Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050728a.jpg" width="353">
Initial claims for unemployment insurance ticked down to 312,000 last week from an upwardly revised 313,000 the prior week and contrasted to Consensus expectations for 315,000 claims.
The four week moving average of initial claims declined to 316,750 (-7.5% y/y). The decline continued the minor downtrend in place since earlier this year when claims neared 350,000, and the major downtrend since early 2003 when claims touched 430,000.
Continuing claims for unemployment insurance fell 18,000 following a downwardly revised 28,000 increase one week earlier.
During the last ten years there has been a (negative) 75% correlation between the level of initial claims for unemployment insurance and the monthly change in payroll employment. There has been a (negative) 65% correlation with the level of continuing claims.
The insured unemployment rate remained at the four year low of 2.0% for the third straight week.
Payroll Employment Data: Measuring the Effects of Annual Benchmark Revisions from the Federal Reserve Bank of Atlanta can be found <a href="http://www.frbatlanta.org/filelegacydocs/erq205_haltom.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">07/30/05</th>
<th scope="col">07/23/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>312</td>
<td>313</td>
<td>-8.8%</td>
<td>343</td>
<td>402</td>
<td>404</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>2,581</td>
<td>-11.1%</td>
<td>2,926</td>
<td>3,531</td>
<td>3,570</td>
</tr>
</tbody>
</table>
German Factory Orders Advance 2.4% in June: Good Rebound After Sluggish Winter 
by <a href="/comment/Stone.html">Carol Stone</a> August 4, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050804b.jpg" width="353">
Manufacturers&#39; new orders in Germany increased 2.4% in June, following a similar 2.3% gain in May. Forecasters had expected that after the good May rise, orders would be flat in June, so this was a pleasant surprise. This month, it was orders from domestic German customers that gave the push, while in May, foreign customers&#39; orders had the lead. As seen in the table below, foreign orders have been particularly strong over the past year, although domestic orders have shown moderate growth as well.
Further encouragement to the German outlook came from the fact that capital goods orders had the greatest strength. These rose 4.2% in the month and stand 12.9% above a year ago. Among individual industries, the year-on-year pattern highlights this strength in electrical equipment and transport equipment. Consumer orders are also rising, but less vigorously.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050804c.jpg" width="353">
Press commentary today highlighted the decline in the euro so far this year as a factor supporting both domestic and foreign orders in the German factory sector. But the second graph doesn&#39;t seem to bear this out. Foreign orders turned higher before the currency value began to fall. Possibly the uptrend would have faded without the boost from a cheaper euro, but the currency value was not the initial force in the upturn. Rather, we would surmise that for both domestic and foreign orders the recent increases have come as the post-Y2K recession ran its course. Perhaps this performance will work its way into the consumer sector and help to improve the sluggish retail trade trends we discussed here yesterday.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/GERMANY/GERMANY.HTM">Germany</a> % Changes, Months seas adjusted</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Year/ Year</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>2.4</td>
<td>2.3</td>
<td>-2.2</td>
<td>9.0</td>
<td>6.4</td>
<td>0.6</td>
<td>-0.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Domestic</td>
<td>4.0</td>
<td>0.6</td>
<td>-0.5</td>
<td>6.8</td>
<td>4.3</td>
<td>-0.1</td>
<td>-3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Foreign</td>
<td>0.8</td>
<td>4.9</td>
<td>-4.6</td>
<td>11.1</td>
<td>8.9</td>
<td>1.5</td>
<td>3.5</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>4.2</td>
<td>1.9</td>
<td>-3.2</td>
<td>12.9</td>
<td>7.7</td>
<td>1.2</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Goods</td>
<td>0.8</td>
<td>1.2</td>
<td>1.4</td>
<td>9.0</td>
<td>1.2</td>
<td>-3.6</td>
<td>-3.0</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance ticked down to 312,000 last week from an upwardly revised 313,000 the prior week and contrasted to Consensus expectations for 315,000 claims. The four week moving average of initial claims [...]

Unemployment Insurance Claims Continue Downtrend

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803e.jpg" width="353">
Retail sales in the Euro-Zone increased 0.4% in June, reported this morning by Eurostat, to reach 104.25 (2000=100), a record high. The previous high was 104.07 in January. As seen in the first chart, these sales are fairly erratic from month to month, even adjusted for seasonal and working-day variations. Thus, despite the June rise and a strong performance in May, the net gain over the last year is just 0.9%.
Sales of food, beverages and tobacco grew 0.2% in June and non-food products, 0.3%. Over the past few years, sales of food and related products have tended to be firmer than other categories. In part this may be associated with a shift in food marketing. Sales of food at specialized food stores have plummeted, while so-called &quot;non-specialized stores&quot; have seen consistent growth in their food sales. &quot;One-stop shopping&quot; seems popular -- at least for foods. Among non-food sales, pharmaceutical and medical goods and shopping by mail order have increased more than total sales in recent years. Interestingly, while food purchases have been strong at &quot;non-specialized stores&quot;, nonfood items have declined.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803f.jpg" width="353">
Among the various countries of the EU-12, strength has come from France, Finland, Ireland, Greece, Luxembourg, Portugal and Spain. Of these France and Luxembourg have flattened in recent months, but all are stronger than the group as a whole. The more sluggish performances have come in Germany, Austria, Belgium, Italy and the Netherlands; Austria and Belgium have recently seen some pick-up, however.
These sales do not include motor vehicle dealers and they are in volume terms, so gains are &quot;real&quot;, not simply due to rising prices. While slow in an absolute sense -- up, as noted, less than 1% over the past year -- the gains are firmer than in the prior couple of years. We have had the preconception that the European economy is sluggish, but retail sales seem to suggest that activity there is at least holding its own, particularly in the consumer sector.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@UA/@UA02/@UA02.HTM">Euro-Zone</a> % Change, months seas adjusted</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Year- Ago</th>
Year/Year
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</thead>
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<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
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<tr>
<td class="firstcol">Total</td>
<td>0.4</td>
<td>1.1</td>
<td>-1.0</td>
<td>0.9</td>
<td>0.8</td>
<td>0.3</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Food, Beverages, Tobacco</td>
<td>0.2</td>
<td>2.2</td>
<td>-1.9</td>
<td>1.2</td>
<td>0.7</td>
<td>1.1</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">Non-Food Products</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.5</td>
<td>0.4</td>
<td>0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
</tbody>
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Retail sales in the Euro-Zone increased 0.4% in June, reported this morning by Eurostat, to reach 104.25 (2000=100), a record high. The previous high was 104.07 in January. As seen in the first chart, these sales are fairly erratic [...]

Euro-Zone Retail Sales Show Modest Growth through June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803b.jpg" width="353">
Total mortgage applications dipped 0.3% last week, the fifth decline in the last seven weeks according to the Mortgage Bankers Association. The decline lowered the average level in July 1.4% below June.
Again, the weekly decline was led by applications to refinance which fell 3.0% following a 11.4% drop the week prior. Applications to refinance are down 24.2% from the peak in early June.
Purchase applications went the other way last week with a 1.9% rise following three consecutive weeks of decline. The average level in July rose 0.9% versus June. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage rose to 6.06%, it&#39;s highest in three months. The effective rate on a 15-year mortgage also rose to 5.70%.
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 <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">07/29/05</th>
<th scope="col">07/22/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>752.1</td>
<td>754.3</td>
<td>21.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>494.5</td>
<td>485.1</td>
<td>9.4%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,250.3</td>
<td>2,320.3</td>
<td>40.6%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
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Total mortgage applications dipped 0.3% last week, the fifth decline in the last seven weeks according to the Mortgage Bankers Association. The decline lowered the average level in July 1.4% below June. Again, the weekly decline was [...]

Mortgage Applications Dipped Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803d.jpg" width="353">
Challenger, Grey &amp; Christmas reported that job cut announcements fell 7.2% in July to 102,971 but that followed sharp gains both in May (42.2%) and June (34.9%). The three month average of job cut announcements rose to the highest level (98,750) since February.
During the last ten years there has been an 84% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements in the automotive industry fell sharply after increasing ten-fold in June. Job cuts also fell in the chemical and pharmaceutical industries but increases were quite strong in the financial, insurance, electronics and computer industries.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans rose (1.1% y/y).

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>102,971</td>
<td>110,996</td>
<td>48.0%</td>
<td>1,039,175</td>
<td>1,236,426</td>
<td>1,431,052</td>
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Challenger, Grey & Christmas reported that job cut announcements fell 7.2% in July to 102,971 but that followed sharp gains both in May (42.2%) and June (34.9%). The three month average of job cut announcements rose to the highest [...]

Challenger Layoffs Slipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803c.jpg" width="353">
The July Business Activity Index for the non-manufacturing sector reversed about half of the prior month&#39;s improvement and fell 1.7 points to 60.5, reported the Institute for Supply Management. Consensus expectations had been for a decline to 61.
Since the series&#39; inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.
A employment index reversed just a piece of the June improvement and fell to a still firm 56.2. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Moving the other way, the index of new orders jumped 2.4 points to 61.9, the highest level since March. Pricing power also surged. A 10.5 point gain m/m raised the index level to the highest level of this year (70.3).
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.5</td>
<td>62.2</td>
<td>63.4</td>
<td>62.4</td>
<td>58.2</td>
<td>55.1</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.3</td>
<td>59.8</td>
<td>72.4</td>
<td>69.0</td>
<td>56.8</td>
<td>54.0</td>
</tr>
</tbody>
</table>


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The July Business Activity Index for the non-manufacturing sector reversed about half of the prior month's improvement and fell 1.7 points to 60.5, reported the Institute for Supply Management. Consensus expectations had been for a [...]

ISM Non-Manufacturing Index Down, As Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803a.jpg" width="353">
US sales of light vehicles were spurred in July as a result of aggressive price discounts offered by car manufacturers. The program titled &quot;employee discounts&quot; raised the selling rate to 20.86M, its highest since October 2001 according to the Autodata Corporation.
Sales of US made cars and trucks jumped 22.1% m/m and 23.3% y/y. The gain was led by a 27.3% m/m jump in sales of domestically made trucks while car sales rose 12.9%.
Sales of imported cars &amp; trucks also posted a strong 6.4% m/m gain last month to the highest level this year though imports&#39; share of the US market for new vehicles fell sharply to 17.5%, the lowest since 2002. 
Overall auto sales jumped 10.7% m/m and truck sales surged 24.9%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>20.86</td>
<td>17.53</td>
<td>21.0%</td>
<td>16.88</td>
<td>16.63</td>
<td>16.81</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.10</td>
<td>7.31</td>
<td>8.0%</td>
<td>7.49</td>
<td>7.62</td>
<td>8.07</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>12.76</td>
<td>10.22</td>
<td>31.1%</td>
<td>9.39</td>
<td>9.01</td>
<td>8.74</td>
</tr>
</tbody>
</table>
</body>
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US sales of light vehicles were spurred in July as a result of aggressive price discounts offered by car manufacturers. The program titled "employee discounts" raised the selling rate to 20.86M, its highest since October 2001 [...]

Employee Discounts Spurred U.S. Vehicle Sales

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803a.jpg" width="353">
US sales of light vehicles were spurred in July as a result of aggressive price discounts offered by car manufacturers. The program titled &quot;employee discounts&quot; raised the selling rate to 20.86M, its highest since October 2001 according to the Autodata Corporation.
Sales of US made cars and trucks jumped 22.1% m/m and 23.3% y/y. The gain was led by a 27.3% m/m jump in sales of domestically made trucks while car sales rose 12.9%.
Sales of imported cars &amp; trucks also posted a strong 6.4% m/m gain last month to the highest level this year though imports&#39; share of the US market for new vehicles fell sharply to 17.5%, the lowest since 2002. 
Overall auto sales jumped 10.7% m/m and truck sales surged 24.9%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>20.86</td>
<td>17.53</td>
<td>21.0%</td>
<td>16.88</td>
<td>16.63</td>
<td>16.81</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.10</td>
<td>7.31</td>
<td>8.0%</td>
<td>7.49</td>
<td>7.62</td>
<td>8.07</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Trucks</td>
<td>12.76</td>
<td>10.22</td>
<td>31.1%</td>
<td>9.39</td>
<td>9.01</td>
<td>8.74</td>
</tr>
</tbody>
</table>
ISM Non-Manufacturing Index Down, As Expected 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 3, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803c.jpg" width="353">
The July Business Activity Index for the non-manufacturing sector reversed about half of the prior month&#39;s improvement and fell 1.7 points to 60.5, reported the Institute for Supply Management. Consensus expectations had been for a decline to 61.
Since the series&#39; inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.
A employment index reversed just a piece of the June improvement and fell to a still firm 56.2. Since the series&#39; inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.
Moving the other way, the index of new orders jumped 2.4 points to 61.9, the highest level since March. Pricing power also surged. A 10.5 point gain m/m raised the index level to the highest level of this year (70.3).
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.
Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;04</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>60.5</td>
<td>62.2</td>
<td>63.4</td>
<td>62.4</td>
<td>58.2</td>
<td>55.1</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>70.3</td>
<td>59.8</td>
<td>72.4</td>
<td>69.0</td>
<td>56.8</td>
<td>54.0</td>
</tr>
</tbody>
</table>
Challenger Layoffs Slipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 3, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803d.jpg" width="353">
Challenger, Grey &amp; Christmas reported that job cut announcements fell 7.2% in July to 102,971 but that followed sharp gains both in May (42.2%) and June (34.9%). The three month average of job cut announcements rose to the highest level (98,750) since February.
During the last ten years there has been an 84% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.
Job cut announcements in the automotive industry fell sharply after increasing ten-fold in June. Job cuts also fell in the chemical and pharmaceutical industries but increases were quite strong in the financial, insurance, electronics and computer industries.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans rose (1.1% y/y). 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>102,971</td>
<td>110,996</td>
<td>48.0%</td>
<td>1,039,175</td>
<td>1,236,426</td>
<td>1,431,052</td>
</tr>
</tbody>
</table>
Mortgage Applications Dipped Again 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 3, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803b.jpg" width="353">
Total mortgage applications dipped 0.3% last week, the fifth decline in the last seven weeks according to the Mortgage Bankers Association. The decline lowered the average level in July 1.4% below June.
Again, the weekly decline was led by applications to refinance which fell 3.0% following a 11.4% drop the week prior. Applications to refinance are down 24.2% from the peak in early June.
Purchase applications went the other way last week with a 1.9% rise following three consecutive weeks of decline. The average level in July rose 0.9% versus June. During the last ten years there has been a 49% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
The effective interest rate on a conventional 30-year mortgage rose to 6.06%, it&#39;s highest in three months. The effective rate on a 15-year mortgage also rose to 5.70%.
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 <a href="http://www.mbaa.org">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">07/29/05</th>
<th scope="col">07/22/05</th>
<th scope="col">Y/Y</th>
<th scope="col">2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>752.1</td>
<td>754.3</td>
<td>21.2%</td>
<td>735.1</td>
<td>1,067.9</td>
<td>799.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>494.5</td>
<td>485.1</td>
<td>9.4%</td>
<td>454.5</td>
<td>395.1</td>
<td>354.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>2,250.3</td>
<td>2,320.3</td>
<td>40.6%</td>
<td>2,366.8</td>
<td>4,981.8</td>
<td>3,388.0</td>
</tr>
</tbody>
</table>
Euro-Zone Retail Sales Show Modest Growth through June 
by <a href="/comment/Stone.html">Carol Stone</a> August 3, 2005


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803e.jpg" width="353">
Retail sales in the Euro-Zone increased 0.4% in June, reported this morning by Eurostat, to reach 104.25 (2000=100), a record high. The previous high was 104.07 in January. As seen in the first chart, these sales are fairly erratic from month to month, even adjusted for seasonal and working-day variations. Thus, despite the June rise and a strong performance in May, the net gain over the last year is just 0.9%.
Sales of food, beverages and tobacco grew 0.2% in June and non-food products, 0.3%. Over the past few years, sales of food and related products have tended to be firmer than other categories. In part this may be associated with a shift in food marketing. Sales of food at specialized food stores have plummeted, while so-called &quot;non-specialized stores&quot; have seen consistent growth in their food sales. &quot;One-stop shopping&quot; seems popular -- at least for foods. Among non-food sales, pharmaceutical and medical goods and shopping by mail order have increased more than total sales in recent years. Interestingly, while food purchases have been strong at &quot;non-specialized stores&quot;, nonfood items have declined.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050803f.jpg" width="353">
Among the various countries of the EU-12, strength has come from France, Finland, Ireland, Greece, Luxembourg, Portugal and Spain. Of these France and Luxembourg have flattened in recent months, but all are stronger than the group as a whole. The more sluggish performances have come in Germany, Austria, Belgium, Italy and the Netherlands; Austria and Belgium have recently seen some pick-up, however.
These sales do not include motor vehicle dealers and they are in volume terms, so gains are &quot;real&quot;, not simply due to rising prices. While slow in an absolute sense -- up, as noted, less than 1% over the past year -- the gains are firmer than in the prior couple of years. We have had the preconception that the European economy is sluggish, but retail sales seem to suggest that activity there is at least holding its own, particularly in the consumer sector.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/EUROSTAT/@UA/@UA02/@UA02.HTM">Euro-Zone</a> % Change, months seas adjusted</th>
<th scope="col">June 2005</th>
<th scope="col">May 2005</th>
<th scope="col">Apr 2005</th>
<th scope="col">Year- Ago</th>
Year/Year
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2004</td>
<td>2003</td>
<td>2002</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.4</td>
<td>1.1</td>
<td>-1.0</td>
<td>0.9</td>
<td>0.8</td>
<td>0.3</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Food, Beverages, Tobacco</td>
<td>0.2</td>
<td>2.2</td>
<td>-1.9</td>
<td>1.2</td>
<td>0.7</td>
<td>1.1</td>
<td>1.2</td>
</tr>
<tr>
<td class="firstcol">Non-Food Products</td>
<td>0.3</td>
<td>0.5</td>
<td>-0.5</td>
<td>0.4</td>
<td>0.7</td>
<td>-0.4</td>
<td>-0.4</td>
</tr>
</tbody>
</table>


</html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802g.jpg" width="353">
The results of the CBI (Confederation of British Industries) survey of the distributive trades released today show that the balance of opinion on the volume of retail sales improved minimally in July to -18 from -19 in June, the lowest figure since the survey began in 1983. Expectations of the volume of retail sales have caught up with the reported volumes and suggest that August will once again show only a minimal improvement to a balance of -17. The balance of reported sales volume for the retail sector has shown only one modest positive number--2 in February--since the beginning of the year.
There was more positive news for wholesale trade as can be seen in the first chart which shows the balance on reported sales volume for retail and wholesale trade. Although the balance on reported wholesale trade sales volume declined to 22 from 32 in June, the balance is significantly positive. Expected sales volume for August, however, are down to a positive 10. The balance on reported motor trade sales volume has been positive since May, but decreasing and the expected balance for August is once again negative at -4.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/050802h.jpg" width="353">
Balances of opinions on the annual growth of sales volume are also reported. In the most recent survey, Grocers showed the most positive results and Furniture and Carpet stores, the most dismal, as seen in the second chart.
The CBI Distributive Trades survey covers 20,000 outlets of firms responsible for 40% of employment in retailing. The most recent survey was conducted between June 29 and July 20, 2005 and included 125 responses.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/UK/@U9/@U9.HTM">CBI Distributive Trade Survey</a></th>
<th scope="col">Aug 05</th>
<th scope="col">July 05</th>
<th scope="col">Jun 05</th>
<th scope="col">May&nbsp; 05</th>
<th scope="col">April&nbsp; 05</th>
<th scope="col">Mar 05&nbsp;&nbsp;</th>
<th scope="col">&nbsp;Feb 05</th>
<th scope="col">Jan&nbsp; 05</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Trade Sales Volume</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">&nbsp; Expected</td>
<td>-17</td>
<td>-18</td>
<td>5</td>
<td>1</td>
<td>3</td>
<td>14</td>
<td>7</td>
<td>8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Reported</td>
<td></td>
<td>-18</td>
<td>-19</td>
<td>-7</td>
<td>-14</td>
<td>-9</td>
<td>2</td>
<td>-3</td>
</tr>
<tr>
<td class="firstcol">Wholesale Trade Sales Volume</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expected</td>
<td>10</td>
<td>25</td>
<td>23</td>
<td>16</td>
<td>-7</td>
<td>-4</td>
<td>15</td>
<td>6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Reported</td>
<td>&nbsp;</td>
<td>22</td>
<td>32</td>
<td>24</td>
<td>2</td>
<td>-17</td>
<td>9</td>
<td>28</td>
</tr>
<tr class="odd">
<td class="firstcol">Motor Trade Sales Volume</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Expected</td>
<td>-4</td>
<td>2</td>
<td>7</td>
<td>6</td>
<td>-5</td>
<td>4</td>
<td>7</td>
<td>-4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Reported</td>
<td>&nbsp;</td>
<td>3</td>
<td>7</td>
<td>8</td>
<td>-7</td>
<td>-16</td>
<td>2</td>
<td>-9</td>
</tr>
<tr>
<td class="firstcol">Growth in Annual Sales Volume--Reported</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Grocers</td>
<td></td>
<td>21</td>
<td>31</td>
<td>77</td>
<td>20</td>
<td>31</td>
<td>19</td>
<td>4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Furniture and Carpets</td>
<td></td>
<td>-92</td>
<td>-84</td>
<td>-77</td>
<td>-58</td>
<td>-72</td>
<td>6</td>
<td>-16</td>
</tr>
</tbody>
</table>
</body>
</html>

The results of the CBI (Confederation of British Industries) survey of the distributive trades released today show that the balance of opinion on the volume of retail sales improved minimally in July to -18 from -19 in June, the [...]

UK's CBI Survey of Distributive Trades Confirms Slowdown in Retail Trade and Expects Continued Weakness

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Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

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Andrew Cates

**The US housing market**
This first chart below highlights the growing downside risks to the US economic outlook stemming from the housing market. The S&P Case-Shiller home price index has slowed sharply from the pandemic-era surge, while the NAHB (National Association of Homebuilders) housing market index has weakened to levels historically associated with falling home prices. Housing matters because it is not just a cyclical sector but also a key transmission channel for the broader economy: consumer confidence, household balance sheets and credit conditions are all heavily influenced by shifts in the housing market.

250821Z1.jpg

**China’s economy**
The latest run of data from China has also reinforced downside risks for the broader world economy. As the Citigroup Economic Surprise Indices show below, China-specific data have more consistently undershot expectations in recent days. China’s July releases in particular disappointed: retail sales growth slowed to just 3.7% y/y, with weakness in autos and furniture hinting that earlier policy-driven boosts are fading. Industrial output and fixed-asset investment also came in below consensus, while property prices continued to fall and retail sector investment contracted by double digits. Even the labour market showed strain, with unemployment edging higher. The worry is not just China’s slowdown in isolation, but the spillovers. Softer Chinese demand feeds directly into global supply chains, commodity markets, and regional trade partners. Combined with tariff and non-tariff headwinds from the US, the risk is that China’s structural challenges spill into weaker global growth momentum.

250821Z2.jpg

**UK inflation** 
Persistently high services inflation remains one of the biggest headaches for UK monetary policy - and the UK is far from unique in that regard. Services are wage- and demand-sensitive, and their stickiness complicates the calibration of monetary policy even as broader disinflation takes hold. This week’s July upside surprise to UK services inflation was driven in no small part by airfares, which spiked 30% month-on-month – the largest July rise on record. While such volatility may prove temporary, it nonetheless lifted year-on-year services inflation to 5.0%, well above comfort levels. Still, the offsets are important: stripping out airfares and other volatile components, underlying services momentum appears to have eased, while broader data on wages, employment, and activity point to cooling demand. Nevertheless, this tension – headline stickiness versus softer underlying trends – underscores why the Bank of England is treading carefully.

250821Z3.jpg

**Inflation expectations and energy**
US medium-term inflation expectations have been unusually decoupling from oil prices in recent weeks. Normally, falling oil prices would help anchor breakevens, yet the 5-year forward inflation rate has edged higher of late even as WTI has slipped. This probably reflects US tariff policies that are shifting inflation dynamics away from energy and toward trade-related costs. At the same time, a weaker dollar has lifted imported prices, and the upward creep in expectations suggests markets may be more actively questioning whether the Fed’s “higher for longer” stance is sufficient to contain medium-term inflation risks.

250821Z4.jpg

**Clean energy**
Pivoting to more structural issues, the stark divergence between the global clean energy equity market index and the broader S&P 500 underlines the mounting challenges facing the renewables sector at present. While US equities have pushed to record highs, clean energy stocks have languished, weighed down by policy uncertainty, higher financing costs, and a more sceptical public mood. In the US, shifting political winds and uneven implementation of green subsidies have clouded the outlook for investment, while globally, resistance to renewables has grown as consumers and businesses grapple with high energy bills. Rising interest rates have further undermined the economics of capital-intensive clean energy projects, eroding returns and delaying investment pipelines. At the same time, bottlenecks in transmission infrastructure, permitting delays, and questions over the pace of the net-zero transition have all dented confidence. The result is a sector underperforming dramatically even as the urgency of the climate challenge grows.

250821Z5.jpg

**Renewables versus non-renewables**
Global energy consumption data show how limited—and in some respects, stalled—the transition away from fossil fuels has become. Oil, gas, and coal still dominate the energy mix, with shares that have proven remarkably resilient over the past several years. In fact, coal use has ticked higher of late as countries turned back to cheaper, more secure supplies amid energy price spikes and supply disruptions. While renewables have grown rapidly in percentage terms, their absolute contribution remains small compared with the scale of fossil fuel demand. Nuclear and hydro have also struggled to gain ground, leaving the overall mix looking more like a story of continuity than transformation. The result is a global transition that has not just slowed but, in key areas, has partially reversed—highlighting the gulf between climate ambitions and energy realities.

250821Z6.jpg

Recent financial market gains have been underpinned by resilient global data, AI-fuelled optimism, and hopes that most central banks will continue to loosen monetary policy. Yet beneath the surface, a more complicated picture may be emerging. In the US, housing indicators are flashing warnings about household balance sheets and credit channels (chart 1), while China’s latest data—covering retail sales, industrial output, and property—underscore persistent weakness (chart 2). In the UK, this week’s data showing sticky services inflation is complicating the Bank of England’s easing path (chat 3), while back in the US, medium-term inflation expectations have been rising despite softer oil prices (chart 4), hinting at a more disruptive role for trade policy. Against this cyclical backdrop sit deeper structural challenges: global energy consumption remains overwhelmingly dependent on fossil fuels, the clean energy sector has lost momentum amid high costs and policy uncertainty, and equity markets have punished renewables even as climate imperatives intensify (charts 5 and 6). Together, these dynamics suggest that while markets continue to trade on optimism, the mix of weak housing signals, patchy Chinese demand, sticky inflation, and an uneven energy transition potentially leaves the global outlook more fragile than headline performance implies.

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Charts of the Week: Cracks Beneath The Shine

Sandy Batten

250821N4.jpg

250821O4.jpg

The Current Activity Diffusion Index from the latest Manufacturing Business Outlook Survey (MBOS) conducted by the Federal Reserve Bank of Philadelphia, fell more than 16 points to -0.3 in August from 15.9 in July. The index has posted negative readings, which indicate that activity is declining, in four of the previous five months. A reading of +5.0 for August had been expected by the Action Economics Forecast Survey. Nearly 30% of respondents reported an increase in activity in August, down from 31.7% in July, while 30% reported a decline, up markedly from 16% in July. Responses to this month's survey were collected from August 11 to August 18.

The headline index reflects the answer to a single question on activity. Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology employed in constructing the national ISM index. That calculated index fell to 49.1 in August, the first reading below the critical 50 level that separates expansion from contraction since April, from 51.2 in July.

Looking at the component indexes, both new orders and shipments posted significant declines in August with orders plummeting into negative territory at -1.9 versus 18.4 in July. This was the first negative reading for new orders since the tariff-induced plunge in April. Thirty-four percent of respondents reported an increase in orders in August, little changed from 35% in July. In contrast, 36% reported a decline in orders in August, up markedly from 17% in July. Shipments also declined significantly in August although they remained in positive territory at 4.5 versus 23.7 in July. Twenty-nine percent of respondents reported an increase in shipments, down slightly from 32% in July. In contrast, 24% reported a decline, up markedly from 9% in July.

Firms continued to report overall increases in employment, but at a slower pace. The employment index fell 4 points to 5.9 in August from 10.3 in July. Most firms continued to report no change in employment levels (74%), while the share of firms reporting increases (16%) exceeded the share reporting decreases (10%, up from 7% in July). The average workweek index rose from 0.4 in July to 4.7 in August, its highest reading since March.

There was still no indication that increased tariffs have damaged supply chains. The delivery times index slipped further below zero to -5.4 in August, the fourth negative reading in five months indicating that delivery times are shortening, from -4.7 in July. Thirteen percent of respondents reported an increase in delivery times in August, up from 8% in July, while 18% reported a decrease versus 13% in July.

Inflation indicators continued to rise in August. The prices paid index jumped to 66.8 in August, its highest reading since May 2022, from an already elevated 58.8 in July. Nearly 67% of respondents reported an increase in input prices while no respondent reported a decline. The prices received index edged up to 36.1 in August, its highest reading in three months, from 34.8 in July. In the answer to a special question, firms expected a 4.1% increase in the prices of their own products over the coming year, up from 3.8% when this question was last asked in the May survey.

The outlook for the next six months brightened marginally in August with the Future Activity Index rising to 25.0 following an increase to 21.5 in July. Forty-one percent of respondents expect activity to increase over the coming six months, the same as in July, while 16% expect it to decline, down from 20% in July. The pace of increase in both new orders and shipments is expected to pick up. Delivery times are expected to increase only slightly. Employment growth is expected to slow. The outlook for capital expenditures rose markedly to 38.4 in August, the highest reading since January.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The series from the survey dating back to May 1968 can be found in Haver's **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- The headline index fell more than 16 points to -0.3, led by outsized declines in both new orders and shipments.
- The ISM-adjusted composite fell below the critical 50 level for the first time in four months, also pointing to a decline in activity.
- Delivery times shortened further while both prices paid and prices received indexes posted gains.

U.S. Philly Fed Manufacturing Index Dipped Below Zero in August

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Initial claims for unemployment insurance rose to 235,000 during the week ended August 16 after falling to an unrevised 224,000 in the prior week. The Action Economics Forecast Survey expected 226,000 initial claims for last week. The four-week moving average of initial claims increased to 226,250 from 221,750. It was the highest level since the second week of July.

In the week ended August 9, the total number of unemployment insurance beneficiaries – also known as “continuing claims” – rose to 1.972 million from 1.942 million in the prior week, revised from 1.953 million. The four-week moving average rose to 1.955 million, the highest level in five weeks.

In the week ending August 9, the insured rate of unemployment (the number of beneficiaries as a percent of covered employment) was 1.3% for the eleventh straight week.

The insured unemployment rate varied greatly across individual states and territories. In the week ended August 2, the highest unemployment rates were in New Jersey (2.74%), Puerto Rico (2.62%), Rhode Island (2.52%), California (2.14%), Minnesota (2.20%) and Massachusetts (2.15%). The lowest were in South Dakota (0.27%), Florida (0.39%), North Carolina (0.47%), Kansas (0.58%), Georgia (0.59%) and Louisiana (0.61%). Rates in other notable states include Pennsylvania (1.90%), Illinois (1.72%), New York (1.73%), Texas (1.25%) and Michigan (1.17%). 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 surge to highest level in eight weeks.
- Continuing claims extend upward trend.
- Insured unemployment rate holds steady.

U.S. Initial Unemployment Insurance Claims Rise Sharply in Latest Week

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Mortgage applications fell 1.4% (+22.7% y/y) in the week ending August 15 after rising 10.9% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans edged 0.1% higher (22.7% y/y) last week, following a 1.4% gain in the prior week. Applications to refinance a home loan fell 3.1% (+22.8% y/y) last week, following a 23.0% rise in the week of August 8.

The effective interest rate on a 30-year fixed-rate loan held steady at 6.86% in the week ending August 15 after falling from 6.94% in the first week of August. 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 rose to 6.13% in the latest week from 6.09% in the week of August 8. Conversely, the rate on 30-year Jumbo loans decreased to 6.82% last week from 6.86% one week earlier. The rate on a 5-year ARM rose to 6.24% in the week of August 15 and reversed the prior week’s decline to 6.05%.

The share of applications for refinancing an existing loan eased to 46.1% of total applications in the week ending August 15 after rising to 46.5% 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 declined to 8.60% in the latest week after rising to 9.60% in the week of August 8.

The average size of a mortgage loan fell 2.7% (+4.1% y/y) to $387,800 in the week of August 15, following a 4.5% rise in the prior week. The average size of a purchase loan edged 0.5% higher (0.6% y/y) to $429,000 in the latest week after falling 1.2% in the week ending August 8. The average size of a loan to refinance a mortgage fell 7.3% (+9.5% y/y) to $339,800 last week, after rising 18.3% to $366,400 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.

**Tracking Labor Market Stress** from the Federal Reserve Bank of San Francisco is available [here](https://www.frbsf.org/research-and-insights/publications/economic-letter/2025/08/tracking-labor-market-stress/).

- Purchase applications edge higher while loan refinancing declines.
- Effective fixed-interest rate on 30-year loans remains at four-month low.
- Average loan size declines.

U.S. Mortgage Applications Decline Last Week as Interest Rates Steady

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Total housing starts increased 5.2% (12.9% y/y) in July to 1.428 million (SAAR) after rising 5.9% in June to 1.358 million, revised from 1.321 million, and falling 8.3% to 1.282 in May, revised from 1.263 million, according to the U.S. Census Bureau. Total starts in July remained 22.5% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in July.

Single-family starts in July rose 2.8% (7.8% y/y) to 939,000 after falling 3.8% in June to 913,000, revised from 883,000, and edging 0.1% higher in May to 949,000, revised from 926,000. Multi-family starts surged 9.9% (24.1% y/y) in July to 489,000 after strengthening 33.6% in June to 445,000, revised from 438,000, and declining 26.0% to a little-revised 333,000 units in May.

Housing starts in the Midwest surged 33.3% (40.8% y/y) in July to 252,000 after rising 3.3% in June. Adding to this increase, starts in the South rose 19.2% (29.5% y/y) to 833,000 after holding steady in June. Offsetting these gains, starts in the West declined 27.5% (-14.4% y/y) to 232,000 after rising 8.1% in June. Housing starts in the Northeast declined 26.0% (-35.5% y/y) to 111,000 after increasing 44.2% in June.

Building permits declined 2.8% (-5.7% y/y) last month to 1.354 million after easing slightly in June. It was the fourth consecutive monthly decline. Single-family permits rose 0.5% (-7.9% y/y) in July to 870,000 after weakening for four straight months. Multi-family permits fell 8.2% (-1.4% y/y) to 484,000 after rising 6.5% in June. Building permits in the Northeast rose 25.2% (-7.9% y/y), and they edged up 0.5% (12.9% y/y) in the Midwest. In the South, building permits declined 4.6% (-6.1% y/y) while in the West, building permits weakened 10.1% (-15.2% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase brings starts to five-month high.
- Multi-family starts surge while single-family starts rise moderately.
- Building permits decline is led by multi-family.

Economy in Brief: August 2005

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Unemployment Insurance Claims Continue Downtrend

Euro-Zone Retail Sales Show Modest Growth through June

Mortgage Applications Dipped Again

Challenger Layoffs Slipped

ISM Non-Manufacturing Index Down, As Expected

Employee Discounts Spurred U.S. Vehicle Sales

Employee Discounts Spurred U.S. Vehicle Sales

UK's CBI Survey of Distributive Trades Confirms Slowdown in Retail Trade and Expects Continued Weakness