Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020820b.jpg" width="353">
The U.S. foreign trade deficit improved slightly in June, about as expected, versus a record May deficit that was deepened slightly. 
Trade deficits in 2Q02 ran at a $444.6B annual rate versus a $373.3B rate in 2Q01.
Exports rose strongly for the third month this year. Capital goods (-6.4% y/y) and nonauto consumer goods (-2.4% y/y) were strong as were exports of food (6.2% y/y).
Imports rose just moderately as industrial supplies and food imports fell. Imports of capital goods (-1.4% y/y) and nonauto consumer goods (10.0% y/y) were strong.
The refiner&#39;s acquisition cost of imported crude oil fell slightly in June to $23.71 from $24.29 in May and from $23.95 in June 2001. Prices rose in July and August.

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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">June</th>
<th scope="col">May</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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<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$37.2B</td>
<td>$37.8B</td>
<td>$30.8B(6/01)</td>
<td>$358.3B</td>
<td>$378.7B</td>
<td>$262.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>1.7%</td>
<td>0.8%</td>
<td>-2.8%</td>
<td>-6.2%</td>
<td>11.2%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>0.5%</td>
<td>2.0%</td>
<td>3.5%</td>
<td>-6.0%</td>
<td>18.3%</td>
<td>10.9%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 20, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020820a.jpg" width="353">
Chain store sales fell for the second consecutive week, continuing a very checkered performance during the last 2-3 months according to the BTM-UBSW survey.
Sales so far in August are down 0.6% versus the average for July which rose only 0.3% from June.
During the last five years there has been a 61% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales.

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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">8/17/02</th>
<th scope="col">8/10/02</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>410.0</td>
<td>413.1</td>
<td>1.8%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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The U.S. foreign trade deficit improved slightly in June, about as expected, versus a record May deficit that was deepened slightly. Trade deficits in 2Q02 ran at a $444.6B annual rate versus a $373.3B rate in 2Q01. Exports rose [...]

U.S. Trade Deficit Improved in June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020819c.jpg" width="353">
The Composite Index of Leading Economic Indicators fell slightly less than expected last month. It was the third decline in the index during the last four months. June figures were revised down and now show a decline versus the previously reported no change. 
The ratio of coincident-to-lagging indicators was unchanged following five successive months of gain. The ratio is an indicator of excess relative to actual economic performance.
The coincident indicators rose for the fifth consecutive month. The lagging indicators rose for the first month since September of last year, due to higher unit labor costs and consumer debt relative to income .
Only 40% of the leaders&#39; component series rose last month versus 50% that rose in June. Lower stock prices and lower consumer expectations had large negative influences on the leading index.
The Leading index is based on eight previously reported economic data series and two that are estimated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">July</th>
<th scope="col">June</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">Leading</td>
<td>-0.4%</td>
<td>-0.2%</td>
<td>1.7%</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>3.3%</td>
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<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.3%</td>
<td>-1.0%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>3.2%</td>
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<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.1%</td>
<td>-0.3%</td>
<td>-3.9%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
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</table>
The Chain Weighted CPI    
by <a href="/comment/Moeller.html">Tom Moeller</a> August 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020819a.jpg" width="353">
With the release of the July CPI, the Bureau of Labor Statistics began publishing a series called the chained CPI. Unlike the official CPI, the new index reflects changes in consumer spending patterns (weight shifts). It therefore is a better measure of consumers&#39; cost of living.
The chained CPI reflects consumers preference to increase spending on goods and services which are falling in price relative to others. Much of the recent difference between the two CPI measures is due to the falling price of, and increased spending on, computers. 
For a complete discussion of the technical details of the new chained CPI, visit the BLS website: <a href="http://www.bls.gov/cpi/superlink.htm">http://www.bls.gov/cpi/superlink.htm</a>
The new chained CPI is analogous to the PCE deflator published by the Bureau of economic Analysis.
For a discussion of the use of chain weighted data, visit the site below. <a href="http://www.frbsf.org/publications/economics/letter/2002/el2002-22.pdf">http://www.frbsf.org/publications/economics/letter/2002/el2002-22.pdf</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Consumer Price Index</a></th>
<th scope="col">July</th>
<th scope="col">June</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">Official</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>2.8%</td>
<td>3.4%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Chained (NSA)&nbsp;</td>
<td>0.0%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>2.1%</td>
<td>2.0%</td>
<td>n.a.</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less Food &amp; Energy (NSA)</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>1.6%</td>
<td>1.9%</td>
<td>1.4%</td>
<td>n.a.</td>
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The Composite Index of Leading Economic Indicators fell slightly less than expected last month. It was the third decline in the index during the last four months. June figures were revised down and now show a decline versus the [...]

Leading Indicators Fall

Louise Curley

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020813a.jpg">
Retail sales increased 1.2% in July according to the Advance Monthly Sales for Retail and Food Services, after a revised increase of 1.4% in June.
Sales of motor vehicle and parts dealers rose 4.2% in each month as a result of zero-financing and other incentives offered by the automakers.
Excluding sales of motor vehicles and parts dealers, retail sales rose only 0.2% in July, compared with 0.5% in June.
Sales increased 2.7% at gasoline stations, due in part to price increases, 1.1% at health and personal care stores, 1.0% at food services and drinking places, 0.5% at nonstore retailer, 0.4% at sporting goods, hobby, book and music stores and 0.3% at food and beverage stores.
Sales declined 1.4% at furniture and home furnishing stores, 1.3% at clothing and clothing accessories stores, 1.3% at miscellaneous store retailers, 1.2% at building material and garden equipment and supplies dealers and 1.0% at electronics and appliance stores.

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<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">July</th>
<th scope="col">June</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.2%</td>
<td>1.4%</td>
<td>4.8%</td>
<td>3.8%</td>
<td>6.7%</td>
<td>8.4%</td>
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<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.2%</td>
<td>0.5%</td>
<td>3.9%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>7.4%</td>
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</tbody>
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Retail sales increased 1.2% in July according to the Advance Monthly Sales for Retail and Food Services, after a revised increase of 1.4% in June. Sales of motor vehicle and parts dealers rose 4.2% in each month as a result of zero- [...]

July Retail Sales Rose; June Revised Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020809a.jpg" width="353">
Nonfarm labor productivity grew more than expected last quarter. Consensus estimates were for a 0.8% rate of growth.
Revisions to productivity left 1Q02 growth unchanged at 8.6% but 2001 growth was lowered to 1.1% from 1.8%. Growth in 2000 was lowered to 2.9% from 3.3%.
Output in the nonfarm business sector rose 0.5% (AR) following a 6.2% gain in 1Q02. Hours worked fell 0.7%, the eighth decline in the last nine quarters.
Unit Labor costs rose 2.4% following three consecutive quarters of decline. Compensation growth held steady at its 1Q02 rate, but that&#39;s up sharply from the quarterly rates of growth last year.
Manufacturing sector productivity grew at a 4.9% rate following a 9.7% surge in 1Q02. Unit labor costs fell at a 1.8% rate, the fourth consecutive quarterly decline.
Inflation pressure rose. The price deflator for the nonfarm business sector rose 1.4% following two consecutive quarters of decline.
The price-to-unit labor cost ratio, a key measure of corporate profitability, fell slightly following four quarters of gain.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR)</th>
<th scope="col">2Q &#39;02</th>
<th scope="col">1Q &#39;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">Output per Hour</td>
<td>1.1%</td>
<td>8.6%</td>
<td>4.7%</td>
<td>1.1%</td>
<td>2.9%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>3.6%</td>
<td>3.6%</td>
<td>2.4%</td>
<td>2.7%</td>
<td>7.0%</td>
<td>4.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>2.4%</td>
<td>-4.6%</td>
<td>-2.2%</td>
<td>1.6%</td>
<td>3.9%</td>
<td>2.0%</td>
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Nonfarm labor productivity grew more than expected last quarter. Consensus estimates were for a 0.8% rate of growth. Revisions to productivity left 1Q02 growth unchanged at 8.6% but 2001 growth was lowered to 1.1% from 1.8%. Growth in [...]

Nonfarm Productivity Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020808a.jpg" width="353">
Finished producer prices were weak last month, falling instead of rising 0.2% as the Consensus expected. It was the third decline in producer prices this year. Excluding food and energy prices also were weaker than expectations for a 0.1% rise.
Energy prices rose a modest 0.1% following no change in June and a decline in May.
Food prices fell for the third month in four.
Core finished consumer goods prices fell a sharp 0.4% (0.2% y/y). Core nondurable goods prices fell for the first month since February. Consumer durables prices were off 0.7% reflecting lower prices for electronics, furniture and cars. Capital goods prices fell 0.4%, the fourth decline this year. 
Intermediate goods prices rose moderately reflecting higher core intermediate prices. 
Crude goods prices rose reflecting higher prices for energy and other commodities.

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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">July</th>
<th scope="col">June</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>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-1.1%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.3%</td>
<td>0.2%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>-1.3%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>0.6%</td>
<td>-3.6%</td>
<td>-6.3%</td>
<td>0.3%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>1.7%</td>
<td>1.6%</td>
<td>6.7%</td>
<td>-9.9%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 8, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020808b.jpg" width="353">
Initial claims for unemployment insurance fell more than expected in the latest week. The prior week&#39;s level was revised up slightly. 
Continuing claims for unemployment insurance rose a sharp 1.5%, but the prior week&#39;s level was revised down.
The four-week moving average of initial claims fell to 379,000, -4.2% y/y. 
The insured rate of unemployment rose slightly to 2.8%.

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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">8/3/02</th>
<th scope="col">7/27/02</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>
<tbody>
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<td class="firstcol">Initial Claims</td>
<td>376.0</td>
<td>391.0</td>
<td>-5.3%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,532</td>
<td>15.6%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
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</tbody>
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</body>
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Finished producer prices were weak last month, falling instead of rising 0.2% as the Consensus expected. It was the third decline in producer prices this year. Excluding food and energy prices also were weaker than expectations for a [...]

Producer Prices Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020807a.jpg" width="353">
Prices for imported commodities rose twice the Consensus expectation last month. June figures were revised up.
Petroleum import prices reversed all of their June decline. So far in August, the price of Arab Light crude oil is up slightly to $23.26/bbl versus $23.09 in July.
Nonpetroleum import prices were unchanged and have risen 0.1% YTD.
Prices for imported capital goods fell a sharp 0.4% and are down 1.5% YTD. Nonauto consumer goods prices rose 0.1%, down 0.6% YTD and auto prices were unchanged, up 0.1% YTD.
Export prices rose following two months of no change, up 0.7% YTD. Food and industrial supplies prices have been strong but other export prices have been weak or lower.

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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">July</th>
<th scope="col">June</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>0.4%</td>
<td>-0.3%</td>
<td>-1.7%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.9%</td>
<td>-4.8%</td>
<td>4.4%</td>
<td>-17.2%</td>
<td>66.5%</td>
<td>34.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-1.5%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.3%</td>
<td>0.0%</td>
<td>-0.7%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
</tr>
</tbody>
</table>
Consumer Credit Growth Steady 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020807b.jpg" width="353">
Consumer borrowing rose 0.5% in June, as expected. May figures were unrevised, up 0.6%. So far this year, consumer credit outstanding has risen at a 5.5% annual rate. 
Revolving credit rose by a moderate 0.5% m/m. Year to date revolving credit has grown at a 4.5% annual rate.
Nonrevolving credit also rose 0.5%, 6.3% (AR) YTD.

<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/@E1/@E103/@E10308/@E10308.HTM">Consumer Credit Outstanding</a></th>
<th scope="col">June m/m</th>
<th scope="col">May m/m</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>$8.4B</td>
<td>$9.5B</td>
<td>6.1%</td>
<td>6.8%</td>
<td>10.2%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$3.8B</td>
<td>$2.4B</td>
<td>2.7%</td>
<td>4.9%</td>
<td>11.5%</td>
<td>6.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonrevolving</td>
<td>$4.5B</td>
<td>$7.1B</td>
<td>8.6%</td>
<td>8.3%</td>
<td>9.2%</td>
<td>8.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Prices for imported commodities rose twice the Consensus expectation last month. June figures were revised up. Petroleum import prices reversed all of their June decline. So far in August, the price of Arab Light crude oil is up [...]

Import Prices Rose Sharply

<html>
<head>
<style>
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}
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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/020806a.jpg" width="353">
Chain store sales rose 0.1% following a 0.4% dip the prior week according to the BTM-UBSW survey.
Sales began the month of August about even with the average for July.
During the last five years there has been a 61% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales.

<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/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">8/3/02</th>
<th scope="col">7/27/02</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>415.1</td>
<td>414.5</td>
<td>3.8%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales rose 0.1% following a 0.4% dip the prior week according to the BTM-UBSW survey. Sales began the month of August about even with the average for July. During the last five years there has been a 61% correlation [...]

Weekly Chain Store Sales Tick Higher

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

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**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: August 2002

Jump to:

U.S. Trade Deficit Improved in June

Leading Indicators Fall

July Retail Sales Rose; June Revised Higher

Nonfarm Productivity Firm

Nonfarm Productivity Firm

Producer Prices Fell

Import Prices Rose Sharply

Weekly Chain Store Sales Tick Higher