Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071106b.jpg" width="353">
On average, retail gasoline prices topped $3.00 per gallon last week, according to the US Department of Energy survey. The level was not a record as it was still below the highs reached in early June. It did, however, represent a 7.5% increase from the average level in October and a roughly one third increase from prices a year earlier. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071106c.jpg" width="353">
Divided by consumer prices other than energy, these gasoline prices are just 6% below the high reached in 1981.
Higher crude oil prices have driven the price increase. On Friday, spot WTI crude stood at $90.39 per barrel, up by half the price during late 2006.
In another inflation signal, gold prices rose to near $800 per ounce, the level surpassed the previous record price reached in early 1980.
Energy Prices and the Economy, a 2004 article from the Federal Reserve Bank of Dallas is available <a href="http://www.dallasfed.org/research/indepth/2004/id0402.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">11/05/07</th>
<th scope="col">10/31/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Retail Gasoline ($ per Gallon)</td>
<td>3.01</td>
<td>2.87</td>
<td>37.0%</td>
<td>2.57</td>
<td>2.27</td>
<td>1.85</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>90.39</td>
<td>86.48</td>
<td>53.9%</td>
<td>61.11</td>
<td>58.16</td>
<td>41.78</td>
</tr>
<tr class="odd">
<td class="firstcol">Gold: Handy &amp; Harmon ($ per Troy Oz.)</td>
<td>$783.25</td>
<td>$758.25</td>
<td>29.7%</td>
<td>628.70</td>
<td>$507.40</td>
<td>$443.40</td>
</tr>
</tbody>
</table>
</body>
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On average, retail gasoline prices topped $3.00 per gallon last week, according to the US Department of Energy survey. The level was not a record as it was still below the highs reached in early June. It did, however, represent a 7.5% [...]

Gasoline Above $3.00 per Gallon, Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071106a.jpg" width="353">
Chain store sales during the opening week of November jumped 1.0% from the week prior according to the International Council of Shopping Centers (ICSC)-UBS. The gain followed a 0.1% up tick during the prior week.
As a result of rise, early November sales began the month 0.5% ahead of the October average which fell 0.8% from September.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-UBS rose 0.8% (0.5% y/y) after declines during the two prior weeks.
The October 2007 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board is available <a href="http://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/default.htm"> 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/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">11/03/07</th>
<th scope="col">10/27/07</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>477.8</td>
<td>473.3</td>
<td>2.4%</td>
<td>3.3%</td>
<td>3.6%</td>
<td>4.7%</td>
</tr>
</tbody>
</table>


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Chain store sales during the opening week of November jumped 1.0% from the week prior according to the International Council of Shopping Centers (ICSC)-UBS. The gain followed a 0.1% up tick during the prior week. As a result of rise, [...]

U.S. Chain Store Sales Recovered

The Bureau of Labor Statistics reported in the Job Openings & Labor Turnover Survey (JOLTS) that the September job openings rate was unchanged from the prior month at 2.9%. That level was, however, down from the highs of late last [...]

JOLTS: Job Openings Unchanged, Hires Rate Depressed

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105c.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105d.jpg" height="265" width="312">

Industrial production in the United Kingdom declined 0.50% in
September to 99.1 (2003=100) from 99.6 in August and was 0.30% below
September, 2006. Energy, which has been in a down trend for the past
three years was the only major sector to increase. The production of
consumer non durable and durable goods, capital goods and intermediate
goods were all down, as can be seen in the first chart.
The Purchasing Managers Index of manufacturing activity for
October, published last week suggests continued weakness in the
manufacturing sector. The index, while still in the expansion phase
(above 50), declined 3.25% from September to 52.4% in October.
Much more important, the October Purchasing Managers Index for
services was released today. Services account for almost 75% of the
Gross Domestic Product, while manufacturing accounts for about 15%. The
service index showed a decline, almost twice as large as that of the
manufacturing sector--6.37%--to 53.08%. The two PMI's are shown in the
second chart.

<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;INDUSTRIAL
PRODUCTION 2003=100&nbsp;</th>
<th scope="col">Sep 07</th>
<th scope="col">Aug 07&nbsp;</th>
<th scope="col">Sep 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>99.1</td>
<td>99.6</td>
<td>99.4</td>
<td>-0.50</td>
<td>-0.30</td>
<td>98.8</td>
<td>98.8</td>
<td>100.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer
Durables</td>
<td>106.0</td>
<td>107.6</td>
<td>103.7</td>
<td>-1.49</td>
<td>2.22</td>
<td>104.3</td>
<td>102.9</td>
<td>104.1</td>
</tr>
<tr>
<td class="firstcol">Consumer
Nondurables</td>
<td>98.5</td>
<td>98.8</td>
<td>99.8</td>
<td>-0.30</td>
<td>-1.30</td>
<td>99.2</td>
<td>99.2</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">Capital
Goods </td>
<td>108.9</td>
<td>109.4</td>
<td>108.7</td>
<td>-0.46</td>
<td>0.18</td>
<td>107.1</td>
<td>103.2</td>
<td>103.6</td>
</tr>
<tr>
<td class="firstcol">
Intermediate Goods</td>
<td>102.2</td>
<td>103.3</td>
<td>101.6</td>
<td>-1.06</td>
<td>0.59</td>
<td>101.2</td>
<td>100.1</td>
<td>102.3</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>85.2</td>
<td>84.6</td>
<td>85.9</td>
<td>0.71</td>
<td>-0.81</td>
<td>86.2</td>
<td>91.5</td>
<td>96.4</td>
</tr>
</tbody>
</table>
</body></html>

Industrial production in the United Kingdom declined 0.50% in September to 99.1 (2003=100) from 99.6 in August and was 0.30% below September, 2006. Energy, which has been in a down trend for the past three years was the only major [...]

Signs of Cooling in the British Economy

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105a.jpg" width="353">
According to the Institute for Supply Management, the October Business Activity Index for the non-manufacturing sector increased one point to 55.8. The rise made up the one point m/m decline in September and was a better reading than Consensus expectations for a slight decline to 54.
Since the series&#39; inception in 1997 there has been a 44% correlation between the level of the Business Activity Index in the non-manufacturing sector and the Q/Q change in real GDP for the services and the construction sectors. The correlation of the factory sector ISM index with the change in real GDP less just services is a higher 57%, though over the last ten years it only has been 34%.
The new orders sub index of the Business Activity Index recovered most of its September decline and rose to 55.7, still down from last year&#39;s average level of 57.1. So far this year the orders index has averaged 55.3<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105b.jpg" width="353">
The employment sub index, conversely, fell slightly to 51.8. It has averaged 52.1 this year versus 53.8 last year. Since the series&#39; inception in 1997 there has been a 56% 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.
Pricing power fell lightly m/m and for the year so far the index has averaged 61.7 versus 65.2 for all of 2006. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
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 back to July 1997.
The Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the ISM manufacturing sector composite index is a weighted average of five components.
Financial Instability and Monetary Policy is Federal Reserve Board GovernorFrederic S. Mishkin&#39;s speech and it is available <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20071105a.htm"> here</a>.
What Are the Chances? from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20071101/cover.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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October &#39;06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>55.8</td>
<td>54.8</td>
<td>57.4</td>
<td>58.0</td>
<td>60.2</td>
<td>62.5</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.5</td>
<td>66.1</td>
<td>52.6</td>
<td>65.2</td>
<td>68.0</td>
<td>68.8</td>
</tr>
</tbody>
</table>


</html>

According to the Institute for Supply Management, the October Business Activity Index for the non-manufacturing sector increased one point to 55.8. The rise made up the one point m/m decline in September and was a better reading than [...]

U.S. ISM Non-manufacturing Index Improved Slightly

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105a.jpg" align="left" border="0" height="265" width="353">
According to the Institute for Supply Management, the October
Business Activity Index for the non-manufacturing sector increased one
point to 55.8. The rise made up the one point m/m decline in September
and was a better reading than Consensus expectations for a slight
decline to 54.
Since the series' inception in 1997 there has been a 44%
correlation between the level of the Business Activity Index in the
non-manufacturing sector and the Q/Q change in real GDP for the
services and the construction sectors. The correlation of the factory
sector ISM index with the change in real GDP less just services is a
higher 57%, though over the last ten years it only has been 34%.
The new orders sub index of the Business Activity Index
recovered most of its September decline and rose to 55.7, still down
from last year's average level of 57.1. So far this year the orders
index has averaged 55.3<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105b.jpg" align="right" border="0" height="265" width="353">
The employment sub index, conversely, fell slightly to 51.8.
It has averaged 52.1 this year versus 53.8 last year. Since the series'
inception in 1997 there has been a 56% 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.
Pricing power fell lightly m/m and for the year so far the
index has averaged 61.7 versus 65.2 for all of 2006. Since inception
ten years ago, there has been a 60% correlation between the price index
and the q/q change in the GDP services chain price index.
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 back to July 1997.
The Business Activity Index for the non-manufacturing
sector reflects a question separate from the subgroups mentioned above.
In contrast, the ISM manufacturing sector composite index is a weighted
average of five components.
Financial Instability and Monetary Policy
is Federal Reserve Board GovernorFrederic S. Mishkin's speech and it is
available <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20071105a.htm">
here</a>.
What Are the Chances? from the Federal
Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20071101/cover.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/@EF/@EF03/@EF03.HTM">ISM
Nonmanufacturing Survey</a></th>
<th scope="col">October</th>
<th scope="col">September</th>
<th scope="col">October '06</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>55.8</td>
<td>54.8</td>
<td>57.4</td>
<td>58.0</td>
<td>60.2</td>
<td>62.5</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>63.5</td>
<td>66.1</td>
<td>52.6</td>
<td>65.2</td>
<td>68.0</td>
<td>68.8</td>
</tr>
</tbody>
</table>
Signs of Cooling in the BritishEconomy 
by <a href="/comment/Curley.html">Louise
Curley</a> November 5, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105c.jpg" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071105d.jpg" height="265" width="312">

Industrial production in the United Kingdom declined 0.50% in
September to 99.1 (2003=100) from 99.6 in August and was 0.30% below
September, 2006. Energy, which has been in a down trend for the past
three years was the only major sector to increase. The production of
consumer non durable and durable goods, capital goods and intermediate
goods were all down, as can be seen in the first chart.
The Purchasing Managers Index of manufacturing activity for
October, published last week suggests continued weakness in the
manufacturing sector. The index, while still in the expansion phase
(above 50), declined 3.25% from September to 52.4% in October.
Much more important, the October Purchasing Managers Index for
services was released today. Services account for almost 75% of the
Gross Domestic Product, while manufacturing accounts for about 15%. The
service index showed a decline, almost twice as large as that of the
manufacturing sector--6.37%--to 53.08%. The two PMI's are shown in the
second chart.

<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;INDUSTRIAL
PRODUCTION 2003=100&nbsp;</th>
<th scope="col">Sep 07</th>
<th scope="col">Aug 07&nbsp;</th>
<th scope="col">Sep 06&nbsp;</th>
<th scope="col">M/M Chg&nbsp;</th>
<th scope="col">Y/Y Chg&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Industrial Production</td>
<td>99.1</td>
<td>99.6</td>
<td>99.4</td>
<td>-0.50</td>
<td>-0.30</td>
<td>98.8</td>
<td>98.8</td>
<td>100.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer
Durables</td>
<td>106.0</td>
<td>107.6</td>
<td>103.7</td>
<td>-1.49</td>
<td>2.22</td>
<td>104.3</td>
<td>102.9</td>
<td>104.1</td>
</tr>
<tr>
<td class="firstcol">Consumer
Nondurables</td>
<td>98.5</td>
<td>98.8</td>
<td>99.8</td>
<td>-0.30</td>
<td>-1.30</td>
<td>99.2</td>
<td>99.2</td>
<td>100.0</td>
</tr>
<tr>
<td class="firstcol">Capital
Goods </td>
<td>108.9</td>
<td>109.4</td>
<td>108.7</td>
<td>-0.46</td>
<td>0.18</td>
<td>107.1</td>
<td>103.2</td>
<td>103.6</td>
</tr>
<tr>
<td class="firstcol">
Intermediate Goods</td>
<td>102.2</td>
<td>103.3</td>
<td>101.6</td>
<td>-1.06</td>
<td>0.59</td>
<td>101.2</td>
<td>100.1</td>
<td>102.3</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>85.2</td>
<td>84.6</td>
<td>85.9</td>
<td>0.71</td>
<td>-0.81</td>
<td>86.2</td>
<td>91.5</td>
<td>96.4</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102f.jpg" align="left" border="0" height="265" width="353">
Is the thrill gone?EMU indexes stand more or less mid range. 
 

In October the MFG PMIs are losing momentum. The chart on the
left shows the year-over-year percentage drops in the levels of the
index for key EMU countries. Although the various nations are at
different levels in terms of their respective MFG indexes they are all
declining in a very sympathetic bunched fashion. 
 

The big countries - Germany, France, Italy and Spain &#8211; all
have indexes clustered just north of their 50 breakeven marks. Spain
has slipped below 50, the breakeven point for expansion/contraction. In
terms of their respective range of values we find France and Spain are
lower in their range percentiles. France&#8217;s raw reading of 50.54 is in
the bottom 38 percentile of its range even though that PMI reading is
above 50. The MFG PMI in France has simply tended to be stronger than
in other countries. 
 

Some of the smaller countries (Ireland, Greece, Austria and
the Netherlands) have PMI ratings that are much higher in their
respective ranges with raw PMI scores as high as 56. Greece has a PMI
reading that ranks in the top 79th percentile of its range. Right now,
the small countries of Europe are the ones pressing the advance for MFG
for EMU as a region. 
 

The UK, an EU member but not an EMU member, has a raw PMI
score of 52.93, higher than any large EMU county and a range reading of
68.8% showing that the UK is also strong in its range of values. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="7" scope="col"> NTC MFG Indexes</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td style="color: red;">51.52</td>
<td style="color: red;">53.21</td>
<td style="color: red;">53.02</td>
<td style="color: red;">54.09</td>
<td style="color: red;">54.96</td>
<td>52.2%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">51.67</td>
<td style="color: red;">54.87</td>
<td>54.17</td>
<td>55.44</td>
<td>56.67</td>
<td>55.2%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td>50.54</td>
<td style="color: red;">50.51</td>
<td>51.20</td>
<td>52.50</td>
<td>53.27</td>
<td style="color: red;">38.1%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">51.34</td>
<td style="color: red;">52.39</td>
<td>52.45</td>
<td>53.28</td>
<td>53.74</td>
<td>56.1%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td style="color: red;">49.58</td>
<td style="color: red;">50.80</td>
<td>50.85</td>
<td>52.35</td>
<td>54.27</td>
<td style="color: red;">44.7%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td style="color: red;">52.77</td>
<td>55.37</td>
<td>54.21</td>
<td>54.00</td>
<td>55.24</td>
<td>60.8%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td>55.27</td>
<td>53.83</td>
<td>54.22</td>
<td>54.03</td>
<td>53.13</td>
<td>79.6%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">52.27</td>
<td>54.35</td>
<td>53.66</td>
<td>53.33</td>
<td>52.94</td>
<td>67.9%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td style="color: red;">56.15</td>
<td>56.36</td>
<td>56.23</td>
<td>56.98</td>
<td>56.72</td>
<td>78.6%</td>
</tr>
<tr class="grey3">
<td colspan="7" class="firstcol">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td style="color: red;">52.93</td>
<td style="color: red;">54.73</td>
<td>54.54</td>
<td>54.75</td>
<td>54.21</td>
<td>68.8%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">percentile is over range since March
2000</td>
</tr>
</tbody>
</table>
</body></html>

Is the thrill gone?EMU indexes stand more or less mid range. In October the MFG PMIs are losing momentum. The chart on the left shows the year-over-year percentage drops in the levels of the index for key EMU countries. Although the [...]

PMIs in MFG are All Losing Momentum… but Still Showing Growth

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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071102e.jpg" align="left" border="0" height="265" width="353">
Car registrations rose in the EU by 1.9% in August, their
second monthly gain in a row. Still, sales trends are uncertain after
some real volatility from February through July. Except for a real
spike in July flanked by two severe months of declines, car
registrations have been downbeat. The EU numbers today are completed by
release of the French car registration figures that show a decline in
August. With two months gone in the third quarter, car registrations
are dropping at a 14% annual rate in France. For the EU, car
registrations are up at a 10% pace in Q3. For August, a rebound in
Germany and strength in Italy have helped to push the registration
numbers up for EMU in face of declines in the UK and France. On the
whole, though, car sales are as irregular as ever and hard to count on.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">EU Car
Registrations </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Month-to-month</td>
<td colspan="3">Saar</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
</tr>
<tr class="grey2">
<td class="firstcol">EU Total</td>
<td>1.9%</td>
<td>1.8%</td>
<td>-7.5%</td>
<td>-15.3%</td>
<td>11.5%</td>
<td>0.7%</td>
</tr>
<tr class="grey2">
<td class="firstcol">from 3Mo Moving average</td>
<td>-1.4%</td>
<td>2.6%</td>
<td>-0.6%</td>
<td>2.0%</td>
<td>1.6%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">Country detail</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>6.3%</td>
<td>3.0%</td>
<td>-4.7%</td>
<td>18.0%</td>
<td>56.5%</td>
<td>-2.1%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>-3.9%</td>
<td>3.2%</td>
<td>-1.4%</td>
<td>-8.8%</td>
<td>-1.3%</td>
<td>-1.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>10.5%</td>
<td>-10.5%</td>
<td>-5.2%</td>
<td>-22.9%</td>
<td>4.7%</td>
<td>7.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Spain</td>
<td>5.3%</td>
<td>-2.4%</td>
<td>-6.2%</td>
<td>-13.6%</td>
<td>10.5%</td>
<td>-2.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>-20.0%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>-54.4%</td>
<td>-29.4%</td>
<td>1.3%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">All SA
France also working day
adjusted</td>
</tr>
</tbody>
</table>
</body></html>

Car registrations rose in the EU by 1.9% in August, their second monthly gain in a row. Still, sales trends are uncertain after some real volatility from February through July. Except for a real spike in July flanked by two severe [...]

EU Registrations Up in August but Still with Challenged Trend

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

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

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The **PCE chain price index** increased 0.2% (2.6% y/y) after rising an unrevised 0.3% in June and an unrevised 0.2% in May. The y/y gain steadied at 2.6%. It was increased from 2.2% y/y in April. Energy prices fell 1.1% (-2.7% y/y) after rising 0.9%, while food & beverage prices eased 0.1% (+1.9% y/y) following a 0.3% rise. The price index excluding food & energy rose a steady 0.3%, after two straight 0.2% increases. The y/y gain edged up to 2.9% last month from 2.8% in June. It was increased from a low of 2.6% in April.

Durable goods prices eased 0.1% (+1.1% y/y) in July, after rising 0.5% in June. Home furnishings & appliance prices edged 0.1% higher (2.5% y/y), after increasing 1.3%. Recreational goods & vehicle costs declined 0.9% (-0.3% y/y) and reversed the 0.9% June strengthening. Motor vehicle & parts prices rose 0.2% (1.6% y/y), after a 0.4% June decline.

Prices of nondurable goods eased 0.1% (+0.2% y/y) last month after rising 0.4% in June. Clothing prices held steady both m/m and y/y after rising 0.3% in June. Food & beverage prices eased 0.1% (+1.9% y/y), following a 0.4% June increase. Gasoline & other energy prices fell 1.7% (-9.6% y/y), after rising 0.9% in June.

Services prices in July rose 0.3% (3.6% y/y), after four straight 0.2% increases. Housing & utility prices rose 0.2% (4.3% y/y), after two consecutive 0.3% increases, and services prices excluding energy & healthcare gained 0.4% (3.7% y/y) after two 0.2% gains. Healthcare prices rose 0.2% (2.7% y/y), after rising 0.4%. The cost of financial services & insurance jumped 1.2% (5.5% y/y) after rising 0.4% in June. Recreation services costs rose 0.3% (3.2% y/y) after rising 0.1%. Transportation prices gained 0.2% (4.4% y/y), following a 0.1% rise, while hotel & restaurant prices improved 0.1% (2.8% y/y) after a slight June decline.

**Personal consumption expenditures (PCE)** rose 0.5% (4.7% y/y) last month after increasing 0.4% in June, revised from 0.3%, after holding steady in May. The July rise matched expectations in the Action Economics Forecast Survey. When adjusted for price changes, PCE improved 0.3% in July (2.1% y/y) after rising 0.1% in June.

Real spending on durable goods increased 2.0% (3.2% y/y) in July, after falling for three straight months. Real spending on motor vehicles jumped 4.5% (3.5% y/y), after falling sharply in both June and May. Real outlays on furnishings & appliances improved 0.2% (0.9% y/y), after falling in each of the prior month. Real spending on recreational goods & vehicles increased 1.5% (4.9% y/y) last month, after falling 0.4% in June. Spending on “other” durable goods improved 0.4% (2.6% y/y) after rising 0.2% in June.

Nondurable goods spending in real terms rose 0.3% (2.7% y/y) in July after gaining 0.6% in June. Real clothing & footwear purchases rose 0.6% (4.9% y/y) last month, following a 0.5% rise during June. Real food & beverage purchases strengthened 0.7% (1.7% y/y) after rising 0.4%. Real outlays on gasoline & other energy products fell 1.3% (-1.5% y/y), after rising 1.5%. Real spending on “other” nondurable goods edged 0.1% higher (4.1% y/y) last month, following a 0.6% rise in June.

Real spending on services improved 0.1% (1.7% y/y) in July for the second straight month. Real spending on housing & utilities rose 0.1% (1.1% y/y) in July, for a second consecutive month, while real health care spending also rose 0.1% (3.9% y/y) after rising 0.2%. Real spending on food services & accommodations eased 0.2% (+1.7% y/y), after rising 0.4% in June. Real spending on financial services & insurance rose 0.2% (2.4% y/y) after increasing 0.4% in June. Real spending on transportation services rose 0.3% (-0.0% y/y) in July, after falling 0.6% in June. Recreation spending slipped 0.1% (+1.0% y/y), the same as in June. Spending on “other” services rose 0.3% (2.7% y/y) for the second straight month.

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**Personal income** rose 0.4% last month (5.0% y/y) after increasing 0.3% in June. A 0.5% gain was expected. Wages & salaries moved 0.6% higher (5.3% y/y), following a 0.1% increase during June. Rental income increased 0.5% (4.0% y/y) in July, after falling for three straight months. Proprietors’ income improved 0.7% (2.3% y/y), after a minimal 0.1% increase. Income from assets rose 0.1% (1.4% y/y), after holding steady in June, and current transfer receipts were unchanged (8.3% y/y) following a 1.1% June increase.

Disposable personal income increased 0.4% (4.6% y/y) during July following a 0.3% June rise. After adjusting for price changes, disposable income improved 0.2% (2.0% y/y) after holding steady in June.

The personal saving rate held steady in July at 4.4%, after falling from 5.0% in April. It still stands well above low of 3.5% in December of last year. Personal saving fell 1.7% (+5.8% y/y) in July, after declining 0.9% in June.

The personal income and consumption figures are available in Haver’s **USECON** database with detail in the **USNA** database. The Action Economics forecasts are in **AS1REPNA**.

**Let’s Get On with It** from Fed Governor Christopher J. Waller is available [here](https://www.federalreserve.gov/newsevents/speech/waller20250828a.htm).

250829C1.jpg

250829D1.jpg

- Core price increase y/y matches highest since February.
- Real spending moderation centers on services.
- Real disposable income improves; personal savings rate steadies.

U.S. Core PCE Price Inflation Up in July; Real Spending Slows Y/Y 

Winnie Tapasanun

250829H.jpg

250829I.jpg

The advance estimate of the U.S. international trade deficit in goods widened to a larger-than-expected $103.57 billion in July after narrowing to $84.85 billion in June, data from the U.S. Census Bureau showed. The July reading, the second widening in the goods trade deficit in three months, was slightly smaller than a $103.92 billion shortfall in July 2024. A deficit of $90.2 billion for July had been expected by the Action Economics Forecast Survey. The deficit reached a record $161.95 billion in March. In Q2'25, the goods trade deficit narrowed to $266.96 billion, the smallest since Q4'23, after ballooning to a record $465.035 billion in Q1'25; the monthly deficit averaged $88.99 billion in Q2'25, down from a record $155.01 billion in Q1'25.

Total goods exports dipped 0.1% m/m (+3.0% y/y), the third consecutive monthly decline, to $177.97 billion in July, the lowest level since January, after a 0.7% decrease to $178.08 billion in June. April registered a record high of $190.08 billion. Exports were up 9.6% from a June 2023 low but down 2.1% from a July 2022 high. The m/m decline in exports in July reflected exports m/m drops of 2.4% (+16.3% y/y) in other goods, 0.9% (+5.1% y/y) in nonfood consumer goods excluding autos, and 0.8% (-1.2% y/y) in industrial supplies & materials. To the upside, exports for the following end-use categories rose m/m in July: automotive vehicles & parts (2.2%; -4.0% y/y), capital goods excluding autos (0.7%; 7.0% y/y), and foods, feeds & beverages (0.5%; 1.4% y/y).

Total goods imports rebounded 7.1% m/m (1.7% y/y), the first monthly increase since March, to a four-month-high $281.54 billion in July following a 4.6% drop to $262.94 billion in June. March registered a record high of $344.59 billion. Imports were up 11.9% from a June 2023 low but down 2.6% from a March 2022 high. The m/m rebound in imports in July reflected m/m rises in most imports end-use categories. These included a 25.4% surge (the first m/m increase and the largest since January; 4.9% y/y) in industrial supplies & materials as well as rises of 11.5% (23.5% y/y) in other goods, 4.8% (14.7% y/y) in capital goods excluding autos, 2.4% (4.9% y/y) in foods, feeds & beverages, and 2.1% (-12.2% y/y) in nonfood consumer goods excluding autos. In contrast, imports of automotive vehicles & parts, the only end-use category with a monthly decline in July, fell 3.2% (-14.1% y/y), the third m/m fall in four months, on top of a 3.6% June decrease.

The advance international trade data can be found in Haver's **USECON** database. The expectation figure is from the Action Economics Forecast Survey, which is in **AS1REPNA**.

- Deficit: $103.57 bil. in July, jumping 22.1% from June’s $84.85 bil.
- Exports -0.1%, down for the third straight month, led by a 2.4% decline in exports of other goods.
- Imports +7.1%, up for the first time since March, led by a 25.4% surge in imports of industrial supplies & materials.

U.S. Goods Trade Deficit Balloons in July; Largest Since March’s Record High

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Real GDP grew 3.3% (SAAR) during the second quarter of 2025, revised from a 3.0% gain reported initially. The increase followed an unrevised 0.5% decline in Q1. A 3.1% rise had been expected in the Action Economics Forecast Survey. Growth during the last four quarters of 2.1% compared to 2.0% y/y in Q1, and remained below its most recent high of 3.2% in Q4 2023.

After-tax corporate profits without IVA & CCA adjustment increased 1.4% (7.0% y/y) last quarter after easing 0.8% in Q1. Before-tax earnings with IVA & CCA rose 1.7% (4.3% y/y) after falling 2.3% in Q1. Financial sector earnings rose 1.4% (15.3% y/y) after rising 2.3% in Q1. Nonfinancial corporate profits rose 2.2% (2.5% y/y) after falling 2.5% in Q1. Earnings from abroad eased 0.7% (-0.4% y/y) following a 7.3% Q1 decline.

Foreign trade balance improvement added 4.95 percentage points to growth last quarter after subtracting 4.61 percentage points in Q1. Imports fell 29.8% (+1.3% y/y) after surging 38.0% in Q1. Exports declined 1.3% (+2.0% y/y) after improving 0.4% in Q1. Inventories subtracted 3.29 percentage points from growth after adding 2.59 percentage point to Q1 growth.

Real final sales to domestic purchasers grew 1.6% (2.4% y/y), revised from 1.1%, in Q2 after rising 1.5% in Q1. Personal consumption expenditures rose 1.6% (2.4% y/y), revised from 1.4%, following a 0.5% gain. Durable goods spending rose 2.6% (4.6% y/y) after falling 3.7% in Q1. Motor vehicle purchases strengthened 11.7% (6.7% y/y) after declining 11.2% in Q1. Spending on home furnishings & appliances weakened 2.1% (+3.5% y/y) following a 1.5% rise. Recreational goods & vehicle outlays fell 3.5% (+4.3% y/y) last quarter after a 0.4% Q1 gain.

Nondurable goods outlays in constant dollars rose 2.3% (3.0% y/y) following 2.1% growth in Q1. Apparel spending increased 5.4% (4.8% y/y) following a 7.0% rise. Food & beverage buying gained 0.3% (1.5% y/y) after a 1.0% increase. Gasoline & fuel oil purchases weakened 1.4% (+0.9% y/y) after gaining 3.6% in Q1.

Real spending on services increased 1.2% (1.9% y/y) after a 0.6% gain. Outlays on housing & utilities eased 0.4% (+1.1% y/y) after rising 2.9% in Q1. Health care expenditures rose 4.2% (4.8% y/y) after a 3.1% increase. Transportation outlays declined 2.9% (-0.6% y/y) after a 1.4% rise, while recreation spending rose 3.6% (0.7% y/y) following a 5.1% decline. Restaurant & hotel expenditures increased 5.1% (1.9% y/y) after falling 1.8%. Financial services expenditures rose 1.9% (2.3% y/y) following a 0.1% Q1 increase.

Business fixed investment in constant dollars increased 5.7% last quarter (4.2% y/y), revised from 1.9%, following a 10.3% surge in Q1. Expenditures on structures declined 8.9% (-3.4% y/y), after falling 2.4% in Q1. Expenditures on producers’ durable equipment increased 7.4% (7.7% y/y), revised from 4.8%, after surging 23.7% in Q1. Outlays on information processing equipment rose 10.1% (20.1% y/y), revised from 5.5%, after soaring 72.8% during Q1. Industrial equipment investment rose 6.7% (4.0% y/y) after a 4.7% rise. Transportation equipment investment surged 20.4% (6.8% y/y) after a 6.9% gain. Intellectual property product spending rose 12.8% last quarter (5.2% y/y) following a 6.0% rise.

Residential structures investment in real terms declined a little-revised 4.7% (-1.3% y/y), the fourth decline in the last five quarters.

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250828P8.jpg

Government spending eased 0.2%, revised from up 0.5% in Q2 (+1.8% y/y) after a 0.6% decline. Federal government expenditures declined 4.7% (+0.7% y/y) after falling 4.6% in Q1. National defense expenditures increased 1.4% (3.0% y/y) after declining 7.1% in Q1. State & local government spending rose 2.6% (2.5% y/y) following a 2.0% rise.

The GDP chain price index rose an unrevised and expected 2.0% last quarter (2.5% y/y) after increasing 3.8% in Q1. The PCE chain price index increased 2.0% (2.4% y/y) following a 3.7% rise. The PCE price index excluding food and energy rose 2.5% (2.7% y/y) after increasing 3.5% in Q1. The business fixed investment price index edged 0.5% lower (+1.1% y/y) after a 0.4% rise. The residential price index rose 1.1% (2.6% y/y) after a 4.1% rise while the government price index increased 3.3% (3.1% y/y) following a 4.6% rise.

The GDP data can be found in Haver’s **USECON** and **USNA** databases. **USNA** contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in **AS1REPNA**.

250828Q8.jpg

250828S8.jpg

- Business investment strengthens & consumer spending firms.
- U.S. business earnings reverse Q1 decline.
- Increase in price index is unrevised, remaining roughly half of Q1’s gain.

U.S. GDP Q2’25 Growth Revised Up; Profits Improve

Sandy Batten

250828J2.jpg

250828K2.jpg

The Kansas City Fed manufacturing composite index was unchanged at 1 in August from July. This was the second consecutive month that the index has been positive, indicating the manufacturing in the KC Fed district continue to inch up in August. Prior to the positive reading in July, the index had been negative for 22 consecutive months. The index’s most recent high was 31 reached in both April 2021 and October 2021. The durable manufacturing sector was mostly flat in August, while nondurable manufacturing activity declined slightly driven by printing activities and paper and chemical manufacturing. 

The August survey was open for a six-day period from August 20-25, 2025 and included 103 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

The ISM-adjusted index calculated by Haver Analytics rose to 51.1 (NSA) in August from 50.2 in July. This was the fifth reading above the critical 50 level that separates expansion from contraction in the past six months, a further indication of expanding manufacturing activity.

For the major component indexes, the production index was 0 in August, but this was up from -3 in July. The new orders index rose to 5 in August, its highest reading since May 2022, from 2 in July. The shipments index increased to 6 in August from 3 in July. The employment index was 0 in August, but this was up from -11 in July. Also, the average workweek index rebounded to 3 in August after having been in negative territory for the previous four months. Supplier delivery times were unchanged at 7 in August. The elevation of this index since April may indicate some incipient supply-chain disruptions from higher tariffs. In contrast, raw materials inventories fell to -7 in August from 8 in July.

On the inflation front, the prices paid for raw materials index remained elevated but fell to 43 in August from 47 in July and a local high of 51 in June. Forty-four percent of respondents reported an increase in raw materials prices in August, down from 48% in July and 53% in June, while only 4% reported a decrease, down from 5% in July and 6% in June. The prices received for finished products index increased to 21 in August from 18 in July. This index has fluctuated in a range between 17 and 21 for the past four months.

Expectations for future activity remained positive, with the composite index rising to 11 from 8, as firms anticipate an improvement in production and new orders. While expectations have been trending up over the past several months, they remain depressed relative to the recent high reading of 17 last December. Capital expenditures expectations remained in negative territory in August for the second consecutive month but edged up to -3 from -4 in July.

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

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- Index remained (though barely) in positive territory for the second consecutive month, indicating that manufacturing activity was inching up.
- Prior to last month, the index had been negative for 22 consecutive months.
- Positive readings across most key components.

FRB Kansas City Manufacturing Index Unchanged in August

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The Pending Home Sales Index weakened 0.4% in July (+0.7% y/y) to 71.7 after falling an unrevised 0.8% in June and rising an unrevised 1.8% in May, according to the National Association of Realtors (NAR). The Index remained 42.7% below its most recent peak of 125.1 in October 2021. The index is a forward-looking measure of home sales based on contract signings.

The fall in pending home sales occurred as the average rate on a 30-year mortgage rose to 6.72% in July after holding steady m/m at 6.82% in June. These rates remained well above a low of 5.22% in August 2022 and more than double a record-low 2.68% in December 2020.

Pending home sales were mixed last month in the four major regions of the country. Sales in the Midwest declined 4.0% (+1.3% y/y) in July after easing 0.8% in June. Sales in the Northeast fell 0.6% both m/m and y/y, after holding steady in June. In the South, sales eased 0.1% (+1.8% y/y) following a 0.6% June decline, but sales in the West increased 3.7% (-1.9% y/y), reversing a 3.9% June drop.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **WEEKLY** database.

- Decline adds to June weakness.
- Regional changes are mixed.


Economy in Brief: November 2007

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Gasoline Above $3.00 per Gallon, Again

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