Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030715a.jpg" width="353">
Retail sales rose an expected 0.5% in June following just a slight increase in May. The May figures were little revised.
Sales excluding motor vehicles and parts dealers rose a strong 0.7%, more than twice Consensus expectations for a 0.3% gain. The slight increase in May was little revised.
Sales gains were widespread last month. Apparel and accessory stores added 1.3% (2.9% y/y) to the 1.6% May sales spurt that was revised up. Furniture, home furnishing and electronics store sales increased 0.2% (3.4% y/y) following a 1.4% May gain which was weaker than the 2.0% rise reported last month. Sales at general merchandise stores rose 0.3% (2.4% y/y) following an unrevised 0.7% May gain.
Sales of building materials and garden supplies surged 2.6% (6.1% y/y). Excluding these categories, nonauto retail sales rose 0.5% (3.5% y/y).
Motor vehicle dealers&#39; sales fell 0.1% for the second consecutive monthly decline. Unit sales of light vehicles rose 1.9% last month to 16.43 mil. (AR). Sales at gasoline service stations rose 1.3% following two months of sharp decline.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>0.5%</td>
<td>0.0%</td>
<td>4.2%</td>
<td>3.2%</td>
<td>2.9%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.7%</td>
<td>0.1%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>2.9%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
Empire State Factory Survey Showed Third Month of Gain 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030715b.jpg" width="353">
The Empire State Manufacturing Survey indicated the third month of improvement for area manufacturers. The index of general business conditions fell somewhat to 22.56 in July but remained near the series&#39; highs.
Consensus expectations were for a reading of 25.0. The data were reported by the Federal Reserve Bank of New York.
New orders sustained nearly all of the June surge while shipments improved to a series high. Offsetting this strength was sharp deterioration in the unfilled orders and employment indexes which both fell back into negative territory.
The index of prices paid improved to 6.45 versus the negative reading of June.
The survey includes measures of business expectations six months ahead. This diffusion index fell to 52.5 but for the last three months is much improved from the lows of the February-to-April period. Expectations for capital expenditures rose.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For the latest Empire State Manufacturing Survey report, click <a href="http://www.newyorkfed.org/rmaghome/regional/mfg_survey/index.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General business conditions (diffusion index)</td>
<td>22.56</td>
<td>27.60</td>
<td>0.21</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
Chain Store Sales Jump Further 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030715c.jpg" width="353">
Chain store sales added 0.9% last week to the 0.7% jump the week prior, according to the BTM-UBSW survey.
Sales started July 1.1% ahead of June which were barely changed from May.
During the last five years there has been a 60% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM leading indicator of chain store sales fell 0.5% in early July. It was the fourth decline in the last five weeks for this indicator.
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.

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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">7/12/03</th>
<th scope="col">7/5/03</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>423.9</td>
<td>420.1</td>
<td>2.3%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
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Retail sales rose an expected 0.5% in June following just a slight increase in May. The May figures were little revised. Sales excluding motor vehicles and parts dealers rose a strong 0.7%, more than twice Consensus expectations for a [...]

Retail Sales Rose As Expected

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030714b.jpg" width="353">
Stock markets in Latin America are up sharply from late 2002. The Morgan Stanley Capital International index of Latin America EMF (Emerging Markets Free) stock prices in U.S. dollars has risen almost 15% in the last month and is up 23% from July 2002.
Currency appreciation in Argentina and Brazil have accounted for a part of the rise in dollar terms, but political changes have also been important. Brazil&#39;s new president who took office on January 1, has so far surprised investors by adhering to a tough government deficit reduction plan. In Argentina belief that the new president, who was inaugurated in May, will restructure the government debt together with a surge in exports has increased confidence.. Stock markets in Japan, Asian emerging markets and in the United States have increased in recent months, but remain below levels reached a year ago while the stock market in dollar terms in Europe shows little gain in spite of the rise in the Euro.

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<colgroup><col><col><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol">Stock Prices</th>
<th scope="col">June 2003</th>
<th scope="col">&nbsp;May 2003</th>
<th scope="col">June 2002</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>
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</thead>
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<tr class="odd">
<td class="firstcol">Morgan Stanley (12/87=100)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;Asia</td>
<td>154.432</td>
<td>143.572</td>
<td>161.157</td>
<td>7.56</td>
<td>-4.14</td>
<td>140.350</td>
<td>149.704</td>
<td>143.615</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Latin America&nbsp;</td>
<td>800.192</td>
<td>782.791</td>
<td>731.890</td>
<td>14.85</td>
<td>23.00</td>
<td>658.941</td>
<td>876.163</td>
<td>915.634</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Europe&nbsp;</td>
<td>942.252</td>
<td>935.729</td>
<td>1021.604</td>
<td>0.70</td>
<td>-7.77</td>
<td>867.447</td>
<td>1085.759</td>
<td>1378.396</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Japan</td>
<td>1630.444</td>
<td>1518.857</td>
<td>1927.331</td>
<td>7.35</td>
<td>-15.40</td>
<td>1593.175</td>
<td>1789.256</td>
<td>2551.957</td>
</tr>
<tr>
<td class="firstcol">S&amp;P 500 (1941-43=100)</td>
<td>988.00</td>
<td>935.96</td>
<td>1014.05</td>
<td>5.56</td>
<td>-2.57</td>
<td>995.64</td>
<td>1192.08</td>
<td>1426.76</td>
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</tbody>
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Stock markets in Latin America are up sharply from late 2002. The Morgan Stanley Capital International index of Latin America EMF (Emerging Markets Free) stock prices in U.S. dollars has risen almost 15% in the last month and is up [...]

Stock Markets in Latin America Outpace Other Major Areas

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030714a.jpg" width="353">
The OECD Index of Leading Indicators (Big 7) rose in May for the second consecutive month. The 0.7% gain followed a 0.1% rise in April but the two increases represented the only real upward movement in the index so far this year.
Not only has the index just one material rise this year, gains amongst the member country leading indexes have been limited. The leading index for the US rose a smart 1.2% in May following a 0.7% increase in April, and those gains more than made up for sharp declines in February and March.
Also showing some strength were the leaders in Italy. They managed the fourth increase of the year in May and were up 1.2% YTD.
On the weak side, the leading index in Germany rose just 0.3% in May and year to date was up 0.1%. In France, the leaders rose 0.6% in May but remained down 1.6% YTD. Similarly, in the U.K. the May leaders did rise 0.6% but were down 0.7% YTD.
Leaders for Japan were down in May for the third straight month (-1.0% YTD) and in Canada the May leading indicators jumped 2.0% but the gain just made up for three consecutive months of decline.
For more from the Organisation for Economic Cooperation and Development (OECD), visit its <a href="http://www.oecd.org/home/">website</a>.

<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/OECDMEI/OECDMEI.HTM">OECD Main Economic Indicators</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">OECD Major Seven - Leading Index (Trend Restored)</td>
<td>119.1</td>
<td>118.2</td>
<td>-0.3%</td>
<td>4.2%</td>
<td>-2.1%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; European Union</td>
<td>117.2</td>
<td>116.5</td>
<td>0.2%</td>
<td>3.1%</td>
<td>-1.7%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>100.6</td>
<td>100.7</td>
<td>-1.0%</td>
<td>0.7%</td>
<td>-2.9%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>131.0</td>
<td>129.4</td>
<td>-0.0%</td>
<td>5.8%</td>
<td>-2.5%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

The OECD Index of Leading Indicators (Big 7) rose in May for the second consecutive month. The 0.7% gain followed a 0.1% rise in April but the two increases represented the only real upward movement in the index so far this year. Not [...]

OECD Leaders Up A Little

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030711b.jpg" width="353">
Finished producer prices rose 0.5% in June, a bit more than Consensus expectations for a 0.3% gain. The rise was the first in three months.
Finished energy prices jumped 3.4% for the first gain in three months. That accounted for virtually all of the PPI&#39;s rise last month. Gasoline prices rose 5.5% (16.5% y/y) while fuel oil prices jumped 3.5% (23.7% y/y). Residential gas prices rose 3.0% and are up 35.5% y/y. These energy product price series are NSA.
Excluding food and energy, prices fell 0.1% for the third monthly decline this year. The core PPI is up 0.3% YTD.
Core finished consumer goods prices fell 0.1% (-0.5% y/y) for the third consecutive monthly drop. Passenger car prices fell 1.5% (-1.3% y/y). Prices for household appliances fell for the fourth month this year (-1.9% y/y) and home electronic equipment prices also fell (-2.2% y/y). Core consumer nondurable prices rose for the fourth month this year (-0.3% y/y). Capital goods prices dropped for the fourth month this year (0.0% y/y).
Intermediate goods prices rose by 0.5%, the first increase in three months. Energy prices led the gain, up 2.0%, but food prices rose a strong 1.9% (0.8% y/y). Less food &amp; energy intermediate goods prices were unchanged. 
Crude goods prices jumped 4.5% reflecting a 10.7% gain in energy prices. Core crude prices rose 0.6%, the first gain in four months. These prices are up 0.4% YTD.

<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/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.5%</td>
<td>-0.3%</td>
<td>2.9%</td>
<td>-1.3%</td>
<td>2.0%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.5%</td>
<td>-0.8%</td>
<td>4.5%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>2.1%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>4.5%</td>
<td>1.7%</td>
<td>29.5%</td>
<td>-10.6%</td>
<td>0.3%</td>
<td>22.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.6%</td>
<td>-1.9%</td>
<td>4.9%</td>
<td>3.8%</td>
<td>-10.0%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
U.S. Trade Deficit Stable 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 11, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030711a.jpg" width="353">
The U.S. foreign trade deficit in May remained near the record level at $41.8B. That was about stable with an April deficit that was revised slightly shallower. Consensus expectations were for a deficit of $41.5B.
For the first five months of this year, the trade deficit averaged a $492.2B annual rate.
Imports rose 0.7% in May as a decline in the value of petroleum product imports was offset by higher imports of capital goods (+3.0% y/y) and autos (+3.8% y/y).
The quantity of crude petroleum imports rose 1.9% (8.1% y/y) but the average price fell 7.3% to $24.11, about even with last May.
Exports rose 0.9% and are up slightly YTD. Exports of capital goods rose 1.3%, up 3.8% YTD.
A report from the Federal Reserve Bank of St. Louis titled &quot;World Trade: Past, Present, and Future&quot; can be found <a href="http://research.stlouisfed.org/publications/iet/20030501/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$41.8B</td>
<td>$41.6B</td>
<td>$35.1B(5/02)</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>0.9%</td>
<td>-1.8%</td>
<td>1.2%</td>
<td>-3.3%</td>
<td>-5.8%</td>
<td>11.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>0.7%</td>
<td>-2.2%</td>
<td>6.7%</td>
<td>2.0%</td>
<td>-5.5%</td>
<td>18.5%</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices rose 0.5% in June, a bit more than Consensus expectations for a 0.3% gain. The rise was the first in three months. Finished energy prices jumped 3.4% for the first gain in three months. That accounted for [...]

Higher Energy Prices Raised The June PPI, Core Prices Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030710a.jpg" width="353">
Initial claims for unemployment insurance rose unexpectedly by 5,000 last week, to 439,000, and added to a 26,000 increase the prior week that was revised up. Consensus expectations had been for claims of 420,000
The four-week moving average of initial claims rose to 426,750 (+8.2% y/y).
Continuing claims for unemployment insurance surged by 87,000 (2.3%) w/w. The prior week&#39;s level was revised down slightly.
During the last ten years there has been a 79% (inverse) correlation between the level of initial claims for unemployment insurance and the y/y change in nonfarm payrolls.
The insured rate of unemployment rose to 3.0% from a downwardly revised 2.9% the week prior.

<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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">7/2/03</th>
<th scope="col">6/28/03</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>439.0</td>
<td>434.0</td>
<td>9.7%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,818</td>
<td>5.4%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Import Prices Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 10, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030710b.jpg" width="353">
Prices for imported commodities rose more than expected last month. The 0.8% rise was double Consensus expectations. The 0.8% decline in prices in May was much deeper than the initial estimate of a 0.3% decline.
Petroleum import prices rose 4.7% last month and recovered most of a 5.4% May decline that was deepened sharply. So far in July the price of Brent Crude Oil has been around $28.00 versus $27.49/bbl averaged in June.
Nonpetroleum import prices rose 0.5%, the first increase in three months. The gain reflected increases in each of the categories. Nonauto consumer goods prices rose 0.2% (0.0% y/y) for the first gain this year. Prices for industrial supplies and materials jumped 2.6% (8.8% y/y).
Export prices fell 0.2% for the second decline in the last three months. Export prices for food and capital goods fell.

<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">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.8%</td>
<td>-0.8%</td>
<td>2.0%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>6.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.7%</td>
<td>-5.4%</td>
<td>12.0%</td>
<td>3.0%</td>
<td>-17.2%</td>
<td>66.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.5%</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>-2.4%</td>
<td>-1.5%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>1.5%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance rose unexpectedly by 5,000 last week, to 439,000, and added to a 26,000 increase the prior week that was revised up. Consensus expectations had been for claims of 420,000 The four-week moving [...]

Initial Jobless Insurance Claims Again Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030709b.jpg" width="353">
Consumer credit outstanding (which excludes mortgages) rose $7.3B (5.0% AR) in May. Consensus expectations had been for a $5.5B rise. The surge in April was revised down due to a lowered gain in nonrevolving credit. 
During the first five months of this year, consumer credit usage rose at a 4.7% annual rate.
Nonrevolving credit (which includes auto loans) rose at a 4.9% annual rate following the 7.8% jump in April. Year to date, nonrevolving credit usage is up at a 4.9% rate. 
Revolving credit rose at a 5.3% annual rate and recovered from the weak 2.0% gain in April.

<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/@E1/@E103/@E10308/@E10308.HTM">Consumer Credit Outstanding</a></th>
<th scope="col">May m/m</th>
<th scope="col">April 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">Total</td>
<td>$7.3B</td>
<td>$7.9B</td>
<td>3.3%</td>
<td>3.6%</td>
<td>6.9%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$3.1B</td>
<td>$1.2B</td>
<td>2.2%</td>
<td>1.5%</td>
<td>5.1%</td>
<td>11.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonrevolving</td>
<td>$4.2B</td>
<td>$6.6B</td>
<td>4.1%</td>
<td>5.0%</td>
<td>8.2%</td>
<td>9.1%</td>
</tr>
</tbody>
</table>
Mortgage Applications Plunge 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 9, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030709a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association plunged 17.7% last week as interest rates rose. It was the largest drop in one week since late October of last year, also a time when interest rates blipped up.
Applications to refinance fell 21.3% w/w to the lowest level since early May.
Applications for home purchase fell a moderate 5.5% w/w. That followed the 6.6% gain the week prior which was to a record level.
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.
Interest rates on a conventional 30-Year mortgage moved higher for the third week with the effective rate at 5.67% versus 6.13% averaged in December. The effective rate on a 15-year mortgage also rose to 5.07%, the first week over 5% since mid-May.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders.
Visit the Mortgage Bankers Association site at <a href="http://www.mbaa.org/">www.mbaa.org.</a>

<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">7/04/03</th>
<th scope="col">6/27/03</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>1,346.3</td>
<td>1,635.5</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>414.1</td>
<td>438.4</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>6,768.3</td>
<td>8,599.1</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer credit outstanding (which excludes mortgages) rose $7.3B (5.0% AR) in May. Consensus expectations had been for a $5.5B rise. The surge in April was revised down due to a lowered gain in nonrevolving credit. During the first [...]

Consumer Credit Use Up Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030708a.jpg" width="353">
The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) reported in June that &quot;... the U.S. economy continues to experience growth in income and output but employment continues to decline. Because of the divergent behavior of various indicators, the NBER&#39;s Business Cycle Dating Committee believes that additional time is needed before interpreting the movements of the economy over the past two years.&quot; 
Despite the uncertainties, there is much to suggest that the most recent recession ended late in 2001. Its duration was roughly nine months.
For purposes of shading the economic cycles, Haver Analytics will commence ending the last recession in November 2001 in all of its charts. The fourth quarter of 2001 will be recession shaded since growth that quarter was a sub par 2.7% (AR). Our reasons for picking late 2001 as the cycle trough include:<ol><li>The Index of Coincident Indicators compiled by the Economic Cycle Research Institute (ECRI) touched bottom in November 2001. It has since risen 1.8% and has been 0.1% above its prior peak in December 2000.</li><li>Monthly real GDP as compiled by Macroeconomic Advisers troughed in September 2001. It has since risen 4.5% and is 2.7% above its prior peak in February 2001.</li><li>The Index of Coincident Indicators compiled by the Conference Board touched bottom in November 2001. It has since risen 0.8% but it has not yet surpassed its prior peak in December 2000.</li></ol>
Each of these monthly indicators recently has failed to exhibit much strength which is consistent with a US economy growing below its trend rate of about 3.5%. The National Activity Index from the Chicago Federal Reserve supports this point as it has consistently since early 2000. This indicator touched bottom in September 2001.
Below-trend economic growth is characterized by unused productive capacity. The recently rising unemployment rate and the falling capacity utilization rate indicate that economic slack is building. This pattern repeats that of the &quot;jobless recovery&quot; of 1992.
September 2001 was not chosen as the trough date for the last recession. The events of 9/11 greatly depressed economic activity but were unrelated to the normal business cycle.
Click <a href="http://nber.com/cycles/recessions.html"> here</a> for &quot;The NBER&#39;s Recession Dating Procedure.&quot;

Chain Store Sales Jump 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 8, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030708b.jpg" width="353">
Chain store sales jumped 0.7% last week according to the BTM-UBSW survey. The rise recovered all of a 0.5% decline the week prior.
Sales started July 0.6% ahead of June which were barely changed from May.
During the last five years there has been a 61% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM leading indicator of chain store sales fell 0.1% in the last week of June. That was the fourth decline in the last five weeks for this indicator.
The BTM-UBSW retail chain-store sales index is constructed from the sales results reported by seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">7/5/03</th>
<th scope="col">6/28/03</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>420.1</td>
<td>417.3</td>
<td>1.1%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) reported in June that "... the U.S. economy continues to experience growth in income and output but employment continues to decline. Because of the [...]

Looks Like The Recession Ended Late in 2001

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030707a.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) improved in May to -0.39 from a downwardly revised reading of -1.04 in April. . A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of over 3% p.a.
The improvement in May followed three months of readings which together were the weakest since late 2001.
The three-month moving average of the CFNAI improved to -0.69, still the second lowest level since late 2001 and consistent with negligible or negative real GDP growth.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, mfg. &amp; trade sales, and inventories &amp; orders.
For a complete discussion of the latest Chicago Fed&#39;s National Activity Index click <a href="http://www.chicagofed.org/economicresearchanddata/national/index.cfm">here</a>.
A discussion of the CFNAI and its role as a business cycle indicator can be found <a href="http://www.chicagofed.org/publications/economicperspectives/2002/3qepart2.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.39</td>
<td>-1.04</td>
<td>-0.10</td>
<td>-0.33</td>
<td>-1.19</td>
<td>-0.13</td>
</tr>
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The Chicago Fed National Activity Index (CFNAI) improved in May to -0.39 from a downwardly revised reading of -1.04 in April. . A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth [...]

Chicago Fed National Activity Index Up in May

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: July 2003

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