Tom Moeller

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<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021022b.jpg">
Chain store sales recouped some of the prior week&#39;s sharp decline according to the BTM-UBSW survey. Sales rose 0.6% last week following a 0.9% decline the prior week.
Sales thus far in October sales were 1.0% below the average for September which was down 1.1% from August.
During the last five years there has been a 62% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales. There has been a 18% correlation between the month-to-month change in the two sales series.

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<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">10/19/02</th>
<th scope="col">10/12/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>403.3</td>
<td>400.7</td>
<td>2.9%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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Chain store sales recouped some of the prior week's sharp decline according to the BTM-UBSW survey. Sales rose 0.6% last week following a 0.9% decline the prior week. Sales thus far in October sales were 1.0% below the average for [...]

Chain Store Sales Recover, Some

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021021a.jpg" width="353">
The Composite Index of Leading Economic Indicators, reported by the Conference Board, fell as expected last month. It was the fourth consecutive monthly decline and the fifth decline in the last six. August figures were revised to show slightly less of a decline.
The breadth-of-gain amongst the leaders&#39; component series improved slightly to 45% from an upwardly revised 40% in August. Nevertheless, the six-month diffusion index fell to a low 40%. Higher claims for jobless insurance, lower stock prices and a narrower yield curve had the largest negative influences on the leading index in September.
The ratio of coincident-to-lagging indicators rose for the twelfth consecutive month. The ratio is an indicator of excess relative to actual economic performance.
The coincident indicators were unchanged, not rising for the first month since February. The lagging indicators fell sharply due to a shorter duration of unemployment and lower C&amp;I loans.
The Leading index is based on eight previously reported economic data series and two that are estimated.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Leading</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.7%</td>
<td>1.1%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.6%</td>
<td>-0.5%</td>
<td>3.4%</td>
<td>3.2%</td>
</tr>
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<td class="firstcol">Lagging</td>
<td>-0.6%</td>
<td>-0.1%</td>
<td>-4.7%</td>
<td>-1.3%</td>
<td>2.8%</td>
<td>1.8%</td>
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The Composite Index of Leading Economic Indicators, reported by the Conference Board, fell as expected last month. It was the fourth consecutive monthly decline and the fifth decline in the last six. August figures were revised to [...]

Leading Indicators Down For Fourth Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021018a.jpg" width="353">
Consumer prices (CPI-U) rose 0.2% last month, equaling Consensus expectations. Excluding food and energy, prices rose a less than expected 0.1%.
Tobacco prices again were strong, rising 1.6% following a 2.4% jump in August. The core CPI less tobacco rose 0.1% (1.9% AR, YTD).
Amongst goods prices weakness was widespread. Household furnishings and operation prices fell 0.2% (-1.5% AR, YTD). Apparel prices rose just 0.1% (-1.2% AR, YTD). New and used vehicle prices also rose just 0.1% (-2.4% AR, YTD).
Services prices weakened after the prior month&#39;s spurt. Shelter prices rose just 0.1% (3.3% AR, YTD) after a 0.4% August gain, though the price gain for medical care services doubled to 0.4% (5.1% AR, YTD). Public transportation prices fell 0.9% (-1.3% AR, YTD) for the third decline in four months. Education prices also fell and recreation prices were unchanged.
Energy prices were strong last month led by a 1.0% (30.9% AR, YTD) rise in gasoline prices. Fuel oil prices also were strong, up 1.2%, and piped gas &amp; electricity prices were up 0.4% for the second month.

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<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">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Total&nbsp;</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.5%</td>
<td>2.8%</td>
<td>3.4%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.1%</td>
<td>0.3%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>0.0%</td>
<td>0.2%</td>
<td>-1.1%</td>
<td>0.3%</td>
<td>0.5%</td>
<td>0.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Services less Energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>3.6%</td>
<td>3.7%</td>
<td>3.3%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Energy</td>
<td>0.7%</td>
<td>0.6%</td>
<td>-4.9%</td>
<td>3.7%</td>
<td>16.9%</td>
<td>3.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Food &amp; Beverages</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>1.3%</td>
<td>3.1%</td>
<td>2.3%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)l</a></td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.2%</td>
<td>2.1%</td>
<td>2.0%</td>
<td>NA</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy</td>
<td>0.2%</td>
<td>0.3%</td>
<td>1.7%</td>
<td>1.9%</td>
<td>&nbsp;1.4%</td>
<td>NA</td>
</tr>
</tbody>
</table>
U.S. Trade Deficit Deepened Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 18, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021018b.jpg" width="353">
The U.S. foreign trade deficit deepened much more than expected in August to a new record. The previously reported improvement in July was lessened due to lowered exports. Consensus expectations had been for a August deficit of $35.2B
Exports fell (8.6% AR, YTD) and gave back all of the July gain. Capital goods exports fell a sharp 1.5% (8.9% AR, YTD) and nonauto consumer goods exports (-0.3% AR, YTD) also fell sharply.
Imports rose strongly due to a 4.7% surge in industrial supplies &amp; materials (incl. oil). Capital goods imports fell but imports of nonauto consumer goods were strong.
The refiner&#39;s acquisition cost of imported crude oil rose to $26.01 in August versus $15.95 in December. Crude oil prices rose further in September and October.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE03/@EE03.HTM">Foreign Trade</a></th>
<th scope="col">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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<td class="firstcol">Trade Deficit</td>
<td>$38.5B</td>
<td>$35.1B</td>
<td>$29.5B(8/01)</td>
<td>$358.3B</td>
<td>$378.7B</td>
<td>$262.2B</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Exports - Goods &amp; Services</td>
<td>-1.3%</td>
<td>0.9%</td>
<td>-1.5%</td>
<td>-6.2%</td>
<td>11.2%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imports - Goods &amp; Services</td>
<td>2.0%</td>
<td>-0.8%</td>
<td>6.9%</td>
<td>-6.0%</td>
<td>18.3%</td>
<td>10.9%</td>
</tr>
</tbody>
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Consumer prices (CPI-U) rose 0.2% last month, equaling Consensus expectations. Excluding food and energy, prices rose a less than expected 0.1%. Tobacco prices again were strong, rising 1.6% following a 2.4% jump in August. The core [...]

CPI Rose Moderately

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021017a.jpg" width="353">
Housing starts were stronger than expected last month rising 13.3% m/m to the highest level since 1986. Starts in August were revised slightly higher due to raised multi-family starts.
Single family starts rose 18.2% from the previous month to a record high. 
Multi-family starts fell slightly m/m and have moved sideways since 1997.
Building permits rose 3.7% m/m to the highest level since February led by strong permits for single family homes. Permits for multi-family unit structures also rose.

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<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">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Total</td>
<td>1,843</td>
<td>1,627</td>
<td>16.5%</td>
<td>1,603</td>
<td>1,573</td>
<td>1,647</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single Family</td>
<td>1,477</td>
<td>1,250</td>
<td>16.9%</td>
<td>1,273</td>
<td>1,232</td>
<td>1,306</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi Family</td>
<td>366</td>
<td>377</td>
<td>14.7%</td>
<td>330</td>
<td>341</td>
<td>341</td>
</tr>
</tbody>
</table>
Industrial Production Down Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021017b.jpg" width="353">
Industrial production fell slightly in September versus Consensus expectations for a 0.1% rise. August figures were little revised. Production was up 3.7% (AR) year to date.
Output in the manufacturing sector fell 0.2% (3.3% AR, YTD) for the second consecutive month.
Lower motor vehicle and parts output (12.6% AR, YTD) led the factory sector decline, off for the second consecutive month. Output of furniture &amp; fixtures fell for the sixth month this year. 
Output of business equipment fell a sharp 1.7% (-2.5% AR, YTD) led by lower output of transit and other industrial equipment. Output of information processing equipment rose for only the third time this year 
Capacity utilization fell slightly to the lowest level since May. Capacity again rose 0.1%(1.0% AR, YTD) as it has since early last year.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EA/@EA.HTM">Production &amp; Capacity</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Industrial Production</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>1.4%</td>
<td>-3.7%</td>
<td>4.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">Capacity Utilization</td>
<td>75.9%</td>
<td>76.0%</td>
<td>75.5%(9/01)</td>
<td>76.8%</td>
<td>81.8%</td>
<td>81.4%</td>
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</tbody>
</table>
Initial Jobless Insurance Claims Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021017c.jpg" width="353">
Initial claims for unemployment insurance rose as expected in the latest week. Claims in the prior week were revised up slightly.
The latest claims figure was for the survey period for October nonfarm payrolls and claims were down versus the September survey period.
The four-week moving average fell to 408,750, the lowest figure since late-August.
Continuing claims for unemployment insurance jumped 3.9% in the latest available week but the prior week&#39;s levelwas revised down. The latest figure was the highest since late May.
The weekly insured rate of unemployment rose to 2.9% from 2.8% the previous week.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">10/12/02</th>
<th scope="col">10/5/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
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<td class="firstcol">Initial Claims</td>
<td>411.0</td>
<td>389.0</td>
<td>-12.7%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,755</td>
<td>8.1%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
</tr>
</tbody>
</table>
Philadelphia Fed Index Slumped 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 17, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021017d.jpg" width="353">
The Philadelphia Fed&#146;s index of general business conditions for October was much weaker than expected. The Business Activity Index fell to -13.1, the lowest level since last November but only the second negative reading this year. A slightly positive reading had been expected.
Amongst the components, all turned negative versus September.
The business conditions index reflects a separate survey question, not the components. 
The prices paid index fell modestly, but remained quite positive as it has since March.
During the last ten years there has been a 46% correlation between the level of the General Activity Index and the quarterly change in real GDP. Over the last twenty years that correlation has been 67%.
For a discussion of the Philadelphia Fed&#39;s Business Outlook Survey click <a href="http://www.phil.frb.org/files/bos/brso98mt.pdf">here</a>. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S504/@S504.HTM">Philadelphia Fed Business Outlook</a></th>
<th scope="col">Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
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</thead>
<tbody>
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<td class="firstcol">General Activity Index</td>
<td>-13.1</td>
<td>2.3</td>
<td>-18.5</td>
<td>-17.3</td>
<td>8.2</td>
<td>13.3</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>14.3</td>
<td>19.6</td>
<td>-21.4</td>
<td>-1.0</td>
<td>27.1</td>
<td>10.0</td>
</tr>
</tbody>
</table>
</body>
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Housing starts were stronger than expected last month rising 13.3% m/m to the highest level since 1986. Starts in August were revised slightly higher due to raised multi-family starts. Single family starts rose 18.2% from the previous [...]

Housing Starts Much Stronger Than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021016b.jpg" width="353">
Since mid-August, oil prices have held near the $30.00 per barrel level for West Texas Intermediate crude.
Wholesale gasoline prices have shown more strength of late rising $0.10 per gallon, or 12%, during just the last month. Fuel oil prices were up roughly a nickel (4%) per gallon during the last month.
Sharp increases in wholesale natural gas prices, up roughly 50% since August, are beginning to show up in the CPI.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/daily/@D3/@D306/@D30604/@D30604.HTM">Daily Crude Oil Prices</a></th>
<th scope="col">10/15/02</th>
<th scope="col">9/17/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">West Texas Intermediate Crude Oil</td>
<td>$29.73</td>
<td>$29.08</td>
<td>32.0%</td>
<td>$25.97</td>
<td>$30.34</td>
<td>$19.34</td>
</tr>
</tbody>
</table>
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Since mid-August, oil prices have held near the $30.00 per barrel level for West Texas Intermediate crude. Wholesale gasoline prices have shown more strength of late rising $0.10 per gallon, or 12%, during just the last month. Fuel [...]

Crude Oil Prices Hold the High Level

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021015a.jpg" width="353">
Total business inventories fell in August for the first monthly decline since April. Consensus expectations had been for a 0.2% gain. July figures were little revised.
Retail inventories (3.9% YTD) fell led by a 0.5% decline in motor vehicle inventories, the first month-to-month decline since November. Nonauto retail inventories (1.0% YTD) fell for the first time since March.
Inventories of furniture &amp; home furnishings have been steadily accumulating (6.6% YTD) since September. Accumulation at apparel stores (1.8% YTD) has been moderate. At general merchandise stores (-1.1% YTD), inventories have continued to run off.
Overall business sales rose 0.2% (3.9% YTD) mostly on the strength of higher wholesale sales.
The inventory-to-sales ratio fell to 1.34, a new record low. 

<table border="0" cellspacing="0" width="100%">
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<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">Aug</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-3.6%</td>
<td>-6.3%</td>
<td>5.6%</td>
<td>5.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.3%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>-5.0%</td>
<td>6.1%</td>
<td>7.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Autos</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>-2.0%</td>
<td>4.1%</td>
<td>5.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>0.2%</td>
<td>0.6%</td>
<td>-4.2%</td>
<td>-5.5%</td>
<td>6.6%</td>
<td>6.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.0%</td>
<td>-0.1%</td>
<td>-6.2%</td>
<td>-8.0%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
Chain Store Sales Disappoint 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 15, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021015b.jpg" width="353">
Chain store sales reversed all of the prior week&#39;s gain according to the BTM-UBSW survey. Sales fell 0.9% last week following a 0.8% gain the prior week. It was the seventh decline during the last eleven weeks.
Sales thus far in October were 1.1% below the average for September which was down 1.1% from August.
During the last five years there has been a 62% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales. There has been a 18% correlation between the month-to-month change in the two sales series.

<table border="0" cellspacing="0" width="100%">
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<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">10/12/02</th>
<th scope="col">10/5/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>400.7</td>
<td>404.4</td>
<td>2.7%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
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</body>
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Total business inventories fell in August for the first monthly decline since April. Consensus expectations had been for a 0.2% gain. July figures were little revised. Retail inventories (3.9% YTD) fell led by a 0.5% decline in motor [...]

Business Inventory Decumulation Resumed

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021014a.jpg" width="353">
The Future Inflation Gauge (FIG) published by the Economic Cycle Research Institute (ECRI) rose for the sixth consecutive month in September. Gains in the last four of those months have been notable.
The indicator&#39;s six-month growth rate of 25.9% was by far the strongest growth rate in the record of the index which dates back to 1994.
The monthly FIG has a mean lead of 11 months and a median lead of 9 months at inflation cycle turns .
The eight components of the FIG are commodity prices, employment measures, capacity measures, import prices, the yield spread, real estate and debt.
For more on ECRI visit their <a href="http://www.businesscycle.com">website</a>. 

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</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF12/@EF12.HTM">ECRI</a></th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Future Inflation Gauge</td>
<td>113.3</td>
<td>109.0</td>
<td>13.5%</td>
<td>-14.2%</td>
<td>6.5%</td>
<td>3.5%</td>
</tr>
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The Future Inflation Gauge (FIG) published by the Economic Cycle Research Institute (ECRI) rose for the sixth consecutive month in September. Gains in the last four of those months have been notable. The indicator's six-month growth [...]

ECRI Future Inflation Gauge Rose Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021011b.jpg" width="353">
Retail sales fell about as expected last month following firm August gains that were revised slightly down. Year to date retail sales were up at a 3.3% annual rate through September.
Sales of motor vehicle and parts fell a sharp 4.8%. New vehicle purchases dropped 12.6% m/m to a 16.32 mil. unit annual rate.
Sales excluding motor vehicles and parts dealers rose 0.1% (4.6% AR, YTD), slightly below the consensus expectation.
Sales at furniture and home furnishing stores fell 0.4% (-0.8% AR, YTD), the fifth m/m decline this year. Clothing and accessories store sales also were weak, down 0.9% (-0.9% AR, YTD). General merchandise store sales fell as well, off 0.1% (4.5% AR, YTD).
Sales at gasoline stations were flat following a 0.7% August decline. Nonauto retail sales less gasoline rose 0.1% (4.1% AR, YTD).

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
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<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>-1.2%</td>
<td>0.6%</td>
<td>5.8%</td>
<td>3.8%</td>
<td>6.7%</td>
<td>8.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.1%</td>
<td>0.3%</td>
<td>5.2%</td>
<td>3.4%</td>
<td>7.3%</td>
<td>7.4%</td>
</tr>
</tbody>
</table>
<table border="0" cellspacing="0" width="100%">

</table>
Producer Prices Up Slightly 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 11, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021011a.jpg" width="353">
Finished producer prices rose slightly last month, as expected. Excluding food and energy prices also rose an expected 0.1%. Core producer prices were down 0.4% (AR) year to date.
Energy prices rose 0.9% (10.9% AR, YTD). Gasoline prices (74.0% AR, YTD) were strong for the third consecutive month and fuel oil prices also jumped m/m (72.1% AR, YTD). For a discussion by the Atlanta Fed of supplies in the oil market, go <a href="http://www.frbatlanta.org/invoke.cfm?objectid=AB4F965E-E58D-4568-BCA4889D6E63C374&amp;method=display">here</a>. 
Food prices fell for the fifth month in six (-2.6% AR, YTD).
Core finished consumer goods prices rose a slight 0.1% for the first gain in three months (-0.1% AR, YTD). Core nondurable goods prices rose slightly for the second month (1.0% AR, YTD). Consumer durables prices rose 0.1% (-1.3% AR, YTD). Capital goods prices were unchanged following two down months (-0.9% AR, YTD). 
Intermediate goods prices were strong owing to higher petroleum prices. Core intermediate prices rose just 0.1% (1.9% YTD, AR). 
Crude goods prices also were firm (18.7% AR, YTD) reflecting higher energy prices. Other commodities prices, reflected by the core crude price measure, fell but were up 14.6% (AR) year to date.

<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">Sept</th>
<th scope="col">Aug</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>0.1%</td>
<td>0.0%</td>
<td>-1.8%</td>
<td>2.0%</td>
<td>3.7%</td>
<td>1.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>1.4%</td>
<td>1.3%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>0.5%</td>
<td>0.4%</td>
<td>-0.3%</td>
<td>0.4%</td>
<td>4.9%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.5%</td>
<td>-0.1%</td>
<td>2.6%</td>
<td>-0.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>0.6%</td>
<td>1.6%</td>
<td>0.9%</td>
<td>0.3%</td>
<td>22.8%</td>
<td>1.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>-0.6%</td>
<td>0.4%</td>
<td>8.2%</td>
<td>-9.9%</td>
<td>7.3%</td>
<td>-4.7%</td>
</tr>
</tbody>
</table>
Consumer Sentiment Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 11, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021011c.jpg" width="353">
Consumer Sentiment fell sharply in mid-October according to the University of Michigan. Sentiment fell 1.7% (m/m) to its lowest since 1993.
The decline was much greater than consensus expectations and was the seventh this year.
Indexes of consumer expectations and current conditions both fell hard. 
The University of Michigan survey is not seasonally adjusted. It is based on a survey of 500 households.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<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-Oct</th>
<th scope="col">Sept</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>80.4</td>
<td>86.1</td>
<td>-2.8%</td>
<td>89.2</td>
<td>107.6</td>
<td>105.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Retail sales fell about as expected last month following firm August gains that were revised slightly down. Year to date retail sales were up at a 3.3% annual rate through September. Sales of motor vehicle and parts fell a sharp 4.8%. [...]

Retail Sales Decline

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

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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.

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Charts of the Week: Tariff Truce, Tenuous Trust

250501F20.jpg

250501G20.jpg

U.S. light vehicle sales dropped 2.9% (+6.5% y/y) to 17.31 million units (SAAR) in April after surging 10.8% to 17.82 million units in March. The retreat in April vehicle sales accompanied a 1.7% y/y rise in real disposable income through March, which compared to 2.0% growth last year.

Sales declines were broad-based last month. Light truck sales fell 1.3% (+9.9% y/y) during April to 14.34 million units (SAAR), after rising 12.4% in March. Purchases of domestically-made light trucks declined 1.2% (+11.9% y/y) to 11.02 million units, after jumping 12.5% in March. Sales of imported light trucks fell 1.8% (+4.4% y/y) to 3.32 million units, following an 11.6% March surge.

Trucks’ record 82.8% share of the light vehicle market last month compared to 81.5% in March and 80.3% in April of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales also declined last month, down 9.5% (-7.5%) to 2.97 million units (SAAR) following a 3.5% March rise. The decline reversed all of the increase over the prior two months. Purchases of domestically-produced cars fell 9.8% (-4.3% y/y) last month to 2.22 million units, after rising 3.8% in March. Sales of imported autos declined 9.6% (-15.7% y/y) to 0.75 million units, following a 2.5% March increase.

Imports' 23.5% share of the U.S. light vehicle market was little changed from 23.6% in March and compared to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market held steady at 25.3% last month and compared to 27.7% in April of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.2% last month after falling to 23.3% in March.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the I**NDUSTRY** database.

250501H20.jpg

250501I20.jpg

- Light truck sales pull back, while auto sales tumble.
- Both domestic and imported sales decline.
- Imports' market share slips further.

U.S. Light Vehicle Sales Fall in April

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.

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

U.S. ISM Manufacturing Index Indicates Contraction in April

Winnie Tapasanun

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

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

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

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

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

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

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

Carol Stone, CBE

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

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

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

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

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

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

Economy in Brief: 2002

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