Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902k.jpg" align="left" border="0" height="265" width="353">
German retail sales edged higher in July but this is after
several months of declining. Despite the minor rise in sales ex-autos,
retail sales in Q3 (one month into the new quarter) are dropping at an
annual rate of 5.7% or 2.7% in real terms. The rise in real retail
sales in July was a much larger 0.7%., not a barn burner but that did
help to blunt the Q3 decline in retail sales compared to their level in
Q2. 
 

Car registration growth turned negative in July to boot after
a bounce in June. 
 

On balance it is clear that Germany is not building its
recovery on the consumer. Its revival, instead, will be a factory-based
export-led affair and will depend on the performance of exports
relative to imports: those trends will be the real keys. But for a
solid recovery to take hold the German consumer will have to be
involved. 
 

As of July, we are still waiting for that to happen. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">German
Real and Nominal Retail Sales</th>
<th scope="col">QTR</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Jul-09</td>
<td>Jun-09</td>
<td>May-09</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>Yr-Ago</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>0.1%</td>
<td>-1.1%</td>
<td>-1.0%</td>
<td>-7.7%</td>
<td>-1.2%</td>
<td>-2.3%</td>
<td>2.0%</td>
<td>-5.7%</td>
</tr>
<tr>
<td class="firstcol">MV and Parts</td>
<td>0.7%</td>
<td>-1.3%</td>
<td>-1.0%</td>
<td>-6.1%</td>
<td>-1.3%</td>
<td>-1.0%</td>
<td>-1.6%</td>
<td>-2.7%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>-0.9%</td>
<td>-3.2%</td>
<td>0.8%</td>
<td>-12.5%</td>
<td>-3.4%</td>
<td>-2.6%</td>
<td>0.0%</td>
<td>-15.5%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>2.7%</td>
<td>-0.3%</td>
<td>-1.8%</td>
<td>2.3%</td>
<td>8.2%</td>
<td>2.1%</td>
<td>1.5%</td>
<td>11.8%</td>
</tr>
<tr>
<td class="firstcol">Car registrations (units)</td>
<td>-5.8%</td>
<td>6.5%</td>
<td>-6.2%</td>
<td>-21.4%</td>
<td>113.6%</td>
<td>29.6%</td>
<td>1.6%</td>
<td>0.0%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Real</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>0.7%</td>
<td>-1.3%</td>
<td>-1.0%</td>
<td>-6.1%</td>
<td>-1.3%</td>
<td>-1.0%</td>
<td>-1.6%</td>
<td>-2.7%</td>
</tr>
</tbody>
</table>
</body></html>

German retail sales edged higher in July but this is after several months of declining. Despite the minor rise in sales ex-autos, retail sales in Q3 (one month into the new quarter) are dropping at an annual rate of 5.7% or 2.7% in [...]

German Retail Sales Still Short Of Dependable

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902e.jpg" width="353">
It&#39;s part of a slowly developing trend, but the rate of job loss moderated again last month. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payrolls fell 298,000 during August after a revised 360,000 July decline that was slightly shallower than reported initially. The latest reading was the nineteenth consecutive monthly decline, but the monthly change was the smallest since October of last year and less than half the worst of this past March. The three-month annualized rate of decline in payrolls also eased to 3.9% from its March peak of 7.1%.
ADP compiled the estimate from its database of individual companies&#39; payroll information. Macroeconomic Advisers, LLC, the St. Louis economic consulting firm, developed the methodology for transforming the raw data into an economic indicator.
The U.S. Bureau of Labor Statistics will report August payroll employment this Friday. For comparison, July&#39;s 360,000 worker decline in ADP&#39;s measure of private nonfarm payrolls was accompanied by a loss of 254,000 jobs in the BLS measure of private sector payrolls. According to ADP and Macro-Advisers, the correlation between the monthly percentage change in the ADP estimate and that in the BLS data is 0.90.
ADP reported that small-sized payrolls fell the most last month and posted a 122,000 decline (-4.4%). That was similar to the 116,000 (-5.8% y/y) decline in medium-sized payrolls. Large payrolls fell by 60,000 (-5.6% y/y). The steady decline in service-producing industry employment continued. The 146,000 (-3.3% y/y) drop was the seventeenth consecutive monthly decline but in percentage terms the three-month rate of change moderated slightly to -2.3%. The recent declines are roughly half the worst from December through March. Medium-sized service payrolls fell 58,000 (-3.7% y/y) and small-sized payrolls dropped 59,000 (-2.9% y/y). Large service producing payrolls dropped by 29,000 (-3.5% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902f.jpg" width="353">
In the goods producing sector there were 152,000 fewer jobs in August (-13.3% y/y). Here, the three-month rate of change eased again, but remained double-digit at -11.2% versus -17.1% at its worst. Small-sized payrolls fell 63,000 (-12.8% y/y) followed by a 58,000 (-13.7% y/y) drop in medium-sized payrolls. Large payrolls fell 31,000 (-13.1% y/y). In the manufacturing sector alone, payrolls fell an easier 74,000 (-12.8% y/y).
The ADP National Employment Report data is maintained in Haver&#39;s USECON database; historical figures date back to December 2000. The figures in this report cover only private sector jobs and exclude employment in the public sector, which rose an average 11,083 during the last twelve months. 
The full ADP National Employment Report can be found <a href="http://adpemploymentreport.com/pdf/FINAL_Report_August_09.pdf">here</a> and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">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/USECON/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</a></th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Nonfarm Private Payroll Employment (m/m Chg., 000s)</td>
<td>-298</td>
<td>-360</td>
<td>-5.2%</td>
<td>-0.5%</td>
<td>1.2%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Small Payroll (1-49)</td>
<td>-122</td>
<td>-135</td>
<td>-4.4</td>
<td>-0.0</td>
<td>1.6</td>
<td>2.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Medium Payroll (50-499)</td>
<td>-116</td>
<td>-153</td>
<td>-5.8</td>
<td>-0.5</td>
<td>1.2</td>
<td>1.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Large Payroll (&gt;500)</td>
<td>-60</td>
<td>-72</td>
<td>-5.6</td>
<td>-1.6</td>
<td>-0.1</td>
<td>0.4</td>
</tr>
</tbody>
</table>


</html>

It's part of a slowly developing trend, but the rate of job loss moderated again last month. The latest report from the payroll processor ADP, in their National Employment Report, indicated that private nonfarm payrolls fell 298,000 [...]

ADP Report: Rate of Job Loss Continues to Moderate, But Slowly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902a.jpg" align="right" border="0" height="265" width="353">
The U.S. government's "Cash for Clunkers" (CARS) program was
in full force during the final three weeks of last month. The program
gave car buyers up to $4,500 for trading in older, gas-guzzling
vehicles if they bought more fuel efficient cars &amp; light
trucks. An estimated 700,000 clunkers were taken off the road (to be
scrapped) and replaced by more fuel efficient vehicles. The program
cost the Federal Government $2.877 billion. Indeed, the CARS program
seems to have stimulated sales of new vehicles. <img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902b.jpg" align="right" border="0" height="265" width="353">
U.S. unit
sales of light vehicles during August jumped 25.4% m/m to
14.09M units which was their highest since May of 2008, according to
the Autodata Corporation. (Seasonal adjustment of the figures is
provided by the U.S. Bureau of Economic Analysis). August sales were
indeed higher than the expected 13.2M sales rate. The question now is
to what degree these sales borrowed from the future?
Sales of domestically made vehicles jumped
22.6% m/m to 10.02M units but they still were down 0.9% y/y. Sales of
fuel efficient cars rose 28.0% m/m and that lifted them by 18.7% y/y.
Light truck sales posted a 17.1% m/m gain that still left them down
16.3% versus last August. Year-to-date, sales of domestic vehicles
overall are up 31.5% following last year's 35.8% drop from
December-to-December.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902c.jpg" align="right" border="0" height="265" width="353">
Imported light vehicles similarly
benefitted from the government's sales program. A 32.9% m/m rise to
4.08M units actually exceeded the sales gain for domestics and brought
them up 18.1% y/y. Sales of imported autos rose by more than one-third
from July and were at their highest level since last June. Sales of
imported light trucks similarly rose by nearly one-third m/m and rose
16.7% y/y. Year-to-date sales of imported vehicles rose by nearly
one-half following last year's 33.9% decline.
Overall, import's share of the U.S. light
vehicle market rose to 28.9% last month after reaching 26.5% during all
of last year. (Imported vehicles are those produced outside the United
States.) Imports' share of the U.S. car market totaled 34.6%, versus
34.3% last year while the share of the light truck market was 21.4%, up
from 18.3 % last year.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090902d.jpg" align="right" border="0" height="265" width="353">
By maker, GM car sales in August fell 4.6%
from last August but Ford's sales rose 24.9% y/y. Chrysler sales fell
13.0% but sales of Toyotas rose a strong 19.7%. Sales of Nissan autos
jumped 38.4% while Subaru car sales soared 54.7%. Sales of the high-end
Mercedes autos fell 17.5% y/y and sales of BMW's were off 16.3%. In the
light truck market, GM's sales fell by nearly one-third y/y but Ford's
sales increased 12.9%. Chrysler's truck sales fell 16.2% and Toyota
truck sales similarly fell 14.6%. Sales of Nissan's light trucks were
off by nearly one-half versus last August but Subaru's sales rose by
nearly one-half.
The U.S. vehicle sales figures can be found in Haver's
USECON database and the company sales figures are in the INDUSTRY
database.
Economy to turn the corner in 2010 from the
Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2009_265a.pdf">here.</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<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">August</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">August Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>14.09</td>
<td>11.24</td>
<td>9.70</td>
<td>3.9%</td>
<td>13.17</td>
<td>16.16</td>
<td>16.54</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>8.05</td>
<td>6.20</td>
<td>5.04</td>
<td>18.7</td>
<td>6.71</td>
<td>7.58</td>
<td>7.77</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>5.26</td>
<td>4.11</td>
<td>3.28</td>
<td>18.7</td>
<td>4.42</td>
<td>5.07</td>
<td>5.31</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>2.78</td>
<td>2.09</td>
<td>1.76</td>
<td>18.8</td>
<td>2.29</td>
<td>2.52</td>
<td>2.45</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>6.05</td>
<td>5.04</td>
<td>4.66</td>
<td>-10.9</td>
<td>6.47</td>
<td>8.60</td>
<td>8.78</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.75</td>
<td>4.06</td>
<td>3.78</td>
<td>-16.3</td>
<td>5.29</td>
<td>7.10</td>
<td>7.42</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.29</td>
<td>0.98</td>
<td>0.88</td>
<td>16.7</td>
<td>1.18</td>
<td>1.47</td>
<td>1.37</td>
</tr>
</tbody>
</table>
</body></html>

The U.S. government's "Cash for Clunkers" (CARS) program was in full force during the final three weeks of last month. The program gave car buyers up to $4,500 for trading in older, gas-guzzling vehicles if they bought more fuel [...]

Three Weeks Of "Cash for Clunkers" Program Spurs August U.S. Vehicle Sales To Highest Since May 2008

Three Weeks Of "Cash for Clunkers"Program Spurs August U.S. Vehicle Sales To Highest Since May 2008

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901f.jpg" align="right" border="0" height="265" width="353">
Preliminary
data show that German retail sales rose 0.7% in volume
terms in July after declining in May and June. (Final data for total
retail sales plus data on the composition of sales for the month of
July will be available in about two weeks.) The value of
retail sales rose only 0.1%, implying a decline in retail
prices.&nbsp; While the rise in retail sales is encouraging, its
magnitude suggests a pretty lack luster consumer.&nbsp;&nbsp;
The first chart shows the volume, value and implied price level of
Germany's retail sales. Perhaps the reason that these data suggest
such a lack luster consumer, is that they do not take into account the
effect of the Government's program, paying people 2,500 Euros if they
scrap their car and buy a new one, which began in January.&nbsp;
German retail sales data exclude sales of motor vehicles.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901g.jpg" align="right" border="0" height="265" width="353">
&nbsp;
Combined wholesale and retail sales of cars and light trucks are
available in the Manufacturing, Trade &amp; Service Section of the
Haver data base for Germany.&nbsp; This series combining wholesale
sales is not strictly comparable with the retail sales data and is
available only through June. The increase in passenger car
registrations is, perhaps, a better proxy for sales of new cars and
this series, which is not seasonally adjusted, is available through
July.&nbsp; It, too, can be&nbsp; found in the&nbsp;
Manufacturing, Trade &amp; Services section in the Haver data base
on Germany.&nbsp; The year to year increases in these two series
are shown in the second chart.&nbsp; The&nbsp; year to year
increases in car registrations since January have been particularly
striking and suggest that consumers have a higher propensity to spend
than the retail sales data would suggest.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">Jul 09</th>
<th scope="col">Jun&nbsp; 09</th>
<th scope="col">Jul 08</th>
<th scope="col">M/M %&nbsp;</th>
<th scope="col">Y/Y %</th>
<th scope="col">2008&nbsp;</th>
<th scope="col">2007 </th>
<th scope="col"> 2006 </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Retail Sales Volume&nbsp;
(2005=100)</td>
<td>94.9</td>
<td>94.2</td>
<td>-5.9</td>
<td>0.74</td>
<td>-1.04</td>
<td>96.5</td>
<td>97.2</td>
<td>1000.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail Sales Value&nbsp;
(2005=100)</td>
<td>99.1</td>
<td>99.0</td>
<td>101.4</td>
<td>0.10</td>
<td>-2.27</td>
<td>101.4</td>
<td>99.4</td>
<td>100.9</td>
</tr>
<tr class="even">
<td class="firstcol">Retail Sales Implied Price
Level&nbsp; (2005=100)</td>
<td>104.4</td>
<td>105.1</td>
<td>105.7</td>
<td>-0.64</td>
<td>-1.24</td>
<td>105.1</td>
<td>102.2</td>
<td>100.9</td>
</tr>
<tr>
<td class="firstcol">Year to Year % Change</td>
<td>Jul 09</td>
<td>Jun&nbsp; 09</td>
<td>May 09</td>
<td>Apr&nbsp;&nbsp;&nbsp; 09</td>
<td>Mar 09</td>
<td>Feb 09&nbsp;</td>
<td>Jan 09 </td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Wholesale and Retail Sales of
Cars and Light Motor Vehicles</td>
<td>n.a.</td>
<td>8.59</td>
<td>7.23</td>
<td>0.75</td>
<td>23.70</td>
<td>5.38</td>
<td>-15.89</td>
<td>--</td>
</tr>
<tr class="even">
<td class="firstcol">New Passenger Car Registrations</td>
<td>29.50</td>
<td>40.48</td>
<td>39.71</td>
<td>19.39</td>
<td>39.33</td>
<td>21.48</td>
<td>-14.21</td>
<td>--</td>
</tr>
</tbody>
</table>
</body></html>

Preliminary data show that German retail sales rose 0.7% in volume terms in July after declining in May and June. (Final data for total retail sales plus data on the composition of sales for the month of July will be available in [...]

German Retail Sales Up A Bit In July: Where Are The Auto Sales Resulting From Germany's "Cash For Clunkers" Program?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901k.jpg" width="353">
Despite improvement in the residential sector, the total value of construction outlays has continued to trend lower. The overall value of construction spending ticked lower last month by 0.2% to the lowest level since February of 2004.
The declining level of construction has very-much reflected the weakening of corporate profitability which lowered spending in the private nonresidential sector by 1.2% during July and 8.3% from one year ago. That compares to the gain for all of last year of 13.2%. The commercial sector led that weakness with a 34.6% y/y decline followed closely by a 31.3% drop in the multi-retail sector. Office building construction wasn&#39;t far behind with a 26.0% drop in activity. Easier, but still significant, shortfalls versus last year were logged by the health care (-3.6%) and educational (-10.2% y/y) sectors. Spending in the transportation sector was off just 0.6% y/y.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901l.jpg" width="353">
Residential building activity may be finding its bottom to the recent recession in building activity. It rose 2.3% from June. Nevertheless, spending was down by more than one-quarter from the year-ago level paced by a near-halving of single family-home activity and a 36.6% drop in multi-family spending.Sometimes it&#39;s cheaper to fix the old place up than to buy new. Spending on alterations and improvements rose 6.0% from the year-ago level.
Public construction activity has elevated the overall construction market of late. Though in July it edged down 0.5%, there&#39;s been an increase of 5.5% since last year. By sector, health care has led the y/y rise with a 29.2% jump followed by a 17.9% rise in commercial construction. Spending on highways and streets did fall slightly in July but it&#39;s up 3.4% y/y while spending on schools construction rose 4.5 y/y.
The construction put-in-place figures are available in Haver&#39;s USECON database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Construction (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.2</td>
<td>0.1</td>
<td>-10.5</td>
<td>-6.9</td>
<td>-1.6</td>
<td>6.3</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>0.1</td>
<td>-1.6</td>
<td>-17.0</td>
<td>-11.1</td>
<td>-5.7</td>
<td>5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>2.3</td>
<td>-0.5</td>
<td>-27.8</td>
<td>-29.1</td>
<td>-19.7</td>
<td>1.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>-1.2</td>
<td>-2.2</td>
<td>-8.3</td>
<td>13.2</td>
<td>23.1</td>
<td>16.2</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-0.7</td>
<td>3.6</td>
<td>5.5</td>
<td>5.6</td>
<td>13.1</td>
<td>9.3</td>
</tr>
</tbody>
</table>
</body>
</html>

Despite improvement in the residential sector, the total value of construction outlays has continued to trend lower. The overall value of construction spending ticked lower last month by 0.2% to the lowest level since February of [...]

U.S. Construction Spending Holds Steady

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901h.jpg" align="right" border="0" height="265" width="353">There's
been no letup in the recovery in housing demand. The National
Association of Realtors reported that during July pending, improved
home affordability boosted sales of existing homes by 3.2% from June to
their highest level since June of 2007. The gain followed a similar
rise in June sales and doubled Consensus expectations for a 1.6%
increase. The gain in July home sales was led by a 12.1% m/m rise in
sales in the West.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901i.jpg" align="right" border="0" height="265" width="353">
That rise&nbsp; was a multiple of the increases
during the last several months and it lifted sales to the highest level
since September of last year. The latest also was near the highest
since early-2006. Sales in the South also rose a firm 3.1% to the
highest level since mid-2007. Sales in the Midwest went the other way
and fell 2.0%. They have been roughly flat since January. Finally,
sales in the Northeast dropped 3.0% from June and were roughly
unchanged since April. These home sales figures are analogous to the
new home sales data from the Commerce Department in that they measure
existing home sales when the sales contract is signed, not at the time
the sale is closed. The series dates back to 2001.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901j.jpg" align="right" border="0" height="265" width="353">
The
pending home sales data are available in Haver's PREALTOR database.
The number of homes on the market and prices are in the REALTOR
database.&nbsp;
<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/WEEKLY/@W5/@W507/@W507.HTM">Pending
Home Sales (2001=100)&nbsp;</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>97.6</td>
<td>94.6</td>
<td>&nbsp;&nbsp; 12.1%</td>
<td>86.8</td>
<td>95.8</td>
<td>112.1&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Northeast</td>
<td>78.8</td>
<td>81.2</td>
<td>4.6</td>
<td>72.6</td>
<td>85.6</td>
<td>98.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Midwest</td>
<td>88.1</td>
<td>89.9</td>
<td>8.1</td>
<td>80.6</td>
<td>89.5</td>
<td>102.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; South</td>
<td>103.8</td>
<td>100.7</td>
<td>12.1</td>
<td>89.8</td>
<td>107.3</td>
<td>127.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp; West</td>
<td>112.5</td>
<td>100.4</td>
<td>19.9</td>
<td>99.3</td>
<td>92.1</td>
<td>109.5</td>
</tr>
</tbody>
</table>
</body></html>

There's been no letup in the recovery in housing demand. The National Association of Realtors reported that during July pending, improved home affordability boosted sales of existing homes by 3.2% from June to their highest level [...]

U.S. Pending Home Sales Remain Firm And Rise To The Highest Level In Two Years

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901d.jpg" width="353">
Earlier strength in gasoline prices took a breather during July and August. Nevertheless, prices remained up sharply since the year began. The pump price for regular gasoline dipped slightly last week to an average $2.61 per gallon, roughly where it&#39;s been since early June. Compared to the December low, however, prices remained up by one dollar (62%). Yesterday, that slight decline in pump prices was accompanied by a dip in the wholesale gasoline price to $1.84 per gallon. Prices had reached a high in early-August of $2.03. The figures are reported by the U.S. Department of Energy and can be found in Haver&#39;s WEEKLY &amp; DAILY databases.
In contrast to the stability of gasoline prices, crude oil prices have strengthened. Light sweet crude oil prices (WTI) increased to $72.41 per barrel last week versus a June high of $70.61. Prices have more-than-doubled since the December low of $32.37. Most recently, the price strength eased. Yesterday the spot market price for light sweet crude oil fell to $69.96 per barrel. Prices had reached a daily high of $73.82 just last week.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/090901e.jpg" width="353">
Earlier strength in gasoline prices stood against the backdrop of a firming demand picture, which now has eased. Since early-June the demand for gasoline has dropped moderately and year-to year demand slipped by 3.5%. Demand for distillate also is off sharply (-19.8% y/y) and residual fuel oil demand has given back its earlier strength (-14.8% y/y). Finally, oil remains plentiful as evidenced by an 11.3% y/y rise in inventories of crude oil &amp; petroleum products. Inventories of gasoline recently have dropped somewhat but they have strengthened by 6.5% versus last year, the strongest gain since early last year. The figures on crude oil production and inventories are available in Haver&#39;s OILWKLY database.
Natural gas prices make up the weakest part of the energy sector&#39;s pricing environment. Falling last week to an average of $2.72 per mmbtu (-66.5% y/y), prices were down by over three-quarters from the high reached in early-July of last year of $13.19/mmbtu.
Has Greater Globalization Made Forecasting Inflation More Difficult? from the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/eclett/2009/el0905.pdf"> 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/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">08/31/09</th>
<th scope="col">08/24/09</th>
<th scope="col">Y/Y</th>
<th scope="col">2008</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon, Regular)</td>
<td>2.61</td>
<td>2.63</td>
<td>-29.0%</td>
<td>3.25</td>
<td>2.80</td>
<td>2.57</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>72.41</td>
<td>70.82</td>
<td>-37.9%</td>
<td>100.16</td>
<td>72.25</td>
<td>66.12</td>
</tr>
</tbody>
</table>
</body>
</html>

Earlier strength in gasoline prices took a breather during July and August. Nevertheless, prices remained up sharply since the year began. The pump price for regular gasoline dipped slightly last week to an average $2.61 per gallon, [...]

Gasoline Prices Remain Roughly Stable As Crude Oil Prices Tick Higher

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

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.

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/1GqSlFq3gfZuMYDWhif8Ht?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Cracks Beneath The Shine

250820A5.jpg

250820B5.jpg

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

250819F1.jpg

250819G1.jpg

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.

250819H1.jpg

250819I1.jpg

- 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.

U.S. Housing Starts Strengthen Unexpectedly in July

Winnie Tapasanun

250819A35.jpg

250819B35.jpg

Online retail sales, formally known as retail e-commerce sales, rose a seasonally adjusted 1.4% q/q in Q2'25 to $304.2 billion following a 0.1% downtick in Q1’25 (0.0% initially) and a 1.7% increase in Q4’24 (unrevised), according to the U.S. Census Bureau. The Q2’25 reading was the 14th q/q gain in 15 quarters. The year-on-year rate of increase decelerated to 5.3% in Q2'25, the lowest since Q2'22, from 6.0% Q1’25. The latest y/y number was lower than 7.1% in Q2'24; thus, having remained significantly below a high of 45.3% in Q1'21 and a peak of 53.5% in Q2’20.

The Q2'25 rise in retail e-commerce sales compared to a 0.4% q/q gain (3.9% y/y) to $1,865.4 billion in total retail sales during the same period. This overall measure of retail sales excludes food services and restaurant sales. Retail e-commerce sales accounted for 16.3% of total retail sales in Q2'25 following 16.1% in Q1'25, registering the highest rate since Q2'20; the percentage was 16.1% in 2024, 15.3% in 2023, and 7.1% in 2015.

Details of the retail e-commerce sales data by sector are not seasonally adjusted. Sales of nonstore retailers, which accounted for 58.5% of total e-commerce sales, rose 5.3% (1.8% y/y) in Q2'25, the fourth q/q rise in five quarters, following a 20.7% decrease in Q1'25. Building materials & garden equipment sales recovered 34.7% (9.9% y/y), the largest q/q gain since Q2'20, reversing a 16.2% drop. Health & personal care sales rebounded 12.8% (1.7% y/y), the second q/q increase in three quarters, after having plummeted 40.9%.

Clothing accessory store sales rose 9.2% (-1.3% y/y) in Q2'25 after a 38.3% plunge in Q1'25. General merchandise store sales increased 8.4% (17.2% y/y) following a 20.9% drop. Sales of furniture & home furnishings rose 5.1% (4.4% y/y) after a 15.6% fall. Sporting goods, hobby, musical instrument & book sales grew 4.3% (6.7% y/y) following a 31.3% slump. These series registered the fourth q/q gain in five quarters.

Sales of motor vehicles & parts advanced 8.3% (15.9% y/y) in Q2'25, the largest of six straight q/q increases, on top of a 1.0% rise in Q1'25. Miscellaneous sales including gasoline stations recovered 2.6% (2.3% y/y), up for the second quarter in three, following a 2.3% decline. Food & beverage sales excluding food services rose 0.8% (15.5% y/y), the third q/q rise in four quarters, after a 0.1% easing.

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

Retail e-commerce sales data can be found in Haver's **USECON** database.

- Sales +1.4%, the 14th q/q rise in 15 qtrs.; +5.3% y/y, the lowest since Q2'22.
- Online share of total retail sales up to 16.3%, the highest since Q2'20.
- Nonstore sales rebound, up for the fourth quarter in five.
- Widespread gain in online sales led by bldg. materials & garden equipt. (+34.7% q/q).

U.S. Retail E-Commerce Sales Rise in Q2'25

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Retail gasoline prices for all grades, on average, inched up to $3.25 per gallon (-7.1% y/y) last week after falling to $3.24 one week earlier. Prices remained above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel fell to $3.71 per gallon (+0.7% y/y) in the week of August 18 after easing to $3.75 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil declined to $63.31 per barrel (-19.7% y/y) in the week ended August 15 from $64.71 in the prior week. The drop left prices at the lowest level since the first week of June. Prices remained above a $59.04 low in the second week of May. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $63.96 per barrel. The price of European Brent crude fell to $67.17 per barrel (-18.6% y/y) in the week of August 15, after falling to $68.17 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price was $68.18 per gallon yesterday.

Natural gas prices slipped to an average $2.94/mmbtu (+38.0% y/y) in the week ended August 15, after falling to an average $2.99/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.96 per mmbtu.

Gasoline demand declined 1.5% y/y in the four weeks ending August 8, following a 2.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.9% y/y in the four weeks ending August 8, after a 1.6% y/y increase in the previous four-week period. Crude oil input to refineries rose 4.2% y/y in the four weeks ending August 8, after a 2.9% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 8 after a 0.9% y/y in the prior week. Residual fuel oil inventories fell 25.7% y/y in the week of August 8, after a 25.8% y/y fall in the prior week. Crude oil inventories rose 2.8% y/y in the week of August 8 after a 2.7% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 25.0 days in the week of August 8, unchnged from the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil held at 25.0 days in the week of August 8, and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

Economy in Brief: September 2009

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