Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926c.jpg" width="353">
For September, the Conference Board indicated that consumer confidence recovered most of the prior month&#39;s drop, which was revised shallower, with a 4.3% increase to 104.5. Consensus expectations had been for a more moderate increase to 103.
During the last twenty years there has been a 52% correlation between the level of consumer confidence and the y/y change in real consumer spending. The correlation rose to 66% during the last ten years.
Consumers&#39; assessment of the present situation recovered 3.1% (15.7% y/y). The percentage of respondents who viewed business conditions as good (27.4%) rose back to the July level and the percentage that viewed jobs as hard to get (21.3%) rose for the second month.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926d.jpg" width="353">
The index measuring consumers&#39; expectations also recovered the prior month&#39;s decline with a 5.5% rise (23.1% y/y). Expectations for better business conditions improved (16.3%) and more respondents expected an increase in jobs (14.4%).
Expectations for the inflation rate in twelve months dropped to 4.9%, the lowest level since March.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond. 
What Happens To Banks When House Prices Fall? U.S. Regional Busts of the 1980s and 1990s from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/06/09/Wheelock.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM">Conference Board</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Confidence</td>
<td>104.5</td>
<td>100.2</td>
<td>19.4%</td>
<td>100.3</td>
<td>96.1</td>
<td>79.8</td>
</tr>
</tbody>
</table>
Chain Store Sales Down Again. Gasoline Prices Still Falling 
by <a href="/comment/Moeller.html">Tom Moeller</a> September 26, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926a.jpg" width="353">
The International Council of Shopping Centers (ICSC)-UBS reported another drop in chain store sales last week. The 0.6% decline was the third drop in a as many weeks and left the average of sales in September 0.3% below August.
During the last ten years there has been a 47% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
Last week, the retail price for a gallon of regular unleaded gasoline dropped another twelve cents w/w to an average $2.38 (-15.3% y/y), the lowest level since early March. In spot market trading yesterday, the NY harbor price for regular unleaded gasoline continued its recent decline and fell three cents from Friday to $1.49, versus an average $1.53 last week. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926b.jpg" width="353">
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS gave back nearly all of the prior period&#39;s increase with a 0.6% decline last week (+0.5% y/y).
The latest Short-Term Energy Outlook from the U.S. Energy Information Administration is available <a href="http://www.eia.doe.gov/emeu/steo/pub/contents.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">09/23/06</th>
<th scope="col">09/16/06</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>464.2</td>
<td>466.8</td>
<td>4.2%</td>
<td>3.6%</td>
<td>4.7%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
European Confidence Measures Signaling Caution 
by <a href="/comment/Curley.html">Louise Curley</a> September 26, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926e.jpg" width="353">
Business and consumers in Europe continue to be pleasantly surprised by their current situation, but to be anxious about the future.
In Germany, the IFO research institute in Munich reported today that its sentiment indicator based on a survey of about 7,000 executives fell to 104.9 (2000=100) from 105.0 in August. It is now 1.8% below the recent peak of 106.8 in June of this year. The sentiment indicator combines the views of business regarding the present situation and those regarding expectations six months ahead. The indicator of the present situation rose 2.4% in September to 111.3 from 108.3 in August and was 15.6% above September, 2005. The expectations indicator, on the other hand, declined 2.5% in September to 98.9 from 101.4 in August and was only 2.2% above September, 2005. The divergence between the Situation and Expectations indexes since midyear is shown in the first chart.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926f.jpg" width="353">
Yesterday, the French INSEE (Institut National de Statistiques et Etudes Economique) announced that its Composite Business Climate Indicator was unchanged at 107 (2000=100) in September from August but was 1.8% below its recent peak of 109 in April of this year. Business sentiment in France has generally been higher than that in Germany as can be seen in the second chart.
Both Belgium and the Netherlands recently released their measures of business and consumer confidence. Belgium is the only country that so far has shown an increase in confidence in September. Both Belgium and the Netherlands express their measures of confidence as a percent balance. The Belgian measure increased from 3.1% to 4.5% in September, however, it is still below its recent peak of 10.1 in June, 2006. It has only been since last fall that the optimists among the Belgian and Dutch business began to exceed the pessimists as can be seen in the third chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060926g.jpg" width="353">
Consumers in Belgium and the Netherlands have been even more pessimistic than business over the past five years. It was only in June of this year that the optimists outweighed the pessimists in the Netherlands. Pessimists continue to exceed optimists in Belgium, but the margin has narrowed to 2 percentage points in August and September. The fourth chart compares consumer confidence in Belgium and the Netherlands.
Given the improvement in the economy--above expectations--in Europe so far this year, it is not unusual that both business and consumers should express caution regarding the future. So far the confidence measures appear to be signaling just that--caution, not alarm.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Country</th>
<th scope="col">Jul&nbsp; 06</th>
<th scope="col">Jun 06</th>
<th scope="col">Jul 05</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y %</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GERMANY&nbsp; (2000=100</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Overall</td>
<td>104.9</td>
<td>105.4</td>
<td>96.6</td>
<td>-0.10</td>
<td>8.59</td>
<td>95.6</td>
<td>95.5</td>
<td>91.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Present Situation</td>
<td>111.3</td>
<td>108.7</td>
<td>96.3</td>
<td>2.39</td>
<td>15.58</td>
<td>94.7</td>
<td>93.1</td>
<td>88.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>98.9</td>
<td>101.4</td>
<td>96.8</td>
<td>-2.47</td>
<td>2.17</td>
<td>96.3</td>
<td>97.8</td>
<td>95.6</td>
</tr>
<tr class="odd">
<td class="firstcol">FRANCE (2000=100</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Composite Business Climate Indicator ()</td>
<td>107</td>
<td>107</td>
<td>101</td>
<td>0.00</td>
<td>5.94</td>
<td>101</td>
<td>104</td>
<td>94</td>
</tr>
<tr class="odd">
<td class="firstcol">NETHERLANDS&nbsp; (% Bal)</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>M/M&nbsp; Dif&nbsp;</td>
<td>Y/Y&nbsp; Dif&nbsp;&nbsp;</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Business&nbsp;</td>
<td>7.9</td>
<td>8.2</td>
<td>6.3</td>
<td>-0.3</td>
<td>9.2</td>
<td>0.6</td>
<td>-0.1</td>
<td>-5.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer</td>
<td>9</td>
<td>4</td>
<td>-26</td>
<td>0</td>
<td>35</td>
<td>-22</td>
<td>-25</td>
<td>-25</td>
</tr>
<tr>
<td class="firstcol">BELGIUM&nbsp;&nbsp; (% Bal)</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; Business&nbsp;</td>
<td>4.5</td>
<td>3.1</td>
<td>-5.6</td>
<td>1.4</td>
<td>10.1</td>
<td>-7.5</td>
<td>-2.3</td>
<td>-12.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Consumer</td>
<td>-2</td>
<td>-2</td>
<td>-14</td>
<td>0</td>
<td>12</td>
<td>-8</td>
<td>-4</td>
<td>-11</td>
</tr>
</tbody>
</table>


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For September, the Conference Board indicated that consumer confidence recovered most of the prior month's drop, which was revised shallower, with a 4.3% increase to 104.5. Consensus expectations had been for a more moderate increase [...]

Consumer Confidence Recovered

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925c.jpg" width="353">
China&#39;s total exports in July at $80.3 billion exceeded the seasonally unadjusted exports of the United States at $79.2 billion for the first time. US data for August has not yet been published, but Chinese exports in August took another jump to reach $90.7 billion. As the first chart shows, the growth in China&#39;s exports suggests that it will not be long before China becomes the world&#39;s biggest exporter, ousting the United States from its long standing position.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925d.jpg" width="353">
In all the major geographic areas, Chinese exports are growing faster than those of the US. As an example, the second chart compares China and US exports to Europe. Even in areas where the US is still a dominant supplier, such as Latin America, the year to year growth in China&#39;s export to that region has greatly exceeded that of the US, as shown in the third chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925e.jpg" width="353">
China&#39;s status as the Number One Exporter in the world is not without its problems. As a result of the large current account surplus that has resulted from China&#39;s fast growing exports and slow growing imports, China&#39;s international reserves are close to $1.0 trillion. The management of the reserves has become increasingly burdensome and risky. And China&#39;s reluctance to appreciate its currency is becoming increasingly under attack.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Exports (Billions USD)</th>
<th scope="col">Aug&nbsp; 06</th>
<th scope="col">Jul 06</th>
<th scope="col">Jul 06</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td>China</td>
<td>China</td>
<td>US</td>
</tr>
<tr>
<td class="firstcol">Total&nbsp;&nbsp;</td>
<td>90.7</td>
<td>80.3</td>
<td>79.2</td>
</tr>
<tr class="odd">
<td class="firstcol">To Europe</td>
<td>20.7</td>
<td>17.8</td>
<td>18.4</td>
</tr>
<tr>
<td class="firstcol">To Latin America</td>
<td>3.6</td>
<td>3.1</td>
<td>16.9</td>
</tr>
</tbody>
</table>
</body>
</html>

China's total exports in July at $80.3 billion exceeded the seasonally unadjusted exports of the United States at $79.2 billion for the first time. US data for August has not yet been published, but Chinese exports in August took [...]

China Close to Ousting the United States as Number One Exporter

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925a.jpg" width="353">
 Total existing home sales fell just 0.5% during August to 6.30M according to the National Association of Realtors, and it was the sixth decline this year. Though it lowered sales 13.3% below the peak in June of 2005, the decline compared favorably to Consensus expectations for a deeper drop 6.20M.
The data cover sales closed in the latest and previous months, and contrast to the new home sales data which tally sales at the signing of a contract.
Weakness in home sales perhaps was mitigated by price concessions which lowered the median price of an existing single-family home by 2.3%. The y/y change in prices, at -1.7%, was negative for the first time a modest decline in 1995 and the deepest since a 1.1% drop in early 2003. The price figures are not seasonally adjusted.
Sales of single-family homes were unchanged but have fallen during six months this year and are down 13.0% from the peak in June of 2005. Versus the first eight months of 2005 sales this year are down 6.2%.
Single family home sales were unchanged last month both in the South (-6.5% y/y) and in the Midwest (-12.5% y/y). In the Northeast sales posted a 2.7% rise (-10.5% y/y) which was offset by a 1.7% decline (-22.4% y/y) in the West.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925b.jpg" width="353">
The inventory of unsold existing homes rose another 1.5% (37.9% y/y). The supply of unsold single family homes rose 1.2% (36.2% y/y) and the supply of condos &amp; coops for sale rose 3.1% m/m (49.1% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.
Slowdown in housing won&#39;t shut down economic growth from the Federal Reserve Bank of St. Louis can be found <a href="http://stlouisfed.org/publications/re/2006/c/pages/pres_message.html"> here</a>.
Residential mortgage default from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/br_q3-2006-3_residential_mortgage.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>&nbsp;6,300</td>
<td>6,330</td>
<td>-12.6%</td>
<td>7,064</td>
<td>6,722</td>
<td>6,176</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>5,510</td>
<td>5,510</td>
<td>-12.3%</td>
<td>6,170</td>
<td>5,912</td>
<td>5,443</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price (000) </td>
<td>$225.7 </td>
<td>$230.9 </td>
<td>-1.7% </td>
<td>$217.5</td>
<td>$192.8 </td>
<td>$178.3 </td>
</tr>
</tbody>
</table>


</html>

Total existing home sales fell just 0.5% during August to 6.30M according to the National Association of Realtors, and it was the sixth decline this year. Though it lowered sales 13.3% below the peak in June of 2005, the decline [...]

U.S. Existing Home Sales Hold Up As Prices Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925a.jpg" width="353">
 Total existing home sales fell just 0.5% during August to 6.30M according to the National Association of Realtors, and it was the sixth decline this year. Though it lowered sales 13.3% below the peak in June of 2005, the decline compared favorably to Consensus expectations for a deeper drop 6.20M.
The data cover sales closed in the latest and previous months, and contrast to the new home sales data which tally sales at the signing of a contract.
Weakness in home sales perhaps was mitigated by price concessions which lowered the median price of an existing single-family home by 2.3%. The y/y change in prices, at -1.7%, was negative for the first time a modest decline in 1995 and the deepest since a 1.1% drop in early 2003. The price figures are not seasonally adjusted.
Sales of single-family homes were unchanged but have fallen during six months this year and are down 13.0% from the peak in June of 2005. Versus the first eight months of 2005 sales this year are down 6.2%.
Single family home sales were unchanged last month both in the South (-6.5% y/y) and in the Midwest (-12.5% y/y). In the Northeast sales posted a 2.7% rise (-10.5% y/y) which was offset by a 1.7% decline (-22.4% y/y) in the West.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925b.jpg" width="353">
The inventory of unsold existing homes rose another 1.5% (37.9% y/y). The supply of unsold single family homes rose 1.2% (36.2% y/y) and the supply of condos &amp; coops for sale rose 3.1% m/m (49.1% y/y).
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument">here</a>.
Slowdown in housing won&#39;t shut down economic growth from the Federal Reserve Bank of St. Louis can be found <a href="http://stlouisfed.org/publications/re/2006/c/pages/pres_message.html"> here</a>.
Residential mortgage default from the Federal Reserve Bank of Philadelphia is available <a href="http://www.philadelphiafed.org/files/br/br_q3-2006-3_residential_mortgage.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Home Sales</td>
<td>&nbsp;6,300</td>
<td>6,330</td>
<td>-12.6%</td>
<td>7,064</td>
<td>6,722</td>
<td>6,176</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family Home Sales</td>
<td>5,510</td>
<td>5,510 </td>
<td>-12.3%</td>
<td>6,170</td>
<td>5,912</td>
<td>5,443</td>
</tr>
<tr class="odd">
<td class="firstcol">Single Family Median Home Price (000) </td>
<td>$225.7 </td>
<td>$230.9 </td>
<td>-1.7% </td>
<td>$217.5</td>
<td>$192.8 </td>
<td>$178.3 </td>
</tr>
</tbody>
</table>
China Close to Ousting the United  States as Number One Exporter 
by <a href="/comment/Curley.html">Louise Curley</a> September 25, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925c.jpg" width="353">
China&#39;s total exports in July at $80.3 billion exceeded the seasonally unadjusted exports of the United States at $79.2 billion for the first time. US data for August has not yet been published, but Chinese exports in August took another jump to reach $90.7 billion. As the first chart shows, the growth in China&#39;s exports suggests that it will not be long before China becomes the world&#39;s biggest exporter, ousting the United States from its long standing position.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925d.jpg" width="353">
In all the major geographic areas, Chinese exports are growing faster than those of the US. As an example, the second chart compares China and US exports to Europe. Even in areas where the US is still a dominant supplier, such as Latin America, the year to year growth in China&#39;s export to that region has greatly exceeded that of the US, as shown in the third chart.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060925e.jpg" width="353">
China&#39;s status as the Number One Exporter in the world is not without its problems. As a result of the large current account surplus that has resulted from China&#39;s fast growing exports and slow growing imports, China&#39;s international reserves are close to $1.0 trillion. The management of the reserves has become increasingly burdensome and risky. And China&#39;s reluctance to appreciate its currency is becoming increasingly under attack.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Exports (Billions USD)</th>
<th scope="col">Aug&nbsp; 06</th>
<th scope="col">Jul 06</th>
<th scope="col">Jul 06</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td>China</td>
<td>China</td>
<td>US</td>
</tr>
<tr>
<td class="firstcol">Total&nbsp;&nbsp;</td>
<td>90.7</td>
<td>80.3</td>
<td>79.2</td>
</tr>
<tr class="odd">
<td class="firstcol">To Europe</td>
<td>20.7</td>
<td>17.8</td>
<td>18.4</td>
</tr>
<tr>
<td class="firstcol">To Latin America</td>
<td>3.6</td>
<td>3.1</td>
<td>16.9</td>
</tr>
</tbody>
</table>


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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/060922d.jpg" width="353">
Employment in Taiwan is trending steadily higher, even and especially in the manufacturing sector. August data published on September 22 by the Directorate-General for Budgets, Analysis and Statistics (DGBAS) shows a 21,000 increase in total employment in the month, a 2.0% advance over a year ago and following a 42,000 increase in July. Unemployment in Taiwan is declining, and the August rate, 3.8%, is the lowest since February 2001; it peaked at 5.3% in early 2002.
The most distinctive aspect to Taiwan&#39;s labor situation is the uptrend in manufacturing. The number of factory workers has increased by 61,000 over the last year, a gain of 2.2%. After the tech recession in 2001, Taiwan&#39;s manufacturing rebounded promptly and has shown fairly consistent growth since. Its neighbors haven&#39;t fared nearly as well. Until the last few months, South Korea has continued to see job reductions in that sector and Hong Kong&#39;s manufacturing jobs are just managing to hold steady at their cycle low.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922e.jpg" width="353"> 
Clearly too, Taiwan&#39;s manufacturing employment is stronger than in the West. In Taiwan, this key goods-producing sector accounts for just over 27% of all employment. This contrasts with 18.4% recently in the EuroZone (includes mining), about 12% in the US and 11% in the UK. In Europe, too, factory jobs are falling markedly; in the UK, they are also falling, although the rate of decline is easing. In the US, total factory employment has finally stabilized and the number of production workers is actually rising a bit. But by far, Taiwan&#39;s sector is out-performing many other of the world&#39;s markets.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEPR/@P5/@P55/@P55.HTM">Taiwan: SA*, 000s</a></th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Employment</td>
<td>10,141</td>
<td>10,120</td>
<td>10,078</td>
<td>9,951</td>
<td>9,942</td>
<td>9,786</td>
<td>9,573</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>21</td>
<td>42</td>
<td>7</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing </td>
<td>2,783</td>
<td>2,777</td>
<td>2,765</td>
<td>2,722</td>
<td>2,726</td>
<td>2,672</td>
<td>2,590</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>6</td>
<td>12</td>
<td>9</td>
<td>2.2%</td>
<td>2.0%</td>
<td>3.2%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate, %</td>
<td>3.8%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>4.1%</td>
<td>4.4%</td>
<td>5.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Employment in Taiwan is trending steadily higher, even and especially in the manufacturing sector. August data published on September 22 by the Directorate-General for Budgets, Analysis and Statistics (DGBAS) shows a 21,000 increase [...]

Taiwan Employment Grows, Even in Factories; Unemployment Lowest in 5-1/2 Years

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922a.jpg" width="353">
At $61.05 yesterday for a barrel of WTI crude oil, the price has fallen 21% from this past summer&#39;s peak of $77.00.That decline has been accompanied by a 38% decline in the spot price for unleaded gasoline to $1.51 per gallon from $2.42 in July.
A lessening of supply concerns seems to more explain the price drop. Demand for gasoline actually has strengthened of late with y/y growth up to 5.4% during mid-September, according to figures from the U.S. Department of Energy.
Natural gas prices similarly have fallen sharply with the spot price down to $4.67/mmbtu, off by nearly one-half from this past July&#39;s high. During September, the Edison Electric Institute reports that growth in U.S. electricity demand was negative 5-11% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922b.jpg" width="353">
Gold prices have followed suit with a 20% decline to $578.75 per ounce versus the May high of $725.00. Reduced concerns about future inflation certainly figure in the price decline. Federal Reserve Board action has left the level of the monetary base virtually unchanged since the Spring with y/y growth down to 3.3%, near the lows of the last four years.An additional indication of reduced inflation risk is the Treasury market interest rate yield curve which remains inverted between the 10 Year and Fed funds.
Other commodity prices similarly have lost steam. The JoC-ECRI index of industrial metals prices has been volatile in a sideways pattern since the Spring though textile prices recently firmed off a low July base. Lower lumber prices reflect the declines in housing starts &amp; sales. The framing lumber composite from FIBER near $300/1000 board ft. is off by nearly one third from last year&#39;s high.During the last twenty years there has been a 35% correlation between the y/y change in factory sector industrial production and the change in the crude goods Producer Price Index less food &amp; energy.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922c.jpg" width="353">
Inflation, Inflation Expectations, and Monetary Policy from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/dsp_showdetail_Speech.cfm?contentId=613&amp;detailId=568"> here</a>.
Monetary Policy in an Interdependent World from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/Research/Com2006/0501.pdf"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">09/21/06</th>
<th scope="col">12/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$61.05</td>
<td>$61.04</td>
<td>-8.2%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz.)</td>
<td>$578.75</td>
<td>$516.00</td>
<td>24.1%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
</tbody>
</table>


</html>

At $61.05 yesterday for a barrel of WTI crude oil, the price has fallen 21% from this past summer's peak of $77.00.That decline has been accompanied by a 38% decline in the spot price for unleaded gasoline to $1.51 per gallon from [...]

Energy & Gold Prices Deflate

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922a.jpg" width="353">
At $61.05 yesterday for a barrel of WTI crude oil, the price has fallen 21% from this past summer&#39;s peak of $77.00.That decline has been accompanied by a 38% decline in the spot price for unleaded gasoline to $1.51 per gallon from $2.42 in July.
A lessening of supply concerns seems to more explain the price drop. Demand for gasoline actually has strengthened of late with y/y growth up to 5.4% during mid-September, according to figures from the U.S. Department of Energy.
Natural gas prices similarly have fallen sharply with the spot price down to $4.67/mmbtu, off by nearly one-half from this past July&#39;s high. During September, the Edison Electric Institute reports that growth in U.S. electricity demand was negative 5-11% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922b.jpg" width="353">
Gold prices have followed suit with a 20% decline to $578.75 per ounce versus the May high of $725.00. Reduced concerns about future inflation certainly figure in the price decline. Federal Reserve Board action has left the level of the monetary base virtually unchanged since the Spring with y/y growth down to 3.3%, near the lows of the last four years.An additional indication of reduced inflation risk is the Treasury market interest rate yield curve which remains inverted between the 10 Year and Fed funds.
Other commodity prices similarly have lost steam. The JoC-ECRI index of industrial metals prices has been volatile in a sideways pattern since the Spring though textile prices recently firmed off a low July base. Lower lumber prices reflect the declines in housing starts &amp; sales. The framing lumber composite from FIBER near $300/1000 board ft. is off by nearly one third from last year&#39;s high.During the last twenty years there has been a 35% correlation between the y/y change in factory sector industrial production and the change in the crude goods Producer Price Index less food &amp; energy.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922c.jpg" width="353">
Inflation, Inflation Expectations, and Monetary Policy from the Federal Reserve Bank of Cleveland can be found <a href="http://www.clevelandfed.org/dsp_showdetail_Speech.cfm?contentId=613&amp;detailId=568"> here</a>.
Monetary Policy in an Interdependent World from the Federal Reserve Bank of Cleveland is available <a href="http://www.clevelandfed.org/Research/Com2006/0501.pdf"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">09/21/06</th>
<th scope="col">12/30/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; (per bbl.)</td>
<td>$61.05</td>
<td>$61.04</td>
<td>-8.2%</td>
<td>$58.16</td>
<td>$41.78</td>
<td>$32.78</td>
</tr>
<tr>
<td class="firstcol">Gold: Handy &amp; Harmon (per Troy Oz.)</td>
<td>$578.75</td>
<td>$516.00</td>
<td>24.1%</td>
<td>$507.40</td>
<td>$443.40</td>
<td>$416.25</td>
</tr>
</tbody>
</table>
Taiwan Employment Grows, Even in Factories; Unemployment Lowest in 5-1/2 Years 
by <a href="/comment/Stone.html">Carol Stone</a> September 22, 2006


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922d.jpg" width="353">
Employment in Taiwan is trending steadily higher, even and especially in the manufacturing sector. August data published on September 22 by the Directorate-General for Budgets, Analysis and Statistics (DGBAS) shows a 21,000 increase in total employment in the month, a 2.0% advance over a year ago and following a 42,000 increase in July. Unemployment in Taiwan is declining, and the August rate, 3.8%, is the lowest since February 2001; it peaked at 5.3% in early 2002.
The most distinctive aspect to Taiwan&#39;s labor situation is the uptrend in manufacturing. The number of factory workers has increased by 61,000 over the last year, a gain of 2.2%. After the tech recession in 2001, Taiwan&#39;s manufacturing rebounded promptly and has shown fairly consistent growth since. Its neighbors haven&#39;t fared nearly as well. Until the last few months, South Korea has continued to see job reductions in that sector and Hong Kong&#39;s manufacturing jobs are just managing to hold steady at their cycle low.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060922e.jpg" width="353">
Clearly too, Taiwan&#39;s manufacturing employment is stronger than in the West. In Taiwan, this key goods-producing sector accounts for just over 27% of all employment. This contrasts with 18.4% recently in the EuroZone (includes mining), about 12% in the US and 11% in the UK. In Europe, too, factory jobs are falling markedly; in the UK, they are also falling, although the rate of decline is easing. In the US, total factory employment has finally stabilized and the number of production workers is actually rising a bit. But by far, Taiwan&#39;s sector is out-performing many other of the world&#39;s markets.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EMERGEPR/@P5/@P55/@P55.HTM">Taiwan: SA*, 000s</a></th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Year Ago</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Employment</td>
<td>10,141</td>
<td>10,120</td>
<td>10,078</td>
<td>9,951</td>
<td>9,942</td>
<td>9,786</td>
<td>9,573</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>21</td>
<td>42</td>
<td>7</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing </td>
<td>2,783</td>
<td>2,777</td>
<td>2,765</td>
<td>2,722</td>
<td>2,726</td>
<td>2,672</td>
<td>2,590</td>
</tr>
<tr>
<td class="firstcol">Change/ % Chg</td>
<td>6</td>
<td>12</td>
<td>9</td>
<td>2.2%</td>
<td>2.0%</td>
<td>3.2%</td>
<td>1.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate, %</td>
<td>3.8%</td>
<td>3.9%</td>
<td>3.9%</td>
<td>4.1%</td>
<td>4.1%</td>
<td>4.4%</td>
<td>5.0%</td>
</tr>
</tbody>
</table>


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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921h.jpg" width="353">
The Israel&#39;s Central Statistics Bureau today reported its &quot;State of the Economy Index&quot; for August, along with its available components. When we last checked in on the Israeli economy, about six weeks ago, the war in Lebanon was still in full swing and in describing Q2 GDP, we wondered out loud what the war would do to the economy in Q3. Today&#39;s report gives a bit of an indication. The overall index is estimated to have risen 0.3% in each July and August, marginally less than June&#39;s 0.4%, but noticeably less than the 0.6%/month in each of the prior four months. So some slowdown is clearly in process.
The index has five components covering industry, domestic and foreign trade and employment in the business sector (about 70% of total employment). Only exports and imports are published yet for August, and both of these are more than keeping up with their average of the past year. Imports grew 5.2% in August compared with a 12-month average gain of 1.4% and exports were up 3.5% versus an average of 1.1%. Industrial production through July was continuing with some strength as well, with monthly increases well over 1% then and in June, compared with 0.9% monthly for the last 12 months.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921i.jpg" width="353">
The slowing is more evident in demand and employment indicators. The employment data lag, with the latest values only covering June and a detailed industrial breakdown only through Q2. But business sector employment by this monthly indicator peaked in March and fell slightly in each of the following months. Since this information is all prior to the Lebanon war, there is no impact evident here. Further, employment had expanded with some vigor since early in 2004. So perhaps there is nothing more in the recent pattern than a pause after a strong uptrend.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/060921j.jpg" width="353">
Domestic sales, however, seem to be a different story. Revenues from trade and services dropped 2.5% in June and another 2.6% in July, erasing almost all of a nice rise over the nine months beginning last September. People could well hold back purchases or at least take a cautionary stance as political tensions mount. Fortuitously for their welfare, a truce was called quickly, and this likely helps the general economy as well.
In dramatic contrast, the impact of the war showed quickly and distinctly in Lebanon. Data offerings are fairly sparse, but a quick look at imports and exports, which were reported Monday by the Bank of Lebanon, shows a clear picture of significant economic damage. The third graph here tells the whole story.

<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/EMERGEMA/@M7/@M7.HTM">Israel: SA, % Chg</a></th>
<th scope="col">Weight (%)</th>
<th scope="col">Aug 2006</th>
<th scope="col">July 2006</th>
<th scope="col">June 2006</th>
<th scope="col">Yr Ago (Mo. Avg)</th>
Yearly % Change
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2005</td>
<td>2004</td>
<td>2003</td>
</tr>
<tr>
<td class="firstcol">Total Index</td>
<td>100</td>
<td>0.3</td>
<td>0.3</td>
<td>0.4</td>
<td>0.5</td>
<td>7.1</td>
<td>6.9</td>
<td>-0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>28</td>
<td>--</td>
<td>1.3</td>
<td>1.6</td>
<td>0.9</td>
<td>4.6</td>
<td>7.2</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">Imports</td>
<td>15</td>
<td>5.2</td>
<td>2.4</td>
<td>-2.3</td>
<td>1.4</td>
<td>2.3</td>
<td>14.6</td>
<td>-4.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Trade &amp; Services Revenues</td>
<td>28</td>
<td>--</td>
<td>-2.6</td>
<td>-2.5</td>
<td>0.1</td>
<td>8.1</td>
<td>8.0</td>
<td>-0.6</td>
</tr>
<tr>
<td class="firstcol">Employees in Business Sector</td>
<td>19</td>
<td>--</td>
<td>--</td>
<td>-0.3</td>
<td>0.2</td>
<td>4.7</td>
<td>2.4</td>
<td>-0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>10</td>
<td>3.5</td>
<td>-10.2</td>
<td>9.4</td>
<td>1.1</td>
<td>7.1</td>
<td>17.4</td>
<td>4.4</td>
</tr>
</tbody>
</table>
</body>
</html>

The Israel's Central Statistics Bureau today reported its "State of the Economy Index" for August, along with its available components. When we last checked in on the Israeli economy, about six weeks ago, the war in Lebanon was still [...]

Israel's Economy Sees Slower Growth in the Face of War in Lebanon; Lebanon's Economy Falls Dramatically

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 2006

Jump to:

Consumer Confidence Recovered

China Close to Ousting the United States as Number One Exporter

U.S. Existing Home Sales Hold Up As Prices Fell

U.S. Existing Home Sales Hold Up As Prices Fell

Taiwan Employment Grows, Even in Factories; Unemployment Lowest in 5-1/2 Years

Energy & Gold Prices Deflate

Energy & Gold Prices Deflate

Israel's Economy Sees Slower Growth in the Face of War in Lebanon; Lebanon's Economy Falls Dramatically