Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101k.jpg" align="left" class="large">
The CIPS/NTC index of MFG for the UK shows a rather rapid
downturn is in play. But the index reading at 52.9 is still reasonably
upbeat by the historic standards of this survey. While the index is
down from a peak of about 56 in August that nearly matches past peaks
of around 56 back in 2004, the current reading is still in the 58th
percentile of its range - a firm reading and solid location. Still, the
table shows that the index has been falling and is now down over 6
months and 12 months even though the fall is rather recent. The depth
of the plunge is notable. The two-month 3.03 point drop is the largest
change in the index since it rose by 3.03 points in January of this
year. We have to go back to May of 2005 to find a larger two-month
drop. So despite the reasonably cozy position of the index in its range
we should be on the outlook for more weakness given the speed of this
drop.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" colspan="8"> MFG PMI
CIPS/NTC</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Monthly readings</td>
<td colspan="3">Change over:</td>
<td>percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3MO</td>
<td>6MO</td>
<td>12MO</td>
<td>of range</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>52.93</td>
<td>54.73</td>
<td>55.96</td>
<td>-2.61</td>
<td>-1.07</td>
<td>-1.12</td>
<td>58.4</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Range since
January 1992</td>
</tr>
</tbody>
</table>
</body></html>

The CIPS/NTC index of MFG for the UK shows a rather rapid downturn is in play. But the index reading at 52.9 is still reasonably upbeat by the historic standards of this survey. While the index is down from a peak of about 56 in [...]

UK Manufacturing Survey Turns Lower

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101j.jpg" align="left" class="large">
The UK distributive trades survey shows a slowing of the UK
economy. Sales are at a +13 from a year ago and at +7 for this time of
year (Chart). Each of those figures is about at the midpoint of their
respective ranges. Orders at -1 stand in the bottom third of their
range. This is a slowdown in progress. The outlook is however more
upbeat. Sales are expected to post a +28 next month and that
expectation is a top 16% of range expectation. The graph on the left
shows the recent volatility in sales. For the moment it appears as
though industry respondents are not taking the slowdown very seriously.
The other outlook measures at the bottom of the table are strong to
firm in their respective ranges as well.


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr><th scope="col" colspan="10"> UK Distributive volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Reported:</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>12MO Avg</td>
<td>%tile</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales/Yr Ago</td>
<td>13</td>
<td>40</td>
<td>30</td>
<td>4</td>
<td>21</td>
<td>49%</td>
<td>49</td>
<td>-21</td>
<td>70</td>
</tr>
<tr>
<td class="firstcol">Orders/Yr Ago</td>
<td>-1</td>
<td>38</td>
<td>18</td>
<td>1</td>
<td>16</td>
<td>31%</td>
<td>42</td>
<td>-20</td>
<td>62</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales: Time/Yr</td>
<td>7</td>
<td>32</td>
<td>23</td>
<td>11</td>
<td>17</td>
<td>56%</td>
<td>32</td>
<td>-25</td>
<td>57</td>
</tr>
<tr>
<td class="firstcol">Stocks: Sales</td>
<td>5</td>
<td>10</td>
<td>19</td>
<td>12</td>
<td>10</td>
<td>22%</td>
<td>30</td>
<td>-2</td>
<td>32</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="10">Expected:</td>
</tr>
<tr>
<td class="firstcol">Sales/Yr Ago</td>
<td>28</td>
<td>33</td>
<td>0</td>
<td>19</td>
<td>20</td>
<td>84%</td>
<td>36</td>
<td>-15</td>
<td>51</td>
</tr>
<tr class="odd">
<td class="firstcol">Orders/Yr Ago</td>
<td>26</td>
<td>23</td>
<td>-4</td>
<td>16</td>
<td>16</td>
<td>89%</td>
<td>32</td>
<td>-24</td>
<td>56</td>
</tr>
<tr>
<td class="firstcol">Sales: Time/Yr</td>
<td>12</td>
<td>28</td>
<td>8</td>
<td>13</td>
<td>15</td>
<td>61%</td>
<td>29</td>
<td>-15</td>
<td>44</td>
</tr>
<tr class="odd">
<td class="firstcol">Stocks: Sales</td>
<td>7</td>
<td>15</td>
<td>8</td>
<td>8</td>
<td>8</td>
<td>53%</td>
<td>22</td>
<td>-10</td>
<td>32</td>
</tr>
</tbody>
</table>
</body></html>

The UK distributive trades survey shows a slowing of the UK economy. Sales are at a +13 from a year ago and at +7 for this time of year (Chart). Each of those figures is about at the midpoint of their respective ranges. Orders at -1 [...]

UK Distributive Trade Sector Shows a Slowdown

Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101d.jpg" class="large" align="left">
The Composite Index of activity in the manufacturing sector,
reported by the Institute of Supply Management (ISM), fell to 50.9 last
month from 52.0 during September. A reading above 50 indicates growth
in factory sector activity. Consensus expectations had been for a
reading of 51.6.
Last month's PMI figure was the lowest since January when
industrial production in the factory sector fell 0.6%. The three month
% change in factory sector output fell to 0.4% last month
During the last twenty years there has been a 64% correlation
between the level of the Composite Index and the three month growth in
factory sector industrial production.
It is appropriate to correlate the ISM index level
with factory sector growth because the ISM index
is a diffusion index. It measures growth by being constructed using all
of the absolute positive changes in activity added to one half of the
no change in activity measures.
Declines in three of the index's five components accounted for
the lower composite index, notable was the decline in the production
component. The inventories component rose sharply to its highest level
since July and employment also rose.
The modest 0.3 point rise in the employment index to 52.0
followed a 0.4 point September rise. During the last twenty years there
has been a 67% correlation between the level of the ISM employment
Index and the three month growth in factory sector employment.
The index of new export orders recovered all of its September
decline with a 2.5 point rise to 57.0. The import index conversely fell
to 47.5, the lowest level since 2001 and suggestive that imports
declined last month.
The prices index moved much higher with the rise in oil
prices. During the last twenty years there has been a 77% correlation
between the price index and the three month change in the PPI for
intermediate goods. 

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101e.jpg" class="small"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101f.jpg" class="small">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"></th>
<th scope="col">October </th>
<th scope="col">September
</th>
<th scope="col">October'06
</th>
<th scope="col">2006 </th>
<th scope="col"> 2005</th>
<th scope="col">2004 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>50.9</td>
<td>52.0</td>
<td>51.5</td>
<td>53.9</td>
<td>55.5</td>
<td>60.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>52.5</td>
<td>53.4</td>
<td>52.1</td>
<td>55.4</td>
<td>57.4</td>
<td>63.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>63.0</td>
<td>59.0</td>
<td>47.0</td>
<td>65.0</td>
<td>66.4</td>
<td>79.8</td>
</tr>
</tbody>
</table>

</body></html>

The Composite Index of activity in the manufacturing sector, reported by the Institute of Supply Management (ISM), fell to 50.9 last month from 52.0 during September. A reading above 50 indicates growth in factory sector activity. [...]

ISM Index Near "No Growth" Level

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<img align="left" class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101c.jpg">
Initial claims for unemployment insurance fell slightly last week but it was only to 327,000 from an upwardly revised 333,000 during the prior week. There were no distortions to the figure from holidays.
The four week moving average of initial claims rose again to 327,000 (4.1% y/y).
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose a sharp 2.6%. The increase during the prior week was downwardly revised slightly.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment rose to 2.0%. from 1.9% the week prior. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">10/27/07 </th>
<th scope="col">10/20/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;327</td>
<td>333</td>
<td>-0.6%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for unemployment insurance fell slightly last week but it was only to 327,000 from an upwardly revised 333,000 during the prior week. There were no distortions to the figure from holidays. The four week moving average [...]

U.S. Initial Unemployment Insurance Claims Still Higher

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<div align="left"><img align="left" class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101a.jpg">
Personal consumption expenditures rose 0.3% in September, below the downwardly revised 0.5% August increase and below expectations for a 0.4% rise. A pattern of steadily declining rates of increase prevailed through 2007; 1Q up 7.3% (AR), 2Q up 5.7%, 3Q 4.7%.
Most of that slowdown, however, reflects easier price gains. Adjusted for inflation, consumption rose 3.0% last quarter following a 1.4% 2Q gain and a 3.7% 1Q increase. For the year as a whole 2007 real personal consumption should turn in a 3.1% rise, the same as during 2006.
For September, the slower real increase of 0.1% versus a 0.6% August jump reflected a much easier 0.7% rise in auto sales. In the nondurable area spending on tobacco and clothing dropped. In the services area spending on recreation and electricity &amp; gas consumption fell. These (perhaps too) fine levels of detail are available in Haver&#39;s USNA database.
Personal income rose 0.4% in September, the same as during an upwardly revised August, in line with Consensus forecasts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101b.jpg" width="353">
Wages &amp; salaries rose 0.6% (7.1% y/y), ahead of the upwardly revised 0.4% August increase. Factory sector wages were unchanged (6.2% y/y), about as they had been m/m during all of 3Q.Wage &amp; salary income in the service-producing industries recovered 0.8% (8.1% y/y) and wages in the government sector rose 0.4% (4.4% y/y).
Interest income grew 0.5% (4.7% y/y), stronger with the rise in interest rates, and dividend income popped another 0.9% (13.3% y/y).
Personal current taxes rose 0.5% (10.3% y/y). As a result, disposable personal income grew 0.4% (6.3% y/y). Adjusted for inflation, disposable personal income rose 0.2% (3.9% y/y) after a 0.5% August increase.
The PCE chain price index 0.2% (2.4% y/y). The core PCE price index was a bit firmer than in August with a 0.2% rise. The overall price index should firm with oil prices moving above $90 per barrel.
Can Social Security Survive the Baby Boomers? from the Federal reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20070901/cover.pdf">here</a>.
The text which accompanied yesterday&#39;s FOMC decision to cut interest rates can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20071031a.htm"> here</a>.</div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">September</th>
<th scope="col">August</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">Personal Income</td>
<td>0.4%</td>
<td>0.4%</td>
<td>6.8%</td>
<td>6.6%</td>
<td>5.9%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.3%</td>
<td>0.5%</td>
<td>5.6%</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Saving Rate</td>
<td>0.9%</td>
<td>0.8%</td>
<td>0.4% (Sept. 06)</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2%</td>
<td>-0.0%</td>
<td>2.4%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.8%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
</body>
</html>

Personal consumption expenditures rose 0.3% in September, below the downwardly revised 0.5% August increase and below expectations for a 0.4% rise. A pattern of steadily declining rates of increase prevailed through 2007; 1Q up 7.3% [...]

U.S. Personal Spending Up 0.3%, Income Rose 0.4%

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<div align="left"><img align="left" class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101a.jpg">
Personal consumption expenditures rose 0.3% in September, below the downwardly revised 0.5% August increase and below expectations for a 0.4% rise. A pattern of steadily declining rates of increase prevailed through 2007; 1Q up 7.3% (AR), 2Q up 5.7%, 3Q 4.7%.
Most of that slowdown, however, reflects easier price gains. Adjusted for inflation, consumption rose 3.0% last quarter following a 1.4% 2Q gain and a 3.7% 1Q increase. For the year as a whole 2007 real personal consumption should turn in a 3.1% rise, the same as during 2006.
For September, the slower real increase of 0.1% versus a 0.6% August jump reflected a much easier 0.7% rise in auto sales. In the nondurable area spending on tobacco and clothing dropped. In the services area spending on recreation and electricity &amp; gas consumption fell. These (perhaps too) fine levels of detail are available in Haver&#39;s USNA database.
Personal income rose 0.4% in September, the same as during an upwardly revised August, in line with Consensus forecasts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101b.jpg" width="353">
Wages &amp; salaries rose 0.6% (7.1% y/y), ahead of the upwardly revised 0.4% August increase. Factory sector wages were unchanged (6.2% y/y), about as they had been m/m during all of 3Q.Wage &amp; salary income in the service-producing industries recovered 0.8% (8.1% y/y) and wages in the government sector rose 0.4% (4.4% y/y).
Interest income grew 0.5% (4.7% y/y), stronger with the rise in interest rates, and dividend income popped another 0.9% (13.3% y/y).
Personal current taxes rose 0.5% (10.3% y/y). As a result, disposable personal income grew 0.4% (6.3% y/y). Adjusted for inflation, disposable personal income rose 0.2% (3.9% y/y) after a 0.5% August increase.
The PCE chain price index 0.2% (2.4% y/y). The core PCE price index was a bit firmer than in August with a 0.2% rise. The overall price index should firm with oil prices moving above $90 per barrel.
Can Social Security Survive the Baby Boomers? from the Federal reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/net/20070901/cover.pdf">here</a>.
The text which accompanied yesterday&#39;s FOMC decision to cut interest rates can be found <a href="http://www.federalreserve.gov/newsevents/press/monetary/20071031a.htm"> here</a>.</div>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">September</th>
<th scope="col">August</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">Personal Income</td>
<td>0.4%</td>
<td>0.4%</td>
<td>6.8%</td>
<td>6.6%</td>
<td>5.9%</td>
<td>6.2%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.3%</td>
<td>0.5%</td>
<td>5.6%</td>
<td>5.9%</td>
<td>6.2%</td>
<td>6.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Saving Rate</td>
<td>0.9%</td>
<td>0.8%</td>
<td>0.4% (Sept. 06)</td>
<td>0.4%</td>
<td>0.5%</td>
<td>2.1%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.2%</td>
<td>-0.0%</td>
<td>2.4%</td>
<td>2.8%</td>
<td>2.9%</td>
<td>2.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.2%</td>
<td>0.1%</td>
<td>1.8%</td>
<td>2.2%</td>
<td>2.2%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
U.S. Initial Unemployment Insurance Claims Still Higher 
by <a href="/comment/Moeller.html">Tom Moeller</a> November 1, 2007


<img align="left" class="large" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101c.jpg">
Initial claims for unemployment insurance fell slightly last week but it was only to 327,000 from an upwardly revised 333,000 during the prior week. There were no distortions to the figure from holidays.
The four week moving average of initial claims rose again to 327,000 (4.1% y/y).
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose a sharp 2.6%. The increase during the prior week was downwardly revised slightly.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment rose to 2.0%. from 1.9% the week prior. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a></th>
<th scope="col">10/27/07 </th>
<th scope="col">10/20/07 </th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;327</td>
<td>333</td>
<td>-0.6%</td>
<td>313</td>
<td>331</td>
<td>343</td>
</tr>
</tbody>
</table>
ISM Index Near "No Growth" Level 
by <a href="/comment/Moeller.html">Tom
Moeller</a> November 1, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101d.jpg" class="large" align="left">
The Composite Index of activity in the manufacturing sector,
reported by the Institute of Supply Management (ISM), fell to 50.9 last
month from 52.0 during September. A reading above 50 indicates growth
in factory sector activity. Consensus expectations had been for a
reading of 51.6.
Last month's PMI figure was the lowest since January when
industrial production in the factory sector fell 0.6%. The three month
% change in factory sector output fell to 0.4% last month
During the last twenty years there has been a 64% correlation
between the level of the Composite Index and the three month growth in
factory sector industrial production.
It is appropriate to correlate the ISM index level
with factory sector growth because the ISM index
is a diffusion index. It measures growth by being constructed using all
of the absolute positive changes in activity added to one half of the
no change in activity measures.
Declines in three of the index's five components accounted for
the lower composite index, notable was the decline in the production
component. The inventories component rose sharply to its highest level
since July and employment also rose.
The modest 0.3 point rise in the employment index to 52.0
followed a 0.4 point September rise. During the last twenty years there
has been a 67% correlation between the level of the ISM employment
Index and the three month growth in factory sector employment.
The index of new export orders recovered all of its September
decline with a 2.5 point rise to 57.0. The import index conversely fell
to 47.5, the lowest level since 2001 and suggestive that imports
declined last month.
The prices index moved much higher with the rise in oil
prices. During the last twenty years there has been a 77% correlation
between the price index and the three month change in the PPI for
intermediate goods. 

<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101e.jpg" class="small"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101f.jpg" class="small">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"></th>
<th scope="col">October </th>
<th scope="col">September
</th>
<th scope="col">October'06
</th>
<th scope="col">2006 </th>
<th scope="col"> 2005</th>
<th scope="col">2004 </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>50.9</td>
<td>52.0</td>
<td>51.5</td>
<td>53.9</td>
<td>55.5</td>
<td>60.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; New Orders Index</td>
<td>52.5</td>
<td>53.4</td>
<td>52.1</td>
<td>55.4</td>
<td>57.4</td>
<td>63.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>63.0</td>
<td>59.0</td>
<td>47.0</td>
<td>65.0</td>
<td>66.4</td>
<td>79.8</td>
</tr>
</tbody>
</table>
UK Distributive Trade Sector Shows
a Slowdown 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 1, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101j.jpg" align="left" class="large">
The UK distributive trades survey shows a slowing of the UK
economy. Sales are at a +13 from a year ago and at +7 for this time of
year (Chart). Each of those figures is about at the midpoint of their
respective ranges. Orders at -1 stand in the bottom third of their
range. This is a slowdown in progress. The outlook is however more
upbeat. Sales are expected to post a +28 next month and that
expectation is a top 16% of range expectation. The graph on the left
shows the recent volatility in sales. For the moment it appears as
though industry respondents are not taking the slowdown very seriously.
The other outlook measures at the bottom of the table are strong to
firm in their respective ranges as well.


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr><th scope="col" colspan="10"> UK Distributive volume data CBI Survey</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Reported:</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>12MO Avg</td>
<td>%tile</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales/Yr Ago</td>
<td>13</td>
<td>40</td>
<td>30</td>
<td>4</td>
<td>21</td>
<td>49%</td>
<td>49</td>
<td>-21</td>
<td>70</td>
</tr>
<tr>
<td class="firstcol">Orders/Yr Ago</td>
<td>-1</td>
<td>38</td>
<td>18</td>
<td>1</td>
<td>16</td>
<td>31%</td>
<td>42</td>
<td>-20</td>
<td>62</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales: Time/Yr</td>
<td>7</td>
<td>32</td>
<td>23</td>
<td>11</td>
<td>17</td>
<td>56%</td>
<td>32</td>
<td>-25</td>
<td>57</td>
</tr>
<tr>
<td class="firstcol">Stocks: Sales</td>
<td>5</td>
<td>10</td>
<td>19</td>
<td>12</td>
<td>10</td>
<td>22%</td>
<td>30</td>
<td>-2</td>
<td>32</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="10">Expected:</td>
</tr>
<tr>
<td class="firstcol">Sales/Yr Ago</td>
<td>28</td>
<td>33</td>
<td>0</td>
<td>19</td>
<td>20</td>
<td>84%</td>
<td>36</td>
<td>-15</td>
<td>51</td>
</tr>
<tr class="odd">
<td class="firstcol">Orders/Yr Ago</td>
<td>26</td>
<td>23</td>
<td>-4</td>
<td>16</td>
<td>16</td>
<td>89%</td>
<td>32</td>
<td>-24</td>
<td>56</td>
</tr>
<tr>
<td class="firstcol">Sales: Time/Yr</td>
<td>12</td>
<td>28</td>
<td>8</td>
<td>13</td>
<td>15</td>
<td>61%</td>
<td>29</td>
<td>-15</td>
<td>44</td>
</tr>
<tr class="odd">
<td class="firstcol">Stocks: Sales</td>
<td>7</td>
<td>15</td>
<td>8</td>
<td>8</td>
<td>8</td>
<td>53%</td>
<td>22</td>
<td>-10</td>
<td>32</td>
</tr>
</tbody>
</table>
UK Manufacturing Survey Turns Lower 
by <a href="/comment/Brusca.html">Robert
Brusca</a> November 1, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101k.jpg" align="left" class="large">
The CIPS/NTC index of MFG for the UK shows a rather rapid
downturn is in play. But the index reading at 52.9 is still reasonably
upbeat by the historic standards of this survey. While the index is
down from a peak of about 56 in August that nearly matches past peaks
of around 56 back in 2004, the current reading is still in the 58th
percentile of its range - a firm reading and solid location. Still, the
table shows that the index has been falling and is now down over 6
months and 12 months even though the fall is rather recent. The depth
of the plunge is notable. The two-month 3.03 point drop is the largest
change in the index since it rose by 3.03 points in January of this
year. We have to go back to May of 2005 to find a larger two-month
drop. So despite the reasonably cozy position of the index in its range
we should be on the outlook for more weakness given the speed of this
drop.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" colspan="8"> MFG PMI
CIPS/NTC</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Monthly readings</td>
<td colspan="3">Change over:</td>
<td>percentile</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Oct-07</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>3MO</td>
<td>6MO</td>
<td>12MO</td>
<td>of range</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>52.93</td>
<td>54.73</td>
<td>55.96</td>
<td>-2.61</td>
<td>-1.07</td>
<td>-1.12</td>
<td>58.4</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">Range since
January 1992</td>
</tr>
</tbody>
</table>
Australian Economy Remains Strong,
But Strong A$ May Already Be Generating Some Restraint 
by <a href="/comment/Stone.html">Carol
Stone</a> November 1, 2007


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101g.jpg" class="large" align="left">The deficit in Australia's trade in goods and
services
increased further in September as exports declined and an accompanying
decline in imports was smaller. The overall deficit was A$1,862
million, up from A$1,665 million in August (seasonally adjusted). The
year-ago figure was A$761 million.
We have highlighted here before (See May 4, 2007 commentary)
the role of raw materials, particularly mineral resources, in
Australia's international trade. The SITC 3 categories, "crude
materials, inedible, ex fuels" and "mineral fuels, etc" together
constitute about half of the nation's total goods exports. These
exports have brought considerable revenue into the Australian economy.
Australia's economy has been strong recently. Indeed, today, a report
of September retail trade shows a gain of 0.9% in that month, extending
a trend of notable growth in consumer spending.
However, the commodities markets are priced in US dollars. The
Australian dollar, perhaps bolstered by the vigorous economy, has risen
markedly. Yesterday, according to the New York Federal Reserve Bank, it
was priced at US$0.9271, the highest month-end value since March 1984.
[In fact, a retail purchase in New York City yesterday came right at
par.] This rapid increase in the exchange rate means that world
commodities, with US dollar prices, bring relatively fewer Australian
dollars than before. Thus, it is not surprising to see a moderation in
the value of these key Australian exports, which have averaged over the
last six months only 0.5% above a year ago.
This point is more clearly made in the commodity price index
compiled by the Reserve Bank of Australia; the RBA publishes this in
both US$ and A$. See the difference in the third graph. Flexible
currency values are, of course, one of the important transmission
mechanisms for global trade adjustment and for monetary policy. The
strong Australian dollar can help restrain inflation in Australia and
by slowing the Australian-dollar value of tradable goods, it can also
modulate economic activity, an "automatic stabilizer". Still, today's
strong retail trade report brought further talk the the RBA might raise
interest rates at its next policy meeting. This talk too can bring more
strength to the currency -- at least until it is evident that that very
strength is restraining the economy.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101h.jpg" class="small"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071101i.jpg" class="small">


 
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">AUSTRALIA
(Mil.A$)</th>
<th scope="col">Sept 2007</th>
<th scope="col">Aug 2007</th>
<th scope="col">Jul 2007</th>
<th scope="col">Sept 2006</th>
<th scope="col" colspan="3">Monthly Averages</th>
</tr>
<tr>
<th scope="col" class="firstclass" colspan="5"></th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Balance on Goods
&amp; Services</td>
<td>-1,862</td>
<td>-1,665</td>
<td>-1,011</td>
<td>-761</td>
<td>-969</td>
<td>-1,399</td>
<td>-1,985</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods Credits
(Exports)</td>
<td>13,764</td>
<td>14,558</td>
<td>14,200</td>
<td>14,009</td>
<td>13,809</td>
<td>11,690</td>
<td>9,881</td>
</tr>
<tr>
<td class="firstcol">Goods Debits
(Imports)</td>
<td>15,848</td>
<td>16,408</td>
<td>15,408</td>
<td>14,908</td>
<td>14,871</td>
<td>13,147</td>
<td>11,922</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance on Services</td>
<td>223</td>
<td>185</td>
<td>190</td>
<td>138</td>
<td>93</td>
<td>58</td>
<td>58</td>
</tr>
<tr>
<td class="firstcol">Raw Material Exports* (NSA)</td>
<td>6,404</td>
<td>7,077</td>
<td>6,681</td>
<td>6,556</td>
<td>6,544</td>
<td>5,475</td>
<td>3,908</td>
</tr>
</tbody>
</table>
</body>
</html>

Carol Stone, CBE

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The employment cost index slowed to an 0.8% advance for private industry workers in Q3, compared to 0.9% in Q2 and a Consensus forecast of 0.9%.
Wage and salary growth held at the 0.8% quarterly pace seen in Q2, with the year/year growth also at Q2&#39;s amount, 3.4%. Wages account for roughly 70% of the compensation index. The largest recent increase was 1.1% in Q1, driven by outsized increases in several industries.
Benefit costs dropped back from Q2&#39;s 1.1% to 0.8%; this put the year/year increase at 2.4%. For the first three quarters this year, the year/year growth rates are the lowest since 1998. This is at least in part due to a more moderate rise in the cost of health benefits, which was up 4.8% y/y again in Q3, the same as in Q2 and less than half the pace of 2002 and 2003.
Compensation costs also eased for state and local government workers. This group saw a rise of 0.8% in Q3, less than 1.1% in Q2 and 1.3% in Q1 and the lowest since Q1 2006. The move was in benefits, which rose &quot;only&quot; 0.7% in Q3, following 1.7% in Q2 and 2.1% in Q1. Wages and salaries actually picked up in Q3 to 1.0% from 0.8% in Q2.

<img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071031e.jpg"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071031f.jpg">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- Private Industry Workers</a></th>
<th scope="col">3Q</th>
<th scope="col">2Q</th>
<th scope="col">1Q</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">Compensation</td>
<td>0.8%</td>
<td>0.9%</td>
<td>0.6%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>3.1%</td>
<td>3.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.8%</td>
<td>0.8%</td>
<td>1.1%</td>
<td>3.4%</td>
<td>2.9%</td>
<td>2.5%</td>
<td>4.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>1.1%</td>
<td>1.1%</td>
<td>-0.3%</td>
<td>2.7%</td>
<td>2.9%</td>
<td>4.6%</td>
<td>6.8%</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB08/@EB08.HTM">ECI- State &amp; Local Government Workers</a></td>
<td>0.8%</td>
<td>1.1%</td>
<td>1.3%</td>
<td>4.3%</td>
<td>3.9%</td>
<td>3.8%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

The employment cost index slowed to an 0.8% advance for private industry workers in Q3, compared to 0.9% in Q2 and a Consensus forecast of 0.9%. Wage and salary growth held at the 0.8% quarterly pace seen in Q2, with the year/year [...]

U.S. Employment Cost Index Moderates to 0.8% Quarterly Increase

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/071031j.jpg" class="large" align="left">
German retail sales rose in September with downward revision
to the earlier month showing a strong 2.3% rise in real ex-auto sales.
The series is up by 5.1% from one year ago, a pretty good Yr/Yr rise.
But in the third quarter this gain still only leaves sales up at a 1.4%
annual rate. The revival in sales was across the main retail
categories. While the rise of 1.4% in the quarter is not very strong it
is in line with what exceptions have been for German retailing where
the outlook has been set low all year long.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th colspan="9" scope="col"> German
Real and Nominal Retail Sales</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Sep-07</td>
<td>Aug-07</td>
<td>Jul-07</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>New QTR 
Saar</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>2.6%</td>
<td>-1.3%</td>
<td>0.6%</td>
<td>8.2%</td>
<td>4.8%</td>
<td>2.4%</td>
<td>5.6%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicle and Parts</td>
<td>#N/A</td>
<td>3.6%</td>
<td>0.9%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>15.2%</td>
<td>#N/A</td>
</tr>
<tr>
<td class="firstcol">Food, Beverages &amp;
Tobacco</td>
<td>3.4%</td>
<td>-1.2%</td>
<td>-0.1%</td>
<td>8.5%</td>
<td>4.7%</td>
<td>1.9%</td>
<td>5.1%</td>
<td>-0.9%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>3.4%</td>
<td>0.2%</td>
<td>0.2%</td>
<td>16.0%</td>
<td>7.3%</td>
<td>14.0%</td>
<td>3.4%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>2.3%</td>
<td>-1.6%</td>
<td>0.7%</td>
<td>6.0%</td>
<td>3.0%</td>
<td>1.4%</td>
<td>5.1%</td>
<td>1.4%</td>
</tr>
</tbody>
</table>
</body></html>

German retail sales rose in September with downward revision to the earlier month showing a strong 2.3% rise in real ex-auto sales. The series is up by 5.1% from one year ago, a pretty good Yr/Yr rise. But in the third quarter this [...]

German Retail Sales Show Unexpected Lift

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Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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US leader, Germany trailer for real GDP growth over past 3 years

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With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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U.S. light vehicle sales declined 3.0% (+6.9% y/y) to 16.36 million units (SAAR) in August after rising 7.6% to 16.87 million units in July. The decline was the fourth in the last five months. So far in Q3, sales have averaged 16.62 million after averaging 16.21 million in Q2. The improvement in August vehicle sales accompanied a 2.0% y/y rise in real disposable income through July, which compared to 2.1% growth last year.

Sales were uneven last month. Light truck sales declined 4.0% (+10.0% y/y) in August to 13.47 million units, after rising 7.8% to 14.03 million in July and easing 0.2% to 13.02 million in June. Purchases of domestically-made light trucks declined 4.1% (+11.4% y/y) to 10.35 million units, after rising 7.1% in July to 10.79 million. Sales of imported light trucks fell 3.7% (+5.8% y/y) to 3.12 million units, following a 9.8% rise in July.

Trucks’ 82.3% share of the light vehicle market last month compared to 83.2% in July and 80.1% in August of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales rose 1.8% (-5.6% y/y) last month to 2.89 million, following a 6.4% July increase. Purchases of domestically-produced cars rose 1.4% (-0.5% y/y) last month to 2.21 million units, after rising 10.1% in July. Sales of imported autos increased 3.0% (-19.0% y/y) to 0.68 million units and reversed the 2.9% July decline.

Imports' 23.2% share of the U.S. light vehicle market was little changed from 23.1% in July. These compare to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market edged up to 23.5% last month and compared to 27.5% in August of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market of 23.2% last month was roughly steady with 23.1% in July.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

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- Light truck sales decline while auto purchases improve.
- Domestic and import sales decline.
- Imports' market share steadies.

U.S. Light Vehicle Sales Ease in August

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Job openings declined 176,000 (-4.3% y/y) to 7.181 million in July after falling 355,000 in June to 7.357 million, revised from -275,000, according to the Job Openings and Labor Turnover Survey. The change in job openings in May was unrevised at +317,000. The job openings rate fell to 4.3% in July from 4.4% in June. This was the lowest rate in four months and matched the lowest rate since September, down from a 4.8% November high. The record high was 7.4% reached in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings.

Private sector openings declined 138,000 (-2.8% y/y) in July to 6.398 million after falling 340,000 from 6.536 million in June. The private openings rate fell to 4.5% in July from 4.6% in June. The number of job openings declined month-to-month in mining & logging (-48.0% y/y), trade, transportation & utilities (+12.2% y/y), professional & business services (-4.2% y/y), private education & health services (-18.0% y/y), leisure & hospitality (+4.2% y/y) and arts, entertainment & recreation (-19.4% y/y). The number of job openings increased m/m in construction (33 .6% y/y), information (75.7% y/y) and financial activities (-4.8% y/y).

Total hiring rose 41,000 (-2.6% y/y) to 5.308 million in July after falling 198,000 to 5.267 million in June. The hiring rate held steady m/m at 3.3%, the second lowest since the pandemic. Private sector hiring rose 57,000 (-1.6% y/y) in July after falling 174,000 in June. Weakness in hiring during the last year has centered in manufacturing (-9.8% y/y), trade, transportation & utilities (-7.5% y/y), financial services (-7.4% y/y) and education & health (-10.8% y/y).

Total separations declined 52,000 (-2.7% y/y) to 5.289 million in July. The separation rate held at 3.3%, where it’s been since last August. Private separations fell 39,000 (-2.5% y/y) while government separations dropped 13,000 (-5.5% y/y). Total quits fell 1,000 (-5.4% y/y) to 3.208 million in July, the third monthly decline in the past four months, with the quits rate unchanged at 2.0%. Private sector quits rose 5,000 (5.5% y/y) in July. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. In contrast, layoffs and discharges are involuntary separations initiated by the employer. Layoffs and discharges rose 12,000 (3.6% y/y) to 1.808 million in July with private layoffs increasing 14,000 (4.4% y/y) while government layoffs declined 1,000 (-10.3% y/y).

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

- Job openings fall for second straight month.
- Hiring improves after two consecutive months of sharp decline.
- Separations fall, quits ease but layoffs rise slightly.

U.S. JOLTS – Job Openings Decline While Hiring Improves in July

Winnie Tapasanun

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Total factory orders fell 1.3% m/m in July after a 4.8% drop in June and an 8.3% gain in May, data from the U.S. Census Bureau showed. A 1.4% m/m July decline had been expected in the Action Economics Forecast Survey. The July reading marked the third m/m fall in four months following a string of m/m gains between December 2024 and March 2025. The year-on-year rate of increase decelerated to 1.6% in July from 5.6% in June, registering the smallest y/y rate in three months but higher than 1.2% y/y in July 2024. Notably, orders for nondefense aircraft & parts dropped 32.7% m/m in July following a 52.7% plunge in June and an exceptional 231.6% spike in May. Factory orders excluding defense fell 1.1% (+1.5% y/y), down for the third month in four, after a 4.7% June decrease. Factory orders excluding the transportation sector grew 0.6% (1.5% y/y), the largest of three straight m/m increases, after a 0.4% June rise.

Durable goods orders fell 2.8% (+3.4% y/y) in July, down for the third month in four, after a 9.4% decrease in June (matching -2.8% m/m in the advance report on August 26). The July fall reflected m/m orders drops of 9.5% (the third m/m decline in four months; +2.5% y/y) in transportation equipment and 0.3% (+0.4% y/y) in furniture & related products. To the upside, the following durable goods orders rose m/m in July: electrical equipment, appliances & components (1.9%; 8.5% y/y), machinery (1.9%; 5.7% y/y), primary metals (1.6%; 4.2% y/y), fabricated metal products (0.7%; 3.5% y/y), and computers & electronic products (0.5%; 4.7% y/y).

Nondurable goods orders, which equal nondurable goods shipments, rose 0.3% (-0.1% y/y) in July, the third successive m/m rise, after a 0.4% gain in June. The July rise reflected m/m increases of 2.3% (2.9% y/y) in textile mills, 0.8% (-3.6% y/y) in apparel, 0.5% (0.6% y/y) in plastics & rubber products, 0.4% (-6.1% y/y) in petroleum & coal products, 0.3% (3.3% y/y) beverage & tobacco products, 0.3% (3.1% y/y) in chemical products, 0.2% (0.4% y/y) in paper products, and 0.1% (0.1% y/y) in food products. To the downside, the following nondurable goods shipments declined m/m in July: leather & allied products (-3.2%; -7.0% y/y), textile products (-0.3%; +1.7% y/y), and printing (-0.1%; +0.4% y/y).

Total shipments grew 0.9% (1.8% y/y) in July, the largest of three consecutive m/m gains, after a 0.6% increase in June. Excluding transportation, shipments rose 0.6% (1.5% y/y) in July after a 0.5% June rise. Shipments of durable goods industries advanced 1.5% (3.7% y/y) in July, the biggest of eight straight m/m increases, on top of a 0.7% rise in June. This reflected m/m durable goods shipments increases of 2.5% (3.7% y/y) in transportation equipment, 1.6% (3.4% y/y) in fabricated metal products, 1.4% (6.4% y/y) in electrical equipment, appliances & components, 1.4% (4.3% y/y) in machinery, 1.3% (5.4% y/y) in primary metals, 0.9% (2.5% y/y) in miscellaneous durable goods, 0.7% (1.1% y/y) in nonmetallic mineral products, and 0.2% (5.8% y/y) in computers & electronic products. Durable goods shipments for furniture & related products were the only category with a monthly decline in July; they slid 0.5%, the third m/m slide in four months, after a 0.3% June decline. Meanwhile, durable goods shipments for wood products were virtually unchanged m/m (-1.7% y/y) following a 0.1% June uptick.

Unfilled orders held steady m/m (7.0% y/y) in July after rises of 0.9% in June and 3.4% in May. Excluding transportation, unfilled orders were virtually unchanged m/m (0.8% y/y) for the second successive month. Backlogs of durable goods held steady m/m (7.0% y/y) in July, reflecting m/m increases of 0.4% (1.5% y/y) in primary metals and 0.3% (1.7% y/y) in electrical equipment, appliances & components, partly offset by a 0.3% decline (-0.1% y/y) in furniture & related products.

Inventories rose 0.3% (1.5% y/y) in July, up for the third straight month, after a 0.2% increase in June. Excluding transportation, inventories rose 0.3% (1.4% y/y) after a 0.3% June rise. Durable goods inventories were up 0.3% (1.9% y/y) in July after rising 0.2% in June and May, while nondurable goods inventories grew 0.2% (0.8% y/y) following a 0.2% June increase and two successive m/m declines.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Headline: -1.3% m/m; +1.6% y/y, the smallest y/y gain in three months.
- Durable goods orders (-2.8%) down, but nondurable goods orders (+0.3%) and shipments (+0.9%) both up three straight months.
- Transportation equipt. orders -9.5% m/m, w/ a 32.7% drop in nondefense aircraft & parts orders.
- Unfilled orders unchanged after two successive m/m increases.
- Inventories +0.3%, the third consecutive m/m rise.

U.S. Factory Orders Fall in July, the Third M/M Decline in Four Months

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Retail gasoline prices for all grades, on average, rose to $3.30 per gallon (-3.2% y/y) last week after rising to $3.27 one week earlier. Prices had been moving sideways for two months. Gasoline prices are above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel edged up to $3.73 per gallon (3.0% y/y) last week after holding steady at $3.71 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil increased to $64.16 per barrel (-15.5% y/y) in the week ended August 29 after falling in the prior week to $63.23 per barrel. Prices remained below a high of a $74.17 during the third week of June. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $65.59 per barrel. The price of European Brent crude eased to $67.59 per barrel (-16.4% y/y) in the week of August 29 from $67.82 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price yesterday was $68.09 per barrel.

Natural gas prices were unchanged at an average $2.85/mmbtu (+46.9% y/y) in the week ended August 22, after falling from an average $2.94/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $2.70 per mmbtu.

Gasoline demand declined 1.1% y/y in the four weeks ending August 22, following a 1.2% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.5% y/y in the four weeks ending August 22, after a 3.3% y/y increase in the previous four-week period. Crude oil input to refineries rose 3.0% y/y in the four weeks ending August 22, after a 4.1% y/y gain in the prior four weeks.

Gasoline inventories rose 1.8% y/y in the week ending August 22 after a 1.3% y/y in the prior week. Residual fuel oil inventories fell 23.8% y/y in the week of August 22, after falling 25.5% y/y in the prior week. Crude oil inventories rose 2.4% y/y in the week of August 22 after a 2.6% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories stood at 24.6 days in the week of August 22 versus 24.8 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil eased to 24.5 days in the week of August 22 from 24.6 days in the prior week and remained below a high of 31.9 days in the week of March 3, 2023.

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

- Gasoline prices increase to highest level in four weeks.
- Crude oil prices recover after earlier declines.
- Natural gas prices at early-June low.

U.S. Gasoline & Crude Oil Prices Rise Last Week

Kathleen Stephansen, CBE

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Mortgage applications declined by 1.2% (+18.2% y/y) in the week ending August 29, after easing 0.5% (+21.6% y/y) in the week ending August 22, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for purchase loans dropped 3.1% (+16.6% y/y) last week, following a gain of 2.2% (24.3% y/y) in the prior week. Applications to refinance a home loan edged up 0.9% (20.1% y/y) last week, after declining 3.5% (+18.6% y/y) in the week of August 22.

The effective interest rate on a 30-year fixed-rate loan edged down 5bps to 6.81% in the week ending August 29 from 6.86% in the week ending August 22. It had been at 6.86% for three consecutive weeks. The recent high of 7.28% was reached in the second week of January. The rate on 15-year fixed-rate mortgages declined by 18bps to 6.04% in the latest week from 6.22% in the prior week. The rate on 30-year Jumbo loans dropped 11bps to 6.69% in the week ending August 29 from 6.80% one week earlier. The rate on a 5-year ARM fell 16bps to 6.03% in the latest week from 6.19% in the week of August 22.

The share of applications for refinancing an existing loan rose to 46.9% of total applications in the week ending August 29 after easing to 45.3% in the prior week. The share hit a low of 34.6% in the fourth week of May. The adjustable-rate mortgage (ARM) share of activity rose to 8.80% in the latest week from 8.40% in the week of August 22.

The average size of a mortgage loan rose 0.5% (1.8% y/y) to $384,800 in the week ending August 29, after falling 1.2% (+2.9% y/y) to $383,000 in the week of August 22. The average size of a purchase loan fell 1.6% (-0.2% y/y) to $426,400 in the latest week after rising 1.0% (1.5% y/y) to $433,400 in the prior week. The average size of a loan to refinance a mortgage rose 4.8% (5.1% y/y) to $337,700 in the week ending August 29 after falling 5.2% (+4.2% y/y) to $322,200 in the prior week. It was increased from a low of $277,900 in the last week of May.

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

- Purchase applications dropped while loan refinancing edged up.
- Fixed-interest rate on 30-year loan holds at a 4-month low.
- Average loan size edged up.

Economy in Brief: 2007

Jump to:

UK Manufacturing Survey Turns Lower

UK Distributive Trade Sector Shows a Slowdown

ISM Index Near "No Growth" Level

U.S. Initial Unemployment Insurance Claims Still Higher

U.S. Personal Spending Up 0.3%, Income Rose 0.4%

U.S. Personal Spending Up 0.3%, Income Rose 0.4%

U.S. Employment Cost Index Moderates to 0.8% Quarterly Increase

German Retail Sales Show Unexpected Lift