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issue2 Current Statistics (10–03–2003) Inflation, Unemployment, Productivity, Byrne, Derbin, Jobless Claims, New Economic Paradigm, Construction, Durable Goods, 10–Year U.S. Government Bond Current Statistics (05–31–2004) The Employment Picture Unemployment Rate ({5.6% Feb}…{5.6% Mar})…{5.6% Apr} The April unemployment rate remained steady at 5.6%. According to the Bureau of Labor Statistics, 288,000 payroll employment jobs were created (Nonfarm seasonally adjusted measure) in April, following an increase of 337,000 jobs in March. Since August 2003, payroll employment has risen by 1.1 million. How is it that 625,000 jobs can be created in two months time with no resultant drop in the unemployment rate? Recall from the last newsletter, our discussion on the two measures of unemployment: The Establishment Payroll Survey (Current Employment Statistics (CES) Survey), and the other more inclusive Household Survey (Current Population Survey (CPS),%20Issue%202/Newsletter%20Volume%202004%20Issue%202.htm Jobless Claims (4–wk rolling avg: 347,750 Apr–17, 347,000 Apr–24, to 343,500 May–1, to 335,750 May–8) The new Jobless Claims data came in at a 331,000 for the week ending May 8, 2004 an increase in claims of 13,000 from the previous week’s revised 318,000. The last time that the level of initial unemployment claims was at 318,000 was in November 2000. In May 2000 the average weekly initial jobless claims were running around 420,000. GDP (1st Quarter 2004 Real GDP: 4.1%) The numbers for the first quarter of 2004 showed continued positive growth in real GDP. The Commerce Dept. reported a 4.2% growth rate for the 1st Quarter 2004 (on an annualized basis). It marked the 10th consecutive quarter of economic expansion. The 4th Quarter 4.0% rate is a respectable number, given the 8.2% growth in the preceding quarter. Again, the GDP growth was spread across the board, but Personal Consumption Expenditures (PCE) fell off, going from a 6.9% growth in the third quarter to a 2.6% increase in the fourth. Likewise, durable goods purchases rose only 0.9% in the fourth quarter versus a 28.0% growth in the third. Much of the changes in fourth quarter were attributable to the expenditures on autos (down in terms of PCE) and automotive investment (up in the area durable goods – motor vehicle inventory investment). Finalized 4th Quarter GDP numbers were released on March 25, 2004. Leading Indicators (3.5 – 4.0% annual rate April 2004) According to figures released by the Conference Board on May 20, “The leading index increased only slightly in April, but the March increase was revised up from 0.3 percent to 0.8 percent as actual data became available. As a result, the leading index is still increasing at an average annual rate of 3.5 to 4.0 percent.” The Conference Board also noted, “The pickup in the growth rate of the leading index last year signaled stronger economic growth, and correspondingly, real GDP increased at a 5.5 percent annual rate over the last three quarters.” Next release – June 17, 2004 Construction (put in place) The most recent data from the Census Bureau shows steady levels of construction put in place. The January figure of $931.2 billion annualized, shows a decrease of 0.5% below the December 2003 estimate of $934.4 billion. The January figure is 5.4% higher than the January 2003 estimate of $883.2 billion. Next release – April 1, 2004 New Housing Starts The most recent U.S. Census Bureau data available shows continued near record levels of new housing starts. The December figures are running at a seasonally adjusted annual rate of 2.088 million units, 1.7 percent higher than the 2.054 million–unit revised rate reported for November. An estimated 1.848 million units were started in 2003. This is 8.4% higher than December 2002 figure of 1.705 million units. New Residential Sales According to the Census Bureau, sales of new homes increased from January’s numbers of 1.099 million units, to 1.163 million units (on a seasonally adjusted annualized basis) in February, representing an increase of 5.8%. This rate exceeds the February 2003 figure of 0.935 million units by 24.4%! Next release – April 26, 2004 Durable Goods The most recent report from the Commerce Department shows that New Orders for Manufactured durable goods increased 2.5% in February to $183.8 billion. Excluding defense, new orders increased 2.0% (excluding transportation, new orders were down 0.3%). For year–to–date 2004, new orders were 8.0% above the same period in 2003. Shipments increased at a 0.8% rate or $1.4 billion to $187.6 billion in February. This followed a 0.1% decrease for January. For year–to–date 2004, shipments were 7.2% above the same period in 2003. Unfilled orders increased 0.6%, or $2.8 billion to $508.8 billion, with machinery leading the way at 2.9%. This followed a decrease of 0.1% in January. Meanwhile, Inventories increased 1.2% in February, following a January increase of 0.1%. Capital Goods Industries (February): Defense, new orders increased 11.6% to $9.8 billion; shipments increased $1.2 billion or 14.4% to $9.2 billion; unfilled orders increased $0.6 billion or 0.4% to $139.6 billion; inventories increased by $0.5 billion or 2.4% to $19.9 billion. Nondefense new orders increased by $1.7 billion or 2.9% to $60.3 billion; shipments decreased by $0.4 billion or 0.6% to $59.9 billion; unfilled orders decreased by $0.5 billion or 0.2% to $219.9 billion; and inventories increased slightly to $19.9 billion. As ever, durable goods measure continues to be a volatile indicator but the trends have been positive (looking over the past several months). Next release – April 26, 2004 Current Account Balance (Trade Balance) The Current Account Balance consists of the Trade Balance (Net Exports (Exports less Imports) of Goods and Services), the Income Balance (Income Receipts and Income Payments), and net Unilateral Current Transfers. The Department of Commerce publishes the Current Account Balance data on quarterly basis. The Current Account Balance 2003 – $541.8 billion The Trade Balance 2003 – $490.2 billion As reported by the Commerce Department, the trade deficit in January 2004 stood at $43.1 billion, increasing by $0.4 billion from the $42.7 billion (revised) reported for December 2003. January exports were at $89.0 billion down from the $90.1 billion revised figure for December. Imports were at $132.1 billion, down from the revised $132.8 billion reported for December. CPI 0.3% (February) / PPI 0.6% (January) (Seasonally adjusted) CPI – On a seasonally adjusted basis, the CPI–U (all urban consumers), which had increased 0.5% in January, rose 0.3 percent in February. Much of the increase in costs for the month and the year were in the area of energy (within energy, petroleum–based products rose 2.5% for the month). PPI – On a seasonally adjusted basis, the Producer Price Index for Finished Goods increased 0.6 percent in January 2004. With an increase in gasoline prices leading the way, energy prices spiked up 4.7% for the month. Productivity, Unit Labor Cost and Compensation (Seasonally Adjusted) According to the Bureau of Labor Statistics, annual 2003 Productivity gains amounted to 4.4%. Unit Labor Costs declined by 1.2%, and Compensation grew at 2.2% on an annual basis. Aside from the productivity numbers reported for 2002 (5.5%), 2003 was the most productive year since 1983. Side by side, 2002 and 2003 are the most productive consecutive years since the index began in 1947. Note: some of this productivity may be overstated, due in part to the movement of some jobs away from the Current Establishment Survey. The work is still being done, but it may have moved from the realm of the Establishment Survey to that of the Household Survey (we are monitoring this and will discuss in future newsletters). 10–year U.S. Government Bond Rate The 10–year Maturity U.S. Government Security continues to remain trading at a relatively low rate. For the month of February 2004, the yield averaged 4.08 percent. Thus far in March it has dropped down below 3.70% on several occasions. Click here to return to Main Page (Opinions expressed on this web page are those of a faculty member or employee and do not necessarily reflect the position of University of Detroit Mercy)