Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040830a.jpg" width="353">
Personal income grew much less than expected last month. The 0.1% July gain was the weakest in nearly two years, followed a slim 0.2% rise in June and fell short of Consensus expectations for a 0.5% increase.
A 0.5% decline (+6.6% y/y) in proprietors&#39; income was the source of much of last month&#39;s disappointment and that was driven by a 5.4% drop in farmers&#39; income. Wages &amp; salaries rebounded 0.4% (+4.4% y/y) from the slight decline in June. The rebound was paced by a 0.6% (2.7% y/y) increase in manufacturing wages.
Personal disposable income rose a slight 0.1% (4.3% y/y). After accounting for a 2.4% y/y rise in prices, real disposable income rose a much reduced 1.8% y/y.
Consumer spending jumped 0.8% following an upwardly revised 0.2% June decline. Higher light vehicle sales pulled durables up 4.1%. Non-durable goods sales rose a slight 0.2%, held back by lower gasoline prices, and services spending rose 0.4% (5.1% y/y). 
The PCE chain price index fell slightly. Prices less food &amp; energy also were weak, unchanged m/m (1.5% y/y) due to another decline in durables prices (-0.4% m/m, -1.9% y/y). Services prices rose a moderate 0.2% (2.5% y/y). &quot;A Crude Crude Oil Calculation&quot; from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20040801/cover.pdf"> here</a>.
The savings rate fell to 0.6% and prior months&#39; figures were revised down.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM"> Disposition of Personal Income</a></th>
<th scope="col">July</th>
<th scope="col">June</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">Personal Income</td>
<td>0.1%</td>
<td>0.2%</td>
<td>4.9%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>5.9%</td>
<td>5.2%</td>
<td>4.6%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>0.6%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>-0.0%</td>
<td>0.2%</td>
<td>2.4%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
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Personal income grew much less than expected last month. The 0.1% July gain was the weakest in nearly two years, followed a slim 0.2% rise in June and fell short of Consensus expectations for a 0.5% increase. A 0.5% decline (+6.6% [...]

U.S. Personal Income Sluggish. Farmers' Income Fell, Wages OK

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/040827d.jpg" width="353">
Unemployment increased in Japan in July, according to data reported today by the Ministry of Public Management, Home Affairs, Posts and Telecommunications. The unemployment rate rose from 4.6% in June to 4.9%, the highest in five months. Headline writers in the press declared that the economic recovery in Japan was faltering.
Indeed, the trajectory of labor market indicators is not unambiguously upward. Employment is down from an April peak and also lower than its year-ago amount. Even so, the number of people employed rose 90,000 in July and remains well above a recent trough in November. The Japanese &quot;recovery&quot; is proceeding in fits and starts, making any single month&#39;s performance hard to put into a trend or context.
At the same time, the rise in unemployment occurred because of an increase in the labor force. After falling sharply for two months, the total of those employed and unemployed in July regained about half its May-June loss. It is seen in the graph that the labor force has shrunk persistently since the middle of 1998. The July snapback reversed the previous month&#39;s 0.3% fall in labor force participation as a percent of the working-age population. Such developments, if sustained, can suggest improved expectations among potential workers who begin to hunt for new jobs they believe might now be available; this is a sign of recovery even as it keeps the unemployment rate from decreasing until actual hiring catches up.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted, Millions</th>
<th scope="col">July 2004</th>
<th scope="col">June 2004</th>
<th scope="col">May 2004</th>
<th scope="col">July 2003</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">Employment</td>
<td>63.24</td>
<td>63.15</td>
<td>63.53</td>
<td>63.33</td>
<td>63.17</td>
<td>63.30</td>
<td>64.10</td>
</tr>
<tr>
<td class="firstcol">Unemployment</td>
<td>3.27</td>
<td>3.05</td>
<td>3.05</td>
<td>3.52</td>
<td>3.50</td>
<td>3.59</td>
<td>3.40</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force*</td>
<td>66.51</td>
<td>66.20</td>
<td>66.58</td>
<td>66.85</td>
<td>66.67</td>
<td>66.89</td>
<td>67.50</td>
</tr>
<tr>
<td class="firstcol">Population, Age 15+</td>
<td>109.84</td>
<td>109.82</td>
<td>109.95</td>
<td>109.68</td>
<td>109.62</td>
<td>109.27</td>
<td>108.86</td>
</tr>
<tr class="odd">
<td class="firstcol">Participation Rate* (%)</td>
<td>60.6%</td>
<td>60.3%</td>
<td>60.6%</td>
<td>61.0%</td>
<td>60.8%</td>
<td>61.2%</td>
<td>62.0%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate ** (%)</td>
<td>4.9%</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.3%</td>
<td>5.3%</td>
<td>5.4%</td>
<td>5.0%</td>
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Unemployment increased in Japan in July, according to data reported today by the Ministry of Public Management, Home Affairs, Posts and Telecommunications. The unemployment rate rose from 4.6% in June to 4.9%, the highest in five [...]

Japanese Unemployment Rises in July, But So Does Employment; Signs of Recovery Ambiguous

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040827c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index for August rose to 95.9 from the mid-month reading of 94.0. That still was lower than 96.7 in July. Consensus expectations had been for 94.0.
During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.
The expectations sub-index improved to 88.2 versus the mid-month read of 84.7. The index of current economic conditions eased slightly to 107.9 from 108.4 mid-month.
The University of Michigan survey is not seasonally adjusted.The mid-month survey 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.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> Aug</th>
<th scope="col"> July</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">Consumer Sentiment</td>
<td>95.9</td>
<td>96.7</td>
<td>5.3%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>107.9</td>
<td>105.2</td>
<td>8.7%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>88.2</td>
<td>91.2</td>
<td>2.7%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
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The University of Michigans consumer sentiment index for August rose to 95.9 from the mid-month reading of 94.0. That still was lower than 96.7 in July. Consensus expectations had been for 94.0. During the last ten years there has [...]

U.S. Consumer Sentiment Up Through August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040827b.jpg" width="353">
US real GDP growth last quarter was revised slightly lower to 2.8% from 3.0%, about in line with Consensus expectations.
Higher exports did not raise US output as much as previously estimated. Export growth in 2Q was revised down to 6.2% (AR, 10.5% y/y) from the initial estimate of 18.4% growth. Combined with an upward revision to import growth to 14.1% (11.0% y/y) from 9.3%, that raised the trade sector&#39;s subtraction from GDP growth to 1.4 percentage points. News of the record (by far) trade deficit of $55.5B in June drove the revision.
Corporate profit growth slowed considerably to 0.6% (AR, 18.4% y/y) from 13.6% growth in 1Q and 30.2% in 4Q03. Profits in the financial and the foreign sectors fell. In the US nonfinancial corporate sector profit growth remained firm at 20.4% (AR, 26.4% y/y) as firms grew more efficient, indicated by the 3.8% (19.6% y/y) rise in profits per unit of output.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040827a.jpg" width="353"> 
Growth in domestic final demand was a stronger 3.4% versus the initial estimate of 2.7% growth. Real PCE growth was revised up to 1.6% from 1.0% and business fixed investment spending was raised to 12.1% (10.7% y/y) from 8.8%. Growth in equipment &amp; software spending was raised to 13.7% (13.7% y/y) from 10.0%. Residential investment growth was about unchanged at a surging 14.8% (12.8% y/y).
Inventory investment contributed a somewhat larger 0.7 percentage points to growth than the 0.3 points initially estimated, and that was about half the positive contribution in 1Q.
Prices grew the same 3.2% as initially estimated.
This 2001 paper from the Federal Reserve Bank of New York presents an <a href="http://www.newyorkfed.org/research/staff_reports/sr122.html"> overview of labor &amp; total factor productivity</a> and discusses why it is such an important topic. 
Fed Chairman Alan Greenspan&#39;s testimony today in Jackson Hole, Wyoming is available <a href="http://www.federalreserve.gov/boarddocs/speeches/2004/20040827/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"> Chained 2000$, % AR</a></th>
<th scope="col"> 2Q &#39;04 (Prelim.)</th>
<th scope="col"> 2Q &#39;04 (Advance)</th>
<th scope="col"> 1Q &#39;04 (Final)</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">GDP</td>
<td>2.8%</td>
<td>3.0%</td>
<td>4.5%</td>
<td>4.7%</td>
<td>3.0%</td>
<td>1.9%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.7%</td>
<td>0.3%</td>
<td>1.2%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.1%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.4%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-0.7%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.4%</td>
<td>2.7%</td>
<td>3.9%</td>
<td>4.3%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>3.2%</td>
<td>3.2%</td>
<td>2.8%</td>
<td>2.3%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
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US real GDP growth last quarter was revised slightly lower to 2.8% from 3.0%, about in line with Consensus expectations. Higher exports did not raise US output as much as previously estimated. Export growth in 2Q was revised down to [...]

Foreign Trade Drag Reduced 2Q US GDP Growth, Domestic Corporate Profits Slower But Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040827b.jpg" width="353">
US real GDP growth last quarter was revised slightly lower to 2.8% from 3.0%, about in line with Consensus expectations.
Higher exports did not raise US output as much as previously estimated. Export growth in 2Q was revised down to 6.2% (AR, 10.5% y/y) from the initial estimate of 18.4% growth. Combined with an upward revision to import growth to 14.1% (11.0% y/y) from 9.3%, that raised the trade sector&#39;s subtraction from GDP growth to 1.4 percentage points. News of the record (by far) trade deficit of $55.5B in June drove the revision.
Corporate profit growth slowed considerably to 0.6% (AR, 18.4% y/y) from 13.6% growth in 1Q and 30.2% in 4Q03. Profits in the financial and the foreign sectors fell. In the US nonfinancial corporate sector profit growth remained firm at 20.4% (AR, 26.4% y/y) as firms grew more efficient, indicated by the 3.8% (19.6% y/y) rise in profits per unit of output.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040827a.jpg" width="353">
Growth in domestic final demand was a stronger 3.4% versus the initial estimate of 2.7% growth. Real PCE growth was revised up to 1.6% from 1.0% and business fixed investment spending was raised to 12.1% (10.7% y/y) from 8.8%. Growth in equipment &amp; software spending was raised to 13.7% (13.7% y/y) from 10.0%. Residential investment growth was about unchanged at a surging 14.8% (12.8% y/y).
Inventory investment contributed a somewhat larger 0.7 percentage points to growth than the 0.3 points initially estimated, and that was about half the positive contribution in 1Q.
Prices grew the same 3.2% as initially estimated.
This 2001 paper from the Federal Reserve Bank of New York presents an <a href="http://www.newyorkfed.org/research/staff_reports/sr122.html"> overview of labor &amp; total factor productivity</a> and discusses why it is such an important topic. 
Fed Chairman Alan Greenspan&#39;s testimony today in Jackson Hole, Wyoming is available <a href="http://www.federalreserve.gov/boarddocs/speeches/2004/20040827/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM"> Chained 2000$, % AR</a></th>
<th scope="col"> 2Q &#39;04 (Prelim.)</th>
<th scope="col"> 2Q &#39;04 (Advance)</th>
<th scope="col"> 1Q &#39;04 (Final)</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">GDP</td>
<td>2.8%</td>
<td>3.0%</td>
<td>4.5%</td>
<td>4.7%</td>
<td>3.0%</td>
<td>1.9%</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.7%</td>
<td>0.3%</td>
<td>1.2%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>-0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.1%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>4.0%</td>
<td>3.1%</td>
<td>1.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.4%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-0.7%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.4%</td>
<td>2.7%</td>
<td>3.9%</td>
<td>4.3%</td>
<td>3.4%</td>
<td>2.1%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>3.2%</td>
<td>3.2%</td>
<td>2.8%</td>
<td>2.3%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Up Through August 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 27, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040827c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index for August rose to 95.9 from the mid-month reading of 94.0. That still was lower than 96.7 in July. Consensus expectations had been for 94.0.
During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.
The expectations sub-index improved to 88.2 versus the mid-month read of 84.7. The index of current economic conditions eased slightly to 107.9 from 108.4 mid-month.
The University of Michigan survey is not seasonally adjusted.The mid-month survey 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.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> Aug</th>
<th scope="col"> July</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">Consumer Sentiment</td>
<td>95.9</td>
<td>96.7</td>
<td>5.3%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>107.9</td>
<td>105.2</td>
<td>8.7%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>88.2</td>
<td>91.2</td>
<td>2.7%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040826c.jpg" width="353">
British industry continues its improvement this month with only the second positive move in its order volume in 7-1/2 years. The Confederation of British Industry (CBI) survey shows a reading on orders at +2 for August; the other positive observation was just in May, at +1. Other items in the survey also look favorable. Inventories of finished goods are slowing their rate of build-up, the volume of output over the coming three months is holding at a steady gain, and prices are firming at which domestic orders are booked.
The situation is Germany is more problematic. Early August summary measures of the business climate showed some deterioration. While a mere 0.5-percentage-point decrease in the overall diffusion index may be seen as a trivial, marginal movement, it extends a negative tendency that began in February; the index had its best recent level in January at -5.9.
Only the broad sub-gauges of business confidence and expectations are available in this first report on the Ifo Survey. They show that &quot;confidence&quot; is actually holding up well, as its value as an index based in 2000=100 rose from 94.1 in July to 94.7, maintaining an uptrend that began in early 2003. Expectations, by contrast, indicate some nervousness: from a recent peak of 102.8 in January, these sagged to 96.0 for this month. As Louise Curley wrote here Tuesday, concern over labor reforms may be affecting demand, and the uncertainty over the new policies looks to be hurting the business outlook.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Aug 2004</th>
<th scope="col">July 2004</th>
<th scope="col">June 2004</th>
<th scope="col">Aug 2003</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">UK: CBI Order Book Volume</td>
<td>2</td>
<td>-7</td>
<td>-6</td>
<td>-24</td>
<td>-29</td>
<td>-27</td>
<td>-26</td>
</tr>
<tr>
<td class="firstcol">Prices at which domestic orders are booked</td>
<td>11</td>
<td>6</td>
<td>5</td>
<td>-14</td>
<td>-12</td>
<td>-13</td>
<td>-16</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany: Ifo Business Climate</td>
<td>-10.2</td>
<td>-9.7</td>
<td>-11.6</td>
<td>-15.2</td>
<td>-17.5</td>
<td>-22.0</td>
<td>-16.7</td>
</tr>
<tr>
<td class="firstcol">Business Climate Index, 2000=100</td>
<td>95.3</td>
<td>95.6</td>
<td>94.6</td>
<td>92.8</td>
<td>91.7</td>
<td>89.4</td>
<td>92.1</td>
</tr>
</tbody>
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British industry continues its improvement this month with only the second positive move in its order volume in 7-1/2 years. The Confederation of British Industry (CBI) survey shows a reading on orders at +2 for August; the other [...]

British Industry Continues Improvement, but German Expectations Weaken

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040826b.jpg" width="353">
The National Index of Help-Wanted Advertising published by the Conference Board slipped last month to 37, giving back virtually all of this year&#39;s modest improvement from the 2003 low.
During the last ten years there has been a 91% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls. The stall in help wanted indicates that most, if not all, of the y/y improvement in non-farm payroll growth has been due to fewer job losses, not improved hiring.
The proportion of labor markets with rising want-ad volume rose slightly to 41% from a downwardly revised 29% in June.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col"> July</th>
<th scope="col">June</th>
<th scope="col">July &#39;03</th>
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<td class="firstcol">National Help Wanted Index</td>
<td>37</td>
<td>38</td>
<td>38</td>
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The National Index of Help-Wanted Advertising published by the Conference Board slipped last month to 37, giving back virtually all of this year's modest improvement from the 2003 low. During the last ten years there has been a 91% [...]

Help-Wanted Advertising Slipped

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: August 2004

Jump to:

U.S. Personal Income Sluggish. Farmers' Income Fell, Wages OK

Japanese Unemployment Rises in July, But So Does Employment; Signs of Recovery Ambiguous

Japanese Unemployment Rises in July, But So Does Employment; Signs of Recovery Ambiguous

U.S. Consumer Sentiment Up Through August

Foreign Trade Drag Reduced 2Q US GDP Growth, Domestic Corporate Profits Slower But Firm

Foreign Trade Drag Reduced 2Q US GDP Growth, Domestic Corporate Profits Slower But Firm

British Industry Continues Improvement, but German Expectations Weaken

Help-Wanted Advertising Slipped