Tom Moeller

Consumer confidence, as reported by the Conference Board, ticked up this month by 1.8% after having dropped a revised 12.2% m/m during June. The rise contrasted with Consensus expectations for a moderate decline and it was the first [...]

Consumer Confidence Ticked Up During July

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080728c.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s retail sector is in a bad way. Consumer sentiment ad
retail spending usually mark one another pretty well. Right now both
series are telling a dismal story about the Italian consumer. The
recent drop-of in spending is severe, with most of the drop coming in
March and with no recovery (small real declines) in April and May. 
 

In the quarter-to-date Italy&#8217;s real retail spending is
dropping at a 4.1% annual rate. This is in keeping with other signs
from the Euro Area that weakness has suddenly intensified. Even so the
Germany ministry is today saying that they are not going to change
their GDP outlook. There is a thin line that separates stoicism from
denial. The Euro Area seems to be sinking deeper into an undesired
economic funk. Meanwhile the ECB still sees inflation as public enemy
number-one. Only in the EMU&#8217;s UK do the monetary authorities seem to
have a grip on the true dual risk of their situation. Still they have
not magic policy plan but are marking time to see which risk blows out
of proportion and will need attention first. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> Italy Retail Sales Growth</th>

</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">mo/mo %</td>
<td colspan="4">At annual rates</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Retail Trade</td>
<td>0.2%</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-1.5%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.6%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">Food Beverage &amp; Tobacco</td>
<td>0.3%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>1.0%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Clothing &amp; Furniture</td>
<td>4.8%</td>
<td>-4.1%</td>
<td>-2.8%</td>
<td>-9.1%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>-14.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Real Retail</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-1.1%</td>
<td>-5.4%</td>
<td>-3.9%</td>
<td>-3.4%</td>
<td>-1.0%</td>
<td>-4.1%</td>
</tr>
</tbody>
</table>
</body></html>

Italy’s retail sector is in a bad way. Consumer sentiment ad retail spending usually mark one another pretty well. Right now both series are telling a dismal story about the Italian consumer. The recent drop-of in spending is severe, [...]

Italy's Retail Sector Hits the Skids

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080728a.jpg" align="left" border="0" height="265" width="353">
The United Kingdom's Hometrack Survey reports local market
information compiled by real estate agents around England and Wales.
The agents report on house prices, the ratio of the sales price to the
asking price, the number of weeks it takes to make a sale and the
average number of viewings per sale.
According to the July report, released today, the weighted
average price of a house fell 1.2% from 170,500 GBP (Great Britain
Pound) in June to 168,500 GBP in July. (In U. S. dollars, $335,000).
The average price of a house is now 4.4% below the peak reached a year
ago. The selling price of a house has also declined relative to its
asking price. In July, the ratio of sales price to asking price was
90.9, down from 91.6 in June and well below the recent high of 95.7
reached in May, 2007. The average price of a house and the ratio of the
sales price to the asking price are shown in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080728b.jpg" align="right" border="0" height="265" width="353">
Indicative of the difficulty of selling houses, the real
estate agents reported that it took 11 weeks to complete a sale in
July, 2008 compared with 10.3 in June and 90% higher than the 5.8 weeks
in May, 2007. The number of viewings before a sale was made was 14.9 in
July up from 14.4 in June and 51% higher than the 9.9 in January, 2007.
The number of weeks it takes to make a sale and the number of viewings
before a sale is made 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">United
Kingdom</th>
<th scope="col">Jul 08</th>
<th scope="col">Jun&nbsp; 08&nbsp;</th>
<th scope="col">Previous High or Low&nbsp;</th>
<th scope="col">Date</th>
<th scope="col">M/M chg&nbsp;</th>
<th scope="col">&nbsp;Chg&nbsp; from
Previous High or Low</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">House Price (GBP)</td>
<td>168500</td>
<td>170500</td>
<td>176300</td>
<td>Aug 07</td>
<td>-1.2%</td>
<td>-4.4%</td>
<td>174867</td>
<td>165725</td>
</tr>
<tr>
<td class="firstcol">Ratio Sales Price to
Asking Price</td>
<td>90.9</td>
<td>91.6</td>
<td>65.7</td>
<td>May 07</td>
<td>-0.7</td>
<td>-4.8</td>
<td>95.0</td>
<td>94.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Number of Weeks before
a Sale</td>
<td>11.0</td>
<td>10.3</td>
<td>5.8</td>
<td>May 07</td>
<td>6.8%</td>
<td>89.7%</td>
<td>6.7</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">Number of Viewings
before a Sale</td>
<td>14.9</td>
<td>14.4</td>
<td>9.9</td>
<td>Jan 07</td>
<td>3.5%</td>
<td>50.5%</td>
<td>11.0</td>
<td>10.9</td>
</tr>
</tbody>
</table>
</body></html>

The United Kingdom's Hometrack Survey reports local market information compiled by real estate agents around England and Wales. The agents report on house prices, the ratio of the sales price to the asking price, the number of weeks [...]

UK Real Estate Agents Report Declines In House Prices And More Difficulties In Making A Sale

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080728a.jpg" align="left" border="0" height="265" width="353">
The United Kingdom's Hometrack Survey reports local market
information compiled by real estate agents around England and Wales.
The agents report on house prices, the ratio of the sales price to the
asking price, the number of weeks it takes to make a sale and the
average number of viewings per sale.
According to the July report, released today, the weighted
average price of a house fell 1.2% from 170,500 GBP (Great Britain
Pound) in June to 168,500 GBP in July. (In U. S. dollars, $335,000).
The average price of a house is now 4.4% below the peak reached a year
ago. The selling price of a house has also declined relative to its
asking price. In July, the ratio of sales price to asking price was
90.9, down from 91.6 in June and well below the recent high of 95.7
reached in May, 2007. The average price of a house and the ratio of the
sales price to the asking price are shown in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080728b.jpg" align="right" border="0" height="265" width="353">
Indicative of the difficulty of selling houses, the real
estate agents reported that it took 11 weeks to complete a sale in
July, 2008 compared with 10.3 in June and 90% higher than the 5.8 weeks
in May, 2007. The number of viewings before a sale was made was 14.9 in
July up from 14.4 in June and 51% higher than the 9.9 in January, 2007.
The number of weeks it takes to make a sale and the number of viewings
before a sale is made 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">United
Kingdom</th>
<th scope="col">Jul 08</th>
<th scope="col">Jun&nbsp; 08&nbsp;</th>
<th scope="col">Previous High or Low&nbsp;</th>
<th scope="col">Date</th>
<th scope="col">M/M chg&nbsp;</th>
<th scope="col">&nbsp;Chg&nbsp; from
Previous High or Low</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">House Price (GBP)</td>
<td>168500</td>
<td>170500</td>
<td>176300</td>
<td>Aug 07</td>
<td>-1.2%</td>
<td>-4.4%</td>
<td>174867</td>
<td>165725</td>
</tr>
<tr>
<td class="firstcol">Ratio Sales Price to
Asking Price</td>
<td>90.9</td>
<td>91.6</td>
<td>65.7</td>
<td>May 07</td>
<td>-0.7</td>
<td>-4.8</td>
<td>95.0</td>
<td>94.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Number of Weeks before
a Sale</td>
<td>11.0</td>
<td>10.3</td>
<td>5.8</td>
<td>May 07</td>
<td>6.8%</td>
<td>89.7%</td>
<td>6.7</td>
<td>6.8</td>
</tr>
<tr>
<td class="firstcol">Number of Viewings
before a Sale</td>
<td>14.9</td>
<td>14.4</td>
<td>9.9</td>
<td>Jan 07</td>
<td>3.5%</td>
<td>50.5%</td>
<td>11.0</td>
<td>10.9</td>
</tr>
</tbody>
</table>
Italy's Retail Sector Hits the
Skids 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 28, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080728c.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s retail sector is in a bad way. Consumer sentiment ad
retail spending usually mark one another pretty well. Right now both
series are telling a dismal story about the Italian consumer. The
recent drop-of in spending is severe, with most of the drop coming in
March and with no recovery (small real declines) in April and May. 
 

In the quarter-to-date Italy&#8217;s real retail spending is
dropping at a 4.1% annual rate. This is in keeping with other signs
from the Euro Area that weakness has suddenly intensified. Even so the
Germany ministry is today saying that they are not going to change
their GDP outlook. There is a thin line that separates stoicism from
denial. The Euro Area seems to be sinking deeper into an undesired
economic funk. Meanwhile the ECB still sees inflation as public enemy
number-one. Only in the EMU&#8217;s UK do the monetary authorities seem to
have a grip on the true dual risk of their situation. Still they have
not magic policy plan but are marking time to see which risk blows out
of proportion and will need attention first. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> Italy
Retail Sales Growth</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">mo/mo %</td>
<td colspan="4">At annual rates</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Retail Trade</td>
<td>0.2%</td>
<td>0.1%</td>
<td>-0.6%</td>
<td>-1.5%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>0.6%</td>
<td>-0.7%</td>
</tr>
<tr>
<td class="firstcol">Food Beverage &amp; Tobacco</td>
<td>0.3%</td>
<td>0.1%</td>
<td>-0.5%</td>
<td>-0.7%</td>
<td>1.0%</td>
<td>1.1%</td>
<td>1.0%</td>
<td>0.2%</td>
</tr>
<tr>
<td class="firstcol">Clothing &amp; Furniture</td>
<td>4.8%</td>
<td>-4.1%</td>
<td>-2.8%</td>
<td>-9.1%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>0.1%</td>
<td>-14.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Real Retail</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>-1.1%</td>
<td>-5.4%</td>
<td>-3.9%</td>
<td>-3.4%</td>
<td>-1.0%</td>
<td>-4.1%</td>
</tr>
</tbody>
</table>
</body></html>

UK Real Estate Agents ReportDeclines In House Prices And More Difficulties In Making A Sale

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080725g.jpg" width="353">
The University of Michigan&#39;s July reading of consumer sentiment rose 8.5% from June, an improvement from the read for early July which showed a 0.4% uptick versus the June average. The rise beat Consensus expectations for a reading of 56.3 which would have been unchanged from June. The latest level of sentiment was its highest since April.
During the last ten years there has been a 47% correlation between the level of sentiment and the three month change in real consumer spending.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080725h.jpg" width="353">
The expectations component of overall sentiment was much firmer than reported at mid-month. The full-month index rose 8.7% to its highest level since March led by a 9.4% rise (-16.0% y/y) in expectations for personal finances. Expectations for business conditions during the next year also were firm and expectations for conditions during the next five years made up about all of a sharp July decline.
The current conditions index rose 8.1% and recovered all of a decline during June. The rise was due to a sharp increase in the index of whether now is a good time to buy large household goods, to the highest level since March (-26.3% y/y). The view of current personal finances also rose and made about half of the June decline (-36.5% y/y).
The opinion of government policy, which apparently influences economic expectations, gave back about half of its June improvement.
The mean expected rate of inflation during the next twelve months slipped m/m to 6.3% versus an initial expectation for 6.9%. During the next five years the expected inflation rate fell further to 3.5%, the lowest level since April.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">July</th>
<th scope="col">(Prelim.)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">July 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">Consumer Sentiment</td>
<td>61.2</td>
<td>56.6</td>
<td>56.4</td>
<td>59.8</td>
<td>-32.3% </td>
<td>85.6</td>
<td>87.3</td>
<td>88.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>73.1</td>
<td>69.5</td>
<td>67.6</td>
<td>73.3</td>
<td>-30.0%</td>
<td>101.2</td>
<td>105.1</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>53.5</td>
<td>48.3</td>
<td>49.2</td>
<td>51.1</td>
<td>-34.4%</td>
<td>75.6</td>
<td>75.9</td>
<td>77.4</td>
</tr>
</tbody>
</table>
</body>
</html>

The University of Michigan's July reading of consumer sentiment rose 8.5% from June, an improvement from the read for early July which showed a 0.4% uptick versus the June average. The rise beat Consensus expectations for a reading of [...]

Michigan Consumer Sentiment Better Than Expected in July

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080725e.jpg" width="353">
Sales new single-family homes in June dipped 0.6% to 530,000. The fall added to a 1.7% drop during May that was a much shallower decline than initially reported. The level of sales in June was down 61.8% from the July 2005 peak. Nevertheless, the latest level of sales beat expectations for 503,000.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080725f.jpg" width="353">
By region sales in the South fell 2.0% and they are down 12.5% since December. In the West sales dipped 0.9% and that resulted in a 15.6% drop so far this year. Though sales in the Northeast recovered the May decline with a 5.3% gain, they remained down 28.6% since December. In the Midwest June sales rose 2.5%. So far this year this has been the star performing region as sales posted a 12.2% increase.
The median price for a new single-family home increased 1.4% to $230,900 after a 6.5% decline during May which was a deeper drop than reported initially. 
The number of new homes for sale fell 5.3% (-21.5% y/y) and reduced the inventory of unsold homes to the lowest level since December of 2004. The decline in the number of unsold homes has been greatest in the West (-23.9% y/y) but declines of similar magnitude have been logged elsewhere in the country.
The month&#39;s supply of new homes for sale again ticked lower m/m to 10.0 but that remained near the cycle&#39;s high. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</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 Sales (SAAR, 000s)</td>
<td>530</td>
<td>533</td>
<td>-33.2%</td>
<td>768</td>
<td>1,049</td>
<td>1,279</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Northeast</td>
<td>40</td>
<td>38</td>
<td>&nbsp;-37.5</td>
<td>64</td>
<td>64</td>
<td>81</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Midwest</td>
<td>83</td>
<td>81</td>
<td>-27.2</td>
<td>118</td>
<td>161</td>
<td>203</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; South</td>
<td>293</td>
<td>299</td>
<td>-33.4</td>
<td>408</td>
<td>559</td>
<td>638</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; West</td>
<td>114</td>
<td>115</td>
<td>-34.9</td>
<td>178</td>
<td>266</td>
<td>356</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>230,900</td>
<td>227,700</td>
<td>-2.0</td>
<td>243,742</td>
<td>243,067</td>
<td>234,208</td>
</tr>
</tbody>
</table>
</body>
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Sales new single-family homes in June dipped 0.6% to 530,000. The fall added to a 1.7% drop during May that was a much shallower decline than initially reported. The level of sales in June was down 61.8% from the July 2005 peak. [...]

U.S. New-Home Sales Dipped in June, Decline Stabilizing?

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080725d.jpg" align="left" border="0" height="265" width="353">
The German CPI ex-energy inflation rate is still very
well-behaved with inflation on that score below 2% over 12-months and
nearer to 1% over three- and six-months. For the PPI ex energy trends
are worsening, however. Export and import prices excluding the effects
of energy &#8211; just reported - are both up by over 2% over twelve months.
On shorter horizons where they are accelerating sharply, those trends
may be real but since the data are not seasonally adjusted those
calculations are not so reliable. 
 

Still, what is disturbing about those trends is the clear
acceleration in the ex-petrol inflation rates over those less reliable
but shorter horizons. 
 

On balance German inflation does not seem imperiled. But the
ECB caps overall EMU inflation, not German inflation and as one of the
more price-stable countries in the Zone Germany still posts a headline
CPI that is up by 3.3% and an ex-energy result that is up by 1.9%. The
ex-energy number falls below the ECB CPI cap rate, but the ECB does not
have any ceiling except for the full CPI number. Perhaps behind the
closed doors of the meeting room the ECB Council takes some solace in
ex-energy inflation being better behaved, but not in public. 
 

More ominously, the export and import prices for Germany &#8211;
despite ongoing euro strength- suggest that more inflation pressures
may be leaking in apart from energy. All in all this is not a great
result for the month, although the report has its spots for those who
may wish to mount an argument of optimism. I suspect the ECB and the
usual band of inflation adverse German observers will see little good
in this report. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">German
International and Domestic Inflation Trends </th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% m/m</td>
<td colspan="4">% Saar</td>
</tr>
<tr class="grey4">
<td class="firstcol">SA:</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>Yr-Ago</td>
</tr>
<tr class="grey1">
<td class="firstcol">Export Prices</td>
<td>0.7%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>4.9%</td>
<td>4.7%</td>
<td>2.7%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Import Prices</td>
<td>2.1%</td>
<td>2.3%</td>
<td>0.4%</td>
<td>20.6%</td>
<td>13.6%</td>
<td>8.8%</td>
<td>1.4%</td>
</tr>
<tr class="grey2">
<td class="firstcol">NSA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey1">
<td class="firstcol">Exports excl-Petroleum</td>
<td>0.5%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>3.4%</td>
<td>4.6%</td>
<td>2.3%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Imports excl-Petroleum</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.3%</td>
<td>5.5%</td>
<td>6.3%</td>
<td>2.5%</td>
<td>1.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo: SA</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td class="firstcol">CPI</td>
<td>0.4%</td>
<td>0.5%</td>
<td>0.0%</td>
<td>3.4%</td>
<td>3.1%</td>
<td>3.3%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">CPI excl Energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>0.8%</td>
<td>1.2%</td>
<td>1.9%</td>
<td>2.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">PPI</td>
<td>1.0%</td>
<td>1.1%</td>
<td>0.9%</td>
<td>12.6%</td>
<td>9.4%</td>
<td>6.6%</td>
<td>1.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">PPI excl Energy</td>
<td>0.4%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>3.6%</td>
<td>4.2%</td>
<td>2.9%</td>
<td>2.8%</td>
</tr>
</tbody>
</table>
</body></html>

The German CPI ex-energy inflation rate is still very well-behaved with inflation on that score below 2% over 12-months and nearer to 1% over three- and six-months. For the PPI ex energy trends are worsening, however. Export and [...]

Excluding Energy German Export and Import Prices Break Through 2% Mark

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080725c.jpg" align="left" border="0" height="265" width="353">
France&#8217;s formerly stable service sector is weakening: The
Insee indicator that was above its mean level just three short months
ago is now falling sharply. The service sector barometer is now in the
37th percentile of its range with the outlook in the 35th percentile of
its range at a reading of -11 compared with an average of -2. 
 

Observed sales are in the 62nd percentile of that series&#8217;
historic range while expected sales are ominously in the 40th
percentile of their range. The future is expected to be worse. Sales
prices are in the high seventies to 8oth percentiles. While employment
observed over the past three-months was in the 80th percentile of this
historic range for the next three-months the reading for expected
employment conditions is in the bottom 20th percentile. 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col">France INSEE Services Survey Jan 2000-date </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>Apr 08</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
</tr>
<tr>
<td class="firstcol">Climate Indicator</td>
<td>94</td>
<td>101</td>
<td>102</td>
<td>103</td>
<td>36.7</td>
<td>68</td>
<td>113</td>
<td>83</td>
<td>30</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">Climate: 3-Mo MAV</td>
<td>99</td>
<td>102</td>
<td>103</td>
<td>104</td>
<td>50.6</td>
<td>55</td>
<td>113</td>
<td>85</td>
<td>28</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">Climate: 12-Mo MAV</td>
<td>106</td>
<td>108</td>
<td>109</td>
<td>109</td>
<td>79.7</td>
<td>24</td>
<td>110</td>
<td>91</td>
<td>20</td>
<td>102</td>
</tr>
<tr>
<td class="firstcol">Outlook</td>
<td>-11</td>
<td>-6</td>
<td>-4</td>
<td>-3</td>
<td>35.5</td>
<td>75</td>
<td>9</td>
<td>-22</td>
<td>31</td>
<td>-2</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">Sales</td>
</tr>
<tr>
<td class="firstcol">Observed 3-Mos</td>
<td>7</td>
<td>11</td>
<td>11</td>
<td>11</td>
<td>62.1</td>
<td>41</td>
<td>18</td>
<td>-11</td>
<td>29</td>
<td>6</td>
</tr>
<tr>
<td class="firstcol">Expected 3-Mos</td>
<td>1</td>
<td>8</td>
<td>10</td>
<td>11</td>
<td>40.7</td>
<td>70</td>
<td>17</td>
<td>-10</td>
<td>27</td>
<td>7</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">Sales Price</td>
</tr>
<tr>
<td class="firstcol">Observed over 3-Mos</td>
<td>3</td>
<td>5</td>
<td>5</td>
<td>4</td>
<td>77.8</td>
<td>7</td>
<td>5</td>
<td>-4</td>
<td>9</td>
<td>0</td>
</tr>
<tr>
<td class="firstcol">Expected over 3-Mos</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>3</td>
<td>80.0</td>
<td>4</td>
<td>5</td>
<td>-5</td>
<td>10</td>
<td>0</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="11">Employment</td>
</tr>
<tr>
<td class="firstcol">Observed over 3-Mos</td>
<td>12</td>
<td>11</td>
<td>17</td>
<td>14</td>
<td>82.1</td>
<td>9</td>
<td>17</td>
<td>-11</td>
<td>28</td>
<td>5</td>
</tr>
<tr>
<td class="firstcol">Expected over 3-Mos</td>
<td>0</td>
<td>5</td>
<td>12</td>
<td>10</td>
<td>20.8</td>
<td>68</td>
<td>19</td>
<td>-5</td>
<td>24</td>
<td>5</td>
</tr>
</tbody>
</table>
</body></html>

France’s formerly stable service sector is weakening: The Insee indicator that was above its mean level just three short months ago is now falling sharply. The service sector barometer is now in the 37th percentile of its range with [...]

France’s Insee Services Indicator Plunges as Weakness Spreads

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

Previous Trump tariffs fading. A boost from new tariffs ahead?

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

US financial market concerns shifting from growth to inflation

Economic activity is picking up in the US but remains lackluster abroad

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

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The U.S. Treasury Department reported a U.S. government budget surplus of $258.4 billion during April, which compared to a surplus of $209.5 billion twelve months earlier. The Action Economics Forecast Survey expected a $264.0 billion surplus in April. During the first seven months of the current fiscal year, the government ran a budget deficit of $1.049 trillion versus a deficit of $855.2 billion it the first seven months of FY’24.

Overall revenues in the first seven months of FY’25 increased 4.9% y/y compared to a 10.3% y/y rise in the first seven months of last year. Individual income tax receipts rose 7.0% y/y compared to last year’s 11.4% y/y gain. The level of corporate tax receipts fell 9.2% y/y so far this year after a 27.5% y/y rise in the first seven months of FY’24. Social insurance revenues increased 3.5% y/y after a 6.6% y/y rise in the first seven months of FY’24, while excise taxes rose 20.0% y/y so far in FY’25 compared to a 14.0% gain in the first seven months of last fiscal year. Customs duties rose 34.4% y/y in the first seven months of FY’25 after a 7.4% y/y decline last fiscal year.

Federal government outlays grew 8.9% y/y so far in FY’25 versus a 5.8% y/y 	rise in the first seven months of FY’24. Defense spending rose 7.8% y/y versus a 7.0% y/y rise in the first seven months of last fiscal year. Social Security outlays rose 8.4% y/y in the first seven months of FY’25 versus an 8.7% increase in the first seven months of last fiscal year. Interest payments rose 12.6% y/y so far in FY’25 after a 41.4% rise in the first seven months of last fiscal year. Health program spending rose 7.1% y/y after rising 0.8% early in FY’24 while Medicare payments surged 18.4% y/y versus a 9.1% y/y rise last year. Income security outlays rose 8.0% y/y early this year compared to a 16.3% y/y decline in the first seven months of FY’24.

Haver's data on Federal Government receipts & outlays are contained in **USECON**. The expectations figure is in the **AS1REPNA** database.

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- Federal receipt growth slows in FY 2025.
- Outlay growth surges this fiscal year.

U.S. Federal Government Runs a Budget Surplus in April; Larger Deficit ‘YTD

250509A1.jpg

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The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.6% (-3.6% y/y) during the four weeks ended May 9, 2025. The improvement followed sharp declines in April.

Miscellaneous group prices increased 2.4% (5.9% y/y) over the last four weeks. Natural rubber price soared 13.9% (11.7% y/y). The price of tallow (used in the soap industry) rose 10.6% (41.3% y/y) in four weeks but the cost of framing lumber declined 5.6%, but rose 7.3% y/y.

Prices in the Metals group edged 0.2% higher (-7.3% y/y) over the most recent four weeks. Variation in pricing was wide. Copper scrap prices rose 7.4% (-3.3% y/y) while lead costs rose 4.0% in four weeks (-11.1% y/y). The cost of aluminum increased 2.3% in four weeks, off 4.4% y/y. Working lower, the cost of steel scrap declined 8.1% (-11.6% y/) in four weeks while tin prices followed with a 4.9% decline (-2.9% y/y). Zinc prices eased 0.7% in four weeks and declined 10.3% y/y.

Crude Oil & Benzene group prices edged 0.1% higher (-19.4% y/y) in four weeks. The cost of West Texas Intermediate crude oil weakened 4.0% to $58.50 per barrel and was 25.6% lower y/y. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 8.5% (-41.8% y/y) in the last four weeks. Excluding crude oil, the industrial commodity price index rose 0.9% (-2.1% y/y) during the last four weeks.

Textile group prices edged 0.9% lower (-0.5% y/y) during the last four weeks. Burlap costs declined 14.3% (+7.4% y/y) but the cost of cotton rose 4.5% (-7.7% y/y) over four weeks.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

250509D1.jpg

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- Metals prices are mixed.
- Crude oil prices fall sharply.
- Textile prices ease.

FIBER: Industrial Commodity Price Movement Diverges in Latest Four Weeks

250509L1.jpg

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Wholesale trade inventories increased 0.4% (2.2% y/y) during March after rising 0.5% in February, revised from 0.3% after a 0.8% January rise. The increase compared to expectations for a 0.5% rise in the Informa Global Markets Survey and compared to a 0.6% gain in the advance report issued two weeks ago.

Durable goods inventories rose 0.6% in March (1.5% y/y) after rising 0.5% in February. Machinery inventories, the largest sector, increased 0.6% (1.7% y/y) while inventories of motor vehicles & parts, the second largest grouping, rose 1.2% (0.8% y/y). Furniture inventories strengthened 2.7% (6.8% y/y) while electrical equipment inventories declined 1.0% (-3.1% y/y). Inventories of nondurable goods edged 0.1% higher (3.4% y/y). Drug inventories, which make up one-quarter of nondurable inventories, advanced 1.0% (4.6% y/y). Grocery inventories, the second largest category, rose 0.4% (8.3% y/y). Apparel inventories fell 0.8% (-6.5% y/y) and chemical inventories rose 2.1% both m/m and y/y. Petroleum inventories increased 0.7% (0.3% y/y).

Sales at the wholesale level rose 0.6% (6.1% y/y) in March after rising 2.0% in February and falling 0.9% in January. A 0.9% March rise had been expected in the Action Economics Forecast Survey.

Durable goods sales rose 1.0% (8.5% y/y) in March after strengthening 3.2% in February. Sales of electrical equipment & electronic goods, the largest sector, rose 2.5% (20.9% y/y), after a 2.3% rise. Professional and commercial equipment sales, which includes computers, rose 1.2% (11.9% y/y), while vehicle sales declined 1.0% (1.1% y/y). Sales of machinery improved 0.7% (4.2% y/y). Nondurable product sales rose 0.3% (3.9% y/y) in March after gaining 0.9% in February. Drug store sales, the largest category, increased 2.8% (13.4% y/y), while grocery store sales eased 0.2% (+4.3% y/y). Sales of apparel weakened 0.8% (+3.5% y/y) while paper sales declined 1.7% (0.5% y/y). Petroleum product sales fell 4.6% both m/m and y/y.

The inventory-to-sales (I/S) ratio at the wholesale level remained at 1.30 in March and has been moving lower for the last two years.

The wholesale I/S ratio for durable goods eased to 1.69 in March and also has been trending lower. The machinery ratio fell to 2.92 while motor vehicles rose to 1.78. The I/S ratio for nondurable goods slipped to 0.93 and remained down from 1.02 early in 2023. The drug industry ratio eased to 0.94. Apparel's I/S ratio held at 2.06, but remained below its 2.28 level one year earlier, and has been declining since early 2023. The petroleum industry I/S ratio rose to 0.33.

The wholesale trade figures are available in Haver's **USECON** database. The expectations figure for inventories is contained in the **MMSAMER** database. Expectations for sales are from the **AS1REPNA** database.

**Assessing Maximum Employment** from Federal Reserve Governor Adriana D. Kugler is available [here](https://www.federalreserve.gov/newsevents/speech/kugler20250509a.htm).

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- Inventories trend higher y/y.
- Sales increase broadly.
- Inventory-to-sales ratio steadies.

U.S. Wholesale Inventories & Sales Increase in March

250508N2.jpg

250508O2.jpg

Nonfarm labor productivity fell 0.8% (SAAR) during Q1’25 after increasing 1.7% in Q4’24, revised from 1.5%. A 0.6% decline had been expected in the Action Economics Forecast Survey. It was the first productivity decline since Q2’22. The y/y increase during Q1 fell to 1.4% from 2.1% in Q4. It was below a 3.3% high in the first quarter of last year. Productivity fell as real value-added output dropped 0.3% last quarter (+2.2% y/y) after increasing 2.5% in Q4, and hours worked lengthened 0.6% (0.8% y/y) following a 0.8% gain.

Compensation per hour increased 4.8% last quarter following a 3.7% Q4 rise. Despite the strength of these last two increases, y/y growth decelerated to 2.7% from a 6.8% high one year earlier. Nevertheless, the productivity decline raised unit labor costs by 5.7% (1.3% y/y) in Q1 versus expectations for a 5.2% increase. It followed a 2.0% gain during Q4 and was the strongest quarterly increase in a year.

Factory sector productivity surged 4.5% (1.5% y/y) during Q1’25 following three consecutive increases of roughly 0.5%. This strength was accompanied by a 6.2% rise (2.2% y/y) in hourly compensation which came after two consecutive increases of approximately 4.1%. The strength in productivity lowered the rise in unit labor costs to 1.6% from 3.8% in Q4. The y/y gain fell to 0.7% from 2.0% in Q4 and stood below the 6.2% y/y increase in Q1’24.

The productivity and labor cost data are available in Haver’s **USECON** database. The Action Economics expectations figures are in the **AS1REPNA** database.

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- Productivity declines with lower output.
- Compensation surge exacerbates labor market stress.
- Factory sector productivity surge lessens cost pressure.

U.S. Productivity Declines in Q1’25; Unit Labor Costs Surge

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The National Association of Realtors' Fixed Rate Mortgage Housing Affordability Index (HAI) rose 0.6% (3.2% y/y) in March to 103.2 after rising 0.9% to 102.6 in February and rising 0.8% in January to 101.7. The level of home affordability has risen 14.8% from its low of 89.9 in October 2023. It remains 42.4% below the high of 179.2 in April 2020.

The rise in affordability in March occurred as the median price of an existing single-family home rose 1.8% (2.9% y/y) to $408,000 which was offset by a decline in mortgage rates to 6.73% from 6.92% in February. The price compared to the record $432,900 in June 2024. The decline in mortgage rates compared to a recent low of 6.26% in September of last year and a 7.70% high during October of 2023. It remained well above a December 2020 low of 2.73%. These changes lowered the principal & interest payment by 0.2% (+1.1% y/y) to $2,113 per month. That was well above the most recent low of $984 in February 2020. Monthly mortgage payments averaged a lessened 24.2% of income during March. They remained up from a low of 14.0% of income in April 2020.

The rise in housing costs in March was accompanied by improvement in median family income. It increased 0.4% (4.4% y/y) to a record $104,705 after rising 0.4% in February and 0.7% in January.

Housing affordability improved m/m across the country in March. The index edged 0.1% higher (2.8% y/y) to 134.5 in the Midwest. It remains the most affordable region of the country. In the South, the index 0.9% (5.4% y/y) to 106.6 and the affordability index in the Northeast increased 2.1% (-2.6% y/y) to 95.7. In the West, where homes are the least affordable, the index rose 0.8% (3.3% y/y) to 71.8 in March.

The Housing Affordability Index (HAI) equals 100 when a median-income borrower qualifies for an 80% mortgage on a median-priced existing single-family home. The HAI had exceeded 100 in each month since July 1990 and reached its all-time high of 213.3 in January 2013; since then, it fell below 100 for the first time in June 2022.

Data on Housing Affordability can be found in Haver’s **REALTOR** database. Median home sales prices are also available in **USECON**. Higher frequency interest rate data are found in **SURVEYS**, **WEEKLY**, and **DAILY**.

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- Home prices rise but mortgage rates decline.
- Median income improves.
- Affordability increases across the country.