Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/041201d.jpg" width="353">
The Composite Index of activity in the manufacturing sector from the Institute of Supply Management rose a point last month to 57.8 versus Consensus expectations for little change at 57.0.
During the last twenty years there has been a 70% correlation between the level of the Composite Index and the three month growth in factory sector industrial production.
The Composite Index reflected gains in the new orders (61.5), employment (57.6) and inventory (50.7) components.
The separate index of export orders fell and reversed nearly half of the prior month&#39;s rise.
The prices paid index fell, and at 74.0 was well off the year&#39;s high of 88.0.
&quot;Using Manufacturing Surveys to Access Economic Conditions&quot; from the Federal Reserve Bank of Richmond is available <a href="http://www.rich.frb.org/pubs/economic_quarterly/pdfs/fall2004/harrisowenssarte.pdf"> here</a>.

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<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">Nov</th>
<th scope="col">Oct</th>
<th scope="col">Nov &#39;03</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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<td class="firstcol">Composite Index</td>
<td>57.8</td>
<td>56.8</td>
<td>61.3</td>
<td>53.3</td>
<td>52.4</td>
<td>43.9</td>
</tr>
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<td class="firstcol">&nbsp; New Orders Index</td>
<td>61.5</td>
<td>58.3</td>
<td>71.4</td>
<td>58.1</td>
<td>56.6</td>
<td>46.1</td>
</tr>
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<td class="firstcol">Prices Paid Index (NSA)</td>
<td>74.0</td>
<td>78.5</td>
<td>64.0</td>
<td>59.6</td>
<td>57.6</td>
<td>42.9</td>
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The Composite Index of activity in the manufacturing sector from the Institute of Supply Management rose a point last month to 57.8 versus Consensus expectations for little change at 57.0. During the last twenty years there has been a [...]

ISM Factory Index Up

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Mortgage applications increased 10.9% (11.9% y/y) in the week ending August 8, after rising 3.1% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loan refinancing surged 23.0% (7.5% y/y) last week, following a 5.2% gain in the prior week. Applications for loans to purchase a home rose 1.4% (16.3% y/y) last week, following a 1.5% rise in the week of August 1.

The effective interest rate on a 30-year fixed-rate loan eased to 6.86% in the week ending August 8 after falling to 6.94%	 in the prior week. It was the lowest rate since the first week of March, down from a high of 7.28% in the second week of January. The rate on 15-year fixed-rate mortgages declined to 6.09% in the latest week from 6.19% in the week of August 1. Conversely, the rate on 30-year Jumbo loans increased to 6.86% last week from 6.82% one week earlier. The rate on a 5-year ARM dropped to 6.05% in the week of August 8 after falling to 6.25% in the prior week. It was the lowest rate since the second week of March.

The share of applications for refinancing an existing loan jumped to 46.5% of total applications in the week ending August 8, from 41.5% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity rose to 9.60% in the latest week from 8.50% in the week of August 1.

The average size of a mortgage loan jumped 4.5% (-1.1% y/y) to $398,700 in the week of August 8, following a 1.9% rise in the prior week. The average size of a purchase loan fell 1.2%, little changed y/y, to $426,900 in the latest week after gaining 0.7% in the week ending August 1. The average size of a loan to refinance a mortgage surged 18.3% (-3.0% y/y) to $366,400 last week, after rising 5.2% in the prior week. It was increased from $277,900 in the last week of May.

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.

- Loan refinancing continues to strengthen as purchase applications rise slightly.
- Effective fixed-interest rate on 30-year loans falls to four-month low.
- Average loan size continues to increase.

U.S. Mortgage Applications Surge Last Week as Interest Rates Slip

Robert Brusca

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In what is becoming a more common global story, confidence in Norway is rebounding after an earlier significant setback as countries recalibrate their circumstances under the revised Trump's tariff format. Norwegian consumer confidence had slipped in the second quarter to -19.1 from -5.4 in the first quarter, but now in the third quarter, confidence is snapping back to a -3.2 reading, the strongest reading since the first quarter of 2022.

Of course, there's a lot in the mix for this important northern European economy. Norway is an oil economy, and it also is one of the economies that is more vulnerable to relations with Russia. It has a relatively short but direct common border with Russia in the far north; otherwise, the borders are with Sweden and Finland. Still, with conditions in Russia touch and go and with Russian aircraft occasionally testing the air defenses the Baltic region, this is a geopolitically sensitive location.

On the economic front, inflation has been creeping up but the headline and core inflation rates are above the 2% mark and largely occupying space between 2.5% and 3%. Economic performance has been a bit uneven with the unemployment rate beginning to move up, as that rate has been notching steadily higher as 2025 has progressed. The last move by the central bank was to cut its key interest rate on site deposits. With the unemployment rate rising, there was little reaction in the bond market to this, especially in the environment where the manufacturing sector continues to be under pressure as it is for the most part globally with output in Norway contracting over the past two months (Y/Y).

Consumers’ rating of the environment for spending improved in the third quarter after deteriorating sharply in Q2. Its improvement brings it to a level above where it was in the first quarter as well; however, on ranked data back to the early 1990s the environment for making a major purchase still only has an 11.4 percentile standing, a relatively weak performance.

The assessment of the overall economy for the next year improved sharply once again after falling sharply in the second quarter. This metric had a value of 5.1 in the first quarter that slipped back to -21.2 in the second quarter; since then, the third quarter has gained some of that back at a survey reading of -3.3. It's still not back to its first quarter level, and it still is a reading that represents relatively weak performance as it has a 28.8 percentile standing which leaves it clearly in the bottom third of its queue of values since the early 1990s.

However, the personal finance readings do pick up for conditions expected for next year as the index evolves from a reading of 21.5 in the first quarter to 11.2 in the second quarter and back up to 21.8 in the third quarter of 2025. This reading brings the personal finance assessment to a 47-percentile standing, just slightly below its median for the period; at a level of 21.8, it's above its mean value of 20.1 for the period. This news on the personal finance front is better than anywhere else in the survey.

Consumer confidence is also rated according to age. And while there are some differences among the age-cohorts, for the most part they move and evaluated in unison. The queue rankings range from 16.7% (with the youngest growth at the low end) to 25.8% with the oldest group at the high end. Over 4 quarters, the changes in the age-cohort evaluations range from +11.1 to +18.7.

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On balance, Norway’s economy is experiencing some significant strains and it's unclear exactly where it stands trying to draw conclusions from quarterly data after these sharp gyrations as the economy tries to accustom itself to a new global tariff environment, the economic cycle, and deal with the geopolitical realities of the day. There's certainly a lot for Norwegians to sort out, for now confidence has made some recovery, and the economy is experiencing a bit of a soft spot. Consumers are managing to make the best of it, but they're still dealing with consumer confidence readings that have been weaker than this, only about 20% of the time so it's still a difficult slog for consumers.

Norway

Norway’s Confidence Steps Back Up in Q3 After Q2 Stumble

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The Consumer Price Index increased 0.2% in July after rising 0.3% in June and 0.1% in May. The July increase matched the forecast in the Action Economics Forecast Survey. The 2.7% y/y increase in the headline CPI in July held steady with June, but was increased from 2.3% in April. It remained below the 9.1% peak in June 2022. The CPI excluding food & energy increased an expected 0.3% last month after a 0.2% June rise and a 0.1% uptick in May. The 3.1% y/y July rise compared to 2.8% from March through May, still well below the 6.6% peak in September 2022.

Energy prices declined 1.1% (-1.6% y/y) last month after rising 0.9% in June. Gasoline prices weakened 2.2% (-9.5% y/y) after rising 1.0% in June. Fuel oil prices improved 1.8% (-2.9% y/y) after rising 1.3% in May. Natural gas prices fell 0.9% (+13.8% y/y) following a 0.5% gain, and electricity prices eased 0.1% (5.5% y/y) after rising 1.0% in June.

Food prices held steady in July (+2.9% y/y) following two straight 0.3% increases. Egg prices fell 3.9% (+16.4% y/y), off for the fourth straight month. Meat, poultry & fish prices rose 0.7% (4.6% y/y) after increasing 0.8%, while dairy product prices gained 0.7% (1.5% y/y), after easing in four of the last five months. Cereal & bakery product costs eased 0.2% (+1.0% y/y) for the second straight month while fruit & vegetable prices held steady (0.2% y/y), following a 0.9% gain. Nonalcoholic beverage prices declined 0.5% (+3.6% y/y) in July after rising 1.4% in June.

Goods prices less food and energy rose 0.2% in July for the second straight month. The 1.2% y/y price gain is up from slight y/y declines in the first three months of this year. Prices of used cars and trucks rose 0.5% (+4.8% y/y) last month, after falling 0.7% in June, while new vehicle costs held steady (+0.4% y/y) after falling 0.3% for two consecutive months. Apparel prices edged 0.1% higher (-0.2% y/y) in July after rising 0.4%. Appliance prices fell 0.9% (-0.3% y/y), after strengthening 1.9%. Home furnishings prices increased 0.7% (2.4% y/y) after rising 1.0%. Recreation product costs rose 0.4% (-0.1% y/y) in July, after a 0.8% increase. Education & communication product costs declined 1.3% (-4.3% y/y) after holding steady in June. Medical care goods prices rose 0.1% (NSA, 0.1% y/y) for the second straight month.

Services prices less energy strengthened 0.4% (3.6% y/y) after rising 0.3% in June. Shelter prices rose 0.2% (3.7% y/y), the same as in June, as owners’ equivalent rent of primary residences increased 0.3% (4.1% y/y) for the third straight month. The cost of lodging away from home declined 1.0% (-3.5% y/y), the fifth straight month of decline. Rents of primary residences gained 0.3% (3.5% y/y), after two consecutive 0.2% increases. Transportation service prices jumped 0.8% (3.5% y/y) after gaining 0.2% and the cost of motor vehicle insurance edged up 0.1% (5.3% y/y) in July, the same as in June. Public transportation costs increased 3.0% (0.7% y/y) after rising 0.4% during June. The cost of medical services increased 0.8% (4.3% y/y) after a 0.6% rise, and the cost of recreation services rose 0.4% (3.9% y/y) after rising 0.2% in June. Education & communication services prices rose 0.2% (1.1% y/y) after edging 0.1% higher in June.

The Consumer Price figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Decline in energy & stable food prices reduce overall strength.
- Core inflation picks up with tariff effects.
- Core goods prices strengthen but core services inflation steadies.

U.S. Consumer Price Inflation Eases in July

Winnie Tapasanun

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The NFIB Small Business Optimism Index increased to 100.3 in July, the highest level since February, from 98.6 in June and 98.8 in May, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. This was the third consecutive month that the index was above the 52-year average of 98. The index was down from its recent peak of 105.1 in December but up from 93.7 in July 2024 and a low of 88.5 in March 2024. Six of the 10 index components rose, two fell, and two were unchanged. Amid high uncertainty (with tariffs, inflation, and international conflicts), the NFIB Small Business Uncertainty Index rose to 97 in July, the highest reading in five months, after a five-point decline to 89 in June. The index, while down from its record high of 110 in October, was above its recent low of 86 in December and a low of 65 in November 2023.

The outlook for business conditions in the next six months remained positive for the ninth straight month in the latest survey. The net balance of respondents expecting the economy to improve rose to 36% in July, the highest level since February, following a three-point decline to 22% in June; thus, having remained significantly above a record low of -61% in June 2022. Expected real sales slipped to a net 6% in July after a three-point decrease to 7% in June, posting the lowest of three successive positive readings. The latest figure was above its recent low of -18% in August 2024. A net -9% of respondents reported higher nominal sales in the past three months, down from -5% in June. The latest result was below the most recent positive reading of 1% in May 2022 and a peak of 9% in June 2021.

Plans to expand the business rose to 16% in July, the highest reading since January, from 11% in June; the latest figure, while down from its most recent high of 20% in December, was up from a low of 2% in March 2023. Plans to make capital outlays rebounded to 22% in July following a one-point dip to 21% in June; these numbers were down from their recent high of 28% in November and a high of 31% in October 2021. Meanwhile, expected credit conditions registered at -4% for the third consecutive month in July; this steady reading was slightly below its recent high of -2% in December but above a low of -11% in November 2023.

On the labor front, forty-eight percent of respondents reported that qualified workers to fill job openings were hard to find in July, down from 50% in June. These numbers were below their recent high of 56% in August 2024, a high of 57% in September 2023, and a peak of 62% in September 2021. A net 14% planned to increase employment in July, slightly up from 13% in June and posting the highest reading since February; it was above its recent low of 11% in March 2024 but below a high of 26% in May 2022 and a peak of 32% in August 2021. Notably, 33% reported positions not able to be filled in July, down from 36% in June and registering the lowest reading since January 2021; these figures remained below a high of 51% in May 2022.

Overall earnings trends had remained in negative territory since December 2019. The figure held at -22% in July and June, a poor reading, following a five-point drop to -26% in May. These readings, while up from a low of -37% in August 2024, remained below a high of -18% in March 2023 and a high of -5% in June 2021.

On the pricing front, actual and expected selling prices, while trending down, remained at an inflationary level; thus, suggesting continued inflationary pressures. The net percent of firms raising their average selling prices fell to 24% in July, the lowest reading since January, after a four-point rise to 29% in June. These numbers were up from 22% in July 2024 but well below a high of 66% in March 2022. The percentage planning to raise prices fell to a three-month-low 28% in July following a one-point increase to 32% in June; these figures were above 24% in July 2024 but below a high of 33% in March 2024 and a high of 52% in March 2022.

Wage inflation, while relatively high, eased in the July survey. A net 27% of respondents raised compensation during the last three months, down from 33% reported in the June survey. It was down from a high of 46% in February 2023 and a peak of 50% in January 2022. A net 17% of firms planned to raise worker compensation in the next three months, down from 19% reported in June and posting the lowest reading in three months; these numbers were below a high of 28% in November, a high of 30% in November 2023, and a high of 32% in October 2022.

The quality of labor was reported as the single most important problem facing small businesses, as reported by 21% of NFIB members in July, up five points from 16% in June; it registered the highest reading since August 2024 and the biggest m/m increase since August 2022. Taxes were reported as the next most important problem, with 17% reported in July vs. 19% in June. Inflation continued to be a problem facing small businesses, as reported by 11% in July and June, the lowest reading since September 2021; the figure was well below a peak of 37% in July 2022. Other concerns (in July vs. June) included poor sales (11% vs. 10%), the cost of labor (9% vs. 10%), government requirements (8% vs. 9%), insurance cost/availability (8% vs. 8%), and competition from large businesses (6% vs. 7%).

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

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- July NFIB Small Business Optimism Index up 1.7 pts. to 100.3.
- Uncertainty Index up 8 pts. to a 5-month-high 97.
- Expectations for economy up 14 pts. to 36%, the highest since Feb.
- Plans to expand business up 5 pts. to 16%, the highest since Jan.
- Expected real sales down 1 pt. to 6%, still positive for the third straight month.
- Percent of firms raising avg. selling prices down 5 pts. to a 6-month-low 24%.
- Quality of labor (21%), taxes (17%), and inflation (11%) are the top three business concerns.

U.S. NFIB Small Business Optimism Rises in July; Highest Level Since February