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/080318n.jpg" width="353">
Today, the Federal Open Market Committee lowered the Federal funds rate by 75 basis points to 2.25% in a move that was somewhat more aggressive than generally expected. The funds rate was last this low early in 2005 and it was the largest cut since this past January.
The discount rate was lowered another 75 basis points to 2.5% after this weekend&#39;s cut from 3.5%.
The Fed indicated that &quot;the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.&quot;
The Fed further indicated that &quot;Today&#146;s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain.&quot;
Voting against taking the action was Richard W. Fisher, President of the Federal Reserve Bank of Dallas and Charles I. Plosser, President of the Philadelphia Fed, who preferred less aggressive action at this meeting.
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080318a.htm">link</a>.
Market Bailouts and the &quot;Fed Put&quot; from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/03/Poole.pdf">here</a>.
Booms and Busts: The Case of Subprime Mortgages from the Federal Reserve Bank of Kansas City is available <a href="http://www.kansascityfed.org/PUBLICAT/ECONREV/PDF/4q07Gramlich.pdf">here</a>.

</body>
</html>

Today, the Federal Open Market Committee lowered the Federal funds rate by 75 basis points to 2.25% in a move that was somewhat more aggressive than generally expected. The funds rate was last this low early in 2005 and it was the [...]

FOMC Lowers Fed Funds Rate by 75 Basis Points

<html>
<head>
<style>
.odd{
 background-color:#edf5ff;
}
.even{
 background-color:#dde5ef;
}
.grey1{
	background-color:#f0f0f0;
}
.grey2{
	background-color:#e2e2e2;
}
.grey3{
	background-color:#d4d4d4;
}
.grey4{
	background-color:#c6c6c6;
}
.grey5{
	background-color:#b8b8b8;
}
</style>
</head>

 



<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318k.jpg" width="353">
For last week, the International Council of Shopping Centers ICSC-UBS Chain Store survey indicated that chain store sales rose 0.4% and added to the prior week&#39;s 0.3% rise. The increases raised the average level of sales so far this month 0.2% from February after that month&#39;s 0.4% increase.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318l.jpg" width="353">
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the latest week the leading indicator of chain store sales from ICSC-UBS remained quit week and was unchanged w/w.The index has trended steadily lower since early January.
Retail gasoline prices were again strong last week and repeated the prior period&#39;s six cent rise. The level of $3.28 per gallon, according to the U.S. Department of Energy survey, was a new high.In real terms (calculated as the CPI for gasoline divided by the total CPI less energy) gasoline prices remained in February just above the old high reached early in 1981.
Real gasoline prices likely will reach a new high this month as the wholesale price of gasoline is up more than ten cents from the February average.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318m.jpg" width="353"> 
Crude oil prices have been quite strong with the average for WTI crude at $109.43 per bbl., up roughly ten dollars from the February average. Crude prices backed off slightly yesterday.
These energy price series are available in Haver&#39;s Daily and Weekly databases.

<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">03/14/08</th>
<th scope="col">03/08/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>490.1</td>
<td>488.3</td>
<td>1.6%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">03/17/08</th>
<th scope="col">03/10/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.28</td>
<td>3.23</td>
<td>27.4%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>109.43</td>
<td>103.43</td>
<td>88.9%</td>
<td>94.00</td>
<td>61.11</td>
<td>58.16</td>
</tr>
</tbody>
</table>


</html>

For last week, the International Council of Shopping Centers ICSC-UBS Chain Store survey indicated that chain store sales rose 0.4% and added to the prior week's 0.3% rise. The increases raised the average level of sales so far this [...]

U.S. Chain Store Sales Up Slightly and Gasoline Prices Up Sharply

Louise Curley

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318h.jpg" align="left" border="0" height="265" width="353">
With turmoil in world financial markets and slowing economies,
monetary authorities in some of the countries that have been targeting
inflation may find the "target" too restrictive.
The release of inflation data in the United Kingdom and Canada
today illustrates two different cases. In the United Kingdom where
inflation is increasing and economic conditions deteriorating,
inflation targeting may be relaxed. In Canada where inflation is
falling, weakening demand can be addressed by easier monetary policies
without fear of setting off an inflationary spiral.
In the UK, where the base interest rate is 5.25%, a reduction
in the rate would ordinarily be likely in view of the slowing economy.
However, inflation has been creeping up since a low of 1.75% was
reached last August. It was 2.51% in February, the highest since June
of last year and well above the Bank of England's target rate of 2%. On
the other hand, Core inflation, defined as total excluding energy,
food, alcoholic beverages and tobacco, has been declining over the same
period and is now 1.17%. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318i.jpg" align="right" border="0" height="265" width="353">Overall
inflation and core inflation in the UK are shown in the first chart.
The better performance of the core relative to total inflation may
influence the Monetary Policy Committee against raising interest rates
and may even pave the way for a cut. The next meeting of the Monetary
Policy Commission of the Bank of England will be on April 10th.
The Bank of Canada reduced its base rate by 50 basis points to
3.5% on March 4, 2008. At that time the Bank suggested that further
monetary stimulus might be required. It is unlikely that monetary
policy in Canada in the coming months will be restrained by inflation
considerations. Inflation has been declining since November and was
1.8% in February. below the Bank of Canada's target rate of 2%.
Although core inflation, defined as total inflation less 8 volatile
items and indirect taxes, increased from 1.38% in January to 1.47% in
February it was the first increase in core inflation since June, 2006
and the level is still relatively subdued. Overall inflation and core
inflation in Canada are shown in the second chart. The next interest
rate announcement by the Bank of Canada will be on April 22, 2008.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">CONSUMER
PRICE INDEXES AND INFLATION&nbsp;</th>
<th scope="col">Feb 08</th>
<th scope="col">Jan&nbsp; 08&nbsp;</th>
<th scope="col">Feb 07&nbsp;</th>
<th scope="col">M/M %Chg&nbsp;</th>
<th scope="col">Y/Y %Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol" colspan="9">UNITED
KINGDOM</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total
CPI&nbsp;&nbsp; (2005
=100)</td>
<td>106.3</td>
<td>105.5</td>
<td>103.7</td>
<td>0.76</td>
<td>2.51</td>
<td>104.7</td>
<td>102.33</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core
CPI&nbsp; (2005 =100)&nbsp;</td>
<td>103.4</td>
<td>103.1</td>
<td>102.2</td>
<td>0.29</td>
<td>1.17</td>
<td>103.0</td>
<td>101.3</td>
<td>100.0</td>
</tr>
<tr class="odd">
<td class="firstcol">CANADA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total
CPI&nbsp;&nbsp;(2005=100)*
</td>
<td>104.9</td>
<td>104.5</td>
<td>103.0</td>
<td>0.36</td>
<td>1.81</td>
<td>104.2</td>
<td>102.0</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core
CPI&nbsp;&nbsp; (2005=100)*</td>
<td>105.0</td>
<td>104.4</td>
<td>103.4</td>
<td>0.54</td>
<td>1.47</td>
<td>104.1</td>
<td>101.9</td>
<td>100.0</td>
</tr>
<tr>
<td colspan="9">* Rebased
from&nbsp;&nbsp;(2002=100)</td>
</tr>
</tbody>
</table>
</body></html>

With turmoil in world financial markets and slowing economies, monetary authorities in some of the countries that have been targeting inflation may find the "target" too restrictive. The release of inflation data in the United Kingdom [...]

Inflation Targeting in UK and CANADA

Robert Brusca

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318d.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s export and import rise in January and continue to show
good momentum despite forecasts of slowing in the Euro Area and a
continually rising euro. While MFG readings have showed slowing the
export picture remains surprisingly strong. 
 

After declines in the year ago period Italy&#8217;s exports have
come back to life with strong growth across the export categories.
Capital goods exports remain especially strong. On the import side
growth has also been quite strong. Year over year both export and
imports up by just about 10%. 
 

However the chart provides a different perspective. Despite
all the solid growth rates the time series of Yr/Yr growth rates shows
that apart from a sharp drop and recovery over the past year Italy&#8217;s
export and import Year-over-year growth rates are still locked in a
broad declining trend. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Italy's
Trade Trends </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/mo % monthly rate</td>
<td colspan="4">Period Specified saar</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jan-08</td>
<td>Dec-07</td>
<td>Nov-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Current Account Balance</td>
<td>&#8364;&#8364; (3,670)</td>
<td>&#8364;&#8364; (3,589)</td>
<td>&#8364;&#8364; (2,763)</td>
<td>&#8364;&#8364; (3,341)</td>
<td>&#8364;&#8364; (3,311)</td>
<td>&#8364;&#8364; (3,060)</td>
<td>&#8364;&#8364; (3,299)</td>
</tr>
<tr>
<td class="firstcol">Goods Balance</td>
<td>&#8364;&#8364; 288</td>
<td>&#8364;&#8364; (1,255)</td>
<td>&#8364;&#8364; 455</td>
<td>&#8364;&#8364; (171)</td>
<td>&#8364;&#8364; 174</td>
<td>&#8364;&#8364; 171</td>
<td>&#8364;&#8364; (762)</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>16.2%</td>
<td>-9.1%</td>
<td>-3.3%</td>
<td>8.9%</td>
<td>8.7%</td>
<td>9.9%</td>
<td>13.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>10.3%</td>
<td>-3.6%</td>
<td>-2.7%</td>
<td>14.4%</td>
<td>3.3%</td>
<td>9.9%</td>
<td>9.0%</td>
</tr>
<tr>
<td class="firstcol">Services Balance</td>
<td>&#8364;&#8364; 247</td>
<td>&#8364;&#8364; (40)</td>
<td>&#8364;&#8364; (415)</td>
<td>&#8364;&#8364; (69)</td>
<td>&#8364;&#8364; (392)</td>
<td>&#8364;&#8364; (476)</td>
<td>&#8364;&#8364; (180)</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports</td>
<td>3.6%</td>
<td>8.0%</td>
<td>-2.6%</td>
<td>40.6%</td>
<td>27.5%</td>
<td>10.0%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Imports</td>
<td>-0.3%</td>
<td>2.4%</td>
<td>-2.9%</td>
<td>-3.3%</td>
<td>5.4%</td>
<td>-1.0%</td>
<td>18.3%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="4">Not
Seasonally Adjusted</td>
<td colspan="4">All Yr/Yr</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>Jan-08</td>
<td>&nbsp;</td>
<td>Jan-07</td>
<td>&nbsp;</td>
<td>Jan-06</td>
<td>&nbsp;</td>
<td>Jan-05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>18.3%</td>
<td>--</td>
<td>-2.0%</td>
<td>--</td>
<td>10.9%</td>
<td>--</td>
<td>7.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Goods</td>
<td>14.2%</td>
<td>--</td>
<td>5.3%</td>
<td>--</td>
<td>14.4%</td>
<td>--</td>
<td>8.8%&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Transport</td>
<td>12.1%</td>
<td>--</td>
<td>-3.1%</td>
<td>--</td>
<td>24.0%</td>
<td>--</td>
<td>8.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>12.3%</td>
<td>--</td>
<td>-2.7%</td>
<td>--</td>
<td>10.8%</td>
<td>--</td>
<td>8.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Other Goods</td>
<td>7.2%</td>
<td>--</td>
<td>18.1%</td>
<td>--</td>
<td>9.2%</td>
<td>--</td>
<td>22.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>Jan-08</td>
<td>&nbsp;</td>
<td>Jan-07</td>
<td>&nbsp;</td>
<td>Jan-06</td>
<td>&nbsp;</td>
<td>Jan-05</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>6.4%</td>
<td>--</td>
<td>-5.2%</td>
<td>--</td>
<td>14.7%</td>
<td>--</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Capital Goods</td>
<td>10.6%</td>
<td>--</td>
<td>5.7%</td>
<td>--</td>
<td>7.2%</td>
<td>--</td>
<td>4.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Transport</td>
<td>11.2%</td>
<td>--</td>
<td>11.2%</td>
<td>--</td>
<td>4.4%</td>
<td>--</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>8.1%</td>
<td>--</td>
<td>-1.2%</td>
<td>--</td>
<td>18.8%</td>
<td>--</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Other Goods</td>
<td>17.8%</td>
<td>--</td>
<td>3.0%</td>
<td>--</td>
<td>37.2%</td>
<td>--</td>
<td>17.2%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Balances in
Mil of Euros</td>
</tr>
</tbody>
</table>
</body></html>

Italy’s export and import rise in January and continue to show good momentum despite forecasts of slowing in the Euro Area and a continually rising euro. While MFG readings have showed slowing the export picture remains surprisingly [...]

Italy’s Trade Deficit Widens: Complex Picture Emerges

<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/080318e.jpg" width="353">
Finished producer prices in the U.S. rose 0.3% during February following a 1.0% surge in January. The latest increase fell just short of Consensus expectations for a 0.4% rise but the 6.8% increase versus last February was near this cycle&#39;s high. Moreover it was well up from the 3.9% increase during all of last year.
Less food and energy the 0.5% increase in prices was quite a bit stronger than expectations for a 0.2% gain. While the y/y increase held roughly steady at 2.5% the annualized rate of growth during the last three months surged to 4.7%, about the fastest in ten years.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318f.jpg" width="353">
Energy prices rose 0.8% (20.7% y/y) and added to the prior month&#39;s 1.5% surge. Gasoline prices rose 2.9% for the second consecutive month (43.2% y/y) though home heating oil prices fell 3.7% (+36.8% y/y). Natural gas prices jumped 5.7% (5.3% y/y).
Why Do Gasoline Prices React to Things That Have Not Happened? from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2007/c/pages/gas-prices.html">here</a>.
Finished consumer food prices fell 0.5% (+6.0% y/y) and gave back just a piece of the 1.7% January surge. During the past three months food prices have risen at a 10.8% annual rate.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318g.jpg" width="353">
Prices of core finished consumer goods rose 0.5% (2.5% y/y). That gain was well ahead of expectations for a 0.2% increase and it raised the three month change to 4.7% (AR). Passenger car prices rose 0.8% (1.2% y/y). Capital equipment prices rose a firm 0.5% (1.9% y/y) led by a 0.8% rise in prices of light trucks (0.1% y/y).
Intermediate goods prices rose 0.8% following the 1.4% January surge. Excluding food &amp; energy prices were strong again and posted a 0.6% increase. Industrial chemical prices remained quite firm and rose 17.8% from last year.
The crude materials PPI surged again during February. A 3.7% rise followed the 2.5% jump during January. Crude energy materials prices jumped another 5.6% (30.2% y/y). The core crude materials PPI also was quite firm and posted a 3.3% gain. Prices for iron &amp; steel scrap are up 34.5% y/y and copper base scrap prices are 25.1% higher y/y.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E802/@E80201/@E80201.HTM">Producer Price Index</a> (%)</th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.3</td>
<td>1.0&nbsp;</td>
<td>6.8&nbsp;</td>
<td>3.9</td>
<td>3.0</td>
<td>&nbsp;4.9&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.5</td>
<td>0.4</td>
<td>2.5</td>
<td>1.9</td>
<td>1.5</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.8</td>
<td>1.4</td>
<td>9.1</td>
<td>4.1</td>
<td>6.4</td>
<td>&nbsp;8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.6</td>
<td>0.8</td>
<td>4.8</td>
<td>2.8</td>
<td>6.0</td>
<td>&nbsp;5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>3.7</td>
<td>&nbsp;2.5&nbsp;</td>
<td>24.6</td>
<td>12.2</td>
<td>1.4</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>3.3</td>
<td>4.0</td>
<td>&nbsp;20.6</td>
<td>15.9</td>
<td>20.8</td>
<td>4.9</td>
</tr>
</tbody>
</table>
</body>
</html>

Finished producer prices in the U.S. rose 0.3% during February following a 1.0% surge in January. The latest increase fell just short of Consensus expectations for a 0.4% rise but the 6.8% increase versus last February was near this [...]

U.S. PPI Total & Total 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/080318a.jpg" width="353">
Housing starts during February were firmer than expected and fell just 0.6% to 1.065M units. A m/m decline to 0.96M had been the Consensus expectation. In addition, starts in January were revised higher to 1.065M from 1.012M reported last month.
As occurred last month, however, all of the strength relative to expectations (and most of the revision) was due to the multi-family sector. Starts of condos &amp; coops during February rose 14.4% and January starts were revised higher by nearly one half million units.
Single family starts last month fell 6.7% m/m to .707M after a 3.1% January decline. That decline was revised to show less of a decline. Single family starts in February were at their lowest level since January 1991 and since the peak in early 2006, starts of single family homes were down 61.5%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080318b.jpg" width="353">
By region, single family starts in the Northeast gave back all of the January increase with a 42.3% decline (-28.9% y/y). In the Midwest single family starts fell to the lowest level since (this is not a typo) early 1985 and were down 25.0% y/y. In the South, single family starts fell 7.0% (-42.5% y/y) and out West single family starts rose by nearly one-third m/m but still were down by nearly one-half from February 2007.
Building permits continued the slide from a 2005 peak with a 7.8% m/m drop. Single-family permits fell 6.2% (-41.9% y/y).
Understanding the Securitization of Subprime Mortgage Credit from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/staff_reports/sr318.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/@E9/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">February</th>
<th scope="col">January</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>1,065</td>
<td>1,071</td>
<td>-28.4%</td>
<td>1,344</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>707</td>
<td>758</td>
<td>-40.5%</td>
<td>1,039</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>358</td>
<td>313</td>
<td>19.7%</td>
<td>304</td>
<td>338</td>
<td>354</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>978</td>
<td>1,061</td>
<td>-36.5%</td>
<td>1,371</td>
<td>1,842</td>
<td>2,159</td>
</tr>
</tbody>
</table>
</body>
</html>

Housing starts during February were firmer than expected and fell just 0.6% to 1.065M units. A m/m decline to 0.96M had been the Consensus expectation. In addition, starts in January were revised higher to 1.065M from 1.012M reported [...]

U.S. Housing Starts Buoyed Again By Multi-Family

<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/080317g.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) reported that the March Composite Housing Market Index remained at the same low level as in February. The readings are more than two-thirds lower than the highs of 2004.
During the last twenty years there has been a 76% correlation between the y/y change in the Composite Index and the change in single family housing starts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080317h.jpg" width="353">
The index for single family detached homes also remained near the cycle&#39;s low which was down about three quarters from the 2004 high. Builders saw little improvement in single family home sales during the next six months and their index remained down by two-thirds from 2004.
The Home Builders&#39; index improved slightly in the Southern region of the country but remained at or near the recent lows elsewhere.
Traffic of prospective home buyers was stable m/m following improvement during February.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions good than poor.
Fostering Sustainable Homeownership is Friday&#39;s speech by Federal Reserve Board Chairman Ben S. Bernanke and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/bernanke20080314a.htm"> here</a>. 
Visit the <a href="http://www.nahb.org">National Association of Home Builders</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">March</th>
<th scope="col">February &nbsp;</th>
<th scope="col">March &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>20</td>
<td>20</td>
<td>36</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Association of Home Builders' (NAHB) reported that the March Composite Housing Market Index remained at the same low level as in February. The readings are more than two-thirds lower than the highs of 2004. During the [...]

U.S. NAHB Housing Market Index Low & Stable

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

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

Winnie Tapasanun

250805J23.jpg

250805K23.jpg

The U.S. trade deficit in goods and services (BOP basis) narrowed to $60.18 billion in June after widening to $71.66 billion in May ($71.52 billion originally), according to the U.S. Census Bureau. This was the second month in three in which the deficit had narrowed. The June deficit was the smallest since September 2023 and much smaller than the $73.89 billion in June 2024. A deficit of $61.6 billion had been expected in the Action Economics Forecast Survey. Exports declined 0.5% m/m (+3.3% y/y) in June following a 4.1% drop in May (-4.0% previously) and four successive m/m increases. Imports fell 3.7% (-1.4% y/y) after an unrevised 0.1% downtick in May, registering the third consecutive m/m fall and the fourth in five months.

The real (inflation-adjusted) goods trade deficit (customs value; chained 2017 dollars) narrowed to $84.61 billion in June after widening to $93.32 billion in May; it was smaller than the $92.82 billion in June 2024. The $87.43 billion average monthly real trade deficit in Q2'25 was the smallest since Q4'23 and much smaller than the record $143.28 billion in Q1'25. A trade balance (net exports) added 4.99%-points to Q2'25 real GDP growth after subtracting 4.61%-points in Q1'25.

The deficit in goods trade (BOP basis) narrowed to $85.88 billion in June, the smallest since September 2023, after widening to $97.30 billion in May; it was much smaller than the $99.56 billion in June 2024. Goods exports fell 0.7% (+3.3% y/y) in June following a 5.9% drop in May and four straight m/m rises. Imports of goods fell 4.5% (-2.9% y/y), down for the fourth month in five, after a 0.1% May easing.

The customs value goods trade deficit fell to $84.85 billion in June, the smallest since September 2023, after widening to $96.21 billion in May; it was much smaller than the $98.81 billion in June 2024. The latest figure was slightly smaller than an $85.99 billion deficit in the advance report released on July 29. Custom value exports fell 0.7% (+3.5% y/y) in June following a 5.6% drop in May and four consecutive m/m gains. This reflected m/m falls of 7.4% (+0.7% y/y) in industrial supplies & materials and 2.6% (+22.8% y/y) in other goods. To the upside, exports for the following end-use categories rose m/m in June: nonfood consumer goods excluding autos (4.6%; 4.3% y/y), foods, feeds & beverages (4.4%; 1.2% y/y), capital goods excluding autos (3.4%; 9.7% y/y), and automotive vehicles, parts & engines (1.6%; -15.8% y/y).

Customs value imports slid 4.6% (-2.9% y/y) in June, the third straight m/m slide and the fourth in five months, after a 0.1% downtick in May. This reflected m/m drops of 12.7% (-13.3% y/y) in nonfood consumer goods excluding autos, 5.2% (-12.4% y/y) in industrial supplies & materials, 4.9% (+7.8% y/y) in other goods, 3.6% (-12.2% y/y) in automotive vehicles, parts & engines, and 1.5% (+3.8% y/y) in foods, feeds & beverages. In contrast, imports of capital goods excluding autos, the only end-use category with a monthly increase in June, rose 0.7% (14.0% y/y), the seventh m/m rise in eight months, on top of a 0.3% May rebound. Meanwhile, petroleum imports fell 3.8% (-24.7% y/y) in June, the fourth m/m fall in five months, reversing a 1.5% rise in May. Nonpetroleum imports slid 4.6% (-1.1% y/y), the third straight m/m slide, after a 0.2% May decline.

The services trade surplus rose to $25.70 billion in June after narrowing to $25.64 billion in May; it was in line with $25.67 billion in June 2024. Services exports fell 0.2% (+3.3% y/y) in June, the fifth m/m fall in six months, on top of a 0.6% decline in May. This reflected m/m drops of 4.8% (-11.3% y/y) in government goods & services, 2.1% (+30.8% y/y) in maintenance & repair services, and 1.1% (-0.02% y/y) in travel services, while exports for construction services (0.9%; -5.7% y/y), insurance services (0.7%; 18.9% y/y) and charges for the use of intellectual property (0.5%; 7.0% y/y) increased m/m in June. Services imports fell 0.3% (+4.5% y/y) after a 0.3% May fall and two successive m/m increases. This reflected m/m drops of 1.9% (+48.0% y/y) in maintenance & repair services, 1.5% (+2.9% y/y) in travel services and 1.3% (-1.3% y/y) in transport services, while imports for construction services (2.0%; 82.3% y/y), charges for the use of intellectual property (0.8%; 1.3% y/y) and financial services (0.5%; 4.9% y/y) rose m/m in June.

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $9.38 billion in June, the smallest on record, after falling to $13.97 billion in May. Exports surged 45.4% (-16.6% y/y) following a 19.9% May slump, while imports fell 6.9% (-45.6% y/y) on top of a 26.3% May plunge. The goods trade deficit with the European Union narrowed markedly to $9.52 billion in June, the smallest since June 2013, after widening to $22.54 billion in May, with exports up 6.8% (16.6% y/y) and imports down 19.2% (-8.2% y/y). The trade shortfall with Japan narrowed marginally to $5.72 billion in June, the smallest since March, from $5.77 billion in the previous month, reflecting declines of 3.4% (-7.5% y/y) in exports and 2.3% (-0.4% y/y) in imports.

The international trade data, including relevant data on oil prices, can be found in Haver’s **USECON** database. Detailed figures on international trade are available in the **USINT** and **USTRADE** databases. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

250805L23.jpg

250805M23.jpg

- $60.2 bil. trade deficit, reflecting $85.9 bil. goods deficit & $25.7 bil. services surplus.
- Exports -0.5% m/m, down for the second consecutive month.
- Imports -3.7% m/m, down for the third straight month.
- Real goods trade deficit narrows to $84.6 bil. after May’s widening.
- Goods trade deficits w/ China at a record low, w/ EU at a June ’13 low, and w/ Japan at a 3-month low.

U.S. Trade Deficit Narrows in June; the Smallest Since Sept. ’23

250805E.jpg

The S&P Global PMI indexes once again showed mixed performance in July. Most large economies continue to do better, and the total PMI services sectors continue to make up for shortcomings in manufacturing.

**Stability on a low growth path**
In July, 24% of the reporting countries showed activity was slowing; that's down from 48% in both June and May and indicates some progress. Only five of the reporting jurisdictions have PMI values below 50 indicating economic contraction in July; that July figure compares to five in June and seven in May. Declining activity continues to be an unusual event. Medians and average readings for the group of 25 countries or regions show extreme stability in the recent months as well as across sequential averages.

**Growth moderately improves**
Comparing period averages from 12-months to six-months to three-months, unweighted readings of the U.S., the U.K., and European monetary union show extremely flat PMI values oscillating between values of 51.2 to 51.7 on those period averages; over three months, six months, and 12 months. The jurisdictions in the table show PMI readings below 50 are rare; once again declining activity is an unusual event. The proportion of reporters slowing over three months is 34.8% compared to 52.2% over six months and 30.4% over 12 months. Once again, we see these statistics tilted toward improving growth rather than towards slowing

**Summing up**
The queue percentile standings for the group in July have an average value at 65.9% which is above the 50% mark that coincides with the median for the period. This tells us the growth is largely better than what its median has been over the past 4 1/2 years. On a queue ranking basis, the largest economies consistently perform better with readings above the 50% mark for the U.S. and for the European Monetary System including each of its largest EMU economies: Germany, France, Italy, and Spain. Japan has a queue standing in its 57th percentile. However, China’s percentile standing is in its 26th percentile and the U.K. is at its 40.5 percentile. Not all large economies are in the catbird seat, but most are faring well despite the moderate growth track globally.

250805.jpg

Service Sectors Prop-up Global Economy

250804J1.jpg

250804K1.jpg

Total factory orders declined 4.8% (+5.6% y/y) in June after surging 8.3% in May, revised from 8.2%, as reported by the U.S. Census Bureau. A 4.9% decline had been expected in the Action Economics Forecast Survey. A halving in orders for nondefense aircraft accounted for much of the June decline. Factory orders excluding transportation altogether rose 0.4% after increasing 0.3% in May, revised from 0.2%.

Durable goods orders fell 9.4% (+10.9% y/y) in June after 16.5% rise in May. The advance report indicated a 9.3% decline. Transportation orders fell 22.4% (+30.5% y/y). Automobile orders declined 3.1% (-2.7% y/y). Computer & electronic product orders increased 0.6% (5.2% y/y) while electrical equipment, appliances & components rose 0.1% (4.5% y/y). Machinery orders improved 0.3% (3.0% y/y). Furniture & related products increased 0.1% (1.1% y/y). Primary metals orders increased 0.6% (-0.5% y/y) while fabricated metals orders edged 0.1% (3.1% y/y) higher.

Nondurable goods orders, which equal nondurable goods shipments, rose 0.5% (0.6% y/y) in June after edging 0.1% higher in May. Shipments of petroleum & coal products rose 1.4% (-4.5% y/y) and beverage & tobacco products rose 1.5% (4.2% y/y). Food product shipments improved 0.4% (0.9% y/y) and textile product shipments rose a minimal 0.1% (1.9% y/y). To the downside, apparel shipments declined 0.9% (-4.7% y/y) and chemical product shipments eased 0.1% (+3.6% y/y). Paper products declined 0.3% (+0.7% y/y).

Total shipments increased 0.5% (1.8% y/y) in June following a 0.2% May increase. Excluding transportation, shipments rose 0.4% (1.3% y/y) in June after a 0.1% uptick in May. Shipments of durable goods industries rose 0.5% (3.0% y/y) in April, the seventh consecutive m/m rise.  Transportation equipment shipments rose 0.8% (4.3% y/y) as nondefense aircraft shipments fell 6.2% (+13.8% y/y). Machinery shipments rose 1.0% (1.5% y/y), and electrical equipment, appliances & components shipments increased 0.6 (4.6% y/y). Primary metals shipments rose 0.6% (2.4% y/y), fabricated metals shipment rose 0.2% (1.9% y/y), but furniture & related products eased 0.2% (+1.4% y/y).

Unfilled orders rose 1.0% (7.1% y/y) in June after a 3.4% jump in May. Excluding transportation, unfilled orders held steady (+0.8 y/y) after a 0.1% rise in May. Backlogs of durable goods increased 1.0% (7.1% y/y), reflecting a 2.1% rise (14.7% y/y) in nondefense aircraft and a 0.1% decline (-1.8% y/y) in machinery. Electrical equipment, appliances & components backlogs also rose 0.1% (1.0% y/y) while computer & electronic equipment backlogs eased 0.1% both m/m and y/y.
 
Inventories increased 0.2% (1.1% y/y) in June after edging 0.1% higher in May. Excluding transportation, inventories rose 0.2% (1.0% y/y) in June after a 0.1% uptick in May. Durable goods inventories rose 0.2% (1.5% y/y) in June, the same as in May, and rose 0.1% in both of the prior two months. Nondurable goods inventories increased 0.2% 0.5% y/y) after declines in both of the prior two months.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

250804L1.jpg

250804M1.jpg

- Total orders less transportation rise moderately.
- Shipments pick up.  
- Unfilled orders surge as inventories rise modestly.

U.S. Factory Orders Retreat in June, Largely Centered in Aircraft

Tian Yong Woon

This week, we examine the latest wave of trade developments across Asia as the US unveiled a full list of its modified reciprocal tariff rates, set to take effect on August 7. As anticipated, many of the updated rates are now lower than the original tariffs, with Cambodia and Vietnam seeing the sharpest reductions (chart 1). However, from peak tariff levels, China stands out—continuing to benefit from a 10% pause rate, down from triple-digit highs.

South Korea secured a deal just before the deadline, lowering its tariff from 25% to 15%. The new rate also applies to auto exports, offering relief to Korean automakers (chart 2). Thailand and Cambodia followed with US trade agreements after agreeing to an unconditional ceasefire following earlier military clashes. Their US-imposed tariffs dropped from 36% to 19%, highlighting how US trade policy can intersect with geopolitical interests and, in this case, may help reduce trade uncertainty (chart 3).

Malaysia, a key mediator in the ceasefire, also finalized a trade deal, reducing its tariff rate to 19% and gaining exemptions on key exports such as semiconductors (chart 4). Turning to Japan, while its US trade deal helped avert immediate tensions, the vague terms and a headline $550 billion investment—mostly in the form of loans—leave room for future friction (chart 5). China, however, remains a wildcard. Talks to extend its tariff pause are ongoing, but failure could see a return to extreme tariff levels (chart 6). Meanwhile, tech tensions linger, despite eased restrictions on Nvidia AI chip exports.

**Latest US tariff developments**
We gained further clarity on the new reciprocal tariff rates announced by the US administration last week, as the White House released a full list of the modified rates on Thursday. It also announced that the new rates will take effect on August 7, giving partner countries a bit more time to negotiate new terms. Overall, as earlier indications suggested, Trump’s post-pause tariff rates—regardless of whether trade deals were secured—have often ended up lower than the original rates, as shown in chart 1. The largest reductions from original tariff levels have so far come from Cambodia and Vietnam. However, when looking at the steepest reductions from peak tariff rates, China stands out. It continues to benefit from a 10% tariff pause—down sharply from the triple-digit rates imposed at the height of US-China trade tensions earlier this year. On the flipside, a handful of economies—including New Zealand, the Philippines, and Brunei—are now facing modified tariff rates that are actually higher than their original Liberation Day levels. Notably, the Philippines ended up in this group despite having secured a trade deal with the US.

250804T1.jpg

**South Korea**
As for South Korea, the US reduced its tariff rate to 15% just ahead of the August 1 deadline, a significant drop from the original Liberation Day rate of 25%. In return, South Korea committed to, among other terms, $350 billion in investments into the US. Of that total, $150 billion will go specifically toward shipbuilding cooperation—supporting the entry of Korean firms into the US shipbuilding industry—while the remaining $200 billion will be directed toward semiconductors and other sectors. Similar to Japan’s arrangement, the new 15% tariff rate will also apply to South Korean auto exports, likely providing relief to the country’s automakers. As shown in chart 2, South Korea’s vehicle exports—and, by extension, its export-driven growth—have come under pressure, with more recent headwinds stemming from the broad 25% auto tariffs imposed by the US. Notably, South Korea’s dealmaking pace with the US has been considered exceptionally swift, especially given that the country had only recently undergone an administrative transition following its presidential elections, leaving limited time to initiate formal trade negotiations.

250804T2.jpg

**Thailand and Cambodia**
Moving to other parts of Asia, one of the more notable developments last week was the signing of two additional US trade deals—specifically with Thailand and Cambodia. The two countries had recently been engaged in escalating border clashes but agreed to an unconditional ceasefire after mediation by Malaysia and the US. In reality, tensions between Thailand and Cambodia had been simmering for some time, likely driving in part the heightened uncertainty shown in chart 3, though other factors may have played a role. Notably, US President Trump stated that he had made it clear to both governments that no trade deal would be considered while they remained in conflict—an ultimatum that may have incentivized both sides to pursue de-escalation. Ultimately, US trade deals with both countries were announced, reducing their tariff rates from the original Liberation Day level of 36% to 19%. This illustrates how the US approach to dealmaking goes beyond trade, sometimes factoring in broader geopolitical considerations as well.

250804T3.jpg

**Malaysia**
Touching further on Malaysia, which played a key role in mediating the Thailand-Cambodia conflict mentioned earlier, a last-minute US-Malaysia trade deal also materialized shortly after the agreements with Thailand and Cambodia were hinted at. Under the new terms, Malaysia’s tariff rate was reduced to 19%, down from the original 24%. Malaysian Trade Minister Zafrul described the deal as a “win-win,” noting that Malaysia has either reduced or eliminated tariffs on nearly all American products. Notably—and perhaps offering some interim relief—Malaysia also secured tariff exemptions for its exports of semiconductors and pharmaceuticals. This is especially significant, as semiconductor exports account for a substantial share of Malaysia’s shipments to the US, as shown in chart 4.

250804T4.jpg

**Japan**
Turning to Japan, the recent US-Japan trade deal appears to have averted the worst for now. However, many key details remain unclear, particularly regarding Japan’s reported $550 billion investment into the US. While the headline figure is striking, Japan’s chief trade negotiator, Akazawa, later clarified that only 1–2% of the amount would constitute actual investment, with the remainder largely consisting of loans. More critically, the deal—like several other recent US-Asia trade agreements—was not accompanied by formal documentation, leaving its terms vague and, perhaps more concerning, open to future revision. These loose ends present ongoing risks to US-Japan economic relations and could potentially unwind recent market gains driven by trade optimism, as uncertainty remains and may yet resurface (see chart 5). This lingering uncertainty likely contributed to the Bank of Japan’s decision to hold its policy rate steady last week. The central bank adopted a wait-and-see approach before considering further rate hikes, while notably revising its inflation forecasts upward and presenting a slightly improved growth outlook for the fiscal year.

250804T5.jpg

**China**
Amid the recent flurry of US trade deals, one critical issue that may have slipped from the spotlight—but remains central to the global outlook —is China. Ongoing discussions between the two countries aim to extend China’s current tariff pause. If talks break down, US Treasury Secretary Scott Bessent has warned that the existing 10% tariff on Chinese exports could “boomerang” back to its previously exorbitant levels. This could potentially drive the US effective import tariff rate on China well above its already-elevated levels, as shown in chart 6. Meanwhile, the recent reversal of export restrictions by the US on Nvidia’s H20 AI chips may have brought temporary relief to China’s AI sector. However, Chinese authorities have raised national security concerns over the chips’ built-in tracking features and potential remote shutdown capabilities—adding yet another layer of complexity to the already tense US-China trade relationship and broader economic rivalry.

250804T6.jpg

Asia

Economic Letter from Asia: New Duty Roster

250801A4.jpg

250801D4.jpg

Nonfarm payrolls increased 73,000 during July after rising 14,000 in June, revised from 147,000, and 19,000 in May, revised from 144,000. Expectations had been for a 102,000 rise in the Action Economics Forecast Survey. The three-month average change in payrolls of 35,000 compared to 64,000 in June. The Bureau of Labor Statistics indicates that monthly revisions result from additional reports received from businesses and government agencies since the last published estimates.

Average hourly earnings rose an expected 0.3% during July after unrevised gains of 0.2% and 0.4% in June & May. Earnings growth of 3.9% y/y is little changed over twelve months, 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 4.2% from 4.1% and compared to 4.2% in the previous three months. 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 7.9% last month from 7.7% In June. It was 6.6% in April 2023.

In the **establishment survey**, private-sector employment in July rose 83,000, factory sector jobs declined 11,000, off for the third straight month. Construction sector employment increased 2,000, after rising 3,000 in June. The number of mining & logging industry jobs declined 4,000 after falling in both of the prior two months. 

Private service sector employment increased 96,000 July after improving 16,000 in June. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 79,000 last month, following a 52,000 increase in June. The number of trade, transportation & utilities jobs gained 11,000, following a 22,000 decline and financial activities employment improved 15,000 after a 2,000 drop, while leisure & hospitality employment rose just 5,000 after a 4,000 gain. The number of professional & business services jobs fell 14,000, down for the third straight month.  Information sector employment fell 2,000, after holding steady in June.

Government sector payrolls declined 10,000 last month and revered June’s 11,000 rise. Federal government employment weakened 12,000 and has fallen for six straight months. Local government employment eased 3,000 after rising 10,000 in June while state government payrolls rose 5,000 after increasing 10,000.

Private-sector average hourly earnings rose 0.3% (3.9% y/y) in July. Earnings in the goods-producing sector edged up 0.1% (3.6% y/y). In construction, earnings rose 0.2% (3.7% y/y) following a 0.4% rise, but factory sector earnings eased 0.1% (+3.6% y/y). In the service sector, earnings rose 0.4% (4.0% y/y) in July after increasing 0.2% in June.

250801C4.jpg

The length of the average workweek rose to 34.3 hours in July from 34.2 hours in June. The workweek in the goods-producing sector lengthened to 39.9 hours from 39.7 hours. The construction sector average workweek rose to 39.1 hours from 38.9 while the factory sector workweek held steady at 40.1 hours. The average workweek in the private service sector edged up to 33.2 hours from 33.1 hours.

In the **household survey**, the unemployment rate increased to 4.2% in July after falling to 4.1% as employment fell 260,000 after rising 93,000 in June and the size of the labor force declined 38,000, off for the third straight month. The labor force participation rate eased to 62.2% last month from 62.3% and remained below the high of 63.3% early in 2020. The rate for teenagers declined to 35.0%, after plunging to 35.1%. For workers aged 20-24, the rate declined to 70.9%. For workers aged 25-54, the participation rate eased to 83.4%. For individuals 55 and over, the rate improved slightly to 38.1% but remained near a 20-year low of 38.0% in June.

The employment/population ratio for all workers slipped to 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 fell to 64.7% in July from 64.9% and for women, the rate eased to 54.7% from 54.8% in June.

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.

250801X4.jpg

250801F4.jpg

- Recent job growth reduced by fewer factory & government jobs.
- Earnings gain remains steady y/y.
- Jobless rate reverses June decline.

Economy in Brief: March 2008

Jump to:

FOMC Lowers Fed Funds Rate by 75 Basis Points

U.S. Chain Store Sales Up Slightly and Gasoline Prices Up Sharply

Inflation Targeting in UK and CANADA

Italy’s Trade Deficit Widens: Complex Picture Emerges

U.S. PPI Total & Total Firm

U.S. Housing Starts Buoyed Again By Multi-Family

U.S. PPI Total & Total Firm

U.S. NAHB Housing Market Index Low & Stable