Carol Stone, CBE

<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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030924c.jpg" width="353"></p>
<p>The current account in the Euro-Zone is eroding this year. Monthly surpluses are mostly smaller than in 2002 and two months of 2003, April and July, have not had surpluses at all. This recent pattern reverses an up-trend in the balance that had been in place from early 2001 to late last year.</p>
<p>Exports of goods are a main source of the downturn in the balance. They flattened almost immediately with an upturn in the euro currency in 2001, and began to fall last November. The decline has been moderate, but persistent. It is visible in nearly every country&#39;s individual trade and GDP data. In more recent months, exports of services have crept lower as well. In this current account compilation, the balance on income has also been ratcheting lower, and the most recent data show a large volume of external transfers, worsening the overall current account position in July.</p>
<p>The offsetting financial flows have individually shown little distinct trend, making it hard to identify the factors generating overall capital movements. Portfolio investment has perhaps drifted a bit lower on balance, but direct investment, &quot;other&quot; investment (i.e., bank loans, repo transactions, etc.), and derivative flows have each been very erratic on a monthly basis. There is some hint of a rising capital account trend that is tending to counter the decline in the current account; the &quot;capital account&quot; covers transactions in fixed assets and intangible assets, such as patents. Thus, while a strong euro seems to have had an identifiable impact on current account activity, it has not particularly reflected the sustained inflows of capital funds that might be expected to accompany a steeply rising currency.</p>
</span>
<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><b>Euro-Zone Balance of Payments (Billions of Euros)</b></th>
<th scope="col"><b>July 2003 </b></th>
<th scope="col"><b>June 2003 </b></th>
<th scope="col"><b>May 2003 </b></th>
<b>Annual Average</b>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><b>2002</b></td>
<td><b>2001</b></td>
<td><b>2000</b></td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Balance on Current Account</th>
<th scope="col"><center></center></th>
<th scope="col">0.0</th>
<th scope="col">2.1</th>
<th scope="col">2.8</th>
<th scope="col">5.0</th>
<th scope="col">-1.6</th>
<th scope="col">-6.7</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Balance on Capital Account</td>
<td><center></center></td>
<td>0.8</td>
<td>2.3</td>
<td>0.4</td>
<td>1.0</td>
<td>0.8</td>
<td>1.0</td>
</tr>
<tr>
<td class="firstcol">Net Direct Investment</td>
<td><center></center></td>
<td>-3.6</td>
<td>24.0</td>
<td>-0.2</td>
<td>1.7</td>
<td>3.2</td>
<td>1.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Portfolio Investment</td>
<td><center></center></td>
<td>-35.3</td>
<td>12.9</td>
<td>8.0</td>
<td>4.8</td>
<td>6.8</td>
<td>10.1</td>
</tr>
<tr>
<td class="firstcol">Net &quot;Other&quot; Investment</td>
<td>34.1</td>
<td>-39.6</td>
<td>-39.6</td>
<td>-15.9</td>
<td>-0.1</td>
<td>15.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Errors &amp; Omissions</td>
<td>4.1</td>
<td>16.0</td>
<td>29.1</td>
<td>5.1</td>
<td>2.9</td>
<td>-0.6</td>
</tr>
</tbody>
</table>
</body>
</html>


The current account in the Euro-Zone is eroding this year. Monthly surpluses are mostly smaller than in 2002 and two months of 2003, April and July, have not had surpluses at all. This recent pattern reverses an up-trend in the [...]

Falling Exports Reduce Euro-zone Current Account

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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030924a.jpg" width="353"></p>
<p>The index of mortgage applications compiled by the Mortgage Bankers Association fell 3.7% last week. The decline pulled the average level of applications in September to its lowest since June of last year.</p>
<p>A 7.0% w/w decline in purchase applications led the drop. So far in September purchase applications are 2.2% ahead of the August average.</p>
<p>Despite the latest decline, the level of purchase applications is up 11.8% from a year ago. During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.</p>
<p>Applications to refinance fell a slight 0.4% w/w but are down nearly two-thirds from a year ago.</p>
<p>Interest rates on a conventional 30-Year mortgage fell for the third straight week with the effective rate at 6.11% versus a recent high of 6.64% in early August. The effective rate on a 15-year mortgage was stable w/w at 5.51% but it too is down from a high of 6.07%.</p>
<p>The Impact of Low Interest Rates on Financial Institutions is discussed in <a href="http://www.dallasfed.org/research/indepth/2003/id0309.html"> this</a> paper from the Federal Reserve Bank of Dallas.</p>
<p>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 <a href="http://www.mbaa.org"> here</a>.</p>
</span>
<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"><u><b>9/19/03</b></u></th>
<th scope="col"><u><b>9/12/03</b></u></th>
<th scope="col"><b><u>2002</u></b></th>
<th scope="col"><u><b>2001</b></u></th>
<th scope="col"><b><u>2000</u></b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>699.6</td>
<td>726.7</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>402.1</td>
<td>432.4</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,429.7</td>
<td>2,438.5</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
<span id="articletitle">Productivity - International Comparisons, US Service Sector and R&D</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom Moeller</a> September 24, 2003</span>
<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030926a.jpg" width="353"></p>
<p>The US Department of Labor recently reported that in 2002, growth in manufacturing output per hour was fastest in Sweden (7.6%) and Korea (7.2%).</p>
<p>The 6.4% gain in US factory sector productivity was the fastest in fifteen years. Productivity growth in Italy was negative.</p>
<p>The complete report comparing productivity and unit labor costs internationally is available <a href="http://www.bls.gov/news.release/prod4.nr0.htm">here</a> .</p>
<p>Jack E. Triplett and Barry P. Bosworth examine productivity in the US service sector in <a href="http://www.newyorkfed.org/rmaghome/econ_pol/2003/0309trip.pdf"> this</a> paper from the Federal Reserve Bank of New York. They conclude that service productivity growth after 1995 rivals that in the rest of economy.</p>
<p>A slowdown in the growth of patents granted may not be reason to worry. Analysis from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-26.pdf"> here</a>.</p>
</span>
<table border="0" cellspacing="0" width="100%">

</table>
</body>
</html>


The index of mortgage applications compiled by the Mortgage Bankers Association fell 3.7% last week. The decline pulled the average level of applications in September to its lowest since June of last year. A 7.0% w/w decline in [...]

Mortgage Applications Down 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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030923c.jpg" width="353"></p>
<p>Data on Italian retail sales for July and consumer confidence for September were released today.</p>
<p>Retail sales rose 0.56% in July and were 2.66% above the year ago level. The seasonally adjusted index of retail sales has shown a steady upward trend in spite of the precipitous decline that took place in consumer confidence in 2002 and the continued absence of any real improvement in confidence since then.</p>
<p>Consumer confidence rose 1.23% in September from August, but still remains in the doldrums. Confidence was 3.61% below the year ago level. The balance of respondents appraising their overall situation in the last twelve months declined by one percentage point to minus 68.in September. Looking ahead for the next twelve months, the respondents tend to be more optimistic, that is, the balance tends to be less negative or more positive than that for the previous twelve months. Even so, the balance for the next twelve months also declined by one percentage point to minus 22 in September.</p>
</span>
<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"></th>
<th scope="col"><b>Jul 03</b></th>
<th scope="col"><b>Jun 03</b></th>
<th scope="col"><b>Jul 02</b></th>
<th scope="col"><b>M/M<br> % Chg</b></th>
<th scope="col"><b>Y/Y<br> %Chg</b></th>
<th scope="col"><b>2002</b></th>
<th scope="col"><b>2001</b></th>
<th scope="col"><b>2000</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Sales (2000=100)</td>
<td>108.1</td>
<td>107.5</td>
<td>105.2</td>
<td>0.56</td>
<td>2.66</td>
<td>105.3</td>
<td>102.8</td>
<td>100.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td><b>Sep 03</b></td>
<td><b>Aug 03</b></td>
<td><b>Sep 02</b></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><b>2002</b></td>
<td><b>2001</b></td>
<td><b>2000</b></td>
</tr>
<tr>
<td class="firstcol">Consumer Confidence (1980=100)</td>
<td>106.5</td>
<td>105.5</td>
<td>110.8</td>
<td>1.23</td>
<td>-3.61</td>
<td>115.8</td>
<td>122.6</td>
<td>117.4</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>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Overall Situation (%Balance)</td>
<td><b>Sep 03</b></td>
<td><b>Aug 03</b></td>
<td><b>Sep 02</b></td>
<td><b>Point&nbsp;</b></td>
<td><b>Change</b></td>
<td><b>2002</b></td>
<td><b>2001</b></td>
<td><b>2000</b></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Last 12 months</td>
<td>-68</td>
<td>-67</td>
<td>-65</td>
<td>-1</td>
<td>-3</td>
<td>-46</td>
<td>-28</td>
<td>-37</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Next 12 months</td>
<td>-22</td>
<td>-21</td>
<td>-16</td>
<td>-1</td>
<td>-6</td>
<td>-6</td>
<td>5</td>
<td>1</td>
</tr>
</tbody>
</table>
</body>
</html>


Data on Italian retail sales for July and consumer confidence for September were released today. Retail sales rose 0.56% in July and were 2.66% above the year ago level. The seasonally adjusted index of retail sales has shown a steady [...]

Italian Retail Sales Continue Upward Trend in Spite of Depressed Consumer Confidence

<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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030923a.jpg" width="353"></p>
<p>Chain store sales fell 1.8% last week as Hurricane Isabel <span class="mainarttxt">struck the U.S. mid-Atlantic region Thursday,</span> according to the BTM-UBSW survey.</p>
<p><span class="mainarttxt">The hurricane left over 10 million people without power and killed at least 28.</span></p>
<p>The decline in sales followed a 0.3% dip the prior week and lowered the level of sales so far in September 0.3% below the August average.</p>
<p>During the last five years there has been a 62% correlation between the year-to-year percent change in chain store sales and the change in non-auto retail sales less gasoline.</p>
<p>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.</p>
</span>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><b> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></b></th>
<th scope="col"><u><b>9/20/03</b></u></th>
<th scope="col"><u><b>9/13/03</b></u></th>
<th scope="col"><b><u>Y/Y</u></b></th>
<th scope="col"><b><u>2002</u></b></th>
<th scope="col"><u><b>2001</b></u></th>
<th scope="col"><u><b>2000</b></u></th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>420.2</td>
<td>428.0</td>
<td>4.0%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
<span id="articletitle">US Dollar Tanked Against Major Currencies</span><br>
<span id="byline">by <a href="/comment/Moeller.html">Tom Moeller</a> September 23, 2003</span>
<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030923b.jpg" width="353"></p>
<p>The recent decline in the foreign exchange value of the US dollar gained momentum yesterday. It responded to a weekend communiqu&eacute; from the US, Britain, Canada, France, Germany, Italy and Japan which indicated that a flexible currency rate &quot;is desirable for Major countries or economic areas&quot; in order to iron out global economic imbalances.</p>
<p>JP Morgan&#39;s Trade Weighted Value of the US currency fell 0.8% yesterday and the value is down about 3% from the summer high.</p>
<p>The dollar&#39;s value fell yesterday 1.1% against the Euro and 1.8% against the Japanese yen. Since the summer peaks the dollar is down roughly 5% versus the Euro and 7% against the yen.</p>
<p>Versus the UK pound the dollar fell 1.0% yesterday and is down roughly 5% from the summer high.</p>
<p>Against the Canadian dollar the US currency was about stable yesterday but it has been sliding since early last year.</p>
<p>Economists at the Federal Reserve Bank of San Francisco ask &quot;<a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-20.pdf">Is Official Foreign Exchange Intervention Effective?</a>&quot;.</p>
</span>
</body>
</html>


Chain store sales fell 1.8% last week as Hurricane Isabel struck the U.S. mid-Atlantic region Thursday, according to the BTM-UBSW survey. The hurricane left over 10 million people without power and killed at least 28. The decline in [...]

Hurricane Isabel Lowered Weekly Chain Store Sales Sharply

<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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030922b.jpg" width="353"></p>
<p>The labor situation in Taiwan is beginning to show some improvement. The unemployment rate dipped below 5% in August, for the first time since September, 2000. Prior to the downturn of 2000-2001 the unemployment rate generally averaged less than 3%.</p>
<p>The secular shift in the unemployment rate has been due entirely to conditions in the goods producing industries where employment is still some 6% below the levels reached in September, 2000. The improvement in the overall employment situation is due to the almost steady rise in employment in the service producing industries month after month.</p>
</span>
<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"></th>
<th scope="col"><b>Aug 03</b></th>
<th scope="col"><b>&nbsp;M/M<br> &nbsp;% Chg&nbsp;&nbsp;</b></th>
<th scope="col"><b>Y/Y<br> &nbsp;% Chg</b></th>
<th scope="col"><b>Jul 03</b></th>
<th scope="col"><b>Aug 02</b></th>
<th scope="col"><b>2002</b></th>
<th scope="col"><b>2001</b></th>
<th scope="col"><b>2000</b></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total employment (thousands)</td>
<td>9,592</td>
<td>0.06</td>
<td>1.46</td>
<td>9,586</td>
<td>9,454</td>
<td>9,454</td>
<td>9,382</td>
<td>9,492</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Goods Producing Industries</td>
<td>3,334</td>
<td>-0.21</td>
<td>0.12</td>
<td>3,340</td>
<td>3,329</td>
<td>3,332</td>
<td>3,377</td>
<td>3,533</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Service Producing Industries</td>
<td>5,562</td>
<td>0.31</td>
<td>2.49</td>
<td>5,545</td>
<td>5,427</td>
<td>5,413</td>
<td>5,300</td>
<td>5,218</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate (%)</td>
<td>4.96</td>
<td>-0.14</td>
<td>-0.11</td>
<td>5.02</td>
<td>5.07</td>
<td>5.17</td>
<td>4.56</td>
<td>3.00</td>
</tr>
</tbody>
</table>
</body>
</html>


The labor situation in Taiwan is beginning to show some improvement. The unemployment rate dipped below 5% in August, for the first time since September, 2000. Prior to the downturn of 2000-2001 the unemployment rate generally [...]

Employment in Taiwan's Service Industries Continues to Outpace that in the Goods Industries

<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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030922a.jpg" width="353"></p>
<p>Recent analysis from the US House Budget Committee highlighted two measures of the US employment situation. The latest Economic Update which contains the analysis is available <a href="http://www.house.gov/budget/econup091103.pdf">here</a>.</p>
<p>In fact, employment during the last six months as measured in the establishment survey has fallen at a 0.7% annual rate. Employment as measured in household survey, from which the unemployment rate is derived, has risen at a 0.3% rate during the period<i>.</i></p>
<p><a href="http://www.bls.gov/news.release/empsit.tn.htm">Here</a> is An &quot;Explanatory Note&quot; from the US Bureau of Labor Statistics (BLS) regarding the employment figures.</p>
<p>New &quot;establishments&quot; generate jobs that are initially estimated in the payroll survey of employment. The number of these jobs is imputed using &quot;business deaths.&quot; Click <a href="http://www.bls.gov/web/cesbd.htm">here</a> for the new BLS methodology for estimation.</p>
<p>These jobs have been underestimated following past economic troughs and overestimated following cycle peaks. Subsequent revisions to the payroll figures historically have been positive following troughs and negative following peaks.<br><br></p>
<p>During the last six months, the &quot;net birth/death adjustment&quot; made by BLS to the payroll employment figures has averaged 132,000 per month. That is versus a negative average six month adjustment made earlier this year.</p>
<p>Employment by new firms is captured immediately in the household employment survey.</p>
</span>
</body>
</html>


Recent analysis from the US House Budget Committee highlighted two measures of the US employment situation. The latest Economic Update which contains the analysis is available here. In fact, employment during the last six months as [...]

U.S. Employment Series Indicate Positive or Negative Growth

<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>
<br>

<span id="articletext">
<p></p>
<p><img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030919c.jpg" width="353"></p>
<p>Hong Kong business sales data and industrial production showed widely divergent trends in the second quarter largely due to the differential impact of the SARS epidemic.</p>
<p>Domestic activity and tourism were hit hard by the highly contagious disease, as seen in the dramatically precipitous drops in sales at hotels, restaurants, tourism, air travel and local retail trade. Manufacturing activity, indicated in Hong Kong&#39;s &quot;index of industrial production&quot; has never really recovered after the 1997-98 currency crises, and it experienced one of its more severe decline in the second quarter. To be sure, economic sluggishness in many countries early this year would have also be a restraint for business activity in Hong Kong.</p>
<p>Notably, though, several important sectors expanded anyway during the period. Hong Kong is primarily a trade and transport center, and those activities continued apace. Export/import sales gained, and maritime transport held its first quarter level. Banking, insurance and other finance all increased. Also, encouragingly, monthly retail sales data indicate that virtually as soon as the incidence of new SARS cases moderated in early May, local consumers resumed shopping immediately. Employment finally turned upward just in August. Both of these developments bode well for an early rebound in the Hong Kong economy and suggest the disease had little or no lasting impact.</p>
</span>
<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><b>Hong Kong<br> Sales and Production Data<br> (% Changes)</b></th>
<th scope="col"><b>2Q 03 (Q/Q)</b></th>
<th scope="col"><b>1Q 03 (Q/Q)</b></th>
<th scope="col"><b>2Q 03 (Y/Y)</b></th>
<b>Q4/Q4</b>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"><b>2002</b></td>
<td><b>2001</b></td>
<td><b>2000</b></td>
</tr>
<tr>
<td class="firstcol">Manufacturing Production</td>
<td>&nbsp;-4.3</td>
<td>&nbsp; -2.7</td>
<td>-12.5</td>
<td>-9.2</td>
<td>&nbsp; -9.4</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Hotels</td>
<td>-60.9</td>
<td>-10.6</td>
<td>-64.3</td>
<td>12.6</td>
<td>-21.3</td>
<td>17.6</td>
</tr>
<tr>
<td class="firstcol">Air Transport&nbsp;&nbsp;</td>
<td>-20.9</td>
<td>&nbsp; -8.2</td>
<td>-21.5</td>
<td>22.7</td>
<td>-15.0</td>
<td>22.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Tourism</td>
<td>&nbsp;-60.2&nbsp;</td>
<td>-20.4</td>
<td>-63.2</td>
<td>22.4</td>
<td>&nbsp; -2.8</td>
<td>13.9</td>
</tr>
<tr>
<td class="firstcol">Maritime Transport</td>
<td>&nbsp; 0.8</td>
<td>&nbsp;&nbsp; 4.7</td>
<td>&nbsp;13.7</td>
<td>&nbsp; 5.9</td>
<td>&nbsp;&nbsp; 2.4</td>
<td>13.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Export/Import Trade</td>
<td>&nbsp; 7.7</td>
<td>&nbsp; -3.1</td>
<td>&nbsp; 4.8</td>
<td>&nbsp; 5.4</td>
<td>-20.0</td>
<td>&nbsp;9.4</td>
</tr>
<tr>
<td class="firstcol">Banking</td>
<td>11.9</td>
<td>-18.7</td>
<td>&nbsp; 2.3</td>
<td>&nbsp; 7.3</td>
<td>&nbsp;&nbsp; 4.5</td>
<td>-8.6</td>
</tr>
</tbody>
</table>
</body>
</html>


Hong Kong business sales data and industrial production showed widely divergent trends in the second quarter largely due to the differential impact of the SARS epidemic. Domestic activity and tourism were hit hard by the highly [...]

Hong Kong Trade & Finance Grow in Second Quarter -- Despite SARS

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

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

240910T5.jpg

240910U5.jpg

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.

240910V5.jpg

240910W5.jpg

- 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

240910C2.jpg

240910D2.jpg

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

240910E.jpg

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.

240910.jpg

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.

240910 2.jpg

**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

240909R5.jpg

240909S5.jpg

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.

240909T5.jpg

240909U5.jpg

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

U.S. Consumer Credit Usage Surges in July

240909L1.jpg

240909M1.jpg

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.

240909N1.jpg

240909O1.jpg

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

Economy in Brief: September 2003

Jump to:

Falling Exports Reduce Euro-zone Current Account

Mortgage Applications Down Again

Mortgage Applications Down Again

Italian Retail Sales Continue Upward Trend in Spite of Depressed Consumer Confidence

Hurricane Isabel Lowered Weekly Chain Store Sales Sharply

Employment in Taiwan's Service Industries Continues to Outpace that in the Goods Industries

U.S. Employment Series Indicate Positive or Negative Growth

Hong Kong Trade & Finance Grow in Second Quarter -- Despite SARS