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[SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) is a seamless interface between Haver and SAS data processing that enables SAS users to read economic and financial time series data that reside in a Haver Analytics DLX (Data Link Express) database. [SASEHAVR](http://support.sas.com/documentation/cdl/en/etsug/67525/HTML/default/viewer.htm#etsug_sasehavr_gettingstarted01.htm) requires both SAS/ETS and Base SAS Software.

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[RATS (Regression Analysis of Time Series) Econometric Software](https://estima.com) by Estima is a leading econometrics and time-series analysis software package. It provides ability to do linear and non-linear least squares, forecasting, SUR and ARIMA models and in addition, supports advanced techniques such as GMM, ARCH and GARCH models, state space models, and more.

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RATS

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Teaches econometrics and forecasting at the University of Colorado Denver. He has over 15 years of econometric experience in both the private and public sector.

Daniel L. Jerrett, Ph.D.

Abdel M. Zellou, Ph.D.

Bootcamp and Econometric Tools 1 & 2

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Haver partners with SmartMacro Labs to offer a two week immersive online course introducing participants to the power of the Python programming language. This applied hands-on training develops statistical economics skills with a concentration on economics and finance.

Gain proficiency in building modern time-series models in Python through real-world applications. Designed for professionals in both the public and private sector, the course does not require prior experience, assuming only that participants have a basic understanding of regression and statistical concepts.

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Remote Training: Applied Time Series in Python

Recent increases in US long-term rates surprisingly little impacted by inflation expectations

Sandy Batten

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In the third estimate, real GDP grew 2.2% q/q saar in Q2, up from 1.5% in both the advance and the second estimates, according to the Bureau of Economic Analysis. The Action Economics Forecast Survey looked for an unrevised 1.5% quarterly gain. Compared with a year ago, GDP was up 2.2% versus 2.1% in both the advance and second estimates. The upward revision to Q2 GDP growth were rather widely spread across expenditure categories, led by personal consumption expenditures, nonresidential fixed investment and a smaller drag from declining inventories. This was the fifth consecutive quarter in which inventories declined, a very unusual occurrence when the economy is not in a recession. This release also contained the second estimate of corporate profits. Profit growth was revised down to 8.9% q/q not annualized from 9.1% in the first estimate. However, this was still the fastest quarterly advance for profits since Q2 2021.

Personal consumption expenditures increased 3.8% q/q saar in the third estimate of Q2, up from 3.4% in the second estimate and 3.2% in the advance report. Faster growth of spending on durable goods and on services were the primary factors behind the upward revision to consumption. Fixed investment growth was also revised faster. Growth of nonresidential fixed investment was revised up to 9.0% from 8.5% in the second estimate, led by upward revisions to both structures and intellectual property. Residential investment growth was also revised up to 2.8% from 1.2% in the second estimate.

Both export and import growth were revised slightly faster but resulted in only a slight widening of the trade deficit and no revision to on overall GDP growth. The previously estimated decline in total government spending growth was revised smaller with a smaller decline in federal spending than previously estimated and a larger increase in state and local government.

Reflecting the upward revision to personal consumption and fixed investment, real domestic demand growth, already strong in the previous two estimates, was revised even stronger. Real final sales to domestic purchasers (GDP less inventory investment and net exports) increased a well above trend 3.8% q/q saar in Q2 versus 3.3% in the second estimate and 3.1% in the advance report. Real final sales to private domestic purchasers (the Fed’s preferred measure of domestic demand) jumped 4.6% q/q in Q2, its largest quarterly gain since Q1 2023, up from 4.2% in the second estimate and 3.9% in the advance report.

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After having been revised higher in the second estimate, GDP inflation measures were revised down in the third estimate. GDP price inflation was revised down to 6.1% q/q saar in the third estimate from 6.4% in the second estimate, still due mostly to the surge in energy prices that occurred in Q2. The core GDP price index rose a revised 4.2%, down from 4.4% in the second estimate. PCE price inflation (the measure the Fed targets) in Q2 was also revised down to 5.0% from 5.3% in the second estimate, again reflecting the surge in energy prices, with core PCE inflation revised down to 3.3% from 3.6% previously but still well above the Fed’s 2% target.

**Today’s report also included annual benchmark revisions for the period Q1 2021 to Q1 2026.** Annual updates provide the opportunity to incorporate improvements that are generally of three types: (1) statistical changes to incorporate newly available and revised source data and to introduce new and improved methodologies, (2) changes in definitions to more accurately portray the evolving U.S. economy and to provide consistent comparisons with data for other national economies, and (3) changes in presentations to reflect the definitional and statistical changes, where necessary, or to provide additional data or perspectives for users. In addition, seasonally adjusted statistics are evaluated and revised during annual updates to reflect recalculated seasonal factors.

In general, these revisions were generally small. After the benchmark revision, annual real GDP grew 3.4% at an annual rate from 2020 to 2025, up slightly from the previously reported 3.3% increase. Real personal consumption expenditures growth slowed marginally to a still well-above trend 3.9% from 4.0% previously. Nonresidential business investment posted the largest upward revision, rising 5.9% from 2020 to 2025 versus 5.4% previously estimated. Residential investment fell a revised 1.3%, down slightly from -1.1% previously. Growth of exports and imports were revised up marginally. And government spending growth was revised up to 1.8% from 1.4%.

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

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- The third estimate of Q2 real GDP raised growth to 2.2% q/q saar from 1.5% in both the advance and second estimate.
- In the annual benchmark revision, Q1 growth was revised up to 2.5% from 2.1%. 
- The sources of the Q3 revision were rather widespread—leading the way, faster consumption and nonresidential investment and a smaller drag from inventories
- The strong Q2 domestic demand growth reported in the advance and second estimates was revised even stronger.
- The Q2 rise in corporate profits were revised down slightly but still posted the strongest quarterly advance since Q2 2021.
- Total benchmark revisions were relatively small with average annual GDP growth from 2020 to 2025 revised up only 0.1%-point to a robust 3.4%.
- The largest annual revision was a 0.5%-point upward revision to nonresidential fixed investment growth.

U.S. GDP Growth Revised Up in both Q1 and Q2; Benchmark Revision Small

Kathleen Stephansen, CBE

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Mortgage applications fell 6.0% w/w (-37.0% y/y) in the week ending September 25, the fourth consecutive weekly decline, after declining 1.5% w/w (-41.5% y/y) in the week ending September 18, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house fell 4.3% w/w (-14.2% y/y) in the latest week, after edging down 0.8% w/w (-11.2% y/y) in the September 18 week. Applications for loan refinancing dropped 8.7% w/w (-56.4% y/y) in the September 25 week following a decline of 2.6% w/w (-62.0% y/y) in the September 18 week.

The effective interest rate on a 30-year fixed-rate loan jumped 19bps to 7.52% in the week ending September 25 from 7.33% in the week ending September 18, reaching its highest level since November 2023. The rate on 15-year fixed-rate mortgages rose 9bps to 6.81% in the September 25 week from 6.72% in the September 18 week. The 30-year Jumbo rate increased 12bps to 7.42% in the latest week from 7.30% in the September 18 week. The rate on a 5-year ARM jumped 54bps to 6.92% in the September 25 week from 6.38% in the September 18 week.

The share of applications for refinancing an existing loan fell to 38.3% of total applications in the week of September 25 from 39.3% in the week ending September 18. The adjustable-rate mortgage (ARM) share of activity rose to 10.3% in the latest week from 9.8% in the September 18 week.

The average size of a mortgage rose 0.9% w/w (-5.8% y/y) to $384,200 in the week ending September 25, after rising 0.6% w/w (-11.4% y/y) to $380,700 in the week ending September 18. The average size of a purchase loan also increased 0.9% w/w to $450,900 in the September 25 week after rising 1.0% w/w to $446,900 in the September 18 week. The average size of a loan to refinance a mortgage fell 0.6% w/w to $276,700 in the week ending September 25 after declining 0.5% w/w to $278,400 in the September 18 week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Applications for loans to purchase and applications for loan refinancing both declined in the latest week.
- Interest rate on 30-year fixed-rate loans jumped 19bps to 7.52%.
- Average loan size rose moderately in the September 25 week.

U.S. Mortgage Applications Fell in the September 25 Week

Robert Brusca

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Inflation has flared across the largest economies of the monetary union. The headline boost is clear. The core or ex-energy gains also are clear but are more moderate; more moderate but nonetheless excessive in September. Largely over the last three months, inflation has been percolating.

The chart shows a clear, abrupt acceleration of inflation in the three largest monetary union economies: Germany, France, and Italy. Twelve-month inflation rates for the top four economies range from 3.3% in Germany to 5.0% in Spain. Over six months, the range is 3.5% (Germany) to 6.2% (Spain). Over three months, the stakes rise sharply, with annualized inflation spurts at a high of 9.1% (Spain) vs. ‘only’ 5.5% (Italy).

Inflation accelerates from a year ago to 12 months, from 12 months to six months, and from six months to three months on all headline comparisons except for Italy from six months to three months. But even on that comparison, the downshift in the pace is minor, and three-month inflation in Italy is still stronger than 12-month inflation. The inflation pressure is rising even if the gains are not monotonic.

Core inflation is high and mostly rising as well. However, core inflation is less prone to have risen over 12 months compared to 12 months ago. On that basis, only Spain’s core inflation has risen. German ex-energy inflation steps down, and Italian core inflation drops off to a below-target 1.5% over 12 months. To restart these comparisons for the three-country inflation ranges on the core or ex-energy measures over one year, we see a range from 1.5% to 3.1%. Over six months, inflation accelerates for all three, but the low end sees Italian inflation only up to a 1.6% pace, whereas the high end at 3% is Spain. However, Spain’s strong gain marks a deceleration from its 12-month pace. Over three months, inflation kicks up its heels across the core and ex-energy measures, from a low of 2.4% in Italy to a high of 3.6% in Spain. And core inflation accelerates in all three countries over three months.

Core inflation has been slower to rise, but once it rises it tends to be more stubborn. The global push toward higher inflation is still in gear as oil prices are lingering high. Stock markets have been trying to weather the storm of high inflation and an uncertain future. All eyes are turning to the winter season even though it is only fall. Winter is cropping up to be a difficult one for Europe, with low energy stockpiles as the season approaches. There is a lot to worry about and very little we can be sure of. As aspects of the future draw nearer, we’re gaining focus on what matters, and what matters and what is under control are, increasingly, two different things.

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Europe

Inflation Sallies Forth

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The August Job Openings and Labor Turnover Survey (JOLTS) continued to depict a labor market in which demand and supply are relatively balanced. Job openings slid 256,000 to 7.079 million in August from an upwardly revised 7.335 million in July (previously 7.271 million). This is the lowest level of openings since March and was the third monthly decline in the past four months. The financial market had expected a small decline in openings in August. The job openings rate (the ratio of openings to nonfarm employment plus openings) declined to 4.3% from 4.4% in July. In August, the number of openings fell while the number of unemployed increased. However, the number of openings continued to marginally exceed the number of unemployed for the fifth consecutive month. After openings had significantly exceeded the number of unemployed from early 2022 to the middle of 2024, the two have been roughly in balance since then.

Private sector openings fell 214,000 in August to 6.348 million after a 142,000 increase in July. The performance was varied across sectors but was generally weak. A 61,000 gain in leisure and hospitality was the largest increase, following by increases of 45,000 in information and 43,000 in trade and transport. Openings in business and professional services fell 119,000, their third monthly decline in the past four months and a possible reflection of the rise in AI. Openings in private education and health services slumped 101,000; construction openings declined 48,000, their first monthly decline in six months; manufacturing openings fell 54,000 but failed to reverse the 75,000 gain in July.

Total hires increased 46,000 in August, the third monthly rise in the past four months, to 5.192 million after a 186,000 drop in July. The hiring rate edged up to 3.3% from 3.2% in July. The August rebound in hiring was due solely to a 46,000 increase in state and local government hiring. Private sector hiring edged down 1,000 in August. Oddly, manufacturing led the hiring in August with an increase of 39,000, followed closely by a 36,000 increase in professional and business services hiring. Construction hiring fell 50,000, the first only decline in the past three months. Information hiring slipped 18,000, and leisure and hospitality hiring declined 10,000, the fourth decline in the past five months.

Total separations fell for the second consecutive month, declining 58,000 in August to 5.070 million on top of a 209,000 drop in July. The separation rate was unchanged at 3.2%. The August decline in total separations was led by a 61,000 decrease in layoffs to 1.641 million, the lowest level since March 2025 and below the 2024 and 2025 monthly averages. Private sector layoffs fell 50,000 in August, led by a 58,000 drop in construction and 56,000 decline in professional and business services. Quits declined 23,000 in August to 3.066 million following a 124,000 decrease in July. Quits have been range-bound so far this year but continue to indicate that workers are feeling uncertain about their employment prospects and hence are choosing to remain in their current jobs.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

- Openings slid 256,000 in August, the third monthly decline in the past four months.
- However, the number of openings marginally exceeded the number of unemployed for the fifth consecutive month.
- Hiring edged up 46,000, the third monthly increase in the past four months, due entirely to increased state and local government hiring.
- Separations fell 58,000, led by a 61,000 decline in layoffs.

U.S. JOLTS: Openings Slipped and Hiring Edged Up in August

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The EU Commission indexes weakened in September, with the overall index falling to 97.9 from 98.4 in August; however, the month's level is still stronger than recent readings prior to August (the strongest since February, excluding August). The index ranks at its 31.9 percentile on data since 1985, marking the month as below its median by a good margin. The median observation on data presented as a percentile ranking occurs at a ranking of 50%.

**Monthly sector readings and perspectives**
The industrial reading improved month-to-month to -4 in September from -5 in August. The rise on the month lifts it just above its historic mean, and above its historic median, with a 54th percentile ranking. Consumer confidence slipped on the month to -16.5 from -15.5 in August. The consumer reading is substantially below its historic mean, which occurs at a reading of -9. The ranking for consumer confidence on the month is in its 12.4 percentile, an extremely weak reading. It has been this way for consumer confidence for some time. Even in the United States, where the economy is doing much better, readings on various consumer surveys have been exceptionally weak. The retailing assessment was unchanged at -6 in September; a reading of -6 is above its historic mean, which occurs at a value of -8. The month’s level also leaves retailing above its historic median at a standing of 56.6%. Construction was also unchanged at -5 in September; construction has been steady at -5 for a number of months in a row. Its historic mean is -15, and the -5 reading this month leaves construction at a 68.6 percentile, a quite firm level despite the negative diffusion reading. Services were also unchanged in the month at +6. Services have gotten slightly stronger in recent months. The historic mean for services is +6, so the sector is at its mean, but it is below its median, with a 39.4 percentile ranking.

**Most country readings show gains on the month**
The reading for the overall EMU level declined in September, falling by 0.5%. In addition, seven reporting countries issued negative readings in September. Two of those countries, France and Italy, are among the four largest monetary union economies. However, the other two large EMU economies, Germany and Spain, marked improvements, with Germany rising 0.6% month-to-month in September and Spain rising 3.3% after a 2.1% decline in August.

**Rankings remain overwhelmingly weak**
Looking at the rankings by country, among the 18 reporting countries only seven have country-specific ratings above their historic medians. Among the four largest EMU economies, only Spain is above its historic median with a 68.2 percentile ranking. Germany has a 29.6 percentile ranking, France is in its 36.9 percentile, and Italy is in its 44.8 percentile. The strongest reporting countries are small countries, with Greece posting a 73rd percentile ranking and Lithuania a 71.7 percentile ranking, followed by Spain’s 68.2 percentile ranking as the next highest reading.

**Industry is back...for now**
It's good to see the industrial sector back up at a reading above its historic median and to be joined by retailing and construction. Retailing is a particularly rewarding sector to see performing well because consumer confidence is performing so poorly, with a 12.4 percentile standing. However, the services sector continues to lag with a 39.4 percentile standing, and that could be a problem because that's the job-creating sector for most economic units, and it's certainly true of the monetary union.

**The job front** 
On the job front, industrial employment and construction employment sectors report above 50th percentile standings in their monthly responses. With the employment in construction at a 71st percentile reading and for industry at a 68th percentile reading, we have some good news. However, for services, the employment reading is only at the 37th percentile, and that is the sector most responsible for delivering employment opportunities. Under consumer confidence, unemployment expectations have a 64.6 percentile standing, nearly a top one-third reading on that gauge. The U.S. economy is doing much better than the European economy; yet, there too, consumer confidence readings are weak, very weak. But the U.S. economy is growing strongly, and Europe continues to grow as well; a lack of confidence so far has not been an impediment to growth. As we can see so far this month, the manufacturing sector, the industrial sector, seems to be doing relatively better; however, everything is at risk due to events in the Middle East. Conditions in the Strait of Hormuz and what happens to oil prices are critical to what happens next. In addition, there's a great deal of concern about Europe and its low stocks of heating oil as winter approaches. The monthly readings from the EU indexes showed a step back on the month, but that was after the sharp improvement a month ago. In general, the European economy is doing a little bit better, with sectors in an upswing more so than they had previously, but conditions remain substantially touch-and-go, dependent on unforeseeable events.

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EU Commission Indexes Weaken in September

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Confidence across business sectors and consumers stepped back slightly in September in Finland. However, the overwhelming trend result is that business sector confidence is on an upswing; consumer confidence has undergone some slight weakening to its trend recently, led by some deterioration in its macro-indicator.

The monthly setbacks in September were relatively small, while the changes in confidence show improvement in the averages over three months compared to six months for all the sectors except retailing where the step-back is a single point to an average of 20 over three months from an average of 21 over six months. However, the retail sector is an exception and also shows a substantial step-down in September compared to August to a level that is going to point to a further deterioration in the moving averages ahead.  But that phenomenon seems to be limited to retailing.

Manufacturing confidence holds steady with low single-digit positive readings over three months, six months, and 12 months. The September level has a 75.1 percentile standing, which is quite solid. Sector readings generally display this same phenomenon; construction is an exception as its headline readings are negative; however, they're improving more substantially. The retailing readings have been improving from 12 months to three months, based on the averages, until the recent drop-off in September.

The consumer sector shows consistently mild negative readings, and they have decayed slightly. The consumer sector is the only one with a current queue standing that ranks data back to 2007 below its historic median, meaning below a ranking of 50%. The consumer sector ranking in September is at 48.1%, marginally below its median. The other sectors have rankings generally in their mid-70th percentile, with the exception being construction, which has a 69.3 percentile standing. All of those are quite solid.

Finland’s business sector and consumer rankings as well as their within-sector readings are, for the most part, firm. The line item for the order book level in construction has a below-median standing in September; however, that reading has been improving smartly from 12 months to six months to three months. Expected sales in services register a 49.2 percentile standing, below their median; that reading has been dead solid at 15 over 12 months, six months, and three months.

The consumer sector shows some of the weakest readings (not shown here). Some of that traces to expected high consumer price inflation that has an 81.9 percentile standing in the consumer survey. While the overall threat to unemployment in that survey is above median at a 56th percentile standing, that generic overall concern does not translate into individual concerns as a separate reading on the personal threat to unemployment is quite low at a 17th percentile standing.

On the whole, the business and consumer readings for Finland are good and for the most part quite solid, with the need to keep an eye on the responses in retailing and perhaps also in the consumer sector, largely because of what appears to be the impact of inflation on the consumer psyche.

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Finland

Finland’s Confidence Erodes Only Slightly

Tian Yong Woon

In this week's Letter, we explore US-China dynamics and their implications for Asia following last week's summit in Washington, alongside other pertinent issues for the region. The summit was long on diplomacy but short on tangible economic outcomes, with the fragile trade truce extended by just two months. Asia's trade orientation, meanwhile, has shifted from the US towards China since the turn of the millennium (chart 1). Some economies, Taiwan among them, have since tilted back towards the US partly on AI-related trade. Bilaterally, the narrowing of the US goods deficit with China seen last year has stalled and even reversed slightly this year, alongside easing effective US tariffs (chart 2). Further easing may follow, with tariff relief recommended on $30bn of goods in each direction. China, for its part, has more than replaced lost US export revenue with sales to the ASEAN-6 and India, keeping export growth robust while domestic demand flounders (chart 3). AI was the summit's other key theme. The two sides agreed to set up a Super Intelligence Dialogue and an incident communication channel, a timely step after the Hugging Face incident sharpened calls for a slowdown in AI development (chart 4). In the US, AI is the leading reason cited for job cuts this year, though broad displacement has arguably yet to emerge (chart 5). So far, the change lies more in how people work. Meanwhile, AI-related hiring continues to grow across much of the world, including Asia (chart 6), though the productivity gains from wider adoption are still awaited. Across both trade and technology, the US-China relationship remains the thread shaping Asia's outlook.

**Asia’s trade situation**
The US-China summit in Washington concluded last week, with mutual diplomacy on full display, including China sending a pair of giant pandas to the US. Tangible economic outcomes, however, were few. The fragile trade truce was extended by just two months, short of the six months or longer that many had expected. Both sides also moved to operationalise the US-China Board of Trade and Board of Investment, which were agreed at the May summit in Beijing. Asia's trade picture continues to evolve nonetheless (chart 1). At the start of the millennium, Asian economies' trade was weighted more heavily towards the US. Over the following decades, their ties with China grew steadily closer. Some economies have since tilted back towards the US, Taiwan among them, in a shift driven partly by AI-related trade.

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**US-China trade**
The US-China trade relationship itself is also shifting. Relations have thawed this year, as the two summits so far attest, a marked change from the tone struck in 2025, the first year of President Trump's second term. On trade, the US goods deficit with China narrowed sharply last year against a backdrop of surging US tariffs, to levels last seen around two decades ago (chart 2). This year, however, the narrowing has stalled and even reversed slightly, alongside an easing in the effective US tariff rate on Chinese goods. More easing may follow if the thaw holds. The latest summit yielded recommendations for more favourable tariff treatment on $30bn of non-sensitive goods in each direction, from US farm exports to toys and small appliances. These are recommendations rather than signed cuts, so their effect on the balance will hinge on implementation.

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**China’s trade with Asia**
Chart 3 brings charts 1 and 2 together. It shows that export revenue lost in the US market has been more than replaced by sales elsewhere, particularly to the ASEAN-6 and India. This has allowed China's overall exports to sustain robust growth. The latest customs data bear this out: exports rose 25% y/y to $401.4bn in August, with shipments to ASEAN reaching USD 74.4bn and to India USD 14.6bn. That resilience feeds into headline growth, which matters all the more while China's domestic sectors continue to flounder. Retail sales rose just 0.4% y/y in August, while fixed asset investment contracted 7.2% y/y in the first eight months, weighed down by the prolonged property downturn. For now, external demand is doing much of the heavy lifting.

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**Artificial Intelligence**
AI was another key topic at the summit. The two presidents diverged on the approach to AI regulation but agreed to establish a US-China Super Intelligence (SI) Dialogue, due to meet by November. They also agreed to set up a communication channel for AI-related incidents. The timing is apt. Calls to slow AI development to manage security risks have grown, coming not only from the public but from those working at the frontier itself. The heads of Anthropic and OpenAI both backed calls this month to pace the frontier of AI development. These calls follow the so-called Hugging Face incident, disclosed in July. AI agents under test at OpenAI escaped their sandbox, accessed the internet and breached the systems of Hugging Face, an AI platform company. OpenAI has since acknowledged dozens of further incidents involving its test agents, adding a new dimension to reported AI incidents and controversies (chart 4). All this unfolds even as investment and competition in AI intensify between the US and China, the two frontier economies.

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Beyond these risks, fears of mass worker displacement continue to run high. They are partly justified, given the surge in US job cuts attributed to AI, especially in knowledge-based sectors and white-collar work (chart 5). Challenger data show AI cited in 116,175 announced job cuts in the first eight months, about 22% of the total and the leading reason year to date. Even so, AI slipped to the fourth most cited reason in August, ending a five-month run at the top. So far, there is arguably little sign of such displacement on a broad scale, although entry-level positions appear to have been affected. What we are seeing instead is a shift in how people work, as capable AI tools cut the effort needed for lower-level tasks, the so-called grunt work.

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The ongoing shift also brings opportunities. LinkedIn's AI hiring index shows AI-related hiring continuing to grow across much of the world, including Asia (chart 6). Broader US hiring intentions have also firmed: Challenger reports that announced hiring plans were up 37% y/y in the first eight months. Technology, the largest source of announced cuts this year, also led hiring plans through July. Challenger's own reading is that AI is reshaping the labour market rather than dismantling it. Taken with chart 5, this signals that we are entering a brave new age. We are wrestling with both the benefits AI offers and the displacement it may bring. Beyond the pivot towards AI-related expertise, however, we are still waiting on the so-called productivity gains associated with more pervasive AI adoption.

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Asia

Economic Letter from Asia: Beyond the Summit

Winnie Tapasanun

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New orders for durable goods were virtually unchanged m/m in August to $338.6 billion after rises of 0.9% in July (+1.1% initially) and 0.6% in June, according to today’s advance report from the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 0.3% m/m August decline. The latest reading was still up 21.3% from a low of $279.1 billion in November 2022. The year-on-year rate decelerated to 8.5% in August from 11.8% in July (7.7% in August 2025), remaining positive since January 2025 except for May (-3.0%). Excluding transportation, durable goods orders grew 0.3% (11.2% y/y) in August, the 16th straight m/m increase, after a 0.7% rise in July. Durable goods orders excluding defense inched up 0.1% (7.9% y/y), the fourth m/m gain in five months, following a 1.4% July advance.

The m/m flat reading in August durable goods orders reflected a 4.3% m/m decrease in orders for nondefense aircraft & parts, following a 12.0% jump in July and a 2.9% decline in June. Orders for defense aircraft & parts rose 5.9% (-9.2% y/y), the first m/m rise since May, after drops of 13.0% in July and 7.0% in June. Orders excluding aircraft edged up 0.1% (11.2% y/y), the ninth successive m/m gain, after a 0.5% July increase.

Durable goods orders for transportation fell 0.6% (+3.4% y/y) in August, the third m/m fall in four months, following a 1.2% gain in July. In addition to August’s m/m decrease in nondefense aircraft orders and rise in defense aircraft orders, motor vehicles & parts orders slid 0.6% (+9.4% y/y) after a 0.8% July rebound. Orders for fabricated metal products dropped 1.3% (+8.6% y/y), down for the second time in three months, reversing a 0.3% July increase. Orders for computers & electronic products were essentially unchanged m/m (+16.5% y/y) following a 0.7% July decline and two consecutive m/m rises. To the upside, orders for primary metals climbed 1.2% (20.1% y/y), up for the ninth straight month, adding to a 2.1% July increase. Machinery orders grew 1.1% (15.1% y/y) on top of a 1.5% July rise, continuing a string of gains since March 2025. Orders for electrical equipment, appliances & components rose 1.1% (7.6% y/y) following a flat July reading and four successive m/m increases. Orders for all other durable goods were up 0.4% (4.0% y/y), the 12th straight m/m gain, after a 0.6% July rise.

Capital goods orders grew 0.7% (10.1% y/y) in August, the fifth m/m rise in six months, following a 0.6% increase in July. Nondefense capital goods orders rose 1.2% (6.0% y/y), up for the fourth time in five months, after a 2.3% July rise. Core capital goods orders (i.e., nondefense capital goods orders excluding aircraft) advanced 1.6% (14.1% y/y), the sixth m/m gain in seven months, following a 0.6% July increase. Defense capital goods orders, however, fell 1.5% (+34.6% y/y), the third m/m decline in four months, after a 6.4% July drop. Notably, core capital goods shipments (core capex shipments)—a reliable coincident indicator of business spending on equipment in the national accounts—rose 0.6% (11.4% y/y), the 11th m/m gain in 12 months, adding to a 1.4% July increase and pointing to a solid contribution to Q3 2026 GDP from business equipment spending.

Shipments of all manufactured goods held steady m/m (+8.6% y/y) in August following a 0.8% increase in July and no change in June. Durable goods shipments slipped 0.2% (+8.6% y/y), the first m/m decline since November 2025, after a 0.9% July rise. Nondurable goods shipments increased 0.3% (8.6% y/y), the eighth m/m rise in nine months, building on a 0.6% July gain.

Unfilled orders of durable goods climbed 0.6% (8.8% y/y) in August after rising at the same pace in July and June. Excluding transportation, unfilled orders rose 0.9% (7.1% y/y) after a 1.0% July gain. Both series posted the 13th consecutive m/m increase.

Manufacturing inventories advanced 0.5% (2.6% y/y) in August, up for the 10th month running, on top of a 0.4% rise in July. Durable goods inventories grew 0.5% (3.0% y/y), the 11th straight m/m increase, after rising at the same rate in July. Nondurable goods inventories rose 0.5% (1.9% y/y), up for the sixth time in seven months, following a 0.3% July rebound.

Manufacturers’ orders and shipments of durable and nondurable goods, along with unfilled orders and inventories, are compiled by the U.S. Census Bureau. They are available in Haver’s **USECON** database. The Action Economics forecast data are in the **AS1REPNA** database.

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- August headline orders unchanged after two straight m/m rises; +8.5% y/y, positive since Jan. ’25 except for May; still up 21.3% from a Nov. ’22 low.
- Nondefense aircraft & parts -4.3% m/m vs. July’s +12.0%.
- Transportation orders -0.6%, third fall in four months; orders ex transp. +0.3%, 16th consecutive m/m increase.
- Core capital goods shipments +0.6%, 11th gain in 12 mths., pointing to a solid contribution to Q3’26 GDP from business equipt. spending.
- Durable goods shipments -0.2% (+8.6% y/y); unfilled orders +0.6% (+8.8% y/y); inventories +0.5% (+3.0% y/y).

U.S. Durable Goods Orders Flat in August on Nondefense Aircraft Weakness

Michael J. Moran

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Nonfarm payroll employment rose 29K in September, notably below the expected increase of 85K. Moreover, results in the prior two months were revised lower by 60K, with adjustments in July and August contributing about equally. The new figures left the average monthly increase so far this year at 68K, an improvement from the average of 10K in 2025 but light relative to historical norms.

By industry, construction and manufacturing performed reasonably well with gains of 11K and 9K, respectively. These sectors were decidedly weak last year, but they have posted gains in most months this year (average advances of 10K and 8K year-to-date). Retail trade is another area that is improving this year after a poor performance in 2025. Retailers added 6K jobs in September, but combined results in the prior two months were revised lower by 14K (still up year-to-date with an average monthly gain of 7K). The business service sector also is on a recovery track this year, but September brought a notable setback: employment fell by 9K and results in July and August were revised lower by 36K (still up year-to-date, 12K on average).

Three areas were weak last year and remain on soft paths so far this year. The information sector lost an average of 4K jobs per month last year and is cutting at an average pace of 11K so far this year. This is a broad area, encompassing firms involved in movie production, broadcasting, publishing, libraries, and tech-related areas; all have been soft. The financial service industry did little hiring last year (fewer than 1K jobs per month), and it has cut at an average rate of 12K per month so far this year. Government employment fell at an average rate of 15K last year and 2K so far this year. The federal government has led this retreat in employment, but state governments trimmed payrolls last year and have continued to do so this year. Local governments have made only modest additions to payrolls since mid-2025.

The unemployment rate reportedly rose 0.1 percentage point to 4.2%, but if calculated with more precision, the change was less than 0.1 percentage point (4.176% vs. 4.141%). In addition, it was a benigh increase in joblessness in that the labor force expanded solidly (485K), but employment as measured by the household survey rose by a slightly smaller amount (406K). The broad unemployment rate (the U-6 measure) fell 0.1 percentage point to 7.6%. The number of individuals working part-time involuntarily rose in September, but this increase was offset by a drop in the number of individuals marginally attached to the labor force. (Marginally attached individuals are defined as those that would like a job and have looked in the past 12 months but have not searched in the past four weeks.)

Average hourly earnings rose 0.1% in September, lighter than the expected increase of 0.3% and a reading in the low end of the recent range. The year-over-year change of 3.0% continued a downward trend that began in 2022 (chart, below left). Many observers have noted that wage growth is no longer keeping pace with inflation. This is true, although the differential has not been large and it followed gains in purchasing power by working individuals in the prior few years (wages did trail inflation during the burst in 2021-22). The relationship between wage growth and inflation waxes and wanes over time; from a long-term perspective, wage growth has bested inflation more often than not. 


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- Disappointing change in nonfarm payrolls
- Marginal increase in unemployment
- Modest increase in average hourly earnings


September Employment Report

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