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Economy in Brief

U.S. Retail Sales Pause
by Tom Moeller July 14, 2004

Retail sales slipped 1.1% in June following an upwardly revised 1.4% rise in May. Consensus expectations had been for a 0.8% decline.

Recent sales volatility reflects large m/m changes in motor vehicle dealers' sales, down 4.3% last month after a 3.2% gain in May. June unit sales of light vehicles fell 13.4% after an 8.7% May gain.

Excluding motor vehicles & parts dealers sales fell 0.2% versus an upwardly revised 0.9% gain in May. Consensus expectations had been for a 0.2% rise. Less gasoline non-auto sales slipped 0.1% (7.0% y/y) after a 0.4% May increase.

Sales of furniture/home furnishings & electronics/appliances rose 0.8% (+5.4% y/y) following declines in the prior two months. Sales at general merchandise stores slipped 0.2% (+6.7% y/y) and clothing and accessory store sales fell 0.5% (+6.0% y/y).

Sales at gasoline service stations fell 0.9% (21.4% y/y) after a 5.0% May rise. Average gasoline prices fell 0.7% m/m in June to $1.97/gallon and have fallen further this month to an average $1.91/gal.

  June May Y/Y 2003 2002 2001
Retail Sales & Food Services -1.1% 1.4% 6.3% 5.3% 2.5% 3.1%
  Excluding Autos -0.2% 0.9% 8.3% 5.2% 3.2% 3.1%
Import Prices Slipped
by Tom Moeller July 14, 2004

Import prices slipped 0.2% last month following a downwardly revised 1.4% gain in May.The Consensus expectation had been for a 0.1% rise.

Lower oil prices accounted for the decline last month, off 1.0%. The price of Brent crude during the several days moved higher to $36.53 per barrel and so far in July has averaged $36.47 versus $35.24 in June.

Non-petroleum import prices were unchanged last month. The decline was led by a 0.5% (+5.6% y/y) decline in food prices and a 0.1% dip capital goods prices (-1.4% y/y). Capital goods prices excluding computers fell 0.1% (+0.5% y/y) for the second month. Non-auto consumer goods prices were unchanged (+0.4% y/y) following two months of slight decline.

Export prices dropped 0.6% as food prices slid 4.6% (+16.5% y/y). Nonagricultural export prices dipped 0.1% (+2.9% y/y).

"US Production Abroad" from the Federal Reserve Bank of St. Louis can be found here.

Import/Export Prices (NSA) June May Y/Y 2003 2002 2001
Import - All Commodities -0.2% 1.4% 5.6% 2.9% -2.5% -3.5%
  Petroleum -1.0% 9.4% 34.3% 21.0% 3.0% -17.2%
  Non-petroleum 0.0% 0.3% 2.4% 1.1% -2.4% -1.5%
Export - All Commodities -0.6% 0.4% 4.0% 1.6% -1.0% -0.8%
Mortgage Applications Backpedal
by Tom Moeller July 14, 2004

The index of mortgage applications compiled by the Mortgage Bankers Association gave back 6.3% (-52.6% y/y) last week of the 19.5% rise the prior period.

Applications to refinance mortgages slipped 6.1% after the 27.7% spike the prior week (-75.0% y/y).

Purchase applications fell 6.4% (4.8% y/y) after the 15.0% gain the prior week. So far in July purchase applications are 9.5% higher than in June.

The effective interest rate on a conventional 30-Year mortgage fell slightly to 6.22% from 6.24% the week earlier and an average 6.52% in June. The effective rate on a 15-year mortgage also fell to 5.67% versus an average 5.98% in June.

During the last ten years there has been a 63% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

MBA Mortgage Applications (3/16/90=100) 07/09/04 07/02/04 2003 2002 2001
Total Market Index 643.9 687.0 1,067.9 799.7 625.6
  Purchase 468.8 500.9 395.1 354.7 304.9
  Refinancing 1,662.4 1,769.7 4,981.8 3,388.0 2,491.0
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