Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624i.jpg" align="left" border="0" height="265" width="353">
The British Bankers Association (BBA) announced today that
mortgage approvals for house purchases by banks in the United Kingdom
continued to fall in May. At 4,289 million GBP (Great Britain Pounds)
they are now 64% below the peak of 11,811 million GBP reached in
November of 2006. Approvals for re-mortgaging, on the other hand, are
rising. In May they were 9,165 million GBP, more than twice approvals
for house purchases. In the past approvals for refinancing were
generally lower than those for house purchases as can be seen in the
first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624j.jpg" align="right" border="0" height="265" width="353">
In addition to banks, building societies, non bank credit
grantors and specialist mortgage lenders are in the business of
providing loans for house purchase and re-mortgaging. The Bank of
England publishes data on all the sources of mortgage finance, usually
about three weeks after the BBA release. As banks are the major
supplier of mortgage credit, there is a close correlation between the
two series as can be seen in the second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">UNITED
KINGDOM &nbsp;</th>
<th scope="col">May 08</th>
<th scope="col">Apr 08&nbsp;</th>
<th scope="col">Mar 08&nbsp;</th>
<th scope="col">Peak&nbsp;</th>
<th scope="col">% Chg from peak&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol" colspan="9">BRITISH
BANKERS
ASSOCIATION
(mil GBP)</td>
</tr>
<tr class="odd">
<td class="firstcol">Mortgage Approvals for
House Purchase</td>
<td>4289</td>
<td>5354</td>
<td>5806</td>
<td>11811*</td>
<td>-63.69</td>
<td>105727</td>
<td>115475</td>
<td>97175</td>
</tr>
<tr class="odd">
<td class="firstcol">Mortgage Approvals for
Refinancing</td>
<td>9165</td>
<td>9987</td>
<td>9632</td>
<td>11160#</td>
<td>-17.88</td>
<td>103155</td>
<td>94351</td>
<td>85802</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td class="firstcol">BANK OF ENGLAND</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">Mortgage Approvals for
House Purchase</td>
<td>--</td>
<td>8268</td>
<td>8997</td>
<td>17933*</td>
<td>-53.90</td>
<td>180494</td>
<td>192325</td>
<td>146750</td>
</tr>
<tr class="odd">
<td class="firstcol">Mortgage Approvals for
Refinancing</td>
<td>--</td>
<td>14133</td>
<td>13627</td>
<td>15072#</td>
<td>-6.23</td>
<td>150744</td>
<td>138590</td>
<td>128970</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">
&nbsp;* November, 2006
</td>
</tr>
<tr class="odd">
<td colspan="9" class="firstcol">&nbsp;#
January, 2008</td>
</tr>
</tbody>
</table>
</body></html>

The British Bankers Association (BBA) announced today that mortgage approvals for house purchases by banks in the United Kingdom continued to fall in May. At 4,289 million GBP (Great Britain Pounds) they are now 64% below the peak of [...]

UK Mortgage Approvals By Banks Continue To Fall

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624f.jpg" width="353">
Last week, the retail price for a gallon of regular gasoline remained even with the prior week&#39;s level of $4.08 per gallon, according to the U.S. Department of Energy survey. For all grades of gasoline the average price also remained even w/w at an average $4.13 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline continued about stable with last week&#39;s level at $3.30 per gallon.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624g.jpg" width="353">
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database, daily prices are in the DAILY database.
According to the U.S. Department of Energy the increase in gasoline prices, along with the slowdown in economic growth, have lowered the demand for gasoline during the latest four weeks by 2.4% from a year earlier.
The DOE figures are available in Haver&#39;s OILWKLY database.
During all of last week, the price of a barrel of WTI crude oil dipped slightly to an average of $134.37 but yesterday the price moved higher $136.00.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">06/23/08</th>
<th scope="col">06/16/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per Gallon)</td>
<td>4.08</td>
<td>4.08</td>
<td>36.8%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil, WTI&nbsp; ($ per bbl.)</td>
<td>134.37</td>
<td>134.73</td>
<td>95.7%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
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Last week, the retail price for a gallon of regular gasoline remained even with the prior week's level of $4.08 per gallon, according to the U.S. Department of Energy survey. For all grades of gasoline the average price also remained [...]

U.S. Gasoline Price Stable at $4.08 per Gallon

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624d.jpg" align="left" border="0" height="265" width="353">
The Conference Board reported that consumer confidence this
month fell by 13.3% m/m after a 7.5% drop in May. The decline nearly
equaled the largest since 2005 and it more-than-doubled the decline
that was generally expected.
The June decline left confidence at its lowest level since
early-1992.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624e.jpg" align="right" border="0" height="265" width="353">
The present conditions index fell 13.1% m/m to the lowest
level since 2003.
Just 11.5% of respondents saw business conditions as good, the
lowest since early-1992. Jobs as plentiful were seen by a much lessened
14.1% while 30.5% felt that jobs were hard to get, the highest since
mid-2004.
The expectations component of the index fell a notably hard
13.3% m/m to a record low. The percentage of respondents expecting
business conditions to worsen in six-months rose to 33.9% and the
percentage expecting income to decline rose to 15.9%. Only 8.0% of
respondents expected more jobs.
Expectations for the inflation rate held steady last month at
7.7%. That was the highest level in the series' 20 year history.
Consumer Confidence Surveys: Can They Help Us
Forecast Consumer Spending in Real Time? is a 2006 article
from the Federal Reserve Bank of Philadelphia. It answers "no" and it
is available <a href="http://www.philadelphiafed.org/files/br/br_q3-2006-1_consumer_confidence.pdf">here</a>.
<div align="left"></div>


<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Conference
Board &nbsp;(SA, 1985=100)</th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y %</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer
Confidence Index</td>
<td>50.4</td>
<td>58.1</td>
<td>-52.1</td>
<td>103.4</td>
<td>105.9</td>
<td>100.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;
Present Situation</td>
<td>64.5</td>
<td>74.2</td>
<td>-50.3</td>
<td>128.8</td>
<td>130.2</td>
<td>116.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;
Expectations</td>
<td>41.0</td>
<td>47.3</td>
<td>-53.8</td>
<td>86.4</td>
<td>89.7</td>
<td>89.7</td>
</tr>
</tbody>
</table>
</body></html>

The Conference Board reported that consumer confidence this month fell by 13.3% m/m after a 7.5% drop in May. The decline nearly equaled the largest since 2005 and it more-than-doubled the decline that was generally expected. The June [...]

Consumer Confidence in June Again Fell Surprising Hard

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624c.jpg" align="left" border="0" height="265" width="353">
At the crossroads 
The IFO business sentiment reading made a deeper Yr/Yr drop in June
than in May. It has slipped to the 68th percentile of its range of
values (range from 1992 to date). The current situation is not as glum
a reading as it stands in the 78th percentile of its range; it is
hardly beleaguered. Yet, it slipped in the month and was lower by 2.8%
Yr/Yr, a bigger drop than May&#8217;s 2.1%. But it is the all-important
expectations index that by its very nature is more forwarding looking
and that is a cause for distress. This index fell by 7.9% Yr/Yr more
than the 7.1% registered in May. Its June level stands at the 50.9th
percentile of its range almost exactly mid range. The German economy is
at the crossroads. 
 

The diffusion values show widespread slippage in June with
each of the major sectors lower in June than in May except for
construction. The all-sector climate diffusion index stands at 1.7 down
from 6.1 in May. It stands at the 85.2 percentile much like its pure
index counterpart listed in the table above which is in its 68th
percentile. The sector detail from diffusion data is the only sector
detail available for now. 
 

Climate by sector slipped to 8.2 from 15.0 in MFG dropping
climate to the 61st percentile of its range. Construction is an odd
case at a -18.9 actually stronger than May&#8217;s -20.2 and standing in the
74th percentile of its range. Despite the poorer absolute performances
the construction sector is doing relatively better than MFG.
Wholesaling index slipped to 2.1 from 4.0 falling to the 66th
percentile of its range. Retailing registered a weaker -6.5 compared to
-4.4 in May, a range reading of the 80.9 percentile again, an
absolutely weaker sector with a relative standing that is better than
the group average. Services fell to a +16.3 diffusion reading from
+19.4 in May for a percentile standing of 72.4. 
 

Since these are diffusion readings and span positive and
negative values we cannot express drops from their peaks very
effectively. But in terms of the range percentiles we can give some
idea of the slippage. Most of these series peaked in Early 2006 or late
2007. Over this period each was at its own respective cycle high 100th
percentile. So each index has fallen from 100% during this period to
its current reading. These are large drops over a span of 18-months or
less. 
 

The net changes in these various indices the over 18-months
are about half as large as the largest 18-month dropped ever
experienced for all sectors for MFG and for wholesaling. For consumers
the last 18 month&#8217;s drop is only one-quarter on the largest ever. For
retail sales and services the drop is on the order of the fifth to
tenth percentile of the largest drop. In terms of monthly variation the
all-sector reading is 17% more variable over the past 18months than
what is normal MFG is 11% more variable. Wholesaling is has been more
variable. But construction has been 20% less variable retailing has
been 15% less variable. Services overall have been 35% less variable.
It has been a bit of a mixed bag but the German consumer and services
sector has been clearly eroding but slowly while MFG has been slipping
more rapidly. 
 

What we have is an economy in transition with most of the
transition coming from manufacturing and wholesaling (trade). The
domestic retail construction and services industries aren&#8217;t really hit
that hard although they have been slipping. With banks seeing some
financial stress and turmoil we have to wonder how long before real
estate gets hit since it is a troubled sector internationally and
requires bank financing in most circumstances. Manufacturing shows
weakness and the euro remains strong; how long before it begins to
affect the consumer and services sectors? What of the eroding impact on
the consumer of higher oil prices? The RTC/Reuters indices already how
a bigger hit to services that does the IFO reading. Ultimately, it&#8217;s a
question of contagion from a weaker MFG sector and a direct hit from
oil. 
 

<div align="left">
<div align="left"></div>
</div>


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">IFO Survey: Germany </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="3">Index Numbers</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>Feb-08</td>
<td>Current</td>
<td>Average</td>
<td>%tile</td>
</tr>
<tr>
<td class="firstcol">Biz Climate</td>
<td>-5.3%</td>
<td>-4.6%</td>
<td>-5.7%</td>
<td>-2.7%</td>
<td>-2.8%</td>
<td>101.3</td>
<td>96.1</td>
<td>68.6%</td>
</tr>
<tr>
<td class="firstcol">Current Situation</td>
<td>-2.8%</td>
<td>-2.1%</td>
<td>-4.2%</td>
<td>-0.7%</td>
<td>-1.1%</td>
<td>108.3</td>
<td>95.4</td>
<td>78.0%</td>
</tr>
<tr>
<td class="firstcol">Biz Expectations: Next 6-Mos</td>
<td>-7.9%</td>
<td>-7.1%</td>
<td>-7.2%</td>
<td>-4.7%</td>
<td>-4.4%</td>
<td>94.7</td>
<td>97.0</td>
<td>46.3%</td>
</tr>

</tbody>
</table>
</body></html>

At the crossroads The IFO business sentiment reading made a deeper Yr/Yr drop in June than in May. It has slipped to the 68th percentile of its range of values (range from 1992 to date). The current situation is not as glum a reading [...]

IFO Business Sentiment Reading is Still Sinking

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624a.jpg" align="left" border="0" height="265" width="353">
The April S&amp;P/Case-Shiller
Composite 20 home price index fell 1.4% m/m and continued its decline
from the peak in home prices reached during July 2006. The decline in
home prices since that peak totals 17.8% and 15.3% during the last
twelve months. The series dates back only to 2000.
For the first quarter overall, home prices fell 6.7% and that
was the largest decline since the series peak in 2Q06. Year to year, 1Q
prices were down 14.1%.
The Case-Shiller index of 20 U.S. cities and their surrounding
areas is not adjusted for the quality or the size of a home. The home
price index from the Office of Federal Housing Enterprise Oversight
(OFHEO), released last week, does make these adjustments. This series
indicates that during 1Q08 house prices were roughly unchanged y/y but
the purchase-only price index fell 3.1% y/y.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080624b.jpg" align="right" border="0" height="265" width="353">
The Case-Shiller composite index of homes in just 10
metropolitan areas has a longer history and dates back to 1987. This
measure of prices fell 1.6% in April and was down 16.3% year-to-year.
Home prices in Las Vegas Nevada remained quite weak and were
down 26.8% y/y. Prices in Miami were off 26.7% and home prices in Los
Angeles were off 23.1%. In San Diego prices fell 22.4% but they were
off a lesser 8.4% in New York and by 6.4% in Boston.
In Dallas prices also were off a moderate 3.4% and they were
down 0.1% in Charlotte, North Carolina.
The latest press release from Standard &amp; Poor's can be
found <a href="http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_062418.pdf">here</a>..
An overview of the S&amp;P/Case-Shiller home price series can be
found <a href="http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_csmahp/0,0,0,0,0,0,0,0,0,1,1,0,0,0,0,0.html">here</a>.
The S&amp;P/Case-Shiller home price series can be found in
Haver's USECON database but the city data is in the
REGIONAL database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">S&amp;P/Case-Shiller
Home Price Index (NSA, Jan 00 = 100)</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">20 City Composite
Index</td>
<td>169.85</td>
<td>172.20</td>
<td>-15.3%</td>
<td>-3.8%</td>
<td>7.6%</td>
<td>15.8%</td>
</tr>
</tbody>
</table>


</body></html>

The April S&P/Case-Shiller Composite 20 home price index fell 1.4% m/m and continued its decline from the peak in home prices reached during July 2006. The decline in home prices since that peak totals 17.8% and 15.3% during the last [...]

Case-Shiller Home Price Index Off 17.8% Since Peak

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080623f.jpg" align="left" border="0" height="265" width="353">
Price trends deteriorate 
Manufacturing prices were up strongly in May. All major divisions of
the PPI are showing some pressure even capital goods inflation is
rising. Core PPI prices are up by 2.9% Yr/Yr and at a faster paced 3.6%
over three-and six-months. 
 

Inflation accelerates 
At least the acceleration in consumer prices where inflation has been
the virulent has begun to slow. Yet, over the past year the Yr/Yr
inflation rate has accelerated by four percentage points while Core PPI
inflation has accelerated by 0.3 percentage points. 
 

Why it matters&#8230; 
While the ECB&#8217;s inflation ceiling applies to HICP prices only, the
worry from the ECB&#8217;s standpoint is that producer price inflation could
become embedded in prices at the consumer level. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Germany PPI </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">%m/m</td>
<td colspan="4">%-SAAR</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>12-moY-Ago</td>
<td>IN Q1</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>1.1%</td>
<td>0.9%</td>
<td>0.5%</td>
<td>10.5%</td>
<td>7.7%</td>
<td>5.9%</td>
<td>1.9%</td>
<td>8.3%</td>
</tr>
<tr>
<td class="firstcol">Ex Energy</td>
<td>0.4%</td>
<td>0.2%</td>
<td>0.4%</td>
<td>3.6%</td>
<td>3.6%</td>
<td>2.9%</td>
<td>2.6%</td>
<td>4.1%</td>
</tr>
</tbody>
</table>
</body></html>

Price trends deteriorate Manufacturing prices were up strongly in May. All major divisions of the PPI are showing some pressure even capital goods inflation is rising. Core PPI prices are up by 2.9% Yr/Yr and at a faster paced 3.6% [...]

PPI Pressures Begin to Spread in Germany

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080623b.jpg" width="353">
The Chicago Fed National Activity Index (CFNAI), published by the Chicago Federal Reserve Bank, for May remained negative at -0.96. The reading left the three-month moving average of the figure to -1.08 which was near its lowest level since the end of the 2001 recession.
A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP. An index level at or below -0.70 typically has indicated negative U.S. economic growth.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_june2008.pdf">here</a> and the historical data are available in Haver&#39;s SURVEYS database.
The modest improvement in May owed to production-related indicators. Employment, consumption and housing continued to make negative contributions to the CFNAI during April.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
Economic Trends and the Chicago Fed National Activity Index from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/fedletter/cflmay2008_250.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">May &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.96</td>
<td>-1.23</td>
<td>-0.29</td>
<td>-0.42</td>
<td>-0.05</td>
<td>0.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-1.08</td>
<td>-1.27</td>
<td>-0.15</td>
<td></td>
<td></td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
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The Chicago Fed National Activity Index (CFNAI), published by the Chicago Federal Reserve Bank, for May remained negative at -0.96. The reading left the three-month moving average of the figure to -1.08 which was near its lowest level [...]

Chicago Fed Index Still Gives A Recession Signal

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

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

US economy expected to outperform other major economies in 2025

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

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

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Nonfarm payrolls increased 73,000 during July after rising 14,000 in June, revised from 147,000, and 19,000 in May, revised from 144,000. Expectations had been for a 102,000 rise in the Action Economics Forecast Survey. The three-month average change in payrolls of 35,000 compared to 64,000 in June. The Bureau of Labor Statistics indicates that monthly revisions result from additional reports received from businesses and government agencies since the last published estimates.

Average hourly earnings rose an expected 0.3% during July after unrevised gains of 0.2% and 0.4% in June & May. Earnings growth of 3.9% y/y is little changed over twelve months, but has been trending lower from its 5.9% high in March 2022.

The unemployment rate, measured in the household survey, edged up m/m to an expected 4.2% from 4.1% and compared to 4.2% in the previous three months. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, rose to 7.9% last month from 7.7% In June. It was 6.6% in April 2023.

In the **establishment survey**, private-sector employment in July rose 83,000, factory sector jobs declined 11,000, off for the third straight month. Construction sector employment increased 2,000, after rising 3,000 in June. The number of mining & logging industry jobs declined 4,000 after falling in both of the prior two months. 

Private service sector employment increased 96,000 July after improving 16,000 in June. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 79,000 last month, following a 52,000 increase in June. The number of trade, transportation & utilities jobs gained 11,000, following a 22,000 decline and financial activities employment improved 15,000 after a 2,000 drop, while leisure & hospitality employment rose just 5,000 after a 4,000 gain. The number of professional & business services jobs fell 14,000, down for the third straight month.  Information sector employment fell 2,000, after holding steady in June.

Government sector payrolls declined 10,000 last month and revered June’s 11,000 rise. Federal government employment weakened 12,000 and has fallen for six straight months. Local government employment eased 3,000 after rising 10,000 in June while state government payrolls rose 5,000 after increasing 10,000.

Private-sector average hourly earnings rose 0.3% (3.9% y/y) in July. Earnings in the goods-producing sector edged up 0.1% (3.6% y/y). In construction, earnings rose 0.2% (3.7% y/y) following a 0.4% rise, but factory sector earnings eased 0.1% (+3.6% y/y). In the service sector, earnings rose 0.4% (4.0% y/y) in July after increasing 0.2% in June.

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The length of the average workweek rose to 34.3 hours in July from 34.2 hours in June. The workweek in the goods-producing sector lengthened to 39.9 hours from 39.7 hours. The construction sector average workweek rose to 39.1 hours from 38.9 while the factory sector workweek held steady at 40.1 hours. The average workweek in the private service sector edged up to 33.2 hours from 33.1 hours.

In the **household survey**, the unemployment rate increased to 4.2% in July after falling to 4.1% as employment fell 260,000 after rising 93,000 in June and the size of the labor force declined 38,000, off for the third straight month. The labor force participation rate eased to 62.2% last month from 62.3% and remained below the high of 63.3% early in 2020. The rate for teenagers declined to 35.0%, after plunging to 35.1%. For workers aged 20-24, the rate declined to 70.9%. For workers aged 25-54, the participation rate eased to 83.4%. For individuals 55 and over, the rate improved slightly to 38.1% but remained near a 20-year low of 38.0% in June.

The employment/population ratio for all workers slipped to 59.6% last month. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic. For men, the rate fell to 64.7% in July from 64.9% and for women, the rate eased to 54.7% from 54.8% in June.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Recent job growth reduced by fewer factory & government jobs.
- Earnings gain remains steady y/y.
- Jobless rate reverses June decline.

U.S. Employment Report Shows Weakness in July, While Revisions Reduce Earlier Gains; Jobless Rate Picks Up

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U.S. light vehicle sales increased 7.6% (6.0% y/y) to 16.87 million units (SAAR) in July after falling 0.3% to 15.68 million units in June. The gain followed three straight months of decline. The improvement in July vehicle sales accompanied a 1.7% y/y rise in real disposable income through June, which compared to 2.1% growth last year.

Increases in sales were broad-based last month. Light truck sales rose 7.7% (10.0% y/y) in July to 14.02 million units, after easing 0.2% to 13.02 million in June and weakening 8.7% in May to 13.04 million. Purchases of domestically-made light trucks improved 7.1% (12.0% y/y) to 10.79 million units, after falling 1.0% in June to 10.07 million. Sales of imported light trucks rose 9.8% (3.8% y/y) to 3.24 million units, following a 3.9% rise in June.

Trucks’ record 83.1% share of the light vehicle market last month compared to 83.0% in June and 80.1% in July of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales rose 6.4% last month, down 9.8% y/y, to 2.84 million units (SAAR) following a 0.4% June decline. Purchases of domestically-produced cars rebounded 10.1% (-6.4% y/y) last month to 2.18 million units, after declining 2.5% in June. Sales of imported autos fell 2.9% (-20.5% y/y) to 0.66 million units, after a 4.6% June gain.

Imports' 23.1% share of the U.S. light vehicle market edged down from 23.2% in June. These compare to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market fell to 23.2% last month and compared to 26.4% in July of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market rose to 23.1% last month after rising to 22.7% in June.

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

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- Both light truck and auto sales recover.
- Domestic and imports each increase.
- Imports' market share steadies.

U.S. Light Vehicle Sales Rebound in July

Winnie Tapasanun

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The ISM U.S. manufacturing PMI fell to 48.0 in July from 49.0 in June and 48.5 in May, according to the Institute for Supply Management. The July manufacturing PMI, below the 50 expansion-contraction dividing line, indicated that the U.S. manufacturing sector contracted for the fifth consecutive month and to the lowest level since October 2024. The July reading, while slightly higher than a low of 46.9 in October and 47.0 in July of last year, was below its recent high of 50.9 in January and a peak of 63.8 in March 2021. A reading of 49.5 for July had been expected in the Action Economics Forecast Survey.

The production index rose to 51.4 in July after rising to 50.3 in June, suggesting production expanded for the second successive month and to the highest level since January; it was up from its most recent low of 44.0 in April but slightly below a high of 53.7 in March 2024. Twenty percent (NSA) of respondents reported higher production in July while 19.2% reported lower.

The new orders index increased to 47.1 in July after falling to 46.4 in June, indicating new orders contracted for the sixth straight month but at a slightly less severe pace. The Index, while below its recent high of 55.1 in January, was up from a low of 42.7 in January 2023. Nearly nineteen percent (NSA) of respondents reported higher new orders in July while 25.9% reported declines. The inventories index, however, fell to 48.9 in July after rising to 49.2 in June, showing inventories contracted for the third consecutive month. The index was down from its recent high of 53.4 in March and a high of 56.5 in July 2022. Meanwhile, the supplier deliveries index fell to 49.3 in July from 54.2 in June, indicating faster delivery performance following seven straight months in slower territory. An 8.7% (NSA) of respondents reported slower delivery speeds in July while an increased 10.2% reported faster speeds.

On the labor front, the employment index fell to 43.4 in July after falling to 45.0 in June, indicating employment contracted for the sixth straight month and to the lowest level since June 2020. The index was down from its recent high of 50.3 in January and a high of 56.5 in March 2022. A 12.6% (NSA) of respondents reported higher employment in July while an increased 25.0% reported less hiring.

On the pricing front, the prices paid index declined to 64.8 (NSA) in July after rising to 69.7 in June, indicating raw materials prices rose for the 10th straight month but at the slowest rising rate since February. The July index remained well above a low of 39.4 in December 2022 but meaningfully below a high of 87.1 in March 2022 and a peak of 92.1 in June 2021. A decreased 35.4% (NSA) of respondents reported higher prices in July while 5.8% reported price declines.

In other ISM series not included in the composite index, the new export orders index slipped to 46.1 in July after increasing to 46.3 in June, indicating new export orders contracted for the fifth straight month. It was down from its recent high of 52.4 in January and a high of 57.1 in February 2022. The imports index edged up to 47.6 in July after rising to 47.4 in June, remaining at a contraction level for the fourth consecutive month; it was down from its recent high of 52.6 in February and a high of 55.4 in February 2022. The order backlog index increased to 46.8 (NSA) in July after declining to 44.3 in June, indicating falling backlog levels since October 2022. It was up from a low of 37.5 in May 2023 but down from a peak of 70.6 in May 2021.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- 48.0 in July vs. 49.0 in June; the fifth consecutive month of contraction.
- Production (51.4) expands to a six-month high.
- New orders (47.1) contract for the sixth successive month.
- Employment (43.4) contracts to the lowest level since June ’20.
- Prices Index (64.8) indicates prices rise for the 10th straight month; exports & imports contracting.

U.S. ISM Manufacturing PMI Contracts in July to a Nine-Month Low

Michael J. Moran

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Total construction activity fell 0.4 percent in June, continuing a soft trend that began in the middle of last year. After peaking in May 2024, total outlays have declined 3.6%. The retreat was modest at first, but the softness began to intensify last fall. Activity has now declined in nine of the past ten months, with the drop over this span totaling 3.1%. The private sector accounts for nearly all of the softness, with both residential and nonresidential contributing; public construction has continued to advance, although gains in recent months have been modest.

Private residential construction fell 0.7% in June, marking the 12th decline in the past 13 months and leaving activity 7.3% below the peak in May 2024. Hints of softness in private residential construction first appeared in mid-2023, when multi-family construction first stalled and then moved notably downward throughout 2024. Following the swoon in 2024, multi-family activity has stabilized in recent months.

However, single family building has taken the lead in pulling activity lower, declining for four consecutive months with pronounced retreats in the past three (average of -1.8%). Prospects for single-family construction do not seem bright, as the ups and downs in single-family housing starts have left little net growth in the past year; the past four months have been especially soft.

Improvements to existing structures contributed to weakness with sharp declines early in the year, but this area has posted small gains in the past three months. Home improvements (i.e. additions and renovations) should not be ignored in assessing residential construction, as they typically represent 35 to 40 percent of private activity.

Private nonresidential construction fell 0.3 percent in June, reinforcing the downward drift that has been in place since the start of 2024. This sector has posted 11 declines in the past 18 months. While activity grew in several months over this span, most of the increases were minuscule. The net effect of the ups and downs was a drop of 6.6% (annual rate of 4.4%). Total nonresidential activity has several components, and some have advanced in the past year or so, but none has posted an impressive performance. Two areas, lodging (hotel, motels, resorts) and commercial (retail and wholesale), have been notably soft.

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The public sector has started to sputter after two years of strong activity. Building was vigorous in 2023, growing 21.8% (December to December), and activity advanced an additional 2.4% in 2024. Growth so far this year has been modest on balance. Most months have registered gains, but they offset declines in the closing months of last year by only a small margin. Activity in June was 0.1% above the reading in October (the high point in 2024). Both state and Local governments and the federal sector have posted similar performances: robust in 2023, moderate in 2024, and hesitating this year.

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

- Private building, both residential and nonresidential, drifting lower.
- Public construction hesitating after two strong years.

U.S. Construction: Sluggish in June

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Manufacturing PMIs in the S&P framework were mixed in July. However, the median reading edged slightly higher rising to 48.6 in July from 48.5 in June. But both of these are significantly weaker than the 49.1 reading in May. Manufacturing continues to post PMI readings that are below 50 indicating sector contraction on a fairly broad basis in July among the 17 reporting countries in the table plus the euro area. Only India and Vietnam reported PMI readings above 50 indicating sector expansion in July. In June, three of these jurisdictions showed readings above 50; in May, only three had readings above 50 as well. It remains a difficult time for manufacturing globally.

The readings for the manufacturing PMIs also show slippage in the medians from 12-months to six-months to three-months. The 12-month median is 49.2, the six-month median at 48.8, and the three-month median at 48.7. The bottom line is that most manufacturing sectors show contraction, and the contractions are generally getting slightly worse.

However, on an individual basis over three months about two-thirds of the reporters showed an improvement. Over six months just under 40% showed improvement and over a year about 44% of them showed improvement compared to the year before. Only the three-month versus six-month comparison shows a majority of reporters indicating better performance in July.

The ranked or queue standings metrics that place these individual readings for July in their queue of data over the last 4 ½ years, show standings above 50% which put the individual readings above their medians for this period. And only six of these eighteen reporting jurisdictions sported readings above 50%. Those were for the euro area, Germany, France, and India. India has a rating well above 50% at its 96th percentile; Malaysia has a reading above 50% and Vietnam has a reading well above 50% at its 74th percentile.

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The global economy has been put through the ringer with shocks from a war in Ukraine, stepped up military action in the Middle East, threats in the Straits of Hormuz, and an aggressive tariff policy from the United States, affecting global trade- a significant factor for manufacturing. These events have wrong-footed manufacturing globally. During this period, the inflation threat has dissipated; however, in most countries, inflation still slightly overshoots its target where central banks have such targets.

The U.S. has a particularly large number of policy changes afoot. Its manufacturing sector is still struggling. And recent employment data there indicate what appears to be a broader slowdown in the economy. Job growth in the U.S. has slowed and U.S. trends now show consumer spending slowing along with weaker and downwardly revised job growth. Put together, these are signals to watch closely.

Economy in Brief: June 2008

Jump to:

UK Mortgage Approvals By Banks Continue To Fall

U.S. Gasoline Price Stable at $4.08 per Gallon

Consumer Confidence in June Again Fell Surprising Hard

IFO Business Sentiment Reading is Still Sinking

Case-Shiller Home Price Index Off 17.8% Since Peak

Consumer Confidence in June Again Fell Surprising Hard

PPI Pressures Begin to Spread in Germany

Chicago Fed Index Still Gives A Recession Signal