Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820a.jpg" width="353">
The Labor Department indicated that initial claims for unemployment insurance increased unexpectedly for the second consecutive week to 576,000 after an upwardly revised rise to 561,000. The four-week moving average of claims, which smoothes out some of the volatility in the weekly numbers, increased to 570,000 but was down from the April high of 658,750 and near its lowest level since late-January. A decline in weekly claims to 550,000 had been expected.
The latest figures cover the survey period for August nonfarm payrolls and initial claims were up 17,000 (3.0%) from the July survey period. During the last ten years there has been a negative 86% correlation between the level of initial claims and the m/m change in payrolls.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820b.jpg" width="353">
The Labor Department indicated that the largest increases in initial claims for the week ending August 8 were in Tennessee (+2,525), North Carolina (+2,469), Wisconsin (+2,078), Georgia (+1,753), and Washington (+1,697), while the largest decreases were in California (-5,635), Michigan (-1,490), Ohio (-951), Kentucky (-690), and Delaware (-226).
Continuing claims for unemployment insurance ticked higher in the latest week but remained down by nearly 10% from their late-June high, a decline which probably owes to the exhaustion of benefits. Continuing claims provide an indication of workers&#39; ability to find employment and the level of 6,241,000 claims is up sharply from the year-ago level. The four-week average of continuing claims fell modestly to 6,266,000 and that was the lowest since late-April. The series dates back to 1966.
Extended benefits for unemployment insurance fell slightly w/w at the end of July. The slip to 400,779 compared to a high of 491,684 reached during the middle of the month. Extended benefits began to rise slowly in June of 2008 but surged by January.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820c.jpg" width="353">
The insured rate of unemployment held steady at 4.7% which was the lowest level since mid-April. The rate reached a high of 5.2% during late-June. During the last ten years, there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.
The highest insured unemployment rates in the week ending August 1 were in Puerto Rico (7.3 percent), Oregon (6.2), Pennsylvania (6.1), Michigan (5.9), Nevada (5.9), Wisconsin (5.5), California (5.3), Connecticut (5.3), New Jersey (5.3), North Carolina (5.1), and South Carolina (5.1). The lowest rates were in South Dakota (1.3) and North Dakota (1.5), Virginia (2.4), Wyoming (2.9), Texas (3.0), Maine (3.1), Colorado (3.2), Maryland (3.6), Minnesota (3.7), Florida (4.2), New York (4.2), Mississippi (4.3) and Georgia (4.7).
The unemployment insurance claims data is available in Haver&#39;s WEEKLY database and the state data is in the REGIONW database.
The Peak Oil Debate from the Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">07/31/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>576</td>
<td>561</td>
<td>554</td>
<td>31.5%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,241</td>
<td>6,239</td>
<td>83.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.7</td>
<td>4.7</td>
<td>2.5</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
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The Labor Department indicated that initial claims for unemployment insurance increased unexpectedly for the second consecutive week to 576,000 after an upwardly revised rise to 561,000. The four-week moving average of claims, which [...]

Extended Benefits Dip

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820a.jpg" align="left" border="0" height="265" width="353">
The Labor Department indicated that initial claims for
unemployment insurance increased unexpectedly for the second
consecutive week to 576,000 after an upwardly revised rise to 561,000.
The four-week moving average of claims, which smoothes out some of the
volatility in the weekly numbers, increased to 570,000 but was down
from the April high of 658,750 and near its lowest level since
late-January. A decline in weekly claims to 550,000 had been expected.
The latest figures cover the survey period for August nonfarm
payrolls and initial claims were up 17,000 (3.0%) from the July survey
period. During the last ten years there has been a negative 86%
correlation between the level of initial claims and the m/m change in
payrolls.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820b.jpg" align="right" border="0" height="265" width="353">
The Labor Department indicated that the largest increases in
initial claims for the week ending August 8 were in Tennessee (+2,525),
North Carolina (+2,469), Wisconsin (+2,078), Georgia (+1,753), and
Washington (+1,697), while the largest decreases were in California
(-5,635), Michigan (-1,490), Ohio (-951), Kentucky (-690), and Delaware
(-226).
Continuing claims for unemployment insurance ticked higher in
the latest week but remained down by nearly 10% from their late-June
high, a decline which probably owes to the exhaustion of benefits.
Continuing claims provide an indication of workers' ability to find
employment and the level of 6,241,000 claims is up sharply
from the year-ago level. The four-week average of continuing
claims fell modestly to 6,266,000 and that was the lowest since
late-April. The series dates back to 1966.
Extended benefits for unemployment insurance fell slightly w/w
at the end of July. The slip to 400,779 compared to a high of 491,684
reached during the middle of the month. Extended benefits began to rise
slowly in June of 2008 but surged by January.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820c.jpg" align="left" border="0" height="265" width="353">
The insured rate of unemployment held steady at 4.7% which was
the lowest level since mid-April. The rate reached a high of 5.2%
during late-June. During the last ten years, there has been a 93%
correlation between the level of the insured unemployment rate and the
overall rate of unemployment published by the Bureau of Labor
Statistics.
The highest insured unemployment rates in the week ending
August 1 were in Puerto Rico (7.3 percent), Oregon (6.2), Pennsylvania
(6.1), Michigan (5.9), Nevada (5.9), Wisconsin (5.5), California (5.3),
Connecticut (5.3), New Jersey (5.3), North Carolina (5.1), and South
Carolina (5.1). The lowest rates were in South Dakota (1.3) and North
Dakota (1.5), Virginia (2.4), Wyoming (2.9), Texas (3.0), Maine (3.1),
Colorado (3.2), Maryland (3.6), Minnesota (3.7), Florida (4.2), New
York (4.2), Mississippi (4.3) and Georgia (4.7).
The unemployment insurance claims data is available in Haver's
WEEKLY database and the state data is in the REGIONW
database.
The Peak Oil Debate from the
Federal Reserve Bank of Atlanta is available <a href="http://www.frbatlanta.org/filelegacydocs/er0902_graefe.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">07/31/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Initial Claims</td>
<td>576</td>
<td>561</td>
<td>554</td>
<td>31.5%</td>
<td>420</td>
<td>321</td>
<td>313</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>6,241</td>
<td>6,239</td>
<td>83.2%</td>
<td>3,342</td>
<td>2,552</td>
<td>2,459</td>
</tr>
<tr class="odd">
<td class="firstcol">Insured Unemployment Rate (%)</td>
<td>--</td>
<td>4.7</td>
<td>4.7</td>
<td>2.5</td>
<td>2.5</td>
<td>1.9</td>
<td>1.9</td>
</tr>
</tbody>
</table>
UK Retail Sales Stir by <a href="/comment/Brusca.html">Robert
Brusca</a> August 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820d.jpg" align="left" border="0" height="265" width="353">
The 0.4% rise in real UK retail sales is the largest increase
in fourteen months. Retail sales ex autos also rose by 0.4% and put in
its second month-in-row increase. 
 

The momentum in real retail sales is positive, having
recovered from some very deep lows reached just after mid-year in 2008.
In contrast this global business cycle hit the US consumer most
strongly at the end of 2008 and in early 2009. 
 

UK food and beverage purchases have been a mainstay of growth
over the past year. But spending in this category fell in July.
Clothing and foot wear expenditures have run hot and cold and these
took a small decline in July as well. The strength in retail sales came
from other sectors in July. 
 

In the quarter to date real ex-auto retail sales are growing
at a robust 6.4% annual rate. The new quarter is only one month old but
it is off to a very good start for UK retailers.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> UK Real
and Nominal Retail Sales
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Nominal</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr AGo</td>
<td>Quarter-2-date</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Retail Total</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.5%</td>
<td>2.9%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>3.1%</td>
<td>5.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food Bev &amp;
Tobacco</td>
<td>-0.4%</td>
<td>0.7%</td>
<td>0.5%</td>
<td>3.0%</td>
<td>7.1%</td>
<td>5.2%</td>
<td>7.1%</td>
<td>1.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Clothing footwear</td>
<td>-0.1%</td>
<td>3.2%</td>
<td>-2.2%</td>
<td>3.3%</td>
<td>-1.4%</td>
<td>2.7%</td>
<td>1.0%</td>
<td>7.8%</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>
<td>&nbsp;</td>
</tr>
<tr class="even">
<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 class="odd">
<td class="firstcol">&nbsp; Retail Ex auto</td>
<td>0.4%</td>
<td>1.4%</td>
<td>-0.9%</td>
<td>3.6%</td>
<td>1.8%</td>
<td>3.3%</td>
<td>1.1%</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
U.S. Leading Indicators Signal
Economic Recovery With Fourth Straight Monthly Increase 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820e.jpg" align="left" border="0" height="265" width="353">
The Conference Board's Index of Leading Economic Indicators
continued to suggest a pending economic recovery. The July composite
index of leaders rose another 0.6% after gains of 0.8%, 1.2% and 1.1%
during the prior three months. The combined 3.8% rise during those four
months was the strongest since early-2002 while the index itself was at
the highest level since last June. 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.
For the fourth straight month, nearly three-quarters of the
ten components of the leading index increased.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820f.jpg" align="right" border="0" height="265" width="353">
Again suggesting that the rate of decline in the economy is
slowing were the coincident indicators which were unchanged m/m. This
compares with monthly declines of 0.6%-to-1.1% dating back to September.
In a sign that excesses in the U.S. economy are diminishing,
the lagging index fell for the seventh month in the last eight. The
ratio of coincident-to-lagging indicators (a measure of economic
excess) rose again m/m to the highest level since December.
The Conference Board figures are available in Haver's BCI
database. Visit the Conference Board's <a href="http://www.conference-board.org">site</a> for
coverage of leading indicator series from around the world.


<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">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April 6-Month % (AR)</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Leading</td>
<td>0.6</td>
<td>0.8</td>
<td>1.2</td>
<td>6.2</td>
<td>-2.8</td>
<td>-0.3</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0</td>
<td>-0.4</td>
<td>-0.4</td>
<td>-5.4</td>
<td>-0.9</td>
<td>1.6</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-1.0</td>
<td>-0.7</td>
<td>-0.3</td>
<td>-8.6</td>
<td>2.9</td>
<td>2.8</td>
<td>3.3</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Remains
Positive At Its Highest Level Since 2007 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 20, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820g.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank indicated that its
August index of factory sector activity in the region rose to its
highest since November of 2007. The level of 4.2 compared to figures
near -40.0 this past fall and winter. Consensus expectations had been
for a slightly negative reading of -1.5 for this month.
During the last ten years there has been a 77% 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 70% correlation with q/q growth in real GDP. The latest
survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.philadelphiafed.org/research-and-data/regional-economy/business-outlook-survey/2009/bos0809.pdf">here.</a><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090820h.jpg" align="right" border="0" height="265" width="353">
Amongst the components, new orders improved to 4.2 from -2.2
and the latest figure was the highest since 2007. A sharp rise in the
inventory component to its highest since 2007 may indicate that the
period of strong inventory decumulation reached its end. The latest
figure of 0.3 compares to a low of -55.6 reached this past March. Also
showing improvement was the employment index. It rose to a still
negative -12.9 but that compared with a low of -52.0 during March.
During the last ten years there has been a 79% correlation between the
index level and the m/m change in manufacturing sector payrolls.
Improved pricing power accompanied the gains in real activity.
The prices paid index jumped to its first positive reading since last
October. During the last ten years there has been a 74% correlation
between the prices paid index and the three-month growth in the
intermediate goods PPI. There has been an 83% correlation with the
change in core intermediate goods prices.
Expected business conditions in six months also have improved.
The August index ticked up to 56.8 and recovered most of its July
decline. The latest figure was still near its highest level since 2003.
Most of the index components moved sideways at improved levels but the
inventories series jumped sharply to new cycle high.
The figures from the Philadelphia Federal Reserve can be found
in Haver'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">Philadelphia
Fed (%)</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">August '08</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General Activity Index</td>
<td>4.2</td>
<td>-7.5</td>
<td>-20.1</td>
<td>-21.3</td>
<td>5.0</td>
<td>8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders</td>
<td>4.2</td>
<td>-2.2</td>
<td>-15.2</td>
<td>-14.7</td>
<td>6.9</td>
<td>9.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Number of Employees</td>
<td>-12.9</td>
<td>-25.3</td>
<td>-4.6</td>
<td>-8.7</td>
<td>6.8</td>
<td>9.0</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>10.0</td>
<td>&nbsp;-3.5</td>
<td>&nbsp;53.0</td>
<td>36.4</td>
<td>26.3</td>
<td>36.7</td>
</tr>
</tbody>
</table>
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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819g.jpg" align="left" border="0" height="265" width="353">
The Confederation of British Industry continues to see very
weak orders in both its domestic and export surveys. Both total and
export orders are in the lower ten percentile of their historic range
of values. Stocks of goods with a diffusion reading that fell to +13
from +20 are now near their range mid range (standing at their 45th
percentile) and are well below their 12-monhth average, showing
inventory progress has been made. In contrast orders are weaker than
their 12-month averages. What ever is getting better it does not seem
to be boosting orders despite the gain in August. 
 

To compare with that finding we have the contrary result that
although orders are very weak output volume over the next three months
is expected to do much better. The survey measure rose to -5 in August
from -14 in July, thrusting output volume expectations into the 57th
percentile of their range, far better than the reading for orders. The
average price expected has however slipped in August to -17 from -6 in
June. That is on the lower 6 percentile of its range. These readings
contrast with the UK MFG readings from NTC which at 50.84 is indicating
expansion and stands in the 74th percentile of its range. (The NTC
survey is also a diffusion survey but it presents its statistics as
dose the US ISM rather than as an &#8216;up&#8217; minus &#8216;down&#8217; diffusion index as
the one used by the CBI. For the CBI, zero is neutral; for the NTC
index, 50 is the neutral mark. Also the NTC index is for manufacturing
not all of industry, as is the CBI report.) 
 

The outlook portion of the CBI index is relatively more
positive, but still is not as upbeat as the Markit/NTC index. And the
orders assessment from the CBI is downright depressing as its
improvement in July still leaves the index lower over three months and
longer. The picture of the UK MFG industry is curiously mixed. The
differences are not simply those between different surveys but among
somewhat related measures in the same survey. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">UK
Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Reported:</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>May 
09</td>
<td>Apr 
09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-54</td>
<td>-59</td>
<td>-51</td>
<td>-56</td>
<td>-57</td>
<td>-43</td>
<td>7%</td>
<td>9</td>
<td>-59</td>
<td>68</td>
</tr>
<tr class="grey3">
<td class="firstcol">Export Orders</td>
<td>-48</td>
<td>-45</td>
<td>-52</td>
<td>-46</td>
<td>-34</td>
<td>-36</td>
<td>7%</td>
<td>3</td>
<td>-52</td>
<td>55</td>
</tr>
<tr class="grey3">
<td class="firstcol">Stocks: FinGds</td>
<td>13</td>
<td>20</td>
<td>22</td>
<td>30</td>
<td>28</td>
<td>25</td>
<td>45%</td>
<td>31</td>
<td>-2</td>
<td>33</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Looking
ahead</td>
</tr>
<tr class="grey3">
<td class="firstcol">Output Volume: Nxt 3M</td>
<td>-5</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-32</td>
<td>-31</td>
<td>57%</td>
<td>28</td>
<td>-48</td>
<td>76</td>
</tr>
<tr class="grey3">
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>-17</td>
<td>-6</td>
<td>-13</td>
<td>-20</td>
<td>-10</td>
<td>-1</td>
<td>6%</td>
<td>34</td>
<td>-20</td>
<td>54</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">From end
2000</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Compare to NTC MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>May 
09</td>
<td>Apr 
09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>50.84</td>
<td>47.36</td>
<td>45.40</td>
<td>43.13</td>
<td>41.22</td>
<td>74%</td>
<td>56.32</td>
<td>34.93</td>
<td>21</td>
</tr>
</tbody>
</table>
</body></html>

The Confederation of British Industry continues to see very weak orders in both its domestic and export surveys. Both total and export orders are in the lower ten percentile of their historic range of values. Stocks of goods with a [...]

UK's CBI Orders Continue To Lag

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819d.jpg" align="right" border="0" height="265" width="353">Encouraging
indications that consumer spending was improving faded during August.
During the latest week, chain store sales fell 0.9% and that was enough
to leave the August average unchanged from July after that month's 1.0%
increase from June. During the last ten years there has been a 69%
correlation between the year-to-year growth in chain store sales and
the growth in general merchandise sales. The weekly figures
are available in Haver's SURVEYW database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819e.jpg" align="right" border="0" height="265" width="353">

The ICSC-Goldman Sachs
retail chain-store sales index is constructed using the same-store
sales (stores open for one year) reported by 78 stores of seven
retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and
Wal-Mart.Prospects for improvement in sales
seem limited. The leading indicator of sales ticked up 0.1% (-0.3% y/y)
during the latest week and it has been flat all this year.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819f.jpg" align="right" border="0" height="265" width="353">
The Johnson Redbook also reported soft sales of late. General
merchandise store sales so far this month slipped a seasonally adjusted
0.6% from July (-4.4% y/y). Department store sales were down 6.6% y/y
on a same-store basis while discount store sales fell a lesser 3.4% as
shoppers searched for bargains. Excluding
Items from Personal Consumption Expenditures Inflation from
the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/staff/2009/staff0901.pdf">
here.</a>&nbsp;
<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">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>491.0</td>
<td>495.6</td>
<td>-0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
</body></html>

Encouraging indications that consumer spending was improving faded during August. During the latest week, chain store sales fell 0.9% and that was enough to leave the August average unchanged from July after that month's 1.0% increase [...]

Weekly Chain Store Sales Remain Flat Versus July

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819a.jpg" align="right" border="0" height="265" width="353">The Mortgage
Bankers Association indicated that mortgage applications overall
increased 5.6% last week; however, that only made up for a 3.5% decline
during the prior period. Together, the latest figures left applications
for all of August up 0.6% from July after that month's 3.7% decline.
Applications still remained near the lowest level since last November.
There has been some life in purchase applications, but it's
hardly
vibrant. Applications rose 3.9% last week after a 1.1% increase during
the prior period. Together the gains lifted applications for the month
so far by 2.2% from July when applications fell 1.3% m/m. Nevertheless
since the early-February low, purchase applications have risen 15% as
new and existing home sales have recovered.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819b.jpg" align="right" border="0" height="265" width="353">
During the last ten years
there has been a (negative) 79% correlation between the level of
applications for purchase and the effective interest rate on a 30-year
mortgage.&nbsp; Moreover, during the last ten years there has been
a 61% correlation between the y/y change in purchase applications and
the change in new plus existing single family home sales.
Interest in
mortgage refinancing has been stifled of late by the rise in interest
rates. Applications to refinance made up merely the prior week's
decline with a 6.9% increase. So far in August, applications are 0.8%
lower than July and near the lowest level since November. Since their
peak in January, refinance applications have fallen by
three-quarters.
Since the
beginning of this year, fixed-rate
mortgage applications have fallen by slightly more than one-half while
adjustable-rate mortgages have doubled. The number of conventional
loans has fallen nearly two-thirds while gov't backed loans have fallen
by more than one-third. The earlier rise in mortgage interest rates
has stabilized, for the moment. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819c.jpg" align="right" border="0" height="265" width="353">
The effective interest rate on a
conventional 15-year mortgage fell last week to 4.76% and for the month
averaged 4.89%. These figures are up from the April low of 4.69% but
the rate had reached a high of 5.36% in early-June. For a 30-year
mortgage, the rate also fell last week to 5.35% after reaching a high
of 5.79% in early-June.&lt;
Interest rates on 15- and 30-year mortgages are
closely correlated (&gt;90%) with the rate on 10-year Treasury
securities. Rates on adjustable 1-Year mortgages averaged 6.71% this
month versus the low near 6.0% during January. Nevertheless, the rate
remained down from the 7.07% peak reached last
fall.
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
covers roughly 50% of all U.S. residential mortgage applications
processed each week by mortgage banks, commercial banks and thrifts.
Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.&nbsp;The figures for weekly
mortgage applications are available in Haver's SURVEYW
database.
 Sustaining a Global Recovery from the
International Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/fandd/2009/09/blanchardindex.htm">here</a>.&nbsp;
<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/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>527.0</td>
<td>499.0</td>
<td>25.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>277.7</td>
<td>267.2</td>
<td>-11.6%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,982.5</td>
<td>1,853.8</td>
<td>91.6%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>

</body></html>

The Mortgage Bankers Association indicated that mortgage applications overall increased 5.6% last week; however, that only made up for a 3.5% decline during the prior period. Together, the latest figures left applications for all of [...]

U.S. Weekly Mortgage Applications Rise But Trend Remains Weak

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819a.jpg" align="right" border="0" height="265" width="353">The Mortgage
Bankers Association indicated that mortgage applications overall
increased 5.6% last week; however, that only made up for a 3.5% decline
during the prior period. Together, the latest figures left applications
for all of August up 0.6% from July after that month's 3.7% decline.
Applications still remained near the lowest level since last November.
There has been some life in purchase applications, but it's
hardly
vibrant. Applications rose 3.9% last week after a 1.1% increase during
the prior period. Together the gains lifted applications for the month
so far by 2.2% from July when applications fell 1.3% m/m. Nevertheless
since the early-February low, purchase applications have risen 15% as
new and existing home sales have recovered.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819b.jpg" align="right" border="0" height="265" width="353">
During the last ten years
there has been a (negative) 79% correlation between the level of
applications for purchase and the effective interest rate on a 30-year
mortgage.&nbsp; Moreover, during the last ten years there has been
a 61% correlation between the y/y change in purchase applications and
the change in new plus existing single family home sales.
Interest in
mortgage refinancing has been stifled of late by the rise in interest
rates. Applications to refinance made up merely the prior week's
decline with a 6.9% increase. So far in August, applications are 0.8%
lower than July and near the lowest level since November. Since their
peak in January, refinance applications have fallen by
three-quarters.
Since the
beginning of this year, fixed-rate
mortgage applications have fallen by slightly more than one-half while
adjustable-rate mortgages have doubled. The number of conventional
loans has fallen nearly two-thirds while gov't backed loans have fallen
by more than one-third.
 The earlier rise in mortgage interest rates
has stabilized, for the moment. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819c.jpg" align="right" border="0" height="265" width="353">
The effective interest rate on a
conventional 15-year mortgage fell last week to 4.76% and for the month
averaged 4.89%. These figures are up from the April low of 4.69% but
the rate had reached a high of 5.36% in early-June. For a 30-year
mortgage, the rate also fell last week to 5.35% after reaching a high
of 5.79% in early-June.&lt;
Interest rates on 15- and 30-year mortgages are
closely correlated (&gt;90%) with the rate on 10-year Treasury
securities. Rates on adjustable 1-Year mortgages averaged 6.71% this
month versus the low near 6.0% during January. Nevertheless, the rate
remained down from the 7.07% peak reached last
fall.
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
covers roughly 50% of all U.S. residential mortgage applications
processed each week by mortgage banks, commercial banks and thrifts.
Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.&nbsp;The figures for weekly
mortgage applications are available in Haver's SURVEYW
database.
 Sustaining a Global Recovery from the
International Monetary Fund can be found <a href="http://www.imf.org/external/pubs/ft/fandd/2009/09/blanchardindex.htm">here</a>.&nbsp;
<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/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>527.0</td>
<td>499.0</td>
<td>25.7%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>277.7</td>
<td>267.2</td>
<td>-11.6%</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,982.5</td>
<td>1,853.8</td>
<td>91.6%</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
</tbody>
</table>

Weekly Chain Store Sales Remain
Flat Versus July 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 19, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819d.jpg" align="right" border="0" height="265" width="353">Encouraging
indications that consumer spending was improving faded during August.
During the latest week, chain store sales fell 0.9% and that was enough
to leave the August average unchanged from July after that month's 1.0%
increase from June.
 During the last ten years there has been a 69%
correlation between the year-to-year growth in chain store sales and
the growth in general merchandise sales. The weekly figures
are available in Haver's SURVEYW database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819e.jpg" align="right" border="0" height="265" width="353">

The ICSC-Goldman
Sachs
retail chain-store sales index is constructed using the same-store
sales (stores open for one year) reported by 78 stores of seven
retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and
Wal-Mart.


Prospects for improvement in sales
seem limited. The leading indicator of sales ticked up 0.1% (-0.3% y/y)
during the latest week and it has been flat all this year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819f.jpg" align="right" border="0" height="265" width="353">The
Johnson Redbook also reported soft sales of late. General
merchandise store sales so far this month slipped a seasonally adjusted
0.6% from July (-4.4% y/y). Department store sales were down 6.6% y/y
on a same-store basis while discount store sales fell a lesser 3.4% as
shoppers searched for bargains.
 Excluding
Items from Personal Consumption Expenditures Inflation from
the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/staff/2009/staff0901.pdf">
here.</a>&nbsp;
<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">08/14/09</th>
<th scope="col">08/07/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>491.0</td>
<td>495.6</td>
<td>-0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>
UK's CBI Orders Continue To Lag 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 19, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090819g.jpg" align="left" border="0" height="265" width="353">
The Confederation of British Industry continues to see very
weak orders in both its domestic and export surveys. Both total and
export orders are in the lower ten percentile of their historic range
of values. Stocks of goods with a diffusion reading that fell to +13
from +20 are now near their range mid range (standing at their 45th
percentile) and are well below their 12-monhth average, showing
inventory progress has been made. In contrast orders are weaker than
their 12-month averages. What ever is getting better it does not seem
to be boosting orders despite the gain in August. 
 

To compare with that finding we have the contrary result that
although orders are very weak output volume over the next three months
is expected to do much better. The survey measure rose to -5 in August
from -14 in July, thrusting output volume expectations into the 57th
percentile of their range, far better than the reading for orders. The
average price expected has however slipped in August to -17 from -6 in
June. That is on the lower 6 percentile of its range. These readings
contrast with the UK MFG readings from NTC which at 50.84 is indicating
expansion and stands in the 74th percentile of its range. (The NTC
survey is also a diffusion survey but it presents its statistics as
dose the US ISM rather than as an &#8216;up&#8217; minus &#8216;down&#8217; diffusion index as
the one used by the CBI. For the CBI, zero is neutral; for the NTC
index, 50 is the neutral mark. Also the NTC index is for manufacturing
not all of industry, as is the CBI report.) 
 

The outlook portion of the CBI index is relatively more
positive, but still is not as upbeat as the Markit/NTC index. And the
orders assessment from the CBI is downright depressing as its
improvement in July still leaves the index lower over three months and
longer. The picture of the UK MFG industry is curiously mixed. The
differences are not simply those between different surveys but among
somewhat related measures in the same survey. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">UK
Industrial volume data CBI Survey </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Reported:</td>
<td>Aug 
09</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>May 
09</td>
<td>Apr 
09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total Orders</td>
<td>-54</td>
<td>-59</td>
<td>-51</td>
<td>-56</td>
<td>-57</td>
<td>-43</td>
<td>7%</td>
<td>9</td>
<td>-59</td>
<td>68</td>
</tr>
<tr class="grey3">
<td class="firstcol">Export Orders</td>
<td>-48</td>
<td>-45</td>
<td>-52</td>
<td>-46</td>
<td>-34</td>
<td>-36</td>
<td>7%</td>
<td>3</td>
<td>-52</td>
<td>55</td>
</tr>
<tr class="grey3">
<td class="firstcol">Stocks: FinGds</td>
<td>13</td>
<td>20</td>
<td>22</td>
<td>30</td>
<td>28</td>
<td>25</td>
<td>45%</td>
<td>31</td>
<td>-2</td>
<td>33</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">Looking
ahead</td>
</tr>
<tr class="grey3">
<td class="firstcol">Output Volume: Nxt 3M</td>
<td>-5</td>
<td>-14</td>
<td>-17</td>
<td>-17</td>
<td>-32</td>
<td>-31</td>
<td>57%</td>
<td>28</td>
<td>-48</td>
<td>76</td>
</tr>
<tr class="grey3">
<td class="firstcol">Avg Prices 4Nxt 3m</td>
<td>-17</td>
<td>-6</td>
<td>-13</td>
<td>-20</td>
<td>-10</td>
<td>-1</td>
<td>6%</td>
<td>34</td>
<td>-20</td>
<td>54</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="11">From end
2000</td>
</tr>
<tr class="grey1">
<td colspan="11" class="firstcol">Compare
to NTC MFG</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>Jul 
09</td>
<td>Jun 
09</td>
<td>May 
09</td>
<td>Apr 
09</td>
<td>12MO Avg</td>
<td>Pcntle</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="grey3">
<td class="firstcol">UK MFG</td>
<td>&nbsp;</td>
<td>50.84</td>
<td>47.36</td>
<td>45.40</td>
<td>43.13</td>
<td>41.22</td>
<td>74%</td>
<td>56.32</td>
<td>34.93</td>
<td>21</td>
</tr>
</tbody>
</table>
</body></html>

U.S. Weekly Mortgage ApplicationsRise But Trend Remains Weak

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090818h.jpg" align="right" border="0" height="265" width="353">
The participants in the ZEW survey--institutional investors
and analysts--have become much more positive about the outlook, six
months ahead. The ZEW Economic Sentiment indicator increased 16.6
points in August to reach a percent balance of 56.1, the highest since
April 2006 and well above the long term average of 26.5. At the same
time the appraisal of the current economic condition was somewhat <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090818i.jpg" align="right" border="0" height="265" width="353">
less
negative. The excess of pessimists regarding the current economic
situation was 77.2% compared with 89.3% in July. The two indicators are
shown in the first chart.
Recent data showing improvements in orders, production,
exports and an increase in Germany's second quarter GDP, no doubt,
influenced the improvement in both the appraisal of the current
situation and of the outlook.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090818j.jpg" align="right" border="0" height="265" width="353">
The continued high negative balance of
opinion regarding the current situation could suggest that the
financial community has yet to be convinced that recovery is underway,
but their positive view of the future suggests otherwise. (Opinions are
influenced by current economic conditions and opinions, through their
impact on "animal spirits" influence future economic conditions.)

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ZEW</th>
<th scope="col">Aug 09</th>
<th scope="col">Jul 09</th>
<th scope="col">Aug 08</th>
<th scope="col">M/M chg&nbsp;</th>
<th scope="col">Y/Y chg</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Current Economic Situation (%
balance)&nbsp;&nbsp;</td>
<td>-77.2</td>
<td>-89.3</td>
<td>-9.2</td>
<td>12.1</td>
<td>-68.0</td>
<td>7.3</td>
<td>75.9</td>
<td>18.3</td>
</tr>
<tr>
<td class="firstcol">Economic Expectation (%
balance)&nbsp;</td>
<td>56.1</td>
<td>39.5</td>
<td>-55.5</td>
<td>16.6</td>
<td>111.6</td>
<td>-47.5</td>
<td>-3.0</td>
<td>22.3</td>
</tr>
</tbody>
</table>
</body></html>

The participants in the ZEW survey--institutional investors and analysts--have become much more positive about the outlook, six months ahead. The ZEW Economic Sentiment indicator increased 16.6 points in August to reach a percent [...]

Economic Sentiment In Germany's Financial Community Rises Sharply In August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090818f.jpg" width="353">
The strong rise this year in gasoline prices stabilized last week. The pump price for regular gasoline held at an average $2.64 per gallon and that was down a nickel from last month&#39;s high. Despite this w/w stability, however, prices remain roughly one dollar (59%) higher versus the December low. Yesterday, the cash market price for gasoline of $1.87 was down from last week and down from the $1.99 averaged the week earlier. Nevertheless, gasoline prices were up off the early-July low of $1.60. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
Crude oil prices also are slightly off their high. Light sweet crude oil prices (WTI) dipped last week to $69.65 per barrel but they&#39;ve roughly doubled this year. Yesterday the spot market price for light sweet crude oil fell back again, to $66.75 per barrel. Prices had reached a daily high of $72.68 earlier in July.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090818g.jpg" width="353">
Of late, the demand for gasoline hit a plateau after an earlier seasonal run-up. During the last four weeks since May, the demand for gasoline has moved sideways and is down by 3.1% y/y. Though that compares to a nearly 5% rate of decline last fall, the relative strength is diminishing. Demand for distillate also is off a sharp 20.7% though residual fuel oil demand has moved higher. Finally, oil remains plentiful as evidenced by a 14.1% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline recently have firmed by 4.5% y/y and crude oil inventories less the SPR are up by 18.7%. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Natural gas prices continued their move sideways last week. At an average of $3.44 per mmbtu (-62.8% y/y), the price was down by three-quarters from the high reached in early-July of last year of $13.19/mmbtu.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">08/17/09</th>
<th scope="col">08/10/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.64</td>
<td>2.65</td>
<td>-29.5%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>69.65</td>
<td>71.57</td>
<td>-39.1%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

The strong rise this year in gasoline prices stabilized last week. The pump price for regular gasoline held at an average $2.64 per gallon and that was down a nickel from last month's high. Despite this w/w stability, however, prices [...]

Gasoline Price Increase Stabilizes After A One Dollar Rise This Year

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

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Andrew Cates

**China-US shipping activity** 
The economic fallout from escalating US-China trade tensions is becoming increasingly visible in the data. A clear example is the chart below, which highlights a sharp drop in vessel arrivals at the ports of Los Angeles and Long Beach, along with a notable decline in ships waiting offshore. These trends point to a tangible weakening in bilateral trade flows, as the effects of tit-for-tat tariffs imposed by both countries begin to bite. Given the outsized role the US and China play in global commerce, this slowdown is likely to reverberate through global supply chains, weighing on trade volumes, dampening demand, and curbing economic growth worldwide.

250501Z1.jpg

**GDP growth in Q1**
Data this week showed that the US economy contracted, albeit modestly, in Q1 even as the euro area recorded a modest expansion—an unusual divergence. The contraction in US GDP can be largely attributed to a sharp increase in imports, as firms rushed to front-load purchases ahead of anticipated tariff hikes. In addition, domestic demand was subdued, with weaker contributions from both consumer spending and government consumption. This decoupling between the US and euro area economies is particularly striking given the current global focus on the US dollar. While the euro area has shown unexpected signs of resilience, the US downturn raises important questions about its underlying momentum, especially as trade dynamics and policy uncertainty continue to cloud the outlook.

250501Z2.jpg

**The US dollar versus yield differentials**
Chart 3 below illustrates a sharp breakdown in the correlation between the US-Germany 10-year yield differential and the EUR/USD exchange rate. Historically, the dollar has moved closely with interest rate spreads, as yield-seeking capital flowed into US assets. But since early 2025—and more acutely following the April tariff actions—the dollar has weakened markedly even as the yield spread has narrowed only modestly. This decoupling underscores a critical shift: capital markets are reacting not just to monetary policy, but to rising trade and geopolitical uncertainty. In other words, the exchange rate is now being driven as much by risk sentiment as by interest rate arbitrage.

250501Z3.jpg

**The US economy’s structural outperformance and the dollar**
A second dynamic, captured in the next chart, reveals a tight correlation between the US real effective exchange rate and the potential GDP growth differential between the US and euro area over the past 50-60 years. This raises the question: has dollar strength (until recently) merely been a reflection of US growth leadership—or are capital inflows themselves helping to sustain this growth outperformance? In effect, the tail may be wagging the dog. Global investors have long allocated capital to the US, attracted by its macroeconomic resilience, technological leadership, and deep, liquid financial markets. The danger now is that the US trade war may disrupt this equilibrium. A sharp or sustained reduction in capital inflows could undermine growth, weaken the dollar, and trigger broader financial instability. Moreover, reversing this dynamic is not straightforward—barring a credible structural resurgence in European (or Asian) growth, the global investment landscape remains tilted toward the US.

250501Z4.jpg

**US competitiveness versus Europe, China and Japan** 
The next chart below examines relative unit labour costs across major economies since 2011. The US and China have seen a broadly similar trajectory, with steady increases in relative cost structures, while the euro area has remained flat and Japan has seen dramatic improvement. This suggests that, from a cost competitiveness standpoint, the US is not uniquely disadvantaged vis-à-vis China. However, as we discuss further below, this parallel erosion of cost competitiveness is occurring at much higher nominal wage levels in the US, which blunts its ability to regain export share through tariff-related shifts alone. The trade war strategy—absent a corresponding improvement in productivity or structural reforms—risks imposing costs without delivering material competitiveness gains.

250501Z5.jpg

**Average wages in selected developed and developing economies**
This point is reinforced by the final chart, which shows estimates for average monthly wages across countries in 2024. US labour remains much more expensive than in peer or emerging economies. So even if China’s costs rise in tandem with the US, the global supply chain has ample alternatives. 'China plus one' strategies are accelerating, and the US remains structurally misaligned with low-cost production hubs. Tariffs aimed at reshoring supply chains are unlikely to deliver sustained gains unless accompanied by deep supply-side reforms, and risk further disincentivizing foreign direct investment if global firms perceive US trade policy as erratic or punitive.

250501Z6.jpg

Financial markets found a measure of calm this week, buoyed by some subtle shifts in tone from US policymakers. A softening in the administration’s rhetoric around trade tariffs coupled with a less confrontational stance toward Federal Reserve Chair Jerome Powell, helped ease tensions that had roiled markets earlier in the month. Equities rebounded modestly, and volatility indicators edged lower, reflecting cautious optimism that the worst of the policy shocks may be behind us. But beneath the surface, significant downside risks persist. New shipping data point to a pronounced slowdown in US-China trade flows (chart 1), suggesting the damage from recent tariff escalations is already rippling through global supply chains. Meanwhile, incoming data for the US revealed an unexpected contraction in the economy in Q1 and further signs of weakness in the labour market (chart 2). The US dollar, in the meantime, while long supported by superior growth and yield differentials, has begun to decouple from traditional drivers (charts 3 and 4) suggesting growing pressure on capital flows. At the same time, structural imbalances are drawing renewed scrutiny: unit labour cost comparisons show the US steadily losing competitiveness (chart 5), while nominal wage disparities remain stark versus China and other Asian economies, further complicating any effort to restore trade balance without broader reforms (chart 6). In short, while markets may be drawing temporary comfort from a pause in tariff brinkmanship, the deeper economic and financial vulnerabilities exposed this month remain unresolved—and increasingly central to the global macro narrative.

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Charts of the Week: Tariff Truce, Tenuous Trust

250430N1.jpg

250430O1.jpg

Real GDP eased 0.3% SAAR (+2.1% y/y) during the first quarter of 2025 after increasing 2.4% in Q4’24 and 3.1% in Q3’24. A 0.4% increase had been expected in the Action Economics Forecast Survey. It was the first decline since Q1 2022.

Foreign trade subtracted 4.83 percentage points from growth last quarter as imports surged 41.3% (13.4% y/y) ahead of tariffs, which began to come into effect in the first quarter. The rise followed a 1.9% decline in Q4’24. Exports rose 1.8% (3.0% y/y) after easing 0.2% in Q4. Inventories added 2.25 percentage points to growth after subtracting 0.84 percentage point from Q4 growth.

Real final sales to domestic purchasers grew 2.3% (2.9% y/y) in Q1 after rising 3.0% in Q4. Personal consumption expenditures rose 1.8% (3.1% y/y) following a 4.0% gain. Durable goods spending fell 3.4% (+5.3% y/y) after surging 12.4% in Q4. Motor vehicle purchases declined 11.1% (+5.5% y/y) after strengthening 19.7% in Q4. Spending on home furnishings & appliances gained 1.5% (6.1% y/y) following a 5.4% rise. Recreational goods & vehicle outlays rose 2.5% (7.0% y/y) last quarter after a 13.9% Q4 increase.

Nondurable goods outlays rose 2.7% (3.0% y/y) following 3.1% growth in Q4. Apparel spending increased 6.7% (2.5% y/y) following a 5.0% rise. Food & beverage buying gained 2.5% (2.3% y/y) after a 1.8% increase. Gasoline & fuel oil purchases increased 4.6% (3.4% y/y) after falling 2.0% in Q4.

Spending on services increased 2.4% last quarter (2.7% y/y) after a 3.0% gain. Outlays on housing & utilities increased 3.4% (1.8% y/y) after rising 1.1% in Q4. Health care expenditures rose 4.0% (4.8% y/y) following a 4.7% strengthening. Transportation outlays increased 5.3% (4.6% y/y) after a 3.7% rise while recreation spending rose 4.7% (2.8% y/y) following a 4.5% rise. Restaurant & hotel expenditures declined 2.1% (+0.5% y/y) following a 2.8% rise. Financial services expenditures rose 1.9% (2.0% y/y) after a 3.1% Q4 increase.

Business fixed investment increased 9.8% (3.6% y/y) following a 3.0% decline in Q4. Expenditures on structures rose 0.4% (-0.4% y/y) after a 2.9% increase. Expenditures on producers’ durable equipment jumped 22.5% (8.0% y/y) after falling 8.7%.  Outlays on information processing equipment soared 69.3% (18.9% y/y) following a 7.3% decline. Industrial equipment investment fell 1.4% (-0.3% y/y) after easing 0.9%. Intellectual property product spending rose 4.1% (1.8% y/y) following a 0.5% decline. 

Residential structures investment increased 1.3% (-0.1% y/y) in Q1 after a 5.5% Q4 rise.

250430P1.jpg

250430Q1.jpg

Government spending fell 1.5% (+2.4% y/y) after a 3.1% Q4 rise. Federal government expenditures declined 5.1% (+2.9% y/y) after rising 4.0% in Q4. National defense expenditures declined 8.0% (+4.0% y/y) after increasing 4.8% in Q4. State & local government spending rose 0.8% (2.1% y/y) following a 2.5% rise.

The GDP price index rose 3.7% (2.6% y/y) after increasing 2.3% in Q4. It was the largest increase since Q4’22. A 2.4% increase had been expected. The PCE chain price index increased 3.6% (2.5% y/y) following a 2.4% rise. The PCE price index excluding food and energy rose 3.5% (2.8% y/y) after increasing 2.6% in Q4. The business fixed investment price index rose 0.4% (1.8% y/y) after 1.5% rise. The residential price index strengthened 3.9% (3.2% y/y) after a 1.9% rise while the government price index increased 4.7% (2.8% y/y) following a 2.1% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

250430R1.jpg

250430S1.jpg

- Decline in GDP is first in three years.
- Foreign trade subtracts substantially ahead of tariffs.
- Domestic final demand growth weakens.
- Price index strengthens with higher core PCE prices.

U.S. GDP Unexpectedly Declines in Q1’25; Prices Strengthen

Michael J. Moran

250430A.jpg

250430B.jpg

High-side readings on the price indexes for personal consumption expenditures in January and February caused some concern about emerging price pressure, especially with some policies of the Trump administration possibly adding to the upward force. However, March brought notable relief, with the headline price index falling slightly (-0.04%). A marked decline in energy prices was helpful (-2.7%), but core prices also were subdued, increasing less than 0.1%.  Year-over-year changes were still above the Fed’s target of 2%, but only barely so for the headline measure (2.3%). The core index backed away from the reading of 3.0% in February, but the latest reading of 2.7% was in line with observations in the past year, and still uncomfortably above target.

Consumers roused from a winter slumber in March, with nominal outlays increasing 0.7%. With inflation restrained, real outlays also posted a gain of 0.7%. Spending on durable gods stood out, with real outlays advancing 3.2%. Real outlays for both nondurable goods and services rose 0.4%, a solid pace. Signs of life were certainly welcome after an average decline of 0.1% in January and February. The March rebound left growth of 1.8% (annual rate) in the first quarter.

The brisk increase in spending in March was supported by a solid gain in personal income (0.5% in both nominal and real terms). Growth in wage income was firm at 0.5%, while proprietors’ income was robust with a gain of 1.8% (not annualized!). The farm sector led the advance in proprietors’ income, but the nonfarm sector also was strong (0.6%).

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

250430C.jpg

250430D.jpg

- Price pressure eases.
- Spending rebounds after two soft months.

Personal Income, Consumption, and Prices in March

250430F20.jpg

250430G20.jpg

The Pending Home Sales Index, a forward-looking home sales measure based on contract signings, from the National Association of Realtors rose 6.1% to 76.5 (-0.6% y/y) during March after rising a little-revised 2.1% in February. These changes followed a 4.6% January decline.

The rise in March sales occurred as the rate on a 30-year mortgage eased to an average 6.65% from 6.84% in February. This rate was well above a low of 2.68% averaged in December 2020.

Pending home sales were up in most regions of the country. Sales in the Midwest rose 4.9% (1.4% y/y) last month after rising 1.8% in February. Sales in the South increased 9.8% (-0.4% y/y) following a 5.8% February rise. Sales in the West improved 4.8% (-2.0% y/y) after falling 3.0% in February. Sales in the Northeast were off 0.5% (-3.0% y/y) in March after falling 0.9% in February.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Sales rise to highest level in four months.
- Strength is evident throughout most of country.

U.S. Pending Home Sales Surge in March

Sandy Batten

250430F5.jpg

250430G5.jpg

The employment cost index (ECI) for civilian workers, arguably the most accurate measure of labor compensation in the United States, rose 0.9% q/q (3.6% y/y) in Q1, the same quarterly increase as in last year’s Q4, according to the Bureau of Labor Statistics. The quarterly gains have fluctuated between 0.8% and 1.0% for the past six quarters. The Action Economics Forecast Survey had expected a 0.9% q/q increase and a 3.5% y/y gain.

Wages and salaries for civilian workers rose 0.8% q/q (3.5% y/y) in Q1, down from 1.0% q/q in Q4. This tied the Q3 2024 quarterly rise as the smallest increase since Q2 2021. It was also the smallest y/y increase since Q2 2021. Benefits increased by an outsized 1.2% q/q (3.9% y/y) in Q1 versus 0.8% q/q in Q4. This is the largest quarterly gain since Q2 2022. In general, employment cost gains remain above the pace observed prior to the pandemic but are slowing gradually.

Private industry workers’ compensation rose 0.8% q/q (3.4% y/y) in Q1, down from 0.9% q/q (3.6% y/y) in Q4. Wages and salaries for private industry workers increased 0.8% q/q (3.4% y/y) in Q1 versus 0.8% q/q (3.7% y/y) in Q4. The quarterly gain in Q1 tied that in Q3 2024 as the smallest increase since Q4 2020. Benefits for private industry workers jumped 1.2% q/q (3.6% y/y). the largest quarterly gain since Q2 2022. The acceleration in benefits in Q1 was primarily in service-producing industries.

Compensation in private goods-producing industries increased 1.0% q/q (3.2% y/y) in Q1, the largest quarterly gain in five quarters, versus a 0.7% q/q increase in Q4. Compensation in construction jumped 1.3% q/q, its largest quarterly increase since Q2 2022, up from a 0.6% q/q gain in Q4. Manufacturing compensation growth slowed to 0.7% q/q, its slowest quarterly advance since Q4 2020, from 0.8% q/q in Q4. Compensation in private service-producing industries increased 0.8% q/q (3.5% y/y), down slightly from a 0.9% q/q gain in Q4. Compensation in education and health services jumped 1.3% q/q, its largest quarterly gain since Q3 2023. In contrast, compensation in other services edged up 0.1% q/q in Q1, its smallest quarterly advance since before the pandemic.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver’s **USECON** database. Consensus estimates from the Action Economics Forecast Survey are in Haver’s **AS1REPNA** database.

250430H5.jpg

250430I5.jpg

- Compensation grew 0.9 q/q in Q1, the same pace as in Q4.
- Wage growth slowed to 0.8% q/q while benefits surged 1.2% q/q, their largest quarterly increase since Q2 2022.

Economy in Brief: August 2009

Jump to:

Extended Benefits Dip

Extended Benefits Dip

UK's CBI Orders Continue To Lag

Weekly Chain Store Sales Remain Flat Versus July

U.S. Weekly Mortgage Applications Rise But Trend Remains Weak

U.S. Weekly Mortgage ApplicationsRise But Trend Remains Weak

Economic Sentiment In Germany's Financial Community Rises Sharply In August

Gasoline Price Increase Stabilizes After A One Dollar Rise This Year