Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923g.jpg" width="353">
In an anticipated and unanimous vote, the Federal Open Market Committee today left the Federal funds rate in a &quot;range from 0 to 1/4 percent.&quot; The discount rate also was left unchanged at 0.5%. The action was as expected and left the Fed funds rate at its lowest level ever.
The Fed indicated that &quot;economic activity has picked up following its severe downturn.&quot; In addition, as at earlier meetings, it noted &quot;Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.&quot;
Regarding inflation the FOMC statement indicated that &quot;With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.&quot;<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923h.jpg" width="353">
In its effort to promote economic liquidity, the Fed used similar language as in June that &quot;... to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. As previously indicated, the Committee indicated that the Federal Reserve&#146;s purchases of $300billion of Treasury securities will be completed by the end of October 2009. Moreover, &quot;The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20090923a.htm">link</a>.
The Haver databases USECON, WEEKLY and DAILY contain the figures from the Federal Reserve Board.
Against the backdrop of monetary ease, forward indicators are signaling the possibility of future inflationary risk. The CRB Commodity Price Index has risen roughly 25% since yearend while the trade-weighted value of the dollar has fallen 13% since March.

<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">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
</table>
</body>
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In an anticipated and unanimous vote, the Federal Open Market Committee today left the Federal funds rate in a "range from 0 to 1/4 percent." The discount rate also was left unchanged at 0.5%. The action was as expected and left the [...]

FOMC Cites Economic Improvement But Leaves Rates Unchanged

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923d.jpg" align="right" border="0" height="265" width="353">The Mortgage
Bankers Association indicated that mortgage applications overall
increased 12.8% last week as lower interest rates spurred strength in
refinancings. Applications to refinance jumped 17.4% last week and in
September they have risen 29.3% from August. Nevertheless, since their
peak this past January refinance applications have fallen by nearly
two-thirds.I tandem, there has been lesser strength in
purchase applications. Applications rose 5.6% last week and that made
up roughly half of the prior week's decline. So far this month purchase
applications have risen 4.6% from August after that month's 3.4%
increase. Since the early-February low purchase applications have risen
22% as new and existing home sales have recovered. 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. 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.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923e.jpg" align="right" border="0" height="265" width="353">
The effective
interest rate on a conventional 15-year mortgage fell last week to
4.67%, down from the high of 5.21% averaged during June. These figures
are near the lowest since 2003. For a 30-year mortgage the rate also
fell last week to 5.19% after reaching a high of 5.79% in early-June.
Interest rates on 15-year and 30-year mortgages are closely correlated
(&gt;90%) with the rate on 10-year Treasury securities. Rates on
adjustable 1-Year mortgages averaged 6.66% this month versus the low
near 6.0% during January. Nevertheless, the rate remained down from the
7.07% peak reached last fall. Though they have recovered of
late, since the beginning of this year fixed-rate mortgage applications
have fallen by slightly more than one-half while adjustable-rate
mortgages have more than doubled. The number of conventional loans has
fallen nearly two-thirds but gov't backed loans.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923f.jpg" align="right" border="0" height="265" width="353">
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.TALF:
Jump-Starting the Securitization Markets from the Federal
Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0906.html%A0">
here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">09/18/09</th>
<th scope="col">09/11/09</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>668.5</td>
<td>592.8</td>
<td>13.0%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>288.3</td>
<td>272.9</td>
<td>-15.8</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,881.5</td>
<td>2,454.5</td>
<td>41.0</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
<tr>
<td class="firstcol">15-Year Effective Interest Rate
(%)</td>
<td>4.7%</td>
<td>4.7%</td>
<td>6.1% (9/08)</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.3%</td>
</tr>
</tbody>
</table>
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The Mortgage Bankers Association indicated that mortgage applications overall increased 12.8% last week as lower interest rates spurred strength in refinancings. Applications to refinance jumped 17.4% last week and in September they [...]

U.S. Weekly Mortgage Applications Strengthen As Interest Rates Near The Lowest Since 2003

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923c.jpg" align="left" border="0">
The EMU PMIs are up again &#8211; and, for the second month running,
the overall business index is over 50, showing positive growth. The two
main PMI components improved again in September with MFG index up to
40.04 from 48.24 and the services index up to 50.61 from 49.92. 
 

The MFG PMI is at its highest since June of 2008. The services
index is at its best value since April 2008. 
 
The more detailed results show that Germany is suffering some setbacks
and cross currents. That is in-keeping with other German indicators we
have recently seen. In France the improvement continues to move ahead,
with a national index of business sentiment also up sharply in
September. 
 

&#8216; V-shaped&#8217; recovery -- Europe&#8217;s PMIs
continue to sketch out a recovery that is very &#8220;V-shaped.&#8217; The MFG PMI
fell from 50 to its cycle low in eight months. Now after eight months
it has risen from its low to 49.04 , nearly back to 50. The Services
PMI slipped to its cycle low in nine months. Now, seven months later,
it is above the neutral mark of 50. 
 

Beyond the diffusion world of the PMIs - Of
course the indices are not yet back to their respective cycle peaks.
But that typically does not happen until the cycle itself actually
peaks which is a long way off (we hope). For now the recovery has been
unfolding apace. The more detailed news from Germany suggests that the
pace of recovery may be in store for some slowing, from a diffusion
standpoint. But there is plenty of room for the expansion to spread in
terms of real readings like orders and industrial output and job
growth, even if the PMIs do not advance very fast from now on. PMIs are
economic indicators; formally, they are measures of breadth- the answer
the question, &#8220;what proportion of the industries are doing better, in
terms of jobs, orders, overall performance and so on?&#8221; The PMIs do not
answer the question, &#8220;how strong is the gain?&#8221; That is the next
challenge, to expand the increase in orders and in output that has
begun, and to extend the expansion to include job gains. Then the task
is to continue to show staying power across sectors. Indicators like
the diffusion-based PMIs can be very useful, but they fall short of
giving us the true welfare picture of the economy. 
 

Shifting the focus - For this cycle the PMIs have mostly done
their job. They flagged the slow down and the move lower in the economy
ahead of most traditional economic variables and they also showed the
way for the pick up. Now they will give us some indication of how the
various sectors change speed. But the key reports from here on out will
be the traditional reports that reveal true strength instead of just
diffusion or breadth. 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col">FLASH
Readings</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="3" class="firstcol">Markit
PMIs for the E-Zone</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>MFG</td>
<td>Services</td>
</tr>
<tr class="grey4">
<td class="firstcol">Sep-09</td>
<td>49.04</td>
<td>50.61</td>
</tr>
<tr class="grey4">
<td class="firstcol">Aug-09</td>
<td>48.24</td>
<td>49.92</td>
</tr>
<tr class="grey4">
<td class="firstcol">Jul-09</td>
<td>46.25</td>
<td>45.69</td>
</tr>
<tr class="grey4">
<td class="firstcol">Jun-09</td>
<td>42.62</td>
<td>44.65</td>
</tr>
<tr class="grey3">
<td colspan="3" class="firstcol">Seqment
averages</td>
</tr>
<tr class="grey2">
<td class="firstcol">3-Mo</td>
<td>45.70</td>
<td>48.57</td>
</tr>
<tr class="grey2">
<td class="firstcol">6-Mo</td>
<td>41.43</td>
<td>46.34</td>
</tr>
<tr class="grey2">
<td class="firstcol">12-Mo</td>
<td>39.34</td>
<td>44.31</td>
</tr>
<tr class="grey3">
<td colspan="3" class="firstcol">127-Mo
Range</td>
</tr>
<tr class="grey1">
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr class="grey1">
<td class="firstcol">Low</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr class="grey1">
<td class="firstcol">% Range</td>
<td>57.5%</td>
<td>49.2%</td>
</tr>
</tbody>
</table>
</body></html>

The EMU PMIs are up again – and, for the second month running, the overall business index is over 50, showing positive growth. The two main PMI components improved again in September with MFG index up to 40.04 from 48.24 and the [...]

PMIS Show Continued Growth In Europe

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923a.jpg" align="left" border="0">
Released yesterday was the U.S. House Price Index from the
Federal Housing and Finance Agency (FHFA). The Purchase Only Index for
July rose 0.3% from June and it was the third consecutive monthly
increase. Moreover, the latest gain eased the year-to-year decline in
the nationwide average of home prices to 4.2% from its worst reading of
negative 8.9% last November. Since their peak in early-2007 home prices
nationwide have fallen 10.5%. The FHFA uses data provided by Fannie Mae
and Freddie Mac and it is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923b.jpg" align="right" border="0">
Most notable during July was the 1.6% gain in home prices in
the Pacific region of the country. It followed similarly strong 0.7%
and 1.6% increases during the prior two months. Nevertheless these
increases follow earlier home price declines that were amongst the
sharpest in the country. Versus last July prices in the region were
still down 9.0% after having fallen 17.3% during all of 2008. Recent
improvement in home prices also was evident in a 1.0% July increase in
the Mid-Atlantic region. That gain, however, only recouped the decline
during June and left prices roughly even with the year-end 2008 level.
More moderate monthly gain in home prices were logged in the West North
Central, South Atlantic and Mountain Regions of the country. In the
latter two regions, however, prices continued notably below the
year-ago level.
Continuing weak were home prices in several of the country's
regions. Despite a 0.3% July increase, prices in the Mountain states
remained off 9.8% from the year ago level and they were off 16.1% from
the 2007 peak. In the South Atlantic region prices also posted a gain
during July but the 0.6% uptick still left them off by 5.6% from one
year ago. Since their early-2007 peak prices here have fallen 12.8%. In
the populous East North Central region prices slipped another 0.3%
during July and they were flat year-to-date.
Cross-Country Causes and Consequences of the 2008
Crisis: Early Warning Signals from the Federal Reserve Bank
of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-17bk.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">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">July</th>
<th scope="col">June</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</td>
<td>0.3</td>
<td>0.1</td>
<td>-4.2</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-0.1</td>
<td>0.3</td>
<td>-2.5</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>1.0</td>
<td>-1.1</td>
<td>-2.9</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.3</td>
<td>-0.2</td>
<td>-3.3</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.3</td>
<td>-0.3</td>
<td>-1.5</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>0.6</td>
<td>-0.2</td>
<td>-5.6</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>-0.9</td>
<td>2.3</td>
<td>-1.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.2</td>
<td>1.1</td>
<td>0.1</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-1.0</td>
<td>-9.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.6</td>
<td>0.7</td>
<td>-9.0</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
</body></html>

Released yesterday was the U.S. House Price Index from the Federal Housing and Finance Agency (FHFA). The Purchase Only Index for July rose 0.3% from June and it was the third consecutive monthly increase. Moreover, the latest gain [...]

FHFA Home Price Index Strengthens Due To Notable Gains In The Pacific & Mid-Atlantic Regions

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923a.jpg" align="left" border="0">
Released yesterday was the U.S. House Price Index from the
Federal Housing and Finance Agency (FHFA). The Purchase Only Index for
July rose 0.3% from June and it was the third consecutive monthly
increase. Moreover, the latest gain eased the year-to-year decline in
the nationwide average of home prices to 4.2% from its worst reading of
negative 8.9% last November. Since their peak in early-2007 home prices
nationwide have fallen 10.5%. The FHFA uses data provided by Fannie Mae
and Freddie Mac and it is not value-weighted.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923b.jpg" align="right" border="0">
Most notable during July was the 1.6% gain in home prices in
the Pacific region of the country. It followed similarly strong 0.7%
and 1.6% increases during the prior two months. Nevertheless these
increases follow earlier home price declines that were amongst the
sharpest in the country. Versus last July prices in the region were
still down 9.0% after having fallen 17.3% during all of 2008. Recent
improvement in home prices also was evident in a 1.0% July increase in
the Mid-Atlantic region. That gain, however, only recouped the decline
during June and left prices roughly even with the year-end 2008 level.
More moderate monthly gain in home prices were logged in the West North
Central, South Atlantic and Mountain Regions of the country. In the
latter two regions, however, prices continued notably below the
year-ago level.
Continuing weak were home prices in several of the country's
regions. Despite a 0.3% July increase, prices in the Mountain states
remained off 9.8% from the year ago level and they were off 16.1% from
the 2007 peak. In the South Atlantic region prices also posted a gain
during July but the 0.6% uptick still left them off by 5.6% from one
year ago. Since their early-2007 peak prices here have fallen 12.8%. In
the populous East North Central region prices slipped another 0.3%
during July and they were flat year-to-date.
Cross-Country Causes and Consequences of the 2008
Crisis: Early Warning Signals from the Federal Reserve Bank
of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/papers/2009/wp09-17bk.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">FHFA
U.S. House Price Index Purchase Only (%)</th>
<th scope="col">July</th>
<th scope="col">June</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</td>
<td>0.3</td>
<td>0.1</td>
<td>-4.2</td>
<td>-5.8</td>
<td>1.3</td>
<td>6.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New England</td>
<td>-0.1</td>
<td>0.3</td>
<td>-2.5</td>
<td>-4.6</td>
<td>-1.7</td>
<td>1.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Middle Atlantic</td>
<td>1.0</td>
<td>-1.1</td>
<td>-2.9</td>
<td>-2.3</td>
<td>1.9</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; East North Central</td>
<td>-0.3</td>
<td>-0.2</td>
<td>-3.3</td>
<td>-4.4</td>
<td>-1.3</td>
<td>1.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West North Central</td>
<td>0.3</td>
<td>-0.3</td>
<td>-1.5</td>
<td>-2.8</td>
<td>1.0</td>
<td>3.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South Atlantic</td>
<td>0.6</td>
<td>-0.2</td>
<td>-5.6</td>
<td>-7.1</td>
<td>1.4</td>
<td>7.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; East South Central</td>
<td>-0.9</td>
<td>2.3</td>
<td>-1.7</td>
<td>-1.4</td>
<td>3.8</td>
<td>7.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West South Central</td>
<td>-0.2</td>
<td>1.1</td>
<td>0.1</td>
<td>0.7</td>
<td>4.7</td>
<td>7.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Mountain</td>
<td>0.3</td>
<td>-1.0</td>
<td>-9.8</td>
<td>-6.0</td>
<td>4.0</td>
<td>10.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Pacific</td>
<td>1.6</td>
<td>0.7</td>
<td>-9.0</td>
<td>-17.3</td>
<td>0.1</td>
<td>9.8</td>
</tr>
</tbody>
</table>
PMIS Show Continued Growth In
Europe 
by <a href="/comment/Brusca.html">Robert
Brusca&nbsp;</a> September 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923c.jpg" align="left" border="0">
The EMU PMIs are up again &#8211; and, for the second month running,
the overall business index is over 50, showing positive growth. The two
main PMI components improved again in September with MFG index up to
40.04 from 48.24 and the services index up to 50.61 from 49.92. 
 

The MFG PMI is at its highest since June of 2008. The services
index is at its best value since April 2008. 
 
The more detailed results show that Germany is suffering some setbacks
and cross currents. That is in-keeping with other German indicators we
have recently seen. In France the improvement continues to move ahead,
with a national index of business sentiment also up sharply in
September. 
 

&#8216; V-shaped&#8217; recovery -- Europe&#8217;s PMIs
continue to sketch out a recovery that is very &#8220;V-shaped.&#8217; The MFG PMI
fell from 50 to its cycle low in eight months. Now after eight months
it has risen from its low to 49.04 , nearly back to 50. The Services
PMI slipped to its cycle low in nine months. Now, seven months later,
it is above the neutral mark of 50. 
 

Beyond the diffusion world of the PMIs - Of
course the indices are not yet back to their respective cycle peaks.
But that typically does not happen until the cycle itself actually
peaks which is a long way off (we hope). For now the recovery has been
unfolding apace. The more detailed news from Germany suggests that the
pace of recovery may be in store for some slowing, from a diffusion
standpoint. But there is plenty of room for the expansion to spread in
terms of real readings like orders and industrial output and job
growth, even if the PMIs do not advance very fast from now on. PMIs are
economic indicators; formally, they are measures of breadth- the answer
the question, &#8220;what proportion of the industries are doing better, in
terms of jobs, orders, overall performance and so on?&#8221; The PMIs do not
answer the question, &#8220;how strong is the gain?&#8221; That is the next
challenge, to expand the increase in orders and in output that has
begun, and to extend the expansion to include job gains. Then the task
is to continue to show staying power across sectors. Indicators like
the diffusion-based PMIs can be very useful, but they fall short of
giving us the true welfare picture of the economy. 
 

Shifting the focus - For this cycle the PMIs have mostly done
their job. They flagged the slow down and the move lower in the economy
ahead of most traditional economic variables and they also showed the
way for the pick up. Now they will give us some indication of how the
various sectors change speed. But the key reports from here on out will
be the traditional reports that reveal true strength instead of just
diffusion or breadth. 


 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="3" scope="col">FLASH
Readings</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="3" class="firstcol">Markit
PMIs for the E-Zone</td>
</tr>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td>MFG</td>
<td>Services</td>
</tr>
<tr class="grey4">
<td class="firstcol">Sep-09</td>
<td>49.04</td>
<td>50.61</td>
</tr>
<tr class="grey4">
<td class="firstcol">Aug-09</td>
<td>48.24</td>
<td>49.92</td>
</tr>
<tr class="grey4">
<td class="firstcol">Jul-09</td>
<td>46.25</td>
<td>45.69</td>
</tr>
<tr class="grey4">
<td class="firstcol">Jun-09</td>
<td>42.62</td>
<td>44.65</td>
</tr>
<tr class="grey3">
<td colspan="3" class="firstcol">Seqment
averages</td>
</tr>
<tr class="grey2">
<td class="firstcol">3-Mo</td>
<td>45.70</td>
<td>48.57</td>
</tr>
<tr class="grey2">
<td class="firstcol">6-Mo</td>
<td>41.43</td>
<td>46.34</td>
</tr>
<tr class="grey2">
<td class="firstcol">12-Mo</td>
<td>39.34</td>
<td>44.31</td>
</tr>
<tr class="grey3">
<td colspan="3" class="firstcol">127-Mo
Range</td>
</tr>
<tr class="grey1">
<td class="firstcol">High</td>
<td>60.47</td>
<td>62.36</td>
</tr>
<tr class="grey1">
<td class="firstcol">Low</td>
<td>33.55</td>
<td>39.24</td>
</tr>
<tr class="grey1">
<td class="firstcol">% Range</td>
<td>57.5%</td>
<td>49.2%</td>
</tr>
</tbody>
</table>
U.S. Weekly Mortgage Applications
Strengthen As Interest Rates Near The Lowest Since 2003 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 23, 2009



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923d.jpg" align="right" border="0" height="265" width="353">The Mortgage
Bankers Association indicated that mortgage applications overall
increased 12.8% last week as lower interest rates spurred strength in
refinancings. Applications to refinance jumped 17.4% last week and in
September they have risen 29.3% from August. Nevertheless, since their
peak this past January refinance applications have fallen by nearly
two-thirds.
I tandem, there has been lesser strength in
purchase applications. Applications rose 5.6% last week and that made
up roughly half of the prior week's decline. So far this month purchase
applications have risen 4.6% from August after that month's 3.4%
increase. Since the early-February low purchase applications have risen
22% as new and existing home sales have recovered. 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. 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.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923e.jpg" align="right" border="0" height="265" width="353">The
effective
interest rate on a conventional 15-year mortgage fell last week to
4.67%, down from the high of 5.21% averaged during June. These figures
are near the lowest since 2003. For a 30-year mortgage the rate also
fell last week to 5.19% after reaching a high of 5.79% in early-June.
Interest rates on 15-year and 30-year mortgages are closely correlated
(&gt;90%) with the rate on 10-year Treasury securities. Rates on
adjustable 1-Year mortgages averaged 6.66% this month versus the low
near 6.0% during January. Nevertheless, the rate remained down from the
7.07% peak reached last fall.
 Though they have recovered of
late, since the beginning of this year fixed-rate mortgage applications
have fallen by slightly more than one-half while adjustable-rate
mortgages have more than doubled. The number of conventional loans has
fallen nearly two-thirds but gov't backed loans.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923f.jpg" align="right" border="0" height="265" width="353">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.
TALF:
Jump-Starting the Securitization Markets from the Federal
Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2009/el0906.html%A0">
here.</a>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">09/18/09</th>
<th scope="col">09/11/09</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>668.5</td>
<td>592.8</td>
<td>13.0%</td>
<td>642.9</td>
<td>652.6</td>
<td>584.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>288.3</td>
<td>272.9</td>
<td>-15.8</td>
<td>345.4</td>
<td>424.9</td>
<td>406.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,881.5</td>
<td>2,454.5</td>
<td>41.0</td>
<td>2,394.1</td>
<td>1,997.9</td>
<td>1,634.0</td>
</tr>
<tr>
<td class="firstcol">15-Year Effective Interest Rate
(%)</td>
<td>4.7%</td>
<td>4.7%</td>
<td>6.1% (9/08)</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.3%</td>
</tr>
</tbody>
</table>

FOMC Cites Economic Improvement
But Leaves Rates Unchanged 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 23, 2009


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923g.jpg" align="left" border="0" height="265" width="353">
In an anticipated and unanimous vote, the Federal Open Market
Committee today left the Federal funds rate in a "range from 0 to 1/4
percent." The discount rate also was left unchanged at 0.5%. The action
was as expected and left the Fed funds rate at its lowest level ever.
The Fed indicated that "economic activity has picked up
following its severe downturn." In addition, as at earlier meetings, it
noted "Although economic activity is likely to remain weak for a time,
the Committee anticipates that policy actions to stabilize financial
markets and institutions, fiscal and monetary stimulus, and market
forces will support a strengthening of economic growth and a gradual
return to higher levels of resource utilization in a context of price
stability."
Regarding inflation the FOMC statement indicated that "With
substantial resource slack likely to continue to dampen cost pressures
and with longer-term inflation expectations stable, the Committee
expects that inflation will remain subdued for some time."<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090923h.jpg" align="right" border="0" height="265" width="353">
In its effort to promote economic liquidity, the Fed used
similar language as in June that "... to provide support to mortgage
lending and housing markets and to improve overall conditions in
private credit markets, the Federal Reserve will purchase a total of up
to $1.25 trillion of agency mortgage-backed securities and up to $200
billion of agency debt by the end of the year. As previously indicated,
the Committee indicated that the Federal Reserve&#8217;s purchases
of $300billion of Treasury securities will be completed by the end of
October 2009. Moreover, "The Committee will continue to evaluate the
timing and overall amounts of its purchases of securities in light of
the evolving economic outlook and conditions in financial markets. The
Federal Reserve is monitoring the size and composition of its balance
sheet and will make adjustments to its credit and liquidity programs as
warranted.
For the complete text of the Fed's latest press release please
follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20090923a.htm">link</a>.
The Haver databases USECON, WEEKLY and DAILY
contain the figures from the Federal Reserve Board.
Against the backdrop of monetary ease, forward indicators are
signaling the possibility of future inflationary risk. The CRB
Commodity Price Index has risen roughly 25% since yearend while the
trade-weighted value of the dollar has fallen 13% since March.

<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">December</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>0.00 - 0.25</td>
<td>0.00 - 0.25</td>
<td>0.16</td>
<td>1.93</td>
<td>5.02</td>
<td>4.96</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>0.50</td>
<td>0.50</td>
<td>0.50</td>
<td>2.39</td>
<td>5.86</td>
<td>5.96</td>
</tr>
</tbody>
</table>
</body></html>

FHFA Home Price Index StrengthensDue To Notable Gains In The Pacific & Mid-Atlantic Regions

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922f.jpg" align="right" border="0" height="265" width="353">
Quarterly unemployment data for the second quarter for Ireland
and Italy, and monthly data for August for Finland and Taiwan were
released today. The attached two charts show the year over year changes
in the unemployment rates for the four countries: monthly data for
Finland and Taiwan and quarterly data for Ireland and Italy. Ireland
has the highest rate of unemployment, 12%, of the four countries and
the largest increase, 6.3 percentage points, over the same period of a
year ago. The other three countries show year over year increases of
2.6 percentage points or less. The big rise in unemployment in Ireland
is another indicator of the severity of the recession hitting that
country.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922g.jpg" align="right" border="0" height="265" width="353">
The rise in unemployment in Ireland has undoubtedly played a
part in the dramatic change in its net migration. The Irish Central
Statistics Office reported today that in the year ending April, 2009,
emigrants exceeded immigrants by 7,800, compared with an excess of
immigrants of 38,500 in the previous year. This was the first excess of
emigrants since 1995. Ireland's long history of net emigration, was
reversed beginning in 1996 and continued through 2008 as the economy
prospered. Net migration reached a high of 71,800 in 2006 at the height
of the economic boom.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">
Unemployment Rates (NAS %)</th>
<th scope="col">Q2 09</th>
<th scope="col">Q1 09</th>
<th scope="col">Q4 09</th>
<th scope="col">Q3 08</th>
<th scope="col">Q2 08</th>
<th scope="col">Q1 08</th>
<th scope="col">Q4 07</th>
<th scope="col">Q3 07</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Ireland</td>
<td>12.0</td>
<td>10.2</td>
<td>7.6</td>
<td>7.0</td>
<td>5.7</td>
<td>4.9</td>
<td>4.5</td>
<td>4.6</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>7.4</td>
<td>7.9</td>
<td>7.1</td>
<td>6.1</td>
<td>6.7</td>
<td>7.1</td>
<td>6.6</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>Aug 09</td>
<td>Jul&nbsp; 09</td>
<td>Jun 09</td>
<td>May 09&nbsp;</td>
<td>Apr 09&nbsp;</td>
<td>Mar 09&nbsp;</td>
<td>Feb 09 </td>
<td> Jan 09 </td>
</tr>
<tr class="odd">
<td class="firstcol">Finland</td>
<td>7.6</td>
<td>7.7</td>
<td>9.1</td>
<td>10.9</td>
<td>8.8</td>
<td>8.3</td>
<td>7.6</td>
<td>7.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>6.1</td>
<td>6.1</td>
<td>5.9</td>
<td>5.8</td>
<td>5.8</td>
<td>5.8</td>
<td>5.8</td>
<td>5.3</td>
</tr>
</tbody>
</table>
</body></html>

Quarterly unemployment data for the second quarter for Ireland and Italy, and monthly data for August for Finland and Taiwan were released today. The attached two charts show the year over year changes in the unemployment rates for [...]

Unemployment In Ireland, Italy, Finland, And Taiwan

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922e.jpg" align="left" border="0" height="265" width="353">
Retail sales in Canada fell by 0.6% in July following a surge
in growth of 1% in June and of 1.1% in May. In the new quarter retail
sales are expanding at a 3% pace in nominal terms. For the quarter
supermarket sales are dropping. Sales of new car dealers are surging in
double digits. Clothing sales are up at a 3.4% nominal pace. Excluding
autos the annual rate gain early in Q3 are 0.9%. 
 

More broadly, sales trends show gains that are gathering pace
over three-months and mixed to the positive side over six months.
Overall sales are expanding at a rate of 6.4% over three months at a
pace of 3.6% excluding autos and at a 6.4% pace for overall sales. 
 

The chart shows how Canada&#8217;s retail sales simply fell off a
cliff at the end of 2008 when the US economy&#8217;s financial crisis took
hold. Since then ex-auto sales are showing a more consistent rebound.
Overall sales have only really reduced their rate of decline and the
trend drop still seems to be operative for year-over year calculations.
However over that short spans memorialized in the table both overall
and ex-auto sales are hosing that progress is in train. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Canada Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td colspan="4">Saar</td>
<td>New QTR</td>
</tr>
<tr>
<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>Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Total RTL</td>
<td>-0.6%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>6.4%</td>
<td>2.5%</td>
<td>-4.9%</td>
<td>5.0%</td>
<td>3.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">New Car Dealerss</td>
<td>0.2%</td>
<td>0.5%</td>
<td>3.5%</td>
<td>18.0%</td>
<td>15.1%</td>
<td>-6.6%</td>
<td>-5.8%</td>
<td>10.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Supermarkets</td>
<td>-1.6%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>-3.9%</td>
<td>-2.5%</td>
<td>4.3%</td>
<td>3.1%</td>
<td>-6.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Clothing Stores</td>
<td>0.1%</td>
<td>0.5%</td>
<td>0.3%</td>
<td>3.8%</td>
<td>-2.1%</td>
<td>-4.1%</td>
<td>2.4%</td>
<td>3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail less MVs</td>
<td>-0.8%</td>
<td>1.1%</td>
<td>0.6%</td>
<td>3.6%</td>
<td>0.2%</td>
<td>-4.7%</td>
<td>7.9%</td>
<td>0.9%</td>
</tr>
</tbody>
</table>
</body></html>

Retail sales in Canada fell by 0.6% in July following a surge in growth of 1% in June and of 1.1% in May. In the new quarter retail sales are expanding at a 3% pace in nominal terms. For the quarter supermarket sales are dropping. [...]

Canadian Retail Sales Are Digging Out Slowly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922c.jpg" width="353">
Encouraging indications that consumer spending was improving faded further during September. During the latest week, chain store sales fell 2.0% and that was enough to pull sales for the month so far to their lowest level since 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&#39;s SURVEYW database.
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 slipped 0.5% (-2.0% y/y) during the latest week though it had risen somewhat earlier this summer.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090922d.jpg" width="353">
The Johnson Redbook also reported soft sales of late. General merchandise store sales so far this month increased a seasonally adjusted 0.4% from August (-2.1% y/y) following three months of sometimes sharp decline. Department store sales were down 4.8% y/y on a same-store basis while discount store sales slipped just 0.2% as shoppers searched for bargains.
The Dynamics of Automobile Expenditures from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr394.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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">09/19/09</th>
<th scope="col">09/12/09</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>484.6</td>
<td>494.5</td>
<td>0.6%</td>
<td>1.4%</td>
<td>2.8%</td>
<td>3.3%</td>
</tr>
</tbody>
</table>


</html>

Encouraging indications that consumer spending was improving faded further during September. During the latest week, chain store sales fell 2.0% and that was enough to pull sales for the month so far to their lowest level since June. [...]

Weekly Chain Store Sales Trend Lower During September

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

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

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

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

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

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Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 one week earlier. 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 fell to $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 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 $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices 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 $63.96 per barrel. The price of European Brent crude fell to $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 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 $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/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 $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, 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.

U.S. Energy Prices Are Mixed in Latest Week

Tian Yong Woon

This week, we examine recent developments in US-China trade and assess the broader implications of US trade actions for the BRIC bloc—Brazil, Russia, India, and China. Last week, the US and China extended their tariff truce by 90 days, a move welcomed by equity markets (chart 1). While this pause eased fears of renewed trade tensions, it remains temporary and fragile, with no durable resolution in sight.

As for China’s economy, July data disappointed: retail sales, industrial production, and fixed-asset investment all missed expectations (chart 2). This may signal that tariffs are beginning to bite, as earlier growth drivers—such as some front-loading of imports and one-off consumption boosts like China’s durable-goods subsidy—are fading (chart 3). Newer measures, including loan-interest subsidies, may provide some interim relief. Meanwhile, the property sector remains under heavy strain, with further price and investment declines evidenced in July (chart 4).

In the broader regional context, US trade measures may inadvertently push trading partners closer together, complicating Washington’s bilateral strategy. The BRIC bloc shows tentative signs of greater alignment, though this has yet to appear in data for trade flows (chart 5). China and India, however, are warming toward one another: Foreign Minister Wang Yi’s visit to India this week—focused on the Himalayan border among other issues—suggests an improving dialogue. Separately, discussions at the national level to restart direct flights between the two countries also signal a thaw. Full economic integration remains distant, but the scale of both economies suggests significant potential if relations continue to improve (chart 6).

**The US-China tariff truce**
Last week, the US and China announced a 90-day extension to their mutual tariff truce. Although largely expected, the move still generated further equity market gains (see chart 1). This contrasts sharply with worst-case scenarios earlier this year, when tensions peaked and Washington imposed sweeping tariffs of 145% on Chinese imports — levels that would have severely disrupted global trade and growth if sustained. Instead, both sides agreed to keep additional tariffs at 10% until November 10, allowing more time to pursue a durable trade deal. Still, this is merely a pause rather than progress. 

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**The China docket**
In the meantime, China’s latest monthly data releases were watched closely and offered valid reasons for caution despite earlier signs of resilience. More specifically, retail sales, industrial production, and fixed-asset investment (chart 2) all missed expectations, suggesting US tariff and non-tariff measures are beginning to weigh on growth alongside persistent domestic headwinds. Also, China’s unemployment rate inched higher, while property prices continued to decline. If such weakness persists, calls for additional policy support will grow, even though debt-fuelled measures risk merely trading today’s problems for tomorrow’s.

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**China retail sales**
Diving deeper into the individual releases, chart 3 highlights the gradual slowdown in China’s retail sales in recent months, with growth easing to 3.7% y/y in July. By product category, the deceleration reflects weaker automobile sales — amid authorities’ clampdown on carmaker price wars — and softer furniture sales, suggesting a one-off boost from the government’s durable-goods subsidy programme may now be fading. Clearer confirmation could come if sales growth of other subsidized goods, such as home appliances, also begin to weaken. Still, retail spending — and broader consumption activity — may gain fresh support from China’s new loan-interest subsidy programme, which covers both consumer borrowing and eligible service-sector business loans.

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**China property prices and investment**
Moving next to China’s beleaguered property market, the sector has shown no meaningful recovery for several years. Prices remain on a downtrend, and repeated investor attempts to call a bottom have proven futile. The latest data offered no relief: property prices continued to decline, while investment in the sector fell 12% y/y year-to-date in July (chart 4). That said, the pace of price declines has slowed sharply compared with last year. Even so, what was once a major engine of China’s growth continues to shrink into a shadow of its former self.

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**The BRIC bloc**
While recent trade measures appear favourable for the US, lowering partner tariffs and modestly raising Washington’s own rates, significant risks remain. Such moves could push US trading partners closer together, undermining the administration’s strategy of leveraging bilateral negotiations. One potential area of alignment is the BRIC bloc — Brazil, Russia, India, and China. Although hard data have yet to show major shifts (see chart 5), recent headlines suggest small steps toward deeper cooperation. That said, Russia remains constrained by heavy US sanctions and pressure, as reflected in trade flows with its closest partners.

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Digging a little further, China and India have recently begun to ease their decades-long frosty ties, partly in response to this year’s US trade tensions. A key sign of improving relations is China’s Foreign Minister Wang Yi’s high-profile visit to India from Monday to Wednesday this week. The visit focused on, among other topics, the disputed Himalayan border — which, if resolved, would mark a major step in restoring bilateral relations — and trade across the border. Other indicators of a warming relationship include ongoing talks to restart direct flights, suspended during the pandemic. Given the sheer size of their populations and economies, as shown in chart 6, a fully developed China-India economic partnership could unlock immense potential. However, the path to meaningful economic integration remains at an early stage, with numerous hurdles still to navigate.

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Asia

Economic Letter from Asia: BRIC by BRIC

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The Housing Market Index, compiled by the National Association of Home Builders/Wells Fargo, eased 3.0% (-17.9% y/y) to 32 in August, reversing the 3.1% July rise to 33. It remained below the break-even point of 50, where it’s been since May of last year. The index remains below a July 2023 high of 56 and a November 2020 peak of 90.

The rate on a 30-year fixed rate mortgage averaged 6.61% in the first two weeks of August versus 6.72% during all of July. It fell to 6.58% last week and remained below the high of 7.79% in the last week of October 2023, according to Freddie Mac.

The single-family sales measure declined 2.8% (-20.5% y/y) this month to 35, after rising 2.9% in July. The prospective sales in six months measure held steady (-12.2% y/y) at 43, after rising 7.5% in July. The traffic of prospective buyers’ index rose 10.0% (-12.0% y/y) to 22 in August, after declining 4.8% in July.

Housing weakness centered in the Northeast this month with the index declining 18.8% (-15.2% y/y) to 39, after rising 9.1% in July. It was the lowest level since January 2023.  In the West, the index rose 4.0% (-29.7% y/y) to 26, its highest level in three months. The index for the Midwest held steady (+13.2% y/y) at 43, and matched the highest level in four months. The index in the South also held steady at 29 (-25.6% y/y), after falling in each month of this year.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's **SURVEYS** database.

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- Overall reading matches lowest level since December 2022.
- Current sales slip, expectations steady, while traffic improves.
- Lower Northeast reading accounts for overall index decline.

Economy in Brief: September 2009

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