Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114a.jpg" width="353">
Early third-quarter GDP reports from more countries indicate that growth resumed or improved most everywhere. Eurostat tallied a 0.4% gain in its &quot;flash&quot; estimate, after two negative quarters. This put GDP up 0.3% over a year ago, breaking a deteriorating trend that had reduced year-on-year growth to a minimal 0.2% in Q2. A detailed report on the sources of this improvement is due December 3. Separate data on trade in the various constituent countries suggest that export demand is providing a major boost.
In Italy, growth resumed after two down quarters, with a respectable 0.5% gain from Q2. That too halted a weakening in the trend year-on-year pace.
Growth marked two Asian reports today as well. Japan&#39;s Q3 GDP was up 0.6%, its seventh consecutive increase. Available components do show an important role for exports in this growth and also for private investment. Unlike most other countries, Japan has seen investment in plant and equipment on a rising trend, indeed, for five straight quarters. Industrial production of capital goods is also expanding, corroborating the GDP data. In Taiwan, widespread gains in consumption, fixed investment, and exports all contributed to an upturn in the economy in Q3. These data are available in current prices only, but with only modest changes in prices in Taiwan, they are probably sufficient to describe &quot;real&quot; developments. The in-and-out trade that characterizes that economy is evident in a sizable increase in imports as well as exports, but the trade surplus still widened.
Press reports point to strong growth in the US and in China as boosting growth in other countries. US imports were actually flat in Q3, but they expanded markedly in five of the six prior periods. Chinese imports are growing very rapidly, expanding on a sustained basis this year at a 40% year-on-year pace. Europe is a particular beneficiary of this increasing demand, which is surely supporting its upturn.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GDP Percent Changes</th>
Qtr/Qtr
<th scope="col">Year/ Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">3rd Qtr 2003</td>
<td>2nd Qtr 2003</td>
<td>1st Qtr 2003 &nbsp;</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Euro-zone</td>
<td>0.4</td>
<td>-0.1</td>
<td>-0.0</td>
<td>0.3</td>
<td>1.1</td>
<td>0.8</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.5</td>
<td>-0.1</td>
<td>-0.2</td>
<td>0.5</td>
<td>0.9</td>
<td>0.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>0.6</td>
<td>0.9</td>
<td>0.5</td>
<td>2.3</td>
<td>2.5</td>
<td>-1.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">Taiwan (current prices)</td>
<td>5.1</td>
<td>-2.1</td>
<td>-1.8</td>
<td>2.4</td>
<td>2.6</td>
<td>-1.1</td>
<td>3.9</td>
</tr>
</tbody>
</table>
</body>
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Early third-quarter GDP reports from more countries indicate that growth resumed or improved most everywhere. Eurostat tallied a 0.4% gain in its "flash" estimate, after two negative quarters. This put GDP up 0.3% over a year ago, [...]

Favorable Growth Reports for Entire Euro-zone, Japan and Taiwan

Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114c.jpg">
The University of Michigan&#146;s consumer sentiment index rose more than expected in mid-November to 93.5 versus 89.6 in October. It was the highest sentiment reading since May 2002. Consensus expectations were for a reading of 91.0.
During the last ten years there has been a 70% correlation between the level of consumer sentiment and the y/y change in real PCE.
The current conditions index rose to 102.8, again the highest level since May 2002.
The expectations index rose to 87.6, the highest level since May of this year.
The University of Michigan survey is not seasonally adjusted.It is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> Mid-Nov</th>
<th scope="col"> Oct</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">Consumer Sentiment</td>
<td>93.5</td>
<td>89.6</td>
<td>11.0%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>102.8</td>
<td>99.9</td>
<td>10.4%</td>
<td>97.5</td>
<td>100.1</td>
<td>115.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>87.6</td>
<td>83.0</td>
<td>11.6%</td>
<td>84.6</td>
<td>82.3</td>
<td>102.7</td>
</tr>
</tbody>
</table>
U.S. Retail Sales Fell Slightly, Auto Sales Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 14, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114d.jpg">
Retail sales fell 0.3% last month but the 0.2% decline in September was deepened to 0.4%. Consensus expectations were for no change. Excluding motor vehicles &amp; parts dealers sales rose 0.2% last month. The September gain was revised to 0.2% from 0.3%. Consensus expectations were for a 0.3% rise in October.
Motor vehicle dealers&#39; sales fell 1.9% m/m in October. Unit sales of light vehicles fell 6.5% m/m to 15.6 mil. (AR). Sales at gasoline service stations fell 1.6% (4.6% y/y).
Sales at food services &amp; drinking places jumped 1.9% (10.6% y/y). Less this strength, nonauto retail sales fell slightly last month (5.6% y/y).
Apparel and accessory stores ticked 0.1% higher (4.6% y/y) following a downwardly revised 0.9% September gain. Furniture, home furnishing and electronics store sales rose 0.5% (9.4% y/y) but September now shows a 0.7% increase versus the initial report of a slight decline. Furniture and computer sales have been quite strong. Sales at general merchandise stores were unchanged m/m (4.6% y/y).
Sales of building materials surged again, up 1.6% (12.5% y/y).
Sales of nonstore retailers rose 0.7% (8.6% y/y)

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM"> Retail Sales &amp; Food Services</a></td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>6.1%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.2%</td>
<td>0.2%</td>
<td>6.2%</td>
<td>3.6%</td>
<td>2.9%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
PPI Jumped Due To Higher Light Vehicle Prices 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 14, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114e.jpg">
Finished producer prices rose quite a bit more than expected last month, up 0.8% versus Consensus expectations for a 0.2% gain. Core producer prices also were strong rising 0.4% versus expectations for a 0.1% uptick.
Core finished consumer goods prices jumped 0.6% (0.1% y/y) as passenger car prices surged 7.0% (-0.4% y/y). Tobacco prices (0.5%) and carpet prices (0.8%) also were strong.
Capital equipment prices rose 0.6% (0.9% y/y). The gain was largely confined to higher prices for light trucks (1.7% y/y).
Finished energy prices fell 0.1% (9.3% y/y) following a 0.1% gain in September. The decline was due to lower prices for gasoline (3.7% y/y) and residential natural gas (24.9% y/y) which offset a surge in fuel oil prices (3.2% y/y). These energy product price series are NSA.
Intermediate goods prices rose 0.4% reflecting strength in prices for certain chemicals, plywood (36.6% y/y) and metals. 
Crude goods prices jumped 2.6% and again were strong due to gains in scrap metals prices.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM"> Producer Price Index</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.8%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>-1.3%</td>
<td>2.0%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5%</td>
<td>0.0%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>3.5%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.1%</td>
<td>1.8%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.6%</td>
<td>3.4%</td>
<td>22.7%</td>
<td>-10.6%</td>
<td>0.3%</td>
<td>22.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>3.1%</td>
<td>2.3%</td>
<td>14.1%</td>
<td>3.8%</td>
<td>-10.0%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
U.S. Industrial Production Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 14, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114b.jpg">
Industrial production rose 0.3% in October, as expected by the Consensus of economists. Increases in output in earlier months were revised slightly upward. Slight data revisions extend back to 1972.
Output in the manufacturing sector rose just 0.1% (0.7% y/y). The 0.7% September gain in output was unrevised but earlier months were revised stronger.
Output in selected high-technology industries jumped 2.5% (20.5% y/y). Output of computers and peripheral equipment surged 1.4% (13.1% y/y) and output of semiconductors &amp; related equipment rose 3.5% (30.5% y/y). Output of communications equipment rose 1.4% (9.7% y/y) and upward revisions to prior months were quite large.
&quot;Taking the Pulse of the Tech Sector: A Coincident Index of High-Tech Activity&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/national_economy/tech_pulse_index.html"> here</a>.
Excluding high-tech, factory output fell 0.1% (-0.6% y/y) as output of motor vehicles &amp; parts (2.4% y/y) gave back roughly half of the September jump. Electrical equipment &amp; appliance output rose 0.7% (0.3% Y/Y). Output in earlier months was revised up. Furniture output rose 0.4% (-2.1% y/y) and output of non-durable goods fell slightly (-2.0% y/y).
Total capacity utilization rose slightly to 75.0% and capacity growth improved slightly to 1.2% from earlier figures showing 1.1% y/y growth.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.3%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.6%</td>
<td>-3.4%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.0%</td>
<td>74.9%</td>
<td>75.4%(10/02)</td>
<td>75.6%</td>
<td>77.4%</td>
<td>82.6%</td>
</tr>
</tbody>
</table>
</body>
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The University of Michigans consumer sentiment index rose more than expected in mid-November to 93.5 versus 89.6 in October. It was the highest sentiment reading since May 2002. Consensus expectations were for a reading of 91.0. [...]

U.S. Consumer Sentiment Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113a.jpg" width="353">
GDP picked up in Europe in the third quarter, according to early and &quot;flash&quot; reports from Germany, France and the Netherlands. An easing of the negative trade situation that weighed on this region earlier in the year appears to be a main factor in the upturns.
Only the Netherlands reported any details today. They show that exports were basically flat in Q3 after a large decline in Q2. More directly, domestic demand, up 0.2% on the quarter, showed its first positive move in five quarters. Dutch consumers bought more and government consumption stabilized after a huge Q2 decline. Government investment increased. However, private investment remains very weak.
In Germany, the upswing, mild though it is, was apparently driven by a rise in exports. The Federal Statistics Office will not publish details until next Thursday, November 20, but their press release today cites a gain in exports and a decline in imports. However, the German statisticians further explain that domestic demand continued to falter. No detail or descriptive commentary was released by INSEE, the French statistical agency, although separate data on household purchases of manufactured goods suggests that consumption turned higher in Q3. France will also make its detailed GDP report next Thursday.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Percent Changes</th>
Qtr/Qtr
<th scope="col">Year/ Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">3rd Qtr 2003</td>
<td>2nd Qtr 2003</td>
<td>1st Qtr 2003 &nbsp;</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.22</td>
<td>-0.16</td>
<td>-0.24</td>
<td>-0.20</td>
<td>0.34</td>
<td>0.42</td>
<td>0.93</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.40</td>
<td>-0.34</td>
<td>0.08</td>
<td>-0.09</td>
<td>1.34</td>
<td>0.70</td>
<td>3.84</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td>0.12</td>
<td>-0.59</td>
<td>-0.33</td>
<td>-1.06</td>
<td>0.13</td>
<td>0.51</td>
<td>2.13</td>
</tr>
</tbody>
</table>
</body>
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GDP picked up in Europe in the third quarter, according to early and "flash" reports from Germany, France and the Netherlands. An easing of the negative trade situation that weighed on this region earlier in the year appears to be a [...]

Q3 Growth Turns Positive in Germany, France and the Netherlands

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113b.jpg" width="353">
The U.S. foreign trade deficit deepened more than expected in September to $41.3B. Consensus expectations were for a deficit of $40.0B. The deficit in August was revised slightly deeper.
Nonpetroleum imports rose 4.5% (4.1% y/y) and petroleum imports rose 1.6% (14.6% y/y).
Automobile imports jumped 10.6% (-2.4% y/y) but that followed a 13.3% August decline. Capital goods imports also jumped 6.0% (7.1% y/y).
Exports surged 2.8% (8.4% YTD, AR) in September. Exports of capital goods jumped 3.2% (13.5% YTD, AR) and nonauto consumer goods exports recovered all of the prior two months&#39; decline with a 3.7% gain (14.6% YTD, AR).
By country, the US trade deficit with China deepened to $12.7B in September and $119.6B (AR) year to date versus a deficit of $103.1B last year. With Japan the US trade deficit deepened to $5.1B and $64.1B (AR) year to date versus $70.0B last year. The US trade deficit with the European Union deepened to $8.1B and $90.6B (AR) year to date versus a deficit of $82.1B last year.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$41.3B</td>
<td>$39.5B</td>
<td>$36.7B(9/02)</td>
<td>$418.0B</td>
<td>$357.8B</td>
<td>$375.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.8%</td>
<td>-2.6%</td>
<td>4.7%</td>
<td>-3.3%</td>
<td>-5.8%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>3.3%</td>
<td>-2.2%</td>
<td>7.1%</td>
<td>2.0%</td>
<td>-5.5%</td>
<td>17.8%</td>
</tr>
</tbody>
</table>
Import Prices Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113d.jpg" width="353">
Prices for imported commodities rose in October by 0.1% (0.9% y/y). The rise was quite a bit weaker than Consensus expectations for a 0.4% increase.
Petroleum import prices rose 2.3% last month following a 5.0% decline in September. So far in November, the price of Brent Crude Oil is down slightly from the $29.81/bbl averaged in October.
Non-petroleum import prices fell 0.1% last month. The decline was not broad based but capital goods fell 0.5% (-1.1% y/y). Non-auto consumer goods prices dipped 0.1% (-0.3% y/y) and motor vehicle prices gained 0.6% (0.4% y/y).
Export prices rose 0.3% reflecting additional strength in food prices (9.3% y/y). Export prices elsewhere were tame.
For a report from the Federal Reserve Bank of New York titled &quot;Exchange Rate Pass-Through into Import Prices: A Macro of Micro Phenomenon?&quot;, click <a href="http://www.newyorkfed.org/research/staff_reports/sr149.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>0.9%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>6.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>2.3%</td>
<td>-5.0%</td>
<td>3.4%</td>
<td>3.0%</td>
<td>-17.2%</td>
<td>66.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>-2.4%</td>
<td>-1.5%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.3%</td>
<td>0.4%</td>
<td>1.4%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Tick Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113c.jpg" width="353">
Initial claims for jobless insurance rose 13,000 to 366,000 last week. The gain only partially recouped a 38,000 decline the week prior. Consensus expectations had been for claims of 355,000.
The four-week moving average of initial claims fell to 375,250 (-7.8% y/y), the lowest level since March 2001.
Continuing claims for unemployment insurance rose 49,000 following a decline of 60,000 the prior week which was three times deeper than initially reported.
The insured rate of unemployment was stable 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">11/08</th>
<th scope="col">11/01</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>366.0</td>
<td>353.0</td>
<td>-8.0%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,527</td>
<td>-2.1%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Mortgage Applications Drop Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113e.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association dropped 8.6% last week (-36.9% y/y) to the lowest level since June 2002.
Purchase applications fell 7.1% (+12.6% y/y) and gave back most of the 11.1% jump the week prior. Applications to refinance plunged 10.1% (-56.8% y/y).
During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The effective interest rate on a conventional 30-Year mortgage rose w/w to 6.22%. The effective rate on a 15-year mortgage also rose w/w to 5.64%.
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>.

<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">11/07</th>
<th scope="col">10/31</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>626.0</td>
<td>685.2</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>375.4</td>
<td>404.3</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,084.2</td>
<td>2,319.4</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
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The U.S. foreign trade deficit deepened more than expected in September to $41.3B. Consensus expectations were for a deficit of $40.0B. The deficit in August was revised slightly deeper. Nonpetroleum imports rose 4.5% (4.1% y/y) and [...]

U.S. Trade Deficit Deepened

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031112b.jpg" width="353">
Labor market conditions improved modestly in the three months ended September (data the UK Office of National Statistics reports as values for &quot;August&quot;, that is, a centered 3-month average). Employment rose 28,000 from its total three months before (the comparison emphasized by the ONS in its data press release) and up 309,000 from a year ago. These totals have been revised upward somewhat this month to account for new population benchmarks. The unemployment rate held steady at 5.0%, showing very little movement over the last nine months. As we noted here in October, the number of claims for the &quot;Jobseeker&#39;s Allowance&quot;, the so-called claimant count, is falling; it is now down for a fifth month, 3,300 in the latest month and 15,300 over the last year. Workers&#39; earnings rose at a 3.6% pace in the July-September quarter, picking up from prior months&#39; increases.
One facet of the employment gain in the &quot;August&quot; period highlights a developing trend. Older workers, men over 65 and women over 60, are increasing their participation in the job market. Their economic activity rates (comparable to participation rates in the US) are rising markedly, with that for men at 8.8% in the August period, up 0.8% from a year ago, and for women at 9.6%, up 0.4% from the 2002 period. By contrast, the economic activity rate for the population in the working age range, 16 to 64/59, is up only 0.1% on the year to 78.7%. In the latest 3-month period, &quot;August&quot; vs. &quot;May&quot;, employment in the standard working age group fell 3,000, but employment of those older rose 32,000. Such absolute out-performance is not frequent, but proportionately, older workers are accounting for a substantial portion of job growth. In the last two 3-month periods, some 27% of the 12-month job gains have occurred in this population group, which covers only 3% of the economically active population and 22.5% of the total population over age 16.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK: Selected Labor Market Indicators</th>
<th scope="col">&quot;Sep&quot; (3 mos ended Oct)</th>
<th scope="col">&quot;Aug&quot;&nbsp;(3&nbsp; mos ended Sep)</th>
<th scope="col">&quot;Jul&quot; (3&nbsp; mos ended Aug)</th>
<th scope="col">Year Ago (&quot;Aug&quot;)</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">Unemployment Rate (%)</td>
<td>N.A.</td>
<td>5.0</td>
<td>5.0</td>
<td>5.3</td>
<td>5.2</td>
<td>5.1</td>
<td>5.5</td>
</tr>
<tr>
<td class="firstcol">Claimant Count (thous.)</td>
<td>926.9*</td>
<td>930.2*</td>
<td>931.7*</td>
<td>942.2*</td>
<td>946.8</td>
<td>970.1</td>
<td>1,088.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Labor Force Employment (thous.)</td>
<td>N.A.</td>
<td>28,151</td>
<td>28,109</td>
<td>27,842</td>
<td>27,846</td>
<td>27,658</td>
<td>27,425</td>
</tr>
<tr>
<td class="firstcol">Average Earnings Index: &quot;Headline Rate&quot; (% Change)</td>
<td>N.A.</td>
<td>3.6</td>
<td>3.4</td>
<td>3.7</td>
<td>3.5</td>
<td>4.6</td>
<td>4.6</td>
</tr>
</tbody>
</table>
</body>
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Labor market conditions improved modestly in the three months ended September (data the UK Office of National Statistics reports as values for "August", that is, a centered 3-month average). Employment rose 28,000 from its total three [...]

Older Workers Increase Role in UK Job Market

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031112a.jpg" width="353">
Prices for industrial commodities added to earlier gains and through October jumped roughly 10% versus August. The JoC-ECRI Industrial Price Index has leveled off recently.
Strength in the metals sub-index has cooled the past month, but prices for steel scrap (24.1% y/y), aluminum (9.9% y/y) and copper scrap (32.7% y/y) all remained firm.
Prices for lumber &amp; plywood retreated nearly 20% from the late Summer highs but lately have stabilized. Textile prices also are down modestly from the highs as gains in cotton prices slowed during the last three weeks (62.0% y/y).
Energy prices recently have moved erratically higher, though they remain below earlier peaks.

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Prices for industrial commodities added to earlier gains and through October jumped roughly 10% versus August. The JoC-ECRI Industrial Price Index has leveled off recently. Strength in the metals sub-index has cooled the past month, [...]

Commodity Prices Higher

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031111c.jpg" width="353">
The ZEW Index that measures investors&#39; expectations of economic growth rose to 67.2 in November from 60.3 in October and was at its highest level since July, 2002. Movements in the index often foreshadow those of the broader IFO index that measures businessmen&#39;s expectations. Investors, however, tend to be more optimistic and more volatile than the business men as can be seen in the attached chart.
Increased confidence has yet to result in any significant upturn in the German economy. However, those developments that have recently led to the increased confidence, such as growing exports in spite of the rise in the Euro, the irregular, but definitely upward trend in manufacturing new orders and a small decline in the unemployment rate, have only recently begun to surface. Developments such as these, are usually the precursors of increased demand that eventually leads to higher production. The rising confidence on the part of investors suggests that these underlying developments may be gathering strength.

<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">&nbsp;</th>
<th scope="col">NOV 2003</th>
<th scope="col">OCT 2003</th>
<th scope="col">SEP 2003&nbsp;</th>
<th scope="col">AUG 2003</th>
<th scope="col">JUL 2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">ZEW (% balance)</td>
<td>67.2</td>
<td>60.3</td>
<td>60.9</td>
<td>52.5</td>
<td>41.9</td>
</tr>
<tr>
<td class="firstcol">IFO&nbsp; Expectation 6 mo. (% balance)</td>
<td>n.a.</td>
<td>10.3</td>
<td>5.1</td>
<td>-0.8</td>
<td>-4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing new orders (2002=100)</td>
<td>n.a.</td>
<td>n.a.</td>
<td>98.3</td>
<td>97.2</td>
<td>97.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Foreign</td>
<td>n.a.</td>
<td>n.a.</td>
<td>103.6</td>
<td>103.8</td>
<td>102.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Domestic</td>
<td>n.a.</td>
<td>n.a.</td>
<td>94.0</td>
<td>91.9</td>
<td>93.6</td>
</tr>
<tr>
<td class="firstcol">Merchandise Exports&nbsp; (Bil. Euros)</td>
<td>n.a.</td>
<td>n.a.</td>
<td>58.58</td>
<td>55.61</td>
<td>55.06</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>n.a.</td>
<td>10.5</td>
<td>10.5</td>
<td>10.6</td>
<td>10.6</td>
</tr>
</tbody>
</table>
</body>
</html>

The ZEW Index that measures investors' expectations of economic growth rose to 67.2 in November from 60.3 in October and was at its highest level since July, 2002. Movements in the index often foreshadow those of the broader IFO index [...]

ZEW Index of German Confidence Rises to Highest Level in Sixteen Months

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031111b.jpg" width="353">
Chain store sales jumped 1.2% in the opening week of November according to the BTM-UBSW survey.
Sales began the month of November 0.9% ahead of last month&#39;s average. That followed a 0.6% m/m decline during all of October.
During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.
The BTM-UBSW retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">11/08/03</th>
<th scope="col">11/01/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>425.3</td>
<td>420.3</td>
<td>5.8%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
Gasoline Prices Down Sharply From Peak 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 11, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031111a.jpg" width="353">
Retail gasoline prices fell sharply last week to $1.50 per gallon. That added to earlier declines and pulled prices down 14% versus the peak of $1.75 in early September.
Crude oil prices also have fallen during the period. The price of West Texas Intermediate crude was $30.88 per barrel yesterday (19.1% y/y) versus a June high near $32.00 and a March high near $37.00.
Wholesale natural gas prices have trended lower recently to $4.37/mmbtu (12.1% y/y), down from the cold-weather spike over $12.00 in late February.
For the latest Short Term Energy Outlook from the US Department of Energy click <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W4/@W403/@W40303/@W40303.HTM"> US Retail Gasoline Prices</a></th>
<th scope="col">11/10/03</th>
<th scope="col">12/30/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Formulations ($/Gal.)</td>
<td>$1.50</td>
<td>$1.44</td>
<td>4.5%</td>
<td>$1.34</td>
<td>$1.42</td>
<td>$1.48</td>
</tr>
</tbody>
</table>
</body>
</html>

Chain store sales jumped 1.2% in the opening week of November according to the BTM-UBSW survey. Sales began the month of November 0.9% ahead of last month's average. That followed a 0.6% m/m decline during all of October. During the [...]

Weekly Chain Store Sales Jump

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

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Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

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- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

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High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

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- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

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The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

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The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

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- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Employment Cost Growth Steady in Q1 2025

Kathleen Stephansen, CBE

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The ADP National Employment Report indicated that nonfarm private sector payrolls rose 62,000 (1.4% y/y) during April after increasing 147,000 (1.4% y/y) during March, revised from 155,000. A 124,000 April rise in ADP employment had been expected in the Action Economics Forecast Survey.

Growth in median annual pay for "job stayers" eased to 4.5% y/y during April, from 4.6% y/y in March and from 4.7% y/y in the prior two months. Manufacturing sector pay grew 4.6% y/y during April, down from 4.8% y/y in March. Construction sector pay was unchanged at 4.7% y/y. Natural resource & mining sector pay grew 4.4% y/y. Financial sector pay rose 5.1% y/y, while education & health services pay rose 4.7% y/y. Leisure & hospitality pay also increased 4.7% y/y. Professional & business service sector pay increased 4.3% y/y as did trade, transportation & utilities pay. Information pay rose 4.1% y/y. Median annual pay for “job changers” rose 6.9% y/y after 6.7% y/y in March.

Small business hiring (less than 50 employees) rose 11,000 (0.6% y/y) after rising 18,000 (0.6% y/y) in March, revised down from 52,000. Employment at medium-sized firms (50-499,000 employees) rose 40,000 (1.1% y/y) after rising 43,000 (1.1% y/y). Large business hiring (500+ employees) rose 12,000 (3.4% y/y) in April, after rising 61,000 (3.6% y/y) in March, revised from 59,000.

Goods-producing employment rose 26,000 (1.3% y/y) in April, after rising 16,000 (1.3% y/y) during March, revised from 24,000. Manufacturing jobs rose 4,000 (-0.2% y/y) after rising 17,000 (-0.3% y/y) in March. The number of construction sector jobs rose 16,000 (3.4% y/y) in April, following a 2,000 (3.6% y/y) March increase, revised from 6,000. Natural resources & mining jobs rose 6,000 (2.8% y/y) in April after falling 3,000 (+1.9% y/y) in March.

The number of service-producing jobs rose 34,000 (1.4% y/y) during April, following a rise of 131,000 (1.4% y/y) in March. Professional & business services employment fell 2,000 (0.6% y/y) after rising 46,000 (0.7% y/y) in the prior month, revised from 57,000. Employment in the financial industry rose 20,000 (2.1% y/y) in April, after rising 38,000 (2.0% y/y) in March. Leisure and hospitality employment increased 27,000 (3.0% y/y), following a 23,000 (2.9% y/y) March increase, revised from 17,000. The number of education & health care jobs fell 23,000 (1.6% y/y) in April, following a 15,000 (1.8% y/y) rise in March, revised from 12,000. Information sector employment fell 8,000 (-0.1% y/y) after a rise of 3,000 (0.2% y/y) in March. The number of jobs in trade, transportation & utilities rose 21,000 (0.4% y/y) in April, after falling 4,000 (+0.4% y/y) in March, revised from a 6,000 fall. Employment in “other” services rose fell 1,000 (+3.2% y/y) following a 10,000 (3.4% y/y) rise in March, revised from 11,000.

By region, employment in the Northeast increased 10,000 (1.9% y/y) in April, following an increase of 95,000 (2.0% y/y) in March, revised from 89,000. Employment in the Midwest rose 42,000 (1.5% y/y) after a gain of 84,000 (1.4% y/y) in March, revised from 81,000. In the South, employment rose 3,000 (1.3% y/y) during April, after rising 10,000 (1.4% y/y) in March, revised from 27,000. In the West, employment rose 9,000 (0.6% y/y) after declining 43,000 (+0.6% y/y), revised from a 41,000 decline in March.

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

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- Employment increase is modest in both services & factory sectors.
- Wage growth for “job stayers” moderates.
- Small and medium-sized business employment slows.

Economy in Brief: November 2003

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