Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827d.jpg" width="353">
China&#39;s trade surplus declined by $2,426 million from June to $23,294 million in July, but it was still the third highest on record. Exports were up by $6,894 million but imports rose by $9,320 million. Data on the trade balance, exports and imports are shown in the first chart.
China&#39;s balance of trade with Japan continues to show surplus, while that with Europe and the United States show large deficits. There has been some decline in the deficits with the U.S. and Europe since February of this year, but the declines have been small. The second chart shows the balance of trade with Japan, the U.S. and Europe.
The July data on China&#39;s exports to the U. S. are probably too soon to reflect any impact of the spate of recalls and questions about the quality of some of its exports, notably frozen fish, tooth paste, toys and blankets. As the third chart shows, July exports of toys to the U. S. were up and exports of frozen fish were flat. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827e.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827f.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">CHINA&nbsp;</th>
<th scope="col">Jul 07</th>
<th scope="col">Jun 07&nbsp;</th>
<th scope="col">Jul 06&nbsp;</th>
<th scope="col">M/M Dif&nbsp;</th>
<th scope="col">Y/Y Dif&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>107115</td>
<td>100221</td>
<td>79927</td>
<td>6894</td>
<td>27189</td>
<td>968950</td>
<td>761953</td>
<td>593327</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>83821</td>
<td>47501</td>
<td>65677</td>
<td>9320</td>
<td>18144</td>
<td>791473</td>
<td>659959</td>
<td>561228</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance</td>
<td>23294</td>
<td>25720</td>
<td>14250</td>
<td>-2426</td>
<td>9044</td>
<td>177477</td>
<td>101999</td>
<td>32094</td>
</tr>
<tr>
<td colspan="9"> Exports to: </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>8946</td>
<td>7992</td>
<td>7331</td>
<td>954</td>
<td>1614</td>
<td>91723</td>
<td>84097</td>
<td>73536</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; U.S.</td>
<td>19791</td>
<td>18799</td>
<td>16613</td>
<td>993</td>
<td>3178</td>
<td>203516</td>
<td>162938</td>
<td>124973</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Europe</td>
<td>22152</td>
<td>23321</td>
<td>18042</td>
<td>-1169</td>
<td>4110</td>
<td>215310</td>
<td>165678</td>
<td>122923</td>
</tr>
<tr>
<td colspan="9">Imports from:</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>11373</td>
<td>10730</td>
<td>9673</td>
<td>643</td>
<td>1700</td>
<td>115811</td>
<td>100468</td>
<td>94192</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; U.S.</td>
<td>5879</td>
<td>5504</td>
<td>5130</td>
<td>376</td>
<td>749</td>
<td>59223</td>
<td>48735</td>
<td>44653</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Europe</td>
<td>9370</td>
<td>10888</td>
<td>9614</td>
<td>-1518</td>
<td>-244</td>
<td>114877</td>
<td>96403</td>
<td>88731</td>
</tr>
</tbody>
</table>
</body>
</html>

China's trade surplus declined by $2,426 million from June to $23,294 million in July, but it was still the third highest on record. Exports were up by $6,894 million but imports rose by $9,320 million. Data on the trade balance, [...]

China's Trade Balance Dips in July but Is Still Third Highest on Record

Robert Brusca

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827c.jpg" width="353">
Spain&#39;s price trends show tempered results only for investment goods. Overall PPI inflation is stronger over three months than for year/year trends. Intermediate goods trends are firm at around a 6% pace. Consumer goods price trends are accelerating. 
The impact of these various trends on the overall PPI is depicted in the sequential growth rate chart on the left. Year/year inflation is ever so gradually edging lower. But over 6 months and 3 months, inflation has flared to a stronger pace and to a pace that is above the year/year pace. That is usually a prescription for year/year acceleration as well. While not the largest of the Euro economies, Spain is still significant. Its price trends will not be encouraging to the ECB. But then again this is only the PPI not the favored CPI measure (HICP). 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Spain PPI
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol"> SPAIN</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> May-07</td>
<td> 3-Mo</td>
<td> 6-Mo</td>
<td> Yr/Yr</td>
<td> Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>5.4%</td>
<td>4.9%</td>
<td> 2.3%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.0%</td>
<td> 6.9%</td>
<td> 2.9%</td>
<td> 1.8%</td>
<td> 3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>0.3%</td>
<td>0.6%</td>
<td>0.6%</td>
<td> 6.0%</td>
<td>6.5%</td>
<td> 5.5%</td>
<td>7.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Investment Goods</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.4%</td>
<td> 2.1%</td>
<td> 2.7%</td>
<td>3.0%</td>
<td>2.4%</td>
</tr>
<tr class="even">
<td colspan="8">&nbsp;</td>
</tr>
<tr>
<td class="firstcol">HIPPX Constructions</td>
<td>--</td>
<td>0.5%</td>
<td>0.6%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Spain's price trends show tempered results only for investment goods. Overall PPI inflation is stronger over three months than for year/year trends. Intermediate goods trends are firm at around a 6% pace. Consumer goods price trends [...]

Spain’s PPI Eases Pace in July but Still Too Strong

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827a.jpg" width="353">
Sales of existing homes fell again in July to 5.750M units. Though the decline of 0.2% from a revised 5.76M in June was slight, it still amounted to the lowest level since 2002 and was down 9.0% from the year earlier level. Sales were down 20.2% from the peak during September of 2005. Sales of 5.70M were expected by the Consensus of economists.
Sales of single family homes fell 0.4% last month to 5.0M after a revised 3.3% decline in June. Sales were 20.6% below the peak month of September 2005.
By region, single family home sales rose 1.4% (-2.7% y/y) in the Northeast but n the West sales rose 1.0% (-15.5% y/y) in July. Sales in the Midwest slipped 1.6% (-4.8% y/y) and down South sales slipped 1.0% (-10.4% y/y).
The inventory of single family &quot;homes on the market&quot; rose 2.7% (16.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827b.jpg" width="353">
The median price of an existing single family home slipped 0.3% and versus last year fell 1.0%.
The broad aggregate data on existing home sales are included in Haver&#39;s USECON database; details about prices by region and inventories are available in the REALTOR database.
International Trade: A Larger Piece of the Economic Pie from the Federal Reserve Bank of Atlanta is Available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=73A20C29-5056-9F12-12EF96DE8AD55372&amp;method=display_body">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (SAAR, 000s)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales</td>
<td>5,750</td>
<td>5,760</td>
<td>-9.0%</td>
<td>6,510</td>
<td>7,065</td>
<td>6,727</td>
</tr>
<tr>
<td class="firstcol">Single-Family Sales</td>
<td>5,000</td>
<td>5,020</td>
<td>-9.3%</td>
<td>5,708</td>
<td>6,182</td>
<td>5,914</td>
</tr>
<tr class="odd">
<td class="firstcol">Median Single-Family Home Price (NSA,000s)</td>
<td>$228.6</td>
<td>$229.2</td>
<td>-1.0%</td>
<td>$221.9</td>
<td>$217.5</td>
<td>$192.8</td>
</tr>
</tbody>
</table>
</body>
</html>

Sales of existing homes fell again in July to 5.750M units. Though the decline of 0.2% from a revised 5.76M in June was slight, it still amounted to the lowest level since 2002 and was down 9.0% from the year earlier level. Sales were [...]

U.S. Existing Home Sales Slipped Less Than Expected Last Month

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827c.jpg" width="353">
Spain&#39;s price trends show tempered results only for investment goods. Overall PPI inflation is stronger over three months than for year/year trends. Intermediate goods trends are firm at around a 6% pace. Consumer goods price trends are accelerating. 
The impact of these various trends on the overall PPI is depicted in the sequential growth rate chart on the left. Year/year inflation is ever so gradually edging lower. But over 6 months and 3 months, inflation has flared to a stronger pace and to a pace that is above the year/year pace. That is usually a prescription for year/year acceleration as well. While not the largest of the Euro economies, Spain is still significant. Its price trends will not be encouraging to the ECB. But then again this is only the PPI not the favored CPI measure (HICP). 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
Spain PPI
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol"> SPAIN</td>
<td> Jul-07</td>
<td> Jun-07</td>
<td> May-07</td>
<td> 3-Mo</td>
<td> 6-Mo</td>
<td> Yr/Yr</td>
<td> Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>0.3%</td>
<td>0.4%</td>
<td>0.6%</td>
<td>5.4%</td>
<td>4.9%</td>
<td> 2.3%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Consumer Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>0.0%</td>
<td> 6.9%</td>
<td> 2.9%</td>
<td> 1.8%</td>
<td> 3.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Intermediate Goods</td>
<td>0.3%</td>
<td>0.6%</td>
<td>0.6%</td>
<td> 6.0%</td>
<td>6.5%</td>
<td> 5.5%</td>
<td>7.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Investment Goods</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.4%</td>
<td> 2.1%</td>
<td> 2.7%</td>
<td>3.0%</td>
<td>2.4%</td>
</tr>
<tr class="even">
<td colspan="8">&nbsp;</td>
</tr>
<tr>
<td class="firstcol">HIPPX Constructions</td>
<td>--</td>
<td>0.5%</td>
<td>0.6%</td>
<td>#N/A</td>
<td>#N/A</td>
<td>#N/A</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
China's Trade Balance Dips in July but Is Still Third Highest on Record  
by <a href="/comment/Curley.html">Louise Curley</a> August 27, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827d.jpg" width="353">
China&#39;s trade surplus declined by $2,426 million from June to $23,294 million in July, but it was still the third highest on record. Exports were up by $6,894 million but imports rose by $9,320 million. Data on the trade balance, exports and imports are shown in the first chart.
China&#39;s balance of trade with Japan continues to show surplus, while that with Europe and the United States show large deficits. There has been some decline in the deficits with the U. S. and Europe since February of this year, but the declines have been small. The second chart shows the balance of trade with Japan, the U. S. and Europe.
The July data on China&#39;s exports to the U. S. are probably too soon to reflect any impact of the spate of recalls and questions about the quality of some of its exports, notably frozen fish, tooth paste, toys and blankets. As the third chart shows, July exports of toys to the U. S. were up and exports of frozen fish were flat. <img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827e.jpg" width="353"><img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827f.jpg" width="353">

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">CHINA&nbsp;</th>
<th scope="col">Jul 07</th>
<th scope="col">Jun 07&nbsp;</th>
<th scope="col">Jul 06&nbsp;</th>
<th scope="col">M/M Dif&nbsp;</th>
<th scope="col">Y/Y Dif&nbsp;</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>107115</td>
<td>100221</td>
<td>79927</td>
<td>6894</td>
<td>27189</td>
<td>968950</td>
<td>761953</td>
<td>593327</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>83821</td>
<td>47501</td>
<td>65677</td>
<td>9320</td>
<td>18144</td>
<td>791473</td>
<td>659959</td>
<td>561228</td>
</tr>
<tr class="odd">
<td class="firstcol">Balance</td>
<td>23294</td>
<td>25720</td>
<td>14250</td>
<td>-2426</td>
<td>9044</td>
<td>177477</td>
<td>101999</td>
<td>32094</td>
</tr>
<tr>
<td colspan="9"> Exports to: </td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>8946</td>
<td>7992</td>
<td>7331</td>
<td>954</td>
<td>1614</td>
<td>91723</td>
<td>84097</td>
<td>73536</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; U.S.</td>
<td>19791</td>
<td>18799</td>
<td>16613</td>
<td>993</td>
<td>3178</td>
<td>203516</td>
<td>162938</td>
<td>124973</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Europe</td>
<td>22152</td>
<td>23321</td>
<td>18042</td>
<td>-1169</td>
<td>4110</td>
<td>215310</td>
<td>165678</td>
<td>122923</td>
</tr>
<tr>
<td colspan="9">Imports from:</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Japan</td>
<td>11373</td>
<td>10730</td>
<td>9673</td>
<td>643</td>
<td>1700</td>
<td>115811</td>
<td>100468</td>
<td>94192</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; U.S.</td>
<td>5879</td>
<td>5504</td>
<td>5130</td>
<td>376</td>
<td>749</td>
<td>59223</td>
<td>48735</td>
<td>44653</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Europe</td>
<td>9370</td>
<td>10888</td>
<td>9614</td>
<td>-1518</td>
<td>-244</td>
<td>114877</td>
<td>96403</td>
<td>88731</td>
</tr>
</tbody>
</table>
U.S. Existing Home Sales Slipped Less Than Expected Last Month 
by <a href="/comment/Moeller.html">Tom Moeller</a> August 27, 2007


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827a.jpg" width="353">
Sales of existing homes fell again in July to 5.750M units. Though the decline of 0.2% from a revised 5.76M in June was slight, it still amounted to the lowest level since 2002 and was down 9.0% from the year earlier level. Sales were down 20.2% from the peak during September of 2005. Sales of 5.70M were expected by the Consensus of economists.
Sales of single family homes fell 0.4% last month to 5.0M after a revised 3.3% decline in June. Sales were 20.6% below the peak month of September 2005.
By region, single family home sales rose 1.4% (-2.7% y/y) in the Northeast but n the West sales rose 1.0% (-15.5% y/y) in July. Sales in the Midwest slipped 1.6% (-4.8% y/y) and down South sales slipped 1.0% (-10.4% y/y).
The inventory of single family &quot;homes on the market&quot; rose 2.7% (16.3%.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070827b.jpg" width="353">
The median price of an existing single family home slipped 0.3% and versus last year fell 1.0%.
The broad aggregate data on existing home sales are included in Haver&#39;s USECON database; details about prices by region and inventories are available in the REALTOR database.
International Trade: A Larger Piece of the Economic Pie from the Federal Reserve Bank of Atlanta is Available <a href="http://www.frbatlanta.org/invoke.cfm?objectid=73A20C29-5056-9F12-12EF96DE8AD55372&amp;method=display_body">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Existing Home Sales (SAAR, 000s)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Sales</td>
<td>5,750</td>
<td>5,760</td>
<td>-9.0%</td>
<td>6,510</td>
<td>7,065</td>
<td>6,727</td>
</tr>
<tr>
<td class="firstcol">Single-Family Sales</td>
<td>5,000</td>
<td>5,020</td>
<td>-9.3%</td>
<td>5,708</td>
<td>6,182</td>
<td>5,914</td>
</tr>
<tr class="odd">
<td class="firstcol">Median Single-Family Home Price (NSA,000s)</td>
<td>$228.6</td>
<td>$229.2</td>
<td>-1.0%</td>
<td>$221.9</td>
<td>$217.5</td>
<td>$192.8</td>
</tr>
</tbody>
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Spain’s PPI: Eases Monthly Pace in July but Still Too Strong

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824e.jpg" width="353">
A further clarification on the borrowings data reported late yesterday by the Federal Reserve. There&#39;s some confusion over whether any banks borrowed earlier in the week or if it was just the four large banks who announced they were borrowing on Wednesday.
The Fed&#39;s &quot;Factors Affecting Bank Reserves&quot; H.4.1 release includes two measures for these factors, the daily average for the 7-day week ended each Wednesday and the amount outstanding on Wednesday at the close of business. The average amount of &quot;Primary Credit&quot; for the entire week ended August 22 was $1,200 million. The amount outstanding Wednesday night was $2,001 million. The Fed doesn&#39;t publish these figures for each day. We can, though, use the ones we have to address the general question, was there borrowing before Wednesday?
Take the $1,200 million average for the week. Multiply by 7 to obtain the aggregate amount of daily borrowing for the whole week; this is $8,400 million. Subtract the amount outstanding Wednesday night, $2,001 million, leaving $6,399 million. Divide this by the remaining days of the week, 6, and see that there indeed was an average $1,067 million every day before Wednesday. This is a not inconsiderable amount, given that there had been only $11 million of primary credit on average during the week before. We have no idea what days saw the most, who those borrowers might have been or even what Fed district they are in. But there was in fact noticeable borrowing prior to Wednesday and it looks to us that it was large enough that it probably came from a number of institutions.

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A further clarification on the borrowings data reported late yesterday by the Federal Reserve. There's some confusion over whether any banks borrowed earlier in the week or if it was just the four large banks who announced they were [...]

Borrowing at the Fed: Some Arithmetic

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824g.jpg" width="353">
GDP steady Y/Y up Q/Q on stronger private consumption. 
UK trends are more or less in tact with the release of the Q2 GDP report. Both exports and imports are sharply lower owing to a boost in both flows in Q1 2006. Quarterly trade flows show that exports are lagging a bit more in their recovery compared to imports. Private consumption is still strong, unlike on the continent. 

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
UK GDP
</tr>
</thead>
<tbody>
<tr class="grey4">
<td colspan="2">&nbsp;</td>
<td colspan="2">Consumption</td>
<td colspan="2">Capital Formation</td>
<td>3COLSPAN</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Total</td>
<td>Housing</td>
<td>Exports</td>
<td>Imports</td>
<td>Domestic Demand</td>
</tr>
<tr class="grey2">
<td colspan="9">% change Q/Q; X-M is Q/Q change in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>3.4%</td>
<td>3.0%</td>
<td>3.2%</td>
<td>-4.3%</td>
<td>#N/A</td>
<td>-4.0%</td>
<td>-1.7%</td>
<td>3.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>2.8%</td>
<td>1.9%</td>
<td>2.2%</td>
<td>4.5%</td>
<td>16.0%</td>
<td>-3.3%</td>
<td>-2.6%</td>
<td>2.8%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-06</td>
<td>3.3%</td>
<td>4.4%</td>
<td>1.8%</td>
<td>13.1%</td>
<td>-11.4%</td>
<td>-1.4%</td>
<td>-3.0%</td>
<td>2.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-06</td>
<td>2.8%</td>
<td>1.1%</td>
<td>1.3%</td>
<td>8.7%</td>
<td>8.4%</td>
<td>-38.5%</td>
<td>-39.8%</td>
<td>0.3%</td>
</tr>
<tr class="grey2">
<td colspan="9">% change Yr/Yr; X-M is Yr/Yr change in Gap in Blns of euros</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-07</td>
<td>3.0%</td>
<td>2.6%</td>
<td>2.1%</td>
<td>5.3%</td>
<td>#N/A</td>
<td>-13.4%</td>
<td>-13.5%</td>
<td>2.4%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-07</td>
<td>3.0%</td>
<td>2.9%</td>
<td>1.1%</td>
<td>8.9%</td>
<td>6.7%</td>
<td>-11.6%</td>
<td>-9.8%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-06</td>
<td>3.1%</td>
<td>2.5%</td>
<td>1.9%</td>
<td>9.8%</td>
<td>5.0%</td>
<td>-1.1%</td>
<td>0.1%</td>
<td>3.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-06</td>
<td>3.0%</td>
<td>1.9%</td>
<td>1.9%</td>
<td>7.8%</td>
<td>12.6%</td>
<td>3.5%</td>
<td>4.0%</td>
<td>3.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">5-Yrs</td>
<td>2.8%</td>
<td>2.5%</td>
<td>2.7%</td>
<td>4.3%</td>
<td>#N/A</td>
<td>3.1%</td>
<td>3.6%</td>
<td>2.9%</td>
</tr>
</tbody>
</table>
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GDP steady Y/Y up Q/Q on stronger private consumption. UK trends are more or less in tact with the release of the Q2 GDP report. Both exports and imports are sharply lower owing to a boost in both flows in Q1 2006. Quarterly trade [...]

Yr/Yr UK GDP Growth Holds Steady

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824f.jpg" width="353">
Longer view shows price pressures dissipating in Germany. 
On the month, German export and import prices were subdued but over three months some pressures are evident. But broader year-over-year trends do seem to have turned a corner. Excluding petroleum export and import prices are moving lower: fast for imports, slower for exports. Domestically, producer prices excluding energy are ever so gradually losing momentum, while consumer prices are slow in showing declines after having stepped up their pace sharply early in 2007. Internationally, excluding petroleum, trends are generally milder than their domestic counterparts.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead>
<tr>
German International and Domestic Inflation Trends
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">M/M % Change</td>
<td colspan="4">% SAAR</td>
</tr>
<tr class="odd">
<td class="firstcol">SA</td>
<td>Jul-07</td>
<td>Jun-07</td>
<td>May-07</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr-Ago</td>
</tr>
<tr>
<td class="firstcol">Export Prices</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>1.9%</td>
<td>1.5%</td>
<td>1.6%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol">Import Prices</td>
<td>0.1%</td>
<td>1.1%</td>
<td>0.5%</td>
<td>6.9%</td>
<td>5.6%</td>
<td>0.4%</td>
<td>6.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">NSA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Exports ex Petrol</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>1.7%</td>
<td>2.5%</td>
</tr>
<tr>
<td class="firstcol">Imports ex Petrol</td>
<td>-0.4%</td>
<td>0.0%</td>
<td>0.0%</td>
<td>-1.5%</td>
<td>0.0%</td>
<td>0.6%</td>
<td>4.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo: SA</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">CPI</td>
<td>0.3%</td>
<td>0.0%</td>
<td>0.2%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>2.0%</td>
</tr>
<tr>
<td class="firstcol">CPI ex energy</td>
<td>0.2%</td>
<td>0.0%</td>
<td>0.1%</td>
<td>1.1%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">PPI</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>2.0%</td>
<td>1.9%</td>
<td>1.1%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">PPI ex energy</td>
<td>0.1%</td>
<td>0.4%</td>
<td>0.2%</td>
<td>2.6%</td>
<td>2.6%</td>
<td>2.5%</td>
<td>3.0%</td>
</tr>
</tbody>
</table>
</body>
</html>

Longer view shows price pressures dissipating in Germany. On the month, German export and import prices were subdued but over three months some pressures are evident. But broader year-over-year trends do seem to have turned a corner. [...]

German Export and Import Prices Misbehave as Domestic Trends Turn Lower Too

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824d.jpg" width="353">
July new home sales increased 2.8% from June to 870,000 following a 4.0% drop during June which was less than reported initially. 
The sales increase during July owed mostly to a 22.4% (-19.6% y/y) gain in sales in the West. Sales also rose 0.6% (-3.0% y/y) in the South but in the Northeast sales fell 24.3% (11.7 y/y) after a similar drop during June. In the Midwest sales fell 0.9% (-18.2% y/y) after a whopping 21.5% decline during June.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/070824c.jpg" width="353">
The inventory of unsold homes fell 0.9% (-7.0% y/y) after three months of steady decline.
The median new home price rose 3.9% (+0.6% y/y) after three months of hard decline during which the June decline was deepened to -4.6% m/m.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">US New Homes</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
<th scope="col">2004</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Sales (SAAR, 000s)</td>
<td>870</td>
<td>846</td>
<td>-10.2%</td>
<td>1,049</td>
<td>1,279</td>
<td>1,201</td>
</tr>
<tr>
<td class="firstcol">Median Price (NSA, $)</td>
<td>239,500</td>
<td>230,600</td>
<td>0.6%</td>
<td>241,125</td>
<td>234,208</td>
<td>217,817</td>
</tr>
</tbody>
</table>
</body>
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July new home sales increased 2.8% from June to 870,000 following a 4.0% drop during June which was less than reported initially. The sales increase during July owed mostly to a 22.4% (-19.6% y/y) gain in sales in the West. Sales also [...]

New Home Sales and Prices Up

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

Policy uncertainty has surged since the US national elections.

Recent turnaround in US economic surprises leading to increases in rate-cut expectations

The outlook has brightened in the US, while it has dimmed for other major economies

Headline US PCE inflation elevated by sticky services prices

US and global equity prices have recently diverged

US leading global upturn in economic surprises

Blue Chip forecasters look for further significant monetary easing apart from Japan

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

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The Conference Board's Index of Consumer Confidence fell 7.2% (-9.9% y/y) to 92.9 after a 4.9% decline in February to 100.1, revised from down 6.6%. A reading of 94.0 had been expected in the Action Economics Forecast Survey. The March figure was 17.6% below its November high. Weakness in confidence is widespread amongst components in this latest report.

The Expectations Index slumped 12.8% (-11.9% y/y) to 65.2, after a 9.0% February weakening, revised from a 12.9% decline. This latest figure was the weakest since March 2013. The Present Situation index fell 2.6% (-8.4% y/y) to 134.5, after declining 1.3% in February, revised from down 2.4%, after a 2.8% January fall. The reading was the lowest in six months.

The percentage of respondents assessing business conditions as “good” fell to 17.7% this month after declining to 19.1% in February. The index hit a high of 22.0 in October. The percentage assessing conditions as “bad” rose to 16.6% after falling to 14.8% in February. The appraisal of labor market conditions held steady m/m in March as 33.6% of respondents thought jobs were plentiful, down from 41.7% one year earlier. Jobs were viewed as hard to get by 15.7% of respondents this month, down from 16.0% in February. This measure has risen from 11.0% in January 2024. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) stood at 17.9% compared to 17.6% in February and remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations for business conditions deteriorated in March. A lessened 17.1% of respondents expect conditions to improve over the next six months, down from 20.8% in both February and January, while a higher 27.3% expect them to deteriorate, up from 25.5% in February. On employment, a lessened 16.7% expect the number of jobs to increase over the next six months. The percentage expecting the number of jobs to decline in the next six months rose to 28.5% after surging to 26.6% in February, and increasing to 21.0% in January. A lessened 16.3% expect income to increase in six months. That remained down from a high of 20.7% in November and compares to a higher 15.5% who expect income to decrease.

The expected rate of price inflation over the next twelve months rose to 6.2% in March after increasing to 5.8% in February from 5.2% in January. Interest rates are expected to rise this year by a higher 54.6% of respondents, up from 52.6% in February. The percentage of respondents expecting equity prices to increase over the next twelve months plummeted to 37.4% after dropping to 46.7% in February, while the percentage expecting a decline in stock prices jumped to 44.5% after rising to 34.0% in February.

The percentage of respondents planning to buy a home rose in March to 5.4% from 5.3% in February. Plans to purchase an automobile eased to 10.3% this month from a downwardly revised 10.7% in February.

The Consumer Confidence data are available in Haver’s **CBDB** database. The total indexes, which are indexed to 1985=100, appear in **USECON**, and market expectations are in **AS1REPNA**.

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- Confidence weakens to lowest level since January 2021.
- Expectations reading plummets to twelve-year low; present situation reading weakens.
- Inflation and interest rate expectations rise further.

U.S. Consumer Confidence Tumbles in March; Inflation Expectations Strengthen

Michael J. Moran

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Sales of new homes rose 1.8% in February, a solid increase on a month-to-month basis, but one that had little influence on the recent trend. The ups and downs of the past two years have traced a sideways path, with the February total of 676 thousand homes (annual rate) nearly identical to the average of 675 thousand in the prior two years.

Results for new home sales in the past two years have been light relative to the burst triggered by low interest rates from mid-2020 to early 2022, and they are well shy of the exuberance seen in the years before the housing-related recession in 2008-09. Otherwise, sales compare favorably with historical norms.

While sales of new homes can be viewed as respectable, more might have been expected given conditions in the market for existing homes. Sales of existing homes have been light in the past two years because of the effects of high interest rates on potential sellers. Many households that might be interested in moving have remained on the sidelines rather than surrender a low-rate mortgage. With a lack of supply, sales of existing homes have been depressed.

The market for new homes is not supply constrained, as the months’ supply is in the upper portion of its historical range. One might expect potential buyers to shift to the new home market given the limited availability in the existing market. However, a slow pace of total sales (new + existing) suggests that the housing market overall is in the doldrums. High interest rates apparently have triggered affordability issues for many buyers.

Despite slow sales, housing prices have not done much to counter affordability issues. The average and median prices of new homes are now drifting lower, but the change has been modest relative to the surge in prices from 2020 to 2022. More notable, the median price of existing homes has continued to move higher, and various indexes of home prices continue to show upward pressure – lighter than it was two to four years ago, but still upward.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

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- A Respectable pace of new home sales...
- ...but only a modest counter to soft sales in the existing home market.

New Home Sales: Range Bound Activity in February

Winnie Tapasanun

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U.S. house prices rose 0.2% m/m in January after rises of 0.5% in December (+0.4% initially) and 0.4% in November (unrevised), according to the Federal Housing Finance Agency (FHFA) House Price Index. The January reading was the 10th consecutive m/m gain but the smallest since June 2024. The January HPI at 436.52 was 12.9% above a low of 386.53 in August 2022 and 55.2% above a low of 281.32 in May 2020. The year-on-year rate of increase registered at 4.8% in January and December, the highest since July 2024; nevertheless, having remained lower than 6.7% in January 2024 and well below a high of 18.7% in February 2022.

House prices rose m/m in January (vs. December) in six of the nine census divisions. These included West North Central (1.0% vs. -0.2%), Middle Atlantic (0.7% vs. 0.7%), East North Central (0.5% vs. 0.6%), Pacific (0.5% vs. 0.3%), West South Central (0.4% vs. 0.2%), and East South Central (0.2% vs. 0.5%). To the downside, house prices fell m/m in two census divisions in January (vs. December): South Atlantic (-0.8% vs. 0.3%) and Mountain (-0.6% vs. 1.7%). Meanwhile, house prices in New England were virtually unchanged (+7.3% y/y) in January following six straight m/m increases.

Year-on-year house prices continued to gain in January, with the pace of advance accelerating (vs. December) in four of the nine census divisions. These were Middle Atlantic (8.2% vs. 7.2%), East North Central (6.9% vs. 6.4%), East South Central (4.8% vs. 4.0%), and Pacific (3.6% vs. 2.9%). Meanwhile, house price growth decelerated y/y in January (vs. December) in the following four census divisions: Mountain (3.7% vs. 5.1%), South Atlantic (3.9% vs. 4.4%), West North Central (5.0% vs. 5.2%), and New England (7.3% vs. 7.9%). House price growth in the West South Central region held steady at 2.4% y/y.

The FHFA house price index is a weighted purchase-only index that measures average price changes in repeat sales of the same property. An associated quarterly index includes refinancing the same kind of properties. The indexes are based on transactions involving conforming conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included.

The FHFA data are available in Haver’s **USECON** database.

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- FHFA HPI +0.2% m/m (+4.8% y/y) in Jan.; +0.5% m/m (+4.8% y/y) in Dec.
- House prices up m/m in six of nine census divisions but down in South Atlantic and Mountain.
- House prices up y/y in all of the nine regions, w/ the highest rate in Middle Atlantic (8.2%).

U.S. FHFA House Price Growth Decelerates in January

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Retail gasoline prices for all grades rose to a four-week high last week and averaged $3.24 per gallon (-11.0% y/y) after falling to $3.18 in the week ending March 17. Prices have risen from a low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Its all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel improved to $3.57 per gallon (-11.6% y/y) in the week of March 24 after easing to $3.55 in the prior week. The latest diesel price remained well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil edged up to $67.64 per barrel (-17.9% y/y) in the week ended March 21, after rising to $66.74 per barrel in the prior week. Prices have fallen from a high of $78.50 where they were nine weeks ago, remaining below a high of $91.45 in the week of September 29, 2023. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $69.11	 per barrel. The price of European Brent crude oil of $72.18 per barrel (-16.0% y/y) in the week of March 21 compared to $71.54 in the prior week and a high of $82.79 nine weeks ago. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in the week of June 10, 2022. Yesterday, the price was $73.96 per barrel.

Natural gas prices held last week at an average $4.14 per mmbtu (168.8% y/y) in the week ended March 21 after easing to $4.15/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $4.03 per mmbtu.

Gasoline demand held steady y/y in the four weeks ending March 14 after edging 0.1% higher in the prior four weeks. Demand for all petroleum products rose 2.5% y/y in the four weeks ending March 14 after a 3.9% y/y rise in the previous four-week period. Crude oil input to refineries rose 1.8% y/y in the four weeks ending March 14 after a 3.4% y/y increase in the prior four weeks.

Gasoline inventories rose 4.2% y/y in the week ending March 14 after a 3.0% y/y rise in the week ending March 7. Residual fuel oil inventories fell 21.3% y/y in the week of March 14, after an 17.1% y/y fall in the prior week. Crude oil inventories rose 3.2% y/y in the week of March 14 after a 2.8% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell to 27.2 days in the week of March 14 from 27.8 days in the prior week. The recent low was 22.9 days in the week of November 8. The supply of crude oil was 28.0 days in the week of March 14 for the third straight week, but remained below a high of 31.9 days in the week of March 3, 2023.

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

- Gasoline costs rise.
- Crude oil prices move higher.
- Natural gas costs stabilize.

U.S. Gasoline Prices Strengthen Last Week

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Germany's all sector climate index improved in March to -19.8 from -24 in February. Still, the index only has a 13.9 percentile standing on data back to the early 1990s. The all-sector climate index, the current index and expectations all improve month-to-month with the scope of improvement for the all-sector climate and expectations indexes greater only about 10% of the time. These are sharp month-to-month improvements. However, the levels of the indexes are so weak that the rankings continue to scrape very low levels. Overall conditions in Germany have hardly changed despite the solid month-to-month improvement concentrated in climate and expectations.

**Climate**
The climate measure shows improvements for the all-sector reading, manufacturing, construction wholesaling, retailing, and services. The highest percentile standing for any sector is for construction at a below-median 41.5 percentile standing. The next highest standing is for retailing at a 24.5 percentile standing, the weakest reading is a standing of 10.3% in manufacturing, and the services sector is at a 13.2 percentile standing, not too much stronger than that. 

**Transition-Ho!**
While climate conditions are still in difficult straits, we find that current conditions standings are largely worse than for climate standings; expectations show uneven comparisons. We know there are big changes coming to Europe, particularly for Germany, because of the new shift to more defense spending. This, obviously, will create improvements in the defense sector but should also have broader multiplier effects for the economy, for the manufacturing sector, but also for the economy in general. We also expect these changes to spread across Europe with similar increases in military spending to be introduced in other countries, as the United States is looking for Europe to carry more of its own security burden. We should continue to see improvements in expectations and in climate in the coming months and those improvements should be translated gradually into improved current conditions as well.

**Current conditions-Manufacturing and Construction lead**
Current conditions in the index show improvement across all sectors with minuscule improvements being posted in wholesaling and in retailing in March. The percentile standing for the current indexes in March show the strongest reading in construction; it is the only sector above its median: above its 50th percentile at 61.6%, with retailing close to its 50th percentile mark at 48.2%. The weakest readings are for manufacturing at an 11.9 percentile standing and then services at a 16.9 percentile standing. But manufacturing has the largest month-to-month gain. The overall standing for current conditions is lower still at its 10.7 percentile standing, indicating a confluence of weakness across sectors, a result that has the overall index at a weaker standing than any for individual sector.

**Expectations – Manufacturing surges**
Expectations show broad improvement and for the most part fairly significant improvement across sectors. The headline improvement shows expectations at -16.1 in March compared to -20.5 in February, which leaves the index at a 16.9 percentile standing overall. Expectation standings are weak, however, with the strongest expectation standing in manufacturing at 21.1%, the second strongest for wholesaling at 19.8%; services rank third with the standing of 15.1%. Construction, the sector that has the strongest current and climate standings, has the weakest expectation-standing at the 8.2 percentile mark.

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**Summing up and looking ahead**
These readings begin to pick up some of the changes in progress with expectations showing still very weak current readings but substantial pickups month-to-month. However, most of this is simply expectations improving; it is not expectations built on actually better performance and jumping off from there, as we can see from the fact that the current indexes or the most part are not much changed month-to-month, with extremely little change in wholesaling and retailing. Still, both of those current/expectations reading are higher; manufacturing is also improved in the current reading but expectations are leading the way ahead, improving faster, not the other way around. German transactors are beginning to look to the future recognizing there is a change afoot on military spending that is going to permeate the economy and we're beginning to see that in different aspects of the IFO survey. Stay tuned and stay alert.

Economy in Brief: August 2007

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