizable, as indicated in the table below, implying a sustained appeal of corporate securities even through swings in exchange rates, interest rates and asset values.

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<th scope="col" class="firstcol">Net Foreign Purchases of Securities in US Markets (bil $)</th>
<th scope="col"> Dec 2003 </th>
<th scope="col">Nov 2003 </th>
<th scope="col">Oct 2003 </th>
<th scope="col">Dec 2002</th>
Monthly Average
</tr>
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<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
</tbody>
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<th scope="col" class="firstcol">Total</th>
<th scope="col"><center></center></th>
<th scope="col">75.7</th>
<th scope="col">87.5</th>
<th scope="col">27.8</th>
<th scope="col">38.0</th>
<th scope="col">59.0</th>
<th scope="col">47.9</th>
<th scope="col">41.8</th>
</tr>
</thead>
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<td class="firstcol">Treasuries</td>
<td><center></center></td>
<td>29.8</td>
<td>33.4</td>
<td>12.0</td>
<td>13.5</td>
<td>22.8</td>
<td>10.0</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Federal Agencies (mostly &quot;GSEs&quot;)</td>
<td><center></center></td>
<td>17.3</td>
<td>10.6</td>
<td>9.4</td>
<td>15.8</td>
<td>13.6</td>
<td>16.3</td>
<td>13.7</td>
</tr>
<tr class="odd">
<td class="firstcol">US Corporate Bonds</td>
<td><center></center></td>
<td>20.4</td>
<td>29.6</td>
<td>20.9</td>
<td>13.2</td>
<td>22.6</td>
<td>15.2</td>
<td>18.5</td>
</tr>
<tr>
<td class="firstcol">US Corporate Stocks</td>
<td>13.3</td>
<td>8.8</td>
<td>-1.2</td>
<td>3.2</td>
<td>3.1</td>
<td>4.2</td>
<td>9.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign Bonds</td>
<td>0.0</td>
<td>-3.7</td>
<td>-5.1</td>
<td>-5.0</td>
<td>2.1</td>
<td>2.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Foreign Stocks</td>
<td>-5.0</td>
<td>8.8</td>
<td>-8.2</td>
<td>-2.6</td>
<td>-5.2</td>
<td>-0.1</td>
<td>-4.2</td>
</tr>
</tbody>
</table>
</body>
</html>

On Tuesday, the US Treasury published its December "TIC" data, the compilation of securities transactions between foreign investors and US residents. ["TIC" is an acronym for Treasury International Capital.] The data are contained in [...]

Foreign Purchases of US Securities Set Record in 2003

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040219a.jpg" width="353">
Initial claims for jobless insurance dropped 24,000 (-6.5%) to 344,000 last week. Consensus expectations had been for higher claims of 355,000. The prior week&#39;s level was revised up slightly.
The latest figure is for the survey period for February non-farm payrolls and it is roughly unchanged from the January period. During the last ten years there has been a 79% (negative) correlation between the level of initial claims and the y/y change in non-farm payrolls.
The four-week moving average of initial claims was about unchanged at 352,000 (-10.7% y/y).
Continuing claims for unemployment insurance surged 106,000 w/w. The prior week&#39;s level was little revised.
The insured rate of unemployment ticked up w/w to 2.5%, the average level in January.

<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">2/14/04</th>
<th scope="col">2/07/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>344.0</td>
<td>368.0</td>
<td>-15.7%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,186</td>
<td>-7.1%</td>
<td>3,535</td>
<td>3,575</td>
<td>3,022</td>
</tr>
</tbody>
</table>
Leading Indicators Up Trend Firmed 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 19, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040219b.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board rose an expected 0.5% in January, the strongest monthly increase since October. December&#39;s 0.2% gain was unrevised.
One month gains amongst the leaders&#39; component series eased slightly to 60% but over a six-month span 90% of the series rose.
Longer weekly hours worked, fewer claims for jobless insurance, higher stock prices, improved vendor performance and higher consumer expectations made large positive contributions to the January gain in the leading index. A lower money supply, a narrower yield curve and lower building permits had slight negative contributions.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose with all of the four components up over one and six month spans.
The ratio of coincident-to-lagging indicators rose to another record level. 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">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.5%</td>
<td>0.2%</td>
<td>3.6%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.2%</td>
<td>0.4%</td>
<td>-0.5%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.0%</td>
<td>-0.4%</td>
<td>-2.9%</td>
<td>-2.2%</td>
<td>-2.8%</td>
<td>-1.4%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 19, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040219d.jpg" width="353">
The Philadelphia Fed&#146;s February index of general business conditions in the manufacturing sector fell to 31.4 in February from 38.8 last month. Consensus expectations had been for less of a decline to 35.0.
Despite the decline, the last three months&#39; average of 33.5 is the highest since early 1984.
During the last twenty years there has been a 62% 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 76%.
Amongst the sub indexes, new orders fell to 27.5, the lowest level since November. Shipments (19.3) also dropped to the lowest level since September. The employment index fell to 12.5 but that level still is consistent with expanding factory sector employment.
The business conditions index reflects a separate survey question, not the sub indexes.
A separate survey of expected business conditions in six months dipped to 51.4, the lowest level since June.
The prices paid index surged 8.4 points to the highest level since February 1995.
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 Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0204.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">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>31.4</td>
<td>38.8</td>
<td>0.7</td>
<td>10.6</td>
<td>7.7</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>43.7</td>
<td>35.3</td>
<td>16.8</td>
<td>16.7</td>
<td>12.2</td>
<td>-0.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance dropped 24,000 (-6.5%) to 344,000 last week. Consensus expectations had been for higher claims of 355,000. The prior week's level was revised up slightly. The latest figure is for the survey period [...]

Initial Claims for Jobless Insurance Down

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

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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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: February 2004

Jump to:

Consumer Confidence Down Sharply

Changing Patterns in Japanese Export Trade

Metals Prices Strong, Meats Down

Consumer Prices Boosted by Energy, Core Tame

Consumer Prices Boosted by Energy, Core Tame

Consumer Prices Boosted by Energy, Core Tame

Foreign Purchases of US Securities Set Record in 2003

Initial Claims for Jobless Insurance Down