Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804c.jpg" align="left" border="0" height="265" width="353">
Nominal personal income inched up 0.1%
last month following a revised 1.8% May surge which was due to the
first installment of the government's tax rebate checks being mailed
out. During May, the government distributed $48.1 billion in economic
stimulus checks. Last month, the government sent $27.9 billion worth of
checks. The June gain in income exceeded Consensus expectations for a
0.2% decline. Excluding rebates income rose just 0.4%.
Disposable personal income fell 1.9% last
month after the 5.7% spike during May. Net taxes jumped 18.6% in June
following the 24.4% May decline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804d.jpg" align="right" border="0" height="265" width="353">
Wage &amp; salary income rose a minimal 0.2% (4.5% y/y)
after a 0.3% rise during May. These moderate increases reduced the
annualized three-month growth in wages to 2.8% versus a 5.8% rise
during 2007 and a 6.3% 2006 gain. Factory sector wages rose 0.1% (1.5%
y/y) after a 0.2% May uptick. Wages &amp; salaries in the private
service-providing industries ticked up 0.2% (5.1% y/y). Wages in the
government sector, however, have been strong and they posted a 0.5%
(5.4% y/y) rise and three-month growth rose to 5.3%.
Interest income fell 0.7% (-1.8% y/y) and that was the ninth
consecutive month of decline. Year-to-year growth fell to -1.8% after a
7.9% rise during all of 2007. Dividend income rose 0.6% (8.4% y/y)
after a 12.4% rise last year and a 21.7% gain during 2006.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804e.jpg" align="left" border="0" height="265" width="353">
The PCE chain price index jumped 0.8%
driven higher by rising energy prices. Some spillover to other prices
may be apparent as the core PCE price index rose
0.3%. That exceeded Consensus forecasts for a 0.2% rise. Three-month
growth in core prices rose to 2.3% from the recent low of 1.9%.
Durable goods prices fell at a 2.0% rate during the last three months
but services prices rose at an accelerated 4.3% annual rate.
Personal consumption expenditures rose another 0.6% after the
0.8% during May. Adjusted for price inflation, however, real
spending fell 0.2% after a 0.3% May increase. Three-month
growth in real spending amounted to just 0.9% (AR).
The personal savings rate halved versus May to 2.5% as a
result of the rebate checks started being been spent.
The Changing Nature of the U.S. Balance of Payments
from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci14-4.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/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.1</td>
<td>1.8</td>
<td>5.7</td>
<td>6.1</td>
<td>7.1</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-1.9</td>
<td>5.7</td>
<td>7.6</td>
<td>5.5</td>
<td>6.4</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption</td>
<td>0.6</td>
<td>0.8</td>
<td>5.3</td>
<td>5.5</td>
<td>5.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.5</td>
<td>4.9</td>
<td>0.5 (June '07)</td>
<td>0.5</td>
<td>0.7</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.8</td>
<td>0.5</td>
<td>4.1</td>
<td>2.6</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.3</td>
<td>0.2</td>
<td>2.3</td>
<td>2.2</td>
<td>2.3</td>
<td>2.1</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Lowest
Since 1992 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804a.jpg" align="left" border="0" height="265" width="353">
U.S. sales of light vehicles in July fell another 8.3% from
June, according to the Autodata Corporation. The latest sales level of
12.55M units was the lowest since early-1992 and it pulled sales down
21.5% so far this year. The level of vehicle sales also was lower than
Consensus expectations for sales of 13.7M.
Sales of domestically made light vehicles
overall, at 8.94M, fell 8.5% last month from June and they were off
24.7% YTD. The level of domestic sales was at the lowest since January
1987.
The relatively fuel inefficient domestically
made light trucks continued to feel most the effect of higher gasoline
prices and sales fell 9.1% from June. That pulled the decline in sales
since December to 32.3% and it left the level of light truck sales at
the lowest since late-1992.
Sales of U.S. made cars also felt the effect of higher gas
prices. They about repeated their June decline with a 7.8% m/m drop to
4.35M units. Using data from Ward's Automotive News, that was lowest
level of car sales since the late 1950s.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804b.jpg" align="right" border="0" height="265" width="353">
Sales of imported light vehicles also
showed the effect of higher gasoline prices, and weaker consumer
spending generally. They fell by 7.8% to 3.61 million after June's 0.1%
uptick.
Sales of imported autos fell 9.0%, to 2.54M, after the revised
4.1% increase during June. Despite the monthly decline, sales of the
relatively fuel efficient imported cars are up 1.9% year-to-year.
Not impervious to the rise in gasoline prices, sales of
imported light trucks fell 5.0% (-24.5% y/y) last month while they were
off 4.6% since December.
As a result of the greater decline in sales of U.S. made
vehicles, import's share of the U.S. light vehicle
market rose again to another record level of 28.8%. (Imported vehicles
are those produced outside the U.S. and does not include vehicles with
the nameplate of a foreign manufacturer produced within the U.S.)
Imports' share of the U.S. car market ticked slightly lower from the
June record to 36.9% while import's share of the light truck market
rose to 18.9%, near the record of 19.3%.
U.S. auto exports on the rise from the
Federal Reserve Bank of Chicago can be found <a href="http://midwest.chicagofedblogs.org/"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>12.55</td>
<td>13.69</td>
<td>-18.9%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>6.88</td>
<td>7.50</td>
<td>-5.6</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.35</td>
<td>4.72</td>
<td>-9.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>2.54</td>
<td>2.79</td>
<td>1.9</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.67</td>
<td>6.18</td>
<td>-30.8</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.59</td>
<td>5.05</td>
<td>-32.1</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.07</td>
<td>1.13</td>
<td>-24.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Up With
Oil Prices 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804f.jpg" align="left" border="0" height="265" width="353">
Factory inventories surged 1.0% during June, thanks to the
surge in oil prices. The value of inventories at petroleum refineries
rose 9.5% (37.2% y/y) in June and the value is up by more than one-half
since December as prices have surged. Less petroleum, factory
inventories rose 0.4% (5.1% y/y) in June and YTD they rose 4.6%.
Less oil, the rate of inventory slowed. Automobile inventories
fell at a 31.7% annual rate during the last three months. Inventory
accumulation in the machinery sector also dropped to a 1.8% growth
rate. Accumulation in the computer &amp; electronics areas fell as
well to a 1.0% rate of growth.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804g.jpg" align="right" border="0" height="265" width="353">
Factory shipments also surged, by 1.6%, due to oil. Shipments
of petroleum surged by 5.6% (52.5% y/y). Less petroleum shipments rose
(2.2% y/y) after a 0.5% May decline.
Total factory orders jumped by 1.7%, which was double
expectations, again reflecting stronger petroleum orders (which equal
shipments). Less petroleum, shipments did surge 1.0% (1.8% y/y) though
the gain was making up for weakness earlier this year. Durable orders
rose 0.8% which was the same as reported in the advance report, after a
0.1% May uptick.
Overall unfilled orders rose 0.9%, the same as they did in
May. Order backlogs for civilian aircraft, which have been rising at a
25.3% rate, have started to cool. They were up just 0.4% in June
Excluding the transportation sector altogether unfilled orders still
rose 1.2% in June and at a 12.8% rate during the last three months.
Accelerated growth in backlogs of machinery still account for much of
that strength.

<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/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory
Survey</a> (NAICS, %)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>1.0</td>
<td>0.6</td>
<td>7.0</td>
<td>3.7</td>
<td>6.4</td>
<td>8.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.0</td>
<td>0.5</td>
<td>5.9</td>
<td>2.7</td>
<td>7.9</td>
<td>8.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.7</td>
<td>0.9</td>
<td>7.1</td>
<td>1.9</td>
<td>6.2</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>2.3</td>
<td>0.8</td>
<td>11.7</td>
<td>1.2</td>
<td>7.4</td>
<td>11.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.6</td>
<td>0.3</td>
<td>7.5</td>
<td>1.2</td>
<td>5.9</td>
<td>10.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.6</td>
<td>0.9</td>
<td>10.1</td>
<td>1.5</td>
<td>6.7</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.9</td>
<td>0.9</td>
<td>15.3</td>
<td>17.1</td>
<td>15.3</td>
<td>15.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>1.2</td>
<td>0.7</td>
<td>10.1</td>
<td>8.2</td>
<td>16.0</td>
<td>9.2</td>
</tr>
</tbody>
</table>
Challenger Layoffs Near Recent High 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804h.jpg" align="left" border="0" height="265" width="353">
Job cut announcements during July recovered their June decline
with a 26.4% m/m rise, according to the Challenger, Grey &amp;
Christmas survey. The three-month level layoffs rose further, to the
highest level since early-2006.
A rise in the three-month average of job cut announcements in
the financial, automotive, transportation and telecommunication sectors
led the recent strength.
During the last ten years there has been a 76% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved
through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans rose
sharply m/m but they were still down 90.2% y/y.
What Determines An Output Drop after an Energy Price
Increase? Household or Firm Energy Share? by Rajeev Dhawan
and Karsten Jeske for the Federal Reserve Bank of Atlanta and it is
available <a href="http://www.frbatlanta.org/filelegacydocs/wp0720.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/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>103,312</td>
<td>81,755</td>
<td>140.8%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
Some Recent Data From New Zealand by <a href="/comment/Curley.html">Louise
Curley</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804i.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804j.jpg" border="0" height="265" width="312">

Shortly after the late June report of a first quarter 0.6%
decline in New Zealand's Real Gross Domestic Product, the New Zealand
Institute of Economic Research (NZIER) reported that its second quarter
opinion survey showed that the pessimists on the outlook outweighed the
optimists by 64%, the same balance as in the first quarter. (See the
first chart).
Seasonally unadjusted data on the trade balance showed a
$NZ295 million improvement in June over June of last year. Exports were
up $NZ 846 million and imports $NZ 550 million. The trade balance tends
to vary considerably from month to month so that it is useful to look
at the trend adjusted data, which at present is pointing downward, as
can be seen in the second chart.
Public sector wages and salaries in New Zealand continued to
rise in the second quarter of 2008, while wages and salaries in the
private sector declined slightly. Wages and salaries in the public
sector have generally increased faster than those in the private sector
as can be seen in the third chart.
The exchange rate has depreciated 12% against the dollar from
the peaks earlier this year and while the Stock Market declined by
almost 25% from January 4 to July 15, it has since risen by 10%, as
seen in the last chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804l.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804k.jpg" border="0" height="265" width="312">


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Nominal personal income inched up 0.1% last month following a revised 1.8% May surge which was due to the first installment of the government's tax rebate checks being mailed out. During May, the government distributed $48.1 billion [...]

U.S. Income Gain Modest after May Surge

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801j.jpg" align="left" border="0" height="265" width="353">
The Markit/NTC PMIs show a clear pattern of weakness in the
manufacturing sector. Among the major PMI reporters only Germany and
Greece still post PMI values above 50, the ostensible neutral mark. If
we calculate where the various PMIs stand in their respective historic
ranges we find that only Germany is above its range midpoint. Spain,
Ireland and the UK are on all time lows since this measure has been
reported going back to March 2000. We use March 2000 since it is the
date from which all the above PMIs are available although some
individual country reports go back farther. We want to compare them
over a common time horizon.
On this basis most of the PMIs for manufacturing are in the
lower third of their range or weaker. The EMU measure has slid to the
lower third of its range. Europe&#8217;s manufacturing sector continues to
erode. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Markit/NTC Manufacturing Indexes </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>May-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td style="color: red;">47.38</td>
<td style="color: red;">49.16</td>
<td style="color: red;">50.60</td>
<td>49.05</td>
<td>50.38</td>
<td>51.62</td>
<td style="color: red;">27.0%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">50.90</td>
<td style="color: red;">52.56</td>
<td style="color: red;">53.57</td>
<td>52.34</td>
<td>53.35</td>
<td>53.69</td>
<td style="color: red;">50.8%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td style="color: red;">47.05</td>
<td style="color: red;">49.24</td>
<td style="color: black;">51.48</td>
<td>49.26</td>
<td>50.76</td>
<td>51.54</td>
<td style="color: red;">22.6%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">45.32</td>
<td style="color: red;">46.91</td>
<td style="color: red;">48.05</td>
<td>46.76</td>
<td>48.10</td>
<td>49.90</td>
<td style="color: red;">13.9%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td style="color: red;">39.20</td>
<td style="color: red;">40.61</td>
<td style="color: red;">43.79</td>
<td>41.20</td>
<td>43.66</td>
<td>47.04</td>
<td style="color: red;">0.0%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td style="color: red;">46.97</td>
<td style="color: red;">48.39</td>
<td style="color: red;">49.76</td>
<td>48.37</td>
<td>50.12</td>
<td>52.14</td>
<td style="color: red;">23.5%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td style="color: red;">51.63</td>
<td style="color: black;">53.81</td>
<td style="color: red;">53.77</td>
<td>53.07</td>
<td>53.11</td>
<td>53.31</td>
<td style="color: red;">42.3%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">43.39</td>
<td style="color: red;">44.71</td>
<td style="color: black;">45.21</td>
<td>44.44</td>
<td>45.63</td>
<td>48.58</td>
<td style="color: red;">0.0%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td style="color: red;">47.99</td>
<td style="color: red;">51.07</td>
<td style="color: black;">51.46</td>
<td>50.17</td>
<td>51.17</td>
<td>53.14</td>
<td style="color: red;">31.8%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td style="color: red;">44.26</td>
<td style="color: red;">45.92</td>
<td style="color: red;">49.23</td>
<td>46.47</td>
<td>48.54</td>
<td>51.06</td>
<td style="color: red;">0.0%</td>
</tr>
</tbody>
</table>
</body></html>

The Markit/NTC PMIs show a clear pattern of weakness in the manufacturing sector. Among the major PMI reporters only Germany and Greece still post PMI values above 50, the ostensible neutral mark. If we calculate where the various [...]

Manufacturing PMIs: Falling in Concert in Europe

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801h.jpg" width="353">
The value of construction put in place fell 0.4% during June after having been unchanged in May. The decline was as-expected.Year-to-year construction was down 5.9% but the level of activity so far this year has been roughly stable.
Residential building activity, however, continued to decline in June by 1.8%. Since it&#39;s peak it has fallen by more than one-third. Single-family construction continued quite weak as it fell another 3.7% (-39.1% y/y). Building activity on multi-family units edged down 0.4% (-8.0% y/y). Spending on improvements has been edging higher since last November but it&#39;s still off 2.0% y/y.
During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.
The value of nonresidential building activity rose another 0.8% led by a 1.2% (37.9% y/y) jump in lodging spending. Spending on health care facilities rose 0.6% (10.0% y/y) but office construction was roughly unchanged (12.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801i.jpg" width="353">
Public construction fell a slight 0.2%. The y/y gain of 5.2% is down from 12.3% growth last year. Nevertheless, spending on office structures continued quite firm at 26.5% y/y. The value of construction spending on highways &amp; streets was roughly unchanged y/y. (The value of construction on highways &amp; streets is roughly one third of the value of total public construction spending.) Building activity of educational facilities fell 1.5% (+4.2% y/y) during June.
The more detailed categories of construction represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.
Are Inflation Targets Good Inflation Forecasts? from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_2qtr2008_part3_diron_mojon.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/@E9/@E907/@E907.HTM">Construction</a> (%)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.4</td>
<td>0.0</td>
<td>-5.9</td>
<td>-2.7</td>
<td>6.3</td>
<td>11.2</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.4</td>
<td>0.0</td>
<td>-9.6</td>
<td>-6.9</td>
<td>5.5</td>
<td>12.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.8</td>
<td>-1.1</td>
<td>-26.7</td>
<td>-19.8</td>
<td>1.0</td>
<td>14.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.8</td>
<td>1.1</td>
<td>15.0</td>
<td>19.6</td>
<td>16.2</td>
<td>7.8</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-0.2</td>
<td>0.1</td>
<td>5.2</td>
<td>12.3</td>
<td>9.3</td>
<td>6.2</td>
</tr>
</tbody>
</table>
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The value of construction put in place fell 0.4% during June after having been unchanged in May. The decline was as-expected.Year-to-year construction was down 5.9% but the level of activity so far this year has been roughly stable. [...]

U.S. Construction Spending Fell in June, Stable This Year

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801g.jpg" align="left" border="0" height="265" width="353">
Add German retail sales trends to the list of items turning
out more negative prospects for the e-Zone. Retail sales ex-autos as
well as real retail sales ex autos saw sales drop by 1.4%
month-to-month in June of 2008. Over three-months and six-months and
12-months retail ex-auto retail sales are declining.
In the current quarter real retail sales excluding autos are
falling at a sharp 3.8% annual rate.
All the major components of retail sales are showing declines
in 2008-Q2 compared to Q1. The industrial data are slowing and now the
consumer side data are slowing as well. There does not appear to be a
part of the economy prepared to step up and make up for the weakness
elsewhere. Europe is slipping. Germany is leading the way.



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Real and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>Qtr Saar</td>
</tr>
<tr>
<td class="firstcol">Retaill Ex auto</td>
<td>-1.4%</td>
<td>0.9%</td>
<td>0.8%</td>
<td>0.8%</td>
<td>2.3%</td>
<td>1.0%</td>
<td>-2.8%</td>
<td>-1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>1.0%</td>
<td>-1.8%</td>
<td>-0.3%</td>
<td>-4.0%</td>
<td>6.9%</td>
<td>1.2%</td>
<td>-3.4%</td>
<td>-3.2%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-9.6%</td>
<td>14.3%</td>
<td>-0.3%</td>
<td>12.8%</td>
<td>0.2%</td>
<td>-1.4%</td>
<td>-0.5%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Real</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>-1.4%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.8%</td>
<td>-0.8%</td>
<td>-1.8%</td>
<td>-3.1%</td>
<td>-3.8%</td>
</tr>
</tbody>
</table>
</body></html>

Add German retail sales trends to the list of items turning out more negative prospects for the e-Zone. Retail sales ex-autos as well as real retail sales ex autos saw sales drop by 1.4% month-to-month in June of 2008. Over three- [...]

German Retail Sales Wither

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801e.jpg" width="353">
The Institute for Supply Management &#39;s Composite Index of Manufacturing Sector Activity fell very slightly month-to-month during July to a break-even 50 from 50.2 in June. Still, the index is up from the monthly lows near 48 this past winter. Consensus expectations had been for more of a decline to 49.1 in July.
Despite the very recent improvement, the index&#39;s average level so far this year of 49.4 was its lowest since early-2003.
During the last twenty years there has been a 64% correlation between the level of the Composite Index and the three-month growth in factory sector industrial production.
It is appropriate to correlate the ISM index level with factory sector growth because the ISM index is a diffusion index. It measures growth by using all of the positive changes in activity added to one half of the zero change in activity measures.
The employment index improved markedly last month to a level of 51.9. That was the first reading above the break-even level of 50 since October. During the last twenty years there has been a 67% correlation between the level of the ISM employment index and the three-month growth in factory sector employment.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801f.jpg" width="353">
The new orders index, however, offset that rise with a decline to 45.0 which was its lowest level since the recession of 2001. The new export orders sub-series declined sharply to 54.0 which was its lowest reading since last December. During the last ten years there has been a 53% correlation between the index and the q/q change in real exports of goods in the GDP accounts.
The production index rose modestly to 52.9 but the inventories series fell sharply to 45.0.
Prices paid backed off a bit to a still high index level of 88.5. During the last twenty years there has been a 79% correlation between the price index and the three-month change in the PPI for intermediate goods.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S2/@S201/@S201.HTM">ISM Mfg</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>50.0</td>
<td>50.2</td>
<td>52.3</td>
<td>51.1</td>
<td>53.1</td>
<td>54.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>45.0</td>
<td>49.6</td>
<td>56.9</td>
<td>54.3</td>
<td>55.4</td>
<td>57.4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Employment Index</td>
<td>51.9</td>
<td>43.7</td>
<td>50.3</td>
<td>50.5</td>
<td>51.7</td>
<td>53.6</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>88.5</td>
<td>91.5</td>
<td>65.0</td>
<td>64.6</td>
<td>65.0</td>
<td>66.4</td>
</tr>
</tbody>
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The Institute for Supply Management 's Composite Index of Manufacturing Sector Activity fell very slightly month-to-month during July to a break-even 50 from 50.2 in June. Still, the index is up from the monthly lows near 48 this past [...]

ISM Index Roughly About Stable M/M But Still Up From Recent Lows

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801a.jpg" width="353">
Nonfarm payrolls fell 51,000 last month after a revised decline of 51,000 during June, according to the Bureau of Labor Statistics. The latest decline was less than expectations for a 75,000 drop but payrolls have declined in each month of this year. The total drop so far in 2008 amounts to 463,000 jobs and during the last three months payrolls fell at a 0.4% annual rate. That compared to a rate of decline in excess of 2.0% by the end of the last recession.
Weakness in the latest jobs report reflects the effect of recent floods in the Midwest region of the country.
Factory sector jobs fell 35,000, the same as during June, and at a 2.7% rate over the last three months. That was improved from the fastest rate of decline (-4.2%) this cycle and it was slower than during the 2001 recession employment when jobs dropped at a 10% rate.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801b.jpg" width="353">
Construction sector employment dropped 22,000 last month, half the June decline, and at a 5.9% rate during the last three months.
Hiring in the service sector fell 5,000 and rose at a rate of just 0.1% in the last three months. That negligible rate of increase has been stable since March and compares to a 1.6% rise last year.
Government sector jobs continued to rise, last month by 25,000, after firmer gains in May and June. They&#39;ve increased at a 2.2% rate during the last three months. Federal government hiring rose at a 0.7% rate during the last three months while state as well as local government hiring rose at a 2.2% and a 2.4% rate, respectively.
Private service sector jobs continued to weaken as indicated by a 76,000 decline last month which followed a 94,000 June drop. It was the eighth consecutive monthly decline and the three-month rate of job loss was -0.9% during that period. Retail sector job loss continued at a 1.2% rate during the last three months, though that was eased from the 3.0% rate this past April. Motor vehicle &amp; parts dealers jobs fell at a 4.7% rate. Jobs in the information sector fell 13,000 last month and at a 3.2% rate during the last three. Professional &amp; business services sector have fallen at a 2.5%.
These declines have been offset by 7.5% three-month growth in the number of jobs in education and by 2.6% growth health care jobs. The number of finance sector jobs were unchanged last month but they&#39;re down at a 0.8% rate during the last three. Temporary help services jobs, often a leading indicator of employment growth, fell 29,000 last month and at a 14.8% rate during the last three. Real estate sector jobs have been falling at a 0.7% annual rate during the last three months which is an improvement from the 3% to 4% rates of job loss late last year and early this year. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801c.jpg" width="353">
The one month diffusion index, which measures the breadth of job gain or loss (50 is the break-even level), dropped to a new low for this cycle and stood at 41.2%. The three- month index also reached a new low of 40.0%. The three-month figure for the factory sector was weaker at 32.1%.
The Bureau of Labor Statistics household sector survey indicated that the unemployment rate rose to 5.7% in July versus expectations for a 5.6% rate. That was the highest level since January of 2004 as employment fell another 72,000 (-0.2% y/y) after the 155,000 June decline. The level of the unemployed rose 285,000 (23.1% y/y) after a 12,000 rise during June.
The labor force reversed the June decline and rose 213,000 (0.9% y/y) last month. The labor force participation rate was stable m/m at 66.1%, 66.0% during all of last year and 66.2% in 2006. The participation rate amongst adult men was 75.9%, the same as averaged last year, and amongst adult women it was 60.8% versus 60.6% averaged during 2007.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801d.jpg" width="353">
The average duration of unemployment slipped m/m to 17.1 weeks but that was still up from 16.9% weeks averaged during the last two years.
Average hourly earnings increased 0.3%, the same as during the prior two months, but three-month growth rose slightly to 3.9% after 4.0% growth during 2006 and 2007. Factory sector earnings rose 1.8% during the last three months, the weakest rate of gain since last summer, while private service sector earnings rose at a 0.5% rate.

<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/@EB/@EB01/@EB01.HTM">Employment: 000s</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-51</td>
<td>-51</td>
<td>-47</td>
<td>-0.0%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Previous</td>
<td>--</td>
<td>-62</td>
<td>-62</td>
<td>--</td>
<td>1.3%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-35</td>
<td>-35</td>
<td>-21</td>
<td>-2.8%</td>
<td>-1.9%</td>
<td>-0.5%</td>
<td>-0.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Construction</td>
<td>-22</td>
<td>-49</td>
<td>-38</td>
<td>-6.0%</td>
<td>-1.0%</td>
<td>4.9%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Weekly Hours</td>
<td>33.6</td>
<td>33.7</td>
<td>33.7</td>
<td>33.8 (July &#39;07)</td>
<td>33.8</td>
<td>33.9</td>
<td>33.8</td>
</tr>
<tr>
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>4.0%</td>
<td>3.9%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Unemployment Rate</td>
<td>5.7%</td>
<td>5.5%</td>
<td>5.5%</td>
<td>4.7% (July &#39;07)</td>
<td>4.6%</td>
<td>4.6%</td>
<td>5.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Nonfarm payrolls fell 51,000 last month after a revised decline of 51,000 during June, according to the Bureau of Labor Statistics. The latest decline was less than expectations for a 75,000 drop but payrolls have declined in each [...]

U.S. Payrolls Down, Jobless Rate Up

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

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

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250806B1.jpg

Mortgage applications increased 3.1% (17.8% y/y) in the week ending August 1, after declining 3.8% in the prior week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loan refinancing jumped 5.2% (17.5% y/y) last week, following three straight weeks of decline. Applications for loans to purchase a home rose 1.5% (18.0% y/y) last week, following a 5.8% decline in the week of July 25.

The effective interest rate on a 30-year fixed-rate loan slipped to 6.94% in the week ending August 1, from 7.00% in the prior week. It was the lowest rate since the first week of April. The rate on 15-year fixed-rate mortgages declined to 6.19% in the latest week from 6.28% in the week of July 25. The rate on 30-year Jumbo loans dropped to 6.82% last week from 6.89% one week earlier. The rate on a 5-year ARM dropped to 6.25% in the week of August 1 after rising to 6.40% in the prior week. It was above a low of 5.84% in the week of September 13, 2024.

The share of applications for refinancing an existing loan rose to 41.5% of total applications in the week ending August 1, from 40.7% in the prior week. The adjustable-rate mortgage (ARM) share of activity rose to 8.50% in the latest week from 8.30% in the week of July 25.

The average size of a mortgage loan rose 1.9% (0.6% y/y) to $381,400 in the week of August 1, following a 0.7% rise in the prior week. The average size of a purchase loan rose 0.7% (1.3% y/y) to $432,300 in the latest week after gaining 0.6% in the week ending July 27. The average size of a loan to refinance a mortgage rose 5.2% (-0.8% y/y) to $309,800 last week, after rising 2.3% in the prior week.

The Mortgage Bankers Association Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver’s **SURVEYS** database.

- Loan refinancing jumps as purchase applications edge higher.
- Effective fixed-interest rate eases on 30-year loans. 
- Average loan size increases again.

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

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German orders expressed in real terms fell by 1% in June after falling by 0.8% in May. Foreign orders fell by 3% month-to-month after rising 3.8% in May. Domestic orders came back to life rising by 2.2% in June but only after a sharp 7.5% drop in May; that drop had been preceded by a 2.8% increase in April. The gyration and trend performance of orders is still choppy and, for the most part, weak.

**Order trends**
Sequential growth rates show that overall orders for Germany (still expressed in real terms) rose by 0.6% over 12 months; however, they fall at 4.7% annual rate over six months and fall at a 0.5% annual rate over three months. Foreign orders rise by 7.4% over 12 months; over six months the gain is at a 13.7% annual rate, and over three months that pace is reduced to a 7.3% annual rate. German domestic orders fall by 8.6% over 12 months, then decline at an extremely rapid 26.1% annual rate over six months, and continue to decline at 11.1% annual rate over three months. For the time being, orders have been propped up by strength in the international market while domestic orders continue to languish and to contract.

**Real sales**
Sector sales, expressed in real terms, rose by 1% and those across all the components after seeing widespread contractions in May that had followed an uneven performance in April. Real sales for manufacturing fall by 1.5% over 12 months, fall at a 1.9% annual rate over six months, and fall at an annual rate of 9.2% over three months. Real sales trends are not reassuring.

**European Surveys on Industry**
Survey results for the largest economies in the European Monetary Union show slippages in June compared to May as three of the four large economies weaken (with Italy being the exception). Over three months France logged a weaker reading compared to six-months, Germany improved, Italy's performance is unchanged; Spain reports a result that's better by a single tick on the survey index comparing 3-months to 6-months. Comparing the 12-month to averages to 3-month averages for the four large European economies, shows deterioration that's across the board with the slight exception of Italy.

**Quarter-to-date (completed Q2)**
The quarter-to-date (QTD) performance in Germany for orders are strong, rising at a 13.1% annual rate. Sector sales show deteriorated real sector sales across most sectors on QTD basis; manufacturing sales fall at a 2.9% annual rate.

**Longer term evaluations** 
The two right hand columns evaluate the growth and level performance of these various metrics on real sector sales and on a level basis and well as on annual growth rates. Total orders and foreign orders ranked on levels are well above their 50% mark, which puts them above their median on data back to 1994. Domestic sales levels have only a 21.8 percentile standing, extremely weak. Rankings on growth rates show total orders at a 45.9 percentile ranking, below the median growth rate (which occurs at a ranking of 50%). However, foreign orders’ growth ranks in the 70th percentile, quite firm, while the domestic growth rate queue ranking resides in the lower 10.7 percentile of its range. Growth rates for real sector sales are mostly below their 50-percentile mark except for consumer nondurables and consumer goods sales overall (which, of course, are boosted by the sales of consumer nondurables). The industrial confidence indicators for European economies that are from diffusion surveys are evaluated relative to historic levels only. All of them score weak results. The best queue standing is Spain with a 37.5 percentile standing, followed by Italy at a 24.8 percentile standing. France has a 14.6 percentile standing, while Germany has a 7.4 percentile standing. These range from weak, and below median, to very weak.

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**Summing up**
On balance, German performance in June is poor. The trends are poor, and far from reassuring. Sector sales performance is poor. Performance across Europe continues to be poor as captured by survey results- that performance continues, for the most part, to deteriorate. However, German quarter-to-date growth rates for orders are strong in Q2 compared to Q1, but that is only on the back of strength in foreign orders. German domestic orders are still behaving badly. All-in-all, it's a disappointing report on the manufacturing sector for Germany and for what we survey of Europe.

Germany

German Orders Fall Again, Unexpectedly

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The U.S. ISM Services PMI declined to 50.1 during July, after rising to 50.8 in June from 49.9 in May, according to the Institute for Supply Management. The index hit a recent high of 55.8 in October of last year, and remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected a reading of 51.5 for July.

The composite index combines the services index and the manufacturing index released last Friday. This index fell to 49.8 in July from 50.6 in June. The latest figure is the lowest since June 2024, down from the November 2024 high of 54.7.

Amongst the services component series, the business activity index fell to 52.6 last month from 54.2 in June. Twenty-four percent (NSA) of respondents reported improved activity while 14.4% reported a decline. The new orders index fell to 50.3 in July from 51.3 in June. Twenty percent (NSA) of respondents reported improved orders while a higher 18.7% reported a decline. The employment series weakened to 46.4, its lowest level in four months, from 47.2 in June. An increased 12.3% (NSA) of respondents reported increased employment while a higher 18.1% reported a decline. Working higher, the supplier delivery series edged up to 51.0 in July after falling to 50.3 in June, but remained below a high of 56.4 in October of last year. A reduced 4.3% of respondents (NSA) reported faster delivery speeds while a higher 6.3% reported a slowing.

On the inflation front, the prices index surged to 69.9 in July after easing to 67.5 in June. It was the highest level since October 2022. An increased 42.1% (NSA) of respondents reported higher prices while an increased 4.0% reported lower prices. The index was increased from its March 2024 low 53.5 and stood at its highest level since October 2022.

Additionally, the new export orders index fell sharply to 47.9 (NSA) in October following a rise to 51.1 in June. Just 10.4% of survey respondents reported higher exports while an increased 14.7% reported a decline. The imports index fell sharply to 45.9 last month from 51.7 in June. A greatly lessened 4.1% of respondents reported higher imports while a higher 12.4% reported a decline. The inventory change index weakened to 51.8. The order backlog index rose to 44.3 in July after falling to 42.4 in June. A higher 8.3% of respondents reported higher backlogs while a fewer 19.7% reported a decline. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries.

The ISM figures are available in Haver's **USECON** database, with additional detail in the **SURVEYS** database. The expectations figure from Action Economics is in the **AS1REPNA** database.

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- Total index trending lower for nine months.
- Business activity, new orders & employment weaken.
- Prices Index strengthens to highest level since 2022.

U.S. ISM Services PMI Declines in July; Price Index Increases

Winnie Tapasanun

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The U.S. trade deficit in goods and services (BOP basis) narrowed to $60.18 billion in June after widening to $71.66 billion in May ($71.52 billion originally), according to the U.S. Census Bureau. This was the second month in three in which the deficit had narrowed. The June deficit was the smallest since September 2023 and much smaller than the $73.89 billion in June 2024. A deficit of $61.6 billion had been expected in the Action Economics Forecast Survey. Exports declined 0.5% m/m (+3.3% y/y) in June following a 4.1% drop in May (-4.0% previously) and four successive m/m increases. Imports fell 3.7% (-1.4% y/y) after an unrevised 0.1% downtick in May, registering the third consecutive m/m fall and the fourth in five months.

The real (inflation-adjusted) goods trade deficit (customs value; chained 2017 dollars) narrowed to $84.61 billion in June after widening to $93.32 billion in May; it was smaller than the $92.82 billion in June 2024. The $87.43 billion average monthly real trade deficit in Q2'25 was the smallest since Q4'23 and significantly smaller than the record $143.28 billion in Q1'25. A trade balance (net exports) added 4.99%-points to Q2'25 real GDP growth after subtracting 4.61%-points in Q1'25.

The deficit in goods trade (BOP basis) narrowed to $85.88 billion in June, the smallest since September 2023, after widening to $97.30 billion in May; it was much smaller than the $99.56 billion in June 2024. Goods exports fell 0.7% (+3.3% y/y) in June following a 5.9% drop in May and four straight m/m rises. Imports of goods decreased 4.5% (-2.9% y/y), down for the fourth month in five, after a 0.1% May easing.

The customs value goods trade deficit fell to $84.85 billion in June, the smallest since September 2023, after widening to $96.21 billion in May; it was much smaller than the $98.81 billion in June 2024. The latest figure was slightly smaller than an $85.99 billion deficit in the advance report released on July 29. Custom value exports fell 0.7% (+3.5% y/y) in June following a 5.6% drop in May and four consecutive m/m gains. This reflected m/m falls of 7.4% (+0.7% y/y) in industrial supplies & materials and 2.6% (+22.8% y/y) in other goods. To the upside, exports for the following end-use categories rose m/m in June: nonfood consumer goods excluding autos (4.6%; 4.3% y/y), foods, feeds & beverages (4.4%; 1.2% y/y), capital goods excluding autos (3.4%; 9.7% y/y), and automotive vehicles, parts & engines (1.6%; -15.8% y/y).

Customs value imports slid 4.6% (-2.9% y/y) in June, the third straight m/m slide and the fourth in five months, after a 0.1% downtick in May. This reflected m/m drops of 12.7% (-13.3% y/y) in nonfood consumer goods excluding autos, 5.2% (-12.4% y/y) in industrial supplies & materials, 4.9% (+7.8% y/y) in other goods, 3.6% (-12.2% y/y) in automotive vehicles, parts & engines, and 1.5% (+3.8% y/y) in foods, feeds & beverages. In contrast, imports of capital goods excluding autos, the only end-use category with a monthly increase in June, rose 0.7% (14.0% y/y), the seventh m/m rise in eight months, on top of a 0.3% May rebound. Meanwhile, petroleum imports fell 3.8% (-24.7% y/y) in June, the fourth m/m fall in five months, reversing a 1.5% rise in May. Nonpetroleum imports slid 4.6% (-1.1% y/y), the third straight m/m slide, after a 0.2% May decline.

The services trade surplus rose to $25.70 billion in June after narrowing to $25.64 billion in May; it was in line with $25.67 billion in June 2024. Services exports fell 0.2% (+3.3% y/y) in June, the fifth m/m fall in six months, on top of a 0.6% decline in May. This reflected m/m drops of 4.8% (-11.3% y/y) in government goods & services, 2.1% (+30.8% y/y) in maintenance & repair services, and 1.1% (-0.02% y/y) in travel services, while exports for construction services (0.9%; -5.7% y/y), insurance services (0.7%; 18.9% y/y) and charges for the use of intellectual property (0.5%; 7.0% y/y) increased m/m in June. Services imports fell 0.3% (+4.5% y/y) after a 0.3% May fall and two successive m/m increases. This reflected m/m drops of 1.9% (+48.0% y/y) in maintenance & repair services, 1.5% (+2.9% y/y) in travel services, and 1.3% (-1.3% y/y) in transport services, while imports for construction services (2.0%; 82.3% y/y), charges for the use of intellectual property (0.8%; 1.3% y/y) and financial services (0.5%; 4.9% y/y) rose m/m in June.

The U.S. goods trade deficit with China narrowed to a seasonally adjusted $9.38 billion in June, the smallest on record, after falling to $13.97 billion in May. Exports surged 45.4% (-16.6% y/y) following a 19.9% May slump, while imports fell 6.9% (-45.6% y/y) on top of a 26.3% May plunge. The goods trade deficit with the European Union narrowed markedly to $9.52 billion in June, the smallest since June 2013, after widening to $22.54 billion in May, with exports up 6.8% (16.6% y/y) and imports down 19.2% (-8.2% y/y). The trade shortfall with Japan narrowed marginally to $5.72 billion in June, the smallest since February, from $5.77 billion in the previous month, reflecting declines of 3.4% (-7.5% y/y) in exports and 2.3% (-0.4% y/y) in imports.

The international trade data, including relevant data on oil prices, can be found in Haver’s **USECON** database. Detailed figures on international trade are available in the **USINT** and **USTRADE** databases. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- $60.2 bil. trade deficit, reflecting $85.9 bil. goods deficit & $25.7 bil. services surplus.
- Exports -0.5% m/m, down for the second consecutive month.
- Imports -3.7% m/m, down for the third straight month.
- Real goods trade deficit narrows to $84.6 bil. after May’s widening.
- Goods trade deficits w/ China at a record low, w/ EU at a June ’13 low, and w/ Japan at a 4-month low.

U.S. Trade Deficit Narrows in June; the Smallest Since Sept. ’23

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The S&P Global PMI indexes once again showed mixed performance in July. Most large economies continue to do better, and the total PMI services sectors continue to make up for shortcomings in manufacturing.

**Stability on a low growth path**
In July, 24% of the reporting countries showed activity was slowing; that's down from 48% in both June and May and indicates some progress. Only five of the reporting jurisdictions have PMI values below 50 indicating economic contraction in July; that July figure compares to five in June and seven in May. Declining activity continues to be an unusual event. Medians and average readings for the group of 25 countries or regions show extreme stability in the recent months as well as across sequential averages.

**Growth moderately improves**
Comparing period averages from 12-months to six-months to three-months, unweighted readings of the U.S., the U.K., and European monetary union show extremely flat PMI values oscillating between values of 51.2 to 51.7 on those period averages; over three months, six months, and 12 months. The jurisdictions in the table show PMI readings below 50 are rare; once again declining activity is an unusual event. The proportion of reporters slowing over three months is 34.8% compared to 52.2% over six months and 30.4% over 12 months. Once again, we see these statistics tilted toward improving growth rather than towards slowing

**Summing up**
The queue percentile standings for the group in July have an average value at 48.4% which is below the 50% mark that coincides with the median for the period. This tells us the growth is largely worse than what its median has been over the past 4 1/2 years. On a queue ranking basis, the largest economies consistently perform better with readings above the 50% mark for the U.S. and for the European Monetary System including each of its four largest EMU economies (Germany, France, Italy, and Spain). Japan has a queue standing in its 57th percentile. However, China’s percentile standing is in its 26th percentile and the U.K. is at its 40.5 percentile. Not all large economies are in the catbird seat, but most are faring well despite the moderate growth track globally.

Economy in Brief: August 2008

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U.S. Income Gain Modest after May Surge

Manufacturing PMIs: Falling in Concert in Europe

U.S. Construction Spending Fell in June, Stable This Year

German Retail Sales Wither

ISM Index Roughly About Stable M/M But Still Up From Recent Lows

U.S. Payrolls Down, Jobless Rate Up

U.S. Payrolls Down, Jobless Rate Up