Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030805a.jpg" width="353">
The Institute for Supply Management reported that its July index of activity in the nonmanufacturing sector rose to the highest level in the series brief seven year history. The index rose to 65.1 versus Consensus expectations for a rise to 58.0.
The 4.5 point m/m rise followed a 6.1 point gain in June and over the last four months the activity index has jumped 17.2 points.
During the last five years, there has been a 66% correlation between the level of the Business Activity Index from the ISM nonmanufacturing survey and quarterly growth in real GDP in the service sector plus structures.
The seasonally adjusted new orders index jumped to a record high 66.9. The employment index also improved to 50.7, the third month above 50 since early 2001. During the last five years there has been a 68% correlation between the level of the ISM nonmanufacturing employment index and the m/m change in payroll employment in the service producing and construction industries.
Business activity for the nonmanufacturing sector is a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index weights the components.
The seasonally adjusted prices index fell to 50.6 versus 53.9 during all of last year.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The nonmanufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively. 

<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/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Business Activity Index</td>
<td>65.1</td>
<td>60.6</td>
<td>53.7</td>
<td>55.1</td>
<td>49.0</td>
<td>59.3</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>50.6</td>
<td>51.4</td>
<td>59.1</td>
<td>53.9</td>
<td>51.6</td>
<td>63.5</td>
</tr>
</tbody>
</table>
Challenger Layoffs Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 5, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030805c.jpg" width="353">
According to Challenger, Gray &amp; Christmas, announced job cuts rose last month from very depressed levels in May and June. Layoff announcements rose 42.5% in July versus June.
The three month moving average of job cut announcements collapsed to its lowest level since November 2000.
Job cut announcements differ from layoffs in that many are achieved through attrition or just never occur.
During the last nine years there has been a 72% correlation between the y/y change in announced job cuts and the y/y percent change in initial claims for jobless insurance. Like claims, job cut announcements indicate little about new hiring activity.
The increase in job cut announcements m/m was dominated by huge gains in a few industries including aerospace, consumer goods, government and services. Elsewhere announcements were mixed.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Announced Job Cuts</td>
<td>85,117</td>
<td>59,715</td>
<td>5.1%</td>
<td>1,431,052</td>
<td>1,956,876</td>
</tr>
</tbody>
</table>
Chain Store Sales Rose 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 5, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030805b.jpg" width="353">
Chain store sales rose 0.8% last week, rising for the fourth week in the last five according to the BTM-UBSW survey.
For all of July sales rose 1.4% from the June average which was barely changed from May.
During the last five years there has been a 62% correlation between the year-to-year percent change in chain store sales and the change in nonauto retail sales less gasoline.
The BTM-UBSW retail chain-store sales index is constructed from the sales results reported by seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">BTM-UBSW (SA, 1977=100)</a></th>
<th scope="col">8/2/03</th>
<th scope="col">7/26/03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>427.7</td>
<td>424.1</td>
<td>3.0%</td>
<td>3.6%</td>
<td>2.1%</td>
<td>3.4%</td>
</tr>
</tbody>
</table>


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The Institute for Supply Management reported that its July index of activity in the nonmanufacturing sector rose to the highest level in the series brief seven year history. The index rose to 65.1 versus Consensus expectations for a [...]

ISM Nonmanufacturing Index Strong

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030804b.jpg" width="353">
There has been a major realignment of currencies over the past year or so. The trade weighted US dollar against the major currencies has depreciated by more than 12% over the past year, but only 6% against a broader selection of countries. The Euro and the Canadian, Australian and New Zealand currencies have appreciated strongly against the US dollar.. Relative to the US dollar the Chinese Yuan and Japanese Yen have, on the contrary, been relatively unchanged. While in Latin America, the Brazilian Real, which had depreciated over the year, has recently strengthened against the dollar

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol">Currency (EOP)</th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
Appreciation/ Depreciation
<th scope="col"></th>
<th scope="col"></th>
<th scope="col"></th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td></td>
<td>Q2/03</td>
<td>Q1/03</td>
<td>Q2/02</td>
<td>M/M</td>
<td>Y/Y</td>
<td>2002</td>
<td>2001</td>
<td>2000</td>
</tr>
<tr>
<td class="firstcol">Euro</td>
<td>Euro/US$</td>
<td>1.1502</td>
<td>1.0900</td>
<td>0.9856</td>
<td>5.52</td>
<td>16.70</td>
<td>1.0485</td>
<td>0.8801</td>
<td>0.9388</td>
</tr>
<tr class="odd">
<td class="firstcol">New Zealand</td>
<td>US$/NZ$</td>
<td>0.5866</td>
<td>0.5538</td>
<td>0.4860</td>
<td>5.92</td>
<td>20.70</td>
<td>0.5239</td>
<td>0.4161</td>
<td>0.4423</td>
</tr>
<tr>
<td class="firstcol">Australia</td>
<td>US$/A$</td>
<td>0.6713</td>
<td>0.6045</td>
<td>0.5638</td>
<td>11.05</td>
<td>19.07</td>
<td>0.5625</td>
<td>0.5117</td>
<td>0.5560</td>
</tr>
<tr class="odd">
<td class="firstcol">Canada</td>
<td>C$/US$</td>
<td>1.3556</td>
<td>1.4695</td>
<td>1.5190</td>
<td>8.40</td>
<td>12.06</td>
<td>1.1580</td>
<td>1.5925</td>
<td>1.4995</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">China</td>
<td>Yuan/US$</td>
<td>8.2771</td>
<td>8.2774</td>
<td>8.2770</td>
<td>0.00</td>
<td>0.00</td>
<td>8.2808</td>
<td>8.2776</td>
<td>8.2774</td>
</tr>
<tr>
<td class="firstcol">South Korea</td>
<td>Won/US$</td>
<td>1196.00</td>
<td>1252.00</td>
<td>1205.00</td>
<td>4.68</td>
<td>0.75</td>
<td>1186.30</td>
<td>1313.50</td>
<td>1267.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>Yen/US$</td>
<td>119.87</td>
<td>118.07</td>
<td>119.85</td>
<td>-1.50</td>
<td>-0.02</td>
<td>118.75</td>
<td>131.04</td>
<td>114.35</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Brazil</td>
<td>Real/US$</td>
<td>2.8520</td>
<td>3.332</td>
<td>2.83</td>
<td>16.83</td>
<td>-0.77</td>
<td>3.54</td>
<td>2.312</td>
<td>1.951</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Trade-Weighted Dollar</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Broad Index</td>
<td>1/97=100</td>
<td>119.67</td>
<td>123.96</td>
<td>127.33</td>
<td>-3.46</td>
<td>-6.02</td>
<td>127.19</td>
<td>126.09</td>
<td>119.93</td>
</tr>
<tr class="odd">
<td class="firstcol">Major Countries</td>
<td>3/73=100</td>
<td>90.78</td>
<td>95.11</td>
<td>103.97</td>
<td>-4.55</td>
<td>-12.69</td>
<td>102.93</td>
<td>104.30</td>
<td>98.34</td>
</tr>
</tbody>
</table>
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There has been a major realignment of currencies over the past year or so. The trade weighted US dollar against the major currencies has depreciated by more than 12% over the past year, but only 6% against a broader selection of [...]

Realignment of Currencies

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030804a.jpg" width="353">
Factory orders surged 1.7% in June following a 0.3% increase in May. A 2.6% jump in durable goods orders drove the rise which was revised up slightly from an advance report of a 2.1% gain.
The strength in June durable orders reflected a 21.1% spurt in orders for civilian aircraft. Excluding the transportation sector entirely, factory orders rose 1.2% (3.3% y/y).
Manufacturing inventories fell 0.2% in June for the fourth consecutive monthly decline. The ISM inventory index in July remained below 50 and therefore suggests further decumulation.
Inventories fell in most industries in June, but the 1.0% decline (-9.0% y/y) in computers and electronic products was notable. Electrical equipment inventories dropped 0.5% (-6.3% y/y) and machinery inventories fell 0.3% (-3.7% y/y). Furniture inventories squeaked out a 0.1% m/m gain and are up 0.9% y/y.
Nondurable goods inventories rose 0.4% (+4.3% y/y) for the first gain in three months.
Factory shipments jumped 1.1% (1.2% y/y) led by higher shipments in the transportation sector.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Inventories</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>0.5%</td>
<td>-1.9%</td>
<td>-8.0%</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>1.7%</td>
<td>0.3%</td>
<td>4.2%</td>
<td>-0.8%</td>
<td>-7.2%</td>
<td>5.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.1%</td>
<td>0.3%</td>
<td>1.2%</td>
<td>-1.1%</td>
<td>-5.3%</td>
<td>4.4%</td>
</tr>
</tbody>
</table>
</body>
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Factory orders surged 1.7% in June following a 0.3% increase in May. A 2.6% jump in durable goods orders drove the rise which was revised up slightly from an advance report of a 2.1% gain. The strength in June durable orders reflected [...]

Factory Orders Surged 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/030801a.jpg" width="353">
Nonfarm payrolls declined again in July and figures for May and June were revised downward to show larger declines (see table below). This result was remarkably close to forecasts, which had called for a 50,000 decrease. At the same time, the unemployment rate fell 0.2% to 6.2% after its relatively large increase the month before from 6.1% to 6.4%. Forecasters had expected only a 0.1% fall in July.
It was the manufacturing sector that again pulled down the total number of jobs, as a broad array of those industries lost jobs aggregating to 71,000. Durable goods industries were off 54,000 and nondurable goods 17,000. Retail trade (-14,000), government (-10,000) and education and health services (-1,000) were other weak sectors.
In contrast, temporary help agencies had a good gain, increasing 42,000. Including other types of employment agencies, the employment services group surged 73,000, its third consecutive notable rise. This suggests that businesses are starting to staff up, but doing so tentatively, using temp workers until they are more certain their need for workers will be sustained. Construction industries, finance, and leisure and hospitality were other industry groups adding workers in July.
The workweek edged down 0.1 hour to 33.6 hours, a new low. Shorter hours characterized many manufacturing and other goods-producing industries. Average hourly earnings rose 0.3%, the third successive gain of that magnitude after being more sluggish in the winter and early spring.
In the separate household survey, the labor force fell 556,000, basically reversing June&#146;s 611,000 increase. Such swings also characterized the number of people reporting they were employed (down 260,000 in July after a 251,000 increase in June) and those noting unemployment (down 296,000 after a 360,000 rise). About half of the July decline in the labor force occurred among people aged 16-24, suggesting there may be some seasonal influence related to summer vacations from school.

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB01/@EB01.HTM">Employment</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Payroll Employment</td>
<td>-44,000</td>
<td>-72,000</td>
<td>-76,000</td>
<td>-0.3%</td>
<td>-1.1%</td>
<td>0.0%</td>
<td>2.2%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Reported last month</td>
<td></td>
<td>-30,000</td>
<td>-70,000</td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Manufacturing</td>
<td>-71,000</td>
<td>-63,000</td>
<td>-49,000</td>
<td>-4.2%</td>
<td>-6.9%</td>
<td>-4.8%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">Average Weekly Hours</td>
<td>33.6</td>
<td>33.7</td>
<td>33.7</td>
<td>34.0</td>
<td>33.9</td>
<td>34.0</td>
<td>34.3</td>
</tr>
<tr class="odd">
<td class="firstcol">Average Hourly Earnings</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>3.8%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Unemployment Rate</td>
<td>6.2%</td>
<td>6.4%</td>
<td>6.1%</td>
<td>5.8%</td>
<td>5.8%</td>
<td>4.8%</td>
<td>4.0%</td>
</tr>
</tbody>
</table>
Moderate Rise in U.S. Personal Income & Spending 
by <a href="/comment/Stone.html">Carol Stone</a> August 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030801b.jpg" width="353">
Mild increases in both personal income and expenditures marked the June performance of the consumer sector. Income rose 0.3%, giving the entire first half of 2003 a moderate 3.4% annualized gain. As in May, one of the distinctive features of income growth was another sizable advance in proprietors&#146; income; it increased 0.8% in June, yielding a whopping 11% annual rate of expansion over the last four months. Profits of small, unincorporated businesses seem to be advancing strongly. Wages and salaries, on a much steadier trend, picked up to a 0.3% gain in June from 0.2% in May and a small outright decline in April.
Consumer spending has also been steady of late, with the last two months, 0.4% in May and 0.3% in June, tracing a smoother path than the wide swings earlier in the year that resulted from uneven buying patterns for motor vehicles and the volatility in gasoline prices. Broadly, expenditures on durable goods rose 0.4% in June, almost the same increase as in May. Outlays for nondurable goods were also up 0.4% in June, but they had been flat in May; the whipsaw in gasoline purchases, down sharply in May and back up somewhat in June, caused most of the upturn in June nondurable goods buying. Spending on services slowed to a 0.2% rise in June after 0.6% in May. Outright declines in outlays for household utilities and recreation in June followed increases in May.
The saving rate remained flat at 3.3% in June, almost the same as in each of the preceding three months.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>3.3%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>0.3%</td>
<td>0.4%</td>
<td>4.7%</td>
<td>4.5%</td>
<td>4.5%</td>
<td>7.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>3.3%</td>
<td>3.3%</td>
<td>4.4%</td>
<td>3.7%</td>
<td>2.3%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">PCE Price Deflator</td>
<td>-0.2%</td>
<td>-0.1%</td>
<td>1.8%</td>
<td>1.4%</td>
<td>2.0%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
ISM Factory Index Rises Above 50 
by <a href="/comment/Stone.html">Carol Stone</a> August 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030801c.jpg" width="353">
After a sluggish few months that raised concerns about renewed recession, the Institute of Supply Management&#146;s Purchasing Managers&#146; Index (PMI) rose 2 points in July, crossing above the key 50% expansion/decline line for the first time since February. A 4.4-point gain in new orders was the prime mover in the July improvement, with a larger number of ISM survey participants reporting increases in their orders. Less inventories liquidation, slower deliveries by vendors and a slight pick-up in production also added to the overall index. Employment held just about steady after an encouraging rise last month.
Prices paid for materials and supplies moderated somewhat in July; they appear to be establishing a trend of increases at fewer companies than has generally be the case over the last 15 months. No item is reported &#147;in short supply&#148; and only one raw material and some energy costs were reported up in price in July. While this softening may leave commodity producers less well off, it relieves further pressure on profits of finished goods manufacturers.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF02/@EF02.HTM">ISM Manufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Composite Index</td>
<td>51.8</td>
<td>49.8</td>
<td>49.4</td>
<td>52.4</td>
<td>44.0</td>
<td>51.7</td>
</tr>
<tr>
<td class="firstcol">New Orders Index</td>
<td>56.6</td>
<td>52.2</td>
<td>51.9</td>
<td>56.7</td>
<td>46.2</td>
<td>52.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid Index (NSA)</td>
<td>53.0</td>
<td>56.5</td>
<td>51.5</td>
<td>57.6</td>
<td>42.9</td>
<td>64.8</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Improves 
by <a href="/comment/Stone.html">Carol Stone</a> August 1, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030801d.jpg">
The University of Michigan&#146;s consumer sentiment index edged slightly higher in the latter part of July to 90.9, giving it a 1.2-point increase all together from June&#146;s 89.7 level. The sub-index describing current conditions was 102.1, unchanged from the mid-month reading and up 7.4 points from June. Expectations improved slightly to 83.7 from 82.7 at mid-month, but remain 2.7 points below the June value. 
The Michigan Survey&#146;s improvement in July stands in contrast to a decrease in the Conference Board&#146;s Consumer Confidence Index reported Tuesday. That survey gives heavy weight to job-market perceptions, which deteriorated. The decline in nonfarm payrolls in the month would seem to bear out this assessment by consumers. The Michigan survey covers many fewer participants, 500 versus 5,000 for the Conference Board. But Michigan asks many more questions. It may then react more directly to stock market and political events. The better stock market conditions in July and the US&#146;s progress in finding hunted Iraqi leaders may thus have offset in the Michigan survey some of the negative factors that hurt the Conference Board&#146;s result.

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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 (Final)</th>
<th scope="col">Mid-July</th>
<th scope="col">June</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
<tbody>
<tr>
<td class="firstcol">Consumer Sentiment</td>
<td>90.9</td>
<td>90.3</td>
<td>89.7</td>
<td>89.6</td>
<td>89.2</td>
<td>107.6</td>
</tr>
</tbody>
</table>
U.S. Construction Spending Flat 
by <a href="/comment/Stone.html">Carol Stone</a> August 1, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030801e.jpg" width="353">
The value of total construction put in place was flat in June as a modest 0.3% decline in private building offset a 1.0% gain in public (government) projects. Within the private sector, residential construction, which accounts for about two-thirds of that sector&#146;s dollar value, fell 0.4%, while most categories of non-residential building firmed. For instance, office building rose 3.1%, commercial projects were up 2.2% and health care added 2.7%.
Among public, government-owned buildings, offices added 5.7%, health care facilities, 6.0% and power projects, 24.0%.
These more detailed categories represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.
All that said, total construction activity remained sluggish through June, although it showed some signs of stabilization after a decline that had lasted since January. Notably, while residential building continued to fall through June, commercial projects do seem to be sustaining a long-awaited upturn.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E907/@E90701/@E90701.HTM">Construction Put-in-place</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.0%</td>
<td>-0.5%</td>
<td>-0.3%</td>
<td>1.1%</td>
<td>1.1%</td>
<td>2.7%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.3%</td>
<td>-0.8%</td>
<td>1.5%</td>
<td>0.8%</td>
<td>-0.2%</td>
<td>1.4%</td>
<td>8.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-0.4%</td>
<td>-0.8%</td>
<td>-1.6%</td>
<td>3.5%</td>
<td>8.6%</td>
<td>3.3%</td>
<td>7.4%</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>1.0%</td>
<td>0.5%</td>
<td>1.3%</td>
<td>1.9%</td>
<td>5.2%</td>
<td>7.4%</td>
<td>9.6%</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Up Considerably 
by <a href="/comment/Stone.html">Carol Stone</a> August 1, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030801f.jpg">
Light vehicle sales picked up considerably in July compared to June, increasing by 910,000 (annual rate). However, auto company reports, which are stated on a year-to-year change basis, showed huge declines relative to July 2002. That month saw heavy sales incentives, however, making it a high base from which to measure such performance. The June-to-July gain was shared by both cars and trucks; domestic truck sales rose especially sharply, from 7.58 million units to 8.25 million. Sales of imported vehicles actually eased slightly on the month.
In recent years, vehicle sales have not shown much relation to consumer confidence measures, but they do have some tendency to move with the Conference Board&#146;s Buying Plans measure for Automobiles. Consumers anticipate their vehicle purchases to some extent; indeed the gain in the July Buying Plans gauge foretold the gain in vehicle sales experienced in the month.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil.Units)</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>17.34</td>
<td>16.43</td>
<td>16.12</td>
<td>-4.3%</td>
<td>16.81</td>
<td>17.26</td>
<td>17.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>7.81</td>
<td>7.56</td>
<td>7.27</td>
<td>-10.2%</td>
<td>8.07</td>
<td>8.48</td>
<td>8.83</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>9.53</td>
<td>8.87</td>
<td>8.86</td>
<td>5.5%</td>
<td>8.74</td>
<td>8.78</td>
<td>8.56</td>
</tr>
</tbody>
</table>
</body>
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Nonfarm payrolls declined again in July and figures for May and June were revised downward to show larger declines (see table below). This result was remarkably close to forecasts, which had called for a 50,000 decrease. At the same [...]

U.S. Nonfarm Payrolls Decline

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030731a.jpg" width="353">
Real GDP grew at a 2.4% annual rate in the second quarter, after increasing only 1.4% in each of the two previous periods. Consensus forecasts for 2Q GDP were 1.8% growth.
Personal consumption expenditures were 3.3% (a.r.) higher than last quarter with the bulk of the advance in durable goods purchases (+22.6% a.r.). Fixed investment rose by 6.6% a.r. the largest increase since the second quarter of 2000. Expenditures for equipment and software (+4.8% a.r.) grew for the first time since the fourth quarter of 2000.
Federal defense spending soared by 44.1% a.r. in the second quarter, while federal nondefense and state and local government expenditures were lower.
The largest drag on second quarter GDP was the trade balance. Exports were 3.1% a.r. lower while imports increased by 9.2% a.r. causing a negative contribution of 1.56 percentage points to real GDP.
Domestic final demand was up 4.6% a.r. last quarter, the largest increase since the first quarter of 2000.
Inflation was up a modest 1.0 % with the price indexes of many consumer goods declining.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained &#39;96 $, % AR</a></th>
<th scope="col">2Q&#39;03</th>
<th scope="col">1Q&#39;03</th>
<th scope="col">4Q&#39;02</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>2.4%</td>
<td>1.4%</td>
<td>1.4%</td>
<td>2.4%</td>
<td>0.3%</td>
<td>3.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-0.8%</td>
<td>-0.8%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>-1.2%</td>
<td>0.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.2%</td>
<td>2.3%</td>
<td>1.1%</td>
<td>1.8%</td>
<td>1.5%</td>
<td>3.7%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-1.6%</td>
<td>0.8%</td>
<td>-1.6%</td>
<td>-0.7%</td>
<td>-0.2%</td>
<td>-0.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>4.6%</td>
<td>1.4%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>1.6%</td>
<td>4.3%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Deflator</td>
<td>1.0%</td>
<td>2.4%</td>
<td>1.8%</td>
<td>1.1%</td>
<td>2.4%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Chicago Purchasing Agents' Index Advances 
by <a href="/comment/Stone.html">Carol Stone</a> July 31, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030731b.jpg" width="353">
After increasing by 1.3% in the first quarter of 2003 the employment cost index for civilian workers advanced a more modest 0.9% in the second quarter.
The components for both wages and salaries and benefit costs each showed smaller gains from March to June than in the previous three month period. The largest differences in wages and salaries were in the finance, insurance and real estate industry which had surged 5.2% in the first quarter and was 0.8% higher in Q2, and in wholesale trade (+1.6% in Q1 vs &#150;0.1% in Q2).
Benefit costs in manufacturing, which had jumped 4.0% in the first quarter, gained 1.3% in the second.
Wages and salaries account for roughly 70% of the compensation index and benefit costs comprise about 30%.

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<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">2Q&#39;03</th>
<th scope="col">1Q&#39;03</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Compensation</td>
<td>0.8%</td>
<td>1.4%</td>
<td>3.6%</td>
<td>3.2%</td>
<td>4.2%</td>
<td>4.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wages &amp; Salaries</td>
<td>0.6%</td>
<td>1.0%</td>
<td>2.6%</td>
<td>2.7%</td>
<td>3.8%</td>
<td>3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Benefit Costs</td>
<td>1.3%</td>
<td>2.4%</td>
<td>6.2%</td>
<td>4.7%</td>
<td>5.1%</td>
<td>5.6%</td>
</tr>
</tbody>
</table>


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030731c.jpg" width="353">
Initial claims for unemployment insurance edged down 3,000 in the July 26 week to 388,000 from an upward-revised 391,000 the prior week. This move extends to a second week an encouraging decline in claims below the 400,000 often associated with slack (or even recessionary) conditions in labor markets. It also adds further evidence that the bulge in claims in late June and early July was transitory, due to seasonal plant maintenance in such manufacturing industries as auto, apparel and furniture.
At the same time, the total number of unemployment benefit recipients &#150; also called &#147;continuing claims&#148; &#150; remained high the prior week and the associated &#147;insured unemployment rate&#148; returned to 2.9% from 2.8% the week before. Thus, even as the number of layoffs seems to be receding, it is still relatively difficult for those unemployed to get the new jobs that would remove them from the ranks of the unemployed.

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<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">7/26/03</th>
<th scope="col">7/19/03</th>
<th scope="col">7/12/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
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<td class="firstcol">Initial Claims</td>
<td>388.0</td>
<td>391.0</td>
<td>415.0</td>
<td>404.3</td>
<td>406.0</td>
<td>299.7</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,648</td>
<td>3,585</td>
<td>3,575</td>
<td>3,022</td>
<td>2,114</td>
</tr>
</tbody>
</table>


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030731d.jpg" width="353">
The Chicago Purchasing Managers &#147;Business Barometer&#148; advanced 3.4 points in July to 55.9, its highest reading since January and well ahead of the consensus forecast for a 1.1-point rise. New orders led the gain, picking up nearly 7 points to 61.7, their highest since last November. Production increased 1.9 points, and employment, 2.2. This last however, remains below 50%, indicating the persistence of an adverse balance of layoffs and hires.
Seasonal factors for the overall index are supportive in July, accounting for some of the month-to-month firmness. However, this July&#146;s performance before seasonal adjustment is definitely better than the prior couple of years. The current July saw a decrease in the overall index of about 3 points from June, comparing favorably to declines of almost 8 points in July 2002 and 5 points in July 2001. Thus, there appears to be genuine improvement in manufacturing in the Chicago metropolitan area. Similarly, the Milwaukee Purchasing Managers Index rose from 48 in June to 58 in July. Although frequently more volatile, the Milwaukee survey indicates the geographic breadth of the improvement.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF05/@EF05.HTM">Chicago Purchasing Managers Index, SA</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
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<td class="firstcol">Business Barometer</td>
<td>55.9</td>
<td>52.5</td>
<td>52.2</td>
<td>52.7</td>
<td>41.4</td>
<td>51.8</td>
</tr>
<tr>
<td class="firstcol">New Orders</td>
<td>61.7</td>
<td>54.8</td>
<td>54.6</td>
<td>56.3</td>
<td>42.3</td>
<td>53.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices Paid</td>
<td>47.9</td>
<td>49.1</td>
<td>53.7</td>
<td>56.9</td>
<td>50.4</td>
<td>65.6</td>
</tr>
</tbody>
</table>


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030731e.jpg" width="353">
The Conference Board&#146;s National Index of Help-Wanted Advertising increased slightly in June to 38 from its downward revised level of 35 in May. During the last ten years there has been a 92% correlation between the level of help-wanted advertising and the year-to-year % change in nonfarm payrolls.
The proportion of labor markets with rising want-ad volume junped to 73% in June, the highest since September, 2002.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June2002</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>38</td>
<td>35</td>
<td>47</td>
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Real GDP grew at a 2.4% annual rate in the second quarter, after increasing only 1.4% in each of the two previous periods. Consensus forecasts for 2Q GDP were 1.8% growth. Personal consumption expenditures were 3.3% (a.r.) higher than [...]

Initial Jobless Claims Below 400,000 a Second Week

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030730a.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI) improved slightly in June to &#150;0.32 from a reading of &#150;0.40 in May.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of over 3% a.r.
The June index was the highest since November, 2002. The three-month moving average of the CFNAI improved to &#150;0.58 from -0.70 in May.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production and income, the labor market, personal consumption and housing, manufacturing and trade sales, and inventories &amp; orders. Employment data accounted for &#150;0.35 of the &#150;0.32 June index, while output components contributed &#150;0.01 (an improvement from May) and all other components contributed +0.04 up from &#150;0.01 the previous month.
For a complete discussion of the latest Chicago Fed&#39;s National Activity Index click <a href="http://www.chicagofed.org/economicresearchanddata/national/index.cfm">here</a>.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">June 2003</th>
<th scope="col">May 2003</th>
<th scope="col">June 2002</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
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</thead>
<tbody>
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<td class="firstcol">CFNAI</td>
<td>-0.32</td>
<td>-0.40</td>
<td>-0.04</td>
<td>-0.33</td>
<td>-1.19</td>
<td>-0.13</td>
</tr>
</tbody>
</table>


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030730b.jpg" width="353">
Mortgage applications plunged last week, according to survey data compiled by the Mortgage Bankers Association of America. The overall index of mortgage applications dropped 24.3% on the week to 972.4, the lowest since last December (3/16/90 = 100). The abrupt, sharp upturn in interest rates has put a heavy brake on refinancing activity, pulling that sub-index down 32.9% this last week alone, putting it 58.4% below its all-time high of 9977.8 reached just eight weeks ago on May 30. The index for loan applications for home purchase, however, remained firm, edging down just 3.5% on the week; at 426.9, this index stands 7.3% below its record 460.5 set in that same May 30 week.
Interest rates are the main drag on this market. The contract rate on 30-year fixed rate loans tabulated by the Federal Home Loan Mortgage Corporation (&#147;Freddie Mac&#148;) was up 27 basis points last week to 5.94%, 73 basis points above its recent low set in the week ended June 20 and the highest since mid-January. The bigger part of the impact of this rapid rise in rates has been on refinancing activity, which had been used by consumers to help fund new spending and also to pay down old debt.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders.
Visit the Mortgage Bankers Association site at <a href="http://www.mbaa.org/">www.mbaa.org.</a>

<table border="0" cellspacing="0" width="100%">

</table>
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">7/25/03</th>
<th scope="col">7/18/03</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>972.4</td>
<td>1,284.3</td>
<td>799.7</td>
<td>625.6</td>
<td>322.7</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>426.9</td>
<td>442.4</td>
<td>354.7</td>
<td>304.9</td>
<td>302.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>4145.8</td>
<td>6,181.2</td>
<td>3,388.0</td>
<td>2,491.0</td>
<td>438.8</td>
</tr>
</tbody>
</table>
</body>
</html>

The Chicago Fed National Activity Index (CFNAI) improved slightly in June to 0.32 from a reading of 0.40 in May. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of over 3% [...]

Mortgage Applications Plunged

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After Thursday&#146;s report of strong retail sales in the UK for June, tepid growth in second quarter GDP was disappointing. The Preliminary estimate showed only a 0.3% increase from the first quarter (1.8% from a year ago).
The early GDP tabulation represents estimates of industrial value added. It indicates that oil, gas and other mineral extraction declined, and manufacturing production was probably flat. Service sector output gained about 0.4% on the quarter. Thus, while retail sales suggest that consumer demand improved, other segments of the UK economy were sluggish.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UK: Constant GDP (1995=100)</th>
Q2 2003
Q1 2003
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Q/Q%Chg</td>
<td>Y/Y%Chg</td>
<td>Q/Q%Chg</td>
<td>Y/Y%Chg</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.3</td>
<td>1.8</td>
<td>0.1</td>
<td>2.1</td>
<td>1.9</td>
<td>2.1</td>
<td>3.1</td>
</tr>
<tr class="odd">
<td class="firstcol">Service Industries</td>
<td>0.4</td>
<td>2.6</td>
<td>0.4</td>
<td>2.6</td>
<td>2.6</td>
<td>3.5</td>
<td>3.6</td>
</tr>
</tbody>
</table>
German Inflation Drifting Lower 
by <a href="/comment/Stone.html">Carol Stone</a> July 25, 2003


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030725e.jpg" width="353">
German consumer prices are drifting ever so slightly lower, according to the preliminary July CPI data for the six &#147;Laender&#148; (states). Their individual states&#146; price indexes rose 0.2% to 0.3% each, averaged by the Federal Statistics Office to 0.2%, which yields a 0.1% decline after seasonal adjustment. This monthly performance produced year-on-year inflation in July at just under 1% for a fourth consecutive month. Details on the sources of the moderation in July will not be reported until the final data are issued in mid-August. But a quick glance at the trend in the euro suggests that its recent strength has been a factor in the current slow pace of inflation in Germany. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">German CPI</th>
<th scope="col">July 2003, NSA</th>
<th scope="col">July 2003, SA</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">2000=100</td>
<td>0.19%</td>
<td>-0.10%</td>
<td>0.87%</td>
<td>1.37%</td>
<td>1.97%</td>
<td>1.47%</td>
</tr>
</tbody>
</table>
</body>
</html>

After Thursdays report of strong retail sales in the UK for June, tepid growth in second quarter GDP was disappointing. The Preliminary estimate showed only a 0.3% increase from the first quarter (1.8% from a year ago). The early GDP [...]

U.K. Q1 GDP Lower than Expected

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030725a.jpg" width="353">
Durable goods orders surged 2.1% in June, double the Consensus expectation for a 1.0% rise. May figures were revised up slightly.
A 20.0% m/m jump in orders for commercial aircraft &amp; parts accounted for the upside surprise in orders. That gain lifted all transportation sector orders by 3.9%. Excluding the transportation sector, durable orders rose 1.4% (2.7% y/y) following a 0.9% gain in May.
Nondefense capital goods orders jumped 2.0% on the gain in aircraft orders. Excluding aircraft and parts, nondefense capital goods orders rose 0.6% (8.3% y/y) following an upwardly revised 0.5% May gain.
For a report from the Federal Reserve Bank of St. Louis titled &quot;Waiting for the Investment Boom? It Might Be a While&quot; click <a href="http://research.stlouisfed.org/publications/net/20030501/cover.pdf">here</a>.
During the last nine years there has been an 85% correlation between the y/y change in nondefense capital goods orders and the change in nonresidential investment in equipment &amp; software. There has been a 96% correlation between the change in shipments of these capital goods and investment.
Shipments of durable goods rose 1.3% (-0.8% y/y). Durable goods shipments were up 1.3% YTD.
Durable inventories dropped 0.6% (-1.7% y/y), the largest one month decline since March 2002. Lower inventories in the transportation sector accounted for much of the drop.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED01/@ED0101/@ED0101.HTM">NAICS Classification</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Durable Goods Orders</td>
<td>2.1%</td>
<td>0.0%</td>
<td>4.4%</td>
<td>-0.1%</td>
<td>-11.4%</td>
<td>3.3%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nondefense Capital Goods</td>
<td>2.0%</td>
<td>0.2%</td>
<td>12.3%</td>
<td>-5.3%</td>
<td>-16.5%</td>
<td>7.9%</td>
</tr>
</tbody>
</table>
New Home Sales Stronger Still 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 25, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030725b.jpg">
Sales of new single family homes in June continued the recent surge and added 4.7% m/m to the 10.9% May gain which was revised down slightly. June sales were at a record 1.160M unit rate versus Consensus expectations for 1.100M.
Sales gains were spread across the country&#39;s regions in June but were strongest in the Northeast where sales rose 32.3% (24.6% y/y). In the Midwest sales rose 9.8% (20.3% y/y).
Elsewhere, sales in the South rose 0.9% (21.8% y/y) and in the West sales rose 2.7% (19.2% y/y).
The median price of a new home fell to $187,000 (-1.9% y/y) and the prior month&#39;s figure was revised up.
The new home sales data reflect current sales versus the existing home sale figures which reflect closings on past sales.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E904/@E90401/@E90401.HTM">Homes Sales (000s, AR)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>1,160</td>
<td>1,108</td>
<td>21.0%</td>
<td>977</td>
<td>907</td>
<td>880</td>
</tr>
</tbody>
</table>
Existing Home Sales Dip 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 25, 2003


<img align="left" border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/030725c.jpg">
Sales of existing single family homes fell short of Consensus expectations for 6.00M. Sales in June were 5.830M, down 0.3% from May. Figures back to 1989 were revised slightly due to new seasonal factors.
Lower sales in the Northeast and in the Midwest were partially offset by a gain in the West and stability in the South.
The median price of an existing home rose to $176,500 (+7.7% y/y).
The figures reflect closings of past home sales.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E9/@E905/@E90501/@E90501.HTM">Existing Home Sales (000, AR)</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
<th scope="col">2000</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;5,830</td>
<td>&nbsp;5,850</td>
<td>8.6%</td>
<td>5,595</td>
<td>5,292</td>
<td>5,158</td>
</tr>
</tbody>
</table>
</body>
</html>

Durable goods orders surged 2.1% in June, double the Consensus expectation for a 1.0% rise. May figures were revised up slightly. A 20.0% m/m jump in orders for commercial aircraft & parts accounted for the upside surprise in orders. [...]

U.S. Durable Goods Orders Surge

PMIs showing widespread revival of global economy

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

Surging orders for computers and electronics propelling durable goods orders

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

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Tian Yong Woon

In this week's Letter, we examine the underbelly of the AI boom, the risks that sit beneath its optimism. Start with the public mood: American concern about AI has grown alongside adoption over the past three to four years (chart 1). Those worries span mass job displacement, misuse of top-end models by bad actors, and fears of being left behind. The first of these is already surfacing: in June, AI was again the most cited reason for announced US layoffs, with year-to-date AI-linked cuts above 100,000 (chart 2). Technology led all sectors in overall cuts, though the data do not isolate how many were AI-driven. Among those hit, the young are arguably the most exposed to these labour effects. They enter a labour pool swollen by displaced professionals, just as AI masters the entry-level tasks where they would start. India and Indonesia illustrate the stakes on youth NEET, the share not in education, employment, or training, both above 20% and among Asia's highest (chart 3). Beyond the labour market, the same optimism reshapes asset prices. The rally has lifted AI-related valuations to historic highs and concentrated a few names in cap-weighted indexes (chart 4). That raises correlation and the risk of a sharper index fall should the rally unravel. The same concentration runs through economies via exports, from Taiwan's advanced chips to South Korea's memory (chart 5). Its footprint is physical too, and cuts both ways: data-centre investment has lifted growth in Johor, Malaysia (chart 6) while straining local power and water. None of this argues against riding the AI wave, which still promises real productivity and welfare gains. Rather, these are caveats that investors and policymakers must keep in view, since the story is not all upside.

**AI-related concerns**
AI adoption has exploded over the past three to four years, and Americans' concerns have risen alongside it (chart 1). That is understandable, given how advanced and broad AI's proven applications have become. They now span everyday tasks and subject-specific work across fields such as finance and production, as well as tech and development, the sector AI was born in. Major concerns run from mass AI-induced job displacement to a more recent fear, that top-end models fall into the wrong hands and are used by bad actors. A further worry is distributional: AI advances are powerful and could deliver leaps in productivity, yet they may also leave many people behind. Those most exposed include workers already displaced from their jobs and people facing scarcer basic resources as AI demand competes for them. Others simply lack equitable access to AI tools or their benefits.

260713T1.jpg

**AI-driven job displacement**
Some of the fears US workers first had about AI-driven job displacement are already playing out. In June, AI was again the most cited reason for announced job cuts in the US (chart 2). That pushed year-to-date job cuts attributed to AI above 100,000, more than half of all AI-tagged cuts since AI became a selectable reason in 2023. The data come from the latest survey by Challenger, Gray & Christmas. This likely reflects AI's disproportionately heavy impact on certain industries such as technology, which again led all sectors in cuts. At the same time, announced hiring plans stayed subdued, leaving laid-off workers with limited opportunities to find new roles. All of this is occurring even as market valuations remain elevated on the broader wave of AI optimism.

260713T2.jpg

**AI and youth unemployment**
Arguably among those bearing the brunt of these labour-related effects are the youth. Many have graduated on a curriculum built largely for a pre-AI era. They now enter a labour pool swollen by experienced professionals whom AI has displaced. At the same time, AI is proving especially capable at the entry-level tasks on which young workers usually start. An elevated youth unemployment rate only intensifies the competition young people face for gainful employment. On the broader NEET measure, which also captures youth who are neither working nor studying, India and Indonesia stand out. On the latest available WDI data, both have youth NEET rates above 20%, among the highest in Asia and above the global average (chart 3). Should employers in these economies adopt AI aggressively across processes and production, including physical AI such as humanoid robots, the problem could worsen. Yet firms that stay purely labour-intensive risk losing out to rivals using more efficient, and perhaps cheaper, AI-driven methods.

260713T3.jpg

**Concentration risk**
The recent wave of AI optimism has pushed the equity valuations of major AI developers and AI-related goods producers to historically high levels. These gains are partly backed by strong earnings and upbeat forward guidance. Most major indexes are weighted by market capitalisation, so a counter's weight tracks its price. As these counters have outperformed their peers (chart 4), their index weight has risen close to mechanically, when holding the number of shares constant. This raises concentration risk, since a small group of counters now carries more of the index and moves it more closely. So, if the rally in these counters were to unravel deeply, it would drag the broader index down more heavily with it.

260713T4.jpg

AI-related concentration risk is not confined to equity indexes; it also shows up in the growth of major economies. In Asia, that risk usually runs through a country's exports. Take Taiwan, the world's largest advanced semiconductor exporter, as an example. As chart 5 shows, its recent export growth has come more than entirely from integrated circuits and from infocomm and audiovisual equipment. Other goods categories have often contributed negatively in recent months. This is good news for the Taiwanese economy, which sits right at the centre of the global AI boom. Yet it is also a source of concentration risk, should AI-related goods demand collapse or substantial alternative supply emerge elsewhere. A similar story applies to South Korea, through its role in supplying high-end memory chips.

260713T5.jpg

**Data centres, energy, and water**
Finally, rapidly advancing AI promises major productivity gains and broad improvements to daily life. Yet AI infrastructure rests on resource-intensive inputs: the energy needed for data centre compute, and the water needed to cool those centres. Both may deprive real people of the very resources they need to survive. One recent hotspot is Malaysia, which has courted a wave of foreign direct investment to expand its data centre footprint in the state of Johor. These capital inflows are welcome, and have lifted state-level growth through the construction sector (chart 6). But they have also raised concerns about straining local grids and water supplies, possibly leaving less for residents. Among estimates, a recent one puts data centres at around 40% of Johor's electricity demand by 2035. That is pressuring the state to expand generation capacity and grid access to match the data centre pipeline already in place. Its neighbour Singapore faced similar strains earlier, and has since repositioned itself as a hub for the most advanced and efficient data centres, partly because of its severe land constraints. 

260713T6.jpg

Asia

Economic Letter from Asia: The AI Underbelly

Robert Brusca

260714E.jpg

Industrial output in Norway fell by 1% in May after rising by 0.6 in April and falling by 1.1% in March. The seesaw act for output continues. Over broader horizons, however, output is falling. It falls by 0.1% over 12 months, falls at a 1.1% annual rate over six months, and falls at a 6.2% annual rate over three months, giving us a clear sequential trend toward falling and decelerating output. Utilities output has chaotic trends, as do mining and quarrying; however, manufacturing shows a clear trend toward output acceleration, with a 2.1% output increase over 12 months, a 2.6% annual rate rise over six months, and a 9% annual rate increase over three months.

Manufacturing sectors show consumer goods output increasing in May, also showing secular acceleration from 12 months to six months to three months. Durable goods, however, are the fly in the ointment, with output up 2.2% over 12 months, accelerating over six months, and then dropping at a 20.4% annual rate over three months. However, consumer nondurables show growth and acceleration, with a 12-month gain of 1.8%, rising to a 3.6% annual rate increase over six months and a 10.9% annual rate increase over three months. Intermediate goods output trends return to more difficult times and show declines over 12 months, six months, and three months, but not a clear path of deceleration. Capital goods output is up 5.4% over 12 months and at an 8.5% annual rate over three months, but there is an intervening soft spot with output up at only a 3.4% annual rate over six months.

Against this background, inflation in Norway showed solid increases in May, rising by 0.2% overall and by 0.3% for the core HICP. However, sequentially inflation gains 3% over 12 months, rises at a 3.8% annual rate over six months, and then backs down to a 1.2% annual rate over three months. The core HICP is steadier, with a 3.4% gain over 12 months, rising to a 3.8% annual rate over six months, and then backing down to 3.2% at an annual rate over three months. That's a set of growth rates that are more stable than either accelerating or decelerating.

In the quarter-to-date (QTD) basis, industrial production is falling 4.6%; this is two months into the second quarter. On the other hand, manufacturing output is rising QTD at a 4.9% annual rate, with consumer nondurables showing strong positive growth along with intermediate goods output. There is a solid gain of 3.1% at an annual rate from capital goods. The QTD inflation trends remain somewhat mixed, with a weak headline showing a 1.6% annual rate, against a core HICP at a 3.4% annual rate rise, the latter gain being well in step with its sequential results.

The far right-hand column compares industrial production over the broad period from just before COVID (in January 2020) looking at the ratio of the level of output in May 2026 to its index value in January 2020. Remember that IP data are inflation-adjusted, so these are real data. Over this span, industrial production excluding construction is up by approximately 10%, with utilities output up at about 21%, mining and quarrying up about 5%, and manufacturing up a little more than 7%. This is a 5½-year period. Consumer goods output is up by 2.7%, led by consumer nondurables which rise 4.1% on the period and against durable goods output where there is a decline of about 13% on that timeline. Intermediate goods output drops slightly on the timeline by less than half a percentage point, while capital goods output is up at a solid and strong 23% gain. Looking at prices over the same period, the headline HICP is higher by 27% while the core is higher by 24%.

The weakened output shows the stresses and strains of the period, with weak gains in place over the last 5½ years and with the consumer showing considerable wear and tear, leaving consumer goods output lower on balance over this 5½-year span. It hasn't been such a bad time for capital goods, where output rose by 23% over the period. Inflation got out-of-the-box and grew quite strongly. The headline HICP grew by 27% since January 2020, a duration of time during which, sticking to its target, would have implied a gain in the price level of only 11.5%.

**Ongoing overshooting**
Even now central banks are trying to decide how to come to grips with the inflation pressures from that. Pressures continue to linger and threaten the economies. Of course, there are some new factors in place, but that's the nature of inflation: if it's not one thing, it's something else. And failing to respond to the one thing means that you're going to get hit even worse when it becomes something else. This is the lesson the central banks haven't learned during this period. 

**Have central banks learned their lesson?**
Noting that inflation is over target and then forecasting that it's going to come back down to target over some period ahead puts the inflation performance at risk to whatever happens between now and the end of that period ‘ahead.’ If that forecast isn't perfectly right and if there's something else that disturbs the path of prices, what will happen is that an inflation that is already over the top of the target will push even farther over the top of the target and the dilemma faced by the central bank will become even worse. This is why kicking the can down the road generally is not a very good strategy, but it's one that virtually all the central banks pursued in the wake of COVID. So, will central bankers come to see inflation that is here and now as a here-and-now problem to be addressed here and now, or as a candidate for tomorrow land? The ECB seems to be changing, and the Fed has formed task forces. What about Norway and the rest of the world? Norway did push its target rate up as the ECB hiked. But what is its plan?

260713.jpg

Norway

Norwegian IP Struggles, but Manufacturing Shows Some Strength

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Manufacturing output in the countries of the European Monetary Union continues to underperform. The median change for the 11 countries reporting on the table is a 0.5% decline in May following a 0.3% increase in April. However, only 41.7% of the reporters are accelerating in May, compared to 25% in April, although in March over half of the reporters had showed some acceleration, with output at 61.5%.

In May, of these eleven early reporters, seven showed month-to-month declines in output. This compares to four showing declines in April and four showing declines in March.

**Sequential trends**
Over 12 months, output is declining in four of these eleven countries: Germany, Luxembourg, Ireland, and Portugal. Over six months, output declines in five of the eleven countries. Over three months, output declines in four of the eleven countries. Over these broader sequential periods, output is increasing in most cases; only one country, Ireland, shows consistent declines in output over three months, six months, and 12 months. However, among EMU countries, only Italy shows output expanding on all three timelines, although Sweden, an EU member country, also shows output increasing in all three periods.

Amid the output weakness in May, the quarter-to-date calculation for industrial production growth is also broadly weak. In May, seven of the eleven quarter-to-date changes in industrial production are negative. Positive results, increases in the quarter-to-date, are registered by Germany, Luxembourg, Greece, and Portugal.

The ranking of the year-over-year growth rates shows seven countries with output growth rate rankings below 50%, marking them as below their respective medians. The comparisons for output growth are taken back to 2006, a period of about 20 years.

Four EMU countries rank above their twenty-year medians: France, Italy, Luxembourg, and Greece.

The snapshot of industry in the monetary union is consistent, showing little momentum, little strength, and relatively low rankings for current growth rates; only a minority of reporters show an acceleration in growth in May compared to April. With the situation in the Strait of Hormuz deteriorating again, the outlook for industrial production has to remain guarded.

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Europe

Industrial Sector Remains Under Pressure in EMU

Andrew Cates

**Growth Surprises Continue to Underpin Equity Resilience**
Global equity markets have proved remarkably resilient in recent weeks, shrugging off intermittent bouts of geopolitical and policy uncertainty to grind higher. Chart 1 below helps explain why: it tracks the relationship between global growth-versus-inflation surprises and world equity markets, and on that measure the recent run of global growth data has continued to surprise on the upside relative to inflation outturns — a combination that has historically been supportive for risk assets. Whether that resilience persists will depend on whether the growth-surprise advantage evident in the chart below can be sustained in the face of the inflationary pressures explored below.

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**PMIs Confirm a Broadly Solid Global Expansion**
This week's final composite PMI readings for June reinforced the broader impression of resilient global growth. As chart 2 below shows, most major economies posted readings comfortably in expansionary territory, with India continuing to lead the pack and the US not far behind. Even the laggards in the sample are hovering close to the expansion threshold rather than falling decisively below it, suggesting stabilisation rather than outright contraction (and with the UK a notable exception).

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**Inflation Surprises Are Creeping Back, and Bond Yields Are Taking Notice**
The US growth picture painted by Haver's surprise indices broadly echoes the message from the global PMI data. Chart 3 below shows the combined growth-and-inflation surprise index drifting higher this week, and closer inspection suggests growth is doing most of that work, with activity data continuing to outperform expectations. That is, on the face of it, good news. But it has not stopped bond markets from taking notice: short-dated Treasury yields have remained elevated in recent weeks, as stronger growth keeps alive the possibility that the Federal Reserve holds rates higher for longer or even lifts them in coming weeks.

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**Supply Chains Are Tightening** 
Latest data show that global supply chain pressures tightened by less in June than they had the month before, likely reflecting the easing of Middle East tensions through much of the period. Chart 4 below shows that pressures troughed in the middle of last year and have been building gradually since, though June's slower pace of tightening suggests that easing had started to feed through. Still, today's flare-up threatens to undo that improvement, particularly if it affects shipping routes or energy flows through the region once again.

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**Extreme Weather: An Old Supply-Side Risk Returns**
Geopolitics is not the only source of supply-side risk currently in play. Large parts of Europe have been gripped this week by another intense and prolonged heatwave, with temperatures in several major cities running well above seasonal norms. Extreme heat of this kind carries real economic costs: it depresses labour productivity, particularly in outdoor and manufacturing-adjacent sectors, strains electricity grids as air-conditioning demand spikes, and can disrupt agricultural output and river-based transport when water levels fall. Episodes like this have become more frequent in recent years, and while any single heatwave rarely shifts the macro picture on its own, the cumulative effect of more frequent and more severe weather events could start showing up in productivity and inflation data across the advanced economies. It is a reminder that the supply side of the global economy faces structural as well as cyclical challenges, and that climate-related disruption deserves a permanent place alongside geopolitics and demographics in any assessment of medium-term inflation risk.

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**AI Investment: The Other Side of the Supply Equation**
Set against these supply-side headwinds is a genuinely positive structural development: the extraordinary scale of private investment now flowing into artificial intelligence. Chart 6 below shows just how sharply that investment has grown in recent years, reaching a fresh high last year. If even a fraction of that investment translates into genuine productivity gains, it could provide a meaningful long-run offset to the energy, climate and geopolitical constraints highlighted elsewhere in this week's charts. The scale of the bet now being placed on AI is large enough that it is beginning to show up in aggregate investment and capital expenditure data across the advanced economies, and it is likely to remain one of the defining structural themes shaping the global growth outlook over the remainder of this decade.

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Global markets head into this week’s closing stages digesting a mixed set of signals. Last week's US non-farm payrolls report undershot expectations, adding to questions about the durability of the US labour market even as broader activity data have continued to hold up well. Compounding that picture, news broke today of renewed instability in the Middle East, reintroducing a geopolitical risk premium into markets just as investors had begun to look past it. Global equity markets have nonetheless remained resilient, continuing to track the broadly encouraging tone of incoming activity data (chart 1). That resilience was reinforced by a solid set of global PMIs across most major economies over the past few days (chart 2). Haver's surprise indices tell a similar story of positive growth momentum in the US, but with an important caveat: incoming inflation data have also been surprising to the upside, driven largely by higher oil prices (chart 3). These inflation risks could persist moreover, as global supply chain pressures have picked up in recent months and today's flare-up in the Middle East threatens to add further strain (chart 4). The world economy remains vulnerable to other supply-side shocks too, such as the extreme heat gripping much of Europe this week (chart 5). Still, on the other side of the ledger the enormous scale of investment now flowing into artificial intelligence could be a genuine source of supply-side potential (chart 6).

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Charts of the Week: Growth Holds Firm

Winnie Tapasanun

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Existing home sales unexpectedly fell 2.4% m/m (+2.8% y/y) to 4.09 million units (SAAR) in June, the first monthly decline since March, following an upwardly revised 3.7% increase to 4.19 million in May (previously +3.2%; 4.17 mil.), according to the National Association of Realtors (NAR). The Action Economics Forecast Survey had expected June sales of 4.20 million units. Sales remained 36.4% below a high of 6.43 million in January 2022 and 38.0% below a peak of 6.60 million in January 2021. The June decline coincided with a rise in the average 30-year fixed mortgage rate to 6.49% in June, the highest since August 2025, after increasing to 6.44% in May, according to Freddie Mac. The sales figures are based on closings of sales contracts signed over the past couple of months.

Existing single-family home sales fell 2.4% (+3.3% y/y) to 3.73 million units in June, the first m/m fall in three months, following a 4.1% gain to 3.82 million in May, remaining 34.6% below a high of 5.70 million in January 2022. Sales of condos and co-ops decreased 2.7% (-2.7% y/y) to 360,000 in June, the lowest level since May 2025, after being unchanged m/m for the third successive month at 370,000, remaining 50.7% below a high of 730,000 in January 2022.

Regionally, June existing home sales declined m/m in all regions except the Northeast. Sales in the South dropped 3.6% (+3.8% y/y) to 1.89 million in June, a three-month low, after a 3.2% rise in May, and sales in the Midwest slid 3.0% (+2.1% y/y) to 980,000 following a 7.4% May advance; both posted the first m/m decrease in three months. Sales in the West fell 1.3% (+2.8% y/y) to 740,000, the lowest level since January, after being flat m/m at 750,000 in May. In contrast, sales in the Northeast increased 2.1% (0.0% y/y) to 480,000 after a 4.4% May gain. Notably, the South remained the dominant region, accounting for 46.2% of total U.S. existing home sales.

The median price of all existing homes (NSA) rose 2.2% (1.8% y/y) to $440,600 in June, the fifth consecutive m/m rise, on top of an upwardly revised 3.3% increase to $431,200 in May ($429,300 previously). Prices were 22.1% above a low of $360,800 in January 2023. The median price of an existing single-family home climbed 2.3% (1.8% y/y) to $446,400 in June, the fifth straight m/m increase, after a 3.4% advance to $436,400 in May. The median price of condos and co-ops, up for the sixth time in seven months, grew 0.6% (1.6% y/y) to $380,000 following a 1.0% May gain to $377,800. Regionally, overall prices rose m/m and y/y in June in the Northeast (+5.6%; +3.9% y/y), Midwest (+2.1%; +2.7% y/y), South (+1.0%; +0.9% y/y), and West (+0.8%; +0.9% y/y). All these price series were at their record highs.

Inventories of homes for sale fell m/m in June for the first time since December. The number of existing homes for sale (NSA) declined 0.6% (+1.3% y/y) to 1.56 million units following an upwardly revised 4.7% May rise to 1.57 million (the highest level since November 2019). The supply of homes on the market at the current selling rate (NSA) increased to 4.6 months in June from 4.5 months in May and April, matching the highest level since August 2025. A record low in supply of 1.6 months was in January 2022.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

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- June sales -2.4% m/m to 4.09 mil., first drop in three mths.; +2.8% y/y, third straight y/y rise.
- Sales m/m down in the South (-3.6%), Midwest (-3.0%), and West (-1.3%); up in the Northeast (+2.1%).
- Sales y/y up in all regions except the Northeast w/ a flat reading.
- Median sales price +2.2% (+1.8% y/y) to $440,600, a record high.
- Unsold inventory -0.6% (+1.3% y/y) to 1.56 mil. units, first m/m decline since Dec.; 4.6 months' supply, highest since Aug. ’25.