Robert Brusca

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The Bank of France continues to look for a 16% rebound in Q3 GDP even as evidence shows that the sharp gain from Q2 lows is losing momentum and may have reached a plateau of some sort. The virus is circulating in France again causing countermeasures to be put in place and restricting the evolution of France’s economic recovery.

French coronavirus is spreading and the outbreak is severe. Infections rose to 18,746 as of October 7 by far the largest count in France back to March when data originate. Over 32.5K people have died of the virus in France according to official French statistics. Paris and three adjacent neighborhoods are on the top covid-19 alert level.

Despite what appears to be a significant rebound in Q3, France is facing challenges.

The BOF survey for September shows a backing off of the survey indicator to 101 in September from 105.1 in August.

In terms of month-to-month changes, five of the components are stronger while four are weaker. Weakening on the month are foreign and total new orders, the change in finished inventories and capacity utilization. Strengthening or unchanged on the month was the output change, expected production, order books, and employment vs. last month; the outlook for employment was unchanged.

Looking at changes much more broadly back to February before the virus began taking its toll, the survey indicator is higher in September as is the output change and expected output change as well as the employment indicator vs. a month ago. Still lagging behind their February readings are order books, as well and new overall and foreign orders, capacity utilization is lower by 5.4 points, and expected employment is weaker.

Conditions remain mixed and that is true for the whole French economy as, like every other economy, it is experiencing very unequal sector pressures from the virus itself.

For now France is under pressure from a significant new outbreak of the virus. Economic momentum is being lost. Whether France is on a plateau or something worse is yet to be seen. But it has a significant outbreak of the virus to deal with as it also tries to stimulate growth and extend its economic recovery.


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The Bank of France continues to look for a 16% rebound in Q3 GDP even as evidence shows that the sharp gain from Q2 lows is losing momentum and may have reached a plateau of some sort. The virus is circulating in France again causing [...]

Bank of France Business Survey Rebounds Then Stalls

Tom Moeller

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 &bull; Nonrevolving borrowing edges higher.
 &bull; Credit card balances are being liquidated.

 Consumers recently grew cautious about using credit. Consumer
 credit outstanding declined $7.2 billion during August following two
 months of double-digit gain. So far this year, consumer credit has
 declined 10.3%. A $14.1 billion increase had been expected by the Action Economics Forecast Survey.

 Revolving consumer credit balances pulled back $9.4
 billion (-9.6% y/y) in August, down for the seventh month this year. Credit
 provided by depository institutions, 90% of the total and mostly credit
 card debt, declined 9.7% y/y. Credit union borrowing fell 4.7% y/y and finance company loans
 were off 21.4% y/y.

 Nonrevolving credit usage edged $2.2 billion higher
 (3.8% y/y) after double-digit increases in each of the prior three months. Federal
 government borrowing, which uses over 40% of
 nonrevolving credit, grew 5.6% y/y. Depository institution loans (29% of
 credit) gained a greatly lessened 3.1% y/y, down from 6.8% y/y growth as
 of December. Finance company borrowing
 (16.0% of loans) rose 2.3% y/y and credit union loans (14.0% of the total)
 increased 2.8% y/y.

 These Federal Reserve Board figures are break-adjusted
 and calculated by Haver Analytics. The breaks in the series in 2005, 2010
 and 2015 are the result of the incorporation of the Census and Survey of
 Finance Companies, as well as changes in the seasonal adjustment
 methodology.

 The consumer credit data are available in Haver's USECON
 database. The Action Economics figures are contained in the AS1REPNA database.

 Recent Economic Developments and the Challenges
 Ahead from Federal Reserve Chair Jerome H. Powell is available
 <a href="https://www.federalreserve.gov/newsevents/speech/powell20201006a.htm">here</a>.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th height="25" class="firstcol" scope="col" >&nbsp;Consumer
 Credit Outstanding (M/M Chg, SA)</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 <th scope="col" >Jun</th>
 <th scope="col" >Aug y/y</th>
 <th scope="col" >2019</th>
 <th scope="col" >2018</th>
 <th scope="col" >2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Total ($ bil)</td>
 <td>-7.2</td>
 <td>14.7</td>
 <td>16.9</td>
 <td>0.3%</td>
 <td>4.6%</td>
 <td>4.8%</td>
 <td>5.3%</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;Nonrevolving</td>
 <td>2.2</td>
 <td>14.9</td>
 <td>18.6</td>
 <td>3.8</td>
 <td>4.9</td>
 <td>5.2</td>
 <td>5.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp; &nbsp;Revolving</td>
 <td>-9.4</td>
 <td>-0.2</td>
 <td>-1.7</td>
 <td>-9.6</td>
 <td>3.8</td>
 <td>3.6</td>
 <td>6.0</td>
 </tr>
	 </tbody>
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• Nonrevolving borrowing edges higher. • Credit card balances are being liquidated. Consumers recently grew cautious about using credit. Consumer credit outstanding declined $7.2 billion during August following two months of double- [...]

U.S. Consumer Credit Usage Surprisingly Reverses Course in August

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German manufacturing is stumbling according to the August industrial production report and that is very different from the PMI survey from Markit that says output is advancing nicely.

According to Markit, manufacturing diffusion is higher by 4.2 points than it was in February the last month before the virus began to seriously disrupt Germany and Europe. But compared to its February level, manufacturing output is lower than its February level by 12.1%. This is a serious disconnect of difference.

However, not everything disconnects...

The IP report remains closely tied to the data on real sector sales (presented yesterday along with the German orders data; see <a href="http://www.haver.com/comment/comment.html?c=201006C.html">here</a>). So what we seem to have is a difference between count-'em-up old-style accounting reports and the diffusion data that are so popular, sensitive and timely but less accurate.

Diffusion data measure the breadth of a trend not its strength. Strength can also be thought of as breadth weighted by size- two measures of size. One of them measuring the size of the monthly change (such as percentage change- not just toting it as 'up' or 'down') the second relates to the relative importance of that gain: how big of a gain for how important of a company? What the diffusion data lack are the two 'size' weights and that loss can be significant. So what is happening is either more small firms doing well and larger firms doing worse or there are a lot of very small increases in activity that boost 'diffusion' a lot more than they boost output. Unfortunately, we just can't tell exactly what it is. But breadth is not strength even though the two concepts are correlated.

What we are seeing is either relatively broad based but small increases that are probably being offset by some substantial weakness at some larger firms accounting for why overall output gains are still so weak. We know that some sectors of the economy are still shut down or partly impaired.

The German data show that even diffusion surveys of current activity are still weak. The IFO manufacturing gauge, for example, rose to 90.9 in August from 87.9 in July, but it is still 1.8 points below its February level. But the IFO expectations gauge for manufacturing also rose to 104.9 in August from 103.9 in July and it is some 11 points above its February level. Surveys that have forward-looking components are much stronger than IP and real sales gauges that are only about what is selling or being produced here and now, not about expectations.

In manufacturing in August, only intermediate goods output expanded. Consumer goods and capital goods output both contracted. All sectors show output declines over 12 months and six months with large annualized again in place over three months The only exception to this is the construction sector that saw output fall for three months in a row, has an output gain over 12 months but slows steadily from 12-months to six-months to three-months.

Output is also jumping out of its own skin in the quarter-to-date in each sector except construction.

Several other early-reporting European countries have issued IP data for August. Spain alone shows an August drop while Portugal, Sweden and Norway log monthly increases. Portugal and Sweden show gradually increasing output from 12 months to six months with an explosion of output over three months. Norway and Spain show declines in output over 12 months with a worsening decline over six months then an explosion in output over three months. All four countries show sharp gains in output in the unfolding quarter-to-date but only Norway reports out a more normal-sized number (but still strong number) without output up at a 12% annualized rate.


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On balance, all of Europe got the virus and everyone's data seem to reflect the same sorts of patterns for recovery after accounting for some clear idiosyncrasies by nation. However, the past has been determined but policy toward the virus and so will the future. Just yesterday WHO warned about another spread of the virus impacting the global economy. Countries are handing this reflux or second wave with limited shutdowns instead of across the board shutdowns. Those shutdowns will be adversely impacting growth as well just not as dramatically.

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German manufacturing is stumbling according to the August industrial production report and that is very different from the PMI survey from Markit that says output is advancing nicely. According to Markit, manufacturing diffusion is [...]

Surprise Drop in German IP; MFG PMI Outruns IP Itself

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&bull; Refinancing applications surge but purchase applications fall.
&bull; Mortgage interest rates reach record lows.

The Mortgage Bankers Association Mortgage Loan Applications
Index rebounded 4.6% (38.4% y/y) in the week ended October 2 after having
declined 4.8% in the previous week.

Applications to refinance an existing loan surged 8.2% (49.8%
y/y) following a 6.5% decline in the previous week. Purchase applications
declined 1.5% (+21.1% y/y) after falling 1.9% in the previous week. The
refinance share of mortgage activity rose to 65.4% of total applications. That
remained down from the recent peak of 74.4% during all of April 2020. The
adjustable-rate mortgage (ARM) share of activity held steady at 2.2% of total applications.

The effective rate on a 30-year fixed rate interest rate
declined to a record low of 3.12% from 3.20% in the week ended September 25. The
rate on 15-year loans fell to 2.68% from 2.77%. The effective rate for a Jumbo
mortgage loan eased six basis points to 3.39%. The rate on the 5-year adjustable
rate mortgage weakened 23 basis points to 2.92%.

The average mortgage loan size edged 0.4% higher (-1.9% y/y)
to $322,500. The average size of a purchase loan improved 0.2% (12.4% y/y) to
$371,500. The average loan size to refinance gained 1.5% (-9.4% y/y) to $296,600.

Applications for fixed-rate loans rebounded 4.6% (42.7% y/y)
and applications for adjustable rate mortgages increased 3.2% (-43.3% y/y).

The survey covers over 75% of all U.S. retail residential
mortgage applications and has been conducted weekly since 1990. Respondents
include mortgage bankers, commercial banks and thrifts. The base period and
value for all indexes is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW database.

The minutes to the latest FOMC meeting can be found <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20200916.pdf">here</a>.

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<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >MBA Mortgage Applications (%,
 SA)</th>
 <th>10//2/20</th>
 <th>09/25/20</th>
 <th>09/18/20</th>
 <th>Y/Y</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Total Market Index</td>
 <td>4.6</td>
 <td>-4.8</td>
 <td>6.8</td>
 <td>38.4</td>
 <td>32.4</td>
 <td>-10.4</td>
 <td>-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp;Purchase</td>
 <td>-1.5</td>
 <td>-1.9</td>
 <td>3.4</td>
 <td>21.1</td>
 <td>6.6</td>
 <td>2.1</td>
 <td>5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp; Refinancing</td>
 <td>8.2</td>
 <td>-6.5</td>
 <td>8.8</td>
 <td>49.8</td>
 <td>71.1</td>
 <td>-24.3</td>
 <td>-34.</td>
 </tr>
 <tr>
 <td class="firstcol" >30-Year Effective Mortgage Interest Rate
 (%)</td>
 <td>3.12</td>
 <td>3.20</td>
 <td>3.24</td>
 <td>4.08
 (Oct '19)
 </td>
 <td>4.34</td>
 <td>4.94</td>
 <td>4.32</td>
 </tr>
 </tbody>
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• Refinancing applications surge but purchase applications fall. • Mortgage interest rates reach record lows. The Mortgage Bankers Association Mortgage Loan Applications Index rebounded 4.6% (38.4% y/y) in the week ended October 2 [...]

Mortgage Applications Move Higher as Interest Rates Decline

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<a href="http://www.haver.com/comment/Moeller.html">Tom
Moeller</a>&nbsp;&nbsp; &nbsp;October 7, 2020
• Refinancing applications surge but purchase
applications fall.
• Mortgage interest rates reach record lows.
The Mortgage Bankers Association Mortgage Loan Applications
Index rebounded 4.6% (38.4% y/y) in the week ended October 2 after having
declined 4.8% in the previous week. 
Applications to refinance an existing loan surged 8.2% (49.8%
y/y) following a 6.5% decline in the previous week. Purchase applications
declined 1.5% (+21.1% y/y) after falling 1.9% in the previous week. The
refinance share of mortgage activity rose to 65.4% of total applications. That
remained down from the recent peak of 74.4% during all of April 2020. The
adjustable-rate mortgage (ARM) share of activity held steady at 2.2% of total
applications.
The effective rate on a 30-year fixed rate interest rate
declined to a record low of 3.12% from 3.20% in the week ended September 25. The
rate on 15-year loans fell to 2.68% from 2.77%. The effective rate for a Jumbo
mortgage loan eased six basis points to 3.39%. The rate on the 5-year adjustable
rate mortgage weakened 23 basis points to 2.92%.
The average mortgage loan size edged 0.4% higher (-1.9% y/y)
to $322,500. The average size of a purchase loan improved 0.2% (12.4% y/y) to
$371,500. The average loan size to refinance gained 1.5% (-9.4% y/y) to $296,600.
Applications for fixed-rate loans rebounded 4.6% (42.7% y/y)
and applications for adjustable rate mortgages increased 3.2% (-43.3% y/y).
The survey covers over 75% of all U.S. retail residential
mortgage applications and has been conducted weekly since 1990. Respondents
include mortgage bankers, commercial banks and thrifts. The base period and
value for all indexes is March 16, 1990=100. The figures for weekly mortgage
applications and interest rates are available in Haver's SURVEYW
database.
<table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="851">MBA Mortgage Applications (%,
 SA)</th>
 <th width="145">10//2/20</th>
 <th width="145">09/25/20</th>
 <th width="145">09/18/20</th>
 <th width="145">Y/Y</th>
 <th width="145">2019</th>
 <th width="145">2018</th>
 <th width="146">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="851">Total Market Index</td>
 <td align="center" width="145">4.6</td>
 <td align="center" width="145">-4.8</td>
 <td align="center" width="145">6.8</td>
 <td align="center" width="145">38.4</td>
 <td align="center" width="145">32.4</td>
 <td align="center" width="145">-10.4</td>
 <td align="center" width="146">-17.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="851">&nbsp;&nbsp;Purchase</td>
 <td align="center" width="145">-1.5</td>
 <td align="center" width="145">-1.9</td>
 <td align="center" width="145">3.4</td>
 <td align="center" width="145">21.1</td>
 <td align="center" width="145">6.6</td>
 <td align="center" width="145">2.1</td>
 <td align="center" width="146">5.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="851">&nbsp; Refinancing</td>
 <td align="center" width="145">8.2</td>
 <td align="center" width="145">-6.5</td>
 <td align="center" width="145">8.8</td>
 <td align="center" width="145">49.8</td>
 <td align="center" width="145">71.1</td>
 <td align="center" width="145">-24.3</td>
 <td align="center" width="146">-34.</td>
 </tr>
 <tr>
 <td class="firstcol" width="851">30-Year Effective Mortgage Interest Rate
 (%)</td>
 <td align="center" width="145">3.12</td>
 <td align="center" width="145">3.20</td>
 <td align="center" width="145">3.24</td>
 <td align="center" width="145">4.08 
 (Oct '19)
 &nbsp;
 </td>
 <td align="center" width="145">4.34</td>
 <td align="center" width="145">4.94</td>
 <td align="center" width="146">4.32</td>
 </tr>
 </tbody>
</table>

<div id="content">
 <div id="rightside">
 <div class="col" id="entire">
 &nbsp;
 U.S. Consumer Credit Usage Firms Again in July 
 by <a href="http://www.haver.com/comment/Moeller.html">Tom
 Moeller</a>&nbsp;&nbsp;October 7, 2020
 • Nonrevolving borrowing usage surges.
 • Charge card balances ease further.
 Consumers continue to buy more using credit. Consumer
 credit outstanding increased $12.2 billion during July (0.5% y/y)
 following an $11.4 billion June increase, revised from $9.0 billion.
 Credit usage had fallen in each month from March through May. A $13.0
 billion rise had been expected by the Action Economics Forecast Survey.
 Nonrevolving credit usage rose $12.6 billion (3.9% y/y)
 after increasing $13.2 billion in June, revised from $11.3 billion.
 Borrowing from the federal government, which issues over 40% of
 nonrevolving credit, grew 5.9% y/y. Depository institution loans (29% of
 credit) gained a greatly lessened 3.6% y/y. Finance company borrowing
 (16.0% of loans) rose 1.6% y/y and credit union loans (14.0% of the total)
 increased 2.3% y/y.
 Revolving consumer credit balances weakened $0.3
 billion (-8.7% y/y) in July, down for the sixth month this year. Credit
 provided by depository institutions, 90% of the total and mostly credit
 card debt, declined an accelerated 8.7% y/y. Credit union borrowing
 dropped a quickened 5.9% y/y and finance company loans fell 22.3% y/y.
 These Federal Reserve Board figures are break-adjusted
 and calculated by Haver Analytics. The breaks in the series in 2005, 2010
 and 2015 are the result of the incorporation of the Census and Survey of
 Finance Companies, as well as changes in the seasonal adjustment
 methodology.
 The consumer credit data are available in Haver's USECON
 database. The Action Economics figures are contained in the AS1REPNA
 database.
 <table width="1871" class="centered" border="0" cellSpacing="0">
 <thead>
 <tr>
 <th height="25" class="firstcol" scope="col" width="1021">Consumer
 Credit Outstanding (M/M Chg, SA)</th>
 <th scope="col" width="120">Aug</th>
 <th scope="col" width="121">Jul</th>
 <th scope="col" width="121">Jun</th>
 <th scope="col" width="121">Aug y/y</th>
 <th scope="col" width="121">2019</th>
 <th scope="col" width="121">2018</th>
 <th scope="col" width="121">2017</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1021">Total ($ bil)</td>
 <td align="center" width="120"></td>
 <td align="center" width="121">12.2</td>
 <td align="center" width="121">11.4</td>
 <td align="center" width="121">0.5%</td>
 <td align="center" width="121">4.6%</td>
 <td align="center" width="121">4.8%</td>
 <td align="center" width="121">5.3%</td>
 </tr>
 <tr>
 <td class="firstcol" width="1021">&nbsp; &nbsp;Nonrevolving</td>
 <td align="center" width="120"></td>
 <td align="center" width="121">12.6</td>
 <td align="center" width="121">13.2</td>
 <td align="center" width="121">3.9</td>
 <td align="center" width="121">4.9</td>
 <td align="center" width="121">5.2</td>
 <td align="center" width="121">5.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="1021">&nbsp; &nbsp;Revolving</td>
 <td align="center" width="120"></td>
 <td align="center" width="121">-0.3</td>
 <td align="center" width="121">-1.8</td>
 <td align="center" width="121">-8.7</td>
 <td align="center" width="121">3.8</td>
 <td align="center" width="121">3.6</td>
 <td align="center" width="121">6.0</td>
 </tr>
 </tbody>
 </table>
 
 </div>
 </div>
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&bull; Job openings are fewer in number.
&bull; Hiring increases modestly.
&bull; Layoffs and quits decline.

The Bureau of Labor Statistics reported that on the last
business day of August, the total job openings rate eased to 4.4% from 4.6%
during July, revised from 4.5%. The openings rate is calculated as job openings
as a percent of total employment plus jobs that have not yet been filled. The
August figure remained below the 4.8% record in January 2019. The hiring rate
held steady at 4.2%. July's rate was revised from 4.1%. The overall layoff and
discharge rate fell to 1.0% versus 1.3% in July. The quits rate eased to 2.0%
from a five-month high of 2.1%. It nevertheless remained below the record 2.4%
in July of last year. These figures date back to December 2000.

The job openings level dropped 3.0% to 6.493 million, down
9.4% y/y. The job openings level in the construction sector fell 25.2% y/y but
in manufacturing, it rose 3.4% y/y. It fell by 17.1% y/y in leisure &amp;
hospitality and by 8.2% y/y in the professional &amp; business service sector.
In government, the number of job openings rose 16.1% y/y.

The private-sector job openings rate declined to 4.5% and
remained below the record rate of 5.1% reached in January 2019. The construction
sector's job openings rate fell sharply to 3.5% and remained well below its 5.4%
peak in April 2019. The rate in manufacturing rose m/m to 3.7%, the highest
level since June 2019. The rate in leisure &amp; hospitality held steady at 5.8%
but was below the record 6.6% in June. The rate in professional &amp; business
services held at 5.6%, up from 4.8% three month earlier. The government sector
job openings rate rose to a record high of 3.8%. July was revised sharply higher to 3.7%.

In August, the level of hiring improved 0.3% to 5.919 million (1.4% y/y)
following a 15.3% July decline. The hiring rate held steady at 4.2%, down from
the record 5.4% in May. The private sector hiring rate eased to 4.5% but the
government sector hiring rate surged to a near-record 2.6%. The factory sector
hiring rate improved to 3.2% but the leisure &amp; hospitality rate fell
sharply to 7.5%. The professional &amp; business service sector hiring rate
eased to 5.6% after being elevated at 5.8% in July and the education &amp;
health services hiring rate declined to 3.1%, after surging to 4.9% in May.

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 <a href="/comment/201006m.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201006m.png"></a>

Data on job separations reflect a combination of layoffs and
quits. The separations rate of 3.3% compared to the record 9.7% in March. The
level of separations declined 18.8% y/y. Private sector separations fell 18.6%
y/y and the separations rate fell to 3.6%, just above the record low of 3.5% in
May. The separations rate fell to 5.4% in leisure &amp; hospitality, lower than
32.7% in March. Professional &amp; business realized a separations rate of 4.4%
after surging to a record 8.0% in March. At 2.7%, the separations rate in
education &amp; health services was unchanged, just above May's record low of 2.4%.

The layoff &amp; discharge rate in the private sector
declined to a record low of 1.2% in August. It was a record low of 0.3% in
government. The fairly steady 2.8% rate in construction compared to a lessened
0.9% in manufacturing. The 0.9% rate in the information sector was below the
record 3.7% in April. It compared to 0.6% in finance. The professional &amp;
business services layoff &amp; discharge rate was a record low of 1.5% and
compared to an all-time high of 5.1% in March.

The higher quits rate of 2.2% in the private sector remained
up from 1.6% in April. It compared to an increased 0.6% in government. In
manufacturing, the job quits rate surged to a near-record 1.7%, up from 0.9% in
April. In finance, it jumped to 1.4% from a 0.8% cycle low in April. The quits
rate in professional &amp; business services eased to 2.6% and fell sharply to
3.7% y/y in leisure &amp; hospitality. The level of job quits in the private
sector fell 21.0% y/y and 24.3% y/y in government.

The Job Openings and Labor Turnover Survey (JOLTS) dates to
December 2000; the figures are available in Haver's USECON database.

<a href="/comment/201006n.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201006n.png"></a>
 <a href="/comment/201006o.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201006o.png"></a>


	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 
 
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS
 (Job Openings &amp; Labor Turnover Survey, SA)</a></th>
 <th scope="col" >Aug</th>
 <th scope="col" >Jul</th>
 Jun
 <th scope="col" >Aug'19</th>
 <th scope="col" >Aug'18</th>
 <th scope="col" >Aug'17</th>
 

<tbody>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Job Openings, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>4.4</td>
 <td>4.6</td>
 <td>4.2</td>
 <td>4.5</td>
 <td>4.6</td>
 <td>4.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>6,493</td>
 <td>6,697</td>
 <td>6,001</td>
 <td>7,166</td>
 <td>7,249</td>
 <td>6,335</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Hires, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)&nbsp;</td>
 <td>4.2</td>
 <td>4.2</td>
 <td>5.1</td>
 <td>3.9</td>
 <td>3.9</td>
 <td>3.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>5,919</td>
 <td>5,903</td>
 <td>6,970</td>
 <td>5,839</td>
 <td>5,792</td>
 <td>5,528</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Layoffs &amp; Discharges,
 Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>1.0</td>
 <td>1.3</td>
 <td>1.4</td>
 <td>1.2</td>
 <td>1.2</td>
 <td>1.3</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>1,473</td>
 <td>1,745</td>
 <td>1,995</td>
 <td>1,792</td>
 <td>1,796</td>
 <td>1,866</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colSpan="7" >Quits, Total</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Rate (%)</td>
 <td>2.0</td>
 <td>2.1</td>
 <td>1.9</td>
 <td>2.3</td>
 <td>2.3</td>
 <td>2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Total (000s)</td>
 <td>2,793</td>
 <td>2,932</td>
 <td>2,605</td>
 <td>3,544</td>
 <td>3,446</td>
 <td>3,126</td>
 </tr>
 </tbody>
 
 

</html>

• Job openings are fewer in number. • Hiring increases modestly. • Layoffs and quits decline. The Bureau of Labor Statistics reported that on the last business day of August, the total job openings rate eased to 4.4% from 4.6% during [...]

U.S. JOLTS: Job Opportunities Fall but Hiring Improves

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German orders are up strongly for four months in a row. Orders surged in May as they broke out from their April pit in the wake of lifted restrictions on the economy. Then orders spurted in June as the get-back-to-work phase deepened. Orders rose by 3.3% in July and now by 4.5% in August. And yet with all this surging and spiking and growing, orders are still 3.6% below their level of February of this year just before the virus struck. Foreign orders are 1.4% below their February level while domestic orders in Germany are 6.6% below their February level.

A familiar story from order growth 
Sequential growth rates tell a familiar story. Over 12 months orders fall by 2%. Over six months they drop at a 7.1% annual rate. Over three months orders are jumping wildly at a 273.8% annualized rate. Foreign and domestic orders echo these patterns with different rates of growth, of course.

QTD growth rates are stupendous 
Two months into Q3, the quarter-to-date growth rates show a 224.2% annualized growth in overall orders lead with a nearly 400% rate splurge in foreign orders and an 83.5% pace in domestic orders. The growth rate and growth patterns are still too erratic to try to extract a real trend, but recovery is still afoot.

Sales by sector are recovering 
Real sales by sector are bit more grounded as they require actual production and physical shipping not just orders on paper. Even so, they manage some strong growth rates especially over three months. Total manufacturing and mining sales fall by 9.6% over 12 months and fall again at an 18.5% annual rate over six months. Over three months sales surged at a 100% annual rate. In the quarter-to-date, sales are advancing at a 114.7% annual rate. And despite all this growth, sales are still nearly 10% below their February level. Among the sectors only durable consumer goods have real sales above their February level (1.2% higher). Sales of capital goods lag their February level the most (by 11.2%). But then capital goods are posting the strongest growth rate over three months at 204%, annualized.

...but sales by sector are slowing too 
However, sector sales are decelerating broadly across all sectors over the last two months. The only exception is a pick-up in the sales of consumer durables in August. So despite all the growing and surging and advancing and the support of very strong orders in the background, real sector sales are not building momentum. Sales overall were flat in August and falling in two of the three major sectors (consumer goods, capital goods and intermediate goods) as well as declining slightly in manufacturing overall.


<img border="0" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201006.png" width="660" height="290">


And the outlook is guarded 
Of course, no discussion of momentum or trend or the future is complete these days without a mention of the virus. And there the news is bad and there is some further spreading and countermeasures taken to slow the spread that also impedes growth. As of October 5, German infections were still rising and up to 3,100 per day. This compares to a low of 16 back in June. German infections are still not all that high by the standards of other countries, but they are rising and they are at about 45% of their past peak in late-March. It would appear that Germany will be fighting this ‘rear guard’ action against rising infections for a while longer--and that damps the outlook despite a strong trend in orders and in the presence of a weakening trend in sales.

</html>

German orders are up strongly for four months in a row. Orders surged in May as they broke out from their April pit in the wake of lifted restrictions on the economy. Then orders spurted in June as the get-back-to-work phase deepened. [...]

German Orders Continue to Surge...Still They Lag Below February Level

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&bull; Gasoline prices continue sideways trend.
&bull; Crude oil prices decline.
&bull; Natural gas prices ease w/w; firm yesterday.

Regular gasoline prices were unchanged at $2.17 per
gallon (-17.9% y/y) in the week ended October 5, having hovered around that
level since late-June. Haver Analytics adjusts the gasoline price series for
usual seasonal variation. The seasonally adjusted price held at $2.12 per gallon
versus the previous week. The reformulated RBOB Regular Gasoline Spot Price rose
three cents to $1.29 per gallon in the week ended October 2.

The cost of West Texas Intermediate crude oil fell
1.8% last week (-26.4% y/y) to average $39.10 per barrel in the week ended
October 2 from $39.82 in the previous week. Yesterday, the price was $39.22 per
barrel. The price of Brent crude oil dipped 1.2% w/w (-29.4% y/y) to average
$41.19 per barrel versus $41.70 in the previous week. The price was $41.41 per
barrel yesterday.

Natural gas prices also slipped 1.8% w/w (-29.2% y/y)
to $1.65/mmbtu in the week ended October 2 from $1.68/mmbtu in the previous
week. The weekly average was at its lowest level since late-June, Yesterday, the
price rebounded to $1.92/mmbtu.

In the four weeks ended September 25, gasoline demand
declined 8.9% y/y. Total petroleum product demand fell 14.4% y/y. Crude oil
input to refineries was down 20.1% y/y in the past four weeks. Gasoline
inventories moved 0.8% below a year ago, while inventories of all petroleum
products rose 6.6% y/y.

These data are reported by the U.S. Department of Energy. The
price data can be found in Haver's WEEKLY and DAILY databases.
Greater detail on prices, as well as the demand, production and inventory data,
along with regional breakdowns, are in OILWKLY.

<a href="/comment/201006h.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201006h.png"></a>
 <a href="/comment/201006i.png" name="modal"><img class="small" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/201006i.png"></a>

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Weekly Energy Prices</th>
 <th>10/05/20</th>
 <th>09/28/20</th>
 <th>09/21/20</th>
 <th>Y/Y %</th>
 <th>2019</th>
 <th>2018</th>
 <th>2017</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" >Retail Gasoline ($ per Gallon Regular,
 Monday Price, End of Period)</td>
 <td>2.17</td>
 <td>2.17</td>
 <td>2.17</td>
 <td>-17.9</td>
 <td>2.57</td>
 <td>2.27</td>
 <td>2.47</td>
 </tr>
 <tr>
 <td class="firstcol" >Light Sweet Crude Oil, WTI ($ per bbl,
 Previous Week's Average)</td>
 <td>39.10</td>
 <td>39.82</td>
 <td>39.55</td>
 <td>-26.4</td>
 <td>56.91</td>
 <td>64.95</td>
 <td>50.87</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Natural Gas ($/mmbtu, LA, Previous
 Week's Average)</td>
 <td>1.65</td>
 <td>1.68</td>
 <td>1.93</td>
 <td>-29.2</td>
 <td>2.57</td>
 <td>3.18</td>
 <td>2.99</td>
 </tr>
	 </tbody>
	 </table>
	 
</body></html>

• Gasoline prices continue sideways trend. • Crude oil prices decline. • Natural gas prices ease w/w; firm yesterday. Regular gasoline prices were unchanged at $2.17 per gallon (-17.9% y/y) in the week ended October 5, having hovered [...]

U.S. Gasoline Prices Steady While Crude Oil Costs Ease

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

US financial market concerns shifting from growth to inflation

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

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Wholesale inventories fell 0.3% (+1.4% y/y) during May after edging 0.1% higher in April. The decline was revised from a 0.2% fall in the advance release issued last week. A 0.3% decline had been expected in the Informa Global Markets survey. Durable goods inventories fell 0.8% during May (-0.0% y/y) after increasing 0.1% in April. Furniture & home furnishings inventories were off 2.2% (+4.5% y/y) after weakening 0.8% in April. Professional & business equipment inventories declined 1.7% (+5.1% y/y) and reversed April’s 1.6% increase. Motor vehicle & parts inventories were off 1.5% (-2.6% y/y) following a 0.6% rise. Machinery inventories fell 0.8% (-2.0% y/y), about as they did in April. Electrical equipment inventories eased 0.1% (-3.2% y/y) after falling 0.5% in April. To the upside, hardware & plumbing equipment inventories rose 1.3% (8.1% y/y) following two straight 1.8% increases. Lumber inventories rose 1.0% (3.4% y/y) after falling sharply in both of the prior two months. Inventories of nondurable goods rose 0.5% during May (3.9% y/y) after rising 0.2% in April. Drug inventories surged 1.8% (5.1% y/y) after a 2.0% gain while apparel inventories gained 0.5% (-0.7% y/y) following a 0.9% rise. Grocery inventories rose 0.3% (11.0% y/y) after a 1.2% rise. Paper inventories rose 0.3% (6.9% y/y), reversing the 0.7% April decline, while chemical inventories dropped 1.9% (-1.8% y/y) after declining 1.2% in April. Petroleum & petroleum product inventories rose 2.5% (-8.1% y/y) following a 7.5% drop. Farm product inventories declined 3.8% (4.9% y/y) after two straight months of 2.6% decline.

Wholesale sales declined 0.3% (+4.8% y/y) in May after holding steady in April. A 0.2% increase had been expected in the Action Economics Forecast Survey. Sales of nondurable goods declined 0.8% (+2.3% y/y) after easing 0.1% in April. Paper sales slipped 0.8% (0.7% y/y) after rising 0.9% in April. Drug sales eased 0.3% (+12.0% y/y) after rising 0.2% in April. Petroleum sales weakened 2.8% (-13.3% y/y) after declining 3.3% in April. In contrast, sales of apparel strengthened 1.9% (8.1% y/y), the same as in April. Grocery store sales increased 1.0% (6.7% y/y) after a 1.4% gain. Sales of durable goods rose 0.2% (7.6% y/y) following a 0.1% uptick in April. Auto sales rose 3.6% (5.2% y/y) after easing 0.1% in April. Sales of electrical equipment strengthened 1.2% (15.7% y/y) following a 0.4% decline. Metals & minerals sales gained 0.5% (0.2% y/y) following a 1.8% decline. Working lower, furniture sales declined 1.6% (+3.6% y/y) after a 2.3% increase. Professional equipment sales eased 0.3% (+8.1% y/y) following a 1.0% increase. Machinery sales weakened 0.9% (+5.2% y/y) after increasing 0.8% in April.

The May inventory to sales ratio in the wholesale sector stood at 1.3 for the fourth straight month. The durable goods I/S ratio eased to 1.67 after two months at 1.69, down from the 1.81 high in March of last year. The ratio ranged from a 2.86 high for machinery to 0.95 for electrical equipment. The nondurable goods I/S ratio rose to 0.95 after two months at 0.93. The I/S ratio for apparel was 2.04 in May while for petroleum, it was 0.33.

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

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- Inventory decline reverses two months of increase.
- Sales decline is first in four months.
- I/S ratio steadies at three-year low.

U.S. Wholesale Inventories & Sales Decline in May

Winnie Tapasanun

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Mortgage applications rose 9.4% w/w (36.6% y/y) in the week ending July 4 after a 2.7% rise in the week ending June 27, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The latest reading was the largest of three consecutive w/w rises and the fourth increase in five weeks, to the index level of 281.6, the highest since the April 4 week. Applications for loans to purchase a house advanced 9.4% (25.4% y/y) in the July 4 week following a 0.1% uptick in the June 27 week and two successive w/w decreases. Applications for loan refinancing rose 9.2% (55.8% y/y) in the July 4 week, up for the fourth week in five, after a 6.5% rise in the previous week.

The effective interest rate on a 30-year fixed-rate loan declined 2bps to 6.95% in the week ending July 4 after falling to 6.97% in the week ending June 27; it was up from a low of 6.29% in the September 20 week but down from a peak of 8.12% in the week of October 20, 2023. The rate on 15-year fixed-rate mortgages fell 3bps to 6.20% in the July 4 week after declining to 6.23% in the previous week; it was up from a low of 5.60% in the September 20 week but down from a high of 7.44% in the week of October 27, 2023. The rate on 30-year jumbo loans eased to 6.88% in the July 4 week after dropping 16bps to 6.89% in the prior week; it was up from a low of 6.57% in the September 13 week but below a high of 7.99% in the week of October 27, 2023. These three rates mentioned were the lowest since their recent lows in the April 4 week. Meanwhile, the rate on a 5-year ARM rose 7bps to 6.28% in the July 4 week after decreasing 15bps to 6.21% in the previous week; it was above a low of 5.84% in the September 13 week but below a high of 7.31% in the week of October 27, 2023.

The share of applications for refinancing an existing loan fell to 40.0% of total applications in the week ending July 4 from an 11-week-high 40.1% in the week ending June 27, registering the first w/w fall since the May 23 week; those readings remained well below a peak of 55.7% in the September 20 week. The adjustable-rate mortgage (ARM) share of activity eased to 7.7% in the July 4 week, the third w/w decline in four weeks, after increasing to an eight-week-high 7.8% in the prior week; it was up from a low of 4.7% in the January 3 week but below its recent high of 9.6% in the April 11 week and a high of 10.7% in the week of October 27, 2023.

The average size of a mortgage loan, down for the third week in four, fell 1.3% w/w (+4.5% y/y) to $386,400 in the July 4 week following a 3.5% rebound to $391,500 in the June 27 week. The average size of a purchase loan, also down for the third week in four, fell 2.5% (+1.8% y/y) to $432,600 in the July 4 week, the lowest level since the January 17 week, after a 1.7% rise to $443,500 in the prior week. The average size of a loan to refinance a mortgage, up for the fourth week in five, rose 1.1% (18.8% y/y) to $317,100 in the July 4 week, the highest level since the May 2 week, on top of a 10.0% jump to $313,700 in the previous week.

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

- Purchase applications +9.4% w/w; refinancing loan applications +9.2% w/w.
- Effective interest rate on 30-year fixed-rate loans falls to 6.95%, the lowest since the Apr. 4 week.
- Average loan size declines for the third time in four weeks. 

U.S. Mortgage Applications Advance 9.4% in the July 4 Week, the Third Straight W/W Rise

Andrew Cates

**Equity markets and growth surprises** 
Our first chart helps explain why global equity markets have remained buoyant in recent weeks despite some softer economic signals out of the US. The Citigroup surprise indices show that, on balance, global growth data have continued to surprise on the upside, while inflation readings have generally come in lower than expected. This combination—resilient global growth alongside moderating price pressures—has been supportive for risk assets. Investors appear to be drawing confidence from the prospect of a “soft landing” global backdrop: enough growth to support earnings but with cooling inflation that keeps central banks on track to ease policy further.

250708Z1.jpg

**Global growth** 
This next chart underscores, through the respective June readings for global composite PMIs, how global growth has arguably held up better than expected in recent weeks, helping to sustain positive risk sentiment. India continues to lead with a strikingly strong reading for June, signalling robust economic expansion, while the US also remains firmly in growth territory. Notably, the UK and Japan both posted healthier readings above 50, pointing to steady, broad-based momentum. China’s reading is also comfortably above 50, suggesting some resilience despite lingering concerns. Meanwhile, the euro area is hovering just above the neutral 50 mark, indicating modest growth, while South Africa and Brazil continue to lag behind, with Brazil slipping just below the expansion threshold.

250708Z2.jpg

**Global supply chain pressures** 
This next chart highlights one reason why global growth has so far proven more resilient than many expected: there is little sign at the global level of renewed supply chain stress despite recent shifts in US trade policy. The Federal Reserve Bank of New York’s global supply chain pressure Index remains broadly stable and well below the extreme levels seen during the pandemic, suggesting that supply bottlenecks are not (yet) driving significant upward pressure on global prices. This relative calm in global logistics implies that, for now, new or higher US tariffs have not materially disrupted global supply chains in the way some had feared, helping to support steady production flows and contain cost pressures—key ingredients behind the more stable global growth picture seen in recent months

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**Asia’s trade with the US** 
All that aside, Asia’s exports to the US have already begun to weaken—despite the ongoing tariff pause—and now face broader risks as new post-pause tariff rates are announced.US President Trump’s sector-specific tariffs are weighing on exports from key trading partners, particularly in Asia. For example, auto-export-heavy economies such as Japan and South Korea have seen their rolling 12-month exports to the US stagnate this year, as Trump’s 25% auto tariffs have taken a toll. In response, some producers have been forced to cut prices to absorb part of the tariff burden, squeezing their profit margins. More broadly, China’s exports to the US have plummeted this year amid escalating trade tensions. Although both countries recently agreed to roll back many previous tariff escalations, the agreement has not fully alleviated the uncertainty surrounding the bilateral trade environment—especially given that the rollback is only temporary.

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**China’s capital flows** 
China has also experienced a sustained trend of rising capital outflows in recent years, as illustrated in the chart below. This trend has continued into 2025, with rolling four-quarter total capital outflows exceeding half a trillion US dollars in the first quarter. The surge reflects a mix of investor motivations, including a growing desire to diversify assets abroad. A significant portion of these recent outflows has come from the acquisition of foreign portfolio investment assets, indicating an outward shift of capital into international financial markets. These outflows have contributed to downward pressure on the yuan, which has depreciated notably this year. However, the impact has been partially offset by concurrent weakness in the US dollar, amid recently subdued—yet still unresolved—US-China trade tensions. Despite ongoing currency pressures, Chinese authorities have moved to increase the foreign exchange quota for Qualified Domestic Institutional Investors (QDII), allowing greater investment in overseas securities, as depreciation pressure on the yuan has eased somewhat in recent months.

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**Renewable energy production** 
On a more positive note, this final chart shows the remarkable growth trajectory of global renewable energy production over the past two decades, which has accelerated sharply in recent years. Total renewable generation has climbed steadily to exceed 5,000 terawatt-hours, with China emerging as the dominant driver of this expansion. Europe and North America have also contributed significantly, while the rest of the world is adding to the momentum as emerging markets ramp up investment in cleaner power sources. This sustained surge reflects rising global commitments to decarbonisation and the transition away from fossil fuels, underpinned by technological advances and policy support. However, it’s important to note that despite this impressive growth in renewable supply, real energy costs for many consumers have continued to rise over the same period—highlighting the challenges of integrating renewables at scale, upgrading grids, and balancing supply with demand during the transition.

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_There will be no Charts of the Week publication for the next couple of weeks. The next edition will be released on Thursday, July 30th._

Recent buoyancy in global equity markets reflects a welcome mix of encouraging signals: growth is holding up better than many feared, inflation surprises have turned more benign, and most major central banks are poised to continue lowering interest rates in the period immediately ahead (charts 1, 2 and 3). There are, however, pockets of strain beneath the surface. Trade growth in Asia has slowed, most visibly in exports to the US, as tariffs and lingering tensions weigh on key sectors (chart 4). At the same time, China’s rising capital outflows point to firms and investors hedging their bets by shifting more assets abroad (chart 5). These undercurrents hint at an uneven global picture where trade frictions and capital shifts could test the durability of the recent calm. On a more positive note, the strong, steady climb in renewable energy production is a bright spot, underscoring the scale of investment pouring into the clean energy transition—even as real energy costs remain firm (chart 6). Altogether, while the broader backdrop remains supportive, new trade barriers, shifting capital flows, and the hidden costs of the green transition are watchpoints that could unsettle markets if growth momentum stalls or policy missteps occur.

Charts of the Week: Summer Resilience

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Consumer credit outstanding increased $5.1 billion (2.0% y/y) during May after rising $16.9 billion in April, revised from $17.9 billion, and $7.9 billion in March, revised from $8.6 billion. A $12.0 billion rise had been expected in the Action Economics Forecast Survey. As a percentage of disposable personal income, consumer credit of 22.5% in May compared to 22.3% in April and 22.9% one year earlier. It reached a high of 26.4% during all of 2017.

Nonrevolving credit outstanding rose $8.6 billion (1.8% y/y) during May after rising $9.4 billion in April, revised from $10.2 billion, and $6.0 billion in March, revised from $6.8 billion. Nonrevolving credit held by depository institutions declined 7.3% y/y in May after falling 7.5% y/y in April. Finance company debt holdings eased 0.2% y/y after increasing 0.4% y/y in April, while credit union holdings rose 10.8% y/y in May after a 10.4% y/y April jump. Nonrevolving debt of the federal government rose 4.0% y/y following a 3.6% y/y rise in April.

In May, revolving credit outstanding, which includes credit cards, declined $3.5 billion (+2.6% y/y) after a $7.5 billion gain in April, revised from $7.6 billion following a little-revised rise of $1.9 billion in March. Revolving credit outstanding held by depository institutions fell 2.9% y/y after declining 2.0% y/y in April. Revolving credit held by finance companies fell 10.9% y/y after an 11.6% y/y drop in April, while credit held by credit unions rose a steady 3.9% y/y in May.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Consumer credit weakens more than expected.
- Nonrevolving credit usage eases as revolving credit declines.

U.S. Consumer Credit Slows in May

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The NFIB Small Business Optimism Index slipped 0.2% (+7.8%) to 98.6 in June after rising an unrevised 3.1% in May and falling 1.6% in April, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. Six of the ten index components increased last month. The NFIB Small Business Uncertainty Index fell 5.3% (+8.5% y/y) to 89 after rising 2.2% in May. It was at the lowest level in six months.

The outlook for business conditions dropped in the latest survey. The net balance of respondents expecting the economy to improve stood at 22% last month versus 25% in May. A lessened 7% expected higher real sales in six months, compared to 10% in May. An increased 11% of respondents indicated that now was a good time to expand the business. The figure remained up from 4% last September.

Plans to make capital outlays eased to 21% of firms after rising to 22% in May. Plans to add to inventories were unchanged at -1% of survey respondents, and has been negative or zero all year. The index of expected credit conditions held steady with May at -4%. It remained up from a low of -11 in November 2023. On the labor front, the percent planning to increase employment edged up to 13% from 12% in May. The figure has trended near that level since March, but stands substantially below its high of 32% in August 2021. An increased 50% of businesses reported few or no qualified workers to fill job openings in June, up from a low of 46% last October. These readings remained below a high of 56% in August of last year.

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The net percent of firms reporting higher earnings rose to -22% last month after falling to -26% in May. The figure was increased from the August low of -37%. 

On the pricing front, the net percent raising their average selling prices rose to 29% last month from 25% in May. It had grown to 32% in February. The percentage planning to raise prices increased to 32% in June, up from a 24% low in July of 2024. Worker compensation rebounded as a net 33% of respondents lifted compensation during the last three months versus 26% in the last survey. Compensation gains peaked at 50% of firms in January 2022. A lessened net 19% of firms are making plans to raise worker compensation in the next three months, below November’s high of 28%.

Taxes were reported by an increased 19% of member firms as the single most important issue facing small businesses. These contrasted to a diminished 11% citing inflation as the most important problem. Other major concerns were the cost of labor reported by 10% of firms and government requirements, steady at 9%.

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

- Economic & sales expectations slip.
- Employment plans & job openings improve.
- Percent lifting prices and price expectations rise.

Economy in Brief: 2020

Jump to:

Bank of France Business Survey Rebounds Then Stalls

U.S. Consumer Credit Usage Surprisingly Reverses Course in August

Surprise Drop in German IP; MFG PMI Outruns IP Itself

Mortgage Applications Move Higher as Interest Rates Decline

Mortgage Applications Move Higher as Interest Rates Decline

U.S. JOLTS: Job Opportunities Fall but Hiring Improves

German Orders Continue to Surge...Still They Lag Below February Level

U.S. Gasoline Prices Steady While Crude Oil Costs Ease