Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081022c.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s consumer sentiment trend and retail sales trends
continue to show each other the way lower. While some speak
disparagingly about consumer surveys, it is clear that the consumer&#8217;s
habits are bang in line with what the consumer is telling various
surveyors. 
 

In the quarter to date (two-months into Q3), nominal sales are
still rising. But on the more important inflation-adjusted basis sales
are dropping at a -3.4% annual rate - that&#8217;s quite weak. 
 

Nominal sales trends have bee negative over three, six and
twelve month horizons. In August weakness seems to have hit all the
major categories together. While July showed a nominal sales gain, it
is now clear that it was not heralding a period of better growth ahead
That much has become clear in August. 
 

Italy remains a trouble EMU economy, led by consumer sector
weakness. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col"> Italy Retail Sales Growth</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">mo/mo %</td>
<td colspan="4">At annual rates</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Retail Trade</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>-1.1%</td>
<td>-1.5%</td>
<td>-0.7%</td>
<td>0.7%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>-0.3%</td>
<td>0.6%</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>0.3%</td>
<td>0.9%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Clothing&amp;Furniture</td>
<td>-6.1%</td>
<td>6.3%</td>
<td>-3.0%</td>
<td>-12.2%</td>
<td>-10.7%</td>
<td>-3.7%</td>
<td>-0.3%</td>
<td>12.8%</td>
</tr>
<tr>
<td class="firstcol">Total Real Retail</td>
<td>-0.7%</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>-5.1%</td>
<td>-5.4%</td>
<td>-4.6%</td>
<td>-0.9%</td>
<td>-3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Retial Ex auto</td>
<td>-0.7%</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>-5.1%</td>
<td>-5.4%</td>
<td>-4.6%</td>
<td>-0.9%</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

Italy’s consumer sentiment trend and retail sales trends continue to show each other the way lower. While some speak disparagingly about consumer surveys, it is clear that the consumer’s habits are bang in line with what the consumer [...]

Italy’s Consumer Confidence and Retail Sales Trends Continue to Drop

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081022a.jpg" width="353">
The total number of mortgage applications fell 16.6% last week from the prior period to their lowest level since late-2000, according to the Mortgage Bankers Association. The decline pulled the October average 17.6% below September during which there had been a brief upturn in applications.
Applications for a mortgage to purchase a home tumbled 10.9% w/w and the decline pulled the month-to-date average 13.5% below September. Last month, purchase applications rose 8.7% from August during which these applications fell 6.1% m/m (-27.0% y/y). The August decline was accompanied by a 2.4% m/m decline (-12.7% y/y) in new plus existing single family home sales.
During the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales. Figures covering sales of existing single-family home will be available this Friday while single-family home sales will be published early next week.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081022b.jpg" width="353">
Applications to refinance a home mortgage tumbled 23.5% last week and the decline lowered applications so far this month 22.3% below the September average. During September, applications to refinance had risen 61.9% from August as 15-year mortgage rates fell briefly to 5.54%.
The effective interest rate on a conventional 15-year mortgage rose last week to 6.33% following an average of 6.01% last month. For a 30-year mortgage, rates fell w/w to 6.50%. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10-year Treasury securities. For an adjustable rate 1-Year mortgage the rate rose to 7.07% from 6.70% averaged last month.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
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 covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
The figures for weekly mortgage applications are available in Haver&#39;s USWEEKLY database.
Strategic Risk Management in an Interconnected World is the title of a speech given Monday by Fed Governor Randall S. Kroszner and it can be found <a href="http://http://www.federalreserve.gov/newsevents/speech/kroszner20081020a.htm">here</a>.
Unprecedented Times in our Economy* are remarks offered last week by Chicago Fed President Charles L. Evans and they are available <a href="http://www.chicagofed.org/news_room/speeches/fond%20du%20lac_Speech.cfm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">10/17/08</th>
<th scope="col">10/10/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>408.1</td>
<td>489.3</td>
<td>-37.8%</td>
<td>652.6</td>
<td>584.2</td>
<td>708.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>279.3</td>
<td>313.5</td>
<td>-32.8%</td>
<td>424.9</td>
<td>406.9</td>
<td>470.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,158.8</td>
<td>1,514.2</td>
<td>-43.7%</td>
<td>1,997.9</td>
<td>1,634.0</td>
<td>2,092.3</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications fell 16.6% last week from the prior period to their lowest level since late-2000, according to the Mortgage Bankers Association. The decline pulled the October average 17.6% below September [...]

U.S. Mortgage Applications Lowest Since 2000

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081022a.jpg" align="left" border="0" height="265" width="353">
The total number of mortgage applications fell 16.6% last week
from the prior period to their lowest level since late-2000, according
to the Mortgage Bankers Association. The decline pulled the October
average 17.6% below September during which there had been a brief
upturn in applications.
Applications for a mortgage to purchase a home tumbled 10.9%
w/w and the decline pulled the month-to-date average 13.5% below
September. Last month, purchase applications rose 8.7% from August
during which these applications fell 6.1% m/m (-27.0% y/y). The August
decline was accompanied by a 2.4% m/m decline (-12.7% y/y) in new plus
existing single family home sales.
During the last ten years there has been a 61% correlation
between the y/y change in purchase applications and the change in new
plus existing single family home sales. Figures covering sales of
existing single-family home will be available this Friday while
single-family home sales will be published early next week.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081022b.jpg" align="right" border="0" height="265" width="353">
Applications to refinance a home mortgage tumbled 23.5% last
week and the decline lowered applications so far this month 22.3% below
the September average. During September, applications to refinance had
risen 61.9% from August as 15-year mortgage rates fell briefly to 5.54%.
The effective interest rate on a conventional 15-year mortgage
rose last week to 6.33% following an average of 6.01% last month. For a
30-year mortgage, rates fell w/w to 6.50%. Interest rates on 15 and 30
year mortgages are closely correlated (&gt;90%) with the rate on
10-year Treasury securities. For an adjustable rate 1-Year mortgage the
rate rose to 7.07% from 6.70% averaged last month.
During the last ten years there has been a (negative) 79%
correlation between the level of applications for purchase and the
effective interest rate on a 30-year mortgage.
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 covers roughly 50% of
all U.S. residential mortgage applications processed each week by
mortgage banks, commercial banks and thrifts. Visit the Mortgage
Bankers Association site <a href="http://www.mbaa.org">here</a>.
The figures for weekly mortgage applications are available in
Haver's USWEEKLY database.
Strategic Risk Management in an Interconnected World is
the title of a speech given Monday by Fed Governor Randall S. Kroszner
and it can be found <a href="%7Fhttp:/www.federalreserve.gov/newsevents/speech/kroszner20081020a.htm">here</a>.
Unprecedented Times in our Economy* are
remarks offered last week by Chicago Fed President Charles L. Evans and
they are available <a href="http://www.chicagofed.org/news_room/speeches/fond%20du%20lac_Speech.cfm">here</a>. 


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">BA
Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">10/17/08</th>
<th scope="col">10/10/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>408.1</td>
<td>489.3</td>
<td>-37.8%</td>
<td>652.6</td>
<td>584.2</td>
<td>708.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>279.3</td>
<td>313.5</td>
<td>-32.8%</td>
<td>424.9</td>
<td>406.9</td>
<td>470.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,158.8</td>
<td>1,514.2</td>
<td>-43.7%</td>
<td>1,997.9</td>
<td>1,634.0</td>
<td>2,092.3</td>
</tr>
</tbody>
</table>
Italy&#8217;s Consumer Confidence and
Retail Sales Trends Continue to Drop 
by <a href="/comment/Brusca.html">Robert
Brusca</a> October 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081022c.jpg" align="left" border="0" height="265" width="353">
Italy&#8217;s consumer sentiment trend and retail sales trends
continue to show each other the way lower. While some speak
disparagingly about consumer surveys, it is clear that the consumer&#8217;s
habits are bang in line with what the consumer is telling various
surveyors. 
 

In the quarter to date (two-months into Q3), nominal sales are
still rising. But on the more important inflation-adjusted basis sales
are dropping at a -3.4% annual rate - that&#8217;s quite weak. 
 

Nominal sales trends have bee negative over three, six and
twelve month horizons. In August weakness seems to have hit all the
major categories together. While July showed a nominal sales gain, it
is now clear that it was not heralding a period of better growth ahead
That much has become clear in August. 
 

Italy remains a trouble EMU economy, led by consumer sector
weakness. 


<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col"> Italy
Retail Sales Growth</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">mo/mo %</td>
<td colspan="4">At annual rates</td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Nominal</td>
<td>Aug-08</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>3-MO</td>
<td>6-MO</td>
<td>12-MO</td>
<td>YrAgo</td>
<td>Q-2-Date</td>
</tr>
<tr>
<td class="firstcol">Retail Trade</td>
<td>-0.5%</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>-1.1%</td>
<td>-1.5%</td>
<td>-0.7%</td>
<td>0.7%</td>
<td>0.9%</td>
</tr>
<tr>
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>-0.3%</td>
<td>0.6%</td>
<td>-0.1%</td>
<td>1.0%</td>
<td>0.3%</td>
<td>0.9%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol">Clothing&amp;Furniture</td>
<td>-6.1%</td>
<td>6.3%</td>
<td>-3.0%</td>
<td>-12.2%</td>
<td>-10.7%</td>
<td>-3.7%</td>
<td>-0.3%</td>
<td>12.8%</td>
</tr>
<tr>
<td class="firstcol">Total Real Retail</td>
<td>-0.7%</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>-5.1%</td>
<td>-5.4%</td>
<td>-4.6%</td>
<td>-0.9%</td>
<td>-3.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Real</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Retial Ex auto</td>
<td>-0.7%</td>
<td>0.3%</td>
<td>-0.9%</td>
<td>-5.1%</td>
<td>-5.4%</td>
<td>-4.6%</td>
<td>-0.9%</td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
</body></html>

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021e.jpg" width="353">
The Confederation of Business Industry (CBI) released the results of its latest surveys of industrial trends. The quarterly survey gathers the opinions of manufacturers on a number of trends--the general business outlook, trends in their own output, orders, including foreign, capital spending, employment, prices and inventories. The monthly survey updates the opinions on trends in orders, inventories, prices and output--past and expected.
The latest quarterly survey shows that only 4% of the respondents were more optimistic about the general business situation than they had been in the previous survey, while 64% were more pessimistic, resulting in a -60 for the quarter. This was the most pessimistic reading of business confidence measure since the third quarter of 1980 when the excess of pessimists was 70%. The first chart shows the history of the CBI&#39;s confidence measure.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021f.jpg" width="353">
Most of the components of the survey showed low points not seen for some time. For example, 31% more of the respondents expected output over the next three months to be lower than those expecting it to be higher. It is necessary to go back to the fourth quarter of 1980 to find as many pessimists on the outlook. A few of the components are shown in the table below together with the date when a comparable figure occurred.
Ian McCafferty, Chief Economic Adviser of CBI remarked that &quot;.....the sharp falls in orders and output show that the slowdown in the UK economy is now spreading to sectors previously resilient to the weakness in the banking and housing sectors. It is also of serious concern that constraints on capital now appear to be affecting manufacturers, in a way that had not been the case earlier.&quot; Indeed, there were spikes in the current quarter in the percentage of respondents who said credit or finance might be a factor in their negative appraisal of output, orders and capital spending, as can be seen in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UNITED KINGDOM CBI INDUSTRIAL TRENDS SURVEY&nbsp;</th>
<th scope="col">Q4&nbsp; 08</th>
<th scope="col">Q3&nbsp;&nbsp;&nbsp; 08&nbsp;</th>
<th scope="col">Q2&nbsp; 08&nbsp;</th>
<th scope="col">Q1&nbsp; 08&nbsp;</th>
<th scope="col">PRE- VIOUS&nbsp;</th>
<th scope="col">DATE&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output over next 3 months</td>
<td>-31</td>
<td>-7</td>
<td>0</td>
<td>8</td>
<td>-31</td>
<td>1980:4</td>
</tr>
<tr>
<td class="firstcol">Capital Spending Buildings</td>
<td>-44</td>
<td>-24</td>
<td>-21</td>
<td>-21</td>
<td>-49</td>
<td>1996:4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Capital Spending Plant &amp; Equipment</td>
<td>-38</td>
<td>-24</td>
<td>-18</td>
<td>-12</td>
<td>-46</td>
<td>1980:4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Domestic Orders</td>
<td>-42</td>
<td>-21</td>
<td>-9</td>
<td>-3</td>
<td>-42</td>
<td>1991:1</td>
</tr>
<tr class="odd">
<td class="firstcol">Export Orders</td>
<td>-21</td>
<td>-8</td>
<td>5</td>
<td>0</td>
<td>-34</td>
<td>2001:4</td>
</tr>
</tbody>
</table>
</body>
</html>

The Confederation of Business Industry (CBI) released the results of its latest surveys of industrial trends. The quarterly survey gathers the opinions of manufacturers on a number of trends--the general business outlook, trends in [...]

The Global Financial Crisis Hits British Industry

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021d.jpg" width="353">
According to the International Council of Shopping Centers, chain store sales fell 1.6% last week. The decline more than reversed the gains of the prior two weeks. The level of sales so far October were 1.0% below the September average which fell 1.9% from August.
The level of sales during the latest week was near the lowest since December of last year.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-Goldman Sachs fell 0.2% (-4.8% y/y).
The chain store sales figures are available in Haver&#39;s SURVEYW database.

<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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">10/18/08</th>
<th scope="col">10/11/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>477.0</td>
<td>484.7</td>
<td>0.9%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

According to the International Council of Shopping Centers, chain store sales fell 1.6% last week. The decline more than reversed the gains of the prior two weeks. The level of sales so far October were 1.0% below the September [...]

U.S. Chain Store Sales Fell

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021c.jpg" width="353">
The National Activity Index (CFNAI) from the Chicago Federal Reserve Bank for September moved deeper into recession territory. The reading of -2.57 was the lowest since early during the 1981-82 recession.The current index level was then associated with -6.4% (AR) growth in real GDP during 1Q 1982.
The three-month moving average of the index also fell to -1.78 from -1.18 during August. The latest was its lowest since the last recession, early in 1991.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_october2008.pdf">here</a> and the historical data are available in Haver&#39;s SURVEYS database.
The production and income categories made the largest negative contribution to the total index&#39;s decline during September, though each of the component categories added a negative influence.
Inflationary pressure also was indicated to be low for the coming year with price index at it&#39;s lowest since 1990.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index fell. The August index level reversed its recent improvement and fell to the lowest level since 2003. A decline in the auto sector component of the series led the weakness.
Revisiting Useful Approaches to Data-Rich Macroeconomic Forecasting from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr327.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-2.57</td>
<td>-1.61</td>
<td>-0.30</td>
<td>-0.43</td>
<td>-0.03</td>
<td>0.27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-1.78</td>
<td>-1.18</td>
<td>-0.32</td>
<td>--</td>
<td>--</td>
<td>&nbsp;--</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Activity Index (CFNAI) from the Chicago Federal Reserve Bank for September moved deeper into recession territory. The reading of -2.57 was the lowest since early during the 1981-82 recession.The current index level was [...]

Chicago Fed Index Fell Deeper Into Negative Territory

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021a.jpg" width="353">
For the first time since February of this year, the retail price for a gallon of regular gasoline fell below $3.00 per gallon. At $2.91, according to the U.S. Department of Energy survey, the price was the lowest since October of 2007. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.97 per gallon.
The spot market price for a gallon of regular gasoline during the last two days reversed some of its earlier weakness and rose to $1.92 after touching $1.78 last Thursday. In futures trading the November contract closed at $1.72 per gallon.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021b.jpg" width="353">
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.
According to the U.S. Department of Energy, the demand for gasoline fell 4.8% during the last four weeks versus the same four weeks last year. The y/y decline was the largest since late 1995.
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell sharply last week to an average $75.21 per barrel, down by nearly one half from the high in July of $145.66. In futures trading, the two-month price for crude oil fell yesterday to $74.39 per barrel.
Last week prices for natural gas fell to their lowest level since August of last year. At an average $6.67 per mmbtu prices were down 6.6% year-to-year. The decline stabilized yesterday and prices rose to $6.99 per mmbtu. The high for natural gas prices was in early-July at $13.19/mmbtu.

<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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">10/20/08</th>
<th scope="col">10/13/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.91</td>
<td>3.15</td>
<td>3.2%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>75.21</td>
<td>86.23</td>
<td>-14.8%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
</html>

For the first time since February of this year, the retail price for a gallon of regular gasoline fell below $3.00 per gallon. At $2.91, according to the U.S. Department of Energy survey, the price was the lowest since October of [...]

U.S. Gasoline Prices Below $3.00

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021a.jpg" width="353">
For the first time since February of this year, the retail price for a gallon of regular gasoline fell below $3.00 per gallon. At $2.91, according to the U.S. Department of Energy survey, the price was the lowest since October of 2007. The latest decline was accompanied by a drop in the average price for all grades of gasoline to $2.97 per gallon.
The spot market price for a gallon of regular gasoline during the last two days reversed some of its earlier weakness and rose to $1.92 after touching $1.78 last Thursday. In futures trading the November contract closed at $1.72 per gallon.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021b.jpg" width="353">
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database. Daily prices are in the DAILY database.
According to the U.S. Department of Energy, the demand for gasoline fell 4.8% during the last four weeks versus the same four weeks last year. The y/y decline was the largest since late 1995.
These DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell sharply last week to an average $75.21 per barrel, down by nearly one half from the high in July of $145.66. In futures trading, the two-month price for crude oil fell yesterday to $74.39 per barrel.
Last week prices for natural gas fell to their lowest level since August of last year. At an average $6.67 per mmbtu prices were down 6.6% year-to-year. The decline stabilized yesterday and prices rose to $6.99 per mmbtu. The high for natural gas prices was in early-July at $13.19/mmbtu.

<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/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">10/20/08</th>
<th scope="col">10/13/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>2.91</td>
<td>3.15</td>
<td>3.2%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>75.21</td>
<td>86.23</td>
<td>-14.8%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
Chicago Fed Index Fell Deeper Into Negative Territory 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 21, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021c.jpg" width="353">
The National Activity Index (CFNAI) from the Chicago Federal Reserve Bank for September moved deeper into recession territory. The reading of -2.57 was the lowest since early during the 1981-82 recession.The current index level was then associated with -6.4% (AR) growth in real GDP during 1Q 1982.
The three-month moving average of the index also fell to -1.78 from -1.18 during August. The latest was its lowest since the last recession, early in 1991.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_october2008.pdf">here</a> and the historical data are available in Haver&#39;s SURVEYS database.
The production and income categories made the largest negative contribution to the total index&#39;s decline during September, though each of the component categories added a negative influence.
Inflationary pressure also was indicated to be low for the coming year with price index at it&#39;s lowest since 1990.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
In a separate survey, the Chicago Fed indicated that its Midwest manufacturing index fell. The August index level reversed its recent improvement and fell to the lowest level since 2003. A decline in the auto sector component of the series led the weakness.
Revisiting Useful Approaches to Data-Rich Macroeconomic Forecasting from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr327.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">September</th>
<th scope="col">August</th>
<th scope="col">September &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-2.57</td>
<td>-1.61</td>
<td>-0.30</td>
<td>-0.43</td>
<td>-0.03</td>
<td>0.27</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-1.78</td>
<td>-1.18</td>
<td>-0.32</td>
<td>--</td>
<td>--</td>
<td>&nbsp;--</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Fell 
by <a href="/comment/Moeller.html">Tom Moeller</a> October 21, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021d.jpg" width="353">
According to the International Council of Shopping Centers, chain store sales fell 1.6% last week. The decline more than reversed the gains of the prior two weeks. The level of sales so far October were 1.0% below the September average which fell 1.9% from August.
The level of sales during the latest week was near the lowest since December of last year.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-Goldman Sachs retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
The leading indicator of chain store sales from ICSC-Goldman Sachs fell 0.2% (-4.8% y/y).
The chain store sales figures are available in Haver&#39;s SURVEYW database.

<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/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">10/18/08</th>
<th scope="col">10/11/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>477.0</td>
<td>484.7</td>
<td>0.9%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
The Global Financial Crisis Hits British Industry 
by <a href="/comment/Curley.html">Louise Curley</a> October 21, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021e.jpg" width="353">
The Confederation of Business Industry (CBI) released the results of its latest surveys of industrial trends. The quarterly survey gathers the opinions of manufacturers on a number of trends--the general business outlook, trends in their own output, orders, including foreign, capital spending, employment, prices and inventories. The monthly survey updates the opinions on trends in orders, inventories, prices and output--past and expected.
The latest quarterly survey shows that only 4% of the respondents were more optimistic about the general business situation than they had been in the previous survey, while 64% were more pessimistic, resulting in a -60 for the quarter. This was the most pessimistic reading of business confidence measure since the third quarter of 1980 when the excess of pessimists was 70%. The first chart shows the history of the CBI&#39;s confidence measure.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/081021f.jpg" width="353">
Most of the components of the survey showed low points not seen for some time. For example, 31% more of the respondents expected output over the next three months to be lower than those expecting it to be higher. It is necessary to go back to the fourth quarter of 1980 to find as many pessimists on the outlook. A few of the components are shown in the table below together with the date when a comparable figure occurred.
Ian McCafferty, Chief Economic Adviser of CBI remarked that &quot;.....the sharp falls in orders and output show that the slowdown in the UK economy is now spreading to sectors previously resilient to the weakness in the banking and housing sectors. It is also of serious concern that constraints on capital now appear to be affecting manufacturers, in a way that had not been the case earlier.&quot; Indeed, there were spikes in the current quarter in the percentage of respondents who said credit or finance might be a factor in their negative appraisal of output, orders and capital spending, as can be seen in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">UNITED KINGDOM CBI INDUSTRIAL TRENDS SURVEY&nbsp;</th>
<th scope="col">Q4&nbsp; 08</th>
<th scope="col">Q3&nbsp;&nbsp;&nbsp; 08&nbsp;</th>
<th scope="col">Q2&nbsp; 08&nbsp;</th>
<th scope="col">Q1&nbsp; 08&nbsp;</th>
<th scope="col">PRE- VIOUS&nbsp;</th>
<th scope="col">DATE&nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Output over next 3 months</td>
<td>-31</td>
<td>-7</td>
<td>0</td>
<td>8</td>
<td>-31</td>
<td>1980:4</td>
</tr>
<tr>
<td class="firstcol">Capital Spending Buildings</td>
<td>-44</td>
<td>-24</td>
<td>-21</td>
<td>-21</td>
<td>-49</td>
<td>1996:4</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Capital Spending Plant &amp; Equipment</td>
<td>-38</td>
<td>-24</td>
<td>-18</td>
<td>-12</td>
<td>-46</td>
<td>1980:4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;Domestic Orders</td>
<td>-42</td>
<td>-21</td>
<td>-9</td>
<td>-3</td>
<td>-42</td>
<td>1991:1</td>
</tr>
<tr class="odd">
<td class="firstcol">Export Orders</td>
<td>-21</td>
<td>-8</td>
<td>5</td>
<td>0</td>
<td>-34</td>
<td>2001:4</td>
</tr>
</tbody>
</table>


</html>

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

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

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

Heavy US manufacturing states underperforming while Sun Belt states outperforming

Rising long-term yields a global phenomenon

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250721C2.jpg

The **Industrial Materials Price Index** from the Foundation for International Business and Economic Research (FIBER) increased 0.6% (0.4% y/y) during the last four-week period after rising 1.6% in the prior four weeks.

**Miscellaneous** group prices increased 1.7% (9.7% y/y) in the latest four week period. The price of tallow (used in the soap industry) jumped 10.6% (15.7% y/y) in four weeks. Framing lumber prices gained 5.8% (37.6% y/y) but natural rubber prices fell 2.9% (+13.0% y/y) in four weeks.

Prices in the **Metals** group strengthened 1.4% (-2.9% y/y) over the most recent four weeks. Zinc prices jumped 4.0% (-4.6% y/y) and tin prices rose 2.7% (0.4% y/y). Aluminum prices increased 2.4% (8.4% y/y) over four weeks while steel scrap prices gained 1.8% (-11.2% y/y). Lead prices rose 0.4% (-8.7% y/y) and copper scrap prices fell 1.8% (+0.2% y/y) during the last four week period.

Prices in the **Textile** group edged 0.3% higher (1.6% y/y) during the last four weeks. Cotton prices rose 0.8% in that same period and 2.5% y/y. Burlap costs improved 2.0% in four weeks and 11.4% y/y.

**Crude Oil & Benzene** group prices weakened 2.4% (-13.8% y/y) in the latest four week period. The cost of West Texas Intermediate crude oil fell 9.2% to $67.27 per barrel and remained 18.0% lower y/y. It fell to a low of $58.50 per barrel in the second week of May. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, strengthened 6.2% (-31.7% y/y). Excluding crude oil, the industrial commodity price index rose 1.3% (1.6% y/y) during the last four weeks.

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

250721D2.jpg

250721B2.jpg

- Prices movement by category is mixed.
- Lumber & metals prices strengthen.
- Crude oil prices decline.

FIBER: Industrial Commodities Prices Continue to 	Rise in Latest Four Weeks

250718F5.jpg

250718G5.jpg

Total housing starts increased 4.6% (-0.5% y/y) in June to 1.321 million units (SAAR) after falling a little-revised 9.7% in May to 1.263 million, revised from 1.256 million, and rising 3.2% in April to 1.398 million, revised from 1.392, according to the U.S. Census Bureau. Total starts in June were 27.4% below their peak of 1.820 million units reached in April 2022. The Action Economics Forecast Survey expected 1.30 million starts in June.

Single-family starts in June fell 4.6% (-10.0% y/y) to 883,000 after declining 2.3% in May to 926,000, revised from 924,000, and holding steady at 948,000 in April, revised from 920,000. Multi-family starts rebounded 30.0% in June (26.6% y/y) to 438,000 after declining 25.1% in May to 337,000, revised from 332,000, and increasing 10.6% to 450,000 in April, revised from 472,000.

All of the increase in starts last month was due to a 73.3% surge (52.9% y/y) in the Northeast to 182,000 units, following a decline of 42.6% in May. Offsetting this increase, starts in the South weakened 0.7% (-9.0% y/y) to 674,000 after falling 9.0% in May. Starts in the West declined 1.4% (-1.7% y/y) to 286,000 after rising 22.4% in May. Housing starts in the Midwest declined 5.3% (+1.7% y/y) to 179,000 after falling 18.5% in May.

Building permits improved 0.2% (-4.4% y/y) last month to 1.397 million after falling 2.0% in May and declining 4.0% in April. Single-family permits fell 3.7% (-8.4% y/y) in June to 866,000 after weakening 2.6% in May. Multi-family permits rose 7.3% (+2.9% y/y) after easing 0.8% in May. Building permits fell 11.4% (-7.6% y/y) in the Northeast and in the West, permits fell 5.1% (-9.2% y/y). In the South, building permits rose 4.4% (-4.2% y/y), while in the Midwest, building permits held steady (+4.1% y/y).

The housing starts and building permits figures can be found in Haver’s **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Increase recovers half of prior month’s drop.
- Multi-family starts surge but single-family starts fall.
- Building permits rise negligibly after two months of decline.

U.S. Housing Starts Rebound in June

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No one will be critical of Japan’s efforts to free itself of its torpor into disinflation and deflation that it suffered for many years. The Bank of Japan struggled long and hard to remove the contraction in prices from its economy since falling prices can have a pernicious effect on growth and investment. Japan still faces challenges: it has a contracting population and faces dealing with tariff demands from the United States as negotiations on that front continue to drag and have become harder to settle than Japan had expected. Despite the current inflation overshoot, on data back to January 2011, Japan’s to-date inflation is only averaging 1%; that is still well below its 2% target and ample reason for the Bank of Japan to continue to move carefully to corral inflation especially if inflation has stopped accelerating – as it seems to have done. Against this background, we look at Japan’s CPI report.

**Current inflation: June**
Japan has dispatched deflation and currently faces an inflation problem. In June, the BOJ’s preferred gauge for the CPI excluding fresh foods & energy rose 0.4% month-to-month for the second month in a row; it rose by 0.2% in April. Japan’s headline inflation rate seems to have fallen into line A traditional ‘core reading’ excluding all food & energy flies under the BOJ’s target pace. But the BOJ’s preferred inflation gauge shows a 3.4% rise over 12 months and then gains at a pace of 3.7% over both six months and three months. All of those numbers are too hot to handle.

**Line-items**
Education costs in Japan are falling sharply and sequentially. Medical care costs are deescalating too. And while food & beverage prices continue to overshoot, 2% by a wide margin, the pace of total food & beverage inflation has been falling. No broad category has steadily accelerating inflation. But the BOJ’s preferred gauge of inflation, a specialized core measure excluding energy & fresh foods, sees inflation ramping up and staying high over three months and six months.

**Diffusion/breadth**
Among the eight major categories, year-on-year inflation has accelerated compared to where it was one-year ago in four of the eight. Inflation is above the 2% benchmark for four of eight categories as well.

**Acceleration or not...**
The chart on sequential inflation for the BOJ’s preferred core gauge shows that this measure has accelerated since August or December of last year and since then has more or less marked time oscillating without any clear trend.

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**BOJ policy and communication**
With interest rates having been elevated, this may be the peak for inflation rates in the wake of past interest rate increases- but the BOJ moves to-date have been more about communication and signaling than about actual restraint. These sorts of determinations about the impact of policy are always preliminary and never made clear until time passes and we are able to observe how the trend unfolds. Has inflation really peaked or not?

**BOJ actions**
The BOJ has raised its policy rate in very small and careful steps with an eye to not disrupt markets. Until early 2024, the BOJ has promoted a negative policy rate coupled with policy of yield curve control. However, in early 2024 the BOJ switched the -0.1% target rate to +0.1% and then moved it up to 0.25% just after mid-year 2024, then, early in 2025, it hiked it again to 0.5%. These have been cautious step-wise moves that after three hikes leave the official rate higher by less than one percentage point. But it also reversed an eight-year period of having a negative policy rate and one coupled with yield curve control policy. The BOJ’s careful steps may owe to some learning from the Federal Reserve’s SNAFU when it announced a coming end to its policy of QE for the first time creating a ‘taper tantum.’   

**The environment**
While Japan’s economy is growing, it has logged four quarters of negative growth in the past seven quarters (Q/Q). Year-on-year growth is positive for three quarters in a row after two in a row that logged declines. The economy is not strong, but it is growing in Q1; it grew by 1.7% over the past four quarters even though the Q/Q change was -0.2%, annualized.

**Summing up**
The BOJ is taking policy steps slowly with national elections hovering in the background, keeping monetary policy out of the way of election discussions. So far, we would regard the BOJ’s anti-inflation steps as being more about communicating an end to a period of super easy policy than as a frontal-attack on rising inflation. Given that, Japan’s prices declined for many months from August 2020 to March 2020; the BOJ is being careful to try to arrest inflation increases without pummeling prices and restarting deflation. From January 2011 to September 2022, Japan had only 12 (out of 141) months of inflation above 2% on its preferred gauge. It is now on a run of 33 (well 32 out of 33) months in a row with year-on-year inflation at or above 2%. It is understandable that the BOJ is walking on eggshells when it comes to hiking rates. If its inflation requires a monetary brake, the BOJ has more to do. If inflation merely needs to be ‘reminded’ that the period of excess is over, the recent flattening of inflation could be a sign that the message has been heard. A turn lower for inflation may still be achievable without draconian monetary steps.

Japan

Japan’s Ex-Fresh-Food Ex-Energy Inflation Runs Hot

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Total retail sales increased 0.6% (3.9% y/y) during June following an unrevised 0.9% May decline and an unrevised 0.1% April easing. A 0.1% uptick had been expected in the Action Economics Forecast Survey. Sales excluding autos rose 0.5% (3.3% y/y) following a 0.2% May decline, revised from -0.3%, and an unrevised no change in April. A 0.3% rise had been expected.

Sales in the retail control group, which excludes autos, building materials, gasoline and food services, rose 0.5% (4.0% y/y) in June after gaining 0.2% in May, revised from 0.4%, and minimally revised 0.2% April decline. These sales are used in the construction of personal consumption expenditures in the NIPA accounts. These sales rose 3.2% (AR) last quarter following a 3.7% Q1 rise.

Light vehicle sales increased 1.2% (6.5% y/y) in June after declines of 3.8% and 0.7% in the prior two months. This compares to a 0.3% June decline (2.6% y/y) in unit sales of motor vehicles last month which followed an 8.8% May slump. Gasoline station sales eased lightly (-4.4% y/y) during June after a 1.3% drop during May. Gasoline prices held steady (-7.6% y/y) last month. Sales of building materials & garden equipment rose 0.9% (-1.1% y/y) after a 2.7% decline during May.

Apparel store sales increased 0.9% (3.9% y/y) during June following a 0.3% gain. General merchandise store sales rose 0.5% (3.2% y/y) after they edged 0.1% higher in May, but department store sales declined 0.8% (-3.6% y/y) following a 0.3% dip. Nonstore retail sales increased 0.4% (4.5% y/y) following a 0.6% gain. Sporting goods & hobby shop sales improved 0.2% (1.6% y/y) after strengthening 1.0% in May. To the downside, furniture & home furnishings store sales slipped 0.1% (+4.5% y/y) after declining 0.6% in May. Electronics & appliance store sales also eased 0.1% (-0.2% y/y) following a 0.3% May decline.

In the nondiscretionary sales sector, food & beverage store sales rose 0.5% (2.5% y/y) last month following a 0.5% decline in May. Health & personal care store sales also rose 0.5% (8.3% y/y) after easing 0.1% in May.

Restaurant & drinking establishment sales increased 0.6% (6.6% y/y) in June following a 0.1% slip during May.

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

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- Increase led by surge in sales excluding autos.
- Nonauto sales also improve.
- Sales in the control group (used to estimate PCE) strengthen.

U.S. Retail Sales Rebound in June

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The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose 3.1% to 33 (-19.5% y/y) during July after falling 5.9% to 32 in June. The reading matched expectations in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 72% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present sales conditions in the housing market rose 2.9% (-21.7% y/y) to 36 following two straight months of decline. The index for conditions in the next six months increased 7.5% (-10.4% y/y) to 43 following three consecutive monthly declines.

Home builders reported that the traffic of prospective buyers reading fell 4.8% to 20 (-25.9% y/y), the lowest level since December 2024.

Amongst the regional indexes, the index for the Midwest gained 12.8% both m/m and y/y while the index for the West rose 13.6% (-32.4% y/y). The index for the Northeast improved 9.1% (2.1% y/y) but the index for the South fell 3.3% (-32.6% y/y).

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions asking builders to rate market conditions as "good," "fair," "poor" or "very high" to "very low." The figure is thus a diffusion index with numerical results six over 50 indicating a predominance of "good" readings. The weights assigned to the individual index components are .5920 for single-family detached sales, present time, .1358 for single-family detached sales, next months and .2722 for traffic of prospective buyers. The results are included in Haver’s **SURVEYS** database. The expectations figure is available in Haver's **MMSAMER** database.

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- Increase follows two months of decline.
- Two of three components rise.
- Regional indexes are mixed.

Economy in Brief: 2008

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