Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080623f.jpg" align="left" border="0" height="265" width="353">
Price trends deteriorate 
Manufacturing prices were up strongly in May. All major divisions of
the PPI are showing some pressure even capital goods inflation is
rising. Core PPI prices are up by 2.9% Yr/Yr and at a faster paced 3.6%
over three-and six-months. 
 

Inflation accelerates 
At least the acceleration in consumer prices where inflation has been
the virulent has begun to slow. Yet, over the past year the Yr/Yr
inflation rate has accelerated by four percentage points while Core PPI
inflation has accelerated by 0.3 percentage points. 
 

Why it matters&#8230; 
While the ECB&#8217;s inflation ceiling applies to HICP prices only, the
worry from the ECB&#8217;s standpoint is that producer price inflation could
become embedded in prices at the consumer level. 


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<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Germany PPI </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-moY-Ago</td>
<td>IN Q1</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>1.1%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>10.5%</td>
<td>7.7%</td>
<td>5.9%</td>
<td>1.9%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.6%</td>
<td>3.6%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>4.1%</td>
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Price trends deteriorate Manufacturing prices were up strongly in May. All major divisions of the PPI are showing some pressure even capital goods inflation is rising. Core PPI prices are up by 2.9% Yr/Yr and at a faster paced 3.6% [...]

PPI Pressures Begin to Spread in Germany

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Tom Moeller

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Sales of new single-family home sales improved 0.6% (-6.6% y/y) in June to 627,000 (SAAR) after falling 11.6% to an unrevised 623,000 in May, and rising to 705,000 in April, revised from 722,000 according to the U.S. Census Bureau. The Action Economics Forecast Survey expected sales of 650,000 in June. The sales gain occurred as the average 30-year fixed-rate mortgage held steady m/m at an average 6.82% in June, according to Freddie Mac. So far in July the 30-year mortgage rate has fallen to an average 6.71% and compares to a low of 6.18% averaged in September of last year.

By region, new home sales varied across the country last month. Sales of new homes in the Midwest rose 6.3% (9.0% y/y) to 85,000, after falling 3.6% during May. In the South, new home sales rebounded 5.1% (-4.4% y/y) to 390,000, following a 15.1% May decline. Offsetting these gains, sales of new homes in the West weakened 8.4% (-14.4% y/y) to 131,000, after declining 8.3% in May. Showing even more weakness, new home sales in the Northeast were off 27.6% last month (-34.4% y/y) to 21,000, after holding steady in May.

The median sales price of a new home declined 4.9% (-2.9% y/y) to $401,800 (NSA) in June after rising 2.3% to $422,700 in May. New home prices were 12.7% below the all-time peak of $460,300 in October 2022. The average sales price of a new home fell 2.1% (+1.1% y/y) to $501,000 in June, following a 0.4% May decline. The average price was 7.4% below a high of $541,200 in July 2022. These sales price data are not seasonally adjusted.

The number of unsold new homes on the market rose 1.2% (8.5% y/y) to 511,000 (SA) in June, after a 1.0% May increase. The seasonally adjusted months' supply of new homes for sale rose to 9.8 months in June, the highest level since September 2022, after increasing to 9.7 months in May. The latest reading remained above a low of 6.9 months in May 2023.

The median number of months a new home stayed on the market increased to 2.8 months in June, remaining above a June 2024 low of 2.1 months. The latest number stood well above its record low of 1.5 months in both September and October of 2022, but remained below a high of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

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- Small gain in sales follows sharp decline.
- Sales are mixed throughout the country.
- Median sales price is lowest since November.

U.S. New Home Sales Improve Slightly in June; Prices Decline Sharply

Winnie Tapasanun

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The Kansas City Fed manufacturing composite index inched up to 1 in July from -2 in June and -3 in May, the July 2025 Manufacturing Survey by the Federal Reserve Bank of Kansas City showed, indicating Tenth District manufacturing activity increased slightly this month. The headline index was last positive in September 2022 (with a reading of 6). The July index was up from -11 in July 2024 but well below a high of 30 in March 2022. “The increase from last month was driven by nondurable manufacturing, while durable manufacturing activity continued to fall,” the Kansas City Fed reported.

The ISM-adjusted index calculated by Haver Analytics rebounded to 50.2 (NSA) in July after a 1.3-point decline to 49.8 in June, indicating expansion in factory activity for the fourth time in five months. The latest ISM-adjusted figure was above a low of 43.7 in July 2024 but well below a record-high 68.9 in March 2022.

In the latest survey, the new orders index rose to 2 in July, the first positive reading and the highest since July 2022, after a seven-point increase to -2 in June. Thirty percent of respondents (NSA) reported orders gains in July while 33% reported declines. The production index, however, fell to -3 this month after a 15-point rebound to 5 in June; these readings were well below a high of 35 in March 2022. The shipments index decreased to 3 in July after an 18-point jump to 8 in June; thus, having remained down from a peak of 39 in March 2022.

The raw materials inventory index rose to 8 in July following a 12-point drop to -9 in June, registering the second positive reading in three months and the highest since September 2022. These figures were above a low of -17 in July 2024 but well below a high of 28 in March 2022. The order backlog index, having remained negative since October 2022, plunged to -30 in July, the lowest reading since September 2024, after a 12-point rebound to -11 in June; these numbers were significantly below a record-high 43 in July 2021. Meanwhile, the supplier delivery time index rose to 7 in July, the highest reading since April, after rising to 5 in June; these readings remained well below a high of 51 in March 2022.

On the labor front, the employment index declined to -11 in July after an 11-point drop to -8 in June, posting the fifth negative reading in six months and the lowest in three months. The index was down from a high of 30 in May 2022. A lessened 13% of respondents (NSA) reported increases in the number of employees in July while a steady 23% reported decreases.

On the pricing front, the prices received index for finished products fell to 18 in July following a four-point increase to 21 in June. These readings, while up from a low of -5 in September 2024, remained well below a high of 50 in June 2022 and a record-high 63 in August 2021. Twenty-one percent of respondents (NSA) reported higher prices received in July while 6% reported price declines. The prices paid index for raw materials fell to 47 this month after a 17-point jump to 51 in June. These figures were up from a low of -1 in October 2023 but significantly down from a high of 72 in April 2022 and a record-high 85 in October 2021.

Expectations for future activity continued to stay positive, with activity in most categories expected to gain. The expectations index for six months ahead was at 8 in July, slightly down from 9 in June and up from 5 in May. The expectations indexes for raw materials inventories (8) and supplier delivery time (5) rose in July, while those for production (14), shipments (11), new orders (8), and employment (4) fell for the month; nevertheless, they remained in positive territory. To the negative side, the expectations indexes for new orders for exports (-8), backlog of orders (-5), and capital expenditures (-4) registered negative readings. The expectations index for raw materials prices held steady at a still-high 64 in July compared to a low of 13 in June 2023; the index for finished goods prices was unchanged at 48 vs. a low of 15 in October 2023.

The latest survey was conducted for a six-day period from July 16-21, 2025 and included 105 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.

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- July Composite Index at 1 reflects positive numbers in materials inventories (8) and new orders (2), while employment (-11) and production (-3) post negative readings.
- Price growth cools somewhat, w/ prices paid down 4 pts. to 47 and prices received down 3 pts. to 18.
- Expectations for future activity, while edging down to 8, remain in positive territory.

Kansas City Fed Manufacturing Index Rises in July; First Positive Reading Since Sept. ’22

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The National Activity Index (CFNAI), reported by the Federal Reserve Bank of Chicago, stood at -0.10 in June following a reading of -0.16 in May, revised from -0.28, and -0.41 in April, revised from -0.36.

The index's three-month moving average, which smooths out the m/m volatility in the index, fell to -0.22 last month from -0.14 in May. This reading compares to its zero value, which equals trend real GDP growth. Research at the Chicago Fed indicates that an average reading of -0.70 or below is consistent with the economy being in a recession.

The June reading reflected a negative contribution from each of the four component series. The Production & Income index of -0.01 compared to -0.06 in May and -0.19 in April. The Personal Consumption & Housing contribution of -0.01 in June compared to -0.10 in May and -0.02 in April. The Sales, Orders & Inventories index series of -0.04 in June compared to +0.01 in May and -0.18 in April. The Employment, Unemployment & Hours index weakened to -0.05 last month after contributing -0.01 in May and -0.02 in April.

The CFNAI Diffusion Index, which measures the breadth of change in the component series and is also a three-month moving average, stood at -0.37 in June compared to -0.32 in May and -0.08 in April. A reading of zero indicates that all of the indicators are growing at their long-term average. Thirty-seven of the 85 individual data series made positive contributions to the total index in June while 48 contributed negatively.

The CFNAI is a weighted average of 85 indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend.

These figures are available in Haver's **SURVEYS** database.

- Latest reading improves versus May.
- Each of four components are negative.
- Three-month trend weakens.

Chicago Fed’s National Activity Index Remains Negative in June

Kathleen Stephansen, CBE

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Initial claims for unemployment insurance declined by 4,000 to 217,000 (-8.1% y/y) in the week ended July 19, from the unrevised level of 221,000 (-7.9% y/y) in the previous week. Initial claims have declined for six consecutive weeks. The Action Economics Forecast Survey expected 230,000 initial claims for last week. The four-week moving average of initial claims declined by 5,000 to 224,500 from the previous week’s unrevised average of 229,500. It was the lowest level since the third week of April.

In the week ended July 12, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – rose 4,000 to 1.955 million (5.5% y/y) from 1.951 million (4.56% y/y) in the prior week, revised down from 1.956 million. The four-week moving average was 1.954 million, a decline of 2,250 from 1.956 million, revised from 1.957 million.

In the week ending July 12, the insured rate of unemployment (the number of beneficiaries as a percent of covered employment) was unchanged at 1.3% for the seventh straight week. It had increased from 1.2% since the beginning of 2023 and 1.0% in November 2022.

The insured unemployment rate varied greatly across individual states and territories. In the week ended July 5, the highest unemployment rates were in New Jersey (2.79%), Rhode Island (2.69%), Puerto Rico (2.65%), Minnesota (2.35%), California (2.21%), Massachusetts (2.15%) and Washington (2.10%). The lowest were in South Dakota (0.31%), Florida (0.42%), and North Carolina (0.48%). Rates in other notable states include Pennsylvania (1.90%), New York (1.74%), Illinois (1.71%), and Texas (1.25%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims have declined for six consecutive weeks in the July 19 week.
- Continuing claims rose slightly in the July 12 week.
- Insured unemployment rate was unchanged for the seventh consecutive week.

U.S. Initial Unemployment Insurance Claims Fell Again in Latest Week