Louise Curley

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031006b.jpg" width="353">
Contrary to a consensus estimate of a 0.5% decline, the volume of retail sales, excluding autos, in the Euro-zone actually rose in July, albeit, at a very slight gain of 0.11%.
The consensus estimate of a decline appears to have been influenced by a sharp decline in the volume of sales excluding autos in Germany in July. (Reports of German retail sales precede those of the whole Euro-zone by about a week.) However, retail sales in the rest of the Euro-zone held their own or improved enough to overcome the decline in German sales.
The August data that were released last week for German retail sales excluding autos, showed a 0.9% rise and suggest that Germany may be beginning to join the rest of the Euro-zone where sales have improved.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Volume of Retail Trade (2000=100)</th>
<th scope="col">Aug 03</th>
<th scope="col"> July 03 </th>
<th scope="col"> June 03 </th>
<th scope="col"> July 02 </th>
<th scope="col"> M/M </th>
<th scope="col"> Y/Y </th>
<th scope="col"> 2002 </th>
<th scope="col"> 2001 </th>
<th scope="col"> 2000 </th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Euro-zone</td>
<td>&nbsp;&nbsp; n. a.</td>
<td>102.12</td>
<td>102.02</td>
<td>102.13</td>
<td>0.11</td>
<td>0.00</td>
<td>101.6</td>
<td>101.6</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>&nbsp;&nbsp; 99.4</td>
<td>98.5</td>
<td>101.7</td>
<td>100.9</td>
<td>-2.67</td>
<td>-2.38</td>
<td>100.0</td>
<td>101.5</td>
<td>100.0</td>
</tr>
</tbody>
</table>
Inflation Rates Low in Taiwan, Philippines 
by <a href="/comment/Stone.html">Carol Stone</a> October 6, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031006c.jpg" width="353">
As in many other nations, inflation is running low in Taiwan and the Philippines, which both reported their September CPI data today. Taiwan, in fact, is experiencing mild deflation, while in the Philippines, the year-on-year inflation rate is maintaining a range that&#146;s the lowest since early 1988.
In Taiwan, food prices have shown little change for several years, housing costs are falling and clothing prices, though historically low, are drifting upward. Housing costs are declining, which is likely due to falling prices for appliances and furniture. Turns in the rate of price change frequently coincide with swings in petroleum prices. 
In the Philippines, inflation has eased in several sectors. Food and clothing price inflation is trending consistently lower, serving as a main component of the overall slowing in consumer prices. Housing costs have recently trended right along with the total CPI, and service price inflation runs consistently faster than the total, although it is relatively steady. A separate category &#147;fuel, light and water&#148; has shown an accelerating 12-month pace, corresponding to recent oil price patterns. 
These price trends are important for workers in the Philippines, where nonagricultural wages are governed by a &#147;legislated daily wage rate&#148;. Since it is changed only infrequently, lower inflation provides significant help to Philippine consumers, compared with periods of double-digit inflation as recently as 1999. Earnings of Taiwanese workers have been virtually flat since 1999. But the slightly downward drift to CPI inflation keeps the purchasing power of those workers&#146; incomes on an even keel. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Year/Year % Changes</th>
<th scope="col">Aug 03</th>
<th scope="col"> July 03 </th>
<th scope="col"> June 03 </th>
<th scope="col"> 2002 </th>
<th scope="col"> 2001 </th>
<th scope="col"> 2000 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Taiwan</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">CPI</td>
<td>-0.2</td>
<td>-0.6</td>
<td>-1.0</td>
<td>-0.2</td>
<td>0.0</td>
<td>1.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Nominal Earnings</td>
<td>N.A.</td>
<td>N.A.</td>
<td>-0.2</td>
<td>-0.3</td>
<td>-1.5</td>
<td>2.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Philippines</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">CPI</td>
<td>2.9</td>
<td>3.0</td>
<td>3.3</td>
<td>3.1</td>
<td>6.1</td>
<td>4.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Nominal Earnings</td>
<td>N.A.</td>
<td>N.A.</td>
<td>0.0*</td>
<td>10.3</td>
<td>7.2</td>
<td>12.3</td>
</tr>
</tbody>
</table>


</html>

Contrary to a consensus estimate of a 0.5% decline, the volume of retail sales, excluding autos, in the Euro-zone actually rose in July, albeit, at a very slight gain of 0.11%. The consensus estimate of a decline appears to have been [...]

July Retail Sales in the Euro-zone Exceed Consensus

Tom Moeller

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031006a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) slipped in the last full week of September.
Despite the dip, the six-month growth rate of the weekly leading index remained strong at 12.3%. During the last ten years there has been a 59% correlation between the six-month growth in the leading index and the two quarter growth in real GDP.
Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been a 75% correlation between the y/y percent change in the two series over the last 20 years.
The components of the ECRI weekly leading index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.
For more on ECRI and the Weekly Leading Index go to this <a href="http://businesscycle.com">link</a>.
A report titled &quot;How Did Leading Indicator Forecasts Perform During the 2001 Recession?&quot; by James H. Stock &amp; Mark W. Watson from the Federal Reserve Bank of Richmond can be found <a href="http://www.rich.frb.org/pubs/eq/search.cfm/article=185.">here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM"> ECRI Leading Index</a></th>
<th scope="col">9/26/03</th>
<th scope="col">9/21/03</th>
<th scope="col">Growth Rate</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Weekly</td>
<td>128.3</td>
<td>128.7</td>
<td>12.3%</td>
<td>1.2%</td>
<td>-5.3%</td>
<td>-0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Sept</td>
<td>Aug</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Monthly</td>
<td>128.7</td>
<td>127.9</td>
<td>12.3%</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body>
</html>

The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) slipped in the last full week of September. Despite the dip, the six-month growth rate of the weekly leading index remained strong at [...]

ECRI Weekly Leading Indicators Signal Above-Trend Economic Growth

Carol Stone, CBE

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031003c.jpg" width="353">
Employment conditions at large Italian companies back-tracked in July, according to data reported on 3 October by Istat, the Italian statistical agency. The number of employees in the industrial sector fell 0.9% in the month and was down 3.7% from July 2002. This measure, an index of the number of jobs, had seemed to be stabilizing in June and accompanied a downtick in the second quarter&#39;s unemployment rate. So the setback in July&#39;s jobs is disappointing. However, it is partially countered by a gain in average hours worked by these employees, which went up 0.5%. Thus, aggregate hours fell just 0.4% in the month. The number of jobs and total hours are both down by roundly 3.5% from a year ago. But productivity of Italian workers is evidently increasing, so that through the second quarter, gross value added in industry had edged lower by only 0.3%.
Service companies and jobs fared better in July. The number of service workers held steady in the month and is even a bit higher than a year ago. The workweek in the service sector is shortening slightly, though, generating a 0.9% decrease in total hours worked since July 2002. Nonetheless, as in the industrial sector, implied productivity gains remain sizable, since value added in services is up some 4.8% over the past year (second quarter 2003/second quarter 2002). This said, these data are collected from &quot;large firms&quot; with over 500 employees; in services, small firms are probably a significant presence in Italy as elsewhere. So employment conditions could be better among those firms, accounting for more of the large gains in value added, rather than such dramatic productivity gains as are suggested by the comparisons described here.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Seasonally Adjusted</th>
<th scope="col">July&nbsp; 2003</th>
<th scope="col">June 2003</th>
<th scope="col">May&nbsp; 2003</th>
<th scope="col">July 2002</th>
Annual Average
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Employment in Industry*</td>
<td>89.9</td>
<td>90.7</td>
<td>90.8</td>
<td>93.4</td>
<td>93.5</td>
<td>97.6</td>
<td>100.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Hours Worked per Employee in Industry*</td>
<td>98.5</td>
<td>98.0</td>
<td>98.0</td>
<td>98.4</td>
<td>98.5</td>
<td>98.9</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">Employment in Services*</td>
<td>98.8</td>
<td>98.8</td>
<td>98.7</td>
<td>98.6</td>
<td>98.5</td>
<td>99.4</td>
<td>100.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Hours Worked per Employee in Services*</td>
<td>98.6</td>
<td>98.4</td>
<td>98.8</td>
<td>99.6</td>
<td>100.1</td>
<td>100.1</td>
<td>100.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Employment conditions at large Italian companies back-tracked in July, according to data reported on 3 October by Istat, the Italian statistical agency. The number of employees in the industrial sector fell 0.9% in the month and was [...]

Employment Decreases in Italy

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031003b.jpg" width="353">
Nonfarm payrolls rose unexpectedly by 57,000 (0.04%) in September. It was the first m/m gain in payrolls since January. The previously reported sharp drop in August payrolls was more than halved to 41,000 but July&#39;s decline was deepened slightly. Consensus estimates had been for a 20,000 worker decline in September payrolls.
For 3Q03 the index of aggregate hours worked in private industries (employment times hours worked) fell at a 0.9% annual rate versus 2Q, about half that quarter&#39;s rate of decline. Hours worked were unchanged in September.
The one-month diffusion index for private nonfarm payrolls improved to 47.1 but a level below 50 bodes poorly for a meaningful pickup in hiring activity.
Declines in manufacturing sector payrolls continued. They have fallen in every month since July 2000 and are down 2.762 million (15.9%) during that period. The one-month diffusion index for factory payrolls rose to a still quite low 28.6.
Service producing jobs rose 74,000 (0.1% y/y). The gains were fairly broad based amongst industries though professional &amp; business services jobs rose a hefty 66,000 (0.4%). Half of that gain was in the temporary help services category. Government sector jobs fell 15,000 (-0.4% y/y).
From the separate household survey, the unemployment rate was stable at 6.1% versus expectations for 6.2%. Employment fell 52,000 (0.2% y/y) following a 147,000 August gain. The labor force rose 15,000 (0.6% y/y).
Average hourly earnings fell an unexpected 0.1%. The decline was due to earnings drops in several private service industries.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>57,000</td>
<td>-41,000</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-29,000</td>
<td>-46,000</td>
<td>-4.2%</td>
<td>-6.9%</td>
<td>-4.8%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.7</td>
<td>33.7</td>
<td>33.9</td>
<td>33.9</td>
<td>34.0</td>
<td>34.3</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>6.1%</td>
<td>6.1%</td>
<td>5.7%</td>
<td>5.8%</td>
<td>4.8%</td>
<td>4.0%</td>
</tr>
</tbody>
</table>
ISM Nonmanufacturing Index Fell Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 3, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031003a.jpg" width="353">
The Institute for Supply Management reported that in September, the index of activity in the nonmanufacturing sector was down slightly from the record August to 63.3. Consensus expectations were for a decline to 63.0.
The seasonally adjusted orders index fell sharply to 59.9 from the August record high of 67.6.
The employment index fell to 49.1 from 51.0 in August. Since the series&#39; inception there has been an 85% correlation between the level of the ISM nonmanufacturing employment index and the y/y change in payroll employment in the service producing and construction industries.
Business activity for the nonmanufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
The seasonally adjusted prices index rose sharply for the second month in a row to 60.1.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The nonmanufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>63.3</td>
<td>65.1</td>
<td>55.4</td>
<td>55.1</td>
<td>49.0</td>
<td>59.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>60.1</td>
<td>55.7</td>
<td>54.2</td>
<td>53.9</td>
<td>51.6</td>
<td>63.5</td>
</tr>
</tbody>
</table>


</html>

Nonfarm payrolls rose unexpectedly by 57,000 (0.04%) in September. It was the first m/m gain in payrolls since January. The previously reported sharp drop in August payrolls was more than halved to 41,000 but July's decline was [...]

U.S. Nonfarm Payrolls Rose

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031002d.jpg">
Producer prices in the Euro-Zone rose 0.2% from July to August, following a 0.1% move the month before. August compared to a year ago is up 1.4%, extending approximately that yearly pace through a fourth month.
The month-to-month increase in August was accounted for by energy prices, which were up 1.2 from July. Excluding that segment, the total PPI was flat, including unchanged levels for capital goods and durable consumer items. The largest advance was in the Netherlands, 1.3%, but that reversed a similar magnitude fall in July. Portugal experienced a 0.3% rise, and most other countries experienced the 0.2% increase of the overall total.
The accompanying graph suggests that the Euro exchange rate exerts some influence on these wholesale prices. The PPI excluding energy is plotted with a broad, trade-weighted Euro index. Shifts in that widely defined exchange rate appear to presage by several months a turn in the trend of wholesale prices. Thus, even though these are purely domestic prices, covering goods traded only within local markets, that is, excluding imports, they are seen to follow moves in exchange rates, as might be expected with such open economies. This pattern hints that continuation of the recent softer tone in the euro would foster an uptrend in these producer prices.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Euro-Zone Industrial Producer Prices, % Changes </th>
<th scope="col">Aug 2003</th>
<th scope="col">July 2003</th>
<th scope="col">&nbsp;June&nbsp; 2003</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td colspan="3">(Dec/Dec)</td>
</tr>
<tr>
<td class="firstcol">All industry ex construction</td>
<td>0.2</td>
<td>0.1</td>
<td>-0.3</td>
<td>1.4</td>
<td>1.6</td>
<td>-0.7</td>
<td>5.3</td>
</tr>
<tr class="odd">
<td class="firstcol">All industry ex construction &amp;&nbsp;&nbsp;&nbsp; energy</td>
<td>0.0</td>
<td>-0.1</td>
<td>-0.1</td>
<td>0.6</td>
<td>1.1</td>
<td>0.3</td>
<td>3.0</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>1.2</td>
<td>0.7</td>
<td>0.5</td>
<td>4.5</td>
<td>3.9</td>
<td>-5.8</td>
<td>14.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Exchange Rate*</td>
<td>-1.1</td>
<td>-1.4</td>
<td>0.2</td>
<td>9.2</td>
<td>9.3</td>
<td>4.2</td>
<td>-4.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Producer prices in the Euro-Zone rose 0.2% from July to August, following a 0.1% move the month before. August compared to a year ago is up 1.4%, extending approximately that yearly pace through a fourth month. The month-to-month [...]

Euro-Zone PPI Up 0.2% in August, Index ex-Energy Is Flat

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031002c.jpg" width="353">
Initial claims for jobless insurance rose 13,000 to 399,000 last week. The gain mostly reversed a 15,000 decline the prior week which was revised shallower from the initial report. Consensus expectations had been for claims of 395,000.
The four-week moving average of initial claims fell to 403,500 (-3.2% y/y). That&#39;s down roughly 10% from the recent high in early May.
Continuing claims for unemployment insurance rose a sharp 62,000 to 3,673,000. The claimant the prior week was revised down 20,000.
The insured rate of unemployment held steady at 2.9%. The rate has averaged 2.9% since April.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">9/27/03</th>
<th scope="col">9/20/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>399.0</td>
<td>386.0</td>
<td>-5.7%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,673</td>
<td>1.0%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031002a.jpg" width="353">
Light vehicle sales fell slightly more than expected last month from the heady August selling rate. The 12.0% m/m decline to 16.72M contrasted with Consensus expectations for sales of 17.3M.
Light trucks more than reversed the August sales spike with a 14.6% m/m decline to 9.18M units.
Cars completely undid the sales gains of the prior two months with an 8.7% decline to 7.54M units.
Sales of domestic light vehicles slid 13.5% to a 13.42M unit selling rate as sales of both cars and light trucks fell.
Imported vehicle sales fell a more moderate 5.4% following the 6.3% August gain. Imports captured 19.7% of the US market in September and 19.0% in 3Q03 versus a 19.5% share last year.
The CPI for new vehicles has been deflating since early 1997.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM"> Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>16.72</td>
<td>19.00</td>
<td>2.4%</td>
<td>16.81</td>
<td>17.26</td>
<td>17.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.54</td>
<td>8.26</td>
<td>-4.3%</td>
<td>8.07</td>
<td>8.48</td>
<td>8.83</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>9.18</td>
<td>10.75</td>
<td>8.6%</td>
<td>8.74</td>
<td>8.78</td>
<td>8.56</td>
</tr>
</tbody>
</table>
Factory Orders Skid 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 2, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031002b.jpg" width="353">
Factory orders fell a greater than expected 0.8% in August. The decline followed a 2.0% jump in July that was revised up from 1.6%.
Durable goods orders were revised to show a 1.1% m/m decline versus the 0.8% fall indicated in last week&#39;s advance report. Non-durable goods orders fell 0.5% (+5.0% y/y) following a 2.4% gain in July. (Non-durable goods orders equal shipments in this report on factory sector activity.)
The y/y strength in non-durable goods derives mostly from higher prices for petroleum products and for industrial chemicals.
Manufacturing inventories fell 0.2% in August for the fourth consecutive monthly decline. The ISM inventory index in September remained low at 42.7 suggesting further decumulation last month. Declines in inventories continued widespread.
New research from the Federal Reserve Bank of Philadelphia titled &quot;The Role of Inventories in the Business Cycle&quot; can be found <a href="http://www.phil.frb.org/files/br/brq303ak.pdf"> here</a>.
A 1.8% slide in factory shipments undid much of the prior month&#39;s gain, but lower shipments of autos &amp; light trucks account for much of the weakness. Less the transportation sector altogether shipments fell a more moderate 0.8% (+2.9% y/y) on the heels of a 2.3% gain in July and a 1.2% gain in June. Shipments of computers &amp; electronic products have been strong, up 8.0% y/y.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM"> Factory Survey</a> (NAICS)</th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-0.2%</td>
<td>-0.4%</td>
<td>-0.7%</td>
<td>-1.8%</td>
<td>-6.1%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>-0.8%</td>
<td>2.0%</td>
<td>1.2%</td>
<td>-1.9%</td>
<td>-6.7%</td>
<td>5.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>-1.8%</td>
<td>2.6%</td>
<td>1.6%</td>
<td>-2.0%</td>
<td>-5.4%</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">Unfilled Orders</td>
<td>0.6%</td>
<td>-0.3%</td>
<td>-2.5%</td>
<td>-6.1%</td>
<td>-5.9%</td>
<td>8.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance rose 13,000 to 399,000 last week. The gain mostly reversed a 15,000 decline the prior week which was revised shallower from the initial report. Consensus expectations had been for claims of [...]

Initial Jobless Insurance Claims Rose

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031001e.jpg" width="353">
Large manufacturing companies in Japan reported the first net favorable result in the Bank of Japan&#39;s quarterly TANKAN business sentiment survey since the fourth quarter of 2000, as the Japanese economy shows further signs of pulling out of its recent recessionary slump. Sentiment registered a +1 in September compared with -5 in June. Forecasts had called for a neutral, zero result. In fact, readings were positive or zero in only 7 of 15 industry groups, but readings improved from June&#39;s survey in 10 of the groups, particularly lumber and the various machinery sectors.
Nonmanufacturing industries showed no net change in sentiment at a -13 reading. A large improvement in communications, along with modest gains in a couple of other segments, was offset by deteriorations in retailing and transportation.
These TANKAN results were corroborated by the new Purchasing Managers Index for Japan manufacturers. This survey, begun just in October 2001, rose to 53.01 in September from 52.48 in August and 50.36 in June. These readings too indicate a modest degree of expansion in the manufacturing industries.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Current Business Conditions</th>
<th scope="col">Sept Q 2003</th>
<th scope="col">June Q 2003</th>
<th scope="col">Sept Q&nbsp; 2002</th>
<th scope="col">Q/Q</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Large Manufacturing Companies</td>
<td>+1</td>
<td>-5</td>
<td>-14</td>
<td>6</td>
<td>15</td>
<td>-20</td>
<td>-23</td>
<td>4</td>
</tr>
<tr>
<td class="firstcol">Large Nonmanufacturing&nbsp; Companies&nbsp;</td>
<td>-13</td>
<td>-13</td>
<td>-13</td>
<td>0</td>
<td>0</td>
<td>-17</td>
<td>-16</td>
<td>-12</td>
</tr>
<tr class="odd">
<td class="firstcol">Purchasing Managers&#39; Index: Manufacturing</td>
<td>52.20</td>
<td>49.84</td>
<td>50.94</td>
<td>4.7%</td>
<td>2.5%</td>
<td>49.35</td>
<td>39.65*</td>
<td>N.A.</td>
</tr>
</tbody>
</table>
</body>
</html>

Large manufacturing companies in Japan reported the first net favorable result in the Bank of Japan's quarterly TANKAN business sentiment survey since the fourth quarter of 2000, as the Japanese economy shows further signs of pulling [...]

Japanese TANKAN Shows First Positive Result in 2-1/2 Years

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031001b.jpg" width="353">
The Purchasing Managers&#146; Composite Index (PMI) released by the Institute of Supply Management fell in September to 53.7 from 54.7 in August. Before yesterday&#39;s release of the weak Chicago PMI report, Consensus expectations were for a reading of 55.0.
During the last twenty years there has been a 64% correlation between the National PMI index and quarterly growth in real GDP. That&#39;s slightly higher than the 57% correlation using the Chicago PMI.
The index for new orders rose slightly to the highest this year. Production retraced about half of its August jump but remained at the second highest level this year.
The employment index fell slightly m/m to 45.7, up from the recent lows near 42 but down from the 2002 highs of 48-49. This index has not been above 50, the dividing line between rising and falling activity, since September 2000. There has been a 68% correlation during the last ten years between the ISM employment index and the one-month change in factory sector payrolls.
The inventory index was up very slightly m/m to 42.7, the low end of a range in place since Spring 2002.
The prices paid index rose last month to 56.0. The price index has improved from the deflationary levels of late-2001 but it&#39;s current level does not suggest much pending inflationary pressure.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM"> ISM Manufacturing Survey</a></th>
<th scope="col"> Sept</th>
<th scope="col">Aug</th>
<th scope="col">Sept &#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>53.7</td>
<td>54.7</td>
<td>50.7</td>
<td>52.4</td>
<td>44.0</td>
<td>51.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>60.4</td>
<td>59.6</td>
<td>52.8</td>
<td>56.7</td>
<td>46.2</td>
<td>52.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>56.0</td>
<td>53.0</td>
<td>65.0</td>
<td>57.6</td>
<td>42.9</td>
<td>64.8</td>
</tr>
</tbody>
</table>
Challenger Layoffs Down Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031001c.jpg" width="353">
According to Challenger, Gray &amp; Christmas, announced job cuts fell 4.3% last month versus August. Layoff announcements were up moderately versus a very depressed level last September.
The three month moving average of job cut announcements ticked up but was down by one-third from last year&#39;s average.
Job cut announcements differ from layoffs in that many are achieved through attrition or just never occur.
Regardless, during the last ten years there has been an 83% (inverse) correlation between the three month average level of announced job cuts and the y/y percent change payroll employment.
Job cut announcements were mixed m/m across industries but a 14,531 rise in industrial goods industries was notable..

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM"> Challenger, Gray &amp; Christmas</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>76,506</td>
<td>79,925</td>
<td>9.2%</td>
<td>1,431,052</td>
<td>1,956,876</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031001d.jpg" width="353">
The value of total construction put in place rose the same 0.2% in August as it did in July. A 0.4% gain had been expected by the Consensus.
Private residential building activity showed some life, rising 1.4%. The gain was led by a 1.9% (14.2% y/y) surge in activity building single family homes.
Nonresidential building activity fell 2.7% (-1.2% y/y) as office building activity fell for the seventh month this year (-16.0% y/y). Commercial construction rose for the sixth month this year (+5.8% y/y).
Public sector building reversed the 0.6% decline of the prior month.
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM"> Construction Put-in-place</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.2%</td>
<td>0.2%</td>
<td>4.0%</td>
<td>1.1%</td>
<td>2.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.1%</td>
<td>0.5%</td>
<td>4.3%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>8.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>1.4%</td>
<td>0.6%</td>
<td>7.0%</td>
<td>8.6%</td>
<td>3.3%</td>
<td>7.4%</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>0.6%</td>
<td>-0.6%</td>
<td>3.2%</td>
<td>5.3%</td>
<td>7.4%</td>
<td>9.5%</td>
</tr>
</tbody>
</table>
Mortgage Applications Tick Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031001a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association rose 1.1% last week. Nevertheless, the average level of applications in September fell 4.7% versus August and the average was down 55.8% from the June high.
Applications for mortgages to purchase fell 1.1% for the second weekly drop. So far in September purchase applications are 1.2% ahead of the August average but they are down 5.2% from the July high.
The level of purchase applications in September is up 11.0% from a year ago. During the last ten years there has been a 55% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
Applications to refinance rose 3.2% w/w. The average in September is down 70.7% from the June high. The percent of dollar volume of refinancing loans was 48.2% last week versus a Summer high of 80%.
Interest rates on a conventional 30-Year mortgage fell for the fourth consecutive week to 5.92% versus a recent high of 6.64% in early August. The effective rate on a 15-year mortgage fell to 5.28%, down from a high of 6.07%.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM"> MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">9/26/03</th>
<th scope="col">9/19/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>707.2</td>
<td>699.6</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>397.8</td>
<td>402.1</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,506.8</td>
<td>2,429.7</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The Purchasing Managers Composite Index (PMI) released by the Institute of Supply Management fell in September to 53.7 from 54.7 in August. Before yesterday's release of the weak Chicago PMI report, Consensus expectations were for a [...]

ISM Factory Index Down Just A Bit, Orders Rose

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

Our global data offering is unparalleled in terms of coverage, quality, and organization. We offer 290+ databases from 2500 government and private sources, a wealth of key survey and forecast data covering the world’s economies, and a robust offering of archive databases that drive machine learning for big data applications.

Optimized for precision analytics, our data is seamlessly integrated with Microsoft Office and all leading statistical packages through our DLX® software and platform independent HaverView™ website. We further offer direct database feeds, client server or cloud-based delivery, and RESTful API.


Privacy Policy

Disclaimer

Contact us

A premier time series data platform for the global strategy, research, and quant communities. 

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

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.

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3PzXXKrkHcwtOLipohEdnB?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Tariff Truce, Tenuous Trust

250501J5.jpg

250501K5.jpg

The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 48.7 in April from 49.0 during March and 50.3 in February. It remained up from a low of 46.9 in October of last year. A level of 50 is the break-even point between a rising and falling level of activity. The Action Economics Forecast Survey expected a reading of 47.8 for April. The series reached a monthly high of 63.8 in March 2021.

Two of the five component indexes weakened last month. The April production index fell to 44.0 after declining to 48.3 in March. It was the lowest level since May 2020. A lessened 19.8% (NSA) of respondents reported higher production while an increased 24.2% reported lower output. The inventories index declined to 50.8 last month from 53.4 in March. The index remained up from a low of 43.2 in October of last year.

Moving higher, the new orders index rose to 47.2 last month from 45.2 in March. The index remained below a January high of 55.1. Twenty-eight percent (NSA) of respondents reported higher new orders while 26.7% reported a decline. The employment index rose to 46.5 from 44.7 in March. It was below a high of 50.3 in January. A greater 13.1% (NSA) of respondents reported more hiring while a fewer 16.2% indicated less. The supplier delivery index rose to 55.2 from 53.5 in March. A higher 16.6% (NSA) of respondents reported slower delivery speeds while a fairly steady 6.2% reported a quickening.

The prices index, which is not part of the composite series, edged up to 69.8 (NSA) in April after increasing to 69.4 in March. It was the highest level since June 2022, up from a December 2022 low of 39.4. An increased 49.2% of respondents reported higher prices last month, up from 12.2% in November, while a higher 9.7% reported lower prices.

In other series, the export orders index plummeted to 43.1 in April from 49.6 during March. It was down from the high of 52.4 in January. The imports index fell sharply to 47.1 from 50.1 in March. It was the lowest reading since December 2023. The order backlog index dropped to 43.7 (NSA) last month from 44.5 in March. It was the lowest level in five months.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

250501L5.jpg

250501M5.jpg

- Declines in last three months follow earlier improvement.
- Production & inventories account for m/m shortfall.
- Prices index edges up to another three-year high.

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

250501N.jpg

250501O.jpg

The value of construction put in place unexpectedly fell 0.5% m/m in March after rises of 0.6% in February (+0.7% initially) and 0.1% in January (-0.5% previously), data from the U.S. Census Bureau showed. The March reading was the first m/m fall following five straight m/m gains. A 0.3% m/m March rise had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase decelerated to 2.8% in March, the lowest since May 2019, after registering at 3.4% in February and January. The latest y/y figure was lower than 8.7% in March 2024; thus, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction slid 0.6% (+2.3% y/y) in March, down for the first time since September, following increases of 0.7% in February (+0.9% initially) and 0.1% in January (-0.7% previously). Residential private construction fell 0.4% (+2.8% y/y) in March, the first m/m fall in six months, after an unrevised 1.3% gain in February. Home improvement building dropped 1.2% (+13.4% y/y), the first m/m decline since December, following a 2.3% February gain; it was 41.1% of the residential private construction. Single-family building edged up 0.1% (-0.8% y/y), the smallest of seven consecutive m/m increases, after a 0.8% February rise; it was 46.6% of the residential private construction. Meanwhile, multi-family building was essentially unchanged m/m (-12.1% y/y) in March following 15 straight m/m decreases; it was 12.3% of the residential private construction.

Nonresidential private construction fell 0.8% (+1.6% y/y) in March after a 0.1% increase in February (+0.4% initially) and a 0.1% easing in January (-0.2% previously). The March fall reflected m/m drops in the following nonresidential private constructions. These included religious (-2.9%; +16.4% y/y), health care (-2.2%; -5.2% y/y), office (-1.8%; +2.7% y/y), educational (-1.7%; -4.2% y/y), lodging (-1.6%; -1.0% y/y), commercial (-1.0%; -5.8% y/y), manufacturing (-0.4%; +3.6% y/y), communication (-0.3%; +2.2% y/y), and utilities (-0.1%; +7.0% y/y). In contrast, private constructions for amusement & recreation (1.5%; 7.0% y/y) and transportation (0.7%; 10.2% y/y) rose m/m in March.

The value of public construction declined 0.2% (+4.7% y/y) in March after holding steady in February (+0.2% initially), reflecting a 0.2% increase (-1.9% y/y) in residential public construction and a 0.2% easing (+4.8% y/y) in nonresidential public construction. The March decline reflected m/m drops in the following nonresidential public constructions. These included utilities (-4.8%; -12.8% y/y), commercial (-1.6%; +40.3% y/y), amusement & recreation (-1.0%; +19.1% y/y), educational (-0.6%; +7.6% y/y), sewage & waste disposal (-0.6%; +10.6% y/y), and health care (-0.4%; +13.0% y/y). Notably, spending on highways & streets, which made up 28.7% of public construction spending, fell 0.5% (-2.4% y/y) in March, the first m/m fall since October, following a 0.9% increase in February. To the upside, the following public constructions rose m/m in March: office (1.6%; 6.0% y/y), transportation (1.4%; 7.3% y/y), public safety (0.7%; 4.1% y/y), conservation & development (0.6%; 4.7% y/y), and water supply (0.6%; 12.2% y/y).

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

250501P.jpg

250501Q.jpg

- March construction spending -0.5% m/m; +2.8% y/y, the lowest y/y rate since May ’19.
- Residential private construction -0.4% m/m, led by a 1.2% drop in home improvement building.
- Nonresidential private construction -0.8% m/m, down for the second month in three.
- Public sector construction -0.2% m/m, reflecting a 0.2% decline in nonresidential public building.

U.S. Construction Spending Unexpectedly Drops in March, the First M/M Fall Since September

250501A8.jpg

250501B8.jpg

Initial claims for unemployment insurance rose 18,000 in the week ended April 26 to 241,000, seasonally adjusted.  This is higher by 16,000 than the Action Economics Forecast Survey amount of 225,000 and is the largest amount since the week of February 22. The previous week’s actual count was revised up by 1,000 to 223,000, from 222,000 reported initially.

The total number of unemployment insurance beneficiaries – also known as “continuing claims” – in the week ended April 19 was 1.916 million, up 83,000 from the prior week’s 1.833 million; that earlier amount was revised down by 8,000.

The insured unemployment rate, that is, the number of beneficiaries as a percentage of covered employment, was 1.3% in the April 19 week, following 1.2% continuously since the week of January 6, 2024.

Economic conditions vary widely across states and territories.  In the week ended April 12, the highest unemployment rates were in New Jersey (2.39%), California (2.24%), Washington (2.19%), Rhode Island (2.17%) and Massachusetts (1.93%).  The lowest rates were in Florida (0.35%), South Dakota (0.40%), Alabama (0.41%), Virginia (0.45%) and Tennessee (0.48%).  Rates in other notable states include the Illinois (1.85%), New York (1.71%), Pennsylvania (1.54%) and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in U**SECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

250501C8.jpg

250501D8.jpg

- Actual initial claims amount is 16,000 more than forecast.
- Total beneficiaries rose by 83,000.
- Insured unemployment rate ticked up to 1.3% after 15 months at 1.2%.

U.S. Initial Jobless Claims Rise Notably in April 28 Week

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.

Economy in Brief: October 2003

Jump to: