Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030620b.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions matched Consensus expectations for improvement to 4.0, up nearly nine points from May.
The m/m improvement was the most since November of last year and moved the index into positive territory for the first time since February.
Gains amongst the sub indexes were broad based, although the level of new orders, shipments, and delivery times each remained negative. The 15.3 rise in unfilled orders and the 14.5 point rise in inventories, both to positive readings, were the largest sub index increases. The employment index fell further into negative territory.
During the last twenty years there has been a 67% correlation between the level of the Philadelphia Fed Business Conditions Index and quarterly growth in real GDP. The correlation with quarterly growth in factory sector industrial production has been 79%.
The business conditions index reflects a separate survey question, not the components.
A separate survey of expected business conditions in six months rose to 52.8, the first reading above 50 since December.
The prices paid index fell to 5.8, the lowest level since March of last year.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Fed can be found <a href="http://www.phil.frb.org/media/newsreleases/061903.html">here</a>. 

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">June</th>
<th scope="col">May</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">General Activity Index</td>
<td>4.0</td>
<td>-4.8</td>
<td>20.4</td>
<td>7.7</td>
<td>-17.2</td>
<td>8.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>5.8</td>
<td>8.9</td>
<td>19.2</td>
<td>12.2</td>
<td>-0.9</td>
<td>27.2</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deepened   
by <a href="/comment/Moeller.html">Tom Moeller</a> June 20, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030620a.jpg" width="353">
The US Government budget deficit deepened in May versus last year as growth in revenues continued to lag outlays.
Consensus expectations had been for a May deficit of $90.0B.
The Federal government&#39;s deficit totaled $292.1B through the first eight months of this fiscal year, double last year&#39;s deficit.
Net receipts for the first eight months of FY03 fell 4.8% versus last year. Individual tax payments fell 7.9% and corporate income taxes were down 26.7%. Social insurance contributions rose 2.0% and excise taxes rose 0.2%. 
Federal net expenditures rose 6.4% versus last fiscal year&#39;s first eight months led by higher defense spending which rose 14.7%. Spending on health programs also was strong, up 10.2%, and spending on education rose 16.6%. Spending on income security rose 8.4% and Medicare outlays rose 8.2%. Social Security outlays rose just 4.1% and interest expense fell 6.1% y/y.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E10602.HTM">US Government Finance</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;02</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
<th scope="col">FY2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-90.5B</td>
<td>$51.0B</td>
<td>$-80.6B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
<td>$236.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$103.4B</td>
<td>$231.2B</td>
<td>0.9%</td>
<td>-6.9%</td>
<td>-1.7%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$193.9B</td>
<td>$180.1B</td>
<td>5.9%</td>
<td>7.9%</td>
<td>4.2%</td>
<td>5.1%</td>
</tr>
</tbody>
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The Philadelphia Feds index of general business conditions matched Consensus expectations for improvement to 4.0, up nearly nine points from May. The m/m improvement was the most since November of last year and moved the index into [...]

Philadelphia Fed Index Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030619a.jpg" width="353">
Initial claims for unemployment insurance fell 3.0% last week to 421,000. The decline was from an upwardly revised level the prior week. Claims were slightly higher than Consensus expectations for 425,000. Weekly jobless claims are down 8.3% from the peak in late April.
The latest figure is for the June survey period for nonfarm payrolls and it is down slightly from the May period.
The four-week moving average of initial claims fell slightly to 432,000 (+8.8% y/y).
During the last ten years there has been a 70% (inverse) correlation between the level of initial jobless insurance claims and the m/m change in nonfarm payrolls.
Continuing claims for unemployment insurance fell 1.6% w/w but the prior week&#39;s level was revised down slightly.
The insured rate of unemployment fell to 2.9% from 3.0%.

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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">6/14/03</th>
<th scope="col">6/07/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<tr>
<td class="firstcol">Initial Claims</td>
<td>421.0</td>
<td>434.0</td>
<td>5.5%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,721</td>
<td>0.8%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
U.S. Current Account Deficit Deeper in 1Q 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 19, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030619b.jpg" width="353">
The US current account deficit deepened somewhat less than expected last quarter, but set a new record. The deficit in 2002 was revised shallower. 
The deficit in goods trade deteriorated to $544.0B (AR) in 1Q03 versus a $482.9B deficit for all of last year and $427.2B in 2001. Exports of merchandise rose 1.4% following a 5.1% decline last year and a 6.9% drop in 2001. Goods imports rose 2.0% vs. a 1.6% rise last year.
The surplus on services fell to $57.7B (AR) last quarter but that was down from an upwardly revised surplus of $64.8B last year. The peak services surplus was $91.1B in 1997.
Analysis from the Federal Reserve Bank of Dallas titled &quot;The Fruits of Free Trade&quot; can be found here <a href="http://www.dallasfed.org/fed/annual/2002/ar02b.pdf">http://www.dallasfed.org/fed/annual/2002/ar02b.pdf</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">1Q &#39;03</th>
<th scope="col">4Q &#39;02</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<td class="firstcol">Current Account Deficit</td>
<td>$136.1B</td>
<td>$128.6B</td>
<td>$106.7B</td>
<td>$480.9B</td>
<td>$393.7B</td>
<td>$411.5B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; % of GDP</td>
<td>5.1%</td>
<td>4.9%</td>
<td>4.1%</td>
<td>4.6%</td>
<td>3.9%</td>
<td>4.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$119.0B</td>
<td>$113.2B</td>
<td>$90.8B</td>
<td>$422.0B</td>
<td>$347.1B</td>
<td>$355.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>5.0%</td>
<td>-4.3%</td>
<td>-9.3%</td>
<td>12.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>1.6%</td>
<td>0.4%</td>
<td>11.1%</td>
<td>1.2%</td>
<td>-7.9%</td>
<td>18.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$17.1B</td>
<td>$15.4B</td>
<td>$15.9B</td>
<td>$58.9B</td>
<td>$46.6B</td>
<td>$55.7B</td>
</tr>
</tbody>
</table>
Leading Indicators Surge 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030619c.jpg" width="353">
The Conference Board reported that the Composite Index of Leading Economic Indicators rose 1.0% last month, much more than expected. Prior months&#39; figures were unrevised.
Gains amongst the leaders&#39; component series surged to 80%, the broadest breadth of one month gain since December 2001. The percentage of leading components rising over a six month period rose to 40%.
A higher money supply and higher consumer expectations had the largest positive influences on theMay leading index. Higher stock prices and lower claims for jobless insurance also made significant contributions. A narrower yield curve made a negative contribution.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose slightly following two months unchanged.
The ratio of coincident-to-lagging indicators rose 0.2% to a new high. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.

<table border="0" cellspacing="0" width="100%">
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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">May</th>
<th scope="col">April</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">Leading</td>
<td>1.0%</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.1%</td>
<td>-0.9%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>-2.0%</td>
<td>-4.4%</td>
<td>-1.3%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance fell 3.0% last week to 421,000. The decline was from an upwardly revised level the prior week. Claims were slightly higher than Consensus expectations for 425,000. Weekly jobless claims are [...]

Initial Jobless Insurance Claims Slipped

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040618b.jpg">
The US current account deficit deepened to a record$144.9B in 1Q and totaled 5.1% of GDP, near the record set in 1Q03. Consensus expectations had been for a 1Q deficit of $142.0B.
Exports of goods, services &amp; income in 1Q rose 2.5% (14.5% y/y) led by a 3.8% rise in merchandise exports (11.8% y/y). Imports rose 5.2% led by a 5.6% gain in merchandise imports.
The surplus on services fell moderately to $13.8B. The peak services surplus was $89.9B in 1997.
From the capital account, US assets abroad surged $289.3B. Direct investment abroad rose $57.3B. Foreign assets in the US surged $447.6B. Foreign direct investment rose $18.0B.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">US Int&#39;l Balance of Payments</a></th>
<th scope="col">1Q &#39;04</th>
<th scope="col">4Q &#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Deficit</td>
<td>$144.9B</td>
<td>$127.0B</td>
<td>$138.2B</td>
<td>$530.7B</td>
<td>$473.9B</td>
<td>$385.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods/Services/Income Deficit</td>
<td>$124.3B</td>
<td>$109.3B</td>
<td>$121.4B</td>
<td>$463.2B</td>
<td>$414.6B</td>
<td>$339.1B</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.5%</td>
<td>6.9%</td>
<td>14.5%</td>
<td>5.8%</td>
<td>-3.9%</td>
<td>-9.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>5.2%</td>
<td>3.9%</td>
<td>11.1%</td>
<td>7.3%</td>
<td>1.5%</td>
<td>-8.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Unilateral Transfers Deficit</td>
<td>$20.6B</td>
<td>$17.6B</td>
<td>$16.8B</td>
<td>$67.4</td>
<td>$59.4B</td>
<td>$46.6B</td>
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The US current account deficit deepened to a record$144.9B in 1Q and totaled 5.1% of GDP, near the record set in 1Q03. Consensus expectations had been for a 1Q deficit of $142.0B. Exports of goods, services & income in 1Q rose 2.5% [...]

U.S. Current Account Deficit A New Record

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030618a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.0% last week and recovered a piece of the 9.3% drop the prior week.
Applications for home purchase were about unchanged w/w and in June are up slightly from May at a record level.
During the last ten years there has been a 52% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 1.3% w/w and in June are up 12.4% from the May average.
Interest rates on a conventional 30-Year mortgage again fell w/w to 5.31% versus 6.13% averaged in December. The effective rate on a 15-year mortgage fell to 4.76% versus 5.55% averaged in December.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders.
Visit the Mortgage Bankers Association site at <a href="http://www.mbaa.org/">www.mbaa.org.</a>

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<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">6/13/03</th>
<th scope="col">6/06/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Total Market Index</td>
<td>1,701.7</td>
<td>1,684.6</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>419.1</td>
<td>418.9</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>9,162.7</td>
<td>9,046.9</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
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The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.0% last week and recovered a piece of the 9.3% drop the prior week. Applications for home purchase were about unchanged w/w and in June are up [...]

Mortgage Applications Up

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617f.jpg" width="353">
Seasonally adjusted Gross Domestic Product in Thailand rose 1.5% in the first quarter of 2003 from the fourth quarter of 2002, or slightly above consensus expectations of 1.3%.
The outbreak of SARS (severe acute respiratory syndrome) in late March had little effect on the first quarter data. Even though Thailand has been less directly affected than China, Hong Kong and Taiwan, it will likely suffer, in the second quarter, from reduced tourism. Nevertheless, the government has raised its estimate of growth for the year as a whole to 5.5%.from 5.0%.
Exports continue to be strong and the government is also counting on increased domestic demand as a result of the measures it has undertaken. Taxes have been reduced and subsidies to rice farmers have been increased. In addition low interest rates are having a positive impact on residential construction and the purchase of durable goods.

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<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Thailand&#39;s GDP (Mil.1998.Baht)</th>
<th scope="col">Q1 2003</th>
<th scope="col">Q4 2002</th>
<th scope="col">Q3&nbsp; 2002</th>
<th scope="col">Q/Q</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">Private Consumption</td>
<td>458,117</td>
<td>449,918</td>
<td>430,082</td>
<td>1.8</td>
<td>6.5</td>
<td>4.7</td>
<td>3.7</td>
<td>4.9</td>
</tr>
<tr>
<td class="firstcol">Public Consumption</td>
<td>72,111</td>
<td>68,453</td>
<td>76,940</td>
<td>5.3</td>
<td>-6.3</td>
<td>0.5</td>
<td>2.9</td>
<td>2.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Fixed Capital Formation</td>
<td>167,081</td>
<td>161,299</td>
<td>157,123</td>
<td>3.6</td>
<td>6.3</td>
<td>6.3</td>
<td>0.9</td>
<td>5.3</td>
</tr>
<tr>
<td class="firstcol">Exports</td>
<td>547,877</td>
<td>529,354</td>
<td>488,716</td>
<td>3.5</td>
<td>12.1</td>
<td>10.9</td>
<td>-4.1</td>
<td>17.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>-414,909</td>
<td>-402,592</td>
<td>-370,622</td>
<td>3.1</td>
<td>11.9</td>
<td>-11.3</td>
<td>-5.5</td>
<td>27.3</td>
</tr>
<tr>
<td class="firstcol">GDP</td>
<td>839,791</td>
<td>827,143</td>
<td>786,548</td>
<td>1.5</td>
<td>6.8</td>
<td>5.3</td>
<td>1.9</td>
<td>4.7</td>
</tr>
</tbody>
</table>
Evidence of the Impact of SARS in China 
by <a href="/comment/Curley.html">Louise Curley</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617g.jpg" width="353">
The impact of SARS (Sever Acute Respiratory Syndrome) on China&#39;s economy is beginning to show up in recently released data. Retail sales year over year growth fell to 4.3% in May the lowest rate since August,1990. Government measures to control the disease, such as the closing of movie theaters and internet cafes and the prohibition of mass gatherings may well have contributed more to the decline in sales than the direct effects of the disease itself. With the peaking of the disease and the relaxation of restrictions, the worst of the impact on retail sales may have been felt.
The effect on production as measured by the growth rate of industry value added in 1990 prices has been less severe. The rate of growth has been declining since the February, 2003 peak of 17.5% and is now 15.9% .This is still above the rate in January and the average for all of 2002.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Year/Year % Change</th>
<th scope="col">May 2003</th>
<th scope="col">Apr 2003</th>
<th scope="col">Mar 2003</th>
<th scope="col">Feb 2003</th>
<th scope="col">Jan 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Sales</td>
<td>4.3</td>
<td>7.9</td>
<td>9.3</td>
<td>8.5</td>
<td>10.0</td>
<td>9.8</td>
<td>10.1</td>
<td>11.0</td>
</tr>
<tr>
<td class="firstcol">Gross Value Added</td>
<td>15.9</td>
<td>16.4</td>
<td>17.2</td>
<td>17.5</td>
<td>14.8</td>
<td>12.4</td>
<td>9.9</td>
<td>11.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Seasonally adjusted Gross Domestic Product in Thailand rose 1.5% in the first quarter of 2003 from the fourth quarter of 2002, or slightly above consensus expectations of 1.3%. The outbreak of SARS (severe acute respiratory syndrome) [...]

Thailand’s First Quarter GDP Growth Above Consensus

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617a.jpg" width="353">
The Consumer Price Index (CPI-U) was unchanged last month following a 0.3% drop in April. Consensus expectations had been for a 0.1% decline. Higher prices for most services offset continued price declines for energy and goods.
The CPI less food and energy rose 0.3% last month versus Consensus expectations for a 0.1% rise. It was the strongest m/m gain in core prices since August 2002.
Core services prices led the strength in pricing power last month following three months of little change. So far this year these prices are up 2.6% (AR). Shelter prices rose 0.6% in May (2.3% YTD AR) following three months of no change. Medical care services prices rose 0.5% (2.7% YTD AR).Education and communication prices fell for the third consecutive month. Public transportation prices jumped 2.0% higher (4.5% YTD AR).
Offsetting the strength in services was continued deflation in energy prices which fell 3.1% in May for the second sharp monthly drop. Gasoline prices fell 6.8% but so far in June are flat to up slightly versus May. Fuel oil prices fell 5.6% (28.2% YTD AR). Piped gas &amp; electricity prices rose 0.5% (21.2% YTD AR).
Goods prices continued to deflate. Apparel prices fell 0.3%, down 5.6% YTD AR. New and used vehicle prices fell 0.2%, down 2.2% YTD AR. Prices for household furnishings and operation fell 0.5% (-2.1% YTD AR).
The chained CPI which adjusts for shifts in consumer buying behavior fell 0.2% for the second month. It is similar to the PCE price deflator. The core price measure was unchanged for the second month (1.8% YTD AR).
Analysis by the Federal Reserve Bank of New York titled &quot;Social Security and the Consumer Price Index for the Elderly&quot; can be found <a href="http://www.newyorkfed.org/rmaghome/curr_iss/ci9-5.html">here.</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/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a></th>
<th scope="col">May</th>
<th scope="col">April</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&nbsp;</td>
<td>0.0%</td>
<td>-0.3%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.6%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-1.9%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.5%</td>
<td>0.1%</td>
<td>3.0%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-3.1%</td>
<td>-4.6%</td>
<td>9.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>1.7%</td>
<td>1.8%</td>
<td>3.1%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a></td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.0%</td>
<td>1.0%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
 Housing Starts Recover 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617b.jpg" width="353">
Housing starts rose about as expected last month and recovered just about all of the prior month&#39;s decline. Total starts of 1.73 mil. units were up 6.1% from April which was little revised. Consensus expectations had been for starts of 1.70 mil.
Single family starts rose 1.5% m/m following a 2.5% April decline. So far this year single family starts are up 1.9% from the 2002 average. 
Multi-family starts showed strength last month and rose 29.2%, reversing all of the prior month&#39;s drop. Multi-family starts this year are down 6.3% versus 2002.
Building permits added 3.7% in May to the 2.1% gain in April. Single family permits rose just a bit but multi family permits were strong.

<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">May</th>
<th scope="col">April</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>1,732</td>
<td>1,632</td>
<td>-1.1%</td>
<td>1,711</td>
<td>1,601</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,378</td>
<td>1,358</td>
<td>-0.8%</td>
<td>1,364</td>
<td>1,272</td>
<td>1,232</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>354</td>
<td>274</td>
<td>-2.5%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,788</td>
<td>1,724</td>
<td>3.9%</td>
<td>1,750</td>
<td>1,637</td>
<td>1,598</td>
</tr>
</tbody>
</table>
Industrial Production Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617c.jpg" width="353">
Industrial production rose a slight 0.1% in May following two months of 0.6% decline (revised down). Consensus expectations for no change.
Output in the manufacturing sector rose 0.2% (-1.0% y/y) for the first monthly gain since January.
Output in selected high-technology industries rose 0.8% (8.5% y/y) for the fifth consecutive monthly gain. Excluding high-tech factory output rose 0.2% (-1.7% y/y) in May. Motor vehicle output fell sharply for the fourth straight month but electrical equipment and nondurable factory output rose.
Total capacity utilization was unchanged at 74.3%, the lowest level since July 1983. Factory sector utilization rose slightly to 72.6%. Growth in capacity slowed to 1.0% y/y versus 1.5% growth last year and 3.2% growth in 2001.

<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">May</th>
<th scope="col">April</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>0.1%</td>
<td>-0.6%</td>
<td>-0.7%</td>
<td>-0.8%</td>
<td>-3.5%</td>
<td>4.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>74.3%</td>
<td>74.3%</td>
<td>75.7%(5/02)</td>
<td>75.6%</td>
<td>77.3%</td>
<td>82.7%</td>
</tr>
</tbody>
</table>
Chain Store Sales Better 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617d.jpg" width="353">
Chain store sales rose 0.3% last week and recovered all of the prior week&#39;s decline according to the BTM-UBSW survey.
Sales so far in June sales are 0.1% below the May average.
During the last five years there has been a 59% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM leading indicator of chain store sales was unchanged following strong gains through most of May.
The BTM-UBSW retail chain-store sales index is constructed from the sales results reported by seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<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">6/14/03</th>
<th scope="col">6/07/03</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>417.0</td>
<td>415.8</td>
<td>0.6%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
U.S. Manpower Hiring Index Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030617e.jpg" width="353">
The Manpower employment survey for 3Q indicated that across industries, a seasonally adjusted net 6% of 16,000 employers expect to increase hiring activity.
The latest reading is down from 11% in 2Q and was the lowest since 2Q 1991.
Since 1980 there has been a 74% correlation between the Manpower index and the y/y change in nonfarm payrolls.
The latest press release from Manpower Inc. covering employment prospects in 18 countries can be viewed <a href="http://www.manpower.com/mpcom/files?name=InternationalRLS_3Q03.doc">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/SURVEYS/@SC/@SC.HTM">Manpower Employment Survey</a></th>
<th scope="col">3Q03</th>
<th scope="col">2Q03</th>
<th scope="col">3Q02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Industries - Net Higher (SA)</td>
<td>6</td>
<td>11</td>
<td>14</td>
<td>11</td>
<td>17</td>
<td>24</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) was unchanged last month following a 0.3% drop in April. Consensus expectations had been for a 0.1% decline. Higher prices for most services offset continued price declines for energy and goods. The [...]

Consumer Price Index Flat, Core Boosted by Higher Services Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030616a.jpg" width="353">
The Empire State Manufacturing Survey index of general business conditions rose to the highest level in the survey&#39;s brief two year history. The rise to 26.8 in June added 16 points to the even sharper improvement in May.
Consensus expectations for a reading of 10.1. The data were reported by the Federal Reserve Bank of New York.
Diffusion indexes for most subgroups improved with orders, shipments and unfilled orders each moving into positive territory and thus suggesting positive growth. Conversely, the index of employment fell back into negative territory.
The index of prices paid fell sharply for the second month to -2.06, the first negative reading since February 2002.
The survey includes measures of business expectations six months ahead. This diffusion index for general business conditions added to the sharp gains of the prior two months. The rise to 58.4 was to the highest level since June of last year. Expectations for capital expenditures fell and gave back much of the strong May gain.
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/index.html">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">June</th>
<th scope="col">May</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>26.8</td>
<td>10.6</td>
<td>10.31</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
Housing Market Index Rose Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030616b.jpg" width="353">
The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index rose five points in June to 62. The gain added to a five point rise in May and pulled the index back into the lofty range prevalent before the War with Iraq.
During the last fifteen years there has been a 69% correlation between the y/y change in the NAHB index and the change in new home sales.
The index of current market conditions for home sales rose as the percentage of builders indicating &quot;good&quot; conditions rose to 47% from 44%.
The index which measures expected home sales in six months rose to 70 versus an average of 69 during all of last year.
Traffic of prospective buyers again rose sharply to the average of last year.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
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%">
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<thead>
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<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">June</th>
<th scope="col">May</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>57</td>
<td>60</td>
<td>61</td>
<td>56</td>
<td>62</td>
</tr>
</tbody>
</table>
</body>
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The Empire State Manufacturing Survey index of general business conditions rose to the highest level in the survey's brief two year history. The rise to 26.8 in June added 16 points to the even sharper improvement in May. Consensus [...]

Empire State Factory Survey Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030613c.jpg" width="353">
Finished producer prices fell 0.3% in May following the record 1.9% April drop. Consensus expectations were for a 0.2% decline.
Finished energy prices fell 2.6% and accounted for virtually all of the decline last month. Gasoline prices fell 6.0% (9.5% y/y). Fuel oil prices fell 11.4% (8.2% y/y). Residential gas prices rose 1.4% (31.5% y/y) following a 4.0% April drop. These energy product price series are NSA.
Excluding food and energy prices rose an expected 0.1%.
Core finished consumer goods prices rose 0.1% (-0.3% y/y) following the 1.3% April decline which largely reflected lower tobacco prices. Passenger car prices also fell 0.3% (-0.5% y/y). Prices for carpets, appliances and home electronic equipment fell but furniture prices rose slightly. Capital goods prices were unchanged (0.2% y/y) following the 0.5% April decline.
Intermediate goods prices dropped for the second month, down 0.8%. Energy prices fell 4.4% as natural gas prices to electric utilities fell 8.0% (39.6% y/y) following a 40.3% April drop. Commercial and industrial natural gas prices also fell, both for the second month. 
Crude goods prices rose 1.7% recovering just some of the record 16.3% decline in April. Higher food and energy prices led the partial recovery even though crude petroleum prices fell. Crude natural gas prices rose 6.6% (71.6% y/y). Core crude prices again tumbled led down by lower metals prices. Iron &amp; steel scrap prices fell 4.5%.

<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/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Finished Goods</td>
<td>-0.3%</td>
<td>-1.9%</td>
<td>2.5%</td>
<td>-1.3%</td>
<td>2.0%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>-0.8%</td>
<td>-2.2%</td>
<td>4.2%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.1%</td>
<td>0.0%</td>
<td>2.3%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>1.7%</td>
<td>-16.3%</td>
<td>19.1%</td>
<td>-10.6%</td>
<td>0.3%</td>
<td>22.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-1.9%</td>
<td>-1.3%</td>
<td>7.2%</td>
<td>3.8%</td>
<td>-10.0%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
U.S. Trade Deficit Deep and As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030613b.jpg" width="353">
The U.S. foreign trade deficit improved just slightly in April to $42.0B versus $42.9B in March. The April deficit was the third deepest on record. Consensus expectations for a deficit of $42.0B. March&#39;s deficit was little revised and revisions to prior years were small.
For the first four months of this year, the trade deficit averaged a $490.9B annual rate.
Imports fell 2.1% in April as the value of petroleum product imports fell 10.4%. The daily quantity of crude petroleum imports rose 8.1% but the average price fell 14.0% to $26.02.
Imports of nonauto consumer goods fell but still are up 11.0% y/y. Auto imports fell 2.3% (0.2% y/y). Capital goods imports rose 3.8% (1.6% y/y).
Exports fell a sharp 2.2% and March was revised to a slight decline.
Lower exports of nonauto consumer goods led the April decline, down 2.1% (0.8% y/y). Capital goods exports also sagged 2.6% (-4.7% y/y) for the second consecutive steep decline.
A report from the Federal Reserve Bank of St. Louis titled &quot;World Trade: Past, Present, and Future&quot; can be found <a href="http://research.stlouisfed.org/publications/iet/20030501/cover.pdf">here</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/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">April</th>
<th scope="col">Mar</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">Trade Deficit</td>
<td>$42.0B</td>
<td>$42.9B</td>
<td>$34.2B(4/02)</td>
<td>$418.0B</td>
<td>$357.8B</td>
<td>$375.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-2.2%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-3.3%</td>
<td>-5.8%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-2.1%</td>
<td>3.5%</td>
<td>7.1%</td>
<td>2.0%</td>
<td>-5.5%</td>
<td>18.5%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Sagged Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030613a.jpg" width="353">
The mid-June reading of Consumer Sentiment from the University of Michigan fell 5.3% versus May to 87.2. Consensus expectations were for a reading of 93.5.
The index of consumer expectations fell 7.9% (-4.2% y/y) following sharp gains in the prior two months. The index of current conditions, down 1.3% m/m and off 7.5% y/y, fell for the fourth time this year.
Over the last ten years there has been a 64% correlation between the level of consumer sentiment and the y/y change in real PCE. The correlation over the last five years has been 82%.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">Mid-June</th>
<th scope="col">May</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>87.2</td>
<td>92.1</td>
<td>-5.6%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices fell 0.3% in May following the record 1.9% April drop. Consensus expectations were for a 0.2% decline. Finished energy prices fell 2.6% and accounted for virtually all of the decline last month. Gasoline [...]

Producer Prices Fell Again

Blue Chip forecasters expect US to lead aggressive policy rate cuts over coming year—apart from Japan

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

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The NFIB Small Business Optimism Index declined to 91.2 during August after rising to 93.7 in July, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. The index held steady y/y but has improved from a March low of 88.5. Eight of the 10 index components declined last month. The NFIB Small Business Uncertainty Index increased to 92 in August. It remained higher than its recent low of 65 in November 2023.

The outlook for business conditions in the next six months deteriorated in the latest survey. The net balance of respondents expecting the economy to improve fell to -13% in August from -7% in July but remained higher than a record-low of -61% in June 2022. Expected real sales fell to a net -18% in August, a five-month low. The latest reading as increased from a low of -29% in July 2022. A steady net -16% of respondents reported higher nominal sales in the past three months, down from the most recent positive reading of 1% in May 2022.

Plans to make capital outlays increased to 24% in August following three straight months at 23%. This reading was up from its recent low of 20% in March but remained below a high of 31% in October 2021. Plans to expand business fell to 4% in August after rising to 5% in July and holding at 4% for the prior four consecutive months. Expected credit conditions deteriorated to -8% in August, after three consecutive months at -7, and remained below its high six months ago.

On the labor front, 56% of respondents reported few or no qualified workers to fill job openings in August, up from 49% in July and the highest percentage since September of last year. These readings were below a high of 61% in May 2022. A net 13% planned to increase employment in August, below the most recent high of 18% in November of last year and a peak of 32% in August 2021.

Overall earnings trends deteriorated sharply last month to the weakest reading since March 2020, falling to -37% in August from -30% in July.

On the pricing front, the net percent raising their average selling prices declined to 20% in August, down from 22% in July and below a high of 66% in March of 2022. The percentage planning to raise prices edged higher to 25% in August from 24% in July but remained well below a high of 52% in March 2022.

Wage inflation held steady as a net 33% of respondents raised compensation during the last three months, the same as in July but below 38% reported in the June survey. Compensation peaked at 50% in January 2022. A net 20% of firms planned to raise worker compensation in the next three months, up from 18% in July but below a high of 32% in October 2022.

Inflation continued to be the single most important issue facing small businesses, as reported by 24% of NFIB members in August. The quality of labor was the second most important concern as reported by 21% of members. Other major concerns were taxes, 13%, the cost of labor, 9%, and government requirements, 8%.

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- Expectations for economy & sales decline.
- Employment plans weaken but job openings surge.
- Prices ease but expectations edge higher.

U.S. NFIB Small Business Optimism Index Backpedals in August

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Retail gasoline prices for all grades weakened to $3.36 per gallon (-14.7% y/y) in the week ended September 9 from $3.41 per gallon in the previous week. Prices were below the late-April high of $3.79 per gallon and at the lowest level since the second week of February. They also were below the all-time high of $5.11 in the week ended June 13, 2022. Prices are increased, however, versus the low of $3.18 per gallon in the third week of December. Retail prices for on-highway diesel fuel declined to $3.56 per gallon (-21.7% y/y) last week compared to $3.63 in the prior week. These prices reached a high of $4.63 per gallon in the third week of September of last year.

The average price of West Texas Intermediate crude oil weakened to $69.33 per barrel (-20.5% y/y) in the week ended September 6 from $75.97 per barrel in the prior week. Prices roughly equaled the lowest level since the last week of June 2023 and were lower than the $91.45 high in the last week of September 2023. They peaked at $142.46 per barrel in the week of July 4, 2008. Yesterday, the price of West Texas Intermediate crude oil was $68.71 per barrel. The price of European Brent crude oil fell to $75.25 per barrel (-17.6% y/y) in the week ended September 6 compared to $80.83 in the prior week. The price of Brent has recently ranged from a low of $73.55 in the week ended June 30, 2023 to a high of $127.40 in the week ended June 10, 2022. Yesterday, the price was $72.37 per barrel.

Natural gas prices averaged $2.04/mmbtu (-19.0% y/y) in the week ended September 6 compared to $1.90 in the prior week. Prices recently touched a high of $2.73/mmbtu in the second week of June and they remained above their low of $1.40/mmbtu in the second week of March. Prices reached a high of $9.56/mmbtu averaged in the last week of August 2022. Yesterday, the price of natural gas was $2.03/mmbtu.

Gasoline demand increased 0.9% y/y in the four weeks ended August 30 after improving 1.1% y/y in the four weeks ended August 23. Demand for all petroleum products weakened 1.6% y/y in the last four weeks after falling 2.9% y/y in the previous period. Crude oil input to refineries rose 0.3% y/y in the four weeks ended August 30 after a 0.4% y/y decline during the previous four-week period.

Gasoline inventories rose 2.1% y/y in the week of August 30 after rising 0.5% y/y in the prior week. Inventories of residual fuel oil fell 2.3% y/y after declining 1.9% y/y in the previous week. Crude oil inventories, including the Strategic Petroleum Reserve, rose 4.0% y/y in the week of August 30, the same as during the prior week.

Measured in days’ supply, gasoline inventories were 24.0 days in the week ended August 30 following 23.9 days one week earlier. The recent low was 23.4 days in the week of June 30, 2023. Crude oil inventories fell to 25.0 days in the week of August 30. These compare to a recent high of 31.9 days in the week of March 3, 2023 and a low of 25.0 days in the week of September 1, 2023.

These data are reported by the Energy Information Administration of the U. S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** and **USENERGY** databases.

- Gasoline prices fall to seven-month low.
- Crude oil prices decline sharply.
- Natural gas prices rise slightly.

U.S. Gasoline & Crude Oil Prices Decline in Latest Week

Robert Brusca

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Inflation of the European Monetary Union in August rose by 0.2% compared with 0.3% gain in July and a 0.2% rise in June. The three-month inflation rate at 2.5%, however, is part of a slow progression higher that compares to a 2.2% annual rate over six months and a 2.1% annual rate over 12 months, a moderate but clear accelerating pattern.

**Country level trends**
The four largest countries in the monetary union also are exhibiting patterns that suggest or that outright demonstrate, inflation acceleration at least based on headline measures. Germany is the largest monetary union economy and is a slight exception with a 2.2% inflation rate over three months, down from 2.5% over six months but up from 2.1% over 12 months. France demonstrates inflation rising from 2.2% over 12 months to a pace of 2.4% over six months to a strong 3.6% over three months. In Italy, inflation transitions from a low 1.3% over 12 months to a 3% pace over six months, to another strong pace of 3.7% over three months. Spain is the true exception with inflation well behaved across most of the cohorts at 2.3% over 12 months, an elevated pace but not by much, especially when compared to a 0.7% pace over six months that only ticks up to a 0.8% annual rate over three months.

**Monthly results by country**
The inflation process among these four large countries is still somewhat mercurial as August showed declines in inflation in Germany and Italy on a month-to-month basis while Spain's inflation was flat. On the face of it, this is good news; however, July brought an increase in prices of 0.8% month-to-month in Italy, 0.5% in Germany, 0.4% in France with a moderate 0.2% gain in Spain. So whatever the three-month pace is, it's the product of some fairly erratic monthly numbers and therefore not yet something that we can consider to be very reliable.

**Core inflation**
Core inflation is a different story. Here we get core or at least an ex-energy reading from Germany, Italy, and Spain. The August readings are contained with German ex-energy inflation up by 0.2%, Italian core inflation up by 0.1% and Spain’s core inflation up by 0.3%. These are decelerations from stronger gains in July across the board. And two of these three countries also had larger increases in June than they had in August. Looking at the progression of core inflation for Germany, the 12-month ex-energy rate is 2.5%, the six-month pace is 2.6%, and the three-month pace is 2.4%; all pretty steady stuff. Italy shows core inflation at 2.4% over six months and 12 months that moves up to 3.1% over three months. Spain shows core inflation at 2.7% over 12 months, up to 2.8% over six months and up to 4.3% over three months.

The performance of Brent oil prices explains the headline/core difference as oil prices fell over these progressively longer periods; over shorter periods oil prices have fallen faster tending to push headline inflation down faster over these short horizons contributing to the illusion of inflation deceleration. Even so, deceleration is not a pattern that is detectable in headline inflation for these countries.

The bottoms line here is that core inflation is still stuck and too high and that is too much evidence of inflation accelerating even in the face of easing oil prices for monetary policy to seek further accommodation.

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As we peruse the inflation trends, we find they are accompanied by output trends that are erratic even more than they are weak. Median output among the early reporting EMU members in July shows a gain of 1.0% compared to a gain of 0.4% in June. These contrast to a 0.5% drop in May. Median output among this group falls by 3.7% annualized over three months, rises by 1.5% annualized over six months, and falls by 0.9% over 12 months. And output is falling on the median measure in the quarter-to-date (early in Q3). Still, we also see output trends accelerate more than they decelerate across countries in June and July with a proportion of about 60% accelerating to 40% not accelerating.  Over three months, that full period shows acceleration in only about one third of reporters; output accelerates in half the reporters over six months and for two-thirds of them over 12 months.

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**Mixed, as well as, mixed-up trends**
On balance, the performance of inflation and industrial output in the EMU is mixed. Over three months the output trend is especially hard to pin down with declines of 26.5%, 18.3% and 17% annualized for some reporters juxtaposed to increases of 23.7% annualized, 18.4% annualized and 11.1% annualized- and, of course, more. In such a mixed constellation of growth rates, it is hard to discern trend. However, Portugal, the Netherlands, France and Germany, each reporter shows declines in each of the broader sequential periods- they also show deterioration is worsening. Belgium, Finland and Ireland, a decidedly smaller class of economy, all show persistent IP expansion and acceleration. The quarter-to-date shows declines outnumber increases across EMU members by two-to-one. Still, a lot of these trends are rooted in sharp declines logged in July. The gyrating three-month growth rates also are important contributors to growth results over six months and 12 months. When three-month growth rates are turbulent, they tend to impart their turbulence across the timeline.

For now there is more weakening in this report that I would like to see, but it also is still a mixed report. PMI data remind us that while manufacturing has been weak there has been countervailing strength in services to support growth. The failure of inflation data to clearly fall into line and weaken also is suggestive of a more mixed real sector economic performance. With such data trends in progress, central banks are likely to continue to play the waiting game.

Europe

Core Inflation in Key EMU Members: Mostly Above Target and Not Falling

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Consumer credit outstanding strengthened $25.5 billion (1.9% y/y) in July after rising $5.2 billion in June, revised from $8.9 billion, and increasing $11.7 billion in May, revised from $13.9 billion. It was the largest runup in loan balances since November 2022. A $10.2 billion increase had been expected in the Action Economics Forecast Survey. The ratio of consumer credit outstanding to disposable personal income stood basically unchanged at 24.3% in July, a ratio that has drifted lover the last two years.

Revolving credit outstanding, which includes credit cards, rose $10.6 billion in July (6.6% y/y) following a $0.4 billion decline in June and an $8.5 billion May rise. Revolving credit outstanding held by depository institutions rose 7.2% y/y, down from a high of 17.0% y/y growth in August 2022. Revolving credit held by finance companies fell 8.3% y/y while revolving credit held by credit unions rose 6.3% y/y in July, below the 16.4% y/y peak in February 2022.

Nonrevolving credit outstanding increased $14.8 billion (0.3% y/y) in July after increasing $5.6 billion in June and rising $3.2 billion in May. Nonrevolving credit held by banks fell a lessened 1.8% y/y while finance company credit rose 3.8% y/y. Credit union nonrevolving balances was fairly steady y/y, off from 20.3% y/y growth in January 2023. Federal government balances rose 0.2% y/y to $1.49 trillion.

The value of student loans outstanding totaled $1.75 trillion at the end of June, down 0.9% y/y, and there was $1.56 trillion in motor vehicle loans at the end of June, up 1.8% from a year earlier.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Revolving credit outstanding rebounds.
- Nonrevolving credit gain almost triples.

U.S. Consumer Credit Usage Surges in July

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Wholesale trade inventories increased 0.2% (0.4% y/y) during July after holding steady in June, revised from 0.2%, and an unrevised 0.5% May gain. The increase compared to a 0.3% rise expected in the Informa Global Markets Survey and compared to a 0.3% gain in the advance report issued two weeks ago.

Durable goods inventories edged 0.1% higher last month (2.6% y/y) following a 0.2% decline. Machinery inventories, the largest sector, fell 0.3% (+12.0% y/y) while motor vehicles & parts, the second largest grouping, edged 0.1% higher (11.8% y/y). Electrical equipment inventories rose 0.5% (-4.0% y/y). Inventories of nondurable goods increased 0.5% (-3.2% y/y) following a 0.4% rise. Drug inventories, which make up a quarter of nondurable inventories, rose 2.5% (4.4% y/y). Grocery inventories, the second largest category, eased 0.6% (-2.3% y/y). Petroleum inventories dropped 1.7% (-9.1% y/y). Apparel inventories edged 0.1% higher (-15.1% y/y) and chemical inventories weakened 0.5% (-8.8% y/y).

Sales at the wholesale level strengthened 1.1% (2.9% y/y) in July after a 0.3% June decline, revised from -0.6%. A 0.2% July rise had been expected in the Action Economics Forecast Survey.

Durable goods sales increased 0.5% in July (3.2% y/y) after a 0.6% increase. Sales of electrical equipment, the largest sector, rose 0.2% (9.7% y/y), the same as in June. Professional and commercial equipment sales, which includes computers, jumped 1.2% (6.0% y/y), while vehicle sales rose 0.4% (5.4% y/y). Nondurable product sales improved 1.6% (2.6% y/y) after declining 1.6% in June. Petroleum product sales, the largest category, rose 3.9% (1.3% y/y). Drug store sales jumped 1.5% (9.3% y/y) while grocery store sales gained 0.3% (2.8% y/y). Sales of apparel jumped 2.5% (3.7% y/y) while chemical sales declined 0.9% (-2.9% y/y). Paper sales rose 0.9% (-2.1% y/y).

The inventory-to-sales (I/S) ratio at the wholesale level eased to 1.35 in July from 1.36 in June and has been moving sideways for the last year.

The I/S ratio for durable goods was minimally changed at 1.80. The machinery ratio declined to 3.09 while motor vehicles rose to 1.89. The I/S ratio for nondurable goods eased to 0.94, down from 1.01 early last year. The petroleum industry I/S ratio slipped to 0.32, and the drug industry moved up to 1.02. Apparel's I/S ratio of 2.19 stood below its 2.67 level one year earlier.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

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- Inventory gain extends trend of moderate accumulation.
- Jump in sales concentrates in nondurables.
- Inventory-to-sales ratio continues sideways movement.

Economy in Brief: June 2003

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