Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713n.jpg" width="353">
The accompanying charts show those EMU countries for which we have an early read on June inflation. Finland, Belgium and France show rates of change below the 2% mark. Germany, Italy and The Netherlands are also below the 2% ceiling, but by the skin of their teeth. Luxembourg and Spain are over the top.
It is heartening to see that some of the larger countries have the lower rates of inflation. And for most the pattern is clear. An oil price shock cranked up the inflation rates, but afterward those rates have come back down and are for the most part tolerably closer to the ECB&#146;s ceiling.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713o.jpg" width="353">
Still only France has an extended period in which its year/year pace has been consistently well below the ceiling pace of 2%. Finland&#146;s and Belgium&#146;s rates have just fallen into a more comfortable part of the zone recently. The Netherlands rate has recently risen toward the ceiling. While Germany and Italy are technical successes they have no reassuring history for us. Belgium and Luxembourg show no tendency to do better.
So it is quite understandable that the ECB would be wary in such an environment. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Trends in HICP
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="4">% saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-13</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.0%</td>
<td>2.4%</td>
<td>1.9%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.3%</td>
<td>3.1%</td>
<td>2.5%</td>
<td>1.9%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.8%</td>
<td>9.0%</td>
<td>3.2%</td>
<td>1.4%</td>
<td>2.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>3.9%</td>
<td>2.6%</td>
<td>1.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">HICP</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="odd">
<td class="firstcol">Germany</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>2.0%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.6%</td>
<td>1.7%</td>
<td>1.3%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.3%</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.0%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>3.3%</td>
<td>2.4%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td colspan="2">Core: xFE&amp;A</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>2.2%</td>
<td>2.1%</td>
<td>0.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.3%</td>
<td>2.1%</td>
<td>1.4%</td>
<td>1.4%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>#N/A</td>
<td>0.2%</td>
<td>0.0%</td>
<td>2.0%</td>
<td>1.8%</td>
<td>1.9%</td>
<td>1.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>#N/A</td>
<td>0.3%</td>
<td>0.0%</td>
<td>2.4%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>#N/A</td>
<td>0.1%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>2.7%</td>
<td>2.5%</td>
<td>3.1%</td>
</tr>
<tr>
<td colspan="4">Blue shaded area data trail by one month</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
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The accompanying charts show those EMU countries for which we have an early read on June inflation. Finland, Belgium and France show rates of change below the 2% mark. Germany, Italy and The Netherlands are also below the 2% ceiling, [...]

EMU Inflation Trends Show Success and Reason to be Wary…

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713m.jpg" width="353">
The BOF Outlook index hit a local peak from Mar 07; It is flat in June.
The Bank of France Business report is a comprehensive survey on businesses and their expectations. The table below is a summary of the more extensive report with industry detail. In that report the sentiment index at 108.2 is above its average since January 1987 that stands at 105. However, the index was flat on the month and it had reached its peak in this cycle at 111.89 in March. The index fell sharply from that peak and has stayed in a very tight range over the next three months.
French elections have taken place and the past few months are in the post election period; French consumer confidence has been on an extended rise in the wake of the elections.
As for business, the production outlook at 8.7 is below its average value of 12, although production in the current month at 10.8 is above its average value of 9.
Overall order books are stuffed compared with historic averages. The average for order books is +3 while the June reading is 26.8, the strongest category relative to its average by far. Foreign orders are also above normal at 12.1 compared to an average of 9. New orders are, however, not as robust at a level of 10.9 in June compared to an historic average of 10.
At 85.9, capacity use is above the historic norm of 84. Hiring in the current month at -1.8 is weaker than the monthly average of -1 while the outlook at -3.9 is better than the historic average of -6. 
On balance, the BOF index is better than average. And while many of its component readings are above normal, most are not far above normal and there is some evidence of a loss in momentum.

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Bank of France Monthly INDUSTRY Survey:SUMMARY
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<tbody>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>12 MO</td>
<td>Since Jan-87</td>
<td>2Yr Percentile</td>
</tr>
<tr class="grey4">
<td class="firstcol">&nbsp;</td>
<td>Jun-07</td>
<td>May-07</td>
<td>Apr-07</td>
<td>AVERAGE</td>
<td>Average</td>
<td>rank/range</td>
</tr>
<tr class="grey3">
<td colspan="7">Production-latest month</td>
</tr>
<tr class="grey4">
<td class="firstcol">Total Industry</td>
<td>10.77</td>
<td>9.52</td>
<td>6.59</td>
<td>8</td>
<td>9</td>
<td>61.3%</td>
</tr>
<tr class="grey3">
<td colspan="7">Production Outlook</td>
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<tr class="grey4">
<td class="firstcol">Total Industry</td>
<td>8.7</td>
<td>17.66</td>
<td>7.34</td>
<td>9</td>
<td>12</td>
<td>51.1%</td>
</tr>
<tr class="grey3">
<td colspan="7">Demand</td>
</tr>
<tr class="grey4">
<td class="firstcol">Overall order books</td>
<td>26.85</td>
<td>29.77</td>
<td>30.57</td>
<td>25</td>
<td>3</td>
<td>84.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Foreign Orders</td>
<td>12.12</td>
<td>13.35</td>
<td>11.56</td>
<td>13</td>
<td>9</td>
<td>61.2%</td>
</tr>
<tr class="grey3">
<td colspan="7">New Orders</td>
</tr>
<tr class="grey4">
<td class="firstcol">Total Industry</td>
<td>10.89</td>
<td>13.11</td>
<td>8.68</td>
<td>11</td>
<td>10</td>
<td>49.4%</td>
</tr>
<tr class="grey3">
<td colspan="7">Stocks: Finished Goods</td>
</tr>
<tr class="grey4">
<td class="firstcol">Total Industry</td>
<td>-1.4</td>
<td>-2.68</td>
<td>-5.36</td>
<td>-2</td>
<td>-2</td>
<td>57.3%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Capacity Utilization</td>
<td>85.96</td>
<td>85.72</td>
<td>86.05</td>
<td>85</td>
<td>84</td>
<td>89.0%</td>
</tr>
<tr class="grey3">
<td colspan="7">Hiring</td>
</tr>
<tr class="grey4">
<td class="firstcol">Latest Month</td>
<td>-1.84</td>
<td>2.25</td>
<td>0.36</td>
<td>0</td>
<td>-1</td>
<td>28.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Outlook</td>
<td>-3.92</td>
<td>-4.52</td>
<td>-5.28</td>
<td>-4</td>
<td>-6</td>
<td>82.9%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Industry Sentiment Index</td>
<td>108.21</td>
<td>108.26</td>
<td>108.36</td>
<td>107</td>
<td>105</td>
<td>75.4%</td>
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The BOF Outlook index hit a local peak from Mar 07; It is flat in June. The Bank of France Business report is a comprehensive survey on businesses and their expectations. The table below is a summary of the more extensive report with [...]

Bank of France Business Index is Flat in June

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713i.jpg" width="353">
Gasoline prices turned up slightly in the latest week, ending July 9, but they remain below their May peaks. The latest reading from the Department of Energy (DOE) was $2.981/gallon, up 2.2 cents on the week. At least one reason for the week-to-week increase is the July 4 holiday and the beginning in earnest of the vacation driving season. The same week in 2006 saw $2.973/gallon, so the current level is less than a penny higher. Crude oil prices have also increased from week to week, and they are above their June levels. However, these are below year-ago prices.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713j.jpg" width="353">
These steadier price trends suggest that pressures in the world oil market are diminishing. Indeed, conditions are easing, but relatively so. World product demand appears to have flattened out, with the latest estimate at about 84 million barrel/day through May, according to Oil Market Intelligence. [In Haver&#39;s OMI database; June figures are due out shortly.] This peaked in February at 86.2 mil. b/d. In the last several years, February has been each year&#39;s peak month, with June and August nearly as high. Year-on-year percentage increases are running somewhat slower than they did back in the autumn. So there are hints here that total demand has at least stopped accelerating, but potential increases due to seasonal needs over the summer keep us from a firm conclusion that it has stopped growing altogether.
In the US, total product demand was 20.8 mil b/d in the latest DOE 4-week reading, almost exactly flat with a year ago. Aggregated to monthly averages, these data show an abrupt slowing of demand growth in June after 4 months that ran 2% to as much as 5.6% ahead of a year ago. Gasoline usage, similarly, is still increasing year-to-year, but noticeably less in the last 2 months than earlier this year. [These US product demand data are in OILWKLY; we have used the &quot;Aggregation&quot; feature of DLXVG3 to facilitate the monthly comparisons here.] 

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<td> <img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713k.jpg" width="353"><img border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713l.jpg" width="353">&nbsp;</td>
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<th scope="col" class="firstcol">&middot;&nbsp;The tightness in these markets can be gauged by the adequacy of inventories.&nbsp; Here again, year-ago comparisons are still unfavorable, but they have been less bad lately than in prior months.&nbsp; The size of US gasoline stocks is down 3.3% in the July 9 week from the 2006 week, but in mid-May, they had been down 5.7% from the year-ago amount.&nbsp; With the less weak inventories and the less strong demand growth, the sector&#39;s version of an &quot;inventory/sales ratio&quot;, the &quot;days&#39; supply&quot; has stopped eroding.&nbsp; Gasoline stocks stood at 21.4 days&#39; worth of gasoline demand last week, the same as the week before.&nbsp; The year-ago figure was 22.2 days; so this inventory measure is down from a year ago, but actually better than in late April, when it sank as low as 20.8 days.&nbsp; That was the lowest days&#39; supply reading in the 16-1/2 years of this series, apart from those impacted by hurricanes in 2003 and 2005.&nbsp; Again, July and August are the most sensitive seasonal periods, so the performance of this measure too in the immediately coming weeks will tell more definitively about the vulnerability of oil and gasoline markets to higher prices. </th>
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<colgroup><col><col><col><col><col><col><col></colgroup>
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<th scope="col" class="firstcol">Select Oil Market Indicators</th>
<th scope="col">July 9</th>
<th scope="col">July 2</th>
<th scope="col">June</th>
<th scope="col">Year- Ago Week</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Gasoline, US Regular Grade (cents/gal)</td>
<td>298.1</td>
<td>295.9</td>
<td>305.6</td>
<td>297.3</td>
<td>257.2</td>
<td>227.0</td>
<td>185.2</td>
</tr>
<tr>
<td class="firstcol">Crude: WTI ($/barrel)</td>
<td>71.79</td>
<td>69.19</td>
<td>66.87</td>
<td>75.30</td>
<td>66.13</td>
<td>56.50</td>
<td>41.33</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude: UK Brent ($/barrel)</td>
<td>72.75</td>
<td>71.69</td>
<td>70.58</td>
<td>73.80</td>
<td>65.19</td>
<td>54.58</td>
<td>38.10</td>
</tr>
<tr>
<td class="firstcol">Gasoline Stocks:&nbsp; Days&#39; Supply</td>
<td>21.4</td>
<td>21.4</td>
<td>21.4</td>
<td>22.2</td>
<td>22.7</td>
<td>22.8</td>
<td>23.2</td>
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Gasoline prices turned up slightly in the latest week, ending July 9, but they remain below their May peaks. The latest reading from the Department of Energy (DOE) was $2.981/gallon, up 2.2 cents on the week. At least one reason for [...]

Gasoline Prices Stay Below Peaks; Will July & August Reverse This Improvement?

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713g.jpg" width="353">
The University of Michigan&#39;s preliminary reading of consumer sentiment this month jumped 8.3% to 92.4, the highest level since January.The latest contrasted with Consensus expectations for only a reading of 86.
The consumer expectations contributed the most to the rise with a 12.3% surge m/m.Current conditions also rose 3.7% to the highest level since January.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713h.jpg" width="353">
An improved expectation for business conditions during the next year contributed with a 17.0% m/m rise and a better outlook for the next five years contributed with an 18.2% surge.
The view of current personal finances rose 7.3% (7.3% y/y) but the perspective of current buying conditions rose just 1.3% (-1.3% y/y).
The assessment of government policy improved 6.1% (6.1% y/y) after falling sharply during the prior two months.
The University of Michigan survey is not seasonally adjusted.This mid-month survey was based on telephone interviews with about 340 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month-end. 

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">July (Prelim.)</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
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<td class="firstcol">Consumer Sentiment</td>
<td>92.4</td>
<td>85.3</td>
<td>9.1%</td>
<td>87.3</td>
<td>88.6</td>
<td>95.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>105.7</td>
<td>101.9</td>
<td>2.1%</td>
<td>105.1</td>
<td>105.9</td>
<td>105.6</td>
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<td class="firstcol">&nbsp;&nbsp; Expectations</td>
<td>83.9</td>
<td>74.7</td>
<td>15.7%</td>
<td>75.9</td>
<td>77.4</td>
<td>88.5</td>
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The University of Michigan's preliminary reading of consumer sentiment this month jumped 8.3% to 92.4, the highest level since January.The latest contrasted with Consensus expectations for only a reading of 86. The consumer [...]

Michigan Consumer Sentiment Rebounded

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713e.jpg" width="353">
Surging petroleum prices fueled a 1.0% jump in overall import prices last month. The jump was about equal to the May rise and easily beat Consensus expectations for a 0.6% gain. 
The increase occurred as petroleum import prices surged 4.7% in June after sharp increases during five of the prior six months. Further increases in July in the price of Brent crude oil to $77.12 from an average $71.0 during June promise another price gain this month.
Less petroleum import prices rose a modest 0.2 following the May jump of 0.5%. During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a lower 47% against a broader basket of currencies. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713f.jpg" width="353">
Why a Dollar Depreciation May Not Close the U.S. Trade Deficit from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/current_issues/ci13-5/ci13-5.html">here</a>
Prices for industrial supplies &amp; materials surged 2.6% (4.4% y/y) due to surge in oil prices. Less oil these prices rose 0.5% (7.5% y/y). 
Capital goods prices rose 0.2% (-0.1% y/y) after no change in May. Computers, peripheral and semiconductors fell 0.1% (-5.2% y/y) and less high tech, capital goods prices were unchanged (3.1% y/y). Prices for nonauto consumer goods were unchanged (1.5% y/y).
Export prices rose 0.3%. Nonagricultural export prices rose just 0.1% (2.9% y/y). 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Import - All Commodities</td>
<td>1.0%</td>
<td>1.1%</td>
<td>2.3%</td>
<td>4.9%</td>
<td>7.5%</td>
<td>5.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.7%</td>
<td>3.7%</td>
<td>2.1%</td>
<td>20.6%</td>
<td>37.6%</td>
<td>30.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.2%</td>
<td>0.5%</td>
<td>2.6%</td>
<td>1.7%</td>
<td>2.7%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>0.3%</td>
<td>0.2%</td>
<td>4.1%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>3.9%</td>
</tr>
</tbody>
</table>


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Surging petroleum prices fueled a 1.0% jump in overall import prices last month. The jump was about equal to the May rise and easily beat Consensus expectations for a 0.6% gain. The increase occurred as petroleum import prices surged [...]

U.S. Import Prices Jumped Again in June

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713c.jpg" width="353">
The U.S. federal government ran a surplus of $27.5B last month versus a deep deficit during May. Last month&#146;s surplus was up from the June 2006 figure of $20.B.
The monthly figure was near Consensus expectations for a surplus of $30B. Analysts&#39; forecasts of the Federal budget benefit from access to the Government&#39;s Daily Treasury Statement, the data for which is available in Haver&#39;s DAILY database.
The latest Midsession Review of the Budget can be found <a href="http://www.whitehouse.gov/omb/budget/fy2008/">here</a>
The June budget figures pulled the deficit for the first three quarters of FY07 to $121B, down from $206.5B during last fiscal year&#39;s first nine months. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713d.jpg" width="353">
Net revenues grew 7.5% y/y during the first nine months of FY07. Individual income tax receipts (44% of total receipts) grew 11.5%. Corporate income taxes (13% of total receipts) were down sharply as were estate &amp; gift taxes. Higher employment levels raised employment contributions by 4.2%.
U.S. net outlays grew 2.5% during this fiscal year&#39;s first nine months versus last year driven by a 5.6% rise in defense spending (19% of total outlays). Medicare expenditures (12% of outlays) surged by14.7% while social security spending (21% of outlays) rose 5.7%. The government&#39;s interest expense rose by 4.6% y/y as interest rates have risen. 

<table border="0" cellspacing="0" width="100%">
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<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US Government Finance</a> &nbsp;</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">FYTD 2007</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$27.5B</td>
<td>$-67.7B</td>
<td>$20.5B (6/06)</td>
<td>-$247.7</td>
<td>-$318.7B</td>
<td>-$412.7B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$276.5B</td>
<td>$164.2B</td>
<td>4.6%</td>
<td>7.5%</td>
<td>11.8%</td>
<td>14.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$206.6B</td>
<td>$231.9B</td>
<td>2.1%</td>
<td>2.5%</td>
<td>7.4%</td>
<td>7.8%</td>
</tr>
</tbody>
</table>


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The U.S. federal government ran a surplus of $27.5B last month versus a deep deficit during May. Last months surplus was up from the June 2006 figure of $20.B. The monthly figure was near Consensus expectations for a surplus of $30B. [...]

U.S. Budget Reverses May Shortfall

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713a.jpg" width="353">
In June, US retail sales fell 0.9% after a 1.5% gain during May that was revised from 1.4%. The figure for last month fell short of Consensus expectations for a modest 0.1% rise.
Excluding autos, retail sales fell 0.4% but a revised 1.6% rise during May was initially reported as up 1.3%.Expectations were for a 0.2% increase.
Nonauto retail sales less gasoline fell 0.3% (+4.6% y/y) last month after a revised 1.3% spurt during May, initially reported at up 1.0%.
Sales by motor vehicle &amp; parts dealers fell 2.9% (+2.0% y/y), even though new unit vehicle sales fell 3.5% m/m<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070713b.jpg" width="353">
Gasoline service station sales fell 1.1% after a 4.1% surge during May which reflected a 10.6% ruse in gas prices at the pump which then fell 2.9% during June to an average $3.06 per gallon (5.9% y/y).
Sales of discretionary items were generally firm last month. Sales at general merchandise stores added 0.3% (4.8% y/y) after an upwardly revised 1.0% May increase.Apparel store sales fell 1.4% (+4.8% y/y) after a 2.5% spurt during May. Furniture, home furnishings &amp; appliance stores posted one of weakest showings last month with a 2.2% (-0.1% y/y) decline after a modest 0.7% May rise.
Building material sales fell 2.3%% (-0.1% y/y). Sales of nonstore retailers (internet &amp; catalogue) rose 1.2% (9.5% y/y) but restaurant and bar sales rose only 0.1% (5.9% y/y) after a 0.6% May increase 
How Worrisome Is a Negative Saving Rate? From the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci13-4/ci13-4.html"> here</a>. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>-0.9%</td>
<td>1.5%</td>
<td>3.8%</td>
<td>6.2%</td>
<td>6.6%</td>
<td>6.1%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>-0.4%</td>
<td>1.6%</td>
<td>4.2%</td>
<td>7.3%</td>
<td>7.6%</td>
<td>7.1%</td>
</tr>
</tbody>
</table>


</html>

In June, US retail sales fell 0.9% after a 1.5% gain during May that was revised from 1.4%. The figure for last month fell short of Consensus expectations for a modest 0.1% rise. Excluding autos, retail sales fell 0.4% but a revised [...]

U.S. June Retail Sales Fell After Huge Gain in May

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

With the Iran conflict, geopolitical risk has soared to alarming levels

Soaring AI-related investment in US underpinning strong contribution of business spending to overall growth

AI-related outperformance of IP in Advanced Asia ex Japan

Resilient US economy pushing up Blue Chip 2026 outlook

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

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Andrew Cates

**US Outperformance Holds; Europe and China Continue to Disappoint**
One of the most persistent features of the global macro landscape in 2026 has been the widening divergence between growth outcomes in the United States and those in Europe and China. Citigroup’s global growth surprise indices—which measure the gap between actual economic releases and consensus expectations—capture this divergence with unusual clarity. US data have continued to surprise on the upside, supported by resilient consumer spending, a stronger-than-expected labour market and the ongoing AI-driven capital spending boom. The picture elsewhere is less encouraging. Growth surprises have turned negative across the euro area, reflecting the cumulative toll of elevated energy costs, weak industrial activity and subdued business confidence. And China's growth surprise index has also fallen sharply in recent weeks, with weaker-than-expected retail sales and fixed asset investment data for May this week reinforcing concerns that domestic demand remains fragile and that policy support is yet to gain meaningful traction.

260618Z1.jpg

**The Oil Risk Premium in the UK Has Been Fading**
One of the more notable features of UK markets this year has been the close relationship between oil prices and two-year gilt yields. The link is not mechanical, but in an economy heavily exposed to imported energy, swings in oil prices can materially alter the inflation outlook and, by extension, expectations for Bank of England policy. That relationship was on display again this week. A softer-than-expected UK CPI reading for May—helped in part by easing energy price pressures—led investors to scale back expectations that inflation would remain persistently above target, pushing two-year gilt yields to their lowest level in six weeks. The question now is whether this marks the start of a more sustained easing in inflation pressures or merely a temporary reprieve. Much will depend on whether the recent decline in oil prices following the US-Iran ceasefire agreement proves durable.

260618Z2.jpg

**The AI Investment Boom Is Rewriting the Rule Book for the Chip Industry**
If the divergence in global growth surprises noted above tells a story of a world economy under strain, the semiconductor sales data tell a very different one — of a technology-driven investment cycle that is accelerating almost regardless of the broader macro environment. Global semiconductor sales have surged to record levels over the past twelve months, driven primarily by insatiable demand for the chips that underpin AI infrastructure: graphics processing units, high-bandwidth memory, and advanced logic chips. Data centre capital expenditure from the hyperscalers continues to exceed even the most optimistic forecasts from a year ago, and the investment pipeline shows no sign of moderating. The gains are concentrated in AI-adjacent products; legacy chips for consumer electronics and industrial applications remain relatively soft.

260618Z3.jpg

**Copper Holds Firm As Oil Retreats**
The commodity markets are telling two quite different stories this week, and the contrast is instructive. Oil has moved sharply lower on the US-Iran MoU news as investors trim the conflict risk premium that has been embedded in energy markets since March — a welcome development for inflation and central bank optionality alike. But the three commodities shown in this chart tell a different story. Copper, one of the most reliable proxies for global electricity infrastructure investment, remains near multi-year highs, reflecting the extraordinary volume of data centre construction, grid expansion and electrification spending flowing through the global economy. Aluminium — energy-intensive to produce and increasingly in demand for the structural components of both data centres and electric vehicles — has, until quite recently, held its ground. Lithium hydroxide, the battery-grade refining product that sits at the heart of the energy storage supply chain, has seen some cyclical softness but remains structurally underpinned by the scale of demand being projected for grid-scale storage and electric mobility over the next decade.

260618Z4.jpg

**Is Energy Availability a Binding Constraint on Growth?**
This next chart is a scatter plot that maps electricity generation per capita against GDP growth per capita across a broad sample of countries over the past five years. The positive relationship is striking. Economies with higher electricity generation per capita, including the United States, have generally delivered stronger GDP growth, while those with more constrained electricity systems have tended to lag. The obvious objection is reverse causality: richer economies generate more electricity because they have more to power. That is partly true. But the broader evidence is difficult to dismiss. The US shale revolution delivered an abundance of cheap energy that supported a sustained period of industrial outperformance relative to many advanced economies. Mainstream commentary often attributed this advantage to factors such as labour market flexibility or technological innovation, but energy costs were arguably at least as important.

260618Z5.jpg

**Corporate America Is Investing from a Position of Unusual Financial Strength**
The surge in US corporate investment—particularly in AI infrastructure, data centres and semiconductors—has inevitably drawn comparisons with the late-1990s dot-com boom. Yet the financial balance data suggest an important difference. During the dot-com era, US non-financial corporates moved into a financial deficit approaching 4% of GDP, relying heavily on external financing to fund investment. Today, despite another ambitious investment cycle, the sector remains in surplus, currently around 1.8% of GDP. Corporate America is investing aggressively, but it is still generating more cash than it is spending. The boom is being financed largely through profits rather than debt. Risks remain—not least the growing fiscal burden on the federal government—but the balance-sheet fragilities that turned previous investment booms into systemic crises appear far less pronounced. If a major constraint emerges in the years ahead, it may be energy and resources rather than leverage.

260618Z6.jpg

The signing of a Memorandum of Understanding (MoU) between the United States and Iran earlier this week has offered financial markets their most significant moment of geopolitical relief since the Middle East conflict escalated in early March. Oil prices fell sharply on the news, short-dated bond yields moved lower across several major economies, and risk assets recovered ground. But relief, as investors have learnt repeatedly over the past three months, is arguably not the same as resolution. The MoU sets a framework for negotiations rather than a final settlement, and the history of US-Iran diplomacy is not one that encourages complacency. Meanwhile, the Federal Reserve — concluding its June meeting yesterday under new chair Kevin Warsh — held rates steady but delivered a distinctly hawkish dot plot that shifted the median year-end projection from a cut to a hike, a reminder that the easing cycle the market had been pricing is no longer the base case. Against this backdrop, this week's charts take stock of where the global economy presently stands — and what the underlying data, beneath the geopolitical noise, are telling us. The picture that emerges is one of divergence. The United States continues to outperform consensus growth expectations while Europe and China disappoint (chart 1). UK short-dated yields have tracked oil prices with unusual consistency this year, and today's softer-than-expected CPI print for May — arriving just as the MoU has knocked crude lower — potentially changes the policy calculus for the Bank of England (chart 2). Global semiconductor sales, meanwhile, are storming ahead regardless of the geopolitical noise, powered by AI infrastructure spending that shows no sign of fatigue (chart 3). A cross-section of commodity prices tells two stories simultaneously: the geopolitical risk premium is draining out of oil, but the metals and materials the AI economy actually needs — copper, uranium, critical minerals — are holding firm (chart 4). Meanwhile a cross-country scatter of electricity generation and GDP growth over the past five years raises a question that deserves more attention than it typically gets: is energy availability a constraint on growth, or merely a consequence of it? The evidence, we would argue, points firmly in one direction (chart 5). And finally, for all the comparisons being drawn between the current investment boom and the late 1990s, the financial balance of the US corporate sector tells a rather different story — one that matters for how any correction might unfold (chart 6).

<iframe data-testid="embed-iframe" style="border-radius:12px" src="https://open.spotify.com/embed/episode/7rw2v1Ri8gUVHbFrZfgANL?utm_source=generator&si=75d98727e9524d75" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Between Relief and Reality

Winnie Tapasanun

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The current general activity diffusion index rebounded to a slightly stronger-than-expected 10.3 in June following a 27.1-point drop to -0.4 in May, the latest Manufacturing Business Outlook Survey (MBOS) from the Federal Reserve Bank of Philadelphia showed, indicating a return to expansion in manufacturing activity in the Third Federal Reserve District this month. A reading of 10.0 for June had been expected by the Action Economics Forecast Survey. June marked the fifth m/m increase in six months, showing a sharp improvement from -1.4 in June 2025. In June, 32.1% of firms reported increases in current general activity (up from 22.5% in May), while 21.9% reported decreases (down from 22.9%); 45.4% reported no change (down from 54.6%). Survey responses were collected from June 8 to June 15.

Haver Analytics calculates an ISM-adjusted current activity diffusion index from five key components using the methodology along the lines of the national ISM index. The index rose to 53.1 in June after a 4.8-point decline to a contraction-level 49.7 in May, indicating manufacturing activity expanded for the third time in four months; it was slightly above 51.0 in June 2025.

In the latest survey, the new orders index surged to 27.3 in June following a 34.7-point plunge to -1.7 in May, signaling new orders expanded for the sixth time in seven months. The shipments index rebounded to 14.9 this month from 4.9 in May, registering the seventh consecutive expansion. The unfilled orders index advanced to 10.5 from -2.5, indicating expansion for the first time since July 2025 and the highest level since January 2025. In contrast, the inventories index dropped to -8.5 in June from 6.6 in May, showing inventories contracted for the second time in three months and at the lowest level since July 2024. Meanwhile, the delivery times index increased to -2.6 this month from -10.4 in May (the lowest reading since March 2024).

On the labor front, the number of employees index climbed to 7.9 in June from -2.8 in May, indicating employment expanded for the first time in three months and at the highest level since January. In June, a higher 17.0% of respondents reported increases in employment, while 9.2% reported declines; 73.8% reported no change in employment levels. The average employee workweek index fell to -6.5 this month, the first negative reading and lowest since February, from 1.2 in May.

Inflation indicators were mixed in June. The prices paid index rose to 53.2 this month following an 11.4-point drop to 47.9 in May. A higher 53.5% of respondents reported increases in input prices in June, while only 0.4% reported decreases. The prices received index fell to 20.3, a four-month low, after a 7.2-point May decline to 26.3. In June, 20.3% of respondents reported increases in prices received, while 0.0% reported decreases.

The future indexes remained in positive territory, signaling continued overall growth over the next six months, with most future indicators rising. The future general activity diffusion index edged down to 50.2 in June from 53.2 in May, staying positive since February 2024. Future indexes for new orders (60.8 vs. 53.5) and shipments (60.3 vs. 45.7) increased in June (vs. May) and remained positive. Notably, the future capital expenditures index rose to 41.2 this month, the highest level since June 2021, from 30.9 in May. The following future indexes slipped in June (vs. May) but stayed in positive territory: employment (30.8 vs. 31.7), unfilled orders (17.3 vs. 19.2), and inventories (10.0 vs. 11.8). Prices continued to increase, with the future prices paid index easing to a still-elevated 63.2 in June from 70.0 in May and the future prices received index rising to 67.2, the highest level since August 2021, from 60.5.

The Manufacturing Business Outlook Survey (MBOS), conducted by the Federal Reserve Bank of Philadelphia, is a monthly survey of manufacturers in the Third Federal Reserve District. Participants indicate the direction of change in overall business activity and in the various measures of activity at their plants. The diffusion indexes in the MBOS represent the percentage of respondents indicating an increase minus the percentage indicating a decrease. The indexes range from -100 to +100 with positive values indicating an increase in activity. The series from the survey dating back to May 1968 can be found in Haver’s **SURVEYS** database. The expectations forecast figures are from the Action Economics Forecast Survey in **AS1REPNA**.

260618P12.jpg

260618Q12.jpg

- Current General Activity Index up 10.7 pts. to 10.3 in June; fifth rise in six months.
- New Orders (27.3), sixth expansion in seven mths.; Shipments (14.9), seventh straight expansion; Unfilled Orders (10.5), first expansion since July ’25.
- Employment (7.9), a five-month high after two mths. of contraction.
- Inflation indicators: Prices Paid up (53.2); Prices Received down (20.3, a four-month low).
- Future General Activity Index down to a still-expansion-level 50.2; most subindexes up and positive; future price indexes remaining above long-run avgs.

U.S. Philadelphia Fed Index Returns to Positive Territory in June

260618E.jpg

Unemployment in the European Monetary Union stayed at 6.3% in April, just a tick above its all-time low. In the more inclusive EU, the unemployment rate hovered at 6%, just two tenths of a percentage point above its all-time low. Unemployment conditions in the monetary union remain low without many signs of acceleration.

The unemployment rate in April fell in Italy, Ireland, Greece, Portugal, and the Netherlands. The unemployment rate increased month-to-month in Finland.

In March, the unemployment rate declined in Austria, Belgium, Germany, Finland, Italy, and the Netherlands. It rose month-to-month in Greece and Luxembourg.

Over three months, the unemployment rate in these 12-early reporting monetary union members fell in five countries: Belgium, Germany, Italy, Ireland, and the Netherlands. In contrast, unemployment rose in five countries: Portugal, Greece, France, Finland, and Austria.

Over six months, unemployment rates fell in six countries: the Netherlands, Portugal, Italy, Germany, Belgium, and Austria. This was against increases in six countries: Greece, Finland, France, Luxembourg, Spain, and Ireland.

Year over year, the degree of inflation progress is much thinner, with the unemployment rates falling in only three countries Italy, Spain, and Portugal with increases in unemployment for all the other countries in the table.

Unemployment rates continue to rank low in the monetary union, with only three monetary union countries having their unemployment rates ranked above 50%, putting them above their respective medians on data back to the year 2000. Those three countries are Luxembourg, Finland, and Austria. For the remaining countries, the rankings of their unemployment rates over this period are not even as high as their 30th percentiles. Italy, at present, is experiencing its lowest unemployment rate of the period.

Unemployment conditions in the monetary union remain solid. The past two weeks were significant for monetary policy and global economics, with the ECB raising rates, Japan raising rates, and the United States keeping rates unchanged but moving away from an easing bias in policy that had been in effect for quite a number of months. Today the Bank of England, after experiencing some significant inflation progress, decided to keep its policy on hold for another session. An agreement between the U.S. and Iran securing an opening of the Strait of Hormuz was signed, paving the way for potentially improved oil flows, lower inflation, and less uncertainty in the period ahead.

260618.jpg

EMU Unemployment Remains Low

Sandy Batten

260617V1.jpg

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Total retail sales rose a much larger-than-expected 0.9% m/m (6.9%y/y) in May following a slightly downwardly revised 0.4% monthly gain in April (previously 0.5% m/m), according to data released by the U.S. Census Bureau. The Action Economics Forecast Survey looked for a 0.5% m/m gain. Excluding autos, other sales increased 0.8% m/m (7.5% y/y) after an unrevised 0.7% m/m increase in April. Expectations were for a 0.5% monthly rise.

Elevated retail gasoline prices continued to boost the value of gasoline sales in May. Gasoline sales increased 3.4% m/m (26.5% y/y) in May on top of a 2.8% m/m increase in April. However, both monthly increases were slower than the 14.2% monthly jump reported in March. Gasoline sales accounted for 31% of total sales in May. However, sales were solid even without gasoline sales. Total sales excluding gasoline rose 0.7% m/m in April, up from 0.2% m/m in April. Sales excluding both autos and gasoline increased 0.5% m/m in May, the same monthly gain as in April.

The control group of sales (total sales excluding food services, autos, gasoline and building materials that the BEA uses to construct PCE in the national accounts) posted another solid increase in May, rising 0.7% m/m (6.3% y/y) following an unrevised 0.5% monthly increase in April. The strong performance at the end of Q1 followed by solid gains in April and May put the April-May level of control group sales up 8.6% at an annual rate from the Q1 average, pointing to another solid contribution by consumption to overall GDP growth in Q2. Consumer spending remains surprisingly resilient notwithstanding the recent hit to disposable income from the marked increase in energy prices.

Sales generally increased across major sectors in May. Auto sales rebounded, rising 1.2% m/m in May and more than reversing the 0.9% monthly decline in April. This was the third gain in auto sales in the past four months. Furniture sales rose 1.0% m/m but sales at electronics and appliance stores slipped 0.5% m/m. Building material sales gained 1.0% m/m on top of a 1.1% monthly increase in April. Clothing sales rose 0.3% m/m. Sales at general merchandise stores gained 0.4% m/m in May. Miscellaneous sales jumped 2.3% m/m in May, their first monthly gain in three months. Sales by nonstore retailers continued their strong performance, increasing 1.5% m/m in May on top of a 1.1% monthly rise in April. Over the first five months of this year, nonstore retail sales have risen 7.2%, not annualized. By contrast, food sales were unchanged in May from April while sales at restaurants edged down 0.1% m/m in May, their first monthly decline in four months.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economics Forecast Survey in **AS1REPNA**.

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- Total sales increased 0.9% m/m in May, nearly twice expectations.
- Auto sales rebounded, rising 1.2% m/m in May, more than reversing a 0.9% monthly decline in April. 
- Gasoline sales rose 3.4% m/m in May.
- Excluding auto and gasoline sales, remaining sales increased by a solid 0.5% m/m in May, the same monthly increase as in April.
- Sales of the retail control group that is used to construct PCE rose 0.7% m/m in May and are 8.6% annualized above the Q1 average.

U.S. Retail Sales Jumped More than Expected in May

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Mortgage applications fell 3.8% w/w (+8.6% y/y) in the week ending June 12 following a 10.8% rebound in the week ending June 5, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading was the fourth w/w fall in five weeks, lowering the index to 269.5. Applications for loans to purchase a house slid 3.4% (+3.0% y/y) in the June 12 week, down for the fourth time in five weeks, after a 7.3% rise in the previous week. Applications for loan refinancing dropped 4.5% (+17.0% y/y) in the June 12 week, the seventh w/w decline in eight weeks, following a 15.3% jump in the June 5 week.

The effective interest rate on a 30-year fixed-rate loan was unchanged at 6.78% in the week ending June 12; it was above a low of 6.24% in the February 27 week but below a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages edged up 2bps to 6.18% in the June 12 week, the highest in three weeks, from 6.16% in the previous week; it was up from a low of 5.60% in the week of September 20, 2024 but down from a high of 7.44% in the week of October 27, 2023. Meanwhile, the rate on 30-year jumbo loans declined 4bps to 6.78% in the June 12 week from 6.82% in the prior week; it was above a low of 6.25% in the February 27 week but below a high of 7.99% in the week of October 27, 2023. The rate on a 5-year ARM fell 7bps to 6.16% in the June 12 week, the first w/w decline in six weeks, from 6.23% in the previous week (the highest since the week of August 15, 2025); it was above a low of 5.38% in the February 20 week but below a high of 7.31% in the week of October 27, 2023.

The share of applications for refinancing an existing loan edged up to 40.3% of total applications in the week ending June 12—the fourth w/w increase in five weeks and the highest level since the May 15 week—after rising to 40.2% in the week ending June 5; it remained below a peak of 61.9% in the January 16 week but above a low of 34.6% in the week of May 23, 2025. The adjustable-rate mortgage (ARM) share of activity slipped to 8.5% in the June 12 week from 8.6% in the prior week; it was below a peak of 12.9% in the week of September 12, 2025 but above a low of 4.7% in the week of January 3, 2025.

The average size of a mortgage loan fell 1.5% w/w (+3.7% y/y) to $394,100 in the June 12 week, the lowest level since the April 3 week, after a 0.4% rebound to $399,900 in the June 5 week. The average size of a purchase loan dropped 1.9% (+4.0% y/y) to $456,600 in the June 12 week following a 2.8% recovery to $465,300 in the prior week. The average size of a loan to refinance a mortgage fell 0.4% (+7.0% y/y) to $301,400 in the June 12 week on top of a 2.3% decline to $302,500 in the previous week, marking the third consecutive w/w fall, the sixth decline in seven weeks, and the lowest level since the week of July 25, 2025.

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.

- Purchase applications -3.4% w/w, down for fourth time in five weeks; refinance applications -4.5% w/w, seventh fall in eight weeks.
- Effective interest rate on 30-year fixed loans unchanged at 6.78%, up from a late-February low of 6.24%.
- Average loan size down for the second time in three weeks, lowest since the April 3 week.

Economy in Brief

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U.S. June Retail Sales Fell After Huge Gain in May