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/031119e.jpg" width="353">
The latest data on employment in Germany is encouraging. Since the data are not seasonally adjusted, year-to-year comparisons are more meaningful than quarter-to-quarter comparisons. On this basis the trend in total employment appears to have begun to turn up from the trough reached in the first quarter of this year.
Much of the improvement in employment has taken place in the service sectors--the financial and business area and in the broad category of social services that cover health, education, welfare, etc. Employment in these sectors has shown a secular upward trend. Among the more cyclical sectors, the trade and transport sector employment is beginning to improve, but the construction and manufacturing sectors continue to lag.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Employment in Germany</th>
<th scope="col">Q3 2003</th>
<th scope="col">Q2 2003</th>
<th scope="col">Q1 2003&nbsp;</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col"> Y/Y&nbsp; %</th>
<th scope="col">Y/Y&nbsp; %</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>38276</td>
<td>38235</td>
<td>37832</td>
<td>-1.2</td>
<td>-1.3</td>
<td>-1.5</td>
<td>38668</td>
<td>38914</td>
<td>38750</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>8103</td>
<td>8131</td>
<td>8085</td>
<td>-2.8</td>
<td>-2.7</td>
<td>-3.1</td>
<td>8338</td>
<td>8528</td>
<td>8522</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Construction</td>
<td>2331</td>
<td>2304</td>
<td>2216</td>
<td>-5.6</td>
<td>-5.7</td>
<td>-6.6</td>
<td>2427</td>
<td>2587</td>
<td>2761</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade and transport</td>
<td>9717</td>
<td>9709</td>
<td>9621</td>
<td>-1.5</td>
<td>-1.8</td>
<td>-2.2</td>
<td>9857</td>
<td>9913</td>
<td>9848</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Finance and other business</td>
<td>6029</td>
<td>5965</td>
<td>5904</td>
<td>0.6</td>
<td>0.4</td>
<td>0.2</td>
<td>5963</td>
<td>5900</td>
<td>5713</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Social services</td>
<td>11143</td>
<td>11191</td>
<td>11128</td>
<td>0.2</td>
<td>0.4</td>
<td>0.6</td>
<td>11147</td>
<td>11033</td>
<td>10943</td>
</tr>
</tbody>
</table>
</body>
</html>

The latest data on employment in Germany is encouraging. Since the data are not seasonally adjusted, year-to-year comparisons are more meaningful than quarter-to-quarter comparisons. On this basis the trend in total employment appears [...]

Year-to-Year Growth in German Employment Turns Up

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/031118a.jpg" width="353">
The Consumer Price Index (CPI-U) was unchanged (2.1% y/y) last month following a 0.3% gain in September. Consensus expectations were for a 0.1% rise.
Energy prices fell 3.9% as gasoline prices dropped 6.8% (9.8% y/y). So far in November gasoline prices have fallen another 3.3%. Fuel oil prices fell for the second month, down 1.3% (+10.3% y/y) and piped gas &amp; electricity prices fell 1.1% (8.0% y/y).
Analysis from the Federal Reserve Bank of Dallas titled &quot;Business Cycles: The Role of Energy Prices&quot; can be found <a href="http://www.dallasfed.org/research/papers/2003/wp0304.pdf"> here</a>.
Food prices were firm last month and rose 0.6% (2.9%). Meat prices have been strong, rising 1.8% in October and 7.8% y/y.
Less food &amp; energy prices were somewhat firmer than expected, up 0.2% (1.3% y/y) versus Consensus expectations for a 0.1% rise.
Core services prices firmed last month and rose 0.4%, reflecting a 0.4% (2.4% y/y) gain in shelter prices. Public transportation prices also were firm, up 1.1% (3.9% y/y). Medical care services prices rose 0.4% (4.1% y/y).
Prices of core consumer goods continued to deflate led by a 0.3% (-2.1% y/y) decline in prices for new vehicles. Prices for household furnishings &amp; operation rose 0.2% (-2.2% y/y), the first monthly gain since February. Apparel prices also rose 0.2% (-1.6%).
Tobacco prices rose 0.2% (-0.2% y/y). The CPI less food, energy &amp; tobacco rose 0.2% (1.3% y/y).
The chained CPI which adjusts for shifts in consumer buying behavior was unchanged. It is similar to the PCE price deflator. The core price measure rose 0.4%.

<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/USECON/@E8/@E801/@E80101/@E80101.HTM"> Consumer Price Index</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total&nbsp;</td>
<td>0.0%</td>
<td>0.3%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>-2.5%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.4%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>3.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>-3.9%</td>
<td>3.0%</td>
<td>8.8%</td>
<td>-5.8%</td>
<td>3.7%</td>
<td>16.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.6%</td>
<td>0.2%</td>
<td>2.9%</td>
<td>1.8%</td>
<td>3.1%</td>
<td>2.3%</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>0.0%</td>
<td>0.3%</td>
<td>1.6%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.4%</td>
<td>0.1%</td>
<td>0.8%</td>
<td>1.8%</td>
<td>&nbsp;2.0%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Deepened Further in October 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031118c.jpg" width="353">
The U.S. Government budget deficit deepened to $69.5B in October. That was deeper than the $54.1B deficit in October of last year but near Consensus estimates for a $71.0B deficit. 
Federal net expenditures surged 15.0% versus last year due to a 29.4% jump in defense spending. Spending on health programs rose 8.4% and spending on education rose 7.9%. Growth in Medicare outlays jumped 15.7% y/y and Social Security outlays rose 4.0%. Interest expense fell 4.4% y/y.
Net receipts jumped 9.1% versus last year. That reflected a jump in corporate income taxes which more than doubled versus last October. Individual tax payments fell 0.1% y/y. Social insurance contributions rose 2.8% y/y and excise taxes rose 0.4%.

<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/USECON/@E1/@E106/@E10602/@E10602.HTM"> US Government Finance</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Oct &#39;02</th>
<th scope="col">FY2003</th>
<th scope="col">FY2002</th>
<th scope="col">FY2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-69.5B</td>
<td>$26.3B</td>
<td>$-54.1B</td>
<td>$-374.2B</td>
<td>$-157.8B</td>
<td>$127.3B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revenues</td>
<td>$135.8B</td>
<td>$191.7B</td>
<td>9.1%</td>
<td>-3.8%</td>
<td>-6.9%</td>
<td>-1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Outlays</td>
<td>$205.4B</td>
<td>$165.3B</td>
<td>15.0%</td>
<td>7.2%</td>
<td>7.9%</td>
<td>4.2%</td>
</tr>
</tbody>
</table>
Weekly Chain Store Sales Eased 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 18, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031118b.jpg" width="353">
Chain store sales eased 0.8% last week following a 1.2% pop the week prior according to the BTM-UBSW survey.
So far in November sales are 0.5% ahead of last month&#39;s average. That followed a 0.6% m/m decline during all of October.
During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.
The BTM-UBSW 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"> BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">11/15/03</th>
<th scope="col">11/08/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>421.7</td>
<td>425.3</td>
<td>6.2%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Consumer Price Index (CPI-U) was unchanged (2.1% y/y) last month following a 0.3% gain in September. Consensus expectations were for a 0.1% rise. Energy prices fell 3.9% as gasoline prices dropped 6.8% (9.8% y/y). So far in [...]

CPI Unchanged

<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/031118d.jpg" width="353">
Gross domestic product in Indonesia rose 0.91% in the third quarter. It has generally been on a rising trend since the trough reached in the 1988 Asian crisis. At 112.304.4 Billions Rupiahs, it is now slightly above the peak rate reached in the third quarter of 1997 before the crisis.
Over the period from the third quarter of 1987 to the third quarter of 2003, the composition of output has changed significantly. Private consumption has risen almost 15% and government consumption, almost 30%. Exports of goods and services have declined about 3% over the period, but imports have declined by 28% so that a deficit in the balance of 2,991.2 Billions Rupiah in the third quarter of 1987 has become a surplus of 5,675.5 Billions Rupiah in the third quarter of 2003. Gross capital formation has yet to recover. The latest figure is almost one-half of that reached in the pre crisis period.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"></th>
<th scope="col">Q3 2003 %</th>
<th scope="col">Q2 2003 %</th>
<th scope="col">Q1 2003 %</th>
<th scope="col">Q3 2003 Bil 93 Rupiahs</th>
<th scope="col">Q3 1987 Bil 93 Rupiahs</th>
<th scope="col">% Change</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1.48</td>
<td>2.13</td>
<td>0.91</td>
<td>112,304.4</td>
<td>110,804.1</td>
<td>1.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Private consumption</td>
<td>1.33</td>
<td>0.90</td>
<td>0.78</td>
<td>79,260.2</td>
<td>68,972.2</td>
<td>14.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Government consumption</td>
<td>8.29</td>
<td>9.44</td>
<td>-12.06</td>
<td>10,113.0</td>
<td>7,967.6</td>
<td>26.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Gross capital formation</td>
<td>0.16</td>
<td>-1.93</td>
<td>-1.21</td>
<td>17,255.7</td>
<td>36,855.5</td>
<td>-53.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Exports of goods and services</td>
<td>3.78</td>
<td>-3.17</td>
<td>1.81</td>
<td>29,832.5</td>
<td>30709.9</td>
<td>-2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports of goods and services</td>
<td>5.64</td>
<td>-8.33</td>
<td>4.73</td>
<td>24,157.0</td>
<td>33701.1</td>
<td>-28.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Gross domestic product in Indonesia rose 0.91% in the third quarter. It has generally been on a rising trend since the trough reached in the 1988 Asian crisis. At 112.304.4 Billions Rupiahs, it is now slightly above the peak rate [...]

Third Quarter Indonesian GDP Exceeds pre 1988 Crisis Levels

<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/031117a.jpg" width="353">
The Empire State Index of General Business Conditions for November surged even further to 41.01 following a jump in October to a record 34.11 (revised upward). Consensus expectations had been for a decline this month to 30.0.
New orders (41.37) were notably strong as were shipments (37.6). Both indexes rose sharply to new records in November. Employment (10.26) eased slightly m/m but the latest level was the second highest on record.
The index of prices paid rose slightly to 9.40 and continued the firming trend of the last five months.
The survey includes measures of expectations for business conditions six months ahead. The November index rose to a new high of 67.00 as expectations for capital expenditures improved further, also to a new record level.
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.
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.
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></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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Y/Y (11/02)</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>41.01</td>
<td>34.11</td>
<td>9.91</td>
<td>7.10</td>
<td>-13.02</td>
</tr>
</tbody>
</table>
U.S. Business Inventories Up Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 17, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031117b.jpg" width="353">
Total business inventories rose an unexpected 0.3% in September, the first monthly increase since March. Consensus expectations were for no change.
Retail inventories rebounded 1.0% following the 0.7% plunge in August. Excluding autos, retail inventories surged 0.8% (2.7% y/y), the most for any month since May 2000.
This jump was led by a 2.1% (9.5% y/y) spike in the building materials category and a 1.0% (2.1% y/y) recovery in inventories at general merchandise stores following several months of decline.
Retail inventories of motor vehicles and parts gained back 1.5% (9.5% y/y) versus the 2.1% August drop. According to the Federal Reserve, the gain was accomplished as output of motor vehicles rose 6.5% in September.
Overall business sales surged 0.6% (4.6% y/y) led by a 1.4% (3.1% y/y) jump in factory shipments which primarily reflected a 6.2% jump in shipments of transportation equipment.
The inventory-to-sales ratio was stable for the third month at the record low level of 1.36.
A report titled &quot;Inventory Dynamics and Business Cycles: What Has Changed?&quot; from economists at The Federal Reserve Board can be found <a href="http://www.federalreserve.gov/pubs/feds/2003/200326/200326abs.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/USECON/@ED/@ED06/@ED0601/@ED0601.HTM"> Business Inventories</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>-0.4%</td>
<td>1.6%</td>
<td>2.1%</td>
<td>-4.7%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>1.0%</td>
<td>-0.7%</td>
<td>5.0%</td>
<td>7.6%</td>
<td>-2.9%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>0.8%</td>
<td>0.1%</td>
<td>2.7%</td>
<td>2.5%</td>
<td>-1.2%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.9%</td>
<td>0.4%</td>
<td>-4.9%</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-1.3%</td>
<td>-1.8%</td>
<td>-6.1%</td>
<td>3.8%</td>
</tr>
</tbody>
</table>
</body>
</html>

The Empire State Index of General Business Conditions for November surged even further to 41.01 following a jump in October to a record 34.11 (revised upward). Consensus expectations had been for a decline this month to 30.0. New [...]

Empire State Index Surged Again

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/031114a.jpg" width="353">
Early third-quarter GDP reports from more countries indicate that growth resumed or improved most everywhere. Eurostat tallied a 0.4% gain in its &quot;flash&quot; estimate, after two negative quarters. This put GDP up 0.3% over a year ago, breaking a deteriorating trend that had reduced year-on-year growth to a minimal 0.2% in Q2. A detailed report on the sources of this improvement is due December 3. Separate data on trade in the various constituent countries suggest that export demand is providing a major boost.
In Italy, growth resumed after two down quarters, with a respectable 0.5% gain from Q2. That too halted a weakening in the trend year-on-year pace.
Growth marked two Asian reports today as well. Japan&#39;s Q3 GDP was up 0.6%, its seventh consecutive increase. Available components do show an important role for exports in this growth and also for private investment. Unlike most other countries, Japan has seen investment in plant and equipment on a rising trend, indeed, for five straight quarters. Industrial production of capital goods is also expanding, corroborating the GDP data. In Taiwan, widespread gains in consumption, fixed investment, and exports all contributed to an upturn in the economy in Q3. These data are available in current prices only, but with only modest changes in prices in Taiwan, they are probably sufficient to describe &quot;real&quot; developments. The in-and-out trade that characterizes that economy is evident in a sizable increase in imports as well as exports, but the trade surplus still widened.
Press reports point to strong growth in the US and in China as boosting growth in other countries. US imports were actually flat in Q3, but they expanded markedly in five of the six prior periods. Chinese imports are growing very rapidly, expanding on a sustained basis this year at a 40% year-on-year pace. Europe is a particular beneficiary of this increasing demand, which is surely supporting its upturn.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">GDP Percent Changes</th>
Qtr/Qtr
<th scope="col">Year/ Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">3rd Qtr 2003</td>
<td>2nd Qtr 2003</td>
<td>1st Qtr 2003 &nbsp;</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Euro-zone</td>
<td>0.4</td>
<td>-0.1</td>
<td>-0.0</td>
<td>0.3</td>
<td>1.1</td>
<td>0.8</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.5</td>
<td>-0.1</td>
<td>-0.2</td>
<td>0.5</td>
<td>0.9</td>
<td>0.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>0.6</td>
<td>0.9</td>
<td>0.5</td>
<td>2.3</td>
<td>2.5</td>
<td>-1.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">Taiwan (current prices)</td>
<td>5.1</td>
<td>-2.1</td>
<td>-1.8</td>
<td>2.4</td>
<td>2.6</td>
<td>-1.1</td>
<td>3.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Early third-quarter GDP reports from more countries indicate that growth resumed or improved most everywhere. Eurostat tallied a 0.4% gain in its "flash" estimate, after two negative quarters. This put GDP up 0.3% over a year ago, [...]

Favorable Growth Reports for Entire Euro-zone, Japan and Taiwan

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>
<body>
 



<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114c.jpg">
The University of Michigan&#146;s consumer sentiment index rose more than expected in mid-November to 93.5 versus 89.6 in October. It was the highest sentiment reading since May 2002. Consensus expectations were for a reading of 91.0.
During the last ten years there has been a 70% correlation between the level of consumer sentiment and the y/y change in real PCE.
The current conditions index rose to 102.8, again the highest level since May 2002.
The expectations index rose to 87.6, the highest level since May of this year.
The University of Michigan survey is not seasonally adjusted.It 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-Nov</th>
<th scope="col"> Oct</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>93.5</td>
<td>89.6</td>
<td>11.0%</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>102.8</td>
<td>99.9</td>
<td>10.4%</td>
<td>97.5</td>
<td>100.1</td>
<td>115.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>87.6</td>
<td>83.0</td>
<td>11.6%</td>
<td>84.6</td>
<td>82.3</td>
<td>102.7</td>
</tr>
</tbody>
</table>
U.S. Retail Sales Fell Slightly, Auto Sales Lower 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 14, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114d.jpg">
Retail sales fell 0.3% last month but the 0.2% decline in September was deepened to 0.4%. Consensus expectations were for no change. Excluding motor vehicles &amp; parts dealers sales rose 0.2% last month. The September gain was revised to 0.2% from 0.3%. Consensus expectations were for a 0.3% rise in October.
Motor vehicle dealers&#39; sales fell 1.9% m/m in October. Unit sales of light vehicles fell 6.5% m/m to 15.6 mil. (AR). Sales at gasoline service stations fell 1.6% (4.6% y/y).
Sales at food services &amp; drinking places jumped 1.9% (10.6% y/y). Less this strength, nonauto retail sales fell slightly last month (5.6% y/y).
Apparel and accessory stores ticked 0.1% higher (4.6% y/y) following a downwardly revised 0.9% September gain. Furniture, home furnishing and electronics store sales rose 0.5% (9.4% y/y) but September now shows a 0.7% increase versus the initial report of a slight decline. Furniture and computer sales have been quite strong. Sales at general merchandise stores were unchanged m/m (4.6% y/y).
Sales of building materials surged again, up 1.6% (12.5% y/y).
Sales of nonstore retailers rose 0.7% (8.6% y/y)

<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM"> Retail Sales &amp; Food Services</a></td>
<td>-0.3%</td>
<td>-0.4%</td>
<td>6.1%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>6.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.2%</td>
<td>0.2%</td>
<td>6.2%</td>
<td>3.6%</td>
<td>2.9%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
PPI Jumped Due To Higher Light Vehicle Prices 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 14, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114e.jpg">
Finished producer prices rose quite a bit more than expected last month, up 0.8% versus Consensus expectations for a 0.2% gain. Core producer prices also were strong rising 0.4% versus expectations for a 0.1% uptick.
Core finished consumer goods prices jumped 0.6% (0.1% y/y) as passenger car prices surged 7.0% (-0.4% y/y). Tobacco prices (0.5%) and carpet prices (0.8%) also were strong.
Capital equipment prices rose 0.6% (0.9% y/y). The gain was largely confined to higher prices for light trucks (1.7% y/y).
Finished energy prices fell 0.1% (9.3% y/y) following a 0.1% gain in September. The decline was due to lower prices for gasoline (3.7% y/y) and residential natural gas (24.9% y/y) which offset a surge in fuel oil prices (3.2% y/y). These energy product price series are NSA.
Intermediate goods prices rose 0.4% reflecting strength in prices for certain chemicals, plywood (36.6% y/y) and metals. 
Crude goods prices jumped 2.6% and again were strong due to gains in scrap metals prices.

<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">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.8%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>-1.3%</td>
<td>2.0%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5%</td>
<td>0.0%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>3.5%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.3%</td>
<td>0.1%</td>
<td>1.8%</td>
<td>-0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>2.6%</td>
<td>3.4%</td>
<td>22.7%</td>
<td>-10.6%</td>
<td>0.3%</td>
<td>22.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>3.1%</td>
<td>2.3%</td>
<td>14.1%</td>
<td>3.8%</td>
<td>-10.0%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
U.S. Industrial Production Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 14, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031114b.jpg">
Industrial production rose 0.3% in October, as expected by the Consensus of economists. Increases in output in earlier months were revised slightly upward. Slight data revisions extend back to 1972.
Output in the manufacturing sector rose just 0.1% (0.7% y/y). The 0.7% September gain in output was unrevised but earlier months were revised stronger.
Output in selected high-technology industries jumped 2.5% (20.5% y/y). Output of computers and peripheral equipment surged 1.4% (13.1% y/y) and output of semiconductors &amp; related equipment rose 3.5% (30.5% y/y). Output of communications equipment rose 1.4% (9.7% y/y) and upward revisions to prior months were quite large.
&quot;Taking the Pulse of the Tech Sector: A Coincident Index of High-Tech Activity&quot; from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/national_economy/tech_pulse_index.html"> here</a>.
Excluding high-tech, factory output fell 0.1% (-0.6% y/y) as output of motor vehicles &amp; parts (2.4% y/y) gave back roughly half of the September jump. Electrical equipment &amp; appliance output rose 0.7% (0.3% Y/Y). Output in earlier months was revised up. Furniture output rose 0.4% (-2.1% y/y) and output of non-durable goods fell slightly (-2.0% y/y).
Total capacity utilization rose slightly to 75.0% and capacity growth improved slightly to 1.2% from earlier figures showing 1.1% y/y growth.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM"> Production &amp; Capacity</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Industrial Production</td>
<td>0.3%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.6%</td>
<td>-3.4%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.0%</td>
<td>74.9%</td>
<td>75.4%(10/02)</td>
<td>75.6%</td>
<td>77.4%</td>
<td>82.6%</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigans consumer sentiment index rose more than expected in mid-November to 93.5 versus 89.6 in October. It was the highest sentiment reading since May 2002. Consensus expectations were for a reading of 91.0. [...]

U.S. Consumer Sentiment Firm

<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/031113a.jpg" width="353">
GDP picked up in Europe in the third quarter, according to early and &quot;flash&quot; reports from Germany, France and the Netherlands. An easing of the negative trade situation that weighed on this region earlier in the year appears to be a main factor in the upturns.
Only the Netherlands reported any details today. They show that exports were basically flat in Q3 after a large decline in Q2. More directly, domestic demand, up 0.2% on the quarter, showed its first positive move in five quarters. Dutch consumers bought more and government consumption stabilized after a huge Q2 decline. Government investment increased. However, private investment remains very weak.
In Germany, the upswing, mild though it is, was apparently driven by a rise in exports. The Federal Statistics Office will not publish details until next Thursday, November 20, but their press release today cites a gain in exports and a decline in imports. However, the German statisticians further explain that domestic demand continued to falter. No detail or descriptive commentary was released by INSEE, the French statistical agency, although separate data on household purchases of manufactured goods suggests that consumption turned higher in Q3. France will also make its detailed GDP report next Thursday.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Percent Changes</th>
Qtr/Qtr
<th scope="col">Year/ Year</th>
4th Qtr/4th Qtr
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">3rd Qtr 2003</td>
<td>2nd Qtr 2003</td>
<td>1st Qtr 2003 &nbsp;</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td>0.22</td>
<td>-0.16</td>
<td>-0.24</td>
<td>-0.20</td>
<td>0.34</td>
<td>0.42</td>
<td>0.93</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.40</td>
<td>-0.34</td>
<td>0.08</td>
<td>-0.09</td>
<td>1.34</td>
<td>0.70</td>
<td>3.84</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td>0.12</td>
<td>-0.59</td>
<td>-0.33</td>
<td>-1.06</td>
<td>0.13</td>
<td>0.51</td>
<td>2.13</td>
</tr>
</tbody>
</table>
</body>
</html>

GDP picked up in Europe in the third quarter, according to early and "flash" reports from Germany, France and the Netherlands. An easing of the negative trade situation that weighed on this region earlier in the year appears to be a [...]

Q3 Growth Turns Positive in Germany, France and the Netherlands

<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/031113b.jpg" width="353">
The U.S. foreign trade deficit deepened more than expected in September to $41.3B. Consensus expectations were for a deficit of $40.0B. The deficit in August was revised slightly deeper.
Nonpetroleum imports rose 4.5% (4.1% y/y) and petroleum imports rose 1.6% (14.6% y/y).
Automobile imports jumped 10.6% (-2.4% y/y) but that followed a 13.3% August decline. Capital goods imports also jumped 6.0% (7.1% y/y).
Exports surged 2.8% (8.4% YTD, AR) in September. Exports of capital goods jumped 3.2% (13.5% YTD, AR) and nonauto consumer goods exports recovered all of the prior two months&#39; decline with a 3.7% gain (14.6% YTD, AR).
By country, the US trade deficit with China deepened to $12.7B in September and $119.6B (AR) year to date versus a deficit of $103.1B last year. With Japan the US trade deficit deepened to $5.1B and $64.1B (AR) year to date versus $70.0B last year. The US trade deficit with the European Union deepened to $8.1B and $90.6B (AR) year to date versus a deficit of $82.1B last year.

<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/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Trade Deficit</td>
<td>$41.3B</td>
<td>$39.5B</td>
<td>$36.7B(9/02)</td>
<td>$418.0B</td>
<td>$357.8B</td>
<td>$375.4B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>2.8%</td>
<td>-2.6%</td>
<td>4.7%</td>
<td>-3.3%</td>
<td>-5.8%</td>
<td>10.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>3.3%</td>
<td>-2.2%</td>
<td>7.1%</td>
<td>2.0%</td>
<td>-5.5%</td>
<td>17.8%</td>
</tr>
</tbody>
</table>
Import Prices Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113d.jpg" width="353">
Prices for imported commodities rose in October by 0.1% (0.9% y/y). The rise was quite a bit weaker than Consensus expectations for a 0.4% increase.
Petroleum import prices rose 2.3% last month following a 5.0% decline in September. So far in November, the price of Brent Crude Oil is down slightly from the $29.81/bbl averaged in October.
Non-petroleum import prices fell 0.1% last month. The decline was not broad based but capital goods fell 0.5% (-1.1% y/y). Non-auto consumer goods prices dipped 0.1% (-0.3% y/y) and motor vehicle prices gained 0.6% (0.4% y/y).
Export prices rose 0.3% reflecting additional strength in food prices (9.3% y/y). Export prices elsewhere were tame.
For a report from the Federal Reserve Bank of New York titled &quot;Exchange Rate Pass-Through into Import Prices: A Macro of Micro Phenomenon?&quot;, click <a href="http://www.newyorkfed.org/research/staff_reports/sr149.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/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>0.1%</td>
<td>-0.4%</td>
<td>0.9%</td>
<td>-2.5%</td>
<td>-3.5%</td>
<td>6.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>2.3%</td>
<td>-5.0%</td>
<td>3.4%</td>
<td>3.0%</td>
<td>-17.2%</td>
<td>66.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>-0.1%</td>
<td>0.2%</td>
<td>0.7%</td>
<td>-2.4%</td>
<td>-1.5%</td>
<td>1.0%</td>
</tr>
<tr>
<td class="firstcol">Export - All Commodities</td>
<td>0.3%</td>
<td>0.4%</td>
<td>1.4%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>1.6%</td>
</tr>
</tbody>
</table>
Initial Jobless Insurance Claims Tick Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113c.jpg" width="353">
Initial claims for jobless insurance rose 13,000 to 366,000 last week. The gain only partially recouped a 38,000 decline the week prior. Consensus expectations had been for claims of 355,000.
The four-week moving average of initial claims fell to 375,250 (-7.8% y/y), the lowest level since March 2001.
Continuing claims for unemployment insurance rose 49,000 following a decline of 60,000 the prior week which was three times deeper than initially reported.
The insured rate of unemployment was stable at 2.8%.

<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">11/08</th>
<th scope="col">11/01</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>366.0</td>
<td>353.0</td>
<td>-8.0%</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,527</td>
<td>-2.1%</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>
Mortgage Applications Drop Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 13, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/031113e.jpg" width="353">
The index of mortgage applications compiled by the Mortgage Bankers Association dropped 8.6% last week (-36.9% y/y) to the lowest level since June 2002.
Purchase applications fell 7.1% (+12.6% y/y) and gave back most of the 11.1% jump the week prior. Applications to refinance plunged 10.1% (-56.8% y/y).
During the last ten years there has been a 54% correlation between the y/y change in purchase applications and the change in new plus existing home sales.
The effective interest rate on a conventional 30-Year mortgage rose w/w to 6.22%. The effective rate on a 15-year mortgage also rose w/w to 5.64%.
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">11/07</th>
<th scope="col">10/31</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>626.0</td>
<td>685.2</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>375.4</td>
<td>404.3</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,084.2</td>
<td>2,319.4</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit deepened more than expected in September to $41.3B. Consensus expectations were for a deficit of $40.0B. The deficit in August was revised slightly deeper. Nonpetroleum imports rose 4.5% (4.1% y/y) and [...]

U.S. Trade Deficit Deepened

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

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

Policy uncertainty has surged since the US national elections.

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

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

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

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

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

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

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

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


Privacy Policy

Disclaimer

Contact us

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

New York

London

Singapore

Tokyo

Economy in Brief

Viewpoints

Contact Us

Our Data

Our Products

What We Do

Our Authors

About Us

Data News

Resources

Release Calendars

Training Center

Webinars

Newsletters

Download Software

For Clients

Live Updates

Andrew Cates

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

250501Z1.jpg

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

250501Z2.jpg

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

250501Z3.jpg

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

250501Z4.jpg

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

250501Z5.jpg

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

250501Z6.jpg

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

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

Charts of the Week: Tariff Truce, Tenuous Trust

250501J5.jpg

250501K5.jpg

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

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

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

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

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

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

250501L5.jpg

250501M5.jpg

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

U.S. ISM Manufacturing Index Indicates Contraction in April

250430N1.jpg

250430O1.jpg

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

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

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

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

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

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

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

250430P1.jpg

250430Q1.jpg

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

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

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

250430R1.jpg

250430S1.jpg

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

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

Michael J. Moran

250430A.jpg

250430B.jpg

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

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

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

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

250430C.jpg

250430D.jpg

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

Personal Income, Consumption, and Prices in March

250430F20.jpg

250430G20.jpg

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

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

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

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

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

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

Economy in Brief: 2003

Jump to: