Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918a.jpg" width="353">
Last week, initial claims for unemployment insurance rose to 455,000 from an unrevised level of 445,000 during the prior week. Except for a level at the beginning of last month which was raised by a program to locate and provide extra benefits to people eligible for jobless benefits, the latest was the highest during this cycle. It also was the highest level since 2002.
The latest figure covers the survey week for September nonfarm payrolls and claims rose 20,000 (4.6%) from the August survey period. During the last ten years there has been a 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment
The four-week moving average rose to 445,000 (37.7% y/y) and remained near the highest level since near the end of the 2001 recession. Last month, claims averaged 443,000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918b.jpg" width="353">
A claims level below 400,000 typically has been associated with positive growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment. Over the longer period of time, the level of claims for jobless insurance has not trended higher with the size of the labor force due to a higher proportion of self-employed workers who are not eligible for benefits.
Continuing claims for unemployment insurance during the latest week fell 55,000 after a slightly revised 129,000 increase during the prior period. The four-week average rose to 3,461,000, the highest level since July 2003. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment held stable w/w at 2.6%, the highest level since late-2003.
Yesterday&#39;s announcement by the Federal Reserve of measures &quot;to improve the liquidity conditions in global financial markets&quot; can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm">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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">09/13/08</th>
<th scope="col">09/06/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;455</td>
<td>445</td>
<td>42.6%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,478</td>
<td>36.2%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
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Last week, initial claims for unemployment insurance rose to 455,000 from an unrevised level of 445,000 during the prior week. Except for a level at the beginning of last month which was raised by a program to locate and provide extra [...]

U.S. Initial Unemployment Insurance Claims Near The Highest Since 2002

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918a.jpg" align="left" border="0" height="265" width="353">
Last week, initial claims for unemployment insurance rose to
455,000 from an unrevised level of 445,000 during the prior week.
Except for a level at the beginning of last month which was raised by a
program to locate and provide extra benefits to people eligible for
jobless benefits, the latest was the highest during this cycle. It also
was the highest level since 2002.
The latest figure covers the survey week for September nonfarm
payrolls and claims rose 20,000 (4.6%) from the August survey period.
During the last ten years there has been a 76% correlation between the
level of initial claims and the m/m change in nonfarm payroll employment
The four-week moving average rose to 445,000 (37.7% y/y) and
remained near the highest level since near the end of the 2001
recession. Last month, claims averaged 443,000.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918b.jpg" align="right" border="0" height="265" width="353">
A claims level below 400,000 typically has been associated
with positive growth in nonfarm payrolls. During the last ten years
there has been a (negative) 76% correlation between the level of
initial claims and the m/m change in nonfarm payroll employment. Over
the longer period of time, the level of claims for jobless insurance
has not trended higher with the size of the labor force due to a higher
proportion of self-employed workers who are not eligible for benefits.
Continuing claims for unemployment insurance during the latest
week fell 55,000 after a slightly revised 129,000 increase during the
prior period. The four-week average rose to 3,461,000, the highest
level since July 2003. Continuing claims provide some indication of
workers' ability to find employment and they lag the initial claims
figures by one week.
The insured rate of unemployment held stable w/w at 2.6%, the
highest level since late-2003.
Yesterday's announcement by the Federal Reserve of measures "to
improve the liquidity conditions in global financial markets"
can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080918a.htm">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/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">09/13/08</th>
<th scope="col">09/06/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;455</td>
<td>445</td>
<td>42.6%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,478</td>
<td>36.2%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
U.S. Leading Indicators Fell Again 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918e.jpg" align="left" border="0" height="265" width="353">
The composite index of leading economic indicators, reported
by the Conference Board fell 0.5% last month after an unrevised decline
of 0.7% in July. The decline left the six-month percent change at -2.1%
which was modestly improved from a -4.7% figure last October.
Last month lower building permits, lower vendor performance
and higher claims for unemployment insurance made the largest negative
contributions to the index decline. These were partially offset by a
steepening of the yield curve (10-year Treasury yield vs. Fed funds
rate) and improvement in the University of Michigan index of consumer
expectations.
The breadth of one-month increase amongst the leaders' 10
components remained low at 40%. Over a six-month period the breadth of
gain amongst the leaders' components fell back to its cycle low of 20%.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918f.jpg" align="right" border="0" height="265" width="353">
The leading index is based on actual reports for eight
economic data series. The Conference Board initially estimates two
series, orders for consumer goods and orders for capital goods.
The coincident indicators fell 0.1% after a revised no change
during July. Half of the components rose and half fell, but over six
months only a quarter are up. Over the last ten years there has been an
86% correlation between the y/y changes in the coincident indicators
and real GDP.
The lagging index repeated its increase and rose 0.4%. The
ratio of coincident to lagging indicators (a measure of economic
excess) declined to its lowest level since 1982.
Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


Banking Crisis Solutions Old and New from
the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/09/Milne.pdf">here</a>.
<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/BCI/BCI.HTM">Business
Cycle Indicators</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May, 6 Month % (AR)</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>0.1%</td>
<td>-2.1%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>-0.1</td>
<td>0.0</td>
<td>-0.2</td>
<td>-0.7</td>
<td>1.7%</td>
<td>2.4%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>0.4</td>
<td>0.4</td>
<td>0.0</td>
<td>1.4</td>
<td>2.9%</td>
<td>3.1%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Rose to Its
Highest Since Last Year 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918c.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank indicated that its
September Index of General Business conditions in the manufacturing
sector improved sharply. The index reading of 3.8 was up from a revised
-12.7 in August and it was the highest level since November of last
year. A reading of -10 had been expected for this month.
The Philadelphia Fed constructs a diffusion index for total
business activity and each of the sub-indexes. The business conditions
index reflects a separate survey question.
During the last ten years there has been a 61% correlation
between the level of the Philadelphia Fed Business Conditions Index and
the three-month growth in factory sector industrial production. There
has been a 43% correlation with q/q growth in real GDP.
The new orders index led this month's improvement with a sharp
rise to 5.8, its first positive reading since December. The shipments
index also improved, but more moderately, to its highest level since
December. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918d.jpg" align="right" border="0" height="265" width="353">
The employment index, at -0.9, held roughly steady with August
as 18.2% of respondents expected to increase employment levels while
19.2% expected to decrease them. During the last ten years there has
been a 79% correlation between the index level and the m/m change in
manufacturing sector payrolls.
The prices paid index fell sharply. The decline to 31.5
brought it to the lowest level in twelve months. During the last ten
years there has been a 67% correlation between the prices paid index
and the three-month growth in the intermediate goods PPI. There has
been an 82% correlation with the change in core intermediate goods
prices.
The separate index of expected business conditions in six
months improved moderately to the highest level since October of last
year. Expectations for new orders and for shipments rose while
expectations for employment slipped. The prices fell to its lowest
level in over one year.
The latest Business Outlook Survey from the Federal
Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2008/bos0908.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Philadelphia
Fed (%)</th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>3.8</td>
<td>-12.7</td>
<td>9.2</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>31.5</td>
<td>&nbsp;57.5</td>
<td>&nbsp;23.8</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
</table>
Credit Market Borrowing Declines
Sharply In Q2 
by <a href="/comment/Stone.html">Carol
Stone</a> September 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918g.jpg" align="left" border="0" height="265" width="353">
The flows in credit markets in Q2 make us wonder how the US
economy grew at all then. Never in the history of the Federal Reserve's
Flow-of-Funds data has there been such a sudden dramatic plunge in
credit demand. Domestic nonfinancial credit market borrowing amounted
to $1.127 trillion, SAAR, compared with $1.726 trillion in Q1 and
$2.397 trillion in Q2/2007. This quarter was the smallest since Q2/2001
and compares with a peak of $2.780 trillion in Q3/2007. On June 30,
credit market debt outstanding stood 6.7% higher than a year ago, a
slowdown from 8.6% growth from the beginning to the end of 2007.
Relative to the size of the economy, this measure of credit market
borrowing sank to just 7.9% of GDP, down from 12.2% in Q1 and about
18.5% over the previous three years.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918h.jpg" align="right" border="0" height="265" width="353">
By sector, household borrowing fell to $197 billion, the
smallest amount since Q1/1993. Business borrowing, corporate and
noncorporate together, decreased to $582 billion, less than half the
2007 total of $1.203 billion; however, business credit usage is more
variable generally, and ran to just $449 billion in 2004, when the
economy was quite vigorous. State and local governments raised only
$11.0 billion in Q2, much weaker than the average of $139 billion over
the last five years. Federal government borrowing eased, but at $310
billion during the quarter, it was still near the high end of its
recent range.
Returning to the household sector, despite the smaller amount
of people's borrowing in Q2, their net worth still fell. It was $56.0
trillion, down from $56.4 trillion in Q1, $58.1 trillion in Q4/2007 and
the peak of $58.6 trillion in Q3. This is the first decline ever (there
are 56 years of history) in household net worth over a span of three
quarters. It is all the more remarkable because households' total
liabilities actually went down a little, edging to $14.495 from $14.507
trillion. Assets, as seen in the table below, didn't change much, but
with a fall of $500 billion, they went down by more than liabilities
did, eroding the net.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918i.jpg" align="left" border="0" height="265" width="353"> 

One other note about households: two or three years ago, much
was made of "mortgage equity withdrawal", the practice of refinancing
one's mortgage and taking out cash to use for other purposes, such as
college tuition. This has not only ended, it has now gone the other
way. In the Haver-defined series, "MEW" was -$192.1 billion in Q2,
meaning that people borrowed less than the amount implied by the volume
of residential construction and renovation during the quarter. They
were thus contributing to the equity in their property rather than
drawing it down, as had been the case over the last 10 years.
The Flow of Funds data are all in Haver's dedicated database FFUNDS.
The mortgage equity withdrawal series, those calculated by us and
others compiled by researchers at the Fed, are included in the Housing
&amp; Construction menus of USECON.

<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/FFUNDS/@F2/@F201/@F201.HTM">Flow
of Funds</a> (Y/Y % Chg.)</th>
<th scope="col">% of Total</th>
<th scope="col">2Q '08</th>
<th scope="col">1Q '08</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Credit Market Debt
Outstanding</td>
<td>--</td>
<td>6.7</td>
<td>7.9</td>
<td>8.6</td>
<td>9.1</td>
<td>9.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Federal Government</td>
<td>10%</td>
<td>7.0</td>
<td>5.7</td>
<td>4.9</td>
<td>3.9</td>
<td>7.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Households</td>
<td>27%</td>
<td>4.3</td>
<td>5.8</td>
<td>6.8</td>
<td>10.2</td>
<td>11.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Nonfinancial Corporate Business</td>
<td>14%</td>
<td>9.4</td>
<td>11.7</td>
<td>13.2</td>
<td>9.4</td>
<td>6.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Nonfarm, Noncorporate Business</td>
<td>7%</td>
<td>11.4</td>
<td>13.2</td>
<td>13.3</td>
<td>12.6</td>
<td>13.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Financial Sectors</td>
<td>32%</td>
<td>10.1</td>
<td>10.9</td>
<td>12.5</td>
<td>10.1</td>
<td>8.8</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>
</tr>
<tr class="odd">
<td class="firstcol">Net Worth: Households &amp;
Nonprofit Organizations (Trillions)</td>
<td>--</td>
<td>$55.993</td>
<td>$56.431</td>
<td>$58.081</td>
<td>$55.943</td>
<td>$51.946</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Tangible Assets:
Households</td>
<td>--</td>
<td>$26.149</td>
<td>$26.331</td>
<td>$26.574</td>
<td>$25.930</td>
<td>$24.369</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Financial
Assets: Households</td>
<td>--</td>
<td>$44.340</td>
<td>$44.606</td>
<td>$45.905</td>
<td>$43.486</td>
<td>$39.777</td>
</tr>
<tr class="odd">
<td class="firstcol">"Mortgage Equity Withdrawal"
(Billions)</td>
<td>--</td>
<td>-$192.0</td>
<td>-$27.1</td>
<td>$282.0</td>
<td>$520.6</td>
<td>$531.4</td>
</tr>
</tbody>
</table>
UK Retail Sales in Surprise Rise
for Second Month Running 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080918j.jpg" align="left" border="0" height="265" width="353">
Ironically even with the second strong month of sales
increases the three-month growth rate for retail sales in the UK is
plunging. Barometers and surveys of retail sales have been weak, so the
rise in each of the past two months was a surprise. Even so the
three-month growth rate for sales is getting increasingly weaker (see
chart). That points out how uneven the slowing in sales has been. In
both August and July sales rose by 0.8%. But that compares to a drop in
sales of 3.7% in June and that drop is dominating the three-month
change. It now appears as if weakness was front loaded and probably
exaggerated in June.
Still the trend for sales is lower. In the quarter to date
nominal retail sales are rising at a crawl. Real sales, however, are
falling at a -0.2% annual rate in Q3 even with the last two-month rise
in sales. There is not much doubt that the UK consumer is under
pressure or that these rebounds in sales are not a new trend.

UK Real and Nominal Retail Sales
<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="9" scope="col">UK Real
and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAGo</td>
<td>Quarter -2-date</td>
</tr>
<tr>
<td class="firstcol">Retail Total</td>
<td>0.8%</td>
<td>0.8%</td>
<td>-3.7%</td>
<td>-7.9%</td>
<td>2.6%</td>
<td>4.1%</td>
<td>3.5%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">Food, Beverages &amp;
Tobacco</td>
<td>0.1%</td>
<td>0.7%</td>
<td>-2.4%</td>
<td>-6.0%</td>
<td>3.9%</td>
<td>5.6%</td>
<td>3.9%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.7%</td>
<td>3.3%</td>
<td>-8.4%</td>
<td>-7.2%</td>
<td>5.0%</td>
<td>6.1%</td>
<td>3.0%</td>
<td>11.6%</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>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td>&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">Retail Ex auto</td>
<td>1.2%</td>
<td>0.9%</td>
<td>-4.2%</td>
<td>-8.1%</td>
<td>1.9%</td>
<td>3.4%</td>
<td>4.5%</td>
<td>-0.2%</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917e.jpg" align="left" border="0">
Orders overall and export orders have fallen off very sharply
from August to September. The decline of 16 points in month-to-month
export orders in September is a record going back to 1988. This drop
occurs in the face of a weakening Sterling which implies an improvement
in UK competitiveness. Total
orders fell by 13 points month-to-month and that is the fourth largest
m/m drop since the late 1980s. All
of the outsized drops in total orders have come since October 2006.
While changes in orders on the month demonstrate a very severe
drop, current readings on the diffusion levels remain higher, in the 55th
percentile for total orders and the 72nd
percentile for export orders. &#8211; lower but not as draconian as the
monthly changes. Still both overall and total orders are deep net
negative readings. The volume for output in the look ahead survey is at
a new low. Prices expected in the next four months are still at all
time highs: 100% of their range. The NTC survey available through
August shows MFG is low in its range, in the bottom 15 percent. .
The UK economy looks extremely weak. Current levels in the CBI
Industry sector are not quite as severely weak as for CBI orders but
the pace of decline is something to have some real worries over and the
outlook is as bad as it ever has been.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">UK
Industrial Volume Data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Reported:</td>
<td>Sep 
08</td>
<td>Aug 
08</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="even">
<td class="firstcol">Total Orders</td>
<td>-26</td>
<td>-13</td>
<td>-8</td>
<td>1</td>
<td>-2</td>
<td>55%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr class="even">
<td class="firstcol">Export Orders</td>
<td>-25</td>
<td>-9</td>
<td>-7</td>
<td>-5</td>
<td>-6</td>
<td>72%</td>
<td>3</td>
<td>-40</td>
<td>43</td>
</tr>
<tr class="even">
<td class="firstcol">Stocks: Fin Goods</td>
<td>21</td>
<td>18</td>
<td>13</td>
<td>8</td>
<td>13</td>
<td>80%</td>
<td>23</td>
<td>-2</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="10">Looking
ahead</td>
</tr>
<tr class="odd">
<td class="firstcol">Output Volume: Next 3 Months</td>
<td>11</td>
<td>-13</td>
<td>-7</td>
<td>2</td>
<td>4</td>
<td>0%</td>
<td>28</td>
<td>-13</td>
<td>41</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Prices for Next 3 Months</td>
<td>31</td>
<td>34</td>
<td>28</td>
<td>30</td>
<td>24</td>
<td>100%</td>
<td>34</td>
<td>-20</td>
<td>54</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="10">From end
2000</td>
</tr>
<tr>
<td colspan="10" class="firstcol">Compare
to CIPS MFG</td>
</tr>
<tr class="even">
<td class="firstcol"></td>
<td>Aug 
08</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="even">
<td class="firstcol">UK MFG</td>
<td>45.93</td>
<td>44.13</td>
<td>45.88</td>
<td>49.46</td>
<td>50.21</td>
<td>15%</td>
<td>56.32</td>
<td>44.13</td>
<td>12</td>
</tr>
</tbody>
</table>
</body></html>

Orders overall and export orders have fallen off very sharply from August to September. The decline of 16 points in month-to-month export orders in September is a record going back to 1988. This drop occurs in the face of a weakening [...]

Orders Just Fall Off the Table in the UK

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917c.jpg" width="353">
The US current account deficit deepened slightly last quarter to $183.1 billion from a revised $175.8 billion during 1Q. The 2Q deficit was slightly deeper than the Consensus expectation for a reading of $179.9 billion.
As a percentage of GDP the deficit fell to 5.1%. That level has been fairly constant during the last year. It is reduced, however, from its peak percentage late in 2005, of 6.5% of GDP.
During 2Q, the deficit on goods trade deepened again just slightly to $216.3 billion. Higher oil prices raised imports by 4.7% though exports continued firm and they rose by a stronger 6.1%. The deficit grew because imports are the greater total versus exports. The deficit on goods trade has been fairly steady near $200 billion since late-2005.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917d.jpg" width="353">
The lower U.S. dollar and the strength of foreign economies versus the U.S. continued to be apparent in the surplus in services trade. It grew to a record $35.8B but prior figures were revised to show a smaller surplus. Exports of travel services grew 22.0% y/y and passenger fares were up 31.8%, the strongest y/y gain since late-1990. Imports grew 8.9% and travel imports grew 9.1%. Passenger fares grew 16.5% y/y.
The trade surplus on earned income narrowed to $27.3B but the 1Q surplus was revised up sharply. The deficit on unilateral transfers narrowed just slightly to 29.9B.
Oil and U.S. Macroeconomy: An Update and a Simple Forecasting Exercise from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/09/Kliesen.pdf">here</a>.
The Credit Crunch of 2007-2008: A Discussion of the Background, Market Reactions, and Policy Responses also from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/09/Mizen.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/@EE/@EE01/@EE01.HTM">US Balance of Payments</a>,&nbsp;Bil.$, SA</th>
<th scope="col">2Q &#39;08</th>
<th scope="col">1Q &#39;08</th>
<th scope="col">Year Ago</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account Balance ($ Bil.)</td>
<td>-183.1</td>
<td>-175.6</td>
<td>-194.1</td>
<td>-731.2</td>
<td>-788.1</td>
<td>-729.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Deficit % of GDP</td>
<td>-5.1</td>
<td>-5.0</td>
<td>-5.8</td>
<td>-5.3</td>
<td>-6.0</td>
<td>-5.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance on Goods ($ Bil.)</td>
<td>-216.3</td>
<td>-211.0</td>
<td>-205.9</td>
<td>-819.4</td>
<td>-838.3</td>
<td>-787.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports&nbsp;</td>
<td>6.1%</td>
<td>4.8%</td>
<td>20.7%</td>
<td>12.3%</td>
<td>14.4%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports&nbsp;</td>
<td>4.7%</td>
<td>3.3%</td>
<td>14.1%</td>
<td>5.7%</td>
<td>10.7%</td>
<td>13.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance on Private Services ($ Bil.)</td>
<td>35.8</td>
<td>33.9</td>
<td>27.1</td>
<td>119.1</td>
<td>85.0</td>
<td>75.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Exports</td>
<td>2.7%</td>
<td>1.2%</td>
<td>14.1%</td>
<td>14.6%</td>
<td>11.5%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imports</td>
<td>1.8%</td>
<td>2.8%</td>
<td>8.9%</td>
<td>8.4%</td>
<td>11.3%</td>
<td>7.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance on Income ($ Bil.)</td>
<td>27.3</td>
<td>33.2</td>
<td>9.7</td>
<td>81.8</td>
<td>57.2</td>
<td>67.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral Transfers ($ Bil.)</td>
<td>-29.9</td>
<td>-31.7</td>
<td>-25.0</td>
<td>-112.7</td>
<td>-92.0</td>
<td>-89.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The US current account deficit deepened slightly last quarter to $183.1 billion from a revised $175.8 billion during 1Q. The 2Q deficit was slightly deeper than the Consensus expectation for a reading of $179.9 billion. As a [...]

U.S. Current Account Deficit Slightly Deeper in 2Q'08

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917a.jpg" width="353">
Housing starts fell hard again last month. The 6.2% m/m decline to 895,000 units (SAAR) followed a 12.4% drop during July which was revised slightly deeper. The August level was the lowest since 921,000 starts during January 1991. Consensus expectations had been for 950,000 starts
August starts of single-family homes fell by 1.9% to 630,000 units, also their lowest level since early-1991.
The latest figures suggest that housing this quarter will again subtract from GDP growth. So far in 3Q, single-family starts are down 5.8% from the 2Q average. Starts last quarter fell by 7.2% from 1Q and that decline was accompanied by a 0.6 percentage point subtraction from real GDP growth. For 3Q the subtraction will thus be roughly the same. During the last ten years there has been an 84% correlation between the q/q change in single-family starts and the contribution to quarterly GDP growth.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917b.jpg" width="353">
Multi-family starts have now retraced all of their rise during 2Q. They fell 15.1% last month after the 26.8% drop during July. Thus for 3Q so far, starts are down 17.6% after the 7.5% rise during 2Q.
By region, August starts of single-family units in the Northeast fell 8.6% (-14.7% y/y) following their 11.1% gain during July. The 5.3% m/m decline in the South dropped them 40.4% below the year-ago level. That was also the lowest since early 1991. In the West starts repeated their performance in July and rose 3.5% (-30.7% y/y) while single-family starts in the Midwest also rose by 5.5% (-32.7% y/y).
Building permits fell hard again. They declined 8.9% after a 17.7% plunge during July. Single-family permits repeated their July performance with a 5.1% (-40.3% y/y) decline. That was their lowest level since 1982.
The Fed&#39;s statement regarding American International Group (AIG) and the Federal Reserve Bank of New York can be found <a href="http://www.federalreserve.gov/newsevents/press/other/20080916a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Housing Starts (000s, SAAR)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>895</td>
<td>954</td>
<td>1,089</td>
<td>-33.1%</td>
<td>1,341</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>630</td>
<td>642</td>
<td>663</td>
<td>-34.9</td>
<td>1,034</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>265</td>
<td>312</td>
<td>426</td>
<td>-28.2</td>
<td>307</td>
<td>338</td>
<td>354</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>854</td>
<td>937</td>
<td>1,138</td>
<td>-36.4</td>
<td>1,389</td>
<td>1,844</td>
<td>2,160</td>
</tr>
</tbody>
</table>
</body>
</html>

Housing starts fell hard again last month. The 6.2% m/m decline to 895,000 units (SAAR) followed a 12.4% drop during July which was revised slightly deeper. The August level was the lowest since 921,000 starts during January 1991. [...]

U.S. Housing Starts Lowest Since 1991

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917a.jpg" align="left" border="0" height="265" width="353">
Housing starts fell hard again last month. The 6.2% m/m
decline to 895,000 units (SAAR) followed a 12.4% drop during July which
was revised slightly deeper. The August level was the lowest since
921,000 starts during January 1991. Consensus expectations
had been for 950,000 starts
August starts of single-family homes fell by 1.9% to 630,000
units, also their lowest level since early-1991.
The latest figures suggest that housing this
quarter will again subtract from GDP growth. So far in 3Q,
single-family starts are down 5.8% from the 2Q average. Starts last
quarter fell by 7.2% from 1Q and that decline was accompanied by a 0.6
percentage point subtraction from real GDP growth. For 3Q the
subtraction will thus be roughly the same. During the last ten years
there has been an 84% correlation between the q/q change in
single-family starts and the contribution to quarterly GDP growth.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917b.jpg" align="right" border="0" height="265" width="353">
Multi-family starts have now retraced all of their rise during
2Q. They fell 15.1% last month after the
26.8% drop during July. Thus for 3Q so far, starts are down 17.6% after
the 7.5% rise during 2Q.
By region, August starts of single-family units in the
Northeast fell 8.6% (-14.7% y/y) following their 11.1% gain during
July. The 5.3% m/m decline in the South dropped them 40.4% below the
year-ago level. That was also the lowest since early 1991. In the West
starts repeated their performance in July and rose 3.5% (-30.7% y/y)
while single-family starts in the Midwest also rose by 5.5% (-32.7%
y/y).
Building permits fell hard again. They declined 8.9% after a
17.7% plunge during July. Single-family permits repeated their July
performance with a 5.1% (-40.3% y/y) decline. That was their lowest
level since 1982.
The Fed's statement regarding American International Group
(AIG) and the Federal Reserve Bank of New York can be found <a href="http://www.federalreserve.gov/newsevents/press/other/20080916a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Housing
Starts (000s, SAAR)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>895</td>
<td>954</td>
<td>1,089</td>
<td>-33.1%</td>
<td>1,341</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">Single-Family</td>
<td>630</td>
<td>642</td>
<td>663</td>
<td>-34.9</td>
<td>1,034</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr>
<td class="firstcol">Multi-Family</td>
<td>265</td>
<td>312</td>
<td>426</td>
<td>-28.2</td>
<td>307</td>
<td>338</td>
<td>354</td>
</tr>
<tr class="odd">
<td class="firstcol">Building Permits</td>
<td>854</td>
<td>937</td>
<td>1,138</td>
<td>-36.4</td>
<td>1,389</td>
<td>1,844</td>
<td>2,160</td>
</tr>
</tbody>
</table>
U.S. Current Account Deficit
Slightly Deeper in 2Q'08 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917c.jpg" align="left" border="0" height="265" width="353">
The US current account deficit deepened slightly last quarter
to $183.1 billion from a revised $175.8 billion during 1Q. The 2Q
deficit was slightly deeper than the Consensus expectation for a
reading of $179.9 billion.
As a percentage of GDP the deficit fell to 5.1%. That level
has been fairly constant during the last year. It is reduced, however,
from its peak percentage late in 2005, of 6.5% of GDP.
During 2Q, the deficit on goods trade deepened again just
slightly to $216.3 billion. Higher oil prices raised imports by 4.7%
though exports continued firm and they rose by a stronger 6.1%. The
deficit grew because imports are the greater total versus exports. The
deficit on goods trade has been fairly steady near $200 billion since
late-2005.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917d.jpg" align="right" border="0" height="265" width="353">
The lower U.S. dollar and the strength of foreign economies
versus the U.S. continued to be apparent in the surplus in services
trade. It grew to a record $35.8B but prior figures were revised to
show a smaller surplus. Exports of travel services grew 22.0% y/y and
passenger fares were up 31.8%, the strongest y/y gain since late-1990.
Imports grew 8.9% and travel imports grew 9.1%. Passenger fares grew
16.5% y/y.
The trade surplus on earned income narrowed to $27.3B but the
1Q surplus was revised up sharply. The deficit on unilateral transfers
narrowed just slightly to 29.9B.
Oil and U.S. Macroeconomy: An Update and a Simple
Forecasting Exercise from the Federal Reserve Bank of St.
Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/09/Kliesen.pdf">here</a>.
The Credit Crunch of 2007-2008: A Discussion of the
Background, Market Reactions, and Policy Responses also from
the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/09/Mizen.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/@EE/@EE01/@EE01.HTM">US
Balance of Payments</a>,&nbsp;Bil.$, SA</th>
<th scope="col">2Q '08</th>
<th scope="col">1Q '08</th>
<th scope="col">Year Ago</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Current Account
Balance ($ Bil.)</td>
<td>-183.1</td>
<td>-175.6</td>
<td>-194.1</td>
<td>-731.2</td>
<td>-788.1</td>
<td>-729.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Deficit % of GDP</td>
<td>-5.1</td>
<td>-5.0</td>
<td>-5.8</td>
<td>-5.3</td>
<td>-6.0</td>
<td>-5.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance on
Goods ($ Bil.)</td>
<td>-216.3</td>
<td>-211.0</td>
<td>-205.9</td>
<td>-819.4</td>
<td>-838.3</td>
<td>-787.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Exports&nbsp;</td>
<td>6.1%</td>
<td>4.8%</td>
<td>20.7%</td>
<td>12.3%</td>
<td>14.4%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imports&nbsp;</td>
<td>4.7%</td>
<td>3.3%</td>
<td>14.1%</td>
<td>5.7%</td>
<td>10.7%</td>
<td>13.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Balance on
Private Services ($ Bil.)</td>
<td>35.8</td>
<td>33.9</td>
<td>27.1</td>
<td>119.1</td>
<td>85.0</td>
<td>75.6</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Exports</td>
<td>2.7%</td>
<td>1.2%</td>
<td>14.1%</td>
<td>14.6%</td>
<td>11.5%</td>
<td>10.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imports</td>
<td>1.8%</td>
<td>2.8%</td>
<td>8.9%</td>
<td>8.4%</td>
<td>11.3%</td>
<td>7.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Balance on
Income ($ Bil.)</td>
<td>27.3</td>
<td>33.2</td>
<td>9.7</td>
<td>81.8</td>
<td>57.2</td>
<td>67.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Unilateral
Transfers ($ Bil.)</td>
<td>-29.9</td>
<td>-31.7</td>
<td>-25.0</td>
<td>-112.7</td>
<td>-92.0</td>
<td>-89.8</td>
</tr>
</tbody>
</table>
Orders Just Fall Off the Table in
the UK 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080917e.jpg" align="left" border="0">
Orders overall and export orders have fallen off very sharply
from August to September. The decline of 16 points in month-to-month
export orders in September is a record going back to 1988. This drop
occurs in the face of a weakening Sterling which implies an improvement
in UK competitiveness. Total
orders fell by 13 points month-to-month and that is the fourth largest
m/m drop since the late 1980s. All
of the outsized drops in total orders have come since October 2006.
While changes in orders on the month demonstrate a very severe
drop, current readings on the diffusion levels remain higher, in the 55th
percentile for total orders and the 72nd
percentile for export orders. &#8211; lower but not as draconian as the
monthly changes. Still both overall and total orders are deep net
negative readings. The volume for output in the look ahead survey is at
a new low. Prices expected in the next four months are still at all
time highs: 100% of their range. The NTC survey available through
August shows MFG is low in its range, in the bottom 15 percent. .
The UK economy looks extremely weak. Current levels in the CBI
Industry sector are not quite as severely weak as for CBI orders but
the pace of decline is something to have some real worries over and the
outlook is as bad as it ever has been.

<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">UK
Industrial Volume Data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Reported:</td>
<td>Sep 
08</td>
<td>Aug 
08</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="even">
<td class="firstcol">Total Orders</td>
<td>-26</td>
<td>-13</td>
<td>-8</td>
<td>1</td>
<td>-2</td>
<td>55%</td>
<td>9</td>
<td>-40</td>
<td>49</td>
</tr>
<tr class="even">
<td class="firstcol">Export Orders</td>
<td>-25</td>
<td>-9</td>
<td>-7</td>
<td>-5</td>
<td>-6</td>
<td>72%</td>
<td>3</td>
<td>-40</td>
<td>43</td>
</tr>
<tr class="even">
<td class="firstcol">Stocks: Fin Goods</td>
<td>21</td>
<td>18</td>
<td>13</td>
<td>8</td>
<td>13</td>
<td>80%</td>
<td>23</td>
<td>-2</td>
<td>25</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="10">Looking
ahead</td>
</tr>
<tr class="odd">
<td class="firstcol">Output Volume: Next 3 Months</td>
<td>11</td>
<td>-13</td>
<td>-7</td>
<td>2</td>
<td>4</td>
<td>0%</td>
<td>28</td>
<td>-13</td>
<td>41</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Prices for Next 3 Months</td>
<td>31</td>
<td>34</td>
<td>28</td>
<td>30</td>
<td>24</td>
<td>100%</td>
<td>34</td>
<td>-20</td>
<td>54</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="10">From end
2000</td>
</tr>
<tr>
<td colspan="10" class="firstcol">Compare
to CIPS MFG</td>
</tr>
<tr class="even">
<td class="firstcol"></td>
<td>Aug 
08</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="even">
<td class="firstcol">UK MFG</td>
<td>45.93</td>
<td>44.13</td>
<td>45.88</td>
<td>49.46</td>
<td>50.21</td>
<td>15%</td>
<td>56.32</td>
<td>44.13</td>
<td>12</td>
</tr>
</tbody>
</table>
</body></html>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080916l.jpg" align="left" border="0" height="265" width="353">
The National Association of Home Builders reported that its September Housing Market Index (HMI) improved. The rise to 18 followed two months at 16, which were the lowest readings in the twenty three history of the index. The
index is compiled from survey questions asking builders to rate market
conditions as &#8220;good&#8221;, &#8220;fair&#8221;, &#8220;poor&#8221; or &#8220;very high&#8221; to &#8220;very low&#8221;. Numerical equivalent results over 50 indicate a predominance of &#8220;good&#8221; readings.
Since 1990, the year-to-year change in this index has had a
correlation of 72% with the year-to-year percentage change in new
single-family home sales. As a result, the latest HMI index at best
indicates a bottoming of the housing market's troubles.
The Home Builders Association indicated that its sub-index of
present sales conditions ticked up again, last month to 17 from 16 in
August and from the cycle low of 15 in July. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080916m.jpg" align="right" border="0" height="265" width="353">
Builders&#8217; expectations for sales six months from now improved even
more to a reading of 30. That was its highest level since April. The &#8220;traffic of prospective buyers,&#8221; however, remained near its all-time low at 14.
Each of the country's regions improved last month and by the most in the Northeast and the Midwest. In the South and in the West conditions ticked up only slightly.
The NAHB has compiled the Housing Market Index since 1985. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver&#8217;s SURVEYS database.

<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'l Association of Home Builders</a></th>
<th scope="col">September</th>
<th scope="col">August &nbsp;</th>
<th scope="col">&nbsp;Sept.'07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>18</td>
<td>16</td>
<td>20</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
</body></html>

The National Association of Home Builders reported that its September Housing Market Index (HMI) improved. The rise to 18 followed two months at 16, which were the lowest readings in the twenty three history of the index. The index is [...]

U.S. Home Builders' Survey Improved

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080916j.jpg" width="353">
As expected, the Federal Open Market Committee left the Federal funds rate unchanged today at 2.00%. The discount rate also was left unchanged at 2.25%.
If the Fed had eased, it would have been in the name of boosting market psychology. The markets have been rattled by a significant number of downside risks to economic growth. These include strains in the financial sector as well as weaker labor markets. Weaker consumer spending, tight credit conditions, the housing contraction and slower export growth also were sited in the statement as constraints on economic growth.
While acknowledging these risks, the Fed stated that &quot;Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.&quot;
The Fed&#39;s statement regarding inflation was unchanged from the last meeting. &quot;Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.&quot;<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080916k.jpg" width="353">
The decision was unanimous amongst FOMC voters.
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080916a.htm">link</a>.
How Economic News Moves Markets from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci14-6.pdf">here</a>.
What Drives Housing Prices? also from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr345.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">&nbsp;</th>
<th scope="col">Current</th>
<th scope="col">Last</th>
<th scope="col">August</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>2.00</td>
<td>2.00</td>
<td>2.00</td>
<td>5.05</td>
<td>4.96</td>
<td>3.19</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>2.25</td>
<td>2.25</td>
<td>2.25</td>
<td>5.86</td>
<td>5.96</td>
<td>4.19</td>
</tr>
</tbody>
</table>
</body>
</html>

As expected, the Federal Open Market Committee left the Federal funds rate unchanged today at 2.00%. The discount rate also was left unchanged at 2.25%. If the Fed had eased, it would have been in the name of boosting market [...]

FOMC Left Funds Rate Again at 2.00%

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

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

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The Conference Board's Index of Consumer Confidence increased 2.1% (-4.6% y/y) in July to 97.2 after falling 3.3% in June, revised from down 5.5%, and rising an unrevised 14.8% in May to 98.4. A July reading of 95.9 had been expected in the Action Economics Forecast Survey. The index remained 13.8% below its November peak.

The Expectations Index increased 6.4% (-8.3% y/y) this month after declining 5.0% in June, revised from a 6.3% decline, and rising 32.9% in May. The Present Situation index fell 1.1% (-1.2% y/y) after falling 1.8% in June, revised from down 4.7%, following a 3.4% increase in May.

The percentage of respondents assessing business conditions as “good” dipped to 20.1% in July after falling to 20.5% in June. The index hit a high of 22.0% in October. The percentage assessing conditions as “bad” fell to 14.3% after rising to 15.0% in June. The appraisal of labor market conditions improved as 30.2% described “jobs plentiful” versus 29.4% in June. Jobs were viewed as “hard to get” by 18.9% of respondents this month, up from 17.2% in June. This measure has risen from 11.0% in January 2024. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) fell to 11.3% compared to 12.2% in June and 12.7% in May. This measure remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions improved this month as an increased 18.4% of respondents expect conditions to improve over the next six months, after 17.7% did so in June, while 23.3% expect them to worsen, after falling to 24.8% in June. On employment, an improved 17.5% expect the number of jobs to increase over the next six months versus 15.9% in June. The percentage expecting the number of jobs to decline in the next six months eased to 25.4% after falling to 25.7% in June. A greater 18.2% of respondents expect income to increase in six months, up from 17.6% in June. That remained down from a high of 20.7% in November and compares to 12.0% who expect income to decrease, down from 12.9% in June.

The expected rate of price inflation over the next twelve months dipped to 5.8% in July after falling to 5.9% in June. These remain up from a low of 5.0% in November. Interest rates are expected to rise this year by a lessened 53.0% of respondents, but this remained up from a 45.5% November 2024 low. The percentage of respondents expecting equity prices to increase over the next twelve months rose to 47.9%, up from 46.0% in June and the most in six months, while the percentage expecting a decline in stock prices fell to 28.7% after declining to 33.1% in June.

The percentage of respondents planning to buy a home fell to 5.6% this month after falling to 6.1% in June. Plans to purchase an automobile fell to 11.4% this month, a three-month low.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

**Understanding Job Growth** from the Federal Reserve Bank of Philadelphia can be found [here](https://www.philadelphiafed.org/-/media/FRBP/Assets/Economy/Articles/economic-insights/2025/q2/eiq225-understanding-job-growth.pdf).

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- Decline reverses much of June decline.
- Expectations improve but present situation reading declines.
- Inflation expectations edge down.

U.S. Consumer Confidence Increases in July; Inflation Expectations Ease

Sandy Batten

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Job openings fell 275,000 (+0.3% y/y) in June to 7.437 million according to the Job Openings and Labor Turnover Survey. This was the first monthly decline in three months. The June fall was in line with market expectations. The May figure was revised down slightly to 7.712 million from the previously reported 7.769 million. The job openings rate fell to 4.4% in June from 4.6% in May. This rate has fluctuated between 4.3% and 4.8% over the past year. The record high for this rate was 7.4% reached in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. The number of openings in June was 422,000 higher than the number of people unemployed, an increase from 475,000 in May and well below the 1.0-1.2 million gap that existed just prior to the pandemic, pointing to generally softer labor-market conditions.

Private sector openings decreased 325,000 (+1.5% y/y) in June to 6.551 million from 6.876 million in May. This was only the second y/y increase since July 2022. The private openings rate fell to 4.6% in June from 4.8% in May. The number of job openings decreased in accommodation and food services (-308,000), health care and social assistance (-244,000), and finance and insurance (-142,000). The number of job openings increased in retail trade (+190,000), information (+67,000), and state and local government education (+61,000).

Total hiring fell 261,000 (+2.3% y/y) to 5.204 million in June from 5.465 million in May. The hiring rate slipped to 3.3% from 3.4%. The June reading for the rate was the second lowest since the pandemic. Private sector hiring fell 246,000 in June on top of a 150,000 decline in May. The slide in hiring was led by a 133,000 decline in professional and business services hiring and a 148,000 drop in leisure and hospitality hiring. Government hiring fell 14,000, the fifth monthly decline in the past six months.

Total separations declined 153,000 (-0.1% y/y) to 5.060 million in June, the lowest level since August 2020 and the third monthly decline in the past four months. The separation rate slipped to 3.2%, tying the lowest rate in more than a decade, from 3.3% in May. Private separations fell 76,000 while government separations dropped 77,000, the largest monthly decline since July 2022. Total quits fell 128,000 (-4.3% y/y) to 3.142 million in June, the second monthly decline in the past three months, with the quits rate unchanged at 2.0%. Private sector quits decreased 102,000 in June. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. In contrast, layoffs and discharges are involuntary separations initiated by the employer. Layoffs and discharges edged down 7,000 to 1.604 million in June with private layoffs increasing 22,000 while government layoffs declined 29,000.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

- Job openings fell 275,000 in June after having risen in each of the previous two months.
- Hiring fell 261,000, the largest monthly decline since June 2024.
- Separations fell 153,000, led by a 128,000 decline in quits.
- Layoffs edged down 7,000, the third monthly decline in the past four months.

U.S. JOLTS—Openings and Hiring Slid in June

Winnie Tapasanun

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The advance estimate of the U.S. international trade deficit in goods unexpectedly narrowed to $85.99 billion in June after widening to $96.42 billion in May, data from the U.S. Census Bureau showed. The June reading, the second narrowing in the goods trade deficit in three months, was smaller than a $98.81 billion shortfall in June 2024. A deficit of $98.0 billion for June had been expected by the Action Economics Forecast Survey. The deficit reached a record $161.95 billion in March. In Q2'25, the goods trade deficit narrowed to $268.31 billion, the smallest since Q4'23, after ballooning to a record $465.03 billion in Q1'25; the monthly deficit averaged $89.44 billion in Q2'25, down from a record $155.01 billion in Q1'25.

Total goods exports fell 0.6% m/m (+3.6% y/y) to $178.16 billion in June, the lowest level since February, following a 5.7% drop to $179.26 billion in May and four straight m/m increases. April registered a record high of $190.08 billion. Exports had fallen 2.0% since a July 2022 high. The fall in exports in June was led by an 8.1% decrease (-0.04% y/y) in exports of industrial supplies & materials. To the upside, exports for the following end-use categories rose m/m in June: other goods (5.5%; 22.8% y/y), capital goods excluding autos (4.7%; 11.0% y/y), foods, feeds & beverages (4.0%; 1.3% y/y), automotive vehicles & parts (1.6%; -15.8% y/y), and nonfood consumer goods excluding autos (1.5%; 3.5% y/y).

Total goods imports slid 4.2% m/m (-2.5% y/y), the fourth monthly slide in five months, to $264.15 billion in June, the lowest level since March 2024, following a 0.1% downtick to $275.68 billion in May. March registered a record high of $344.59 billion. Imports had fallen 8.6% since a March 2022 high. The slide in imports in June reflected m/m declines in most imports end-use categories. These included drops of 12.4% (-13.1% y/y) in nonfood consumer goods excluding autos, 5.5% (-12.6% y/y) in industrial supplies & materials, 2.0% (-10.6% y/y) in automotive vehicles & parts, 1.3% (+11.8% y/y) in other goods, and 1.1% (+4.2% y/y) in foods, feeds & beverages. In contrast, imports of capital goods excluding autos, the only end-use category with a monthly increase in June, rose 0.6% (13.9% y/y), the seventh m/m rise in eight months, on top of a 0.3% May rebound.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Deficit: $85.99 bil. in June, smaller than $96.42 in May.
- Exports -0.6%, down for the second straight month, led by an 8.1% decline in exports of industrial supplies & materials.
- Imports -4.2%, down for the fourth month in five, led by a 12.4% drop in nonauto consumer goods imports.

U.S. Goods Trade Deficit Unexpectedly Narrows in June

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U.S. house prices weakened 0.2% (+2.8% y/y) during May after falling 0.3% in April, revised from down 0.4% and holding steady in March, according to the Federal Housing Finance Agency (FHFA) House Price Index.

House price changes were mixed across the nine Census divisions of the country. Prices fell 0.8% (+5.9% y/y) in the Middle Atlantic region and 0.2% (+5.2% y/y) in the East North Central region. Prices were down 0.1% (+1.4% y/y) in the South Atlantic region, 0.6% (+4.0% y/y) in the East South Central region and 0.6% (+0.6% y/y) in the Pacific regions. House price increases were logged in New England where they rose 0.3% (5.3% y/y) and in the West North Central region where they increased 0.2% (3.8% y/y). Home prices also rose 0.3% (0.9% y/y) in the West South Central region and 0.1% (1.2% y/y) in the Mountain region.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.
The FHFA data are available in Haver’s **USECON** database.

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- Prices edge lower m/m.
- Annual increase moves to two-year low.
- Price changes are uneven amongst regions.

U.S. FHFA House Prices Fall Further in May

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Retail gasoline prices for all grades averaged $3.25 per gallon (-9.8% y/y) last week for the fourth straight week. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel held at $3.81 per gallon (+1.0% y/y) in the week of July 21 after rising slightly to $3.76 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $65.97 per barrel (-16.3% y/y) in the week ended July 25. The drop left prices at the lowest level in four weeks. Prices nonetheless remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $66.71 per barrel. The price of European Brent crude eased to $70.09 per barrel (-15.1% y/y) in the week of July 25 after falling to $70.66 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $70.87 yesterday.

Natural gas prices slipped to an average $3.19/mmbtu (+54.9% y/y) in the week ended July 25, after rising to an average $3.39/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $3.12 per mmbtu.

Gasoline demand declined 4.9% y/y in the four weeks ending July 18 following a 1.6% y/y decline in the prior four weeks. Demand for all petroleum products held steady y/y in the four weeks ending July 18 after a 1.1% y/y decline in the previous four-week period. Crude oil input to refineries rose 1.0% y/y in the four weeks ending July 18 after a 0.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.6% y/y in the week ending July 18 after a 0.1% y/y dip in the prior week. Residual fuel oil inventories fell 23.0% y/y in the week of July 18, after a 27.0% y/y fall in the prior week. Crude oil inventories rose 1.3% y/y in the week of July 18 after the same y/y rise in the previous two weeks.

Measured in days’ supply, gasoline inventories rose to 26.2 days in the week of July 18 from 25.9 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil eased to 24.7 days in the week of July 18 from 24.9 days in the prior week, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices hold steady.
- Crude oil prices decline.
- Natural gas prices ease.

Economy in Brief: 2008

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U.S. Initial Unemployment Insurance Claims Near The Highest Since 2002

U.S. Initial Unemployment Insurance Claims Near The Highest Since 2002

Orders Just Fall Off the Table in the UK

U.S. Current Account Deficit Slightly Deeper in 2Q'08

U.S. Housing Starts Lowest Since 1991

U.S. Housing Starts Lowest Since 1991

U.S. Home Builders' Survey Improved

FOMC Left Funds Rate Again at 2.00%