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/040719a.jpg" width="353">
Through the end of last week the S&amp;P 500 Index of stock prices muddled along up just 1.4% from yearend levels. Recent weakness, however, follows strong gains through most of 2003. Year to year stock prices are up 11.6%.
Gains in stock prices raised the value of the household sector&#39;s financial assets. Through 1Q04 the market value of corporate equities held by the household sector rose 27.9% versus 1Q03. Despite the rise in interest rates that would have eroded the value of fixed income assets, the value of all mutual fund shares held by the household sector rose 39.0%.
The rise in the value of these financial assets greatly improved the net worth of the household sector to $45.2 trillion versus $39.6 trillion in 1Q03. A 10.1% rise in the value of real estate holdings aided the improvement. (Financial assets are more than twice the value of real estate assets for the household sector.)
Liabilities owed by the sector were up 10.9% y/y in 1Q due mostly to a 12.5% rise in home mortgage obligations.
&quot;Why Do Stock Prices React to the Fed?&quot; from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20040701/cover.pdf"> here</a>. 

</body>
</html>

Through the end of last week the S&P 500 Index of stock prices muddled along up just 1.4% from yearend levels. Recent weakness, however, follows strong gains through most of 2003. Year to year stock prices are up 11.6%. Gains in stock [...]

Stock Market Rise Rebuilt Wealth

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/040716g.jpg" width="353">
The US Treasury today published its array of monthly data on foreign investors&#39; purchases and sales of &quot;long-term&quot; US securities (having maturity greater than one year) for May. Known as the &quot;TIC&quot; data for Treasury International Capital&quot;, this extensive collection of information on foreign participation in US capital markets is contained in Haver&#39;s USINT database in the section &quot;US International Investment Tables&quot;, shown by security type and country. In May, net foreign purchases of securities traded in US markets totaled $56.4 billion, down from April&#39;s $76.1 billion.
The first graph above shows a simple history of these net foreign purchases of securities in US markets. Besides the simple fact that these transactions have expanded dramatically since about 1985, the most recent periods have also shown significant volatility. Simple explanations are often offered for this activity: a large current account deficit that must be financed, fear of a weakening dollar, the impact of a rising dollar, and so on. Indeed, the current account relationship is significant: aggregated on a quarterly basis, the value of these transactions has had a 90% negative correlation with the current account balance over the past 20 years. But the wide swings in the capital flows, particularly over the past year-and-a-half, suggest that causes for foreign moves in and out of US markets must be much more complex.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040716f.jpg" width="353">
The second graph examines the interaction in these data with a broad gauge of the exchange rate. Using the Fed&#39;s &quot;Broad&quot; trade-weighted dollar index, we see an attractive-looking 70% correlation over the past 15 years. However, this correlation coefficient changes markedly over varying time periods. So while the fit may be pretty good over the years we illustrate, during the last 10 years, that drops to just 44%. An earlier 10-year period, 1986-1995, shows a mere 1%. Thus, it&#39;s hard for investors and traders to count on a particular securities market response to foreign exchange developments. And these relationships deteriorate further when individual countries are examined. The correlations between the yen and net capital flows of Japanese investors generally run in the mid-20% area.[Note that all our comments are based on examination of data properties revealed using Haver&#39;s DLXVG3 software alone. With the &quot;correlation&quot; tool turned on, scrolling across the graph using the arrow keys shows the evolution of the correlation ratio through time.]

<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">Net Foreign Purchases of Securities in US Markets&nbsp; (Billions US$)</th>
<th scope="col">May 2004</th>
<th scope="col">Apr&nbsp; 2004</th>
<th scope="col">Mar &nbsp;2004</th>
<th scope="col">May&nbsp; 2003</th>
Monthly Average
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
</tbody>
</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">Total</th>
<th scope="col"><center></center></th>
<th scope="col">56.4</th>
<th scope="col">76.1</th>
<th scope="col">76.8</th>
<th scope="col">109.9</th>
<th scope="col">58.4</th>
<th scope="col">47.9</th>
<th scope="col">41.8</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Treasuries</td>
<td><center></center></td>
<td>21.9</td>
<td>35.3</td>
<td>61.5</td>
<td>41.1</td>
<td>22.7</td>
<td>10.0</td>
<td>1.5</td>
</tr>
<tr>
<td class="firstcol">Federal Agencies (mostly &quot;GSEs&quot;)</td>
<td><center></center></td>
<td>20.7</td>
<td>31.0</td>
<td>3.9</td>
<td>31.9</td>
<td>13.6</td>
<td>16.3</td>
<td>13.7</td>
</tr>
<tr class="odd">
<td class="firstcol">US Corporate Bonds</td>
<td><center></center></td>
<td>19.9</td>
<td>16.8</td>
<td>30.4</td>
<td>27.4</td>
<td>22.7</td>
<td>15.2</td>
<td>18.5</td>
</tr>
<tr>
<td class="firstcol">US Corporate Stocks</td>
<td>-7.6</td>
<td>-1.8</td>
<td>-13.4</td>
<td>6.6</td>
<td>3.1</td>
<td>4.2</td>
<td>9.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Foreign Bonds</td>
<td>7.4</td>
<td>6.1</td>
<td>-1.7</td>
<td>13.5</td>
<td>2.2</td>
<td>2.4</td>
<td>2.5</td>
</tr>
<tr>
<td class="firstcol">Foreign Stocks</td>
<td>-5.8</td>
<td>-11.3</td>
<td>-4.0</td>
<td>-10.9</td>
<td>-6.0</td>
<td>-0.1</td>
<td>-4.2</td>
</tr>
</tbody>
</table>
</body>
</html>

The US Treasury today published its array of monthly data on foreign investors' purchases and sales of "long-term" US securities (having maturity greater than one year) for May. Known as the "TIC" data for Treasury International [...]

Foreign Purchases of U.S. Securities Ease in May Amid Wide Volatility

<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/040716b.jpg" width="353">
The Consumer Price Index (CPI-U) rose 0.3% in June versus Consensus expectations for a 0.2% rise. The upside surprise was fueled by a 2.6% gain in energy prices.
Seasonally adjusted gasoline prices jumped 3.1%, about double the not seasonally adjusted rise. Even that increase was somewhat surprising given that the weekly tracking of retail gasoline prices indicated a m/m decline of 0.7%. So far in July average gasoline prices are 3.2% below the June average at $1.91 per gallon.
Core consumer prices rose a less than expected 0.1%. The shortfall was the result of no change in the prices of core consumer goods. New &amp; used vehicle prices fell 0.1% (-3.5% y/y) and home furnishings prices rose a modest 0.1% (-0.5% y/y). Apparel prices rose 0.2% (0.5% y/y) and medical care commodities prices ticked 0.1% (2.9% Y/Y) higher.
Core service prices rose 0.2% for the second consecutive month. Shelter costs rose a modest 0.1% (2.9% y/y) and public transportation prices were unchanged after a 1.3% May decline (-0.9% y/y). Medical care services prices rose 0.4% (5.1% y/y), the strongest increase in three months.
The chained CPI which adjusts for shifts in consumer buying behavior rose 0.3%. It is similar to the PCE price deflator. The core chain price measure was unchanged.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM"> Consumer Price Index</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.3%</td>
<td>0.6%</td>
<td>3.2%</td>
<td>2.3%</td>
<td>1.6%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.2%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>2.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.1%</td>
<td>-1.0%</td>
<td>-2.0%</td>
<td>-1.1%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.2%</td>
<td>0.2%</td>
<td>3.0%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>2.6%</td>
<td>4.6%</td>
<td>17.0%</td>
<td>12.2%</td>
<td>-5.8%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food</td>
<td>0.2%</td>
<td>0.9%</td>
<td>3.8%</td>
<td>2.1%</td>
<td>1.8%</td>
<td>3.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM"> Chained CPI: Total (NSA)</a></td>
<td>0.3%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>1.9%</td>
<td>1.3%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>1.4%</td>
<td>1.1%</td>
<td>1.9%</td>
<td>&nbsp;2.0%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Edged Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 16, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040716a.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index for mid-July edged up to 96.0 from the June reading of95.6. Consensus expectations had been for a larger gain to 97.0.
During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.
Improvement in the expectations sub-index to 90.4 followed the sharp m/m rise in June. The index of current economic conditions fell 2.0% versus June.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

<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/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> Mid-July</th>
<th scope="col"> June</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>96.0</td>
<td>95.6</td>
<td>5.6%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>104.6</td>
<td>106.7</td>
<td>2.4%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>90.4</td>
<td>88.5</td>
<td>8.0%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) rose 0.3% in June versus Consensus expectations for a 0.2% rise. The upside surprise was fueled by a 2.6% gain in energy prices. Seasonally adjusted gasoline prices jumped 3.1%, about double the not [...]

CPI Rose Slightly More Than Expected

<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/040715a.jpg" width="353">
Brazil&#39;s retail sales extended a strong recovery in data reported today for May, which showed a third straight month of double-digit year-on-year growth.
Furniture and appliances and motor vehicle dealers have participated in the growth consistently in recent months; the two store categories advanced 35.6% and 21.4% respectively in May from May 2003. Supermarkets and hypermarkets have also shown persistent but less spectacular gains, most recently in the 5% range. In May, clothing had a big jump as well.
These stores had all suffered some degree of contraction during the recessionary aftermath of the mid-2002 plunge in Brazil&#39;s currency value. The recent retail sales gains, particularly in durable goods, show that Brazilian consumers are back in a shopping mode, and with some exuberance.<div align="center"><center></center></div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Yr/Yr % Changes</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Sales: Total Volume</td>
<td>10.0</td>
<td>10.1</td>
<td>11.0</td>
<td>3.2</td>
<td>-5.1</td>
<td>-2.8</td>
</tr>
<tr>
<td class="firstcol">Retail Sales: Total Value</td>
<td>10.3</td>
<td>9.4</td>
<td>11.3</td>
<td>10.8</td>
<td>9.3</td>
<td>3.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Reais/US$</td>
<td>4.9</td>
<td>-6.8</td>
<td>-15.7</td>
<td>-19.3</td>
<td>53.5</td>
<td>20.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Brazil's retail sales extended a strong recovery in data reported today for May, which showed a third straight month of double-digit year-on-year growth. Furniture and appliances and motor vehicle dealers have participated in the [...]

Brazil's Retail Sales Up 10% in May

<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/040715d.jpg" width="353">
The June PPI fell 0.3%, the first m/m decline since November. Consensus expectations had been for a 0.2% rise.In line with expectations was the 0.2% rise in the &quot;core&quot; PPI.
Energy prices fell 1.6% (9.4% y/y), led lower by an 8.1% (+29.9% y/y) decline in gasoline prices and a 1.5% (+28.6% y/y) drop in duel oil prices.
Prices of finished consumer goods less food &amp; energy rose a modest 0.1% (1.9% y/y). Consumer durable prices again were firm and rose 0.5% (+2.5% y/y) but core non-durable prices fell 0.2% (+1.5% y/y).
Finished capital goods prices rose 0.2% (1.7% y/y).
Intermediate goods prices rose a firm 0.5% last month. Core intermediate prices rose the same 0.5% (5.7% y/y), though plywood prices fell 10.5% (34.9% y/y). Steel (40.0% y/y) &amp; aluminum (7.1% y/y) prices were quite strong.
Crude goods prices jumped 1.6% due to higher energy prices, up 7.7% (14.0% y/y). Core crude prices fell for the third consecutive month though more recently the decline in commodity prices has moderated.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM"> Producer Price Index</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>-0.3%</td>
<td>0.8%</td>
<td>4.0%</td>
<td>3.2%</td>
<td>-1.3%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.5%</td>
<td>1.1%</td>
<td>7.0%</td>
<td>4.7%</td>
<td>-1.5%</td>
<td>0.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5%</td>
<td>0.9%</td>
<td>5.7%</td>
<td>2.0%</td>
<td>-0.5%</td>
<td>-0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>1.6%</td>
<td>2.8%</td>
<td>18.9%</td>
<td>25.1%</td>
<td>-10.6%</td>
<td>0.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.5%</td>
<td>-3.8%</td>
<td>20.8%</td>
<td>12.4%</td>
<td>3.8%</td>
<td>-10.0%</td>
</tr>
</tbody>
</table>
U.S. Industrial Production Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040715c.jpg" width="353">
Industrial production unexpectedly fell 0.3% last month following a downwardly revised 0.9% rise in May. Consensus expectations had been for a 0.1% uptick.
Production in the factory sector fell 0.1% (5.8% y/y) but the May gain was revised down to 0.6% from 0.9%.
Lower output of motor vehicles accounted for some of last month&#39;s weakness as it fell 3.7%, the third sharp decline in the last four months. Excluding motor vehicles, non-tech output was unchanged (+4.7% y/y). Furniture output fell for the third month in four (0.4% y/y). Non-durables output was unchanged (+3.3% y/y).
Output in selected high-technology industries was strong again, up 2.4% m/m (29.4% y/y). Output of semiconductors rose 2.3% (44.3% y/y) and output of computers &amp; peripheral equipment surged 3.0% (30.7% y/y). Output of communications equipment also rose 1.9% (2.5% y/y).
Total capacity utilization fell to 77.2% and growth in capacity rose to 1.3% 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/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>-0.3%</td>
<td>0.9%</td>
<td>5.6%</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>-3.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>77.2%</td>
<td>77.6%</td>
<td>74.0%(6/03)</td>
<td>74.8%</td>
<td>75.6%</td>
<td>77.4%</td>
</tr>
</tbody>
</table>
Initial Claims For Jobless Insurance Rebounded 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040715b.jpg" width="353">
Initial claims for jobless insurance rebounded 40,000 last week to 349,000 following the 40,000 drop the prior week. Consensus expectations had been for 345,000 claims.
Recently volatility probably reflects difficulties in seasonally adjusting the regular layoff of autoworkers due to assembly plant closings to prepare for the new model year.
The 4-week moving average of initial claims rose to 339,000 (-18.8% y/y).
Continuing claims for unemployment insurance rose 112,000 following a 98,000 decline the prior week.
The insured rate of unemployment ticked up to 2.4%.

<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">7/10/04</th>
<th scope="col">7/03/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 349</td>
<td>309</td>
<td>-15.1%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>2,971</td>
<td>-18.0%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040716c.jpg">
The Philadelphia Fed&#146;s July index of general business conditions in the manufacturing sector rose much more than expected to 36.1. The 7.2 point increase versus June outpaced Consensus expectations for a decline to 25.0.
During the last ten years there has been a 57% correlation between the level of the Philadelphia Fed Business Conditions Index and m/m growth in factory sector industrial production.
Each of the sub indexes improved m/m with the exception of inventories and the workweek.
The business conditions index reflects a separate survey question, not the sub indexes.
The separate index of expected business conditions in six months slid for the sixth month this year to 36.3, just about the lowest level since the peak last August.
The prices paid index fell to the lowest level since February.
The Philadelphia Fed index is based on a survey of 250 regional manufacturing firms, but these firms sell nationally and internationally.
The latest Business Outlook survey from the Philadelphia Federal Reserve Bank can be found <a href="http://www.phil.frb.org/files/bos/bos0704.html">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM"> Philadelphia Fed Business Outlook</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>36.1</td>
<td>28.9</td>
<td>8.7</td>
<td>10.6</td>
<td>7.7</td>
<td>-17.2</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>46.3</td>
<td>51.9</td>
<td>-5.1</td>
<td>16.7</td>
<td>12.2</td>
<td>-0.9</td>
</tr>
</tbody>
</table>
Empire State Index Up To Five Month High 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040716e.jpg">
The Empire State Index of General Business Conditions for July erased losses in the prior two months and rose 6.6 points to 36.54, the highest level since February. Consensus expectations had been for a decline to 27.8 and the June level was revised down.
All of the subgroups of the survey improved versus June. Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question, not the components.
The prices paid index rose moderately to 56.03, reversing most of the prior two months&#39; decline from the record high.
The July index of expectations for business conditions six months ahead fell slightly. Expectations for capital expenditures fell for the third consecutive month.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead. April 2002 is the first report, although survey data date back to July 2001.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/research/regional_economy/empiresurvey_overview.html"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S511/@S511.HTM"> Empire State Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">7/03</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col"> 2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index)</td>
<td>36.54</td>
<td>29.93</td>
<td>20.20</td>
<td>16.30</td>
<td>7.02</td>
<td>-13.57</td>
</tr>
</tbody>
</table>
U.S. Business Inventories Continue Accumulation 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 15, 2004


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040716d.jpg">
Total business inventories rose 0.4% in May following the upwardly revised 0.7% gain in April. It was the ninth consecutive monthly increase. Consensus expectations were for a 0.5% rise.
Retail inventories fell slightly following an upwardly revised 1.3% gain in April. Lower auto inventories accounted for all of the decline. Non-auto inventories rose 0.6% for the eighth increase in the last nine months. Gains were strong and across the board except general merchandise.
Inventory additions lead production gains. During the last ten years there has been a 46% correlation between the three month change in business inventories and the three month change in US factory production. That correlation rises to 65% when the production gain is lagged three months.
Overall business sales jumped 0.7% (+12.3% y/y) led by a 1.5% gain in retail sales.
The ratio of inventories-to-sales held at the record low of 1.30 for the third consecutive month.

<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/@ED06/@ED0601/@ED0601.HTM"> Business Inventories</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.4%</td>
<td>0.7%</td>
<td>4.0%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>-4.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.0%</td>
<td>1.3%</td>
<td>5.9%</td>
<td>4.9%</td>
<td>6.0%</td>
<td>-2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.6%</td>
<td>0.7%</td>
<td>4.9%</td>
<td>3.0%</td>
<td>2.6%</td>
<td>-1.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>1.2%</td>
<td>0.2%</td>
<td>5.6%</td>
<td>2.2%</td>
<td>0.4%</td>
<td>-4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>0.5%</td>
<td>0.5%</td>
<td>1.1%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

The June PPI fell 0.3%, the first m/m decline since November. Consensus expectations had been for a 0.2% rise.In line with expectations was the 0.2% rise in the "core" PPI. Energy prices fell 1.6% (9.4% y/y), led lower by an 8.1% [...]

Producer Prices Fell Unexpectedly

<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/040714a.jpg" width="353">
Retail sales slipped 1.1% in June following an upwardly revised 1.4% rise in May. Consensus expectations had been for a 0.8% decline.
Recent sales volatility reflects large m/m changes in motor vehicle dealers&#39; sales, down 4.3% last month after a 3.2% gain in May. June unit sales of light vehicles fell 13.4% after an 8.7% May gain.
Excluding motor vehicles &amp; parts dealers sales fell 0.2% versus an upwardly revised 0.9% gain in May. Consensus expectations had been for a 0.2% rise. Less gasoline non-auto sales slipped 0.1% (7.0% y/y) after a 0.4% May increase.
Sales of furniture/home furnishings &amp; electronics/appliances rose 0.8% (+5.4% y/y) following declines in the prior two months. Sales at general merchandise stores slipped 0.2% (+6.7% y/y) and clothing and accessory store sales fell 0.5% (+6.0% y/y).
Sales at gasoline service stations fell 0.9% (21.4% y/y) after a 5.0% May rise. Average gasoline prices fell 0.7% m/m in June to $1.97/gallon and have fallen further this month to an average $1.91/gal.

<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">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM"> Retail Sales &amp; Food Services</a></td>
<td>-1.1%</td>
<td>1.4%</td>
<td>6.3%</td>
<td>5.3%</td>
<td>2.5%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.2%</td>
<td>0.9%</td>
<td>8.3%</td>
<td>5.2%</td>
<td>3.2%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
Import Prices Slipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 14, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040714c.jpg" width="353">
Import prices slipped 0.2% last month following a downwardly revised 1.4% gain in May.The Consensus expectation had been for a 0.1% rise.
Lower oil prices accounted for the decline last month, off 1.0%. The price of Brent crude during the several days moved higher to $36.53 per barrel and so far in July has averaged $36.47 versus $35.24 in June.
Non-petroleum import prices were unchanged last month. The decline was led by a 0.5% (+5.6% y/y) decline in food prices and a 0.1% dip capital goods prices (-1.4% y/y). Capital goods prices excluding computers fell 0.1% (+0.5% y/y) for the second month. Non-auto consumer goods prices were unchanged (+0.4% y/y) following two months of slight decline.
Export prices dropped 0.6% as food prices slid 4.6% (+16.5% y/y). Nonagricultural export prices dipped 0.1% (+2.9% y/y).
&quot;US Production Abroad&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20040601/cover.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM"> Import/Export Prices (NSA)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>5.6%</td>
<td>2.9%</td>
<td>-2.5%</td>
<td>-3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-1.0%</td>
<td>9.4%</td>
<td>34.3%</td>
<td>21.0%</td>
<td>3.0%</td>
<td>-17.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.0%</td>
<td>0.3%</td>
<td>2.4%</td>
<td>1.1%</td>
<td>-2.4%</td>
<td>-1.5%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>-0.6%</td>
<td>0.4%</td>
<td>4.0%</td>
<td>1.6%</td>
<td>-1.0%</td>
<td>-0.8%</td>
</tr>
</tbody>
</table>
Mortgage Applications Backpedal 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 14, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040714b.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association gave back 6.3% (-52.6% y/y) last week of the 19.5% rise the prior period.
Applications to refinance mortgages slipped 6.1% after the 27.7% spike the prior week (-75.0% y/y).
Purchase applications fell 6.4% (4.8% y/y) after the 15.0% gain the prior week. So far in July purchase applications are 9.5% higher than in June.
The effective interest rate on a conventional 30-Year mortgage fell slightly to 6.22% from 6.24% the week earlier and an average 6.52% in June. The effective rate on a 15-year mortgage also fell to 5.67% versus an average 5.98% in June.
During the last ten years there has been a 63% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org"> here</a>.

<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">07/09/04</th>
<th scope="col">07/02/04</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>643.9</td>
<td>687.0</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>468.8</td>
<td>500.9</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,662.4</td>
<td>1,769.7</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales slipped 1.1% in June following an upwardly revised 1.4% rise in May. Consensus expectations had been for a 0.8% decline. Recent sales volatility reflects large m/m changes in motor vehicle dealers' sales, down 4.3% last [...]

U.S. Retail Sales Pause

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>
<body>
 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040714d.jpg" width="353">
Inflation in the United Kingdom, as measured by the year-to-year percentage increase in the Consumer Price Index has risen in the past three months and in June was 1.6%, the highest level since March,2003.
Prior to December 10, 2003, inflation in the U.K. was measured by year-to-year changes in the Retail Price Index. The MPC (Monetary Policy Committee) tracked the Retail Price Index, less mortgage interest (RPIX) as its inflation measure. The target at that time was 2.3%. The change to the Consumer Price Index as the preferred measure of inflation facilitates comparisons with inflation in the Euro Zone countries as this index is based on the same methodology and has the same base year as the Harmonized Indexes of Consumer Price Indexes (HICP) of Euro Zone countries.
In addition to the release of data on inflation in the U.K., inflation data were also released today for Spain and France. In both countries, like the U. K. inflation is rising. Until 2000, inflation was generally higher in the U.K. than in France, but since then has been lower. Inflation in Spain continues to be higher than both the U.K. and France.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Harmonized Indexes of Consumer Prices (1996=100)</th>
<th scope="col">Jun 04</th>
<th scope="col">May 04</th>
<th scope="col">Jun&nbsp; 03</th>
<th scope="col">M/M %</th>
<th scope="col">Y/Y&nbsp;%&nbsp;</th>
<th scope="col">2003 %</th>
<th scope="col">2002 %</th>
<th scope="col">&nbsp;2001 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">France</td>
<td>113.5</td>
<td>113.4</td>
<td>110.5</td>
<td>0.09</td>
<td>2.71</td>
<td>2.17</td>
<td>1.94</td>
<td>1.78</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td>124.8</td>
<td>124.6</td>
<td>120.6</td>
<td>0.16</td>
<td>3.48</td>
<td>3.01</td>
<td>2.87</td>
<td>3.65</td>
</tr>
<tr class="odd">
<td class="firstcol">United Kingdom</td>
<td>111.3</td>
<td>111.4</td>
<td>109.6</td>
<td>-0.09</td>
<td>1.55</td>
<td>1.36</td>
<td>1.27</td>
<td>1.22</td>
</tr>
<tr>
<td class="firstcol">Addendum:</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">UK Retail Price Index&nbsp; (1997=100)</td>
<td>186.8</td>
<td>186.5</td>
<td>181.3</td>
<td>0.16</td>
<td>3.03</td>
<td>2.91</td>
<td>1.63</td>
<td>1.82</td>
</tr>
<tr>
<td class="firstcol">UK RPIX excl Mortgage Interest&nbsp;</td>
<td>184.2</td>
<td>184.3</td>
<td>180.0</td>
<td>-0.05</td>
<td>2.33</td>
<td>2.81</td>
<td>2.21</td>
<td>2.13</td>
</tr>
</tbody>
</table>
</body>
</html>

Inflation in the United Kingdom, as measured by the year-to-year percentage increase in the Consumer Price Index has risen in the past three months and in June was 1.6%, the highest level since March,2003. Prior to December 10, 2003, [...]

Inflation as Measured by Harmonized Indexes of Consumer Prices (HICP) Rises in the United Kingdom, France and Spain

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

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

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. 

London

Singapore

Tokyo

New York

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

Tian Yong Woon

This week, we review the state of play in Southeast Asia and Australia. In Thailand, political uncertainty lingers after the removal of former Prime Minister Paetongtarn, with investors now eyeing fresh elections in the coming months. The ongoing political flux has only deepened concerns over Thailand’s persistent economic underperformance relative to regional peers (chart 1). Indonesia, too, has faced recent political turmoil, as protests over lawmakers’ housing allowances turned violent. While tensions have since eased and financial markets partially recovered (chart 2), the episode highlighted the fragility of investor confidence.

Elsewhere in Southeast Asia, some economies are pressing ahead. Malaysia has made significant strides in establishing itself as a global tech hub, supported by robust direct investment flows (chart 3). Vietnam, likewise, continues to position itself as a manufacturing and electronics powerhouse. Its strong export performance has driven growth but also drawn scrutiny, particularly as the US trade deficit with Vietnam has widened alongside rising imports (chart 4).

In the Pacific, Australia has shown encouraging signs, with Q2 GDP growth outperforming expectations on the back of stronger household consumption (chart 5). This has bolstered expectations that the RBA will pause rate cuts at its month-end meeting. Even so, close attention remains on the labour market (chart 6), potential headwinds from US tariffs, and a broader productivity challenge.

**Thailand**
Thailand continues to struggle to regain its footing, weighed down by ongoing political turmoil. Former Prime Minister Paetongtarn was removed from office by the Constitutional Court in late August, following her July 1st suspension over a leaked phone call with former Cambodian leader Hun Sen. In her place, lawmakers elected former Deputy Prime Minister Anutin as the new premier. However, as part of the deal that secured his appointment, Anutin has pledged to dissolve parliament within four months and call a general election. This political upheaval compounds Thailand’s broader economic challenges. Growth has persistently lagged behind its Southeast Asian peers (chart 1), with tourism—a key revenue source—stalled and still short of pre-pandemic levels. At a time when deeper reforms are needed to unlock the country’s full potential, Thailand instead faces prolonged political flux, leaving policy clarity and direction uncertain even as neighbours forge ahead.

250908T1.jpg

**Indonesia**
Thailand is not alone in Southeast Asia in grappling with political turmoil. Indonesia has recently faced its own unrest, as initially peaceful demonstrations against housing allowances for lawmakers turned violent after a motorbike taxi driver was fatally struck by a police vehicle during an earlier rally in Jakarta. Although protests have since subsided, the turmoil comes on the heels of policy moves that have already unsettled some investors. Concerns have centred on the fiscal strain from large-scale spending programs such as Prime Minister Prabowo’s free school meals initiative. While the program is well-intentioned—aimed at reducing poverty and improving child development—its hefty cost implies spending cuts elsewhere and higher taxes, fuelling unease. Markets have reflected these concerns, with Indonesian equities and the rupiah selling off during the recent protests, though both have staged a partial rebound as tensions eased (chart 2).

250908T2.jpg

**Malaysia**
While Thailand and Indonesia have been grappling with political woes, other Southeast Asian economies have pressed ahead. Malaysia, for instance, has made notable strides in establishing itself as a global tech hub, with significant advances in semiconductors—largely centred in Penang—and, more recently, in electric vehicles, where Malacca is emerging as a key industry hub. These developments have been fuelled in part by strong foreign investment flows, which, while healthy in recent years (chart 3), slipped to a five-year low in Q2 2025 on a directional basis. Still, Malaysia’s semiconductor push remains robust: Prime Minister Anwar announced earlier this year that the country had already secured more than 63 billion ringgit ($14.9 billion) in semiconductor investments, mostly from foreign sources, under its National Semiconductor Strategy—less than a year after the scheme’s launch. More broadly, Malaysia has pressed ahead on multiple fronts in its drive toward high-income status by 2030—an ambition that is looking increasingly attainable.

250908T3.jpg

**Vietnam**
Moving to Vietnam, the economy—like Malaysia’s—has been pushing hard to establish itself as a manufacturing and electronics hub. Vietnam continues to outpace its ASEAN peers in growth and shares Malaysia’s ambition of reaching high-income status, though with a later target of 2045. Its export boom has been central to past success but has also drawn scrutiny, particularly as the US trade deficit with Vietnam has widened with rising imports (chart 4). As a result, Vietnam now faces a more constrained trade environment even as it relies on exports as a key growth driver. For now, Vietnam has avoided a worst-case scenario with the US: a recent trade deal reduced the reciprocal tariff rate from a potential 46% to 20%, though US-perceived “transshipments” will still be hit with a 40% tariff. Beyond navigating this delicate global landscape, Vietnam is also instigating deep structural reforms—such as strengthening the role of the private sector—to sustain growth and meet its long-term development goals.

250908T4.jpg

**Australia**
Moving to the Pacific, Australia is among the few economies relatively insulated from US tariffs, facing only the baseline 10% rate under the revised tariff schedule that took effect in early August. On the domestic front, Australia’s economy outperformed expectations in Q2, with real GDP growth accelerating to 1.8% y/y. The pickup was driven by stronger household consumption (chart 5), offering an encouraging signal for the outlook and easing earlier concerns about economic momentum—perhaps also suggesting that the central bank’s earlier rate cuts are beginning to take effect. 

250908T5.jpg

Turning to monetary policy, the recent upbeat data have reinforced expectations that the RBA will hold rates steady at its September meeting, after cutting a cumulative 75 bps since the start of the year. That said, markets are still pricing in further easing down the line, supported by Australia’s disinflationary trend (chart 6) and lingering downside risks from weaker global demand amid US trade tariffs. Another key dimension is the labour market, which remains tight but has shown signs of softening in recent months. A broader concern is productivity, which has stagnated in recent quarters, raising questions about the sustainability of real wage growth.

250908T6.jpg

Asia

Economic Letter from Asia: Political Woes

250905A2.jpg

250905B2.jpg

Nonfarm payrolls increased 22,000 during August after rising 79,000 in July, revised from 73,000 and falling 13,000 during June, revised from a 14,000 increase. Expectations had been for an 83,000 rise in the Action Economics Forecast Survey. The three-month average change in payrolls of 29,300 compared to 28,300 in July, but stood far below its high of 231,700 in January.

Average hourly earnings rose an expected 0.3% in August after unrevised gains of 0.3% in July and 0.2% in June. Earnings growth of 3.7% y/y equals that in June which is the lowest since July 2024, but has been trending lower from its 5.9% high in March 2022.

The unemployment rate, measured in the household survey, edged up m/m to an expected 4.3% from 4.2% in July and 4.1% in June. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, rose to 8.1% last month from 7.9% In July. It was 6.6% in April 2023.

In the **establishment survey**, private-sector employment in August rose 38,000 after rising 77,000 in July.  Factory sector jobs declined 12,000, off for the fourth straight month. Durable goods employment fell 19,000 after rising 5,000, as motor vehicle & parts hiring declined 7,300 after a 2,000 July gain. Nondurables employment rose 7,000, reversing a 7,000 July decline. Construction sector employment weakened 7,000, down for the third straight month. The number of mining & logging industry jobs declined 6,000, also registering the fourth consecutive month of decline.

Private service-sector employment increased 63,000 during August after improving 85,000 in July. Increases varied greatly amongst service-sector categories. Private education & health sector employment rose 46,000 last month, following a 77,000 increase in July. The number of leisure & hospitality jobs rose 28,000 after a 6,000 gain. Trade, transportation & utilities employment gained 2,000, following a 5,000 increase, but financial activities employment weakened 3,000 after increasing 9,000 in July. The number of professional & business services jobs fell 17,000, down for the fourth straight month as temporary help employment declined 9,800, also off for the fourth month in a row. Information sector employment declined 5,000, after falling 7,000 in July and 3,000 in June. Transportation & warehousing hiring weakened 3,600 last month following a 6,300 drop.

Government sector payrolls declined 16,000 last month following a 2,000 rise. Federal government employment weakened 15,000 and has fallen for seven straight months. State government payrolls declined 13,000 after falling in each of the prior three months. To the upside, local government hiring rose 12,000 following a 17,000 July increase.

Private-sector average hourly earnings rose 0.3% (3.7% y/y) in August, the same as in July. Earnings in the goods-producing sector increased 0.4% (4.0% y/y) in August, double the July rise. In construction, earnings rose 0.6% (4.2% y/y) following a 0.3% rise, while factory sector earnings improved 0.3% (3.9% y/y) after a 0.2% gain. In the service sector, earnings rose 0.3% (3.6% y/y) in August, the same as in July. Professional & business services pay increased 0.4% (5.0% y/y) for the second consecutive month while leisure & hospitality earnings also increased 0.4% (3.7% y/y) after two straight months of 0.3% increase. Information earnings rose 0.2% (4.6% y/y) for the second straight month.

250905C2.jpg

250905D2.jpg

The length of the average workweek was 34.2 hours in August for the third straight month. The workweek in the goods-producing sector eased to 39.8 hours from 39.9 hours in July. The construction sector average workweek held at 39.0 hours while the factory sector workweek eased to 40.0 hours from 40.2 hours. The average workweek in the private service sector held at 33.2 hours. Information sector hours edged up to 37.0 from 36.9. Financial activities hours held at 37.6. Private education & health services hours eased to 32.7 from 32.8 in July.

In the **household survey**, the unemployment rate increased to 4.3% in August after rising to 4.2% in July from 4.1% in June as employment rose 288,000 after falling 260,000 in July and the size of the labor force increased 436,000 after three straight months of decline. The labor force participation rate rose to 62.3% last month from 62.2%, remaining well below the high of 63.3% early in 2020. The rate for teenagers eased to 34.8%, a five-year low. For workers aged 20-24, the rate plunged to 70.2%, a four year-low. For workers aged 25-54, the participation rate increased to 83.7%, an eleven-month high. For individuals 55 and over, the rate held steady at 38.1% but remained near a 20-year low of 38.0% in June.

The employment/population ratio for all workers steadied at 59.6% last month. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic. For men, the rate rose to 65.0% from 64.7% in July and for women, the rate eased to 54.5 % on the heels of a slip to 54.7% in July.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

250905X2.jpg

250905F2.jpg

- Hiring weakens broadly; factory, construction & government jobs decline.
- Earnings gain slows y/y.
- Unemployment rate increases as job growth lags rise in labor force.

U.S. Payroll Employment Report Reveals Unexpected Weakness in August; Earnings Rise Steadily, but Jobless Rate Increases

Robert Brusca

250905E.jpg

Germany's factory orders declined for the third straight month in July. Real new orders fell 2.9% month-on-month in July, against expectations for a small increase. The drop was sharper than a 0.2% decrease in June; foreign orders declined 3.1% in July, as orders from the euro area contracted 3.8%, and orders from outside the euro area fell by 2.8%. These metrics suggest that demand both inside and outside the euro area remains weak. Domestic orders dropped 2.5% in July, an exact offset to their gain in June. When ranked on growth rates over the last 30 years, all three sector growth rates are below their medians (below a ranking of 50%). However, when ranked on the real index number level, total orders rank at their 55.6 percentile, foreign orders rank at their 79.5 percentile and domestic orders rank at their 15.2 percentile. All-in-all it’s an unimpressive report.

**Orders sequentially and QTD:** Sequential trends are ambivalent but still clearly weak. Sequential growth rates do not show a clear acceleration/deceleration pattern. But for total, foreign and domestic real orders, both 3-month and 12-month growth rates are negative (one exception: foreign orders over 12 months). Domestic orders show negative growth over 6 months as well. Quarter-to-date growth rates are negative for all sectors.

**Sales trends:** Real sales are mixed in July, rising 0.9% overall on declines in two sectors: consumer durables and intermediate goods. Sector sales mostly maintain growth as manufacturing sales are positive based on growth rates over 12 months, 6 months, and 3 months. Consumer goods and intermediate goods sales show deceleration and ongoing contraction. Consumer durable goods and intermediate goods show QTD declines. On the manufacturing & mining to total, manufacturing and capital goods show index standings above their respective 50% on 30 years of data. That also shows above-median growth rates on annual data along with consumer goods and consumer nondurable goods.

**Industrial confidence:** Industrial confidence measures for Germany, France, Italy, and Spain, the four largest EMU members, show improved (but still net negative readings) in July compared to June. Over three months and six months, Germany and Italy show some improvement; France still shows steady deterioration. Spain shows improvement over 3 months and it is only slight improvement. The queue standings for the industrial reading over 30 years of data show Spain with an above-median reading in July. Germany and France are exceptionally weak and Italy has been weaker only 26% of the time based on the queue standing measure. Not only are German orders and demand weak and faltering but the broad EU Commission measures of industrial confidence show broadly weak readings for the largest economies in the EMU.

250905.jpg

Germany

German Factory Orders Plunge on Domestic Weakness

Andrew Cates

**Gold prices and trade policy uncertainty**
This week’s record-breaking surge in gold prices has coincided with renewed volatility in trade policy uncertainty, reflecting the market’s heightened sensitivity to political and legal developments in Washington. A series of legislative challenges to the administration’s latest tariff measures has raised the prospect that parts of the policy framework could be overturned or significantly diluted. That possibility has injected another layer of uncertainty into an already fragile trade environment, amplifying demand for gold as a hedge. Investors appear to be weighing not only the inflationary risks of tariffs that remain in place but also the destabilizing effects of unpredictable policy reversals, leaving gold prices at historic highs and the trade policy uncertainty index elevated.

250904Z1.jpg

**US Tariffs**
Although the data in this chart extend only through June 2025, they clearly illustrate which trading partners would gain the most if US tariff policies were to be reversed. China stands out as the most heavily penalised, with effective tariff rates rising by more than 25 percentage points in just six months. Japan and South Korea have also faced significant tariff hikes, suggesting that their exporters would benefit substantially from any policy rollback. Taiwan, India, and the EU also feature prominently, though at more moderate levels. By contrast, ASEAN economies, Australia, and the UK have seen relatively smaller increases, leaving them less exposed. In aggregate, a broad reversal of tariffs would most immediately alleviate the pressure on East Asian exporters—particularly China—while also reducing costs for US importers and consumers who have been disproportionately affected by higher prices on goods from the region.

250904Z2.jpg

**The Indian economy and US trade policy** 
India faces a particularly sharp squeeze from the latest wave of US tariff hikes, given that the US now absorbs nearly one-fifth of its exports. The imposition of higher barriers has dealt a direct blow to key sectors, such as textiles and jewellery, while also undermining investor confidence. That pressure is clearly visible in the sharp depreciation of India’s trade-weighted currency, which has accelerated in 2025. Rather than offering a competitiveness boost, the weaker rupee has compounded difficulties by lifting import costs and stoking inflation at home. The result is that tariffs have both curtailed India’s export earnings and strained its domestic economy, leaving policymakers with limited options beyond seeking trade diversification and targeted support measures.

250904Z3.jpg

**Global monetary policy** 
The latest Blue Chip Financial Forecasts survey helps explain why equity markets have remained upbeat despite escalating geopolitical and trade tensions. The survey points to an expected sizeable policy easing over the coming year, particularly in the US and UK where forecasters anticipate close to a full percentage point of rate cuts. Australia and Canada are also projected to deliver meaningful reductions, while the euro area is expected to ease more modestly. Japan stands out as the exception, with expectations tilted toward further tightening. For equities, these projections of broad-based rate cuts provide a crucial cushion—supporting valuations, lowering discount rates, and reinforcing the sense that policymakers are prepared to offset the drag from tariffs and slowing global growth.

250904Z4.jpg

**Euro area inflation** 
By contrast with the US and UK, where forecasters in the latest Blue Chip Financial Forecasts survey anticipate close to a full percentage point of rate cuts, expectations for the ECB are more restrained. This reflects the fact that the ECB has already delivered a relatively large degree of policy easing, while headline inflation has now fallen back to levels close to its target. Even so, further rate reductions remain likely if underlying price pressures continue to moderate. As the chart shows, services inflation has begun to move lower in line with a clear decline in wage growth, suggesting that disinflationary momentum is building. Should this trend persist, the ECB will have scope to add to its easing cycle, though at a slower and more cautious pace than peers such as the Fed or the Bank of England.

250904Z5.jpg

**Prices and cost pressures in the US corporate sector** 
Corporate profitability has long been one of the best leading signals for US equity cycles, and the measure here (Non-financial corporate profits per unit of output – i.e. profit margins) has slipped from its late-2023 peak and moved sideways for much of the past year. That’s not a collapse, but it does raise questions about how long equities can keep rising without stronger profit momentum. The recent Q2 uptick—a 1.8% annualised gain—came despite a hefty rise in non-labour costs, with margins protected by modest pricing power and a notable 2.2% drop in unit labour costs. Whether that labour relief reflects softer wage pressures or a structural productivity boost—potentially tied to AI—will be crucial in determining if profits can remain resilient, or if this plateau is the prelude to a downturn.

250904Z6.jpg

Equity markets have lost a little ground in recent days and bond markets have been more jittery, as legal challenges to US tariff policies add to a tense backdrop of geopolitical meetings between China, Russia, and India. Gold’s surge to record highs arguably captures the search for safe havens amid this uncertainty (chart 1), while the possibility of tariff reversals keeps alive the prospect of relief for the most affected exporters, notably China, Japan, and South Korea (chart 2). India’s position looks more precarious, with its reliance on the US market colliding with a weakening trade-weighted currency as tariffs bite into growth and investor confidence (chart 3). Monetary policy expectations, however, continue to offer some support, with the latest Blue Chip Financial Forecasts survey pointing to sizeable easing in the US and UK (chart 4). The ECB is expected to tread more cautiously after earlier cuts and with headline inflation now near target. Still, if inflation continues to ease, further action remains possible (chart 5). In the US, corporate resilience is also helping offset some of the gloom: despite tariff-driven spikes in non-labour costs, falling unit labour costs—possibly aided by AI productivity gains—and firmer prices allowed profits per unit of output to rise in Q2 (chart 6).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/0sd6yLt6aGEGOdVpZ2VZbW?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: A Few Cuts More

250904N12.jpg

250904O12.jpg

The U.S. ISM Services PMI increased to 52.0 in August after falling to 50.1 in July from 50.8 in June, according to the Institute for Supply Management. The index had been declining since it reached 53.5 in February. The index hit a recent high of 55.8 in October of last year and remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected a reading of 51.0 for August.

The ISM Composite Index combines the services index and the manufacturing index released on Tuesday. This index rose to 51.6 in August from 49.8 in July. This also was the highest level in six months.

Amongst the services component series, the business activity index rose to 55.0 last month after falling to 52.6 in July. Twenty-three percent (NSA) of respondents reported improved activity while 14.2% reported decline. The new orders index increased to 56.0 from 50.3 in July. Twenty-seven percent (NSA) of respondents reported improved orders while a lessened 16.2% reported decline. The employment series was little-changed in August at 46.5, after falling from 47.2 in June. A lessened 10.3% (NSA) of respondents reported increased employment while a lower 16.8% reported decline. Working lower, the supplier delivery series fell to 50.3 in August after rising to 51.0 in July. Four percent of respondents (NSA) reported faster delivery speeds while 4.5% reported slower speeds.

On the inflation front, the prices index eased to 69.2 after surging to 69.9 in July. A lessened 36.7% (NSA) of respondents reported higher prices while 2.6% reported lower prices. The index has increased from its December 2023 53.1.

Additionally, the new export orders index eased to 47.3 (NSA) in July following a decline to 47.9 in July. Twelve percent of survey respondents reported higher exports while 16.9% reported decline. The imports index surged to 54.6 last month after falling to 45.9 in July. A higher 18.9%% of respondents reported higher imports while a lessened 9.8% reported decline. The inventory change index rose to 53.2 from 51.8 and the order backlog index fell to 40.4 in August after rising to 44.3 in July. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries.

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

250904P12.jpg

250904Q12.jpg

- Total index rebounds to six-month high.	
- Business activity and new orders improve.
- Prices index eases.

Economy in Brief: 2004

Jump to:

Stock Market Rise Rebuilt Wealth

Foreign Purchases of U.S. Securities Ease in May Amid Wide Volatility

CPI Rose Slightly More Than Expected

Brazil's Retail Sales Up 10% in May

Producer Prices Fell Unexpectedly

Brazil's Retail Sales Up 10% in May

U.S. Retail Sales Pause

Inflation as Measured by Harmonized Indexes of Consumer Prices (HICP) Rises in the United Kingdom, France and Spain