Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020319a.jpg" width="353">
The US foreign trade deficit rose more than expected in January. December&#39;s deficit was revised shallower from $25.3B reported last month. The trade deficit began 1Q02 slightly deeper than the 4Q average of $27.6B 
The strength of the rise in imports, notably the 5.5% rise in capital goods and the 6.2% rise in nonauto consumer goods, is further indication that the US economy has improved. 
Offsetting some of this strength is the continued weakness in exports. A 1.0% gain in capital goods and 2.9% gain in autos were offset by a 5.6% decline in nonauto consumer goods and a 10.1% decline in other goods exports.
Imports of industrial supplies and materials surged 4.4% as the value of petroleum imports rose 12%. The price per barrel of crude oil rose 5.2% to $16.31.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">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>
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<td class="firstcol">Trade Deficit</td>
<td>$28.5B</td>
<td>$24.7B</td>
<td>$33.5B(1/01)</td>
<td>$347.5B</td>
<td>$375.7B</td>
<td>$261.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-13.3%</td>
<td>-5.7%</td>
<td>11.3%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>3.6%</td>
<td>-3.6%</td>
<td>-13.7%</td>
<td>-6.2%</td>
<td>18.2%</td>
<td>10.9%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Flat 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020319b.jpg" width="353">
Chain store sales were about flat last week, up 0.1% following three consecutive weeks of moderate decline. So far in March store sales are roughly unchanged from the February average.
Inclement weather may have curtailed sales of spring clothing ahead of this year&#39;s relatively early Easter.
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">3/16/02</th>
<th scope="col">3/09/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>407.5</td>
<td>407.1</td>
<td>5.1%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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The US foreign trade deficit rose more than expected in January. December's deficit was revised shallower from $25.3B reported last month. The trade deficit began 1Q02 slightly deeper than the 4Q average of $27.6B The strength of the [...]

January Trade Deficit Deepened

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020318a.jpg" width="353">
The PCE Chain Price Deflator recently has been quite subdued relative to the Consumer Price Index. Last year, the difference between growth in the two indexes less food &amp; energy jumped to 1.1 percentage points. 
The primary difference between the two series is their different weighting schemes. The PCE deflator published by the Bureau of Economic Analysis updates the weights assigned to each spending category each month as spending patterns change. The CPI published by the Bureau of Labor Statistics holds constant the weights that are currently based on the Consumer Expenditure Survey over the years 1999 and 2000.
The Bureau of Labor Statistics will begin publishing a Chained CPI effective with release of July data in August 2002. Designated the C-CPI-U, the index will supplement the existing indexes already produced by the BLS.
For more information on the upcoming CPI release go to <a href="http://www.bls.gov/cpi/superlink.htm">http://www.bls.gov/cpi/superlink.htm</a>

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The PCE Chain Price Deflator recently has been quite subdued relative to the Consumer Price Index. Last year, the difference between growth in the two indexes less food & energy jumped to 1.1 percentage points. The primary difference [...]

PCE Price Deflator Subdued

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020315a.jpg" width="353">
Industrial production rose for the second month in a row led by factory sector increases of 0.3% in each month. 
Inventory cutbacks recently have severely depressed output. To rebuild inventories production must be raised to the level of sales which recently have been rising. 
Excluding computers and office equipment production rose 0.2% following a 0.3% January gain. Less autos output was up 0.4%. 
Output of consumer goods rose for the third month in four, but output of business equipment fell for the second month in three. 
Capacity utilization rose slightly due to the modest gain in output. Monthly increases in capacity slowed to just 0.1% (1.3% y/y) early last year. In 1998 industry capacity rose 6.7%.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Industrial Production</td>
<td>0.4%</td>
<td>0.2%</td>
<td>-4.1%</td>
<td>-3.7%</td>
<td>4.5%</td>
<td>3.7%</td>
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<td class="firstcol">Capacity Utilization</td>
<td>74.8%</td>
<td>74.5%</td>
<td>78.9%(2/01)</td>
<td>76.8%</td>
<td>81.8%</td>
<td>81.4%</td>
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Producer Prices Rise As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020315b.jpg" width="353">
Finished producer prices rose as expected last month due to a modest 0.4% rise in energy prices, up for the second consecutive month. Food prices popped 1.0%, the second strong monthly increase in a row. 
Core finished consumer goods prices were unchanged and a bit weaker than expected. 
Gasoline prices rose 5.2% for the second strong month in a row. Fuel oil prices also were strong but prices for natural gas and electricity fell. 
Household furniture and electronic equipment prices rose moderately but prices for appliances, floor coverings and autos fell. Apparel prices were generally weak. 
Intermediate goods prices fell for the eleventh time since last February. Core intermediate prices haven&#39;t risen since last March. 
Crude goods prices fell due to lower energy prices, but core crude prices rose reflecting the recent rebound in commodity prices

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Finished Goods</td>
<td>0.2%</td>
<td>0.1%</td>
<td>-2.7%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
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<td class="firstcol">&nbsp; Core</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>0.5%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
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<td class="firstcol">Intermediate Goods</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-4.6%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
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<td class="firstcol">&nbsp; Core</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-1.9%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
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<td class="firstcol">Crude Goods</td>
<td>-0.8%</td>
<td>3.7%</td>
<td>-30.7%</td>
<td>0.5%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>1.5%</td>
<td>-0.5%</td>
<td>-6.9%</td>
<td>-10.0%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020315c.jpg" width="353">
The Mid-March reading of Consumer Sentiment by the University of Michigan was unexpectedly strong, rising to the highest level since December 2000. 
The improved sentiment level reflected higher readings of both consumer expectations and the current situation.
The University of Michigan survey is not seasonally adjusted.
During the past five years there has been a 39% correlation between the level of consumer sentiment and the 3-month % change in real PCE.

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<th scope="col" class="firstcol">Univ. of Michigan</th>
<th scope="col">Mid-March</th>
<th scope="col">Feb</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Consumer Sentiment</td>
<td>95.0</td>
<td>90.7</td>
<td>3.8%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
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Industrial production rose for the second month in a row led by factory sector increases of 0.3% in each month. Inventory cutbacks recently have severely depressed output. To rebuild inventories production must be raised to the level [...]

Industrial Production Rose More Than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020314c.jpg" width="353">
Prices for imported commodities were weaker than expected last month, falling rather than rising 0.2% as expected by Consensus estimates.
Nonpetroleum import prices fell for the twelfth month in thirteen. Prices of capital goods and nonauto consumer goods continued slides that began in 1995. Imported food prices more than reversed a January run-up.
Petroleum import prices rose for the second month in a row and Brent crude oil prices are up further in March. 
Export prices fell for the twelfth month in thirteen.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Import - All Commodities</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-8.3%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>2.9%</td>
<td>5.3%</td>
<td>-30.4%</td>
<td>-17.2%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>-0.5%</td>
<td>0.1%</td>
<td>-5.0%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-2.9%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020314b.jpg" width="353">
Initial claims for unemployment insurance fell slightly less than expected in the latest week. The prior week&#39;s level was revised up from 376,000. Claims are up slightly versus February.
The chart indicates an 82% correlation between the level of initial claims and the 3-month change in nonfarm payrolls.
The four-week moving average of claims rose to 374,750.
Continuing claims for unemployment insurance rose sharply in the latest week but the prior week&#39;s level was revised down substantially.
The insured rate of unemployment rose slightly to 2.7%, about where it&#39;s been all year.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">03/09/02</th>
<th scope="col">03/02/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Initial Claims</td>
<td>377.0</td>
<td>380.0</td>
<td>-0.8%</td>
<td>408.0</td>
<td>302.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,479</td>
<td>40.3%</td>
<td>3,031</td>
<td>2,127</td>
<td>2,187</td>
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</tbody>
</table>
Business Inventories Rose Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020314a.jpg" width="353">
Total business inventories rose in January for the first time since January &#39;01 versus expectations for a slight decline. The decline in December inventories was little revised.
Nonauto retail inventories, the new news in today&#39;s report, rose for the first time since last August led by sharp increases in apparel and furniture. 
Inventories of motor vehicles &amp; parts also rose sharply, the second consecutive monthly gain following three months of decline.
Overall business sales surged 1.1% (-1.9% y/y) following no change in December. Higher sales by merchant wholesalers and manufacturers led the rise.
The inventory-to-sales ratio fell to 1.38, down from 1.42 for all of last year.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">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>
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<td class="firstcol">Total</td>
<td>0.2%</td>
<td>-0.5%</td>
<td>-6.0%</td>
<td>-6.0%</td>
<td>6.0%</td>
<td>5.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>1.4%</td>
<td>0.1%</td>
<td>-3.8%</td>
<td>-4.7%</td>
<td>6.8%</td>
<td>7.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.6%</td>
<td>-0.1%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>4.4%</td>
<td>5.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>-0.2%</td>
<td>-0.5%</td>
<td>-5.1%</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>-0.9%</td>
<td>-8.4%</td>
<td>-7.5%</td>
<td>4.6%</td>
<td>2.3%</td>
</tr>
</tbody>
</table>
4Q Current Account Deficit Deepened Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 14, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020314d.jpg" width="353">
The US current account deficit deepened slightly last quarter following steady improvement during the prior year. 
A deeper deficit on unilateral transfers caused the deterioration in the current account. The deficit on goods, services and income improved slightly.
In percentage terms, exports of goods and services fell more than imports, but the deficit nevertheless improved because imports are so much larger than exports. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">4Q &#39;01</th>
<th scope="col">3Q &#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>
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<td class="firstcol">Current Account Deficit</td>
<td>$98.8B</td>
<td>$98.5B</td>
<td>$116.3B</td>
<td>$417.4B</td>
<td>$444.7B</td>
<td>$324.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % of GDP</td>
<td>3.9%</td>
<td>3.9%</td>
<td>4.6%</td>
<td>4.1%</td>
<td>4.5%</td>
<td>3.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Deficit on Gds, Serv &amp; Income</td>
<td>$85.0B</td>
<td>$85.9B</td>
<td>$100.0B</td>
<td>$366.9B</td>
<td>$390.5B</td>
<td>$275.5B</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>-5.2%</td>
<td>-7.0%</td>
<td>-18.3%</td>
<td>-8.5%</td>
<td>14.2%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>-4.3%</td>
<td>-7.7%</td>
<td>-17.5%</td>
<td>-7.9%</td>
<td>19.2%</td>
<td>11.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$13.9B</td>
<td>$12.7B</td>
<td>$16.7B</td>
<td>$50.5B</td>
<td>$54.1B</td>
<td>$48.9B</td>
</tr>
</tbody>
</table>
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Prices for imported commodities were weaker than expected last month, falling rather than rising 0.2% as expected by Consensus estimates. Nonpetroleum import prices fell for the twelfth month in thirteen. Prices of capital goods and [...]

Import Prices Resume Their Slide

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020313a.jpg" width="353">
Total retail sales rose modestly last month following January performance that was little revised. Sales excluding autos rose less than the expected 0.5% Consensus estimate following a January surge that was unrevised. 
Sales of furniture, home furnishings and electronics rose 1.3% following a 1.5% January drop that was revised from a 0.4% gain reported initially. 
Sales at clothing and accessory stores fell slightly following two months of strong gain.
Sales at general merchandise stores rose for the fifth consecutive month.
Sales at motor vehicle and parts dealers rose for only the second month in seven. Sales of domestic and imported light vehicles rose 5.4% (-4.8% y/y to 16.677M units (SAAR). 
Sales at gasoline service stations were flat.

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<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.3%</td>
<td>-0.3%</td>
<td>2.9%</td>
<td>3.5%</td>
<td>7.6%</td>
<td>8.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.2%</td>
<td>1.2%</td>
<td>2.8%</td>
<td>2.8%</td>
<td>8.0%</td>
<td>7.3%</td>
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Total retail sales rose modestly last month following January performance that was little revised. Sales excluding autos rose less than the expected 0.5% Consensus estimate following a January surge that was unrevised. Sales of [...]

Retail Sales Up Less than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020312a.jpg" width="353">
Chain store sales fell 0.7% last week marking the third consecutive week of moderate decline. Despite recent declines, the trend in store sales has clearly improved.
The latest week is the first full week of the month. So far, March sales remain slightly above the February average.
During the last ten years there has been a 20% correlation between the monthly percent change in chain store sales and the change in consumer confidence.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">3/09/02</th>
<th scope="col">3/02/02</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>407.1</td>
<td>409.8</td>
<td>4.7%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
Foreign Exchange Value of the US $ Falls 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 12, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020312b.jpg" width="353">
The foreign exchange value of the US dollar has fallen more than 1% since its highs set in January.
The decline has been led by weakness against the Japanese Yen which is up nearly 5% during the period due to tentative signs of economic recovery in Japan and new trade legislation in the US.
Despite the recent $ weakness, it&#39;s value remains high relative to recent years.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D2/@D202/@D202.HTM">Trade-Weighted Value of US$</a></th>
<th scope="col">3/08/02</th>
<th scope="col">3/01/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Nominal FX Value of the US$</td>
<td>128.83</td>
<td>129.62</td>
<td>3.4%</td>
<td>5.1%</td>
<td>3.3%</td>
<td>0.2%</td>
</tr>
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Chain store sales fell 0.7% last week marking the third consecutive week of moderate decline. Despite recent declines, the trend in store sales has clearly improved. The latest week is the first full week of the month. So far, March [...]

Weekly Chain Store Sales Slip

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020311a.jpg" width="353">
Announcements of job cuts in February reversed a January run-up, falling to the lowest level since June of last year according to the Challenger, Gray and Christmas survey. 
The February decline confirms improvement in the labor market recently reported weekly by lower claims for jobless insurance and by last Friday&#39;s report of a rise in February nonfarm payrolls.
Announced cuts in the automotive industry plunged to 16,318 from 43,035 in January. Most other industries reported fewer job cuts except commodities, entertainment and consumer goods. 
The figures are not seasonally adjusted.

ECRI Leading Inflation Gauge Up  
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020311b.jpg" width="353">
The Future Inflation Gauge published by the Economic Cycle Research Institute (ECRI) rose in February by 2.6%. 
While large, the February gain was the first material rise since early 2000. It raised the six-month growth rate in the index to -6.2%.
Since 1994, there has been roughly a 40% correlation between the the six-month growth in the ECRI leading inflation indicator and growth in the core Consumer Price Index, twelve months hence. 

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Announcements of job cuts in February reversed a January run-up, falling to the lowest level since June of last year according to the Challenger, Gray and Christmas survey. The February decline confirms improvement in the labor market [...]

Job Cut Announcements Plunge

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020308a.jpg" width="353">
Nonfarm payrolls rose much more than expected last month, although job loss in January was revised deeper due to a deepened estimate of cuts in the factory sector. Consensus estimates had been for no change in February payrolls.
It was the first gain in payrolls since last July. The breadth of job gain improved as indicated by the one month diffusion index rising to 48.2, the highest level since March.
From the household survey, the unemployment rate fell to its lowest level since October.
The median duration of unemployment fell sharply to 8.1 weeks from 8.8 weeks in January. That was still up versus 6.0 weeks last February.
Factory sector jobs continued to fall with losses in the industrial machinery, electronic equipment and nondurable sectors. Nevertheless, the one month diffusion index for the factory sector improved to 40.8 versus a low of 25.7 in November.
Construction sector jobs rose 25,000 (-1.0% y/y) following a 63,000 loss in January. 
Employment in the service sector rose 97,000 (0.1% m/m) led by strong gains at general merchandise stores. Employment in many other service sectors fell. 
The index of aggregate hours worked (employment times hours worked) rose 0.1%. The Jan-Feb average is 1.1% (AR) below 4Q.Aggregate hours continued to fall in the factory sector. 
Average hourly earnings were little changed versus consensus expectations for a 0.3% gain, but January was revised up from no change.
The employment figures for nonfarm payrolls are based on reports provided to the US Labor Department by businesses, while the figures from which the unemployment rate is derived are based on a survey of US households.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">

</table>
<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/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</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>66,000</td>
<td>-126,000</td>
<td>-1.0%</td>
<td>0.4%</td>
<td>2.2%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-50,000</td>
<td>-110,000</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>34.1</td>
<td>34.1</td>
<td>34.3</td>
<td>34.2</td>
<td>34.4</td>
<td>34.5</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.2%</td>
<td>3.7%</td>
<td>4.2%</td>
<td>3.8%</td>
<td>3.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.5%</td>
<td>5.6%</td>
<td>4.2%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls rose much more than expected last month, although job loss in January was revised deeper due to a deepened estimate of cuts in the factory sector. Consensus estimates had been for no change in February payrolls. It [...]

Employment Rose More Than Expected

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

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

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

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

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

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

US PCE inflation over the past six months has slowed to the Fed's 2% target

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

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

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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. 


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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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- 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: March 2002

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