Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030219a.jpg" width="353">
Housing starts were stronger than expected last month. Total starts rose slightly from an upwardly revised December level. Starts had been expected to decline slightly.
Single family starts rose 2.1% m/m, nearly to the record high level set in 1978. 
Multi-family starts fell for the first month in three. The y/y comparison was to a strong January last year.
Building permits fell and gave back roughly half of a very strong December gain that was upwardly revised. The decline was entirely due to a drop in permits for five or more unit structures. Single family permits rose modestly m/m to a record level.
A strong seasonal factor lifted the adjusted level of housing starts last month by 29% versus a 24% add in December and a 10% addition in November.

<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/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,850</td>
<td>1,847</td>
<td>8.0%</td>
<td>1,711</td>
<td>1,603</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,510</td>
<td>1,479</td>
<td>12.4%</td>
<td>1,365</td>
<td>1,273</td>
<td>1,232</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>340</td>
<td>368</td>
<td>-7.9%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,781</td>
<td>1,887</td>
<td>5.6%</td>
<td>1,717</td>
<td>1,639</td>
<td>1,598</td>
</tr>
</tbody>
</table>
NAHB Housing Index Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030219b.jpg" width="353">
The National Association of Home Builders Housing Market Index fell in February, down for the second month. Despite the declines, the index remained at the firmest level since 1999.
Surveys of market conditions for current sales were stable. Expected sales in six months fell to the lowest level since August. 
Traffic of prospective buyers fell sharply. This survey was taken prior to the snowstorm in the East.
For a description of the housing market index from the National Association of Home Builders, visit the <a href="http://www.nahb.org/generic.aspx?sectionID=134&amp;genericContentID=532">NAHB website</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>62</td>
<td>64</td>
<td>58</td>
<td>61</td>
<td>56</td>
<td>62</td>
</tr>
</tbody>
</table>
Chain Store Sales Down Last Week 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030219c.jpg" width="353">
Chain store sales fell a slight 0.1% last week according to the BTM-UBSW survey. The decline followed flat sales the week prior and a sharp decline late in January.
February sales so far are down 0.3% from the January average. The year-to-year comparison went negative due to a sales surge during mid-February last year.
The y/y gain in Redbook Same Store sales remained positive despite a similar sales surge last year.
During the last ten years there has been a 56% correlation between the year-to-year percent change in monthly chain store sales and the change in nonauto retail sales less gasoline.

<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">2/15/03</th>
<th scope="col">2/08/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>408.3</td>
<td>408.9</td>
<td>-1.5%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Housing starts were stronger than expected last month. Total starts rose slightly from an upwardly revised December level. Starts had been expected to decline slightly. Single family starts rose 2.1% m/m, nearly to the record high [...]

Housing Starts Strong Again

Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030214d.jpg" width="353">
Inflation in the United Kingdom was 2.7% in January, 2003, marking the third month of inflation above the Bank of England&#146;s target rate of 2.5%. The Bank uses the year over year change in the retail price index excluding mortgage interest payments as its measure of inflation. This index tends to be less volatile than the all items index. The recent rise in inflation is not expected to lead to a tightening of monetary policy. Inflation is not the Bank&#146;s sole concern. Indeed, the recent slow down in economic growth led the Bank to reduce the bank rate by 25 basis points to 3.75% on February 6th in spite of the rise in inflation.
The all items retail price index including mortgage interest payments was up 2.9% in January over a year ago. Much of the recent rise in inflation can be attributed to the rise in the price of oil.. Both the cost of heating oil in the Housing and Household Expenditure component and the cost of motor fuel in the Travel and Leisure component have risen sharply in recent months.

<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/UK/@U6/@U601/@U60101/@U60101.HTM">U.K. Retail Price Indexes</a></th>
<th scope="col">Jan2003</th>
<th scope="col">Dec2002</th>
<th scope="col">Nov2002</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">All Items ex mortgage interest payments</td>
<td>2.7</td>
<td>2.7</td>
<td>2.8</td>
<td>2.2</td>
<td>2.1</td>
<td>2.1</td>
</tr>
<tr>
<td class="firstcol">All Items</td>
<td>2.9</td>
<td>2.9</td>
<td>2.7</td>
<td>1.6</td>
<td>1.8</td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Housing and Household Expenditures</td>
<td>5.7</td>
<td>5.7</td>
<td>4.5</td>
<td>2.6</td>
<td>2.2</td>
<td>5.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Heating oil and other fuel</td>
<td>19.7</td>
<td>18.4</td>
<td>3.9</td>
<td>-5.6</td>
<td>-2.7</td>
<td>40.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Travel and Leisure</td>
<td>2.6</td>
<td>2.6</td>
<td>2.4</td>
<td>1.3</td>
<td>1.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Motor fuel and oil</td>
<td>6.5</td>
<td>5.7</td>
<td>4.1</td>
<td>-3.2</td>
<td>-5.1</td>
<td>13.1</td>
</tr>
</tbody>
</table>
</body>
</html>

Inflation in the United Kingdom was 2.7% in January, 2003, marking the third month of inflation above the Bank of Englands target rate of 2.5%. The Bank uses the year over year change in the retail price index excluding mortgage [...]

U. K. Inflation Stays Above Bank of England’s Target for Third Month

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030218a.jpg" width="353">
The Empire State Manufacturing Survey reported that the index of general business conditions fell sharply this month. Expectations had been for just a sight decline versus January.
Despite the decline the general business conditions index remained positive, suggesting continued growth in area economic activity as well as positive growth in industrial production nationally.
Diffusion indexes for most subgroups fell. The employment index nevertheless was positive for just the second month since July. Shipments and orders fell. The readings remained fairly positive. The index of prices paid rose sharply to a record for the index as the percentage of respondents reporting higher prices surged.
The survey includes measures of business expectations, six months ahead. The diffusion index for general business conditions fell for the fifth consecutive month to the lowest level since September 2001. Expectations for prices paid in six months surged to the highest level since August.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For the latest Empire State Manufacturing Survey report, click <a href="http://www.newyorkfed.org/rmaghome/regional/mfg_survey/2_2003.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General business conditions (diffusion index)</td>
<td>1.13</td>
<td>20.72</td>
<td>18.06</td>
<td>7.07</td>
<td>-13.81</td>
</tr>
</tbody>
</table>
</body>
</html>

The Empire State Manufacturing Survey reported that the index of general business conditions fell sharply this month. Expectations had been for just a sight decline versus January. Despite the decline the general business conditions [...]

Empire State Factory Survey Down in February

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030214b.jpg" width="353">
Industrial production rose more than Consensus expectations for a 0.3% gain in January. The rise followed a sharp decline in December that was downwardly revised from a 0.2% drop reported last month.
Output in the manufacturing sector rose 0.5% (1.3% y/y). The gain followed a 0.4% December decline that was double the initial estimate.
Excluding a 4.9% jump in motor vehicle and parts factory output rose just 0.1% (0.5% y/y), the second tepid monthly gain following three months of decline. Appliance, furniture &amp; carpeting output fell 0.6% (+1.4% y/y) for the first monthly decline since August. Computer output rose 1.2% (-5.2% y/y) was strong for the third consecutive month. 
Output of business equipment rose 1.0% (-2.8% y/y) following a sharp 1.2% December decline. Output of information processing equipment rose 1.2% (-0.5% y/y) following two down months. Output of transit equipment rose 1.2% (-14.6% y/y) following the 4.8% December collapse. 
Capacity utilization rose but remained near the 2002 average.

<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/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>1.9%</td>
<td>-0.7%</td>
<td>-3.5%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.7%</td>
<td>75.2%</td>
<td>75.0%(1/02)</td>
<td>75.6%</td>
<td>77.3%</td>
<td>82.7%</td>
</tr>
</tbody>
</table>
Business Inventories Rose Through Yearend 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030214a.jpg" width="353">
Total business inventories rose more than expected in December. It was the eighth consecutive month of accumulation.
The effort to accumulate inventory has been sufficient to pull the inventory to sales ratio off record low levels but has generated only modest gains in industrial production.
Retail inventories rose strongly led by strong gains across the board. Auto inventories rose just 0.1% but were up 18.9% y/y.
Nonauto retail inventories clearly turned the corner toward accumulation as inventories at apparel stores jumped 1.1% (4.1% y/y). At general merchandise stores inventories surged 1.3% (2.7% y/y), the second consecutive month of accumulation at that rate. Inventories of building materials jumped 1.2% (6.6% y/y) for the third double digit gain in the last four months.
Overall business sales rose 0.2% (3.7% y/y). Gains in 4Q eased markedly from 2Q and 3Q.
The inventory-to-sales ratio rose to 1.37, off the monthly lows but on a quarterly basis stable at 1.36 since 2Q. 

<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/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.6%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>-6.4%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.6%</td>
<td>0.8%</td>
<td>5.3%</td>
<td>7.7%</td>
<td>-5.0%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.8%</td>
<td>0.5%</td>
<td>3.1%</td>
<td>3.1%</td>
<td>-2.1%</td>
<td>4.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.8%</td>
<td>0.3%</td>
<td>-0.0%</td>
<td>-0.0%</td>
<td>-5.7%</td>
<td>6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.5%</td>
<td>-0.2%</td>
<td>-2.0%</td>
<td>-2.0%</td>
<td>-8.0%</td>
<td>4.5%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Down Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 14, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030214c.jpg" width="353">
The mid-February reading of Consumer Sentiment from the University of Michigan fell 3.9% from January to a level of 79.2. The figure is versus Consensus expectations for 82.0.
The index of current conditions fell moderately. The expectations index fell sharply for the second month and was down roughly 15% over the period.
Over the last 10 years there has been a 52% correlation between the level of consumer sentiment and the y/y change in the S&amp;P 500. That correlation rose to 86% during the last five years.
The University of Michigan survey is not seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Mid-Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>79.2</td>
<td>82.4</td>
<td>-12.7%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Industrial production rose more than Consensus expectations for a 0.3% gain in January. The rise followed a sharp decline in December that was downwardly revised from a 0.2% drop reported last month. Output in the manufacturing sector [...]

Industrial Production Rebounded

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030213c.jpg" width="353">
Retail sales fell more than consensus expectations for a 0.5% decline. Sales in December were revised up slightly. 
Sales excluding motor vehicles and parts dealers rose much more than Consensus expectations for a 0.4% gain. The gain was the strongest monthly increase in nonauto sales since September 2000.
Sales strength centered in higher sales of gasoline (2.7%), building materials (2.9%) and food (2.6%).
Furniture and home furnishing store sales fell 1.4% (-0.2% y/y) following a 0.4% December decline that was revised from an initial estimate of a 0.3% gain. Furniture sales fell a hard 1.3% following a like decline December (revised from unchanged). Sales at electronics and appliance stores fell 1.4% (0.0% y/y).
Sales at general merchandise stores rose a moderate 0.6% (3.5% y/y) following a little-revised 0.4% December gain.
Apparel store sales rose 0.3% (2.0% y/y) following an unrevised 0.8% December increase.Through December, apparel prices in the CPI were down 1.8% y/y.
Motor vehicle dealers&#39; sales fell 7.5% and more than reversed the prior month&#39;s gain. Unit sales of light vehicles fell 11.5% last month to 16.21 mil.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<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>-0.9%</td>
<td>2.0%</td>
<td>3.9%</td>
<td>3.4%</td>
<td>3.9%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.3%</td>
<td>0.2%</td>
<td>4.8%</td>
<td>3.9%</td>
<td>3.4%</td>
<td>7.3%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">

</table>
Import Prices Surged Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030213b.jpg" width="353">
Prices for imported commodities rose quite a bit more than Consensus expectations for a 0.1% gain.
Petroleum import prices rose by the most for any month since April and were up double the strong December gain. This month, the price of West Texas Intermediate crude topped $35.00/bbl. versus $32.94/bbl averaged in January.
Nonpetroleum import prices rose modestly and by the same 0.2% as in December which was revised up. During the last ten years there has been a 60% correlation between the (inverted) level of the US dollar&#39;s real exchange rate and the y/y change in nonoil import prices.
Prices of imported capital goods fell for the fifth straight month (-2.1% y/y). Nonauto consumer goods prices rose modestly for the second month but were down 0.5% versus last year. Imported motor vehicle prices fell 0.2% (+0.5% y/y). Imported food prices rose 0.7% and were up a firm 5.3% y/y.
Export prices rose a firm 0.4% led by gains in both agricultural (7.4% y/y) and nonagricultural (1.0% y/y) commodities.

<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/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>1.5%</td>
<td>0.6%</td>
<td>5.5%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>6.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>12.4%</td>
<td>6.2%</td>
<td>68.6%</td>
<td>3.0%</td>
<td>-17.2%</td>
<td>66.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.6%</td>
<td>-2.4%</td>
<td>-1.5%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.4%</td>
<td>-0.2%</td>
<td>1.5%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030213a.jpg" width="353">
Initial claims for unemployment insurance fell more than expected last week. Claims fell 4.6% from the prior week&#39;s level which was revised up.
The four-week moving average of initial claims rose slightly to 389,000 (-1.8% y/y).
Continuing claims for unemployment insurance fell slightly and the prior week&#39;s level was revised down.
The insured rate of unemployment was stable at 2.6% for the fifth consecutive week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">2/08/03</th>
<th scope="col">2/01/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>377.0</td>
<td>395.0</td>
<td>-2.8%</td>
<td>405.0</td>
<td>405.8</td>
<td>299.8</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,312</td>
<td>-4.3%</td>
<td>3,588</td>
<td>3,021</td>
<td>2,114</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales fell more than consensus expectations for a 0.5% decline. Sales in December were revised up slightly. Sales excluding motor vehicles and parts dealers rose much more than Consensus expectations for a 0.4% gain. The gain [...]

Retail Sales Fell, Nonauto Sales Jump

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030212a.jpg" width="353">
The index of mortgage applications, compiled by the Mortgage Bankers Association, fell last week for the fourth week in the last five. Nevertheless, applications remained up 22.9% so far this year versus December and were up 86.2% y/y.
Mortgage applications to refinance fell for the fourth week in five but remained up 33.9% so far in 2003 versus December. Applications to refinance were well more than double last year&#39;s level.
Mortgage applications for home purchase also fell but much harder than did applications to refinance. So far this year, purchase applications were barely higher than December (+0.4%) and were up 4.5% y/y.
Interest rates on conventional 30 Year mortgages fell to 5.68%.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">2/07/03</th>
<th scope="col">1/31/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>1,083.1</td>
<td>1,141.4</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>328.8</td>
<td>371.1</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>5,470.3</td>
<td>5,621.6</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
OECD Leaders Up Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 12, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030212b.jpg" width="353">
The OECD Index of Leading Indicators rose in December for the third consecutive month. Leaders in the Major Seven countries rose but gains were largely limited to the US.
Leading indicators in the European Union have barely budged since the Summer. Japan leaders did manage modest gains in October and November. However, through December Japan&#39;s leaders rose just 1.6% y/y and not at all since April.
Despite these scattered signs of improvement, economic slack remains great in the Major Seven OECD countries. Industrial production in the Big Seven was roughly 7.5% below trend as of December. The shortfall in the EU was 4.7% but production in the US was 11.9% below trend.

<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/OECDMEI/OECDMEI.HTM">OECD Main Economic Indicators</a></th>
<th scope="col">Dec</th>
<th scope="col">Nov</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Total - Leading Index (Trend Restored)</td>
<td>121.3</td>
<td>120.6</td>
<td>4.0%</td>
<td>4.1%</td>
<td>-2.1%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>3Q02</td>
<td>2Q02</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">OECD Total - GDP (Mil. 95 US$, SAAR)</td>
<td>3.1%</td>
<td>2.2%</td>
<td>2.4%</td>
<td>n.a.</td>
<td>0.8%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">Major Seven - GDP (Mil. 95 US$, SAAR)</td>
<td>3.1%</td>
<td>1.8%</td>
<td>2.2%</td>
<td>n.a.</td>
<td>0.7%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">European Union - GDP (Mil. 95 US$, SAAR)</td>
<td>1.7%</td>
<td>1.7%</td>
<td>1.1%</td>
<td>n.a.</td>
<td>1.6%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Germany - GDP (Bil. 95 Euros, SAAR)</td>
<td>1.1%</td>
<td>0.6%</td>
<td>0.4%</td>
<td>n.a.</td>
<td>0.7%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; United Kingdom - GDP (Mil. 95 Pounds, SAAR)</td>
<td>3.8%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>n.a.</td>
<td>2.0%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Japan - GDP (Bil. 95 Yen, SAAR)</td>
<td>3.2%</td>
<td>3.8%</td>
<td>1.3%</td>
<td>n.a.</td>
<td>0.3%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The index of mortgage applications, compiled by the Mortgage Bankers Association, fell last week for the fourth week in the last five. Nevertheless, applications remained up 22.9% so far this year versus December and were up 86.2% [...]

Mortgage Applications Still Firm

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030211a.jpg" width="353">
Chain store sales were about flat during the first full week of February according to the BTM-UBSW survey.
February sales started the month down 0.2% from the January average. The year-to-year comparison weakened appreciably because of strong sales gains in February 2002.
During the last ten years there has been a 56% correlation between the year-to-year percent change in monthly chain store sales and the change in nonauto retail sales less gasoline.

<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">2/08/03</th>
<th scope="col">2/01/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>408.9</td>
<td>408.8</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
Crude Oil Prices and Economic Uncertainty 
by <a href="/comment/Moeller.html">Tom Moeller</a> February 11, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030211b.jpg" width="353">
Prices for West Texas Intermediate crude oil neared $35.00 per barrel as War worries intensified and added to the continuing labor strike in Venezuela, lean inventory conditions and a severe Winter as sources for price strength.
Federal Reserve Chairman Alan Greenspan addressed the impact of higher energy prices and war worries in his semi-annual testimony before Congress. &quot;The intensification of geopolitical risks makes discerning the economic path ahead especially difficult. If these uncertainties diminish considerably in the near term, we should be able to tell far better whether we are dealing with a business sector and an economy poised to grow more rapidly--our more probable expectation--or one that is still laboring under persisting strains and imbalances that have been misidentified as transitory.&quot; To view the entire text of Greenspan&#39;s testimony click <a href="http://www.federalreserve.gov/BoardDocs/HH/2003/february/testimony.htm">here</a>
Wholesale gasoline prices surged through early February, topping $1.00 per gallon (up 90% y/y). Wholesale fuel oil prices have been even stronger moving well over $1.00 per gallon and are more than double last year at this time.
Wholesale natural gas prices rose above $6.00/mmbtu and are nearly triple last year&#39;s levels.

<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/daily/@D3/@D306/@D30604/@D30604.HTM">Daily Crude Oil Prices</a></th>
<th scope="col">2/10/03</th>
<th scope="col">12/31/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">West Texas Intermediate Crude Oil</td>
<td>$34.48</td>
<td>$31.23</td>
<td>60.9%</td>
<td>$26.17</td>
<td>$25.97</td>
<td>$30.34</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales were about flat during the first full week of February according to the BTM-UBSW survey. February sales started the month down 0.2% from the January average. The year-to-year comparison weakened appreciably because [...]

Chain Store Sales Flat Last Week

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030210a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose through January to its highest level since August.
The six-month growth rate of the index remained negative at -0.7% in the latest week, but that was much improved from the lows of this past October.
Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
The components of the index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.
For more on ECRI and the Weekly Leading Index click <a href="http://www.businesscycle.com/">here</a>.

<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/weekly/@W8/@W801/@W801.HTM">ECRI</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Leading Index</td>
<td>119.2</td>
<td>117.9</td>
<td>-1.4%</td>
<td>1.0%</td>
<td>-5.2%</td>
<td>1.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) rose through January to its highest level since August. The six-month growth rate of the index remained negative at -0.7% in the [...]

ECRI Leading Indicators Recover Further

Ratio of job openings to the number unemployed in the US now below pre-pandemic level

U.S. layoffs not showing as much cooling in labor markets as unemployment rate

While goods prices have moderated, service price inflation remains elevated and sticky

Since Jan 2023, BCEI US outlook has improved, worsened for Japan and the euro area

Persistent negative US economic surprises leading to big rate-cut expectations

Germany is Euro area weakling

Flash PMIs show good start to Q3 in US; loss of momentum in the euro area

Chinese economy on downtrend could threaten global economy

Working age population labor force participation near all-time high as retirements increase

Blue Chip forecasters look for widespread policy rate cuts just ahead

Flash June PMIs point to a widespread slowdown apart from the US

Announcement of snap French election is causing concern across Europe

The UK economy’s post-pandemic under-performance relative to its pre-pandemic trend

US Beveridge Curve back to near pre-pandemic levels

Negative economic surprises in the US but positive in Europe, especially the UK

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Tian Yong Woon

In this week's newsletter, we explore Asia’s manufacturing activity, with a particular emphasis on the semiconductor sector. While that sector continues to expand overall, some economies are experiencing a slowdown in growth (Chart 1). We also assess the growing role of electronics in Asian exports, highlighting Taiwan's significant increase in electronics export share and South Korea's ongoing recovery in this area (Chart 2). Focusing further on the electronics sector, we note an interim stall in global semiconductor sales growth, although it remains robust with double-digit increases (Chart 3). We then delve into specific Asian economies, starting with Taiwan. Here, we identify dual drivers of industrial production: consumer electronics and electronic parts, including semiconductors (Chart 4). Next, we examine Malaysia, which has developed a strong semiconductor ecosystem with expertise in back-end processes and is more recently making headway in front-end areas like chip design (Chart 5). Finally, we consider India’s emerging semiconductor sector, which, despite being in its early stages, is poised for growth thanks to recent initiatives aimed at bolstering domestic prowess (Chart 6).

**Asia’s manufacturing complex**
The manufacturing sector across much of Asia continues to expand, although recent months have seen a deceleration in the rate of growth for some economies. As illustrated in Chart 1, Taiwan's manufacturing PMI peaked at 53.2 in June 2024 but subsequently moderated to 51.5 in August, reflecting a significant slowdown in growth for output and new orders. A similar trend is evident in Southeast Asia (ASEAN), where the PMI has recently edged closer to the neutral level of 50. Within ASEAN, Indonesia has been a notable drag, with its PMI slipping into contractionary territory in July, while Vietnam's PMI has remained above the regional average. In contrast, South Korea's manufacturing sector has shown robust momentum, with output growth reaching a 40-month high in August, thereby supporting the overall manufacturing PMI for the country.

240909T1.jpg

A closer look at Asia’s manufacturing sector reveals significant trends in electronics exports, as illustrated in Chart 2. Many Asian economies remain heavily dependent on electronics for export revenue, with some increasing their reliance over recent years. This highlights the crucial role of electronics in the overall economic growth of these countries. For example, Taiwan's share of electronics in its export revenue surged to over 35% in recent years, up from just above 28% in late 2021. In contrast, South Korea’s electronics export share peaked slightly above 36% in late 2018 but fell to below 28% in 2023 before partially recovering. Malaysia, on the other hand, saw its electronics export share exceed 41% in late 2023, though it has since moderated. Beyond these export shares, the specifics of each economy's electronics export mix vary significantly—a topic we will delve into in subsequent segments.

240909T2.jpg

Next, we delve into the semiconductor industry, which has been making headlines this year due to its pivotal role in the global AI-driven surge. Although worldwide semiconductor sales remain robust, with double-digit growth rates, recent months have seen this growth level off, hovering just below 20%, as illustrated in Chart 3. Asia continues to lead in semiconductor sales, accounting for over 60% of the global market. However, growth in this region appears to have plateaued, while the Americas have rapidly increased their market share. Notably, the Americas surpassed China in semiconductor sales for the first time since China’s sales data was separately reported in 2015. Looking ahead, we can expect ongoing shifts in the semiconductor landscape. Factors contributing to these changes include the US's aggressive strategy to onshore chip production through the CHIPS Act, export controls impacting China's capabilities, and ASEAN countries' efforts to ascend the semiconductor value chain—a topic we will explore further below.

240909T3.jpg

**Economy-specific developments**
The electronics sector remains a major driver of Taiwan's economy. This extends beyond semiconductors to include computers and other consumer electronics, which have experienced even faster industrial production growth, as illustrated in Chart 4. In addition to the direct revenue from electronics exports, Taiwan also gains from other benefits, including job creation and enhanced expertise. However, the current tech upcycle is attracting increased competition. Other Asian economies are positioning themselves to gain a larger share of the supply chain. In the semiconductor foundry sector, competition remains fierce among Taiwan Semiconductor Manufacturing Company (TSMC), South Korea’s Samsung Electronics, and the US-based Intel. The rivalry is particularly intense at the cutting edge, as these companies strive to advance their next-generation sub-2 nanometer chips into mass production in the coming years.

240909T4.jpg

Next, we turn our attention to Malaysia, which has been making significant strides in the semiconductor industry. Like several other Asian economies, Malaysia has increasingly benefited from manufacturers seeking to diversify their supply chains to mitigate the risks of concentrating chip production in a single geographic location. Much of Malaysia's semiconductor growth is centred in the northern state of Penang. Although Penang is home to just under two million of Malaysia's total population of approximately 34 million, it hosts semiconductor assembly, testing, and packaging facilities for several major global companies. This burgeoning semiconductor ecosystem has also led Penang to record the highest investment inflows of any state in Malaysia in 2023, totalling 71.9 billion ringgit ($16.6 billion). These inflows are predominantly foreign direct investment (FDI), contributing significantly to Malaysia's overall FDI, as illustrated in Chart 5. Looking ahead, Malaysia aims to advance further up the semiconductor value chain by gaining a foothold in chip design. Recent developments have been promising: in early August, Malaysia officially launched its first semiconductor integrated circuit (IC) design hub in the state of Selangor, marking a key step towards achieving this goal.

240909T5.jpg

Lastly, we turn to India, a country that may not immediately come to mind as a major electronics hub, but which has been making significant strides to capture a larger share of the electronics pie in recent years. For instance, this year marks the first time iPhone Pro models will be produced in India, perhaps signalling that Prime Minister Modi’s incentives to attract high-end manufacturing are starting to bear fruit. Nonetheless, electronic products remain just a small proportion of India’s overall export mix. When it comes to semiconductors, it may still be early for India to achieve critical mass in the sector, although efforts are already underway. For example, just recently, India and Singapore signed agreements to enhance cooperation in semiconductors and digital technologies. The agreement could prove highly beneficial for India, as Singapore is a major player in the global chipmaking and semiconductor machinery markets, possessing substantial expertise in this field.

240909T6.jpg

Asia

Economic Letter From Asia: Chipping In

240906A2.jpg

240906B2.jpg

Nonfarm payrolls increased 142,000 (1.5% y/y) during August after rising 89,000 in July, revised from 114,000. During June, payrolls rose 118,000, revised from 179,000 while May payrolls rose an unrevised 216,000. Expectations had been for a 162,000 August increase in the Action Economics Forecast Survey.

Average hourly earnings strengthened 0.4% in August following unrevised gains of 0.2% and 0.3% in the prior two months. The y/y earnings increase improved to 3.8% from 3.6% in July, but was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, eased to an expected 4.2% in August from 4.3% in July. It remained near the highest level since October 2021 after having reached a low of 3.4% in April of last year. Household employment rose 168,000 after increasing 67,000 in July. The labor force increased 120,000 after a 420,000 July rise. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, rose to 7.9% from 7.8% in July. It was the highest rate since October 2021.

In the **payroll survey**, private-sector employment increased 118,000 (1.4% y/y) in August after rising 74,000 in July. Construction sector employment increased 34,000 (2.8% y/y) last month after rising 13,000 in July. Factory sector payrolls offset this rise with a 24,000 decline (-0.1% y/y) after a 6,000 in July increase. Mining & logging sector jobs held steady (-1.2% y/y) after a 1,000 July increase.

Private service-producing sector employment increased 108,000 in August (1.5% y/y) after a 54,000 July rise. Employment changes varied greatly amongst service sector categories. Education & health service jobs rose 47,000 (3.9% y/y) following a 55,000 July rise while leisure & hospitality employment rose 46,000 (1.7% y/y) after a 24,000 gain. Professional & business service jobs improved 8,000 (0.4% y/y) after falling 13,000 in July. Within that category, the number of temporary jobs declined 2,900 (-5.8% y/y) and have fallen consistently since a March 2022 high. Trade, transportation & utilities employment gained 2,000 (0.7% y/y) after rising 9,000 as the number of retail jobs fell 11,100 (+0.4% y/y). Financial activities jobs rose 11,000 (0.4% y/y) after falling 1,000 in July. Information sector employment fell 7,000 (+0.1% y/y) after weakening 15,000 in July.

Government sector payrolls increased 24,000 last month (1.9% y/y) after 15,000 July increase. Local government jobs rose 22,000 (1.8% y/y) after July’s rise of 5,000, while state government employment edged 1,000 higher (2.3% y/y) after a 10,000 gain. The number of federal government jobs also inched 1,000 higher (2.0% y/y) after holding steady in July.

The 0.4% August rise in private-sector average hourly earnings reflected a 0.3% gain (4.7% y/y) in the goods-producing sector which was the same as in July. Earnings in construction improved 0.3% (4.4% y/y) following a 0.4% gain while factory sector pay increased 0.4% (4.9% y/y) after rising 0.2%. In the private services-sector, earnings rose 0.4% last month (3.6% y/y) after a 0.2% gain. Professional & business service sector earnings grew 0.4% (4.3% y/y) for the third time in four months. Leisure & hospitality earnings improved 0.2% (4.0% y/y) while information sector earnings strengthened 0.9% (3.7% y/y) after rising 0.4% for three straight months. Financial sector earnings rose 0.6% (4.6% y/y) after a 0.3% gain. Private education & health services earnings improved 0.2% (3.1% y/y), the same as in July. Trade, transportation and utilities pay rose 0.5% (3.0% y/y) in August after edging 0.1% higher in July.

240906C2.jpg

240906D2.jpg

The length of the average workweek in the private sector edged up to 34.3 hours in August from 34.2 in July. The workweek in the goods-producing sector of 39.8 hours last month compared to 39.7 hours in July. The construction sector average workweek lengthened to 39.0 hours from 38.9. The factory sector workweek improved to 40.0 hours from 39.9 while the average workweek in the private service sector remained at 33.2 hours for the fifth straight month.

In the **household survey**, the decline in the jobless rate to 4.2% occurred as employment and the size of the labor force rose slightly. The labor force participation rate held at 62.7%. The rate for teenagers declined sharply for the third straight month from 38.1% in May to 35.7% last month, while for individuals aged 20-24, it also has fallen sharply to 70.5% from a high of 72.7% in January. For rate for workers aged 25-54, the rate eased to 83.9% but remained near the highest since 2001, and for workers 55 and over it rose to 38.6%, the highest level since March.

The employment/population ratio for all workers held steady at 60.0% in August and was slightly below where it was twelve months earlier. It remained below its high of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

240906X2.jpg

240906F2.jpg

- Job gain remains part of decelerating trend with earlier months’ growth revised lower.
- Earnings strengthen m/m but trend increase remains weak.
- Jobless rate edges lower; upward trend continues.

U.S. Employment Disappoints in August; Jobless Rate Eases

Robert Brusca

240906E.jpg

Industrial production in July fell sharply by 2.4% after rising 1.7% in June and falling 3.1% in May. As a result of this production turbulence, Germany continues to experience declining and decelerating output growth. Over 12-months output falls at a -5.3% rate, over six months the pace steps up slightly to a -5.5% annual rate, but over three months industrial production in Germany is falling at a -14% annual rate.

This sequential slippage is mirrored in the declines of consumer goods, capital goods and intermediate goods production where the production of each of these sectors declines over 12 months, six months, and three months. Consumer goods and intermediate goods decline slightly more slowly over six months compared to 12 months, but all the categories show much sharper declines over three months than over 12 months. There's a clear tenancy for German production to show bigger declines over shorter periods and that's a disturbing development. In addition, all the sectors show declines month-to-month in July.

Manufacturing output in total shows a decline of 3.2% in July. As for overall output, manufacturing increased in June and fell sharply in May. Sequentially manufacturing output is persistently decelerating, as its 5.8% 12-month drop becomes an annual rate of decline of 17% over three months.

**Hope in New Orders**
However, real manufacturing orders break this trend and may offer hope for a turnaround as real orders rise by 2.9% in July and by 4.6% in June after a 1.7% drop in May. Sequentially real orders are not just growing but they are accelerating from an increase of 3.8% over 12 months to an annual rate of 25.7% over three months. The path being sketched out by real manufacturing orders is explosively strong while the path being sketched out by actual manufacturing output is impulsively weak. So it looks like the resolution is going to be for manufacturing output to be dragged up from the depths in the coming months by strengthening orders- or at least that's how it appears from these trends. For the time being, sales remain weak, real sales and manufacturing fell in July, June, and May; they are declining at an accelerating pace from 12-months to six-months to three-months. Real sales and manufacturing declined, at a -5.8% rate over 12 months, at a -6.9% annual rate over six months and then at a -12.2% annual rate over three months. For the time being, manufacturing is a hotbed of cross currents.

**Indicators are mixed**
Other indicators from ZEW, from IFO and from the EU Commission are mixed. These are from surveys that often are a little bit more sensitive and up-to-date readings than data on actually booked orders or on actually executed output or experienced sales. However, there is no hint of the kind of strength that we see in orders in these indicators. The ZEW current index shows negative readings sequentially from 12-months to six-months to three-months, but it does improve sequentially in modest steps. The IFO index for manufacturing does show some step up from 12-months to six-months to three-months. IFO manufacturing expectations also step up from 12-months to six-months to three-months but even this is somewhat moderate from 87.8 as an index reading over 12-months to 90.9 over six months to 92.2 over three months; it's a progression of advance but a minor league advance. Meanwhile, the EU Commission indexes show weakening from a -16.5 in their net diffusion reading over 12 months, to -17.7 over six months, to -17.8 over three months.

**Other Europe**
Three European countries are early manufacturing reporters: Portugal, France, and Norway. Among these three countries, two of them have output declines in July. Norway is the exception with a solid 2% increase month-to-month in July, an increase of 2% in June and at 1.7% in May; it is showing accelerating growth from 12-months to six-months to three-months. Norway is a real success story. However, both Portugal and France show industrial production decelerating steadily from 12-months to six-months to three-months; in both cases, the three-month decline culminates in a negative growth rate in double-digits.

**Quarter-to-date trends**
The quarter-to-date statistics show declines across all German manufacturing categories apart from real manufacturing orders. Of course, that shows a sizeable gain of nearly 38% at an annual rate in the quarter. It stands alone in that regard. The other indicators from ZEW to the IFO to the EU Commission also decline in the quarter-to-date except for the current ZEW index which improves by 6.2 points in July compared to the previous quarter’s average level. Manufacturing output for the three European countries shows sizable declines in the quarter-to-date for Portugal and France with Norway showing an annual rate increase at a stupendously strong 26.3% annual rate.

On balance, manufacturing in Germany is weak and it's weak across all categories. The ray of hope comes from real manufacturing orders that are surging as strongly as current output is declining. Sales in manufacturing are also weak. The IFO indicators for Germany are showing some progression towards better circumstances as is the index from ZEW. The EU Commission is eroding slightly sequentially as well as in recent months. There is hope but it runs against the grain of trend.

240906.jpg

Germany

German IP Drops Sharply in July and Broadly

Andrew Cates

**The policy rate consensus** 
Dovish comments from central bankers in recent weeks have amplified expectations for a global policy easing cycle over the past few weeks. Fed Chair Powell’s address at the Jackson Hole symposium, in which he noted that upside risks to inflation have diminished, and the downside risks to employment have increased, have certainly suggested the direction of travel for US policy rates is clear. This chimes too with the latest survey of Blue Chip Financial Forecasts. US policy rates, for example, are expected to decline from current levels by nearly 150bps over the next 12 months. That contrasts with the UK and euro area, where policy rates are expected to decline by 130 and 138 basis points respectively.

240905Z1.jpg

**Inflation progress**
Well-behaved inflation data have been another key driver of these interest rate expectations. Headline inflation rates in most major economies have continued to decline over the past few weeks and, at least as far as the US, the euro area and the UK are concerned, were not that far above central banks’ target levels. Incoming inflation data have, on the whole, also been surprising forecasters’ expectations on the downside in recent weeks with some underlying stability in the price of oil a key factor assisting that trend (chart 2).

240905Z2.jpg

**The global business cycle**
While forward-looking PMI readings for many economies have remained relatively stable in recent months, several have experienced some significant swings. For instance, France has seen a notable improvement, though it is worth noting that the August figures were significantly bolstered by activity from the Olympic Games. Conversely, Germany has struggled, with its PMI falling further into contraction territory due to ongoing weaknesses in the manufacturing sector. Meanwhile, India continues to stand out relative to its peers with consistently strong PMI readings over recent months (see chart 3).

240905Z3.jpg

**China’s excess capacity**
China’s economy stands out too as its latest PMI survey suggest its economy has lost much momentum over the past 3 months, largely because of some further weakening in the manufacturing sector. Digging into some of the underlying details of the manufacturing survey also reveals persistent downward pressure on that sector’s output prices (chart 4). Given the importance of China’s manufacturing sector for world trade, which might herald broader disinflationary pressures in the traded goods sector in the period ahead as well.

240905Z4.jpg

**Japan’s carry trade**
While some of the initial volatility in Japan’s currency markets has stabilized since the decision by the BoJ to lifts its policy rate, fundamental drivers are turning increasingly unfavourable for the carry trade. Specifically, Japan’s yield differentials with other major economies are becoming less advantageous, as evidenced in chart 5 below. As chart 1 above additionally underscores, this shift is being further compounded by the BoJ’s ongoing – and expected - tightening measures, which stand in vivid contrast to the easing cycles now underway from other major central banks.

240905Z5.jpg

**US monetary policy and labour markets**
With central banks arguably now slowly switching their attention away from inflation, the prospective dataflow on economic growth – and perhaps more significantly, labour market activity - is taking on more importance. On that score (and writing ahead of the publication of August’s US employment report on Friday September 6th) it has certainly been notable that much of the incoming US labour market data have disappointed expectations in recent weeks and that financial markets have responded to this by pricing in more easing from the US Fed (see chart 6).

240905Z6.jpg

With the summer vacation season now over in the Northern Hemisphere our charts this week shed light on recent and prospective developments in the world economy. Latest data have, on the whole, reinforced expectations that most central banks will loosen monetary policy in the immediate months ahead (chart 1). And that’s partly because incoming inflation data have been well-behaved (chart 2). In the meantime, forward-looking survey data have, with one or two exceptions, remained above the threshold that would typically generate recession alarms (chart 3). Soft landing narratives have, accordingly, remained in vogue. That being said, lingering imbalances—particularly in China (chart 4)—combined with growing concerns about an unwinding of Japan’s carry trade (chart 5), have left the risks to the global economic outlook skewed to the downside. Added to that, the potential profitability of technology companies and the broader health of the US economy are also now being more actively challenged (chart 6). Either way, central banks continue to face a complex mix of challenges in the period ahead, not least if political instability (e.g. in the US) were to hamper confidence in the final quarter of this year.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/5FLeCL9f8pTNDpcQT3BvWv?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Back to School

240905J5.jpg

240905K5.jpg

The ADP National Employment Report indicated that nonfarm private sector payrolls rose 99,000 (1.3% y/y) during August following a 111,000 July increase, revised from 122,000. June’s rise of 155,000 was unrevised. It was the weakest increase since January 2021, down from the most recent high of 211,000 in March of this year. A 148,000 rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" held at 4.8% y/y in August. It remained the weakest growth since July 2021 and well below a September 2022 high of 7.8% y/y. Pay increases in education & health services of 5.1% y/y compared to a high of 7.3% in October 2022 while construction sector earnings rose a diminished 5.2% y/y. Manufacturing pay growth averaged a steady 4.7% y/y and leisure & hospitality rose a diminished 4.9% y/y. Professional & business services pay grew a lessened 4.7% y/y. Pay increases for “job changers” averaged a steadied 7.3% y/y last month, remaining well below the 16.4% y/y peak in June 2022.

Small business hiring (less than 50 employees) declined 9,000 (+0.2% y/y) last month after easing 1,000 in July. Employment at medium-sized firms (50-499,000 employees) rose 68,000 (1.8% y/y) after a 60,000 July increase. These gains stood below the March high of 113,000. Large business hiring (500+ employees) rose 42,000 (2.7% y/y) during August following a 52,000 July gain. It remained the smallest increase since January.

Goods-producing employment rose 27,000 last month (1.0% y/y) after a 30,000 July rise. The number of construction sector jobs rose 27,000 (3.6% y/y) following a 31,000 July increase. Hiring in the manufacturing sector fell 8,000 (-0.1% y/y) last month, the fourth consecutive monthly shortfall. Natural resource & mining hiring improved 8,000 (-1.9% y/y) after a 2,000 rise in July.

The number of service-producing jobs rose 72,000 (1.4% y/y) in August following an 81,000 July gain. Leisure & hospitality employment rose 11,000 (2.0% y/y) after improving 10,000 in July and education jobs gained 29,000 (2.3% y/y) following a 66,000 July increase. The number of jobs in trade, transportation & utilities increased 14,000 last month (0.9% y/y) following a 46,000 July gain. Employment in “other” services rose 20,000 (3.3% y/y) after increasing 16,000 in July. Moving lower, professional & business services employment declined 16,000 (+0.1% y/y) after falling 47,000 while information employment fell 4,000 (-1.8% y/y), the fifth consecutive monthly decline.

The ADP National Employment Report and Pay Insights data can be found in Haver's **USECON** database. Historical figures date back to January 2010 for private employment. Pay data date back to October 2020. The expectation figure is available in Haver's **AS1REPNA** database.

240905L5.jpg

240905M5.jpg

- Latest job gain is less-than-half its March 2024 high; factory jobs decline for fourth straight month.
- Service-sector slowdown is broad-based. Construction job growth slows. 
- Wage growth for “job stayers” stabilizes y/y.

Economy in Brief: February 2003

Jump to: