Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020219.jpg" width="353">
Housing starts rose more than expected last month as mortgage rates fell. December starts were revised up slightly. 
The rise in starts was due to a 3.5% increase in single-family starts, the third consecutive monthly increase. 
Multi-family starts surged 18.9%, recouping most of the 24.7% plunge the month earlier. Starts of 2-4 unit structures were notably strong. 
By region starts were mixed: up in the Northeast and the South, down in the West and flat in the Midwest. 
Yields on conventional 30-year mortgages fell to 7.00% last month from 7.07% in December. 
Building permits rose 3.1%, up strong for the third consecutive month. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, AR)</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,678</td>
<td>1,579</td>
<td>0.7%</td>
<td>1,606</td>
<td>1,575</td>
<td>1,647</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,345</td>
<td>1,299</td>
<td>0.7%</td>
<td>1,275</td>
<td>1,233</td>
<td>1,306</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>333</td>
<td>280</td>
<td>0.9%</td>
<td>331</td>
<td>342</td>
<td>341</td>
</tr>
</tbody>
</table>
</body>
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Housing starts rose more than expected last month as mortgage rates fell. December starts were revised up slightly. The rise in starts was due to a 3.5% increase in single-family starts, the third consecutive monthly increase. Multi- [...]

Housing Starts Strongest Since Early 2000

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020215b.jpg" width="353">
Finished producer prices in January rose as expected for the first time in four months. Higher food prices (0.8%) caused the increase. Prior months&#39; data was revised slightly.
Finished goods prices fell slightly and are down 0.4% over the last four months.
Core finished consumer goods prices fell slightly and are down 0.3% during the last four months. Tobacco prices fell sharply. 
Prices of home electronic equipment fell for the third month in four. Household furniture prices rose slightly but men&#39;s apparel prices collapsed. 
Capital equipment prices fell slightly and are down 0.6% over the last four months.
Gasoline prices rose for the first month in four. Residential natural gas prices also rose for the first month in twelve.
Intermediate goods prices fell for the tenth month in twelve. Core intermediate prices were unchanged and are down 0.9% over the last four months. 
Crude goods prices rose reflecting higher crude oil and food prices. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Producer Price Index</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-2.8%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>-4.8%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.0%</td>
<td>-0.2%</td>
<td>-1.8%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>3.7%</td>
<td>-9.6%</td>
<td>-40.2%</td>
<td>0.5%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.5%</td>
<td>-0.3%</td>
<td>-9.5%</td>
<td>-10.0%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Industrial Production Decline Moderated 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020215a.jpg" width="353">
Industrial production fell slightly last month, as expected. December&#39;s decline was deepened slightly.
Excluding high tech industries, industrial output fell for the sixth consecutive month, down 3.1% during that period.
Manufacturing output was unchanged, only the third month of no decline since summer 2000.
Output of consumer goods fell but the output of business equipment was up for the first time since August 2000, reflecting higher output of industrial and other business equipment.
Output of high tech products rose for the second month in four, but December&#39;s previously reported gain was revised away. Output of computers and office equipment rose for the fourth consecutive month, up 6.2% during the last four months. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Production &amp; Capacity</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-5.1%</td>
<td>-3.7%</td>
<td>4.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>74.2%</td>
<td>74.4%</td>
<td>79.3%(1/01)</td>
<td>76.8%</td>
<td>81.8%</td>
<td>81.4%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Sagged 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020215c.jpg" width="353">
The Univ. of Michigan&#39;s Index of Consumer Sentiment fell unexpectedly in mid-February. A slight increase has been expected. 
The decline in sentiment reflected a lower reading of consumer expectations but a higher reading of the current situation. 
The University of Michigan survey is not seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">Univ. of Michigan</th>
<th scope="col">Mid-Feb &#39;02</th>
<th scope="col">Jan &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>90.9</td>
<td>93.0</td>
<td>0.3%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices in January rose as expected for the first time in four months. Higher food prices (0.8%) caused the increase. Prior months' data was revised slightly. Finished goods prices fell slightly and are down 0.4% over [...]

Producer Prices Rose

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020214c.jpg" width="353">
Prices for imported commodities rose more than expected last month, led by a jump in oil prices. Updated seasonal factors altered past data slightly. 
Petroleum import prices rose for the first time in four months and erased the decline in December. Crude oil prices have since fallen in February. 
Nonpetroleum import prices also rose, but just slightly. Prices of importedmotor vehicles and capital goods fell last month. Imported food prices rose sharply. 
Export prices fell for the eleventh month in twelve.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Import/Export Prices (NSA)</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.4%</td>
<td>-0.9%</td>
<td>-8.6%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>6.0%</td>
<td>-5.8%</td>
<td>-31.5%</td>
<td>-17.1%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>-5.2%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>-2.8%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020214a.jpg" width="353">
Initial claims for unemployment insurance fell as expected in the latest week. The prior week&#39;s level was little revised. It was the eighth week in ten that claims remained below 400,000
The four-week moving average of claims fell to 376,000.
Continuing claims for unemployment insurance rose slightly in the latest week, and the decline in continuing claims has lagged the drop in initial claims.
The insured rate of unemployment was unchanged at 2.7% for the third consecutive week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Unemployment Insurance (000s)</th>
<th scope="col">02/09/02</th>
<th scope="col">02/02/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>373.0</td>
<td>381.0</td>
<td>8.4%</td>
<td>408.0</td>
<td>302.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,429</td>
<td>40.3%</td>
<td>3,031</td>
<td>2,127</td>
<td>2,187</td>
</tr>
</tbody>
</table>
Inventories Liquidated Through Yearend 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020214b.jpg" width="353">
Total business inventories fell as expected in December. The decline in November inventories was deepened due to a lowered estimate of manufacturing inventories.
Inventory liquidation during the last four months of 2001 (-10.8% AR) by far set a record for that length of time and it was double the rate that sales declined. 
Retail inventories fell only in two categories, clothing and general merchandise stores. Furniture inventories rose for the third month in row. 
Overall business sales were unchanged following the sharp November decline.
The inventory-to-sales ratio was stable at 1.39 for the third month in a row.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Business Inventories</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Nov &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.4%</td>
<td>-1.2%</td>
<td>-5.9%</td>
<td>-5.9%</td>
<td>6.0%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.1%</td>
<td>-1.0%</td>
<td>-4.9%</td>
<td>-4.9%</td>
<td>6.8%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>-0.2%</td>
<td>-0.7%</td>
<td>-1.8%</td>
<td>-1.8%</td>
<td>4.4%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-5.3%</td>
<td>-5.3%</td>
<td>7.1%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.6%</td>
<td>-1.3%</td>
<td>-7.2%</td>
<td>-7.2%</td>
<td>4.6%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

Prices for imported commodities rose more than expected last month, led by a jump in oil prices. Updated seasonal factors altered past data slightly. Petroleum import prices rose for the first time in four months and erased the [...]

First Rise in Import Prices Since May '01

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020213.jpg" width="353">
Total retail sales fell as expected last month due to lower auto sales. Sales excluding autos were quite a bit stronger than expected and December nonauto results were revised up. 
Though sales at gasoline service stations rose for the first time in four months on the strength of higher gas prices, price deflation elsewhere fueled sales. 
Sales of furniture and home furnishings rose 0.4% following three months of huge gain, but sales of electronics and appliances fell 3.6%, again following three months of outsized gain. 
Sales at clothing and accessory stores jumped 2.5% following a 2.7% December gain. 
Sales at general merchandise stores rose 2.1%, December&#39;s gain of 1.0% was double the initial estimated rise, and it was the seventh monthly increase in eight.
Sales at motor vehicle and parts dealers fell 4.3%, the third consecutive monthly decline. Sales of domestic and imported light vehicles fell 4.2% to 15.825 units (SAAR). 

<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">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Sales &amp; Food Services</td>
<td>-0.2%</td>
<td>0.2%</td>
<td>2.8%</td>
<td>3.5%</td>
<td>7.6%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.2%</td>
<td>0.7%</td>
<td>2.5%</td>
<td>2.8%</td>
<td>8.0%</td>
<td>7.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

Total retail sales fell as expected last month due to lower auto sales. Sales excluding autos were quite a bit stronger than expected and December nonauto results were revised up. Though sales at gasoline service stations rose for the [...]

Retail Sales Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020212.jpg" width="353">
Chain store sales rose 2.1% in the first full week of February. The surge followed a slight 0.7% decline the prior week and raised sales so far in February 1.0% above January. 
Through early February, the Tokyo Bank Leading Indicator of chain store sales also had improved, albeit less than actual sales. 
During the last ten years, the correlation between the leading indicator of chain store sales and actual sales has been low.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">BTM-UBSW (SA, 1977=100)</th>
<th scope="col">2/09/02</th>
<th scope="col">02/02/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>406.6</td>
<td>398.2</td>
<td>4.1%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
</body>
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Chain store sales rose 2.1% in the first full week of February. The surge followed a slight 0.7% decline the prior week and raised sales so far in February 1.0% above January. Through early February, the Tokyo Bank Leading Indicator [...]

Weekly Chain Store Sales Build Momentum

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020211.jpg" width="353">
Prices for industrial commodities have risen nearly 5% since the lows last November according to the FIBER index of industrial materials price index (formerly the Journal of Commerce index). 
The FIBER index is heavily weighted (nearly 50%) toward crude oil and benzene prices which are up 6% during the period.
Prices in most other categories also have risen since the fall, including metals, textiles and miscellaneous commodities.
During the last twenty years there has been a 46% correlation between the three-month percent change in the FIBER index and the three-month change in factory sector industrial production.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">FIBER Industrial Materials Price Index (1990=100)</th>
<th scope="col">02/08/02</th>
<th scope="col">02/01/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Items</td>
<td>80.90</td>
<td>80.18</td>
<td>-9.4%</td>
<td>85.28</td>
<td>94.18</td>
<td>92.50</td>
</tr>
</tbody>
</table>
</body>
</html>

Prices for industrial commodities have risen nearly 5% since the lows last November according to the FIBER index of industrial materials price index (formerly the Journal of Commerce index). The FIBER index is heavily weighted (nearly [...]

Higher Commodity Prices Signal Recovery in Manufacturing

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020207b.jpg" width="353">
The Institute for Supply Management (formerly the NAPM) business activity index of the nonmanufacturing sector fell more than expected last month. A slight decline had been expected and new seasonal factors lowered the December level significantly. 
New orders and imports fell, while employment was about unchanged for the second month. 
Business activity for the nonmanufacturing sector is a question separate from the components mentioned above. This is in contrast to the NAPM manufacturing sector composite index that reflects component activity. 
During the last four years, there has been a 44% correlation between the level of the NAPM nonmanufacturing index and quarterly growth in real GDP in the service sector. 
The survey of nonmanufacturing activity dates only to July 1997. Therefore its seasonal adjustment should be viewed tentatively.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ISM Nonmanufacturing Survey</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>49.6</td>
<td>50.1</td>
<td>52.1</td>
<td>49.0</td>
<td>59.2</td>
<td>59.1</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020207a.jpg" width="353">
Initial claims for unemployment insurance fell slightly more than expected in the latest week. The prior week&#39;s level was little revised.
The decline in weekly claims since the October peak has lowered the four-week moving average to 380,500, down 24.8% since that peak.
Continuing claims for unemployment insurance fell in the latest week, but the prior week&#39;s level was revised up significantly.
The insured rate of unemployment was unchanged at 2.7%. The prior week&#39;s level was revised up.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Unemployment Insurance (000s)</th>
<th scope="col">02/02/02</th>
<th scope="col">01/26/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>376.0</td>
<td>391.0</td>
<td>4.2%</td>
<td>408.0</td>
<td>302.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,427</td>
<td>45.6%</td>
<td>3,031</td>
<td>2,127</td>
<td>2,187</td>
</tr>
</tbody>
</table>
</body>
</html>

The Institute for Supply Management (formerly the NAPM) business activity index of the nonmanufacturing sector fell more than expected last month. A slight decline had been expected and new seasonal factors lowered the December level [...]

ISM Nonmanufacturing Index Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201a.jpg" width="353">
The recent decline in nonfarm payrolls moderated as expected last month continuing a trend since payrolls fell 448,000 last October. December&#39;s decline was deepened slightly but the November drop was lessened. 
From the household survey, the unemployment rate fell despite a sharp drop in employment as the labor force fell by a record 924,000. 
The one-month diffusion index of payroll employment rose to 50.1, the first reading over 50 (more firms expanding payrolls than contracting) since last March. The three-month figure rose slightly to 38.1. 
Manufacturing payrolls again fell but by the least amount since September. The employment diffusion index for the factory sector improved to 40.8. 
Employment in the service sector rose due to strength in retail hiring. 
The index of aggregate hours worked (employment times hours worked) fell 0.4% and January was 0.5% below the 4Q average. 
Average hourly earnings were unchanged and the sharp December increase was revised lower. 
The establishment survey figures for nonfarm payrolls are based on reports provided to the US Labor Dept. by businesses. The household survey figures (incl. the unemployment rate) are based on a mail survey of US households.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Employment</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-89,000</td>
<td>-130,000</td>
<td>-0.9%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-89,000</td>
<td>-122,000</td>
<td>-7.2%</td>
<td>-4.2%</td>
<td>-0.5%</td>
<td>-1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>34.0</td>
<td>34.1</td>
<td>34.4</td>
<td>34.2</td>
<td>34.4</td>
<td>34.5</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.0%</td>
<td>0.3%</td>
<td>4.0%</td>
<td>4.2%</td>
<td>3.8%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.6%</td>
<td>5.8%</td>
<td>4.2%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
ISM Index Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201c.jpg" width="353">
The Institute of Supply Management Manufacturing Index - formerly the NAPM Composite Manufacturing Index - rose as expected last month. New seasonal factors altered the historical data slightly. 
Each of the index component series rose except new orders which was about unchanged following a surge in December. 
Deflationary pressure fell as the price index rose to the highest level since last spring.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">ISM Manufacturing Survey</th>
<th scope="col">Jan&#39; 02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>49.9</td>
<td>48.1</td>
<td>41.7</td>
<td>43.9</td>
<td>51.6</td>
<td>54.6</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>43.9</td>
<td>33.2</td>
<td>64.6</td>
<td>43.0</td>
<td>64.8</td>
<td>54.2</td>
</tr>
</tbody>
</table>
Construction Spending Rose in December 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201b.jpg" width="353">
The value of construction put-in-place rose precisely as expected in December. The November total was revised down due to a lowered estimate of nonresidential building but the decline in residential building was lessened. 
Residential building activity rose due to a jump in construction of multi-unit structures. The value of single-unit construction fell for the third month in four. 
Nonresidential building activity fell for the eighth month of the year. 
Spending by governments fell slightly after strong gains the prior two months.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Construction Put-in-place</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Nov &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>5.6%</td>
<td>7.0%</td>
<td>8.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>0.7%</td>
<td>-0.9%</td>
<td>6.0%</td>
<td>5.6%</td>
<td>7.4%</td>
<td>11.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.4%</td>
<td>-2.6%</td>
<td>-11.7%</td>
<td>-0.2%</td>
<td>8.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Public</td>
<td>-0.2%</td>
<td>4.2%</td>
<td>16.0%</td>
<td>11.0%</td>
<td>4.5%</td>
<td>10.1%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Rose Less than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020201d.jpg" width="353">
The University of Michigan&#146;s Index of Consumer Sentiment rose less than expected in January due to weakness late in the month. 
Nevertheless, the 4.7% m/m rise reflected a sharply higher reading of expectations. The reading of current economic conditions fell and nearly erased the December gain. 
The figures are not seasonally adjusted. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">University of Michigan</th>
<th scope="col">Jan &#39;02</th>
<th scope="col">Dec &#39;01</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>93.0</td>
<td>88.8</td>
<td>-1.8%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The recent decline in nonfarm payrolls moderated as expected last month continuing a trend since payrolls fell 448,000 last October. December's decline was deepened slightly but the November drop was lessened. From the household [...]

Job Loss Smallest Since August

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Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

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US consumers much more optimistic than those in the Euro area and the UK

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There are still 1.4 job openings for every unemployed person in the US

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FOMC think rate hikes are done and looks for 75bps of decline in 2024

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240517g5.jpg

The U.S. Leading Economic Index fell 0.6% (-5.4% y/y) during April following an unrevised 0.3% March decline, according to a report by The Conference Board. These two changes followed a 0.2% February improvement. A 0.3% April shortfall had been expected in the Action Economics Forecast Survey.

Five of ten components contributed negatively to the overall index in April including the ISM new orders index, building permits, stock prices, the spread between the 10-year Treasury and the Fed funds rate, as well as consumer expectations for business/economic conditions. Initial claims for unemployment insurance and the leading credit index contributed positively. New orders for capital goods and new orders for consumer goods made minimal positive contributions to the index change while the length of the average workweek had no effect on the leading index change.

A 0.2% April increase in the Coincident Economic Index followed a 0.2% March gain, revised from 0.3%. These gains came after a 0.3% February rise. Three of the four components made positive contributions to the coincident index in April, including the changes in personal income less transfers, nonagricultural payroll employment and real manufacturing & trade sales. The change in industrial production had no effect on the coincident indicators.

The Lagging Economic Index rose 0.4% (1.4% y/y) after unrevised stability in March and a 0.2% February increase. Three of the index’s seven components made positive contributions last month including the average duration of unemployment, commercial & industrial loans outstanding and the ratio of consumer credit to income. The six-month change in unit labor costs made a minimally negative contribution while the six-month change in the services CPI, banks’ prime rate and the ratio of business inventories-to-sales were unchanged.

The ratio of the coincident index to the lagging index is also viewed as a leading indicator of economic activity. This measure fell 0.2% in April, following two straight monthly increases. It was 0.8% below its most recent peak in December of last year.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [website](https://www.conference-board.org/us/) for coverage of leading indicator series from around the world.



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- Leading index decline is largest in six months.
- Coincident Indicators continue to increase moderately.
- Lagging index strengthens after holding steady.


U.S. Leading Economic Indicators Fall Sharply in April

Robert Brusca

240517e.jpg

**EMU Inflation Trends Offer Hope and Hype**- Inflation in the European Monetary Union rose by 0.2% month-to-month in April, the same as in March. Core inflation, however, picked up, rising by 0.4% but that was after being flat in March. The sequential growth rates from 12-months to six-months to three-months show the headline inflation rate at 2.4% over 12-months falling to 2% over 6-months, then rising to a 3% annual rate over three-months. The core rate for the monetary union rose 2.9% over 12-months at a 2.7% annual rate over six-months, it steps up to a 2.8% annual rate over three-months. Headline inflation is resisting moving down to the 2% level consistently while core inflation appears to be stuck just short of 3%. Whether these trends are good enough depends on whether the ECB sees itself implementing precision-guided policy or playing horseshoes and hand grenades.

**Headline Inflation: four largest EMU members**
Statistics for the largest four members of the monetary union show inflation worse in April on balance than for the monetary union as a whole. German inflation rose by 0.8% in April, in France it rose by 0.7%, in Spain at rose by 0.5%, while in Italy it rose by 0.3%. These are month-to-month gains. However, these figures followed either flat or declining inflation (price-) performance in March for each of these four countries. The progression of inflation for Germany, France, Italy, and Spain, however, still shows inflation resisting a consistent move down to 2%. German inflation runs at 2.6% over 12-months steps up to 2.7% over 6-months and reaches a 2.9% annual rate over 3-months. France’s 12-month inflation of 2.4% steps down to 2.2% over 6-months, then rises to a 3.2% annual rate over 3-months. In Italy, headline inflation is 1.1% over 12-months, similarly at a 1% annual rate over 6-months, then rises to a 1.7% annual rate over 3-months. Spain's inflation falls from 3.6% over 12-months to 3.2% over 6-months to 2.3% over 3-months- finally a European Monetary Union large country member with persistently decelerating inflation! On balance Italian inflation over 3-months is under the target that the ECB has for the monetary union as a whole, Spain’s inflation is transitioning from 12-months to 6-months to 3-months down close to the 2% mark, while Germany and France continue to show stubbornly too-high results for their headline inflation rates. All-in-all, that is not a great background to support a rate cut.

**Core inflation and its trends offer hope**
Core inflation rates produce much more beneficial results. Still, in April month-to-month core inflation increases are generally excessive for these four members. But that follows declining inflation – falling prices- for core rates in March. Germany is an exception to this pattern, but it still follows the rule of improvement because its inflation progress is flipped between the two months. Looking at sequential growth rates for core inflation or ex-energy inflation for these large country members, we find that inflation is persistently decelerating from 12-months to 6-months to 3-months for all of them except for France. France shows a pickup in inflation over 3-months compared to 6-months as core inflation rises to a 3-month rate of 2.9% after posting a 2.1% pace over 6-months. The 3-month pace for inflation x-energy for Germany is 2.1%, the core for Italy is at 1.7%, and the core for Spain is at 1.8%. All three-monthly core rates are at the doorstep or within the ECB's target range for headline EMU inflation. France is the exception. The 12-month core inflation rates are all above target but show signs of coming into line; German and French year-over-year inflation rates decline in April compared to March the Italian rate is unchanged year-over-year at 2.3% on the monthly comparison, while only Spain has an acceleration compared to a month ago and that's to a 3.3% rise from 3.1% in March.

**Is it good enough?**
The speed of inflation’s drop- Core inflation rates would seem to build a good enough base for the ECB to move ahead with rate cuts if it decides it wants to go that way. If it wants to be surer and clearer about reducing inflation it will pay more attention to the headline rates that are excessive- especially since no inflation metric is falling particularly fast anymore. The risk over ‘overshooting’ on the downside seems remote. Oil prices as measured by Brent in euros rose by 4.3% month-to-month in April after rising 1.6% in March. However, year-over-year Brent prices are down by 3.3%, so the impulse from oil is mixed across tenors. 

ECB credibility- A different view of reality looks at ECB inflation performance over five-years and finds all the metrics quite unacceptable. Over the last five years the compounded inflation rate for the monetary union is 3.7% and for the core it's 2.8%. For Germany it's 4.1%, for France it's 3.3%, and for Italy and Spain it's 3.4%. The core or X energy inflation rates do not behave much better, Germany is at 3.3% over five years on its core measure, France at 2.7%, Spain at 3%, and Italy at 2.5%. If the ECB is concerned about its credibility, then it's going to want to make sure that it gets inflation down inside of its target soon because the five-year compound inflation rates are so far over their target that clearly a central bank that claims to target 2% inflation cannot look at that five-year record and consider policies to have been a success. 

**Driving the road ahead**- Looking ahead it's very possible that inflation is on a downtrend and that policy is moving inflation in the right direction; the question remains concerns the certainty of that conclusion and the question ‘is inflation moving down fast enough?’  The ECB is going to have to measure the impact on its credibility against its desire to hit its inflation target in the short run and pay some attention to the effect that policy has on economic growth rates in the monetary union. On that score, unemployment rates throughout the European Monetary Union are still extremely low in historic comparisons… but, there has been a new sensitivity across central banks globally as they try to reduce their inflation rates ‘to target levels’ without having much impact on the unemployment rates at all - even though unemployment rates are in many places near some version of historic lows. Time will tell whether this sort of prevarication in inflation fighting that coddles the unemployment rate that is already so low is wise or has turned out to be foolhardy. 


240517.jpg

Europe

EMU Inflation Trends Offer Hope and Hype- Inflation in the European Monetary Union rose by 0.2% month-to-month in April, the same as in March. Core inflation, however, picked up, rising by 0.4% but that was after being flat in March. The sequential growth rates from 12-months to six-months to three-months show the headline inflation rate at 2.4% over 12-months falling to 2% over 6-months, then rising to a 3% annual rate over three-months. The core rate for the monetary union rose 2.9% over 12-months at a 2.7% annual rate over six-months, it steps up to a 2.8% annual rate over three-months. Headline inflation is resisting moving down to the 2% level consistently while core inflation appears to be stuck just short of 3%. Whether these trends are good enough depends on whether the ECB sees itself implementing precision-guided policy or playing horseshoes and hand grenades.

EMU Inflation Holds the line 2% Beckons

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Total housing starts increased 5.7% (-0.6% y/y) during April to 1.360 million units (SAAR) after falling 16.8% in March to 1.287 million units, revised from 1.321 million. Starts in February rose a little-revised 12.4% to 1.546 million units. Starts remained 24.6% below the most recent peak of 1.803 million in April 2022. The Action Economics Forecast Survey expected 1.420 million starts in April.

Housing starts by type were mixed last month. Starts of single-family units eased 0.4% (+17.7% y/y) to 1.031 million after declining 8.7% in March to 1.035 million, revised from 1.022 million. They reached a high of 1.286 units in December 2020. Multi-family starts increased 30.6% (-33.1% y/y) in April to 329,000 after falling 38.8% to 252,000 in March, revised from 299,000. They reached a high of 624,000 units in November 2022.

Regional activity was mixed in April. In the Northeast, the level of starts fell 22.6% (-43.8% y/y) to 72,000 units after declining 21.8% in March and 10.5% in February. Starts in the Midwest rose 19.1% (3.4% y/y) to 181,000 following a 36.4% March decline. Starts in the South improved 10.1% (4.9% y/y) to 799,000 after a 15.9% March decline. In the West, starts fell 2.5% (+1.7% y/y) to 308,000 after declining in each of the prior three months.

Building permits declined 3.0% (-2.0% y/y) in April 1.440 million units after falling 5.0% to 1.485 million in March, revised from 1.458 million. It was the lowest level of permits since December 2022. Single-family permits eased 0.8% (+11.4% y/y) to 976,000 in April following a 4.2% March decline and a 0.4% February slip. Multi-family permits weakened 7.4% (-21.9% y/y) to 464,000, after falling 6.5% in March.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.



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240516i4.jpg

- Single-family starts decline but multi-family surge.
- Starts are mixed throughout the country.
- Building permits fall to lowest level in over one year.


U.S. Housing Starts Rise Modestly in April; Building Permits Fall

Sandy Batten

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Total industrial production was unchanged in April from March and 0.4% lower than a year ago. The previously released 0.4% rise in March was revised down to a meager 0.1% monthly gain. The Action Economics Forecast Survey expected a 0.1% increase in production last month. Manufacturing production slumped 0.3% m/m (-0.5% y/y) after a downwardly revised 0.2% monthly gain in March (initially reported as 0.5%). 

Mining activity declined for the third time in the past four months, falling 0.6% (-1.3% /y) following an upwardly revised 1.1% m/m decline in March (previously -1.4% m/m). Utilities output was the only positive part of industrial activity in April, rising 2.8% m/m (+2.3% y/y) on top of a downwardly revised 1.6% monthly gain in March (previously 2.0% m/m).

Amid the monthly volatility, manufacturing output has been relatively flat over the past nine months. In fact, the index level in April was 99.4, exactly the same as in August 2023. The manufacturing sector has been one of the most adversely affected by the Fed’s interest rate hikes. Since April 2022 (just after the Fed initiated it rate hikes in March 2022), manufacturing output has fallen 1.4%. Within the manufacturing sector in April, durable goods production fell 0.5% m/m, its first monthly decline in three months, led by a 2.0% m/m decline in motor vehicle production and a 1.9% m/m drop in the production of electrical equipment and appliances. Production of nondurable goods edged down 0.1% m/m in April following a 0.2% monthly increase in March. Production of selected high-technology industries increased 1.0% m/m. By contrast, petroleum and coal products output slumped 4.4%m/m, the first monthly decline in three months.

Manufacturing output excluding motor vehicles slipped 01% m/m in April after being unchanged in March. Manufacturing excluding selected high-tech industries fell 0.3% m/m in April versus a 0.1% monthly gain in March. Manufacturing output excluding both selected high-tech industries and motor vehicles decreased 0.2% m/m, its sixth monthly decline in the past seven months. Production of consumer goods inched up 0.1% m/m in April following a 0.5% monthly gain in March. Output of business equipment fell 0.5% m/m on top of a 0.2% monthly decline in March. 

Production of construction supplies fell 1.0% m/m in April, the sixth monthly decline in the past seven months. Materials output edged up 0.1% m/m in April, just offsetting a 0.1% m/m decline in March.

Total capacity utilization slipped to 78.4% in April from a slightly upward revised 78.5% in March (previously 78.4%). The April reading was exactly as expected by the Actions Economics Forecast Survey. The capacity utilization rate for manufacturing fell significantly to 76.9% from 77.2%. By contrast, the capacity rate for utilities rose to 71.0 from 69.2.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- IP was unchanged in April with manufacturing falling 0.3% m/m
- Manufacturing decline led by 2.0% m/m drop in motor vehicle output
- Mining fell for the third month of the past four
- Capacity utilization slipped to 78.4%


U.S. Industrial Production Unchanged in April

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Import prices for all goods rose 0.9% (NSA) in April after a 0.6% March gain, revised from 0.4%, and a 0.2% February increase, according to the Bureau of Labor Statistics. A 0.2% April rise had been expected in the Action Economics Forecast Survey. The y/y change of 1.1% followed 12-month price declines all through 2023. 

Export prices increased 0.5% in April following a 0.1% March uptick, revised from 0.3%, and a minimally revised 0.7% February rise. A 0.2% price gain had been expected. These gains also followed a 0.7% January increase. The 1.0% y/y decline compared to an 11.8% y/y drop in June of last year. 

The monthly rise in April import prices was led by a 2.9% increase (5.2% y/y) in imported petroleum prices after they surged 6.7% in March. The April increase was the fourth consecutive monthly gain. The increase in imported petroleum costs was accompanied by a 9.2% decline in natural gas prices, off 42.5% y/y. Nonfuel import prices rose 0.7% (0.9% y/y) after a 0.2% March increase. Import prices for foods, feeds & beverages strengthened 1.7% (6.8% y/y), up for the fourth consecutive month. Motor vehicle & parts prices increased 0.3% (2.6% y/y) after a 0.2% rise. Capital goods prices edged 0.1% higher (-0.1% y/y) after a 0.2% decline while nonauto consumer goods prices also rose 0.1% (0.5% y/y) after falling 0.3% in March. 

The increase in April export prices included a 0.9% decline (-10.2% y/y) in agricultural export prices, which added to a 1.3% March drop . Nonagricultural export prices rose 0.7% (0.1% y/y), the fourth straight monthly gain. Export prices of industrial supplies & materials rose 1.0% (-1.7% y/y), the fourth straight month of firm gain. Automotive vehicles & parts export prices strengthened 0.8% (4.0% y/y) after easing 0.1% in March. Capital goods prices rose 0.4% (1.8% y/y) after edging 0.1% higher. A 0.1% uptick (-1.3% y/y) in nonauto consumer goods prices followed a 0.4% March rise. Foods, feeds & beverage prices were off 0.7% last month (-10.6% y/y) after falling 1.6% in March. 

The import and export price series can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database. 


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- Import prices rise for fourth consecutive month.
- Excluding fuels, import prices edge up for sixth straight month.
- Export price gain improves. 


Economy in Brief: February 2002

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