Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030919a.jpg" width="353">
The U.S. Government budget deficit deepened in August to $76.5B. That was versus a deficit of $54.7B in August &#39;02. The deficit was slightly shallower than most analysts had expected.
The Federal government&#39;s deficit totaled $400.5B with one month to go in fiscal year 2003. That&#39;s double the deficit through the first eleven months of FY2002. Sizable budget surpluses near $40B have been the norm for September in past fiscal years.
Net receipts for the first eleven months of FY03 fell 4.2% versus last year. Individual tax payments fell 8.1% as the unemployment rate rose and corporate income taxes fell 13.5% though profits have picked up some. Social insurance contributions rose 1.8% and excise taxes rose 0.3%. 
Federal net expenditures rose 7.0% versus last fiscal year&#39;s first eleven months. Defense spending surged 15.8%. Spending on health programs also was strong, up 11.8% and spending on education surged 15.9%. Spending on income security rose 7.4% while Medicare outlays rose 7.5%. Social Security outlays rose 4.0% to 21.8% of the budget. Interest expense fell 10.4% y/y.
The latest update of the budget and economic outlook from the Congressional Budget Office is available <a href="http://www.cbo.gov/showdoc.cfm?index=4493&amp;sequence=0"> 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/@E1/@E106/@E10602/@E10602.HTM"> US Government Finance</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Aug &#39;02</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
<th scope="col">FY2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-76.5B</td>
<td>$-54.2B</td>
<td>$-54.7B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
<td>$236.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$114.3B</td>
<td>$123.6B</td>
<td>-8.3%</td>
<td>-6.9%</td>
<td>-1.7%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$190.7B</td>
<td>$177.8B</td>
<td>6.4%</td>
<td>7.9%</td>
<td>4.2%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
Wood Prices Surge, Gas Prices Moderate 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 19, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030919b.jpg" width="353">
Prices for lumber &amp; plywood recently have surged as the hot US housing market drove up demand. Prices for random lengths of framing lumber were up by more than a third this week versus last year.
Moving more moderately, wholesale natural gas prices moved to the lowest levels of the year as inventories built, but prices still are up considerably from early last year.
Gasoline prices have moderated some recently, falling to an average $1.70 per gallon in the third week of September from a high of $1.75 late last month.
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>.
Giving mixed signals of industrial sector activity, prices for steel scrap have been stable since mid-June, down slightly from the April highs but up 5.6% y/y. Prices for copper scrap recently have been similarly erratic and are down slightly versus last year

<table border="0" cellspacing="0" width="100%">
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<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">09/15/03</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>$1.70</td>
<td>$1.44</td>
<td>21.1%</td>
<td>$1.34</td>
<td>$1.42</td>
<td>$1.48</td>
</tr>
</tbody>
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The U.S. Government budget deficit deepened in August to $76.5B. That was versus a deficit of $54.7B in August '02. The deficit was slightly shallower than most analysts had expected. The Federal government's deficit totaled $400.5B [...]

U.S. Budget Deficit Plumbing New Depths

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/030918c.jpg" width="353">
A couple of weeks ago in this space, we bemoaned the onset of a slowdown in the Korean economy. Two down quarters of GDP in the first half of this year included declines across several sectors, especially exports. Now, today, labor market data for August hint that this weakness may only have been a temporary sinking spell. Employment rose in July, and while it fell back somewhat in August, the July gain broke a four-month string of declines.
In August, even as employment did ease back, unemployment also decreased, with a 0.3-percentage-point reduction in the rate. This reversed half of the increase from February through June, which had carried the rate from its five-year low of 3.0% up to 3.7%.
Clearly, two months don&#39;t make a trend, and the stabilization evident in the employment and unemployment figures in July and August may itself be a pause in a worsening trend. But general economic improvement elsewhere, particularly in the US, suggests that the gains in the Korean labor market may have some staying power.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">South Korea Labor Data</th>
<th scope="col">August 2003</th>
<th scope="col">July 2003</th>
<th scope="col">June 2003</th>
<th scope="col">Year/ Year</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">Change in Total Employment (thousands)</td>
<td>-44</td>
<td>68</td>
<td>-28</td>
<td>-0.4%</td>
<td colspan="3">Dec/Dec % Change</td>
</tr>
<tr>
<td class="firstcol">1.9%</td>
<td>2.8%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate (%)</td>
<td>3.4%</td>
<td>3.7%</td>
<td>3.7%</td>
<td>3.1% (Aug.2002)</td>
<td colspan="3">Annual Average</td>
</tr>
<tr>
<td class="firstcol">3.1%</td>
<td>3.8%</td>
<td>4.1%</td>
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A couple of weeks ago in this space, we bemoaned the onset of a slowdown in the Korean economy. Two down quarters of GDP in the first half of this year included declines across several sectors, especially exports. Now, today, labor [...]

Korean Labor Market Improves in August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030918a.jpg" width="353">
Initial claims for jobless insurance fell an unexpectedly sharp 29,000 to 399,000 last week. The prior week&#39;s level was revised up. Consensus expectations had been for claims of 410,000.
During the last ten years there has been a 80% correlation (inverse) between the level of initial claims and the y/y change in payroll employment.
The four-week moving average of initial claims rose to 410,750 (-0.1% y/y), the highest level since July, as a result of increases during the prior three weeks.
Continuing claims for unemployment insurance rose 39,000 to 3,683,000. The sharp 61,000 gain reported for the prior week was revised to a less steep 37,000.
The insured rate of unemployment held steady at 2.9%. The rate has averaged 2.9% since April.

<table border="0" cellspacing="0" width="100%">
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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">9/13/03</th>
<th scope="col">9/6/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
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<tr>
<td class="firstcol">Initial Claims</td>
<td>399.0</td>
<td>428.0</td>
<td>-4.8%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,683</td>
<td>3.0%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Leading Indicators Up For Fourth Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030918b.jpg" width="353">
The Conference Board reported that the Composite Index of Leading Economic Indicators rose for the fourth consecutive month in August. The 0.4% gain was as expected. The prior month&#39;s increase was revised up to 0.6% from 0.4% reported last month.
Gains amongst the leaders&#39; component series eased to 45%. The diffusion of the prior month&#39;s gain was revised up to 70% from 50%. The percentage of leading components rising over a six month period rose to 85%, the highest level since January 2002.
A steeper yield curve, a higher money supply, higher building permits and stronger vendor performance had significant positive influences on the leading index. Negative influences from the other leading series were modest.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators were unchanged following three months of slight increase.
The ratio of coincident-to-lagging indicators was unchanged for the second month at a record high level. The ratio is an indicator of excess relative to actual economic performance.
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
James H. Stock and Robert W. Watson ask &quot;<a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=185">How Did Leading Indicator Forecasts Perform During the 2001 Recession</a>&quot; in this paper published by the Federal Reserve Bank of Richmond.

<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/BCI/BCI.HTM"> Business Cycle Indicators</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.4%</td>
<td>0.6%</td>
<td>2.2%</td>
<td>2.1%</td>
<td>-0.9%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-2.3%</td>
<td>-4.4%</td>
<td>-1.3%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Down A Bit 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030918d.jpg" width="353">
The Philadelphia Fed&#146;s August index of general business conditions fell in September to 14.6 from 22.1 in August. Consensus expectations were for a reading of 17.5.
During the last twenty years there has been a 65% correlation between the level of the Philadelphia Fed Business Conditions Index and quarterly growth in real GDP. The correlation with quarterly growth in factory sector industrial production has been 77%.
Declines amongst the sub indexes were not broad based. The new orders, unfilled orders and employment indexes each improved, new orders to a cycle high.
Shipments and the factory workweek fell modestly.
The business conditions index reflects a separate survey question, not the sub indexes.
A separate survey of expected business conditions in six months rose to 66.2, the highest level since 1991.
The prices paid index rose further to 22.5.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0903.html">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM"> Philadelphia Fed Business Outlook</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#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">General Activity Index</td>
<td>14.6</td>
<td>22.1</td>
<td>0.4</td>
<td>7.7</td>
<td>-17.2</td>
<td>8.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>22.5</td>
<td>16.0</td>
<td>20.5</td>
<td>12.2</td>
<td>-0.9</td>
<td>27.2</td>
</tr>
</tbody>
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Initial claims for jobless insurance fell an unexpectedly sharp 29,000 to 399,000 last week. The prior week's level was revised up. Consensus expectations had been for claims of 410,000. During the last ten years there has been a 80% [...]

Initial Jobless Insurance Claims Below 400,000

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030917d.jpg" width="353">
Labor force data for the UK out Wednesday show a continuing gain of 3,000 in employment in the three months centered on June from the three months centered on March (the customary style of the UK Statistics Office monthly reports on the labor force). Unemployment edged down 2,000 and the rate held steady at 5.1%. . Other details of this report reveal interesting trends in the workforce. The concept known as the &quot;labor force&quot; in the US is called the &quot;economically active population&quot; in the UK. It numbers some 29.4 million in the latest three-month period, constituting 63.1% of the population aged 16 and over. This proportion has changed little overall in the 11-year history of these data, by only 0.9 percentage point. However, such an aggregate figure masks significant shifts in labor force participation by various age groups. Relatively fewer young people are working or want to work, while the number of older workers is rising rapidly. It&#39;s not just that the population of old people is growing, their labor force participation -- or rather, for the UK, their &quot;rates of economic activity&quot; are showing marked increases. This indicates a recent and distinct shift away from &quot;early&quot; retirement, yielding an older, more experienced labor force in the UK.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol">Economic Activity Rates</th>
<th scope="col">Number&nbsp; (millions)</th>
<th scope="col">&quot;Jun&quot; &nbsp;(3&nbsp; months &nbsp;ended Jul)</th>
<th scope="col">&quot;Mar&quot; &nbsp;(3 months &nbsp;ended Apr)</th>
<th scope="col">Year Ago</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">All ages, 16+</td>
<td>29.4</td>
<td>63.1</td>
<td>63.0</td>
<td>62.8</td>
<td>62.9</td>
<td>62.7</td>
<td>62.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Ages 16-24</td>
<td>4.6</td>
<td>69.8</td>
<td>69.5</td>
<td>70.3</td>
<td>70.5</td>
<td>70.8</td>
<td>71.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ages 25-34</td>
<td>6.6</td>
<td>83.4</td>
<td>83.3</td>
<td>83.7</td>
<td>83.7</td>
<td>83.8</td>
<td>84.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Ages 35-49</td>
<td>10.8</td>
<td>84.8</td>
<td>84.9</td>
<td>84.9</td>
<td>84.8</td>
<td>84.7</td>
<td>85.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Ages 50-59</td>
<td>6.5</td>
<td>72.5</td>
<td>72.4</td>
<td>70.6</td>
<td>70.8</td>
<td>70.2</td>
<td>69.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Ages 60 and over</td>
<td>1.0</td>
<td>9.1</td>
<td>9.0</td>
<td>8.7</td>
<td>8.7</td>
<td>8.3</td>
<td>8.2</td>
</tr>
</tbody>
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Labor force data for the UK out Wednesday show a continuing gain of 3,000 in employment in the three months centered on June from the three months centered on March (the customary style of the UK Statistics Office monthly reports on [...]

UK Employment Rises; Older Workers Increase Participation

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030917a.jpg" width="353">
Housing starts fell 3.8% m/min August to 1.82 mil. units after rising for three consecutive months. Consensus expectations had been for starts of 1.83 mil. Starts in July were revised up to a new seventeen year high.
Single family starts fell 4.0% m/m. So far this year single family starts are up 5.1% from the 2002 average. July starts were revised up. 
Multi-family starts fell 3.1% last month but the slight decline previously reported for July was revised to a small gain. Multi-family starts this year are down 4.0% versus 2002.
Building permits rose 4.8% m/m in august and the July level was revised slightly higher. Permits for single family homes 2.9% (11.8% y/y) for the fifth straight monthly gain. Multi-family permits also rose.

<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/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<td class="firstcol">Total</td>
<td>1,820</td>
<td>1,892</td>
<td>11.7%</td>
<td>1,711</td>
<td>1,601</td>
<td>1,573</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,476</td>
<td>1,537</td>
<td>18.2%</td>
<td>1,364</td>
<td>1,272</td>
<td>1,232</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>344</td>
<td>355</td>
<td>-9.7%</td>
<td>347</td>
<td>330</td>
<td>341</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,886</td>
<td>1,800</td>
<td>10.7%</td>
<td>1,750</td>
<td>1,637</td>
<td>1,598</td>
</tr>
</tbody>
</table>
Mortgage Applications Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030917b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association fell 5.8% last week following a 22.8% jump the week prior.
Applications to refinance gave back 15.4% w/w of the 45.5% surge the prior period.
Purchase applications rose 5.8% for the third consecutive weekly gain. The level of purchase applications so far in September is 3.7% ahead of the August average.
During the last ten years there has been a 56% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Interest rates on a conventional 30-Year mortgage fell 10 basis points with the effective rate at 6.17%. That was versus a low 5.31% in the second week of June. The effective rate on a 15-year mortgage fell 13 basis points to 5.51%.
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> .

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</table>
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<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">9/12/03</th>
<th scope="col">9/05/03</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>726.7</td>
<td>771.8</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>432.4</td>
<td>408.8</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,438.5</td>
<td>2,883.6</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
Small Business Felt Better 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030917c.jpg" width="353">
The Small Business Optimism Index published by the National Federation of Independent Business improved sharply in August to 104.6, the highest level since 1986.
The percent of small business owners planning to increase employment rose to 14%, the highest level in a year.
The percent of owners planning to raise capital expenditures in the next 3-6 months rose to 32%, the highest level since May 2000.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America 
The latest report on Small Business Optimism is available <a href="http://www.nfib.com/cgi-bin/NFIB.dll/public/advocacy/researchStudyDisplay.jsp?BV_SessionID=@@@@0341112109.1063809316@@@@&amp;BV_EngineID=ccchadcjgfhfdkgcfngcfkmdffgdhfi.0&amp;contentId=3986063"> here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM"> Nat&#39;l Federation of Independent Business</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Small Business Optimism Index (1986=100)</td>
<td>104.6</td>
<td>100.6</td>
<td>3.1%</td>
<td>101.2</td>
<td>98.4</td>
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Housing starts fell 3.8% m/min August to 1.82 mil. units after rising for three consecutive months. Consensus expectations had been for starts of 1.83 mil. Starts in July were revised up to a new seventeen year high. Single family [...]

Housing Starts Fell Slightly

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030916f.jpg" width="353">
The ZEW indicator of German Investor Confidence rose to 60.9.in September from 52,5 in August to reach its highest level since July 2002. Investors tend to appraise the future outlook positively. Rarely has the index been in negative territory when pessimists outweigh optimists. Over the long run, the average for the ZEW index is 33.
Although the ZEW index is an indicator of economic growth in the next six months, there are, currently, signs that economic activity is beginning to stabilize, if not actually to pick up after the GDP declines of 0.2% in the first quarter of the year and 0.1% in the second quarter. Industrial production, excluding construction, rose 2.18% in July and was slightly above a year ago. Construction was up 3.69% but was still below a year ago. Domestic new orders in manufacturing rose 1.54% in July, and they, too, remained below levels of a year ago. While these signs are encouraging. so far there are few signs of increased demand from consumers and foreigners. Foreign demand, however, may improve with increased activity in the U. S. and Japan and a more favorable Euro.

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<tr>
<th scope="col" class="firstcol"></th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col">Percent&nbsp;&nbsp;</th>
<th scope="col">Change</th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
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</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td>Sep 03</td>
<td>Aug 03</td>
<td>Sep 02</td>
<td>M/M</td>
<td>Y/Y</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">ZEW Indicator</td>
<td>60.5</td>
<td>52.5</td>
<td>39.5</td>
<td>8.4</td>
<td>21.4</td>
<td>45.3</td>
<td>2.8</td>
<td>59.1</td>
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<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Industrial Production (1995=100)</td>
<td>July 03</td>
<td>Jun 03</td>
<td>July 02</td>
<td>M/M</td>
<td>Y/Y</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Total ex Construction</td>
<td>117.4</td>
<td>114.9</td>
<td>116.7</td>
<td>2.18</td>
<td>0.60</td>
<td>116.5</td>
<td>117.9</td>
<td>117.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>75.8</td>
<td>73.1</td>
<td>76.2</td>
<td>3.69</td>
<td>-0.52</td>
<td>76.7</td>
<td>79.0</td>
<td>85.0</td>
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<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Manufacturing New Orders (2000=100)</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Domestic</td>
<td>92.3</td>
<td>90.9</td>
<td>94.1</td>
<td>1.54</td>
<td>-1.91</td>
<td>93.7</td>
<td>97.2</td>
<td>99.9</td>
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The ZEW indicator of German Investor Confidence rose to 60.9.in September from 52,5 in August to reach its highest level since July 2002. Investors tend to appraise the future outlook positively. Rarely has the index been in negative [...]

German Investors Becoming More Confident

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030916b.jpg" width="353">
The Consumer Price Index (CPI-U) rose 0.3% in August versus the Consensus expectation for a 0.4% gain.
A weaker than expected gain in &quot;core&quot; prices accounted for the relatively tame report. The 0.1% rise in the CPI less food &amp; energy was less than Consensus expectations for a 0.2% increase. This weakness came despite a 0.6% (-1.3% y/y) gain in tobacco prices which followed the 1.3% July jump.
Prices of consumer goods continued to deflate. Prices for new and used vehicles fell 0.2% (-2.7% y/y) and prices for household furnishings &amp; operation dropped 0.3% (-2.0% y/y). Apparel prices rose modestly for the third straight month but nevertheless fell 2.7% y/y.
Core services prices rose just 0.2%, the average of the last three months. Shelter prices rose 0.2% (2.3% y/y) and medical care services prices also rose just 0.2% (4.2% y/y).Public transportation prices fell for the first month since February (2.2 y/y).Education &amp; communication prices surged 0.5% (1.1% y/y) for the second month.
Energy prices jumped 2.7% as gasoline prices surged 6.2% (14.5% y/y). Gasoline prices are up another 6.2% so far in September. Fuel oil prices rose 1.2% (16.7% y/y) though piped gas &amp; electricity prices fell for the second consecutive month (9.4% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior rose 0.3% m/m but is unchanged since March. It is similar to the PCE price deflator. The core price measure was unchanged.
Analysis from the Federal Reserve Bank of San Francisco titled &quot;Improving the Way We Measure Consumer Prices&quot; can be found <a href="http://www.frbsf.org/publications/economics/letter/2003/el2003-24.html"> here</a>.
The paper <a href="http://www.federalreserve.gov/pubs/feds/2003/200341/200341abs.html"> &quot;Inflation Scares and Forecast-Based Monetary Policy&quot;</a> can be found in the Federal Reserve Board&#39;s Finance and Economics Discussion Series.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM"> Consumer Price Index</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<td class="firstcol">Total&nbsp;</td>
<td>0.3%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-2.2%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
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<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.3%</td>
<td>2.7%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>2.7%</td>
<td>0.4%</td>
<td>11.9%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>3.1%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM"> Chained CPI: Total (NSA)</a></td>
<td>0.3%</td>
<td>0.0%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.8%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
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Weekly Chain Store Sales Slipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030916a.jpg" width="353">
Chain store sales last week gave back 0.3% of the prior week&#39;s 0.5% rise according to the BTM-UBSW survey.
So far in September sales are 0.3% ahead of the August average which rose 0.9% from July.
During the last five years there has been a 62% correlation between the year-to-year percent change in chain store sales and the change in non-auto retail sales less gasoline.
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">9/13/03</th>
<th scope="col">9/06/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>428.0</td>
<td>429.4</td>
<td>4.1%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
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</tbody>
</table>
FOMC Left Fed Funds Rate Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030916e.jpg" width="353">
The Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%.
The unanimous action was as expected by economists.
The press release which accompanied the Fed&#146;s action contained the following statement. &quot;The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, although the labor market has been weakening. Business pricing power and increases in core consumer prices remain muted.&quot;
The complete text of the Fed&#39;s latest press release could be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2003/20030916/default.htm">here</a>.

U.S. Manpower Hiring Index Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030916c.jpg" width="353">
The Manpower employment survey for 4Q03 improved versus 3Q. A seasonally adjusted net 10% of 16,000 employers expect to increase hiring activity.
The latest reading is up from 6% in 3Q but was still slightly below the average for this year.
Since 1980 there has been a 75% correlation between the Manpower index and the y/y change in nonfarm payrolls.
The latest press release from Manpower Inc. covering employment prospects in 18 countries can be viewed <a href="http://www.manpower.com/mpcom/files?name=InternationalRLS_3Q03.doc"> here</a>.

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<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SC/@SC.HTM"> Manpower Employment Survey</a></th>
<th scope="col">4Q03</th>
<th scope="col">3Q03</th>
<th scope="col">4Q02</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">All Industries - Net Higher (SA)</td>
<td>10</td>
<td>6</td>
<td>14</td>
<td>11</td>
<td>11</td>
<td>17</td>
</tr>
</tbody>
</table>
Housing Market Index Backed Off 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 16, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030916d.jpg" width="353">
The National Association of Home Builders (NAHB) reported that their Composite Housing Market Index fell this month. Nevertheless, the index at 68, up 7.9% y/y, was at the second highest level since early 2000.
During the last fifteen years there has been a 68% correlation between the y/y change in the NAHB index and the change in new home sales.
The index of current market conditions for home sales fell to 73 (9.0% y/y).
The index which measures expected home sales in six months was unchanged at 78 (8.3% y/y) versus an average of 69 during all of last year.
Traffic of prospective buyers fell slightly but for the quarter was at the highest level since 3Q99.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.
Visit the National Association of Home Builders using this <a href="http://www.nahb.org">link</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">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>
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<td class="firstcol">Composite Housing Market Index</td>
<td>68</td>
<td>71</td>
<td>63</td>
<td>61</td>
<td>56</td>
<td>62</td>
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The Consumer Price Index (CPI-U) rose 0.3% in August versus the Consensus expectation for a 0.4% gain. A weaker than expected gain in "core" prices accounted for the relatively tame report. The 0.1% rise in the CPI less food & energy [...]

CPI Up Less Than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030915e.jpg" width="353">
In contrast to many of the countries in the Pacific Rim, Thailand reported a rise in its seasonally adjusted real GDP of 0.87% in the second quarter. Hong Kong earlier reported a 3.39% decline in its second quarter GDP, Taiwan, a 2.99% decline and Singapore, a 3.29% decline. These last mentioned countries were more seriously affected by the spread of SARS (Severe acute respiratory syndrome) than Thailand.
Thailand was not unaffected by SARS. It suffered a sharp decline in the arrival of foreign tourists and a decline in exports to the affected countries. However, sharp rises in business and government spending more than offset these declines.
The Thai government has raised its forecast of growth for this year from 5.5% to 6.2% and expects growth next year to be between 6.5% and 8.5%.

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<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">Percent Change</th>
<th scope="col">2Q 03 (Q/Q)</th>
<th scope="col">1Q 03 (Q/Q)</th>
<th scope="col">2Q 03(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">Thailand GDP</td>
<td>0.87</td>
<td>1.31</td>
<td>5.70</td>
<td>5.28</td>
<td>1.87</td>
<td>4.68</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gross Capital Formation</td>
<td>5.14</td>
<td>3.60</td>
<td>8.47</td>
<td>6.24</td>
<td>0.69</td>
<td>5.53</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;Government Consumption Expenditures</td>
<td>4.32</td>
<td>5.71</td>
<td>4.51</td>
<td>0.64</td>
<td>2.85</td>
<td>2.60</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;Consumer Expenditures</td>
<td>0.75</td>
<td>1.89</td>
<td>6.05</td>
<td>4.74</td>
<td>3.73</td>
<td>4.86</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Net Exports of Goods and Services</td>
<td>-1.15&nbsp;</td>
<td>4.29</td>
<td>6.73</td>
<td>9.98</td>
<td>1.08</td>
<td>-6.82</td>
</tr>
<tr>
<td class="firstcol">Singapore GDP</td>
<td>-3.29</td>
<td>0.79</td>
<td>-4.19</td>
<td>2.21</td>
<td>-2.32</td>
<td>9.41</td>
</tr>
<tr class="odd">
<td class="firstcol">Hong Kong GDP</td>
<td>-3.39</td>
<td>0.07</td>
<td>0.31</td>
<td>2.12</td>
<td>0.95</td>
<td>10.17</td>
</tr>
<tr>
<td class="firstcol">Taiwan GDP</td>
<td>-2.99</td>
<td>1.72</td>
<td>1.10</td>
<td>4.13</td>
<td>-1.65</td>
<td>6.37</td>
</tr>
</tbody>
</table>
</body>
</html>

In contrast to many of the countries in the Pacific Rim, Thailand reported a rise in its seasonally adjusted real GDP of 0.87% in the second quarter. Hong Kong earlier reported a 3.39% decline in its second quarter GDP, Taiwan, a [...]

Thailand's Gross Domestic Product Shows Growth in the Second Quarter

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: September 2003

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