Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040713c.jpg" width="353">
The U.S. foreign trade deficit narrowed in May to $46.0B versus the little revised record deficit of $48.1B a month earlier. Consensus expectations had been for a deficit of $48.3B.
Exports rebounded 2.9% to a record high following a 1.0% decline in April. Notably strong were capital goods exports, up 6.3% (22.1% y/y). Exports of food &amp; beverages rose 2.8% (9.5% y/y) and exports of industrial supplies jumped 6.0% (22.6% y/y). Non-auto consumer goods exports fell slightly for the second month (17.6% y/y).
Total imports rose by 0.4% for the second month. Imports of petroleum products fell for the third consecutive month (-1.9% y/y). Imports of non-petroleum goods rose a modest 0.1% (11.1% y/y) following a 1.5% jump in April.
Imports of capital goods rose 0.2% (14.2% y/y) following a 2.0% April rise. Imports of non-auto consumer goods slumped 3.0% (+11.0% y/y) led by large declines in imports of apparel &amp; household goods, TVs and stereo equipment.
By country, the US trade deficit with China deepened m/m to $12.1.0B ($124.1B in 2003). The US trade deficit with Japan eased to $5.5B ($66.0B in 2003) and the deficit with Western Europe eased to $8.2B ($100.3B in 2003).

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM"> Foreign Trade</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">Trade Deficit</td>
<td>$46.0B</td>
<td>$48.1B</td>
<td>$40.8B(5/03)</td>
<td>$496.5B</td>
<td>$421.7B</td>
<td>$362.7B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.9%</td>
<td>-1.0%</td>
<td>17.6%</td>
<td>4.6%</td>
<td>-3.1%</td>
<td>-6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>0.4%</td>
<td>0.4%</td>
<td>15.9%</td>
<td>8.5%</td>
<td>2.1%</td>
<td>-5.5%</td>
</tr>
</tbody>
</table>
Small Business Optimism Fell Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 13, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040713b.jpg" width="353">
The Small Business Optimism Index published by the National Federation of Independent Business (NFIB) fell 1.4% last month. It was the fifth monthly decline this year.
The percentage of firms expecting the economy to improve fell sharply to 26% from a high of 51% last November. The percent of firms planning to raise capital expenditures also fell sharply but the percentage planning to raise employment rose slightly.
The percentage of firms raising average selling prices jumped to a record high and the percent reporting higher earnings this quarter deteriorated.
During the last ten years there has been a 50% correlation between the level of the NFIB index and the y/y change in real GDP.
About 24 million businesses exist in the United States. Small business creates 80% of all new jobs in America.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S7/@S7.HTM"> Nat&#39;l Federation of Independent Business</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">Small Business Optimism Index (1986=100)</td>
<td>103.0</td>
<td>104.5</td>
<td>1.3%</td>
<td>101.3</td>
<td>101.2</td>
<td>98.4</td>
</tr>
</tbody>
</table>
Chain Store Sales Unchanged 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 13, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040713a.jpg" width="353">
Chain store sales were unchanged last week following the 0.9% rise the prior period, according to the International Council of Shopping Centers (ICSC)-UBS.
So far in July sales are up 0.1% versus the June average.
During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. 

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">07/10/04</th>
<th scope="col">07/03/04</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">Total Weekly Retail Chain Store Sales</td>
<td>438.5</td>
<td>438.5</td>
<td>3.4%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
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The U.S. foreign trade deficit narrowed in May to $46.0B versus the little revised record deficit of $48.1B a month earlier. Consensus expectations had been for a deficit of $48.3B. Exports rebounded 2.9% to a record high following a [...]

U.S. Trade Deficit Eased

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040712b.jpg" width="353">
More data on industrial production in countries outside the U. S. were released today. The data are mixed. In the Pacific Rim, India reported an increase of 0.15% in May from April and a 6.35% rise over April 2003. Indonesia reported a sharp rice of 5.12% in the month of May which resulted in a 24.25% increase over May 2003.
In Europe, France showed an increase of 0.20%, or an annual rate of 2.4% in May from April and was 3.37% above a year ago.In Italy, however, industrial production was unchanged from April and was only 2.05% above April, 2003. In Ireland, where double digit increases in the annual rate of production were the norm from the time the country joined the Euro Zone up to 2002, industrial production is now declining. In May, industrial production was 3.96% below April and 0.33% below May of 2003.
Finally, Mexico reported that seasonally unadjusted industrial production increased 0.74% in May from April and was 2.11% above May, 2003. The year over year percent change in industrial production for Mexico has been positive for each month of the current year and suggests that the year over year increase for all of 2004 is likely to be positive for the first time since 2000.

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<th scope="col" class="firstcol">Industrial Production</th>
<th scope="col">May 04</th>
<th scope="col">Apr 04</th>
<th scope="col">May&nbsp; 03</th>
<th scope="col">M/M&nbsp; %</th>
<th scope="col">Y/Y %&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 (2000=100)</td>
<td>101.1</td>
<td>100.9</td>
<td>97.8</td>
<td>0.20</td>
<td>3.37</td>
<td>-0.09</td>
<td>-1.25</td>
<td>1.09</td>
</tr>
<tr>
<td class="firstcol">Italy (2000=100)</td>
<td>98.0</td>
<td>98.0</td>
<td>96.0</td>
<td>0.00</td>
<td>2.08</td>
<td>-1.6</td>
<td>-1.38</td>
<td>-1.05</td>
</tr>
<tr class="odd">
<td class="firstcol">Ireland (1995=1000</td>
<td>245.1</td>
<td>255.20</td>
<td>245.9</td>
<td>-3.96</td>
<td>-0.33</td>
<td>6.47</td>
<td>7.71</td>
<td>10.23</td>
</tr>
<tr>
<td class="firstcol">India (FY 1993=100)</td>
<td>194.4</td>
<td>194.1</td>
<td>182.8</td>
<td>0.15</td>
<td>6.35</td>
<td>6.56</td>
<td>4.59</td>
<td>2.71</td>
</tr>
<tr class="odd">
<td class="firstcol">Indonesia (1993=100)</td>
<td>125.22</td>
<td>118.12</td>
<td>100.78</td>
<td>5.12</td>
<td>24.25</td>
<td>4.52</td>
<td>-7.06</td>
<td>-1.08</td>
</tr>
<tr>
<td class="firstcol">Mexico (1993=100)</td>
<td>134.8</td>
<td>135.8</td>
<td>133.0</td>
<td>0.74</td>
<td>2.11</td>
<td>-0.75</td>
<td>-0.31</td>
<td>-3.38</td>
</tr>
</tbody>
</table>
</body>
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More data on industrial production in countries outside the U. S. were released today. The data are mixed. In the Pacific Rim, India reported an increase of 0.15% in May from April and a 6.35% rise over April 2003. Indonesia reported [...]

A Mixed Picture of Industrial Production Trends Outside the United States

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040712a.jpg" width="353">
Growth in the Index of Leading Indicators for the Major Seven OECD Countries slumped through May. The 4.4% rate of growth was the weakest since last July and reflected declines in the index level during two of the last three months. Benchmark revisions lowered the country index levels but growth rates through 2003 were generally raised.
Leaders in Japan fell in each of the last three months and are down 1.3% from the February high. The six-month growth rate went negative for the first time in about a year. Weakness in construction and an excess of imports over exports accounts for much of the decline.
The leading index for the European Union has continued to rise, up 0.2% in each of the last two months but the six month growth rate eased to 4.7% versus the high of 6.2% late last year.
In France the leading index jumped 0.6% in May leaving the six-month growth rate at 6.4%. Leaders in Germany rose 0.3% in four of the five months this year, though these figures are slightly lower than initially reported. The six-month growth rate of 6.1% is off its December high of 9.0%.
Leaders in the UK fell 0.3% for the second month in the last three. The six month growth rate dropped to fell to 2.0% from the high of 5.1% in February. In Italy the leaders fell for the second consecutive month in May and that pulled six month growth to 0.4% its lowest in a year.
In Canada the leading index has been on a tear, up 1.0% in May following an upwardly revised 0.7% gain in April. The six-month growth rate rose to 8.4%, its highest in two years. In the United States the leading indicators slipped 0.1% for the second month in the last three. The six-month growth rate fell to 6.5% from its December high of 12.2%.
Visit the OECD&#39;s website at this <a href="http://www.oecd.org/home/">website</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/OECDMEI/OECDMEI.HTM"> OECD Main Economic Indicators</a></th>
<th scope="col"> May</th>
<th scope="col"> April</th>
<th scope="col"> 6-Mth Chg.</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">OECD Major Seven - Leading Index (Trend Restored)</td>
<td>102.5</td>
<td>102.6</td>
<td>4.4%</td>
<td>2.6%</td>
<td>2.3%</td>
<td>-3.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; European Union</td>
<td>105.9</td>
<td>105.7</td>
<td>4.7%</td>
<td>2.4%</td>
<td>3.5%</td>
<td>-2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>96.5</td>
<td>97.0</td>
<td>-0.5%</td>
<td>1.7%</td>
<td>0.2%</td>
<td>-4.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; United States</td>
<td>103.3</td>
<td>103.5</td>
<td>6.5%</td>
<td>3.9%</td>
<td>2.1%</td>
<td>-3.2%</td>
</tr>
</tbody>
</table>
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Growth in the Index of Leading Indicators for the Major Seven OECD Countries slumped through May. The 4.4% rate of growth was the weakest since last July and reflected declines in the index level during two of the last three months. [...]

OECD Leaders Wobble

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040709a.jpg" width="353">
The Manufacturers Alliance/MAPI Survey of expected business conditions improved sharply for 2Q04, reflecting sharp improvement in order books.
The Composite Business Index rose to its highest level in the series&#39; history which began in 1991. During that period there has been a 63% correlation between the index level and y/y change in factory sector industrial production.
The index of orders, which measures orders in the current quarter versus last year, also rose to its record high. There has been a 94% correlation between the orders index level and the year to year to year change in factory order. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040709c.jpg" width="353"> 
Profit margins were at the highest level on record as the index rose to 79 versus 73 in 1Q and 47 a year ago. Profit margins rose at a record 68% of the firms surveyed and fell at just 10% of those surveyed. 
The index of capital spending plans also rose to 75 versus 69 last quarter. These figures were down somewhat from the record high of 81 in 4Q03 as 59% of firms planned to increase capital spending.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@SE/@SE.HTM">Manufacturers Alliance/MAPI Survey</a></th>
<th scope="col">2Q04</th>
<th scope="col">1Q04</th>
<th scope="col">2Q03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Business Index</td>
<td>80</td>
<td>78</td>
<td>60</td>
<td>67</td>
<td>60</td>
<td>37</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Orders Index</td>
<td>93</td>
<td>90</td>
<td>53</td>
<td>70</td>
<td>52</td>
<td>30</td>
</tr>
</tbody>
</table>
</body>
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The Manufacturers Alliance/MAPI Survey of expected business conditions improved sharply for 2Q04, reflecting sharp improvement in order books. The Composite Business Index rose to its highest level in the series' history which began [...]

Manufacturers Expect Improved Growth: Profits Firm

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040708a.jpg" width="353">
Initial claims for jobless insurance fell sharply last week to 310,000 versus the prior week of 349,000 claims which was revised down. Consensus expectations had been for 340,000 claims.
The decline in claims may have been exaggerated by errant seasonal seasonal adjustment factors which anticipated the regular layoff of autoworkers due to assembly plant closings to prepare for the new model year. Closings this year likely will begin this week. Unadjusted initial claims rose 32,700 in the latest week after falling 4,100 the prior period.
The 4-week moving average of initial claims fell to 336,000 (-20.0% y/y).
Continuing claims for unemployment insurance fell 85,000 following a 5,000 increase the prior week which was revised down.
The insured rate of unemployment was stable at 2.3% for the fifth straight week.

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<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">7/03/04</th>
<th scope="col">6/26/04</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; 310</td>
<td>349</td>
<td>-27.4%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>2,872</td>
<td>-22.4%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
</body>
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Initial claims for jobless insurance fell sharply last week to 310,000 versus the prior week of 349,000 claims which was revised down. Consensus expectations had been for 340,000 claims. The decline in claims may have been exaggerated [...]

Initial Claims For Jobless Insurance Dropped Sharply

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040707c.jpg" width="353">
Orders received by German factories were strong again in May, extending a sharp rebound into a second month. Total orders rose 1.8% month-to-month, after 2.0% in April; February and March had had modest increases. In the table below, we show these monthly changes at annual rates to make them comparable with the year-ago and annual average data. There, the relative strength of the last two months is readily apparent.
Two specific aspects of the geographical distribution of this overall performance stand out. Orders from domestic Germany customers fell in May by 0.5%. Clearly, orders are erratic by nature, so nothing substantive should be made of a one-month decrease. But throughout the period in our table below, domestic orders have been noticeably weaker than orders from foreign customers. German manufacturing is expanding because of demand abroad, not particularly from demand at home.
Further, orders at firms in the old &quot;West&quot; Germany have tended to be less vigorous than total orders at all German firms. That is, old &quot;East&quot; Germany is growing faster and continues to succeed at an effort to catch up. Orders for that section of the nation are not available separately, but until last November, industrial production data were still published separately for the East and the West. With a base of 1995=100, the East German index for mining and manufacturing was 186.2 in November 2003, while that in West Germany was 119.0. Thus, output in the Eastern sector has been much more vigorous than in the West. Recent trends in orders, particularly foreign orders, suggest this pattern of production will continue.
Thus, world recovery and the motivation to extend the development of the eastern sector economy appear to be combining to boost activity in that former communist zone. At the same time, orders are far from weak at firms in western Germany, as export demand lifts manufacturing activity in the nation as a whole.

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<colgroup><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">% Change, Annual Rate</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">Year Ago</th>
Annual Averages
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>24.1</td>
<td>27.5</td>
<td>2.4</td>
<td>11.7</td>
<td>0.7</td>
<td>-0.1</td>
<td>-1.7</td>
</tr>
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<td class="firstcol">&nbsp; West Germany</td>
<td>18.9</td>
<td>29.5</td>
<td>4.9</td>
<td>11.3</td>
<td>0.3</td>
<td>-0.5</td>
<td>-2.2</td>
</tr>
<tr>
<td class="firstcol">Domestic Orders</td>
<td>-5.9</td>
<td>8.9</td>
<td>6.3</td>
<td>4.7</td>
<td>0.0</td>
<td>-3.1</td>
<td>-2.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West Germany</td>
<td>-8.3</td>
<td>9.1</td>
<td>10.6</td>
<td>4.1</td>
<td>-0.6</td>
<td>-3.5</td>
<td>-2.8</td>
</tr>
<tr>
<td class="firstcol">Foreign Orders</td>
<td>66.9</td>
<td>52.8</td>
<td>-2.2</td>
<td>20.1</td>
<td>1.5</td>
<td>3.7</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West Germany</td>
<td>54.4</td>
<td>55.1</td>
<td>1.1</td>
<td>19.3</td>
<td>1.3</td>
<td>3.1</td>
<td>-1.4</td>
</tr>
</tbody>
</table>
</body>
</html>

Orders received by German factories were strong again in May, extending a sharp rebound into a second month. Total orders rose 1.8% month-to-month, after 2.0% in April; February and March had had modest increases. In the table below, [...]

German Factory Orders Gain Further, Pushed by Foreign Demand

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040707b.jpg" width="353">
During last week, chain store sales recouped 0.9% of the steep 1.2% fall of the prior period, according to the International Council of Shopping Centers (ICSC)-UBS.
The recovery moderated the decline for the full month of June to -0.2% versus the May average.
During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">07/03/04</th>
<th scope="col">06/26/04</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">Total Weekly Retail Chain Store Sales</td>
<td>438.5</td>
<td>434.7</td>
<td>4.4%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Mortgage Applications Jumped As Rates Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 7, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040707a.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association jumped 19.5% (-49.0% y/y) last week.
The rise may have been spurred by a decline in interest rates. The effective interest rate on a conventional 30-Year mortgage fell to 6.24% from 6.47% the week earlier. The effective rate on a 15-year mortgage also fell to 5.72%, down 24 basis points.
Applications to refinance mortgages led the gain with a 27.7% rise last week (-73.9% y/y).
Purchase applications jumped 15.0% (21.0% y/y) during the week. For the month purchase applications nevertheless fell 4.7% versus May.
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>
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<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">07/02/04</th>
<th scope="col">06/25/04</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>687.0</td>
<td>575.0</td>
<td>1,067.9</td>
<td>799.7</td>
<td>625.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>500.9</td>
<td>435.4</td>
<td>395.1</td>
<td>354.7</td>
<td>304.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,769.7</td>
<td>1,386.9</td>
<td>4,981.8</td>
<td>3,388.0</td>
<td>2,491.0</td>
</tr>
</tbody>
</table>
</body>
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During last week, chain store sales recouped 0.9% of the steep 1.2% fall of the prior period, according to the International Council of Shopping Centers (ICSC)-UBS. The recovery moderated the decline for the full month of June to [...]

Chain Store Sales Firmed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040706c.jpg" width="353">
Consumer price rises are beginning to accelerate in the Pacific Rim. The pace of acceleration is varied, but the general trend is upward.
China, Hong Kong and Taiwan--all of whom had been experiencing deflation--are beginning to show increasing rates of price rises and, except for Hong Kong, are now showing positive rates of price changes.
In 2003, Indonesia reduced the rate of increase in consumer prices to 6.62% from 11.92 in 2002, but the trend is once more upward. Similarly, the Philippines, which had reduced its inflation rate to 2.88% in 2003 from 3.10% in 2002 and 6.12% in 2001, is now showing a rising trend.
Consumer prices were relatively steady in both South Korea and Thailand during the first five months of this year, but stepped up their rates of increase in June.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
Year over Year % Change&nbsp;
<th scope="col">&nbsp;</th>
<th scope="col">&nbsp;</th>
<th scope="col">&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Price Indexes (NSA)</td>
<td>Jun 04</td>
<td>May 04</td>
<td>Apr&nbsp; 04</td>
<td>Mar&nbsp; 04</td>
<td>Feb&nbsp; 04</td>
<td>&nbsp;Jan 04</td>
<td>2003 %</td>
<td>2002 %</td>
<td>&nbsp;2001 %</td>
</tr>
<tr>
<td class="firstcol">Taiwan&nbsp;</td>
<td>1.75</td>
<td>0.89</td>
<td>0.91</td>
<td>0.89</td>
<td>0.65</td>
<td>0.01&nbsp;</td>
<td>-0.28</td>
<td>-0.20</td>
<td>-0.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Hong Kong</td>
<td>n.a.</td>
<td>-0.86</td>
<td>-1.49</td>
<td>-2.13</td>
<td>-1.93</td>
<td>-1.39&nbsp;</td>
<td>-2.58</td>
<td>-3.04</td>
<td>-1.60</td>
</tr>
<tr>
<td class="firstcol">China</td>
<td>n.a.</td>
<td>4.4</td>
<td>3.8</td>
<td>3.0</td>
<td>2.1</td>
<td>3.2&nbsp;</td>
<td>1.2</td>
<td>-0.8</td>
<td>0.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Indonesia&nbsp;</td>
<td>7.23</td>
<td>6.47</td>
<td>6.11</td>
<td>5.24</td>
<td>4.62</td>
<td>4.82</td>
<td>6.62</td>
<td>11.92</td>
<td>11.46</td>
</tr>
<tr>
<td class="firstcol">Philippines&nbsp;</td>
<td>5.13</td>
<td>4.47</td>
<td>4.06</td>
<td>3.77</td>
<td>3.42</td>
<td>3.43</td>
<td>2.88</td>
<td>3.10</td>
<td>6.12</td>
</tr>
<tr class="odd">
<td class="firstcol">Thailand&nbsp;</td>
<td>&nbsp;3.02</td>
<td>2.45</td>
<td>2.46</td>
<td>2.27</td>
<td>2.18</td>
<td>1.23</td>
<td>1.82</td>
<td>0.60</td>
<td>1.66</td>
</tr>
<tr>
<td class="firstcol">South Korea&nbsp;</td>
<td>3.63</td>
<td>3.35</td>
<td>3.25</td>
<td>3.07</td>
<td>3.28</td>
<td>3.39</td>
<td>3.51</td>
<td>2.76</td>
<td>4.07</td>
</tr>
</tbody>
</table>
</body>
</html>

Consumer price rises are beginning to accelerate in the Pacific Rim. The pace of acceleration is varied, but the general trend is upward. China, Hong Kong and Taiwan--all of whom had been experiencing deflation--are beginning to show [...]

Price Rises Beginning to Accelerate in Pacific Rim Countries

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

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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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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).

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Charts of the Week: A Few Cuts More

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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.

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

Economy in Brief: 2004

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