Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021010a.jpg" width="353">
Prices for imported commodities surged last month by the most for any month since April. Consensus expectations were for a moderate 0.3% gain. August figures were little revised.
Petroleum import prices posted the largest monthly gain since April and are up 61.1% since December. So far in October the price of Arab Light crude oil has averaged $25.95/bbl versus $25.44 in September.
Nonpetroleum import prices rose 0.2% (0.3% YTD) after being unchanged in August. The foreign exchange value of the dollar is down 5.5% YTD despite recent gains, thus fueling sequential growth in nonoil import prices.
Most of the strength in import prices was limited to foods, feeds and beverages where last month prices rose 2.7% (5.5% YTD). Prices for imported capital goods fell 0.1% (-1.4% YTD), the sixth monthly decline this year. Nonauto consumer goods prices fell 0.1% (-0.6% YTD) and auto prices were unchanged (0.2% YTD).
Export prices rose 0.2% (1.1% YTD). Food and industrial supplies prices (9.4% YTD) were strong for the fourth consecutive month, up 3.9%, but other export prices were again weak or fell.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">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">Import - All Commodities</td>
<td>0.7%</td>
<td>0.3%</td>
<td>-0.4%</td>
<td>-3.5%</td>
<td>6.5%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>6.0%</td>
<td>2.8%</td>
<td>11.3%</td>
<td>-17.2%</td>
<td>66.5%</td>
<td>34.2%</td>
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<td class="firstcol">&nbsp; Nonpetroleum</td>
<td>0.2%</td>
<td>0.0%</td>
<td>-0.8%</td>
<td>-1.5%</td>
<td>1.0%</td>
<td>-1.4%</td>
</tr>
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<td class="firstcol">Export - All Commodities</td>
<td>0.2%</td>
<td>0.2%</td>
<td>-0.3%</td>
<td>-0.8%</td>
<td>1.6%</td>
<td>-1.3%</td>
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</tbody>
</table>
Initial Claims for Jobless Insurance Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 10, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021010b.jpg" width="353">
Initial claims for unemployment insurance were lower than expected in the latest week. The prior week was revised slightly higher.At 384,000 it was the first week in seven that claims were below 400,000.
The four-week moving average fell to 412,250, the first decline since early August.
Continuing claims for unemployment fell a slight 0.4% following four weeks of sequential gain. The prior week&#39;s levelwas revised down.
The weekly insured rate of unemployment fell slightly to 2.8%.

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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">10/5/02</th>
<th scope="col">9/28/02</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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<td class="firstcol">Initial Claims</td>
<td>384.0</td>
<td>424.0</td>
<td>-15.4%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,638</td>
<td>6.4%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
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</tbody>
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Prices for imported commodities surged last month by the most for any month since April. Consensus expectations were for a moderate 0.3% gain. August figures were little revised. Petroleum import prices posted the largest monthly gain [...]

Import Prices Rose Twice Expectations

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021009a.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) was again negative in August, the fifth negative reading this year. The reading pulled the three-month moving average to -0.13.
The index level measures deviations from zero. A zero value indicates that the economy is expanding at its historical trend rate of growth.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, mfg. &amp; trade sales, and inventories &amp; orders.
During the last ten years there has been a 72% correlation between the level of the National Activity Index and quarterly growth in real GDP.
For a complete discussion of the Chicago Fed&#39;s National Activity Index visit: <a href="http://www.chicagofed.org/economicresearchanddata/national/pdffiles/CFNAI_july2002.pdf">http://www.chicagofed.org/economicresearchanddata/national/pdffiles/CFNAI_july2002.pdf</a>

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</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">CFNAI</td>
<td>-0.44</td>
<td>-0.04</td>
<td>-1.03</td>
<td>-1.09</td>
<td>-0.17</td>
<td>0.27</td>
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US Dollar Up, Commodity Prices Move Sideways 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 9, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021009b.jpg" width="353">
The trade weighted value of the US dollar rose further through September and early October despite indications of a weak US economy. The dollar has garnered some support from the lack of clear indication that Fed ease is pending and from signs of economic weakness abroad.
The dollar&#39;s trade weighted value has recovered 3.3% since the weekly low set this past July.
Commodity prices have meandered recently. Increases in petroleum prices have been offset by lower prices for textiles. Metals and miscellaneous commodity prices have moved sideways during the last several weeks.

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The Chicago Fed National Activity Index (CFNAI) was again negative in August, the fifth negative reading this year. The reading pulled the three-month moving average to -0.13. The index level measures deviations from zero. A zero [...]

Chicago Fed National Activity Index Down Again in August

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021008a.jpg" width="353">
Chain store sales recovered all of the prior week&#39;s loss according to the BTM-UBSW survey. Sales rose 0.8% last week, reversing the 0.8% drop the prior week.
Sales began the month of October 0.6% below the average for September which was down 1.1% from August.
During the last five years there has been a 61% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales. There has been a 17% 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">10/5/02</th>
<th scope="col">9/28/02</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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<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>404.4</td>
<td>401.0</td>
<td>3.7%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
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Chain store sales recovered all of the prior week's loss according to the BTM-UBSW survey. Sales rose 0.8% last week, reversing the 0.8% drop the prior week. Sales began the month of October 0.6% below the average for September which [...]

Chain Store Sales Recover

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021007a.jpg" width="353">
The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) has fallen 4.0% from the weekly peak reached late this past May.
The indicator&#39;s six-month growth rate, perhaps the more important indicator, fell to -0.1%, the first negative reading since December 2001.
Construction of the ECRI Leading Index differs from the Index of Leading Economic Indicators published by the Conference Board. Nevertheless there has been an 80% correlation between the annual percent change in the two over the last 20 years.
The components of the index are money supply plus stock &amp; bond mutual funds, the JOC-ECRI industrial materials price index, mortgage applications, bond quality spreads, stock prices, bond yields, and initial jobless insurance claims.
The median lead of the ECRI index at business cycle peaks has been 10.5 months and at cycle troughs 3.0 months. The sideways movement of the leading index in 2002 may or may not signal something about the economy&#39;s growth rate.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/weekly/@W8/@W801/@W801.HTM">ECRI</a></th>
<th scope="col">9/20/02</th>
<th scope="col">9/13/02</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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<td class="firstcol">Weekly Leading Index</td>
<td>119.0</td>
<td>119.3</td>
<td>3.0%</td>
<td>-5.0%</td>
<td>0.8%</td>
<td>2.4%</td>
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</tbody>
</table>
Consumer Credit Growth Slowed Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 7, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021007b.jpg" width="353">
Consumer credit outstanding rose $4.2B (0.2%) in August, quite a bit less than expected. July figures were revised down slightly due to a lowered figure for nonrevolving credit. So far this year, consumer credit outstanding has risen at a 5.7% annual rate. 
Revolving credit growth, up 0.5%, returned to the monthly rate of growth seen in in the months prior to July&#39;s 0.9% surge. Year to date revolving credit growth was 5.6% (AR).
One-month growth in nonrevolving credit extension, which was virtually unchanged, slowed to its lowest since June 1999. Nonrevolving extension is up 5.7% (AR) YTD.
Nonrevolving credit extension (NSA) was notably weak from finance companies where it fell.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E103/@E10308/@E10308.HTM">Consumer Credit Outstanding</a></th>
<th scope="col">Aug m/m</th>
<th scope="col">July m/m</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</td>
<td>$4.2B</td>
<td>$10.0B</td>
<td>6.5%</td>
<td>6.9%</td>
<td>10.2%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Revolving</td>
<td>$3.9B</td>
<td>$6.4B</td>
<td>4.1%</td>
<td>5.0%</td>
<td>11.5%</td>
<td>6.3%</td>
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<tr class="odd">
<td class="firstcol">&nbsp; Nonrevolving</td>
<td>$0.2B</td>
<td>$3.7B</td>
<td>8.3%</td>
<td>8.3%</td>
<td>9.2%</td>
<td>8.4%</td>
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The Weekly Leading Index of the US economy published by the Economic Cycle Research Institute (ECRI) has fallen 4.0% from the weekly peak reached late this past May. The indicator's six-month growth rate, perhaps the more important [...]

ECRI Leading Indicators Fell Further

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021004a.jpg" width="353">
Nonfarm payrolls fell unexpectedly last month, down 43,000. It was the first decline in payrolls since April. August&#39;s moderate payroll gain was revised up sharply to 107,000 from 39,000 reported last month. Payrolls are about unchanged YTD.
The length of the workweek rose for the second month, but only back to the June level. As a result, the index of aggregate hours worked (employment times hours worked) rose 0.4% following a 0.3% August gain. The average for 3Q was 0.2% below the 2Q average. That followed no change in 2Q.
Amongst industries, factory sector jobs fell 0.2%, continuing a decline that began in early 1998. The one-month diffusion index rose slightly to a still-depressed 40.4, heralding continued decline in factory jobs. Construction jobs fell 1,000, the second decline in three months. Jobs in service producing industries declined 5,000, the first decline since February. Declines were widespread in the retail, wholesale and transportation industries. Government employment rose 4,000.
The one-month diffusion index for nonfarm payrolls improved slightly to 47.7. The level suggests little or no employment growth near term. The three month diffusion index was 45.0. 
The gain in average hourly earnings was as expected and pulled the y/y gain to its lowest since early 1996.
The unemployment rate fell unexpectedly as a result of a huge 711,000 (0.8% YTD) rise in employment and only a 661,000 (0.7% YTD) rise in the labor force.
The nonfarm payroll employment figures are based on reports provided to the US Labor Department by businesses, while the figures from which the unemployment rate is derived are based on a survey of US households.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</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">Payroll Employment</td>
<td>-43,000</td>
<td>107,000</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>2.2%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-35,000</td>
<td>-63,000</td>
<td>-4.5%</td>
<td>-4.2%</td>
<td>-0.4%</td>
<td>-1.3%</td>
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<td class="firstcol">Average Weekly Hours</td>
<td>34.3</td>
<td>34.1</td>
<td>34.1</td>
<td>34.2</td>
<td>34.4</td>
<td>34.5</td>
</tr>
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<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.0%</td>
<td>4.1%</td>
<td>3.9%</td>
<td>3.6%</td>
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<td class="firstcol">Unemployment Rate</td>
<td>5.6%</td>
<td>5.7%</td>
<td>5.0%</td>
<td>4.8%</td>
<td>4.0%</td>
<td>4.2%</td>
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Nonfarm payrolls fell unexpectedly last month, down 43,000. It was the first decline in payrolls since April. August's moderate payroll gain was revised up sharply to 107,000 from 39,000 reported last month. Payrolls are about [...]

Nonfarm Payrolls Fell in September

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021003c.jpg" width="353">
Initial claims for unemployment insurance were about as expected in the latest week. At 417,000, claims rose 5,000 from the prior week which was revised slightly higher.
The four-week moving average rose slightly to 423,000, up 11.2% from the recent low set in early August.
Continuing claims for unemployment insurance rose another 0.8%, the fourth consecutive weekly rise but the prior week&#39;s levelwas revised down. Continuing claims have risen 5.9% since the weekly low of this past July.
The weekly insured rate of unemployment was stable at 2.9%.

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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">9/28/02</th>
<th scope="col">9/21/02</th>
<th scope="col">Y/Y</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
<th scope="col">1999</th>
</tr>
</thead>
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<td class="firstcol">Initial Claims</td>
<td>417.0</td>
<td>412.0</td>
<td>-20.9%</td>
<td>405.8</td>
<td>299.8</td>
<td>297.7</td>
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<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,681</td>
<td>10.0%</td>
<td>3,021</td>
<td>2,114</td>
<td>2,186</td>
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</tbody>
</table>
ISM Nonmanufacturing Index Improved 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 3, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021003b.jpg" width="353">
The Institute for Supply Management business activity index of the nonmanufacturing sector improved more than expected last month. Consensus expectations were for a rise to 51.5. 
The overall index has been above 50, the dividing line for expansion and contraction, since February.
Of the seasonally adjusted subgroups, new orders rose but imports and employment fell. 
The not seasonally adjusted index of prices fell for the second month to the lowest level since February. 
During the last five years, there has been a 51% correlation between the level of the NAPM nonmanufacturing index and quarterly growth in real GDP in the service sector.
Business activity for the nonmanufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The nonmanufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</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">Business Activity Index</td>
<td>53.9</td>
<td>50.9</td>
<td>49.1</td>
<td>49.0</td>
<td>59.2</td>
<td>59.1</td>
</tr>
</tbody>
</table>
Factory Inventory Decumulation Leveled Off 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 3, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021003a.jpg" width="353">
Manufacturing inventories were down just slightly in August and during the last three months fell just 0.2%.
Excluding the transportation sector inventories were unchanged and are up 0.2% over the last two months. Transportation sector inventories fell for the sixth month this year.
Inventory decumulation of communications and audio &amp; video equipment continued and the accumulation in July was revised away. Elsewhere durable goods inventories continued to run off. Nondurable goods inventories rose 0.3%, the third consecutive monthly increase. Accumulation of nondurable goods was not broad based, centering in the chemicals and plastics industries. 
Shipments fell 0.6% but for the year have risen 2.5%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">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>
<td class="firstcol">Mfg Inventories</td>
<td>-0.0%</td>
<td>-0.1%</td>
<td>-7.1%</td>
<td>-8.0%</td>
<td>4.5%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance were about as expected in the latest week. At 417,000, claims rose 5,000 from the prior week which was revised slightly higher. The four-week moving average rose slightly to 423,000, up 11.2% [...]

Initial Claims for Jobless Insurance Tick Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021002b.jpg" width="353">
According to Challenger, Gray &amp; Christmas, announced job cuts fell sharply in September, more than reversing a large rise in August. The 40.7% m/m decline lowered layoffs to the lowest since late 2000.
Job cut announcements were less than one-third the record level announced last September.
The decline in announced job cuts centered in the retail, services and telecommunications industries. Elsewhere, increases were widespread.
During the last eight years there has been a 36% correlation between the inverse of the y/y change in announced job cuts and growth in payroll employment.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</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>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>70,0577</td>
<td>118,067</td>
<td>-71.8%</td>
<td>1,956,876</td>
<td>613,980</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Down 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 2, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021002a.jpg" width="353">
Unit sales of light vehicles fell more than expected last month as 0% financing plans failed to raise sales of domestics. Total vehicle sales fell 12.6% versus August and were down 1.1% YTD.
Sales of domestically built vehicles fell 16.3% m/m, the first decline in four months. Auto and light truck sales fell evenly. Lean auto inventory levels, which as of August were down by a third versus early last year, may have accounted for much of the decline.
Imported vehicle sales rose 5.7% vs. August following a like decline during that month. Auto sales rose 9.5% but truck sales fell for the second consecutive month.
Imports&#39; share of the US light vehicle market surged to 20.6%, the highest level since January.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil.Units)</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">Total</td>
<td>16.33</td>
<td>18.68</td>
<td>0.9%</td>
<td>17.25</td>
<td>17.40</td>
<td>16.95</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>12.97</td>
<td>15.50</td>
<td>-2.0%</td>
<td>14.18</td>
<td>14.58</td>
<td>14.47</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Imported</td>
<td>3.36</td>
<td>3.17</td>
<td>13.7%</td>
<td>3.06</td>
<td>2.82</td>
<td>2.48</td>
</tr>
</tbody>
</table>
</body>
</html>

According to Challenger, Gray & Christmas, announced job cuts fell sharply in September, more than reversing a large rise in August. The 40.7% m/m decline lowered layoffs to the lowest since late 2000. Job cut announcements were less [...]

Challenger Survey Indicates Layoffs Reversed August Rise

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021001a.jpg" width="353">
The ISM Composite Index of manufacturing sector activity in September fell below 50 for the first time since January. The decline to 49.5 mirrored yesterday&#39;s report from the Chicago purchasing managers. Before that report, Consensus expectations were for a modest rise in the ISM to 51.0. 
Production and employment fell sharply while inventories fell just slightly. The indexes of vendor deliveries and new orders rose slightly.
Inflation pressure rose slightly following a sharp decline in August. The percentage (NSA) of companies reporting higher prices fell for the second month from the peak in July.
Over the last twenty years there has been a 76% correlation between the ISM Composite Index and the three month change in industrial production.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</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">Composite Index</td>
<td>49.5</td>
<td>50.5</td>
<td>46.2</td>
<td>43.9</td>
<td>51.6</td>
<td>54.6</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>62.5</td>
<td>61.5</td>
<td>36.6</td>
<td>43.0</td>
<td>64.8</td>
<td>54.2</td>
</tr>
</tbody>
</table>
Construction Spending Fell in August 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021001b.jpg" width="353">
The value of construction put in place fell modestly, as expected in August. It was the fifth monthly decline in construction spending in the last six months and pulled YTD spending down 1.4%.
Residential building fell for the fourth month in five, but it was still up YTD as a result of large gains early in the year. Single family fell 0.7% (3.2% YTD) following a slight gain in July. 
Nonresidential building activity fell hard for the sixth month this year and was down 13.7% YTD. The decline was again paced by lower industrial and office building.
Spending by governments rose slightly due to broad based increases amongst categories.

<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/@E907/@E90701/@E90701.HTM">Construction Put-in-place</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>-0.3%</td>
<td>-0.1%</td>
<td>-1.0%</td>
<td>2.5%</td>
<td>7.3%</td>
<td>8.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Residential</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>4.0%</td>
<td>3.3%</td>
<td>7.4%</td>
<td>11.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-2.0%</td>
<td>-2.6%</td>
<td>-18.5%</td>
<td>-3.1%</td>
<td>7.1%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Public</td>
<td>0.8%</td>
<td>1.0%</td>
<td>7.8%</td>
<td>7.4%</td>
<td>5.4%</td>
<td>10.6%</td>
</tr>
</tbody>
</table>
Chain Store Sales Slide Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 1, 2002


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/021001c.jpg" width="353">
Chain store sales fell sharply for the second consecutive week according to the BTM-UBSW survey. Sales fell 0.8% last week and that followed a 1.7% drop the prior week.
Sales during September, with just two days yet to be tallied, fell 1.1% versus August. August sales were down 0.9% from July.
During the last five years there has been a 61% correlation between the year-to-year percent change in monthly chain store sales and the change in GAF retail sales. There has been a 17% correlation between the month-to-month change in the two sales series.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">9/28/02</th>
<th scope="col">9/21/02</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>401.0</td>
<td>404.2</td>
<td>2.0%</td>
<td>2.1%</td>
<td>3.4%</td>
<td>6.7%</td>
</tr>
</tbody>
</table>
</body>
</html>

The ISM Composite Index of manufacturing sector activity in September fell below 50 for the first time since January. The decline to 49.5 mirrored yesterday's report from the Chicago purchasing managers. Before that report, Consensus [...]

ISM Index Fell Below 50

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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Nonfarm payrolls increased 177,000 (1.2% y/y) during April after rising 185,000 in March, revised from 228,000, and 102,000 in February, revised from 117,000. Expectations had been for a 130,000 rise in the Action Economics Forecast Survey. The latest figure left the three-month average change at 155,000 in April, down from 232,000 in January.

Average hourly earnings rose 0.2% during April after unrevised increases of 0.3% in March and 0.2% in February. Earnings growth of 3.8% y/y was below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, held m/m at an expected 4.2% in April, and compared to 4.1% in February and 4.0% in January. 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, eased to 7.8% in April from 7.9% in March.

In the **establishment survey**, private-sector employment rose 167,000 (1.2% y/y) after a 170,000 March increase. Factory sector jobs edged 1,000 lower (-0.7% y/y) following a 3,000 gain. Construction sector employment increased 11,000 (1.7% y/y), after rising 7,000 in March.

Private service-producing sector employment increased 156,000 (1.4% y/y) in April after improving 161,000 in March. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 70,000 (3.4% y/y) last month following a 74,000 March increase. Leisure & hospitality employment rose 24,000 (1.3% y/y) after a 38,000 gain. Trade, transportation & utilities rose 32,000 (0.9% y/y) in April following a 25,000 March increase. Professional & business services employment rose 17,000 (-0.1% y/y) following a 3,000 rise while temporary help employment rose 3,600 (-3.9% y/y) following a 2,700 decline. Financial activities employment improved 14,000 (1.2% y/y) after a 6,000 gain. The number of information sector jobs held steady (-0.4% y/y) last month after falling 2,000 in March.

Government sector payrolls rose 10,000 (1.3% y/y) last month after increasing 15,000 in March. The number of local government jobs increased 13,000 (1.4% y/y) following a 17,000 gain. State government employment rose 6,000 (1.8% y/y) following a 2,000 March increase but federal government payrolls fell 9,000 (-0.3% y/y), the third consecutive monthly decline.

Private-sector average hourly earnings rose 0.2% (3.8% y/y) in April after increasing 0.3% in March. Earnings in the goods-producing sector eased 0.1% (+4.0% y/y) following a 0.6% gain. Earnings in construction rose 0.3% (3.6% y/y), after a 0.2% rise but factory sector earnings declined 0.3% (+4.3% y/y) after surging 0.8% in March. In the private services-sector, earnings rose 0.2% (3.7% y/y) in April for the third straight month. Information sector pay increased 1.0% (5.2% y/y) last month after easing 0.1%, and financial activities earnings rose 0.5% (4.3% y/y) for the second straight month. Trade, transportation & utilities sector pay increased 0.4% (3.4% y/y) after 0.6%. Professional & business sector earnings increased 0.1% (4.4% y/y) after 0.2% in March. Leisure & hospitality earnings held steady (+3.8% y/y) following a 0.6% March increase.

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The length of the average workweek held steady at 34.3 hours in April. The workweek in the goods-producing sector eased to 39.8 hours from 40.0 hours. The construction sector average workweek eased to 39.0 hours from 39.3 hours while the factory sector workweek moved lower to 40.0 hours from 40.2. The average workweek in the private service sector held at 33.2 hours. Professional & business service hours fell to 36.3 hours from 36.4 while trade, transportation & utilities hours improved to 34.3 from 34.0 hours. Private education hours rose slightly to 32.8, but leisure & hospitality held steady at 25.5 hours.

In the **household survey**, the unemployment rate held at 4.2% in April as employment rose 436,000 and the size of the labor force increased 518,000. The labor force participation rate edged up to 62.6% last month from 62.5% in March. It remained below the high of 63.3% early in 2020. The rate for teenagers declined to 36.9%. For workers aged 20-24, the rate held steady at 72.1%, up from 71.8% six months earlier. For workers aged 25-54 the rate rose to 83.6%, a five-month high. For individuals 55 and over, the rate improved to 38.4% in April.

The employment/population ratio for all workers in April rose to 60.0%. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic.

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.

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- Job growth spreads across most sectors.
- Earnings growth trend decelerates.
- Jobless rate holds steady.

U.S. Job Growth Is Firm in April but March Gain Is Lessened

Winnie Tapasanun

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Total factory orders rose a slightly less-than-expected 4.3% m/m in March after rises of 0.5% in February and 1.8% in January, data from the U.S. Census Bureau showed. A 4.5% m/m March increase had been expected in the Action Economics Forecast Survey. The March reading was the third successive monthly rise and the largest since July 2024. The year-on-year rate accelerated to 6.0% in March, the highest since November 2022, from 2.3% in February. Notably, orders for nondefense aircraft & parts soared 139.0% in March following a 7.4% drop in February and a 92.9% surge in January. Factory orders excluding defense rose 4.8% (5.9% y/y), the largest of three straight m/m/ rises, after a 0.4% February increase. Factory orders excluding the transportation sector fell 0.2% (+1.1% y/y), the first m/m fall since August, after rising 0.3% in February, January and December.

Durable goods orders jumped 9.2% (11.9% y/y) in March, the third consecutive m/m gain and the biggest since July 2024, on top of a 0.8% increase in February (matching +9.2% m/m in the advance report on April 24). The March jump reflected m/m orders increases of 27.1% (the largest m/m surge since July 2024; 31.2% y/y) in transportation equipment, 1.1% (4.9% y/y) in primary metals, 0.5% (-0.4% y/y) in furniture & related products, 0.1% (2.5% y/y) in fabricated metal products, and 0.1% (0.9% y/y) in machinery. To the downside, durable goods orders for computers & electronic products (-1.3%; +2.7% y/y) and electrical equipment, appliances & components (-1.0%; +4.2% y/y) declined m/m in March.

Nondurable goods orders, which equal nondurable goods shipments, fell 0.3% (+0.4% y/y) in March, the first m/m fall since September, after a 0.1% uptick in February. The March fall reflected m/m drops of 2.4% (-9.3% y/y) in petroleum & coal products and 0.9% (-1.2% y/y) in apparel. To the upside, the following nondurable goods shipments rose m/m in March: leather & allied products (1.5%; 8.6% y/y), beverage & tobacco products (0.7%; 5.8% y/y), paper products (0.6%; 2.3% y/y), printing (0.3%; 3.8% y/y), textile mills (0.3%; 0.8% y/y), chemical products (0.2%; 5.4% y/y), plastics & rubber products (0.2%; 0.4% y/y), food products (0.1%; 1.8% y/y), and textile products (0.1%; 2.1% y/y).

Total shipments slipped 0.1% (+2.0% y/y) in March, the first m/m easing since October, after a 0.7% increase in February. Excluding transportation, shipments were virtually unchanged m/m (+1.1% y/y) in March following six straight m/m gains. Shipments of durable goods industries inched up 0.1% (3.8% y/y) in March, the smallest of four consecutive m/m increases, after a 1.3% advance in February. This reflected m/m durable goods shipments rises of 1.2% (5.6% y/y) in primary metals, 0.9% (0.1% y/y) in furniture & related products, 0.8% (-0.2% y/y) in nonmetallic mineral products, 0.4% (0.0% y/y) in machinery, 0.3% (1.8% y/y) in fabricated metal products, 0.2% (4.5% y/y) in computers & electronic products, 0.2% (-2.1% y/y) in wood products, and 0.1% (3.0% y/y) in electrical equipment, appliances & components. In contrast, durable goods shipments for transportation equipment (-0.5%; +7.3% y/y) and miscellaneous durable goods (-0.1%; +2.9% y/y) fell m/m in March following three successive m/m increases.

Unfilled orders rose 2.0% (2.3% y/y) in March, up for the eighth month in nine, after a 0.1% uptick in February. Excluding transportation, unfilled orders dipped 0.1% (+0.7% y/y) in March, the first m/m easing since May 2024, after holding steady in February. Backlogs of durable goods rose 2.0% (2.3% y/y) in March, reflecting m/m rises of 3.1% (3.1% y/y) in transportation equipment and 0.2% (2.4% y/y) in electrical equipment, appliances & components.

Inventories edged up 0.1% (0.9% y/y) in March, the fifth straight m/m increase, after rising at the same pace in the prior two months. Excluding transportation, inventories were up 0.1% (0.5% y/y) in March, the fifth consecutive m/m rise. Durable goods inventories ticked up 0.1% (1.0% y/y) in March after holding steady in February and January; nondurable goods inventories edged up 0.1% (0.8% y/y), the fifth successive m/m increase.

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

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- March manufacturers’ new orders +4.3% m/m; +6.0% y/y, highest since Nov. ’22.
- Durable goods orders (+9.2%) jump m/m, while nondurable goods orders (-0.3%) and shipments (-0.1%) decline m/m.
- Transportation equipt. orders +27.1% m/m, w/ a 139.0% m/m surge in nondefense aircraft & parts orders.
- Unfilled orders +2.0%, the eighth m/m rise in nine months.
- Inventories +0.1%, the fifth consecutive m/m increase.

U.S. Factory Orders Increase for the Third Straight Month in March

Robert Brusca

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The global manufacturing data showed broad weakening in April as conditions weakened across more than half of the contributing early reporters in the S&P survey of manufacturing. Of the 18 early reporting countries, more than half of them showed deceleration over six months and 12 months. Over three months, only 8 of 18 showed deterioration and that's about as good as it got in this report. In the current month, month-to-month changes showed more than half of the survey contributors showing weaker results than the month before. In the S&P framework, manufacturing improved month-to-month for the U.S.; however, looking at sequential averages for the U.S., U.K., European monetary union, Canada, and Japan, we see a steady weakening and results over 12 months, over six months versus 12 months, and for three months versus 6 months. The highly developed countries are not doing particularly well.

Asian economies are also showing slight deterioration but doing a little better than the developed countries in general.

Only five of the 18 reporting countries have queue percentile standings in their data back to January 2021 that are above their medians. Readings at or above the 50% mark are at or above the median standing. Canada is showing the weakest manufacturing result on record over this span, in terms of its queue percentile standing which is at 0 in the current month.

I showed the graphic for the Baltic dry goods index in this report rather than statistics on the manufacturing PMI data because the Baltic data, which reflect shipping volume for dry goods - that is excluding things like oil - is weak but it's only in the neighborhood where it's been for some time. There has been a great deal of talk about how tariffs may have impacted trade flows, expected trade flows, shipping, shipping rates, and the like. However, according to the Baltic dry goods index, there isn't much evidence that this is occurring right now and affecting the current data. That may still lie ahead but for now it's not baked in the cake.

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Globally Manufacturing Weakens

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.

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**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.

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**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.

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**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.

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**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.

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**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.

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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

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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.

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

Economy in Brief: 2002

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