Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030502b.jpg" width="353">
The unemployment rate rose to 6.0% in April, back to the level of last December. Consensus expectations had been for a rise to 5.9%. Employment rose 339,000 (+1.1% y/y) following two months of slight decline. The labor force surged 680,000 (+1.2% y/y).
Nonfarm payrolls fell in April by 48,000. So far this year nonfarm payrolls have fallen 322,000, or 0.2%. Consensus had expected a 50,000 worker decline in April. The decline in March payrolls was deepened to a loss of 124,000 from a loss of 108,000 reported last month.
The one month diffusion index for nonfarm payrolls was unchanged at a still-low 48.6, so it continued to suggest poor hiring prospects. The three month diffusion index was unchanged at 39.8. By measuring the breadth of hiring increases, these indexes are leading indicators of job growth.
Where Jobs Fell: The number of factory sector jobs fell 95,000 (-0.6% m/m, -3.3% y/y), the most for any one month since January 2002. The one-month diffusion index for the factory sector fell to 33.8 from an upwardly revised March. That was the lowest breadth of gain in factory sector jobs since December 2001. Retail hiring fell another 10,000 (-1.0% y/y). Transportation and public utilities industries shed 19,000 (-2.5% y/y) jobs.
Where Jobs Rose: Construction jobs rose 18,000 (0.2% y/y) for the second consecutive monthly gain. Jobs in service producing industries rose 25,000 for the first gain in three months. All of the gain was due to a 32,000 worker rise in government payrolls. The number of services jobs rose 21,000 (0.9% y/y) and employment in finance, insurance and real estate rose 7,000 (1.3% y/y).
The index of aggregate hours worked (employment times hours worked) fell 0.7% in April so it began 2Q 0.7% below the average for 1Q. Hours worked fell 0.4% (AR) in 1Q versus 4Q02.
Over the last ten years there has been a 58% correlation between the quarterly change in aggregate hours worked and real GDP. That correlation is down from 89% in the 1980s. The decline is due to the recent acceleration in productivity growth.
Average hourly earnings rose just 0.1%, slightly less than expected.
The nonfarm payroll employment figures are based on reports provided to the US Labor Department by businesses, while the figures from which the unemployment rate is derived are based on a survey of US households.
Research from the Federal Reserve Bank of St. Louis which highlights recent regional employment trends can be found <a href="http://research.stlouisfed.org/publications/net/netpub.pdf">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</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">Payroll Employment</td>
<td>-48,000</td>
<td>-124,000</td>
<td>-0.3%</td>
<td>-0.9%</td>
<td>0.2%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-95,000</td>
<td>-43,000</td>
<td>-3.3%</td>
<td>-5.5%</td>
<td>-4.2%</td>
<td>-0.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>34.0</td>
<td>34.3</td>
<td>34.2</td>
<td>34.2</td>
<td>34.2</td>
<td>34.4</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.1%</td>
<td>0.1%</td>
<td>3.1%</td>
<td>3.2%</td>
<td>4.0%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>6.0%</td>
<td>5.8%</td>
<td>5.9%</td>
<td>5.8%</td>
<td>4.8%</td>
<td>4.0%</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Rose, As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030502a.jpg" width="353">
Unit sales of light vehicles rose to an expected sales rate of 16.5 million units in April. Sales rose 1.9% from March and the gain was to the highest sales rate of the year.
Consensus expectations were for a 16.6 mil. unit sales rate.
Sales of cars fell 3.1% m/m and were down 11.6% y/y. Truck sales rose 6.5% m/m and were up 1.6% y/y. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil.Units)</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>
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<td class="firstcol">Total</td>
<td>16.50</td>
<td>16.19</td>
<td>-4.8%</td>
<td>16.81</td>
<td>17.26</td>
<td>17.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.50</td>
<td>7.74</td>
<td>-11.6%</td>
<td>8.07</td>
<td>8.48</td>
<td>8.83</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>9.00</td>
<td>8.45</td>
<td>1.6%</td>
<td>8.74</td>
<td>8.78</td>
<td>8.56</td>
</tr>
</tbody>
</table>
Factory Inventories About Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030502c.jpg" width="353">
Manufacturing inventories fell, but just slightly, in March. The reading followed three consecutive months of accumulation.
Sharp decumulation of automobiles and light trucks led the turn away from accumulation in March, but inventories of computers and electronic products also fell sharply for the fourth straight month.
Nondurable goods inventories rose a slight 0.3% (+4.1% y/y).
Factory shipments rose 1.9% for the second strong monthly gain this year.
Factory orders surged 2.2%. Durable goods orders rose 1.5%, revised down from a 2.0% rise in the advance report. Nondurable goods orders rose 3.0% (7.8% y/y).

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">Mar</th>
<th scope="col">Feb</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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<td class="firstcol">Inventories</td>
<td>-0.0%</td>
<td>0.4%</td>
<td>0.4%</td>
<td>-1.9%</td>
<td>-8.0%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>2.2%</td>
<td>-1.0%</td>
<td>4.2%</td>
<td>-0.8%</td>
<td>-7.2%</td>
<td>5.2%</td>
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<td class="firstcol">Shipments</td>
<td>1.9%</td>
<td>-1.4%</td>
<td>4.2%</td>
<td>-1.1%</td>
<td>-5.3%</td>
<td>4.4%</td>
</tr>
</tbody>
</table>


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The unemployment rate rose to 6.0% in April, back to the level of last December. Consensus expectations had been for a rise to 5.9%. Employment rose 339,000 (+1.1% y/y) following two months of slight decline. The labor force surged [...]

Unemployment Up, Nonfarm Payrolls Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030501a.jpg" width="353">
Nonfarm labor productivity last quarter grew slightly less than expected, up 1.6% versus a Consensus estimate for 2.0% growth.
Productivity growth, though slow, accelerated versus 4Q despite slower growth in output. Output rose 1.4% last quarter and 1.7% in 4Q02. Hours worked fell 0.1% after a 0.9% 4Q gain.
Unit labor cost growth decelerated to 1.9% from 3.2% in 4Q. Growth in compensation remained relatively firm at 3.5% versus 3.9% in 4Q. During the last ten years there has been a 60% (inverse) correlation between the year-to-year growth in unit labor costs and after tax operating corporate profits.
Manufacturing sector productivity growth recovered to 2.1% (2.8% y/y) following a 0.5% decline in 4Q. The rise lowered the gain in unit labor costs to 2.7% from 5.9% in 4Q.
Analysis from the Federal Reserve Bank of Philadelphia of ways to promote creativity and innovation can be found <a href="http://www.phil.frb.org/files/br/brq103ln.pdf">here</a>.
Technological change is explored in this <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-08.pdf">paper</a> by the Federal Reserve Bank of San Francisco.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EC/@EC02/@EC02.HTM">Nonfarm Business Sector</a> (SAAR)</th>
<th scope="col">1Q &#39;03 Prelim.</th>
<th scope="col">4Q &#39;02 Final</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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<td class="firstcol">Output per Hour</td>
<td>1.6%</td>
<td>0.7%</td>
<td>2.3%</td>
<td>4.8%</td>
<td>1.1%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">Compensation</td>
<td>3.5%</td>
<td>3.9%</td>
<td>3.3%</td>
<td>2.4%</td>
<td>2.7%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unit Labor Costs</td>
<td>1.9%</td>
<td>3.2%</td>
<td>0.9%</td>
<td>-2.3%</td>
<td>1.6%</td>
<td>3.9%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030501b.jpg" width="353">
Initial claims for unemployment insurance last week fell less than Consensus expectations. Initial claims fell 2.8% w/w to 448,000. That reversed a 3.1% rise the week earlier which was revised up.
The four-week moving average of initial claims rose to 442,000 (2.3% y/y), the highest level since April of last year.
During the last ten years there has been a 66% correlation (inverse) between the level of initial claims and the month to month change in nonfarm payrolls. The latest claims figures are consistent with a slight decline in April payrolls, to be released tomorrow.
Continuing claims for unemployment insurance rose 3.1% w/w to the highest level since early-October. The prior week&#39;s figure was revised down.
The insured rate of unemployment rose to 2.9%, the highest level since early October.

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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">4/26/03</th>
<th scope="col">4/19/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>448.0</td>
<td>461.0</td>
<td>6.9%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,679</td>
<td>0.4%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
ISM Indicates Further Contraction in Factory Activity 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030501c.jpg" width="353">
The ISM Composite Index of manufacturing sector activity fell to 45.4 last month. It was the second month the index was below 50 since October and thus indicated another decline in factory sector activity.
Consensus expectations were for a reading of 47.0.
During the last ten years there has been a 51% correlation between the level of the ISM index and the month to month change in factory sector industrial production.
Three of the five composite index&#39;s component series declined last month. New orders, employment and the vendor delivery index were down. Production and inventories each rose but just slightly to levels that still suggested contraction.
The separate index of inflation pressure fell for the first month since November. This index is not seasonally adjusted.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</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>
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</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>45.4</td>
<td>46.2</td>
<td>53.3</td>
<td>52.4</td>
<td>44.0</td>
<td>51.7</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>63.5</td>
<td>70.0</td>
<td>62.5</td>
<td>57.6</td>
<td>42.9</td>
<td>64.8</td>
</tr>
</tbody>
</table>
Construction Spending Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> May 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030501d.jpg" width="353">
The value of construction put in place fell a sharp 1.0% in March versus consensus expectations for a slight rise. The slight decline in February spending was revised to a slight rise.
Lower levels of public and of nonresidential construction recently accounted for much of weakness in total construction spending.
In constant 1996 dollars, overall construction spending fell 1.1% (-2.0% y/y) in March. Real public spending fell 3.6% (-2.9% y/y). Real nonresidential activity fell 0.2% (-11.8% y/y).
In addition to those declines, growth in residential building expenditures slowed appreciably. In March, real residential spending was unchanged following a 0.2% February gain. Year-to-year growth fell to 5.0% from a high of 8.5% at the end of last year.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Total</td>
<td>-1.0%</td>
<td>0.2%</td>
<td>1.6%</td>
<td>0.7%</td>
<td>2.5%</td>
<td>7.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>0.1%</td>
<td>0.8%</td>
<td>9.7%</td>
<td>7.1%</td>
<td>3.3%</td>
<td>7.4%</td>
</tr>
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<td class="firstcol">&nbsp; Nonresidential</td>
<td>-0.2%</td>
<td>0.6%</td>
<td>-9.5%</td>
<td>-16.4%</td>
<td>-3.1%</td>
<td>7.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Public</td>
<td>-3.5%</td>
<td>-2.1%</td>
<td>-0.3%</td>
<td>6.2%</td>
<td>7.4%</td>
<td>5.4%</td>
</tr>
</tbody>
</table>
</body>
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Nonfarm labor productivity last quarter grew slightly less than expected, up 1.6% versus a Consensus estimate for 2.0% growth. Productivity growth, though slow, accelerated versus 4Q despite slower growth in output. Output rose 1.4% [...]

1Q Productivity Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030430b.jpg" width="353">
The Chicago Purchasing Manager&#146;s Index of Business activity fell more than expected to 47.6, below 50 for the second month. Consensus estimates were for a reading of 48.5.
The decline was similar to the Philadelphia Fed survey which showed moderate deterioration in general activity versus March. Both surveys indicated a decline in activity this month.
Over the last five years there has been a 61% correlation between the Chicago PMI and the month to month change in factory sector industrial production.
The new orders index fell sharply and moved below 50 for the first month since October. Inventories, employment and the vendor deliveries index also fell. Production improved slightly to a still low 51.0. 
The prices paid index fell for the first month since January.
Visit the Chicago Purchasing Managers website at <a href="http://www.napm-chicago.org/">www.napm-chicago.org.</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</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>
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<td class="firstcol">Business Barometer</td>
<td>47.6</td>
<td>48.4</td>
<td>54.7</td>
<td>52.7</td>
<td>41.4</td>
<td>51.8</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>55.9</td>
<td>62.8</td>
<td>54.3</td>
<td>56.9</td>
<td>50.4</td>
<td>65.6</td>
</tr>
</tbody>
</table>
Mortgage Applications Down Modestly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 30, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030430a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell just 0.5% last week but it was the sixth consecutive weekly decline. During that period applications have fallen 37.2%.
Last week&#39;s decline was due to slight declines in applications both to refinance and purchase. Refinancing applications fell 0.2% but are down 45.8% during the last six weeks. Despite that drop, applications to refinance are 50.3% higher than last year&#39;s average level.
Mortgage applications for home purchase fell 1.1% last week, the fourth decline in five weeks. A surge in purchase applications at the end of March and in early April raised the average level so far for April 3.6% above March which was up 9.3% from February.
During the last ten years there has been a 51% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The average size of a mortgage loan application fell for the third consecutive week to $176,500 (-5.6% y/y). The average size of an application for home purchase fell slightly to $192,800 (+3.8% y/y). The average size of an application to refinance also fell, by 1.1% to $169,000 (-10.4% y/y).
Interest rates on a conventional 30-Year mortgage fell sharply with the contract rate down to 5.51%. The effective rate (incl. points) fell to 5.80%. The effective rate on a 15-year mortgage fell to 5.16%.
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">4/25/03</th>
<th scope="col">4/18/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>1,050.8</td>
<td>1,055.8</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>356.0</td>
<td>359.9</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>5,092.0</td>
<td>5,103.9</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
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The Chicago Purchasing Managers Index of Business activity fell more than expected to 47.6, below 50 for the second month. Consensus estimates were for a reading of 48.5. The decline was similar to the Philadelphia Fed survey which [...]

Chicago Purchasing Agents' Index Below 50 for Second Month

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030429d.jpg" width="353">
Business confidence in France declined sharply in April. The composite business climate indicator, reported today, fell 3.16% from 95 in March to 92 in April. The decline was largely accounted for by depressed household spending and lower export orders.
The French decline follows yesterday&#146;s report of a further decline in German business confidence. The IFO indicator fell 1.70% to 86.6 in April from 88.1 in March. 
The imminence of the end of the war in Iraq has failed to stem the erosion in confidence in the EuroZone; as a result, forecasters have lowered their expectation of growth in the area. The OECD is now estimating growth at only 1% for 2003, down from the 1.8% earlier estimate.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/G10/@GQ/@GQ8/@GQ804/@GQ804.HTM">Business Climate Indicators</a></th>
<th scope="col">April 03</th>
<th scope="col">Mar03</th>
<th scope="col">Apr 02</th>
<th scope="col">M/M%</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">France</td>
<td>92</td>
<td>95</td>
<td>98</td>
<td>-3.16</td>
<td>-6.12</td>
<td>96</td>
<td>101</td>
<td>120</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>86.6</td>
<td>88.1</td>
<td>90.5</td>
<td>-1.70</td>
<td>-4.31</td>
<td>89.1</td>
<td>89.9</td>
<td>99.3</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></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"><a href="http://www.haverselect.com/dlx/G10/@GQ/@GQ2/@GQ202/@GQ202.HTM">GDP</a> (Quarterly % Change, SA/WDA)</th>
<th scope="col">Q4 02</th>
<th scope="col">Q3 02</th>
<th scope="col">Q2 02</th>
<th scope="col">Q1 02</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">France</td>
<td>-0.08</td>
<td>0.33</td>
<td>0.47</td>
<td>0.72</td>
<td>1.22</td>
<td>2.10</td>
<td>4.23</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>-0.03</td>
<td>0.31</td>
<td>0.15</td>
<td>0.29</td>
<td>0.22</td>
<td>0.75</td>
<td>3.09</td>
</tr>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
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Business confidence in France declined sharply in April. The composite business climate indicator, reported today, fell 3.16% from 95 in March to 92 in April. The decline was largely accounted for by depressed household spending and [...]

Continued Erosion of Business Confidence in France and Germany

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030429a.jpg" width="353">
The employment cost index rose last quarter by twice Consensus expectations for a 0.7% gain. The gain was double the 4Q increase.
Faster growth in wages &amp; salaries accounted for most of the acceleration in the ECI. The 1.0% quarterly gain was the strongest since 1Q 2001.
The surge in wages was led by 1.0% unadjusted (3.2% y/y) growth in durable manufacturing industries. The 1.1% (2.9% y/y) pop in service producing industry wages was concentrated in wholesale trade and finance, insurance &amp; real estate. The gain followed unusually slow growth in the prior two quarters.
Benefit costs (roughly 30% of total compensation) jumped 2.4% (6.1% y/y). That was double the average rate of increase in 2002. Benefit costs in both goods-producing and service-producing industries surged due to strong growth in health insurance and defined benefit pension plan costs.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- Private Industry Workers</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>1.4%</td>
<td>0.7%</td>
<td>3.8%</td>
<td>3.2%</td>
<td>4.2%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>1.0%</td>
<td>0.5%</td>
<td>3.0%</td>
<td>2.7%</td>
<td>3.8%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>2.4%</td>
<td>1.2%</td>
<td>6.1%</td>
<td>4.7%</td>
<td>5.1%</td>
<td>5.6%</td>
</tr>
</tbody>
</table>
Consumer Confidence Jumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030429b.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence jumped much more than expected in April. The index rose 31.9% m/m to 81.0 and rivaled the gain following the end of the Gulf War in 1991. Consensus expectations were for a smaller rise to 70.0.
The survey of Consumer Confidence began April 1 and finished on April 22, nearly two weeks after Baghdad fell to U.S. forces.
The rise in Confidence was nearly three times as great as the rise in the index of Consumer Sentiment from the University of Michigan.
The surge in confidence reflected a 38.1% jump in consumer expectations to the highest level this year. The present situation index rose a lesser 22.6% back to the January level.
Jobs were viewed as hard to get by fewer survey respondents. The index fell to 29.5%, the lowest level since January. Expectations for employment opportunities in six months rose to the highest level since September. During the last ten years there has been an 86% (inverse) correlation between changes in jobs hard to get and consumer confidence.
During the last five years there has been a 75% correlation between the level of Consumer Confidence and the y/y change in real consumer spending. 
The Conference Board&#39;s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</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>
<td class="firstcol">Consumer Confidence</td>
<td>81.0</td>
<td>61.4</td>
<td>-25.3%</td>
<td>96.6</td>
<td>106.6</td>
<td>139.0</td>
</tr>
</tbody>
</table>
Chain Store Sales Gave Back Much of Prior Week's Gain 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 29, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030429c.jpg" width="353">
Chain store sales in the week following Easter slumped 1.6% according to the BTM-UBSW survey. The decline followed 1.9% and 1.3% gains in the prior two weeks.
With just a few days sales left to tally, April sales are 0.1% above the March average. March sales finished 0.3% above February.
During the last ten years there has been a 59% correlation between the year-to-year percent change in these chain store sales and the change in nonauto retail sales less gasoline.
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>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">4/26/03</th>
<th scope="col">4/19/03</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>409.1</td>
<td>415.6</td>
<td>2.5%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
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The employment cost index rose last quarter by twice Consensus expectations for a 0.7% gain. The gain was double the 4Q increase. Faster growth in wages & salaries accounted for most of the acceleration in the ECI. The 1.0% quarterly [...]

Employment Cost Index Surged

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030428a.jpg" width="353">
Personal income rose an expected 0.4% last month. The gain was driven by a healthy 0.5% (3.0% y/y) rise in wages and salaries which was the strongest monthly rise in wages since last August. Wages in private industry rose 0.5% (2.7% y/y).
Disposable personal income rose 0.3% (4.4% y/y) following a 0.2% February rise and a 0.4% gain in January.
Personal consumption expenditures rose a less than expected 0.4% in March following two months of little change. The rise reflected a 1.5% gain in durables spending which was lifted by a 4.8% gain in light vehicle sales. Spending on nondurable goods rose just 0.2%, the weakest rise in six months, and spending on services rose a moderate 0.3%.
The PCE price deflator rose 0.3% (2.4% y/y) in March. Less food and energy the price deflator again rose just 0.1% (1.5% y/y), the same as the average increase during the last twelve months. 
Research from the Federal Reserve titled &quot;A Rolling Tide: Changes in the Distribution of Wealth in the US, 1989-2001 can be found <a href="http://www.federalreserve.gov/pubs/oss/oss2/papers/concentration.2001.6.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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Personal Income</td>
<td>0.4%</td>
<td>0.2%</td>
<td>3.6%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.4%</td>
<td>0.1%</td>
<td>4.5%</td>
<td>4.5%</td>
<td>4.5%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>3.6%</td>
<td>3.6%</td>
<td>3.6%</td>
<td>3.7%</td>
<td>2.3%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>0.3%</td>
<td>0.5%</td>
<td>2.4%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

Personal income rose an expected 0.4% last month. The gain was driven by a healthy 0.5% (3.0% y/y) rise in wages and salaries which was the strongest monthly rise in wages since last August. Wages in private industry rose 0.5% (2.7% [...]

Personal Income and Spending Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030425a.jpg" width="353">
Real GDP last quarter grew 1.6% (AR), slightly less than Consensus expectations for 2.0% growth.
Weakness in domestic demand was behind the only modest GDP growth. Final sales to domestic purchasers grew 1.2% and that was the weakest since 3Q 2001. Personal consumption rose just 1.4% (2.3% y/y) as spending on motor vehicles fell for the fourth quarter in the last five. Spending on furniture and household equipment managed only a 3.3% (5.4% y/y) rise, the weakest quarterly gain since 3Q 1996.
Fixed business investment fell 4.2% (-1.3% y/y) due to declines in both structures and equipment &amp; software. The drop in equipment spending was due to declines in the industrial, transportation and other categories. Spending on information processing rose for the fifth consecutive quarter.
Residential investment surged at a 12.0% (6.2% y/y) rate led by 17.7% growth in single family structures.
Government spending rose at only a 0.9% rate, held back by a 1.5% decline in defense outlays.
Inventories accumulated at only half the rate of 4Q02. The slowdown caused inventory accumulation to subtract 0.5 percentage points from GDP growth as production fell.
Improvement in the trade deficit added to GDP growth for the first quarter in two years. The add came as imports fell 7.9% (5.7% y/y). That decline outpaced the 3.2% (2.2% y/y) drop in exports, down for the second consecutive quarter.
Inflation rose at the fastest rate since 2Q 2001 led by a 2.8% gain in the personal consumption deflator. Residential investment prices also rose a strong 7.6%.
Analysis from the St. Louis Federal Reserve Bank titled &quot;Identifying Business Cycle Turning Points in Real Time&quot; can be found <a href="http://research.stlouisfed.org/publications/review/03/03/ChauvetPiger.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained &#39;96 $, % AR</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>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>1.6%</td>
<td>1.4%</td>
<td>2.1%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>0.5%</td>
<td>0.6%</td>
<td>-1.2%</td>
<td>0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>2.1%</td>
<td>1.1%</td>
<td>1.6%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>0.9%</td>
<td>-1.6%</td>
<td>-0.5%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>-0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.2%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>2.5%</td>
<td>1.8%</td>
<td>1.6%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Firmer Than Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030425d.jpg" width="353">
The April reading of Consumer Sentiment from the University of Michigan rose 10.8% versus March. The reading of 86.0 was firmer than Consensus expectations for 84.5, indicating that Sentiment improved as the month progressed.
The index of current conditions rose 7.1% after two months of decline. The index of expectations surged 13.9% and just about recouped all of the prior three months&#39; decline.
Over the last five years there has been an 84% correlation between the level of consumer sentiment and the y/y change in payroll employment.
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%">
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<thead>
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<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">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>
<td class="firstcol">Consumer Sentiment</td>
<td>86.0</td>
<td>77.6</td>
<td>-7.5%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
</tbody>
</table>
New Home Sales Up Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030425b.jpg" width="353">
Sales of new single family homes rose much more than expected last month. Sales rose 7.3% from February&#39;s level which was revised higher. Consensus expectations were for a 910,000 sales rate in March.
Sales snapped back from a February level depressed by severe Winter weather. Sales rose 82.5% m/m in the Northeast region of the country after a 38.0% February decline.
Elsewhere in the country sales were mixed: down 26.4% (-10.1% y/y) in the Midwest; up 15.9% (18.1% y/y) in the South; about flat (-1.5% y/y) in the West for the third straight month.
The median price of a new home rose 1.8% to $182,000 (-0.8% y/y) and the prior month was revised down sharply.
The new home sales data reflect current sales versus the existing home sale figures which reflect closings on past sales.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">New Single-Family</td>
<td>1,012</td>
<td>943</td>
<td>10.6%</td>
<td>978</td>
<td>908</td>
<td>880</td>
</tr>
</tbody>
</table>
Existing Home Sales Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030425c.jpg" width="353">
Sales of existing single family homes fell more than expected last month. The 5.6% m/m decline was the second consecutive monthly decline and probably continued to at least partially reflect severe Winter storms. Sales in February were revised up slightly.
Home sales fell in March in each of the country&#39;s regions.
The median price of an existing home rose 1.1% (m/m) in March to $163,100 (+6.5% y/y).
The figures reflect closings of past home sales. 

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Existing Single-Family</td>
<td>&nbsp;5,530</td>
<td>&nbsp;5,860</td>
<td>2.0%</td>
<td>5,598</td>
<td>5,282</td>
<td>5,158</td>
</tr>
</tbody>
</table>
</body>
</html>

Real GDP last quarter grew 1.6% (AR), slightly less than Consensus expectations for 2.0% growth. Weakness in domestic demand was behind the only modest GDP growth. Final sales to domestic purchasers grew 1.2% and that was the weakest [...]

1Q GDP Grew Modestly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030424a.jpg" width="353">
Initial claims for unemployment insurance last week were again higher than Consensus expectations. Initial claims rose 1.8% w/w to 455,000. That followed an 8.5% rise the week earlier, revised up from the initial estimate.
The recent level of initial jobless claims was the highest since late-March, 2002. The four-week moving average of initial claims rose to 439,250, -2.2% y/y. During the last ten years there has been a 66% correlation (inverse) between the level of initial claims and the month to month change in nonfarm payrolls. There&#39;s been a 77% correlation (inverse) with the year to year change in payrolls.
Continuing claims for unemployment insurance rose 1.2% w/w to the highest level since mid-November. The prior week&#39;s figure was revised down. During the last ten years there has been a 56% correlation (inverse) between the level of continued claims and the month to month change in nonfarm payrolls. There&#39;s been an 82% correlation (inverse) with the year to year change in payrolls.
The insured rate of unemployment was unchanged at 2.8%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">4/19/03</th>
<th scope="col">4/12/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>455.0</td>
<td>447.0</td>
<td>8.3%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,589</td>
<td>-0.8%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Durable Goods Orders Surged 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 24, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030424c.jpg" width="353">
Durable goods orders surged an unexpected 2.0% last month. The sharp decline in February orders was deepened slightly. Consensus expectations had been for a 0.5% decline in March orders.
Much of the strength in orders last month was due to a 4.0% (5.1% y/y) gain in orders for computers and electronic products which snapped back from a 3.6% decline in February. This gain paced a 1.8% rise in nondefense capital goods orders.
Nondefense capital goods orders excluding aircraft and parts rose 3.2% (7.4% y/y). Orders for aircraft and parts plummeted 31.2% on the heels of a 39.4% February drop as orders for nondefense aircraft fell hard for the third straight month.
Orders for electrical equipment rose 2.5% (1.3% y/y) following stiff declines in four of the prior five months. Machinery orders also were strong, up 2.3% (4.2% y/y).
Shipments of durable goods bounced 1.0% (1.0% y/y) following a sharp 2.1% February drop that was revised down.
Durable inventories were unchanged (-1.6% y/y) for the second month.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</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">Durable Goods Orders</td>
<td>2.0%</td>
<td>-1.5%</td>
<td>1.2%</td>
<td>-0.1%</td>
<td>-11.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>1.8%</td>
<td>-5.0%</td>
<td>2.5%</td>
<td>-5.3%</td>
<td>-16.5%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
Help Wanted Advertising At New Low 
by <a href="/comment/Moeller.html">Tom Moeller</a> April 24, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030424b.jpg" width="353">
The Conference Board&#39;s National Index of Help-Wanted Advertising fell to the lowest level since 1963.
The proportion of labor markets with rising want-ad volume nevertheless improved to 49% from an upwardly revised 41% in February.
During the last ten years there has been a 68% correlation between the level of help-wanted advertising and the monthly change in nonfarm payrolls. The correlation with the y/y change in employment has been 92%.
All of the figures mentioned above are seasonally adjusted.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;02</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>38</td>
<td>40</td>
<td>45</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance last week were again higher than Consensus expectations. Initial claims rose 1.8% w/w to 455,000. That followed an 8.5% rise the week earlier, revised up from the initial estimate. The recent [...]

Initial Jobless Insurance Claims Up Again

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

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Consumer credit outstanding increased $13.1 billion (2.3% y/y) in September after rising $3.1 billion in August, revised from $0.4 billion, and $17.7 billion in July, revised from $18.1 billion. A $10.0 billion rise had been expected in the Action Economics Forecast Survey.

Nonrevolving credit outstanding rose $11.4 billion (2.1% y/y) in September after increasing $9.2 billion in August, revised from $6.3 billion, and increasing $6.7 billion in July, revised from $6.9 billion. Nonrevolving credit held by depository institutions declined 6.8% y/y in September after falling 7.4% y/y in August. Finance company debt holdings fell 1.5% y/y after declining 1.3%, while credit union holdings rose an increased 12.8% y/y in September, the quickest growth since in two years. Nonrevolving debt of the federal government rose 3.6% y/y in September, the same as in August.

In September, revolving credit outstanding, which includes credit cards, rose $1.7 billion (2.6% y/y) after falling $6.1 billion in August, revised from a $6.0 billion decline, and rising $11.0 billion in July, revised from $11.2 billion. Revolving credit outstanding held by depository institutions fell 3.0% y/y. Revolving credit held by finance companies fell a steady 14.7% y/y in September, while credit union debt rose 4.5% y/y in September, up from 3.7% y/y in August.

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.

**AI and the Economy** is the title of today’s speech by Federal Reserve Vice Chair Philip N. Jefferson and it can be found [here](https://www.federalreserve.gov/newsevents/speech/jefferson20251107a.htm).

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- Notable gain in credit usage follows prior month’s slowdown.
- Nonrevolving credit usage strengthens and revolving turns positive.

U.S. Consumer Credit Strengthens in September

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.1% during the four weeks ended November 7, 2025 after improving 0.3% in the prior four-week period. The index increased 0.5% y/y following a 0.8% y/y gain at the end of October.

Prices in the **Textile** group increased 2.5% during the last four weeks and rose 3.3% y/y. The cost of burlap increased 23.8% in the last four weeks while surging 48.1% over the last year. Showing modest improvement, cotton prices rose 0.9% in four weeks but declined 5.6% y/y.

**Metals** group prices increased 1.5% (5.9% y/y) in the last four weeks as the cost of aluminum rose 4.9	% (10.3% y/y). Zinc prices moved up 3.6% (5.4% y/y) and the cost of steel scrap rose 1.4% (-5.9% y/y). Lead prices increased 1.1% (-0.2% y/y) in four weeks and the cost of copper scrap rose 0.6% (13.9% y/y). Working lower, tin prices declined 2.2% (+13.8% y/y) in four weeks.

**Miscellaneous** group prices weakened 2.9% in the last four weeks and were off 1.0% y/y, as framing lumber prices fell 11.3% (-4.3% y/y). The cost of tallow, used for frying & baking, declined 9.0% (+10.5% y/y) in four weeks. Offsetting this weakness, natural rubber prices rose 2.0% in four weeks, but were off 6.6% y/y.

Prices in the **crude oil & benzene** group declined 1.6% (-10.8% y/y) in the last four weeks. The cost of West Texas Intermediate crude oil fell 2.2% in four weeks to $60.31 per barrel and declined 15.6% y/y. The price was increased from a low of $58.47 in the third week of last month. The price of the petro-chemical benzene fell 3.8% (-23.2% y/y) in four weeks.

**Excluding crude oil**, the industrial commodity price index was unchanged (+1.5% y/y) over the last four weeks after rising 0.5% during the prior four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Textile and metals prices strengthen.
- Framing lumber costs plummet.
- Crude oil prices weaken.

FIBER: Industrial Commodity Price Index Moves Sideways in Latest Four Weeks

Robert Brusca

251107E.jpg

The chart provides a good overview for German trade trend. The table breaks trade trends down by categories and provides growth rates on shorter horizons of 3 months, 6 months and 12 months. But the chart depicts the overarching trends well. It shows the German surplus being diminished on a gradual path and not altogether in a clear monotonic fashion. Export and import lines on the chart move mostly sideways (horizontal). The export line is below the import line since late last year. These two series plots on the right-hand scale and they depict growth rates (year-over-year). So sideways movements mean roughly steady growth. Exports have been growth steadily year-over-year at a weak pace that on occasion has been a decline in terms of their year-on-year value. Generally, the green line is in positive territory. The red import line has been stronger, indicating somewhat better, steadier import growth over the period.

While exports had a good September, export growth sequenced from 12-months to 6-months, to 3-months has been weakening. Imports also put in a strong September but are showing some erosion from 12-month to 6-months to 3-months in terms of annualized rates of growth. Still, import growth rates remain quite strong and consistent; the sense of erosion is clear but also moderate – it’s a moderate erosion in progress for imports.

Capital goods exports from Germany are improving- this observation is based on lagged data with a one-month lag built in. But consumer goods and vehicle exports are slowing and rather sharply- likely as a result of U.S. tariffs.

Import side trends, with the same lag, are not as clear cut. Capital goods imports are growing, and motor vehicle imports are improving and accelerating. Consumer goods imports have erratically slowed.

Real exports and imports on sequential lagged data show exports contracting on most horizons while imports generate consistent positive growth in real terms. There is a big difference in these two trends expressed in real terms.

On balance, German trade trends are shifting. The trade balance is gradually eroding. Change is in play.

251107.jpg

Germany

German Trade Surplus Shrinks Despite Strong Exports

Andrew Cates

**The global growth cycle**
The new orders-to-inventory spread in the global manufacturing PMI is often been viewed as one of the most reliable forward-looking indicators of the global economic cycle. When new orders are rising relative to inventories, it typically signals that demand is firming, production pipelines are beginning to refill, and industrial momentum is building. Conversely, when inventories accumulate faster than orders, it often foreshadows a slowdown. As the chart shows, this spread has been holding up relatively well in recent months, suggesting that despite ongoing headwinds—US tariff policies, uneven global demand, and geopolitical uncertainty—the underlying pulse of global manufacturing remains resilient.

251106Z1.jpg

**US credit standards**
The latest Senior Loan Officer Opinion Survey (SLOOS) from the Federal Reserve suggests that credit conditions remain tight but are no longer worsening, marking a tentative stabilization after several quarters of tightening. Banks reported modest easing in standards for some categories of corporate and commercial real estate loans, though mortgage lending remains constrained. Demand for business credit continues to soften, reflecting both higher borrowing costs and a cautious corporate outlook. Historically, periods of widespread tightening—like those seen in 2008 and 2020—have coincided with sharp rises in the private sector savings balance (a proxy for deleveraging), as firms and households retrench simultaneously. The current configuration, shown in the chart, indicates lingering deleveraging pressures, but not a collapse in credit availability.

251106Z2.jpg

**China**
Moving to China, the latest official and Caixin PMI releases for October painted a mixed picture of activity. Both manufacturing indices softened, suggesting that the industrial rebound which underpinned much of China’s recent growth may be losing some traction. The official non-manufacturing PMI, by contrast, edged higher, hinting at continued resilience in construction and public-sector-linked services, while the Caixin services measure—which tends to reflect smaller, private-sector firms—slipped modestly. The divergence underscores China’s two-speed recovery: industrial production and exports have carried the economy, while household spending and smaller enterprises remain subdued. If manufacturing momentum fades in the coming months, the economy could face a renewed loss of balance, with fewer reliable growth engines. Still, overall performance this year has surpassed expectations, and the government’s 5% growth target remains within reach, provided activity holds steady through year-end. Looking ahead, marginal policy support and improved external sentiment—helped by selective tariff relief from the US—could offer limited, though welcome, cushioning.

251106Z3.jpg

**Australia** 
In Australia, the RBA left the cash rate unchanged at its November meeting, maintaining a cautious stance amid a still-complex inflation and growth backdrop. The case for further easing has become less compelling as core inflation (trimmed mean CPI) remains above target and labour market conditions—while gradually softening—continue to show resilience. The unemployment rate has edged higher but remains low by historical standards, consistent with lingering wage and services price pressures. Recent data also hint at a tentative pickup in activity, supported by strong population growth and stabilising commodity exports. Against that backdrop, the RBA has stressed that the path for policy remains finely balanced, with a strong focus on incoming inflation data and global financial conditions. While downside risks persist—particularly from China’s slowdown and weak global trade—the persistence of domestic price pressures means the bar for renewed rate cuts remains relatively high.

251106Z4.jpg

**Argentina**
Turning to Argentina, markets continue to digest the implications of President Milei’s midterm election victory amid deepening economic and financial imbalances. The peso’s broad nominal effective exchange rate has remained under heavy pressure, extending its long-running slide as investors weigh the challenges of implementing fiscal consolidation and monetary reform in a fragile political and social environment. In stark contrast, the Buenos Aires stock index has surged to record highs, reflecting optimism that Milei’s reformist agenda—anchored in deregulation, privatisation, and fiscal restraint—may eventually stabilise the economy and attract renewed capital inflows. The divergence between a falling currency and soaring equity prices highlights the tension between near-term macro risks and longer-term reform hopes. Going forward, investor confidence will hinge on the government’s ability to deliver credible policy execution while managing the inflationary fallout from ongoing peso weakness.

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**Global CO2 emissions**
Shifting focus to more structural issues, the chart underscores how decarbonisation challenges remain deeply concentrated in a few heavy-emitting sectors. Energy production alone accounts for nearly 40% of global CO₂ emissions, with manufacturing, households, and transport together contributing another 50%. This composition highlights the complex trade-offs of the energy transition: the very sectors that underpin modern living standards—power generation, industrial output, mobility, and housing—are also those most difficult to decarbonise. Climate change is therefore not just an environmental issue but a structural economic one, shaping investment, infrastructure, and pricing systems for decades to come. The tension between sustaining growth and cutting emissions will remain a defining challenge for policymakers, particularly as clean technologies face constraints in scaling fast enough to offset rising global demand for energy-intensive goods and services.

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Recent financial market developments have been shaped by a renewed bout of volatility, with heightened concerns about stretched AI valuations triggering a big correction across parts of the tech sector. This comes against a backdrop of lingering uncertainty in Washington, where the US government shutdown has continued to delay the release of several key economic reports, clouding visibility on near-term momentum. Still, the broader macro signals offer a mixed but nuanced picture. Global manufacturing PMIs have continued to hold up, hinting that underlying industrial momentum remains resilient (chart 1). The latest US Senior Loan Officer Survey points to a stabilisation in credit conditions—banks remain cautious, but the most intense phase of tightening may have now passed (chart 2). In China, the October PMIs reflected renewed softness in manufacturing alongside a still-steady services sector, tentatively suggesting that growth may be rebalancing, albeit at a weaker aggregate pace of growth (chart 3). Australia’s inflation and labour market data, meanwhile, have complicated the case for near-term policy easing, with the RBA opting to stay on hold this week as core inflation remain sticky. In Argentina, currency weakness persists even as equity markets rally, highlighting the policy and market tension surrounding President Milei’s reform agenda (chart 5). And finally, at a more structural level, latest global emissions data serve as a reminder that energy, manufacturing, transport, and households remain the principal sources of CO₂—illustrating how the climate and energy transition will continue to shape the macro landscape well beyond the current economic cycle (chart 6).

Charts of the Week: Uneven But Unbroken

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Initial claims for unemployment insurance fell 12,643 during the week ended October 25 to 219,520 (+0.6% y/y) and mostly reversed the prior week’s increase to 232,163. The four-week moving average of initial claims eased to 226,766 from 227,953. They have trended higher this year, after weakening late in 2024. The four-week average hit a low of 200,323 in January 2024.

Federal government employees initially filed 9,435 jobless insurance claims last week after 10,062 in the prior week. These figures are increased from 588 at the end of September.

Continuing claims for unemployment insurance rose to 1.957 million (5.5% y/y) in the week ended October 18 from 1.947 million in the prior week. The four-week moving average rose to 1.940 million from 1.931 million. It was the highest level since the last week of August.	

Federal government employees continuing benefits rose to 23,188 in the week ended October 18 from 14,472 in the prior week. These figures are increased from 8,680 at the end of September.

The insured unemployment rate varied greatly across individual states and territories. In the week ended October 18, the highest unemployment rates were in New Jersey (2.14%), Washington (2.03%), California (1.93%), Massachusetts (1.84%), the District of Columbia (1.86%) and Connecticut (1.70%). The lowest were in South Dakota (0.25%), Florida (0.36%), North Carolina & Louisiana (0.41%), Nebraska (0.44%) and Virginia (0.49%). Rates in other notable states include New York (1.51%), Illinois (1.50%), Pennsylvania (1.39%), and Texas (1.11%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- Decline in initial claims reverses earlier gain.
- Continuing claims move higher.
- State unemployment rates vary.

Economy in Brief: 2003

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