Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040318b.jpg" width="353">
Finished producer prices surged 0.6% in January. The increase was the largest since October of last year. The core PPI rose 0.3% following two months of flat-to-down prices.
Release of the figures was delayed due to the conversion to the 2002 North American Industry Classification System (NAICS) from the 1987 Standard Industrial Classification (SIC). The change affects industry breakdowns. The product-type breakdowns which are the usual focus of attention should not be meaningfully impacted. Seasonal adjustment factors also were recalculated.
Finished consumer goods prices rose 0.7% in January (4.0% y/y). Less food &amp; energy finished consumer goods prices rose 0.3% (+0.9% y/y). Consumer durable prices rose 0.4% (1.1% y/y) and reversed a December decline. Core non-durable prices jumped 0.7% (0.7% y/y).
Finished capital goods prices rose 0.3% (+1.1% y/y).
Finished energy prices rose 4.7% (11.3% y/y) on the strength of higher gasoline (13.0% y/y) and fuel oil (10.9% y/y) prices. These energy product price series are NSA.
Intermediate goods prices jumped 0.9% as energy prices rose. Core intermediate prices, up 0.6%, also rose the most for any month since February 2003. 
Crude goods prices surged 2.8% as energy prices jumped 12.5% (11.8% y/y). Core crude prices also rose 3.3%, strong for the seventh consecutive month.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM"> Producer Price Index</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.6%</td>
<td>0.2%</td>
<td>3.3%</td>
<td>3.2%</td>
<td>-1.3%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.9%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.8%</td>
<td>0.4%</td>
<td>3.7%</td>
<td>4.7%</td>
<td>-1.5%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.6%</td>
<td>0.1%</td>
<td>2.3%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.8%</td>
<td>2.2%</td>
<td>13.6%</td>
<td>25.1%</td>
<td>-10.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>3.3%</td>
<td>3.0%</td>
<td>23.9%</td>
<td>12.2%</td>
<td>3.8%</td>
<td>-10.0%</td>
</tr>
</tbody>
</table>
Initial Claims for Jobless Insurance Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 18, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040318a.jpg" width="353">
Initial claims for jobless insurance fell another 6,000 to 336,000 last week. The Consensus expectation was for 340,000 claims. The prior week was revised up slightly.
The latest figure covers the survey period for March nonfarm payrolls. Claims fell 8,000 (2.3%) from the February period.
During the last ten years there has been a 77% (negative) correlation between the level of initial claims and the three-month change in non-farm payrolls.
The four-week moving average of initial claims fell to 344,000 (-18.9% y/y).
Continuing claims for unemployment insurance rose 47,000 from the prior week&#39;s level that was revised to show a 55,000 decline.
The insured rate of unemployment was unchanged at 2.4% for the fourth week.

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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">3/13/04</th>
<th scope="col">3/06/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>336.0</td>
<td>342.0</td>
<td>-21.5%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,064</td>
<td>-13.3%</td>
<td>3,535</td>
<td>3,575</td>
<td>3,022</td>
</tr>
</tbody>
</table>
Leading Indicators Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 18, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040318c.jpg" width="353">
The Composite Index of Leading Economic Indicators reported by the Conference Board was unchanged in February, about as expected. January&#39;s 0.5% gain was revised down slightly.
The soft one-month reading was dominated by lower consumer expectations which subtracted 0.2 percentage points. The breadth-of-gain amongst the leaders&#39; component series improved slightly to 60% from a downwardly revised 50% in January. Over a six-month span 80% of the leading series rose.
The Leading index is based on eight previously reported economic data series and two that are estimated.
The coincident indicators rose 0.3%, the strongest gain since November.
The ratio of coincident-to-lagging indicators rose to another record 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.

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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">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Leading</td>
<td>0.0%</td>
<td>0.4%</td>
<td>4.1%</td>
<td>1.3%</td>
<td>2.2%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.3%</td>
<td>0.1%</td>
<td>1.7%</td>
<td>0.4%</td>
<td>-0.5%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-3.0%</td>
<td>-2.2%</td>
<td>-2.8%</td>
<td>-1.4%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 18, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040318e.jpg" width="353">
The Philadelphia Fed&#146;s March index of general business conditions in the manufacturing sector fell to 24.2 versus 31.4 last month. Consensus expectations had been for less of a decline to 29.0.
During the last twenty years there has been a 62% 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 76%.
Amongst the sub indexes, new orders fell sharply to 21.9 versus a high of 37.9 in December. Shipments improved slightly to 22.3 and the employment index was roughly stable at 12.3, a level consistent with expanding factory sector employment.
The business conditions index reflects a separate survey question, not the sub indexes.
A separate survey of expected business conditions in six months fell sharply to 36.7, the lowest level since February 2003.
The prices paid index surged again to 53.4, the highest level since January 1995.
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/bos0304.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">Mar</th>
<th scope="col">Feb</th>
<th scope="col">Mar &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>24.2</td>
<td>31.4</td>
<td>-6.8</td>
<td>10.6</td>
<td>7.7</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>53.4</td>
<td>43.7</td>
<td>21.2</td>
<td>16.7</td>
<td>12.2</td>
<td>-0.9</td>
</tr>
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Finished producer prices surged 0.6% in January. The increase was the largest since October of last year. The core PPI rose 0.3% following two months of flat-to-down prices. Release of the figures was delayed due to the conversion to [...]

Producer Prices Surged in January

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/040317c.jpg" width="353">
Trade in Singapore remains in comfortable surplus through February as exports continue to grow more rapidly than imports. Growth rates of both are erratic from month to month, but uptrends show the signs of world-wide economic revival following the recession in 2001.
Singapore is widely known as a trading hub in Southeast Asia. And its trade data reflect this status quite clearly. In a distinctive (although not unique) breakdown of its exports, Singapore reports that only some 55% of its exports over the past four years have been produced locally. Of its S$251.1 billion in exports last year, S$112.2 billion represent re-exports, goods imported into the area, possibly graded and/or broken into lots and repackaged and then sent on to a final destination. Much of the Singapore economy is located on its docks.
Among those exports, both domestic and re-exports, is a substantial portion consisting of &quot;machinery and transport equipment&quot;. For Singapore, this largely means semiconductors and other electronic components and parts. The value of this line item fell nearly S$19 billion between 2000 and 2001, and through last year (December is latest available), while those exports have recovered markedly, they remained below the 2000 peak.

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<th scope="col" class="firstcol">Singapore Dollars (except where noted)</th>
Seasonally Adj.
<th scope="col">Year/ Year</th>
<th scope="col">2003</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">Feb 2004</td>
<td>Jan 2004</td>
</tr>
<tr>
<td class="firstcol">Trade Balance</td>
<td>2.8</td>
<td>2.4</td>
<td>&nbsp;</td>
<td>28.3</td>
<td>15.6</td>
<td>10.3</td>
<td>5.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Exports</td>
<td>24.6</td>
<td>23.2</td>
<td>24.1%</td>
<td>251.1</td>
<td>223.9</td>
<td>218.0</td>
<td>237.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Exports</td>
<td>13.6</td>
<td>12.4</td>
<td>22.6%</td>
<td>138.9</td>
<td>119.4</td>
<td>118.4</td>
<td>135.9</td>
</tr>
<tr>
<td class="firstcol">Re-Exports</td>
<td>11.1</td>
<td>10.2</td>
<td>26.0%</td>
<td>112.2</td>
<td>104.5</td>
<td>99.6</td>
<td>101.9</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>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Imports</td>
<td>21.8</td>
<td>20.8</td>
<td>19.8%</td>
<td>222.8</td>
<td>208.3</td>
<td>207.7</td>
<td>232.2</td>
</tr>
</tbody>
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Trade in Singapore remains in comfortable surplus through February as exports continue to grow more rapidly than imports. Growth rates of both are erratic from month to month, but uptrends show the signs of world-wide economic revival [...]

Singapore Exports Lift Trade Surplus

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040317b.jpg" width="353">
The Consumer Price Index (CPI-U) rose 0.3% in February, matching Consensus expectations for a 0.3% gain. A 0.2% rise in prices less food &amp; energy was slightly firmer than the 0.1% Consensus expectation.
Prices of core consumer goods rose 0.2%, the firmest one month gain since August 2002. This strength reflected a 0.4% (2.4% y/y) rise in medical care commodities, a 0.4% (4.7% y/y) rise in educational books &amp; supplies and a 0.4% (-0.7% y/y) gain in new vehicle prices. Prices for home furnishings &amp; operation, up 0.2% (-1.6% y/y), also rose for the second consecutive month.
Apparel prices fell another 0.1% (-1.6% y/y) and tobacco prices also were off slightly (-0.0% y/y).
Core services prices rose a modest 0.1% as shelter prices ticked up just 0.1% (2.1% y/y). Prices for medical care services jumped 0.7% (4.7% y/y) but public transportation prices eased slightly (+2.2% y/y).
Energy prices moderated to a 1.7% gain following the 4.7% January spike. Gasoline prices rose 2.5% after the 8.1% jump in January (+2.0% y/y) but are up another 4.7% so far in March. Fuel oil prices rose 1.0% (-0.7% y/y) and piped gas prices rose 0.9% (6.2% y/y).
Food prices rose 0.2% and mostly reflected higher prices for fruits &amp; vegetables, up 1.0% (2.9% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior surged 0.6%. It is similar to the PCE price deflator. The core chain price measure also surged by 0.5%, the strongest gain since February 2002.
&quot;Classical Deflation Theory&quot; from the Federal Reserve Bank of Richmond can be found <a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=191"> here</a>.

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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">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.3%</td>
<td>0.5%</td>
<td>1.7%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>1.2%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>-2.0%</td>
<td>-2.0%</td>
<td>-1.1%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>1.7%</td>
<td>4.7%</td>
<td>3.9%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.2%</td>
<td>0.0%</td>
<td>3.2%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</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>0.6%</td>
<td>0.5%</td>
<td>1.4%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.5%</td>
<td>0.2%</td>
<td>0.8%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
</table>
Mortgage Applications Surged Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 17, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040317a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association jumped 25.6% last week for the fifth consecutive weekly gain.
Applications to refinance surged 39.7% (-46.9% y/y) as interest rates remained low.
The effective interest rate on a conventional 30-Year mortgage rose to 5.62% from 5.61% the week prior, but these rates are the lowest since last June. The effective rate on a 15-year mortgage ticked up to 5.01%.
Purchase applications rose 5.6% w/w (+30.3% y/y) and so far in March are 6.0% ahead of the February 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.
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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<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">03/12/04</th>
<th scope="col">03/05/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>1,117.1</td>
<td>889.1</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>452.4</td>
<td>428.6</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>4,983.7</td>
<td>3,567.6</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
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The Consumer Price Index (CPI-U) rose 0.3% in February, matching Consensus expectations for a 0.3% gain. A 0.2% rise in prices less food & energy was slightly firmer than the 0.1% Consensus expectation. Prices of core consumer goods [...]

Consumer Prices Rose Broadly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316a.jpg" width="353">
Housing starts fell 4.0% last month and added to the 6.3% drop in January. February starts of 1.855M were the lowest since last August. Consensus forecasts had been for 1.93M starts in February.
Single family starts fell 4.1%, the third consecutive monthly decline.
Multi-family starts fell 3.4% and are off 9.9% during the last two months.
Starts were mixed across the country&#39;s regions last month. Housing starts fell hard m/m in the South (+10.5% y/y) and also were down in the West (+4.1% y/y). Starts rose 25.3% m/m in the Northeast (32.4% y/y) and rose in the Midwest (+25.1% y/y), recovering from the January cold snap.
Building permits fell a moderate 1.5% m/m (+6.6% y/y) for the second month.

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E901/@E90101/@E90101.HTM"> Housing Starts (000s, AR)</a></th>
<th scope="col"> Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,855</td>
<td>1,932</td>
<td>13.1%</td>
<td>1,848</td>
<td>1,711</td>
<td>1,601</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-family</td>
<td>1,489</td>
<td>1,553</td>
<td>13.5%</td>
<td>1,501</td>
<td>1,364</td>
<td>1,272</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-family</td>
<td>366</td>
<td>379</td>
<td>11.6%</td>
<td>347</td>
<td>347</td>
<td>330</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>1,903</td>
<td>1,932</td>
<td>6.6%</td>
<td>1,831</td>
<td>1,750</td>
<td>1,637</td>
</tr>
</tbody>
</table>
Housing Market Index Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316b.jpg" width="353">
The Composite Housing Market Index reported by the National Association of Home Builders (NAHB) was unchanged in March at 64 versus February which was revised down slightly. It was the lowest level for the index since last June.
During the last fifteen years there has been a 79% correlation between the y/y change in the NAHB index and the change in single family housing starts.
The sub index which measures expected home sales in six months fell to the lowest level since June.
The index of current market conditions for home sales fell 2.8% m/m to 69 (+16.9% y/y).
Traffic of prospective buyers rose slightly m/m in March but still was off 12.7% from the August peak.
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>.

<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/SURVEYS/@S4/@S4.HTM"> Nat&#39;l Association of Home Builders</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">3 &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>64</td>
<td>64</td>
<td>52</td>
<td>64</td>
<td>61</td>
<td>56</td>
</tr>
</tbody>
</table>
Chain Store Sales Up Modestly 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316c.jpg" width="353">
Chain store sales rose a modest 0.5% last week and recovered all of the prior week&#39;s 0.3% dip, according to the ICSC-UBS survey.
Sales so far in March are up 0.2% versus the February average.
During the last ten years there has been a 59% correlation between the year-to-year percent change in the ICSC-UBS measure of chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">03/13/04</th>
<th scope="col">03/06/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>438.6</td>
<td>436.6</td>
<td>7.0%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Manpower Index of US Hiring Intentions Up Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316d.jpg" width="353">
The Manpower survey of hiring intentions in the US for 2Q04 improved sharply. A seasonally adjusted net 20% of 16,000 employers expect to increase hiring activity. It was the highest level for hiring intentions since 1Q 2001.
The latest reading is up from 13% in 1Q and from 7% in 3Q03. Hiring typically picks up in 2Q, therefore seasonal adjustment factors damped the increase in the seasonally adjusted index.
Since 1980 there has been a 75% correlation between the Manpower index and the y/y change in non-farm payrolls.
The latest press release from Manpower Inc. covering employment prospects in North America can be viewed <a href="http://www.manpower.com/mpcom/viewMeos?name=Americas.pdf"> here</a>.

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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SC/@SC.HTM"> Manpower Employment Survey</a></th>
<th scope="col">2Q04</th>
<th scope="col">1Q04</th>
<th scope="col">2Q03</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>20</td>
<td>13</td>
<td>11</td>
<td>11</td>
<td>11</td>
<td>17</td>
</tr>
</tbody>
</table>
FOMC Left Rates Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040316e.jpg" width="353">
As expected, 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 decision was unanimous.
The press release which accompanied the Fed&#39;s action indicated that &quot;The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace. Although job losses have slowed, new hiring has lagged.&quot;
Regarding inflation, the Fed indicated that &quot;The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. With inflation quite low and resource use slack, the Committee believes that it can be patient in removing its policy accommodation.&quot;
The complete text of the Fed&#39;s latest press release can be found <a href="http://www.federalreserve.gov/boarddocs/press/monetary/2004/20040316/default.htm"> here</a>.
&quot;How the Fed Affects the Economy: A Look at Systemic Monetary Policy&quot; from the Federal Reserve Bank of Philadelphia is available <a href="http://www.phil.frb.org/files/br/brq104md.pdf">here</a> .
&quot;Macroeconomic Principles and Monetary Policy&quot; from J. Alfred Broaddus, Jr., President of the Federal Reserve Bank of Richmond can be found <a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=190"> here</a>.

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Housing starts fell 4.0% last month and added to the 6.3% drop in January. February starts of 1.855M were the lowest since last August. Consensus forecasts had been for 1.93M starts in February. Single family starts fell 4.1%, the [...]

Housing Starts Fell Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040315a.jpg" width="353">
Industrial production rose another 0.7% in February following an upwardly revised 0.8% gain in January. The rise easily outpaced Consensus expectations for a 0.4% increase.
Production in the factory sector jumped 1.0% following the 0.3% January gain (3.2% y/y). Output of utilities fell 0.7% after a revised 5.3% jump in January due to cold weather.
Output in selected high-technology industries again led the factory sector with a 2.1% m/m surge (23.5% y/y). Output of semiconductors &amp; related equipment surged 3.0% (42.6% y/y). Output of computers &amp; peripheral equipment jumped 2.1% (16.7% y/y), the eighth consecutive monthly gain at about that rate, and output of communications equipment rose 0.3% (-1.3% y/y).
Excluding high-tech, factory output jumped 0.9% (1.9% y/y). Higher output of motor vehicles &amp; parts, up 1.6%, led that gain but machinery output also rose a strong 1.7% (6.4% y/y). Non-durables output jumped 0.9% (0.7% y/y) due to across the board strength.
Total capacity utilization rose to 76.6%, the highest level since June &#39;02. Y/Y growth in capacity was a low 1.1%, the slowest since early 1989.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.7%</td>
<td>0.8%</td>
<td>2.7%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>76.6%</td>
<td>76.1%</td>
<td>75.4%(2/03)</td>
<td>74.9%</td>
<td>75.6%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
Empire State Index Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040315b.jpg" width="353">
The March Empire State Index of General Business Conditions fell to 25.33 from the record high in February. The 16.7 point m/m decline was versus a more moderate decline expected by the Consensus and was to the lowest level in six months.
The new orders index dropped sharply to 23.52, also the lowest level in six months. The shipments index fell just slightly after the 15 point slump in January and the employment index slid further to 9.72, a six month low.
The index of prices surged 16.4 points m/m to 50.0, another series&#39; record.
The February index of expectations for business conditions six months ahead fell slightly m/m, the third consecutive monthly decline from the record high in December. Expectations for capital expenditures improved for the second month in a row.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html"> 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/SURVEYS/@S5/@S511/@S511.HTM"> Empire State Manufacturing Survey</a></th>
<th scope="col">Mar</th>
<th scope="col">Feb</th>
<th scope="col">3/03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col"> 2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>25.33</td>
<td>42.05</td>
<td>-0.35</td>
<td>16.30</td>
<td>7.02</td>
<td>-13.57</td>
</tr>
</tbody>
</table>
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Industrial production rose another 0.7% in February following an upwardly revised 0.8% gain in January. The rise easily outpaced Consensus expectations for a 0.4% increase. Production in the factory sector jumped 1.0% following the [...]

U.S. Industrial Production Firm Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311c.jpg" width="353">
Retail sales rose 0.6% last month and matched the Consensus expectation. The previously reported 0.3% decline in January sales was revised up to a 0.3% increase.
Retail sales excluding motor vehicles &amp; parts dealers were little changed but January sales were revised up to a 1.2% surge from 0.9%. Consensus expectations had been for a 0.5% February increase.
Sales at general merchandise stores jumped another 1.3% (7.2% y/y) after an upwardly revised 1.2% January surge.Sales of furniture/home furnishings &amp; electronics/appliances were unchanged (12.3% y/y) after a 0.7% January gain that was revised from a 0.4% decline. Clothing and accessory store sales rose 0.4% (9.6% y/y) following several months of strong gain.
Motor vehicle dealers&#39; sales rose 2.7% m/m as unit sales of light vehicles rose 1.5% to 16.37M.
Sales of building materials were unchanged (14.7% y/y) following a little-revised 1.0% January drop. Sales at food stores fell 0.5% and gasoline service stations&#39; sales fell 0.1%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM"> Retail Sales &amp; Food Services</a></td>
<td>0.6%</td>
<td>0.2%</td>
<td>7.9%</td>
<td>5.6%</td>
<td>3.0%</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.0%</td>
<td>1.2%</td>
<td>7.3%</td>
<td>5.3%</td>
<td>3.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
Import Prices Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311b.jpg" width="353">
Imported commodities prices rose 0.4% in February, just under the Consensus expectation for a 0.5% rise.
Non-petroleum import prices rose 0.4%. The gain mostly reflected a 1.6% (3.9% y/y) jump in food prices. Capital goods prices were unchanged (-0.9% y/y) and as were non-auto consumer goods prices (0.6% y/y). Auto prices rose 0.1% (1.2% y/y).
During the last fifteen years there has been a (negative) 54% correlation between the trade-weighted exchange value of the dollar and the y/y change in non-petroleum import prices
Petroleum prices rose 0.2% last month. So far in March the price of Brent Crude Oil has risen another 13% to $34/bbl.
Export prices rose another 0.6%. Higher prices for food exports, up 2.1% (15.0% y/y), drove the gain. Capital goods export prices rose just 0.2% (-1.0% y/y) and non-auto consumer goods prices fell for the second month (0.4% y/y).
&quot;Import Prices and the Exchange Rate&quot; from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/iet/20040201/cover.pdf"> here</a>.
&quot;A Perspective on U.S. International Trade&quot; from St. Louis Bank President William Poole can be found <a href="http://research.stlouisfed.org/publications/review/04/03/Poole.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/@E8/@E807/@E807.HTM"> Import/Export Prices (NSA)</a></th>
<th scope="col">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.4%</td>
<td>1.5%</td>
<td>0.8%</td>
<td>2.9%</td>
<td>-2.5%</td>
<td>-3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>0.2%</td>
<td>8.2%</td>
<td>-4.9%</td>
<td>20.9%</td>
<td>3.0%</td>
<td>-17.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.4%</td>
<td>0.8%</td>
<td>1.8%</td>
<td>1.1%</td>
<td>-2.4%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.6%</td>
<td>0.6%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>-1.0%</td>
<td>-0.8%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311a.jpg" width="353">
Initial claims for jobless insurance fell 6,000 (-1.7%) to 341,000 last week, near the Consensus expectation for 345,000 claims. The prior week was revised up slightly.
During the last ten years there has been a 77% (negative) correlation between the level of initial claims and the three-month change in non-farm payrolls.
The four-week moving average of initial claims fell to 345,750 (-17.5% y/y).
Continuing claims for unemployment insurance fell 41,000 from the prior week&#39;s level that was revised to show a 17,000 decline.
The insured rate of unemployment was unchanged at 2.4% for the third week.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">3/6/04</th>
<th scope="col">2/28/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>341.0</td>
<td>347.0</td>
<td>-18.8%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,032</td>
<td>-12.0%</td>
<td>3,535</td>
<td>3,575</td>
<td>3,022</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deeper 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 11, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040311f.jpg" width="353">
The U.S. Government budget deficit deepened to $96.7B in February.That about equaled expectations and also about equaled last year&#39;s deficit in February, but for the first five months of FY04 the deficit of $226.8B was 17% larger than last year.
As a percentage of US GDP the Federal deficit is projected to hit 4.5% this year versus 3.5% last year and a peak of 6.0% in 1983.
Net receipts for the first five months of FY04 rose 0.8% versus the first five months of FY03. The gain reflected higher corporate tax receipts, up 46.7% y/y. Contributions for social insurance, estate taxes, and miscellaneous taxes also rose. Individual income tax receipts fell 4.6% y/y.
Federal net expenditures rose 4.2% versus the first five months of last fiscal year. Defense expenditures surged 14.2%. Medicare outlays grew 0.5% and spending on health programs rose 10.0%. Interest expense fell 4.5% y/y.

<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">Feb</th>
<th scope="col">Jan</th>
<th scope="col">Feb &#39;03</th>
<th scope="col">FY2003</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-96.7B</td>
<td>$-1.6B</td>
<td>$-96.7B</td>
<td>$-374.2B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$85.3B</td>
<td>$184.3B</td>
<td>-4.7%</td>
<td>-3.8%</td>
<td>-6.9%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$182.0B</td>
<td>$185.6B</td>
<td>-2.2%</td>
<td>7.2%</td>
<td>7.9%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales rose 0.6% last month and matched the Consensus expectation. The previously reported 0.3% decline in January sales was revised up to a 0.3% increase. Retail sales excluding motor vehicles & parts dealers were little [...]

U.S. Retail Sales Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040310c.jpg" width="353">
Japan&#39;s seasonally adjusted current account surplus widened to a record in January, according to the Bank of Japan/Ministry of Finance report on the nation&#39;s Balance of Payments issued today. The increase over December was &yen;345 billion. Notably this was not due to a larger surplus in merchandise trade. That balance remained exactly the same as in December, &yen;1185.8 billion, as exports and imports rose by equal amounts..
In the month, then, non-trade factors held sway: the deficit on services decreased markedly, and the surplus on income flows widened. It reached a record &yen;849 billion, &yen;154 billion more than the monthly average for all of last year. The January gain, &yen;212 billion, was more than accounted for by a favorable swing in portfolio investment income of &yen;336 billion. The service accounts saw a decrease in imports of &quot;other business services&quot;, that is, excluding financial, communication and computer services.
The picture from these data still shows Japanese merchandise trade with a sizable surplus due to strong exports. But imports have been growing since late 2001 as the Japanese economy works its way out of recession. And other forces tied to capital markets have been at work, so that, as can be seen in the accompanying chart, the current account in Japan no longer moves in lock step with the trade account.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Billion Yen&nbsp; (Months seasonally adjusted)</th>
<th scope="col">Jan 2004</th>
<th scope="col">Dec 2003</th>
<th scope="col">2003 Monthly Average</th>
<th scope="col">2003 Total</th>
<th scope="col">2002 Total</th>
<th scope="col">2001 Total</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account</td>
<td>1685.2</td>
<td>1339.9</td>
<td>1315.4</td>
<td>15785.2</td>
<td>14139.7</td>
<td>10652.4</td>
</tr>
<tr>
<td class="firstcol">Trade Balance</td>
<td>1185.8</td>
<td>1185.8</td>
<td>1021.3</td>
<td>12255.0</td>
<td>11733.2</td>
<td>8527.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports</td>
<td>4626.8</td>
<td>4545.3</td>
<td>4327.2</td>
<td>51926.1</td>
<td>49479.7</td>
<td>46583.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>3441.0</td>
<td>3359.5</td>
<td>3305.9</td>
<td>39671.3</td>
<td>37746.4</td>
<td>38056.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>-318.7</td>
<td>-394.7</td>
<td>-321.4</td>
<td>-3889.1</td>
<td>-5264.3</td>
<td>-5315.1</td>
</tr>
<tr>
<td class="firstcol">Income</td>
<td>848.8</td>
<td>637.3</td>
<td>690.5</td>
<td>8286.0</td>
<td>8266.6</td>
<td>8400.5</td>
</tr>
</tbody>
</table>
</body>
</html>

Japan's seasonally adjusted current account surplus widened to a record in January, according to the Bank of Japan/Ministry of Finance report on the nation's Balance of Payments issued today. The increase over December was ¥345 [...]

Japan Current Account at Record, Bolstered by Services & Income Flows

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040310a.jpg" width="353">
The U.S. foreign trade deficit set a new record in January. It deepened sharply to $43.1B versus December&#39;s deficit of $42.7B which was little revised. Consensus expectations had been for a deficit of $41.5B.
Exports fell a sharp 1.2% (+8.5% y/y) following a 0.6% December decline which was revised slightly. Lower exports of foods, feeds &amp; beverages paced the January decline and fell 7.9% following a 4.6% December drop.
Exports of capital goods fell 0.8% (+12.6% y/y) after the 4.5% December plunge. Non-auto consumer goods exports also fell for the second month, off 2.1% (+5.8% y/y).
Imports fell 0.5% and it was broad based. Capital goods imports dropped for the second consecutive month (+12.6% y/y). Imports of non-auto consumer goods again fell hard versus the November peak (+5.8% y/y).
Non-petroleum imports fell 1.5% (+7.5% y/y). The value of petroleum imports rose another 6.1% (+13.1% y/y) as crude oil prices rose (+3.0% y/y).
By country, the US trade deficit with China deepened to $11.5B ($123.9B in 2003). The US trade deficit with Japan improved m/m to $5.3B ($66.0B in 2003) and the deficit with the European Union fell to a low $5.9B ($94.3B in 2003) as imports plummeted 20.1% m/m.
Exchange rate analysis from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr179.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM"> Foreign Trade</a></th>
<th scope="col">Jan</th>
<th scope="col">Dec</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$43.1B</td>
<td>$42.7B</td>
<td>$40.0B(1/03)</td>
<td>$489.9</td>
<td>$418.0B</td>
<td>$357.8B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-1.2%</td>
<td>-0.6%</td>
<td>8.5%</td>
<td>4.6%</td>
<td>-3.3%</td>
<td>-5.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>-0.5%</td>
<td>3.1%</td>
<td>8.2%</td>
<td>8.4%</td>
<td>2.0%</td>
<td>-5.5%</td>
</tr>
</tbody>
</table>
Mortgage Applications Spurred by Lower Rates 
by <a href="/comment/Moeller.html">Tom Moeller</a> March 10, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040310b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.2% last week for the fourth consecutive weekly gain.
The effective interest rate on a conventional 30-Year mortgage dropped to 5.61% from 5.75%, the lowest level since last June. The effective rate on a 15-year mortgage fell to 4.92%.
Purchase applications rose 1.4% w/w (+24.2% y/y) and started the month 3.1% ahead of the February average.
During the last ten years there has been a 55% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 1.0% (-60.0% y/y) for the fourth consecutive weekly gain.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
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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">03/05/04</th>
<th scope="col">02/27/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>889.1</td>
<td>878.7</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>428.6</td>
<td>422.6</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>3,567.6</td>
<td>3,532.2</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit set a new record in January. It deepened sharply to $43.1B versus December's deficit of $42.7B which was little revised. Consensus expectations had been for a deficit of $41.5B. Exports fell a sharp 1.2% [...]

U.S. Trade Deficit Set New Record

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

Flash April PMIs point to slower growth in the US but a pickup in Europe and Japan

Outlook strengthens for US while it weakens for other major economies

Crude petroleum prices are having a big impact on inflation expectations

Inflation surprising to upside in the US; by contrast to the downside in the euro area

 Gross Domestic Income is catching up with GDP

FOMC expects GDP growth above trend over the next three years

US core CPI inflation has begun to reaccelerate

Fiscal-policy aided factory building in the U.S. provided an unusually large boost to growth last year

US consumers much more optimistic than those in the Euro area and the UK

  Job openings take a step down in 2024

Fed's super core services inflation measure pushing up core rate

Blue Chip forecasters expect significant monetary easing this year except in Japan

Euro area economy stagnating while US grows above trend

Chinese and Japanese equity markets are diverging markedly

Chinese population declines in 2023 for second consecutive year

Outlook for US GDP growth on the rise; declining in euro area, Japan and China

There are still 1.4 job openings for every unemployed person in the US

US PCE inflation over the past six months has slowed to the Fed's 2% target

FOMC think rate hikes are done and looks for 75bps of decline in 2024

Weaker economic data surprises pushing down US interest rates

Recent disinflation has been widespread across Europe and North America

Recent decline in US inflation expectations helping to lower interest rates

China is losing its luster as foreign direct investment heads out

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240517f5.jpg

240517g5.jpg

The U.S. Leading Economic Index fell 0.6% (-5.4% y/y) during April following an unrevised 0.3% March decline, according to a report by The Conference Board. These two changes followed a 0.2% February improvement. A 0.3% April shortfall had been expected in the Action Economics Forecast Survey.

Five of ten components contributed negatively to the overall index in April including the ISM new orders index, building permits, stock prices, the spread between the 10-year Treasury and the Fed funds rate, as well as consumer expectations for business/economic conditions. Initial claims for unemployment insurance and the leading credit index contributed positively. New orders for capital goods and new orders for consumer goods made minimal positive contributions to the index change while the length of the average workweek had no effect on the leading index change.

A 0.2% April increase in the Coincident Economic Index followed a 0.2% March gain, revised from 0.3%. These gains came after a 0.3% February rise. Three of the four components made positive contributions to the coincident index in April, including the changes in personal income less transfers, nonagricultural payroll employment and real manufacturing & trade sales. The change in industrial production had no effect on the coincident indicators.

The Lagging Economic Index rose 0.4% (1.4% y/y) after unrevised stability in March and a 0.2% February increase. Three of the index’s seven components made positive contributions last month including the average duration of unemployment, commercial & industrial loans outstanding and the ratio of consumer credit to income. The six-month change in unit labor costs made a minimally negative contribution while the six-month change in the services CPI, banks’ prime rate and the ratio of business inventories-to-sales were unchanged.

The ratio of the coincident index to the lagging index is also viewed as a leading indicator of economic activity. This measure fell 0.2% in April, following two straight monthly increases. It was 0.8% below its most recent peak in December of last year.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [website](https://www.conference-board.org/us/) for coverage of leading indicator series from around the world.



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240517i5.jpg

- Leading index decline is largest in six months.
- Coincident Indicators continue to increase moderately.
- Lagging index strengthens after holding steady.


U.S. Leading Economic Indicators Fall Sharply in April

Robert Brusca

240517e.jpg

**EMU Inflation Trends Offer Hope and Hype**- Inflation in the European Monetary Union rose by 0.2% month-to-month in April, the same as in March. Core inflation, however, picked up, rising by 0.4% but that was after being flat in March. The sequential growth rates from 12-months to six-months to three-months show the headline inflation rate at 2.4% over 12-months falling to 2% over 6-months, then rising to a 3% annual rate over three-months. The core rate for the monetary union rose 2.9% over 12-months at a 2.7% annual rate over six-months, it steps up to a 2.8% annual rate over three-months. Headline inflation is resisting moving down to the 2% level consistently while core inflation appears to be stuck just short of 3%. Whether these trends are good enough depends on whether the ECB sees itself implementing precision-guided policy or playing horseshoes and hand grenades.

**Headline Inflation: four largest EMU members**
Statistics for the largest four members of the monetary union show inflation worse in April on balance than for the monetary union as a whole. German inflation rose by 0.8% in April, in France it rose by 0.7%, in Spain at rose by 0.5%, while in Italy it rose by 0.3%. These are month-to-month gains. However, these figures followed either flat or declining inflation (price-) performance in March for each of these four countries. The progression of inflation for Germany, France, Italy, and Spain, however, still shows inflation resisting a consistent move down to 2%. German inflation runs at 2.6% over 12-months steps up to 2.7% over 6-months and reaches a 2.9% annual rate over 3-months. France’s 12-month inflation of 2.4% steps down to 2.2% over 6-months, then rises to a 3.2% annual rate over 3-months. In Italy, headline inflation is 1.1% over 12-months, similarly at a 1% annual rate over 6-months, then rises to a 1.7% annual rate over 3-months. Spain's inflation falls from 3.6% over 12-months to 3.2% over 6-months to 2.3% over 3-months- finally a European Monetary Union large country member with persistently decelerating inflation! On balance Italian inflation over 3-months is under the target that the ECB has for the monetary union as a whole, Spain’s inflation is transitioning from 12-months to 6-months to 3-months down close to the 2% mark, while Germany and France continue to show stubbornly too-high results for their headline inflation rates. All-in-all, that is not a great background to support a rate cut.

**Core inflation and its trends offer hope**
Core inflation rates produce much more beneficial results. Still, in April month-to-month core inflation increases are generally excessive for these four members. But that follows declining inflation – falling prices- for core rates in March. Germany is an exception to this pattern, but it still follows the rule of improvement because its inflation progress is flipped between the two months. Looking at sequential growth rates for core inflation or ex-energy inflation for these large country members, we find that inflation is persistently decelerating from 12-months to 6-months to 3-months for all of them except for France. France shows a pickup in inflation over 3-months compared to 6-months as core inflation rises to a 3-month rate of 2.9% after posting a 2.1% pace over 6-months. The 3-month pace for inflation x-energy for Germany is 2.1%, the core for Italy is at 1.7%, and the core for Spain is at 1.8%. All three-monthly core rates are at the doorstep or within the ECB's target range for headline EMU inflation. France is the exception. The 12-month core inflation rates are all above target but show signs of coming into line; German and French year-over-year inflation rates decline in April compared to March the Italian rate is unchanged year-over-year at 2.3% on the monthly comparison, while only Spain has an acceleration compared to a month ago and that's to a 3.3% rise from 3.1% in March.

**Is it good enough?**
The speed of inflation’s drop- Core inflation rates would seem to build a good enough base for the ECB to move ahead with rate cuts if it decides it wants to go that way. If it wants to be surer and clearer about reducing inflation it will pay more attention to the headline rates that are excessive- especially since no inflation metric is falling particularly fast anymore. The risk over ‘overshooting’ on the downside seems remote. Oil prices as measured by Brent in euros rose by 4.3% month-to-month in April after rising 1.6% in March. However, year-over-year Brent prices are down by 3.3%, so the impulse from oil is mixed across tenors. 

ECB credibility- A different view of reality looks at ECB inflation performance over five-years and finds all the metrics quite unacceptable. Over the last five years the compounded inflation rate for the monetary union is 3.7% and for the core it's 2.8%. For Germany it's 4.1%, for France it's 3.3%, and for Italy and Spain it's 3.4%. The core or X energy inflation rates do not behave much better, Germany is at 3.3% over five years on its core measure, France at 2.7%, Spain at 3%, and Italy at 2.5%. If the ECB is concerned about its credibility, then it's going to want to make sure that it gets inflation down inside of its target soon because the five-year compound inflation rates are so far over their target that clearly a central bank that claims to target 2% inflation cannot look at that five-year record and consider policies to have been a success. 

**Driving the road ahead**- Looking ahead it's very possible that inflation is on a downtrend and that policy is moving inflation in the right direction; the question remains concerns the certainty of that conclusion and the question ‘is inflation moving down fast enough?’  The ECB is going to have to measure the impact on its credibility against its desire to hit its inflation target in the short run and pay some attention to the effect that policy has on economic growth rates in the monetary union. On that score, unemployment rates throughout the European Monetary Union are still extremely low in historic comparisons… but, there has been a new sensitivity across central banks globally as they try to reduce their inflation rates ‘to target levels’ without having much impact on the unemployment rates at all - even though unemployment rates are in many places near some version of historic lows. Time will tell whether this sort of prevarication in inflation fighting that coddles the unemployment rate that is already so low is wise or has turned out to be foolhardy. 


240517.jpg

Europe

EMU Inflation Trends Offer Hope and Hype- Inflation in the European Monetary Union rose by 0.2% month-to-month in April, the same as in March. Core inflation, however, picked up, rising by 0.4% but that was after being flat in March. The sequential growth rates from 12-months to six-months to three-months show the headline inflation rate at 2.4% over 12-months falling to 2% over 6-months, then rising to a 3% annual rate over three-months. The core rate for the monetary union rose 2.9% over 12-months at a 2.7% annual rate over six-months, it steps up to a 2.8% annual rate over three-months. Headline inflation is resisting moving down to the 2% level consistently while core inflation appears to be stuck just short of 3%. Whether these trends are good enough depends on whether the ECB sees itself implementing precision-guided policy or playing horseshoes and hand grenades.

EMU Inflation Holds the line 2% Beckons

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Total housing starts increased 5.7% (-0.6% y/y) during April to 1.360 million units (SAAR) after falling 16.8% in March to 1.287 million units, revised from 1.321 million. Starts in February rose a little-revised 12.4% to 1.546 million units. Starts remained 24.6% below the most recent peak of 1.803 million in April 2022. The Action Economics Forecast Survey expected 1.420 million starts in April.

Housing starts by type were mixed last month. Starts of single-family units eased 0.4% (+17.7% y/y) to 1.031 million after declining 8.7% in March to 1.035 million, revised from 1.022 million. They reached a high of 1.286 units in December 2020. Multi-family starts increased 30.6% (-33.1% y/y) in April to 329,000 after falling 38.8% to 252,000 in March, revised from 299,000. They reached a high of 624,000 units in November 2022.

Regional activity was mixed in April. In the Northeast, the level of starts fell 22.6% (-43.8% y/y) to 72,000 units after declining 21.8% in March and 10.5% in February. Starts in the Midwest rose 19.1% (3.4% y/y) to 181,000 following a 36.4% March decline. Starts in the South improved 10.1% (4.9% y/y) to 799,000 after a 15.9% March decline. In the West, starts fell 2.5% (+1.7% y/y) to 308,000 after declining in each of the prior three months.

Building permits declined 3.0% (-2.0% y/y) in April 1.440 million units after falling 5.0% to 1.485 million in March, revised from 1.458 million. It was the lowest level of permits since December 2022. Single-family permits eased 0.8% (+11.4% y/y) to 976,000 in April following a 4.2% March decline and a 0.4% February slip. Multi-family permits weakened 7.4% (-21.9% y/y) to 464,000, after falling 6.5% in March.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.



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240516i4.jpg

- Single-family starts decline but multi-family surge.
- Starts are mixed throughout the country.
- Building permits fall to lowest level in over one year.


U.S. Housing Starts Rise Modestly in April; Building Permits Fall

Sandy Batten

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Total industrial production was unchanged in April from March and 0.4% lower than a year ago. The previously released 0.4% rise in March was revised down to a meager 0.1% monthly gain. The Action Economics Forecast Survey expected a 0.1% increase in production last month. Manufacturing production slumped 0.3% m/m (-0.5% y/y) after a downwardly revised 0.2% monthly gain in March (initially reported as 0.5%). 

Mining activity declined for the third time in the past four months, falling 0.6% (-1.3% /y) following an upwardly revised 1.1% m/m decline in March (previously -1.4% m/m). Utilities output was the only positive part of industrial activity in April, rising 2.8% m/m (+2.3% y/y) on top of a downwardly revised 1.6% monthly gain in March (previously 2.0% m/m).

Amid the monthly volatility, manufacturing output has been relatively flat over the past nine months. In fact, the index level in April was 99.4, exactly the same as in August 2023. The manufacturing sector has been one of the most adversely affected by the Fed’s interest rate hikes. Since April 2022 (just after the Fed initiated it rate hikes in March 2022), manufacturing output has fallen 1.4%. Within the manufacturing sector in April, durable goods production fell 0.5% m/m, its first monthly decline in three months, led by a 2.0% m/m decline in motor vehicle production and a 1.9% m/m drop in the production of electrical equipment and appliances. Production of nondurable goods edged down 0.1% m/m in April following a 0.2% monthly increase in March. Production of selected high-technology industries increased 1.0% m/m. By contrast, petroleum and coal products output slumped 4.4%m/m, the first monthly decline in three months.

Manufacturing output excluding motor vehicles slipped 01% m/m in April after being unchanged in March. Manufacturing excluding selected high-tech industries fell 0.3% m/m in April versus a 0.1% monthly gain in March. Manufacturing output excluding both selected high-tech industries and motor vehicles decreased 0.2% m/m, its sixth monthly decline in the past seven months. Production of consumer goods inched up 0.1% m/m in April following a 0.5% monthly gain in March. Output of business equipment fell 0.5% m/m on top of a 0.2% monthly decline in March. 

Production of construction supplies fell 1.0% m/m in April, the sixth monthly decline in the past seven months. Materials output edged up 0.1% m/m in April, just offsetting a 0.1% m/m decline in March.

Total capacity utilization slipped to 78.4% in April from a slightly upward revised 78.5% in March (previously 78.4%). The April reading was exactly as expected by the Actions Economics Forecast Survey. The capacity utilization rate for manufacturing fell significantly to 76.9% from 77.2%. By contrast, the capacity rate for utilities rose to 71.0 from 69.2.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.



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- IP was unchanged in April with manufacturing falling 0.3% m/m
- Manufacturing decline led by 2.0% m/m drop in motor vehicle output
- Mining fell for the third month of the past four
- Capacity utilization slipped to 78.4%


U.S. Industrial Production Unchanged in April

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Import prices for all goods rose 0.9% (NSA) in April after a 0.6% March gain, revised from 0.4%, and a 0.2% February increase, according to the Bureau of Labor Statistics. A 0.2% April rise had been expected in the Action Economics Forecast Survey. The y/y change of 1.1% followed 12-month price declines all through 2023. 

Export prices increased 0.5% in April following a 0.1% March uptick, revised from 0.3%, and a minimally revised 0.7% February rise. A 0.2% price gain had been expected. These gains also followed a 0.7% January increase. The 1.0% y/y decline compared to an 11.8% y/y drop in June of last year. 

The monthly rise in April import prices was led by a 2.9% increase (5.2% y/y) in imported petroleum prices after they surged 6.7% in March. The April increase was the fourth consecutive monthly gain. The increase in imported petroleum costs was accompanied by a 9.2% decline in natural gas prices, off 42.5% y/y. Nonfuel import prices rose 0.7% (0.9% y/y) after a 0.2% March increase. Import prices for foods, feeds & beverages strengthened 1.7% (6.8% y/y), up for the fourth consecutive month. Motor vehicle & parts prices increased 0.3% (2.6% y/y) after a 0.2% rise. Capital goods prices edged 0.1% higher (-0.1% y/y) after a 0.2% decline while nonauto consumer goods prices also rose 0.1% (0.5% y/y) after falling 0.3% in March. 

The increase in April export prices included a 0.9% decline (-10.2% y/y) in agricultural export prices, which added to a 1.3% March drop . Nonagricultural export prices rose 0.7% (0.1% y/y), the fourth straight monthly gain. Export prices of industrial supplies & materials rose 1.0% (-1.7% y/y), the fourth straight month of firm gain. Automotive vehicles & parts export prices strengthened 0.8% (4.0% y/y) after easing 0.1% in March. Capital goods prices rose 0.4% (1.8% y/y) after edging 0.1% higher. A 0.1% uptick (-1.3% y/y) in nonauto consumer goods prices followed a 0.4% March rise. Foods, feeds & beverage prices were off 0.7% last month (-10.6% y/y) after falling 1.6% in March. 

The import and export price series can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database. 


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- Import prices rise for fourth consecutive month.
- Excluding fuels, import prices edge up for sixth straight month.
- Export price gain improves. 


Economy in Brief: March 2004

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