Tom Moeller

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080814a.jpg" align="left" border="0" height="265" width="353">
The consumer price index (CPI-U) for July
rose 0.8%. That was down somewhat from the June increase of 1.1%,
according to the Bureau of Labor Statistics, but the gain was double
the Consensus expectation for a 0.4% rise. The Y/Y increase of 5.6% was
the fastest since late 1990.
For June and July together, prices rose at an 11.8% annual
rate. Except for a short-lived spike in mid-2005 that was the fastest
rate of increase since 1982.
Energy prices jumped another 4.0% in July
after increases of 6.6% and 4.4% during the prior two months. Fuel oil
prices continued strong and posted a 1.3% (61.1% y/y) increase while
natural gas &amp; electricity prices jumped 4.0% (15.0% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080814b.jpg" align="right" border="0" height="265" width="353">
Gasoline prices jumped a seasonally adjusted 4.1% in July and
they were up 37.9% y/y. Not seasonally adjusted gasoline
prices, however, rose just 0.7% m/m last month and they are down 5.2%
m/m on average so far in August.
Food &amp; beverage prices continued
strong. A 0.9% July increase lifted the y/y gain to 5.8% and that was
the fastest since 1990. Prices for cereals &amp; bakery products
rose at a 17.0% rate during the last three months while dairy and
related products increased at a 13.2% rate. Prices for meats poultry
&amp; fish showed increased upward pressure and they rose at an
8.1% rate while dairy product prices surged at an 13.2% rate during the
last three months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080814c.jpg" align="left" border="0" height="265" width="353">
Less food &amp; energy consumer prices
beat expectations, slightly, with a 0.3% increase which matched the
June rise. During the last three months the increase in core prices
accelerated to a 3.5% annual rate which was the quickest since mid-2006.
Core goods prices jumped 0.5%, the fastest
m/m increase since 1999. On a three-month basis prices rose at an
accelerated 1.7% rate, the fastest since late 2004. Higher apparel
prices led the recent strength with a 1.2% (0.7% y/y) increase. Prices
for household furnishings &amp; operations also were firm and they
rose 0.4% (0.8% y/y). Prices for new &amp; used motor vehicles
nudged up 0.2% but they were down 0.3% year-to-year. In July, tobacco
prices jumped 1.2% (7.7% y/y).
Core services prices again were firm and
they rose 0.3%. That lifted the three-month growth rate to 4.1%, the
fastest in two years. Public transportation prices remained strong.
They posted a 1.1% July increase (14.5% y/y), rising at a 31.2% annual
rate during the last three months. Medical care services prices rose a
reduced 0.2% (4.1% y/y) and shelter prices also rose just 0.2% (2.5%
y/y) in July. That was the weakest y/y gain since early 2006. Owners
equivalent rent of primary residence, a measure not equivalent to other
house price measures, nudged up 0.1% (2.6% y/y) and rents rose 0.3%
(3.7% y/y). Education costs rose another 0.5% (5.7% y/y) after a 2.4%
rise during all of 2007.
The chained CPI, which adjusts for shifts in consumption
patterns, rose 0.4%. Less food and beverages chained prices rose 0.2%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">Y/Y&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">Total&nbsp;</td>
<td>0.8</td>
<td>1.1</td>
<td>5.6</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="even">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.3</td>
<td>0.3</td>
<td>2.5</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>0.5</td>
<td>0.1</td>
<td>0.6</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.3</td>
<td>0.4</td>
<td>3.3</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Energy</td>
<td>4.0</td>
<td>6.6</td>
<td>29.3</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.9</td>
<td>0.7</td>
<td>5.8</td>
<td>4.0</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.4</td>
<td>0.8</td>
<td>4.8 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.2</td>
<td>0.1</td>
<td>2.2</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for
Unemployment Insurance Dipped&nbsp; 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 14, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080814d.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance dipped last week to
450,000 from an upwardly revised 460,000 during the prior week. The
latest levels were the highest since March of 2002 and the most recent
surpassed Consensus expectations for 432,000 claims.
A program to locate people eligible for jobless benefits may
have continued to play a role in last week's elevated level of claims.
The four-week moving average increased to 440,500 (39.6% y/y),
the highest level since near the end of the 2001 recession 2001. During
July claims averaged 383,440.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080814e.jpg" align="right" border="0" height="265" width="353">
A claims level below 400,000 typically has been associated
with growth in nonfarm payrolls. During the last ten years there has
been a (negative) 76% correlation between the level of initial claims
and the m/m change in nonfarm payroll employment. Over the longer
period of time, the level of claims for jobless insurance has not
trended higher with the size of the labor force due to a higher
proportion of self-employed workers who are not eligible for benefits.
Continuing claims for unemployment insurance during the latest
week jumped 114,000 after a little revised 25,000 rise during the prior
week. The four-week moving average of continuing claims rose to
3,273,750 which was its highest level since late-2003.
Continuing claims provide some indication of workers' ability
to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment rose further to 2.6%, the
highest level since late-2003.
Thoughts About the Phillips Curve is a
paper presented by Paul A. Samuelson and it is available <a href="http://www.bos.frb.org/economic/conf/conf53/papers/Samuelson.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/WEEKLY/@W5/@W507/@W507.HTM">Unemployment
Insurance (000s)</a>&nbsp;</th>
<th scope="col">08/09/08</th>
<th scope="col">08/02/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;450</td>
<td>460</td>
<td>39.3%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,417</td>
<td>33.7%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
EMU GDP in Clear Downtrend and
Declining Across the Board 
by <a href="/comment/Brusca.html">Robert
Brusca</a> August 14, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080814f.jpg" align="left" border="0" height="265" width="353">
EMU GDP fell in 2008 Q2the first time since EMU-wide GDP data
have been collected. Declines were experienced across the main EMU
nations. Yr/Yr EMU growth is still 1.5% Italy&#8217;s growth is flat
year/year. Germany is still at 1.7% Yr/Yr. This was the first
quarter-on-quarter decline in EMU GDP since well before the euro was
launched in 1998. Eurostat has constructed a series for the 15 current
members of the euro zone that goes back to the start of 1995. The
weakest performance on record for that period had been the stagnant
second quarter of 2003. That now has been surpassed. 
 

Q2 was not a good one for the global economy with most of the
major economies showing Q/Q declines in GDP &#8211; the US and UK are
exceptions. The Bundesbank put out a statement warning Germans not to
get too pessimistic about growth: "The German economy has got to get
through a rough patch for growth in the coming months. But overall
there's no reason for excessive pessimism based on the development of
the first half of the year," the German central bank said in a
statement. Still the data are clear and the industrial trends still
point lower. EMU inflation was revised to be one tenth of one percent
less in July to 4% Yr/Yr. Still it si double the allowable ceiling for
the ECB. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr> <th colspan="8" scope="col">E-Zone and
main G-10 country GDP Results </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Quarter over quarter-Saar</td>
<td colspan="4">Year/Year</td>
</tr>
<tr class="even">
<td class="firstcol">GDP</td>
<td>Q2-08</td>
<td>Q1-08</td>
<td>Q4-07</td>
<td>Q2-08</td>
<td>Q1-08</td>
<td>Q4-07</td>
<td>Q3-07</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-15</td>
<td>-0.8%</td>
<td>2.9%</td>
<td>1.5%</td>
<td>1.5%</td>
<td>2.1%</td>
<td>2.2%</td>
<td>2.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>-1.2%</td>
<td>1.6%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>2.0%</td>
<td>2.2%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-2.0%</td>
<td>5.2%</td>
<td>1.4%</td>
<td>1.7%</td>
<td>2.6%</td>
<td>1.7%</td>
<td>2.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>-1.1%</td>
<td>2.0%</td>
<td>-1.7%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>0.2%</td>
<td>1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">The Netherlands</td>
<td>-0.2%</td>
<td>1.5%</td>
<td>5.2%</td>
<td>2.8%</td>
<td>3.7%</td>
<td>4.1%</td>
<td>3.5%</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td>0.7%</td>
<td>1.1%</td>
<td>2.5%</td>
<td>1.6%</td>
<td>2.3%</td>
<td>2.8%</td>
<td>3.0%</td>
</tr>
<tr>
<td class="firstcol">US</td>
<td>1.9%</td>
<td>0.9%</td>
<td>-0.2%</td>
<td>1.8%</td>
<td>2.5%</td>
<td>2.3%</td>
<td>2.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Japan</td>
<td>-2.4%</td>
<td>3.2%</td>
<td>2.4%</td>
<td>1.0%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>1.8%</td>
</tr>
</tbody>
</table>
</body></html>

The consumer price index (CPI-U) for July rose 0.8%. That was down somewhat from the June increase of 1.1%, according to the Bureau of Labor Statistics, but the gain was double the Consensus expectation for a 0.4% rise. The Y/Y [...]

U.S. CPI Up 0.8% in July, Y/Y by 5.6%. Boost from Gasoline Prices Now Easing

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813e.jpg" align="left" border="0" height="265" width="353">
EMU IP came up flat in June but the declining trends are
clear. Capital goods output, consumer goods output and intermediate
goods output all are on declining profiles. Among large EU/EMU
countries Germany is the main exception that helps to prop up output in
the month. Elsewhere the results were much worse on the month. The
weakness in IP mirrors the weakness in order growth. Nonetheless, in
Germany Bert Ruerup, the head of the council of wise men, is opposed to
any German stimulus plan. Of course Germany is still best performing of
the EMU large economies. 
 

Incoming EMU data continue to show weakness of various sorts.
It fits with a picture of global slowing. UK claims data today showed
the greatest gain in job market claimant activity in 15 years. In Japan
authorities are very worried about export growth. Flat IP in EMU seems
a sure bet to give way to declining IP and that will pose a threat to
US export growth that is still performing so well, as we saw in the US
trade report from yesterday. Everyone is linked and the disease of
weaker growth is still spreading. 
 
 
 



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col"> E-zone MFG IP</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Jun 08</td>
<td>May 08</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">Euro Area Detail</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Apr 08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-2 Date</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.0%</td>
<td>-1.4%</td>
<td>0.4%</td>
<td>-4.0%</td>
<td>-6.6%</td>
<td>-1.2%</td>
<td>-0.9%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-3.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>0.8%</td>
<td>-2.0%</td>
<td>0.9%</td>
<td>-1.4%</td>
<td>-7.8%</td>
<td>-1.7%</td>
<td>-3.2%</td>
<td>-1.2%</td>
<td>-2.9%</td>
<td>-3.7%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Durables</td>
<td>-0.1%</td>
<td>-3.2%</td>
<td>1.9%</td>
<td>-5.9%</td>
<td>-12.2%</td>
<td>-3.5%</td>
<td>-3.8%</td>
<td>-5.1%</td>
<td>-5.1%</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Non-Durables</td>
<td>0.9%</td>
<td>-1.4%</td>
<td>0.2%</td>
<td>-1.1%</td>
<td>-7.0%</td>
<td>-1.4%</td>
<td>-2.9%</td>
<td>-0.4%</td>
<td>-2.4%</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>-0.2%</td>
<td>-1.5%</td>
<td>0.3%</td>
<td>-5.1%</td>
<td>-6.6%</td>
<td>-2.0%</td>
<td>-0.5%</td>
<td>-0.9%</td>
<td>-0.5%</td>
<td>-4.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>-0.4%</td>
<td>-2.0%</td>
<td>2.1%</td>
<td>-1.4%</td>
<td>-6.7%</td>
<td>1.0%</td>
<td>0.9%</td>
<td>1.7%</td>
<td>2.8%</td>
<td>-1.7%</td>
</tr>
<tr>
<td colspan="11" class="firstcol">Main E-zone Countries and
UK IP in MFG</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">Mo/Mo</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Jun 08</td>
<td>May 08</td>
<td>&nbsp;</td>
</tr>
<tr class="even">
<td class="firstcol">MFG Only</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Apr 08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-2 Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>-1.9%</td>
<td>-0.3%</td>
<td>-6.9%</td>
<td>-9.2%</td>
<td>-2.2%</td>
<td>-0.8%</td>
<td>2.2%</td>
<td>1.3%</td>
<td>-6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">France: IP excl Construction</td>
<td>-0.4%</td>
<td>-2.9%</td>
<td>1.3%</td>
<td>-7.8%</td>
<td>-10.2%</td>
<td>-4.9%</td>
<td>-2.9%</td>
<td>-1.6%</td>
<td>-1.8%</td>
<td>-5.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>-1.5%</td>
<td>0.4%</td>
<td>-3.3%</td>
<td>-4.9%</td>
<td>1.5%</td>
<td>1.1%</td>
<td>-2.0%</td>
<td>-2.6%</td>
<td>-2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>-4.9%</td>
<td>-14.8%</td>
<td>27.5%</td>
<td>13.9%</td>
<td>-33.7%</td>
<td>-17.5%</td>
<td>-10.0%</td>
<td>-9.6%</td>
<td>-7.7%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>-0.5%</td>
<td>-0.6%</td>
<td>0.0%</td>
<td>-4.2%</td>
<td>-4.2%</td>
<td>-1.5%</td>
<td>-1.0%</td>
<td>-1.3%</td>
<td>-0.9%</td>
<td>-2.9%</td>
</tr>
</tbody>
</table>
</body></html>

EMU IP came up flat in June but the declining trends are clear. Capital goods output, consumer goods output and intermediate goods output all are on declining profiles. Among large EU/EMU countries Germany is the main exception that [...]

EMU IP is FLAT

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813h.jpg" width="353">
Total business inventories jumped 0.7% during June after an upwardly revised 0.4% May increase. The latest increase exceeded Consensus expectations for a 0.5% rise and it was the strongest gain since January. The three-month growth in inventories rose to 6.2% (AR) from roughly 4% during the prior two months.
Higher wholesale inventories led the gain the total with a 1.1% jump during June and at a 14.1% rate during the last three months, again boosted by the rise in oil prices. Nevertheless, less petroleum wholesale inventories rose at a 12.0% rate during those three months which was more than twice the rate of increase during all of last year.
Retail inventories fell 0.1% after a revised 0.3% May decline. The drops left the three-month growth rate negative at -0.5% reflecting the draw-down of automobile inventories. Inventories of motor vehicle &amp; parts fell at a 6.2% annual rate during the last three months due to further production cutbacks. Outside of autos, retail inventories rose at a 2.2% rate over the last three months and that reversed three months of decumulation.
The industry detail in the retail sector indicated that lower apparel inventories led the recent weakness in the total with a 0.9% rate of decline. Furniture inventories rose at a 3.9% rate during the last three months and general merchandise inventories rose at a 2.3% rate. Both of these gains reverse prior declines. Clothing &amp; accessory store inventories still fell at a 0.9% rate over the last three months after an 8.1% rate of decline back in March.
Factory inventories jumped 1.0% and that left the three-month rate of accumulation steady at 6.4%.
Total business sales jumped another 1.7% led higher by the rise in oil prices which lifted factory sales by 1.6%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></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">Total</td>
<td>0.7%</td>
<td>0.4%</td>
<td>5.6%</td>
<td>3.8%</td>
<td>5.9%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>0.9%</td>
<td>2.6%</td>
<td>3.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Auto</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>1.3%</td>
<td>2.7%</td>
<td>4.9%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>1.1%</td>
<td>0.9%</td>
<td>9.5%</td>
<td>5.5%</td>
<td>8.3%</td>
<td>7.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>1.0%</td>
<td>0.6%</td>
<td>7.0%</td>
<td>3.7%</td>
<td>6.4%</td>
<td>8.9%</td>
</tr>
</tbody>
</table>
</body>
</html>

Total business inventories jumped 0.7% during June after an upwardly revised 0.4% May increase. The latest increase exceeded Consensus expectations for a 0.5% rise and it was the strongest gain since January. The three-month growth in [...]

U.S. Business Inventory Gain the Strongest Since January Distorted by Oil Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813f.jpg" width="353">
U.S. import prices overall jumped 1.7% last month after gains between 2.0% and 3.0% during the prior four months. The latest rise nearly doubled expectations for a 1.0% increase. During the last three months import prices have risen at a 34.3% annual rate which again was near the quickest since late-1990.
The rise continued to be led by the strength in petroleum prices which jumped 4.0% and the three-month rate of increase amounted to 137%. This month, however, imported crude petroleum prices already are down 14% from July.
Less petroleum, import prices rose the same 0.9% as they did during June. The 9.9% rate of price increase during the last three months was down somewhat from the recent peak rate of gain of 13.0%. 
 During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a reduced 47% against a broader basket of currencies.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813g.jpg" width="353">
Prices for industrial supplies &amp; materials excluding oil jumped again in July. The 2.2% surge and the three-month rate of increase of 34.9% (AR) reflected strength in building materials, unfinished metals, chemicals and agricultural prices. These detailed import price series can be found in the Haver USINT database. 
Capital goods import prices rose 0.3% after a downwardly revised 0.1% dip in June. The three-month rate of gain of 2.2% was up from last year&#39;s low, but down from this spring&#39;s highs. Less the lower prices of computers, capital goods prices rose 0.8% and at a 5.6% rate during the last three months. They rose 2.7% last year. Prices of computers, peripherals &amp; accessories fell 0.8% last month and they have been falling at a 6.7% recently, after the 5.1% 2007 decline.
Finally, prices for nonauto consumer goods imports rose 0.3% last month. Here again, the 2.3% rate of increase during the last three months is down from the peak rates of gain earlier this year. The diminished rate of increase for durables of 2.8% is notable.
Total export prices surged again, last month by 1.4% as agricultural prices jumped another 6.7% (39.9% y/y). Nonagricultural export prices rose 0.8% (7.5% y/y), about the same as they did in June.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E807/@E807.HTM">Import/Export Prices (NSA)</a></th>
<th scope="col">July</th>
<th scope="col">June</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">Import - All Commodities</td>
<td>1.7%</td>
<td>2.9%</td>
<td>21.6%</td>
<td>4.2%</td>
<td>4.9%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>4.0%</td>
<td>8.9%</td>
<td>79.2%</td>
<td>11.6%</td>
<td>20.6%</td>
<td>37.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.9%</td>
<td>0.9%</td>
<td>8.0%</td>
<td>2.7%</td>
<td>1.7%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>1.4%</td>
<td>1.0%</td>
<td>10.2%</td>
<td>4.9%</td>
<td>3.6%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>


</html>

U.S. import prices overall jumped 1.7% last month after gains between 2.0% and 3.0% during the prior four months. The latest rise nearly doubled expectations for a 1.0% increase. During the last three months import prices have risen [...]

U.S. Total Import Prices Jumped Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813a.jpg" align="left" border="0" height="265" width="353">
The inflation story in EMU/EU is clear but not uncomplicated.
Inflation at 4% Yr/Yr has accelerated in terms of its headline the only
measure the ECB claims to have designs on. But oil prices have dropped.
That should pave the way for better times ahead. Mover over, the core
rate of inflation is 2.5% Yr/Yr - still &#8216;too high&#8217; - but its sequential
growth rates show that core inflation has been decelerating over the
recent 6-mos and three months. Moreover, this core deceleration is
observable across some key EMU countries including Italy. 
 

The most troublesome inflation patterns are in the UK. The BOE
has the same 2% inflation ceiling as the ECB. But its headline Yr/Yr
inflation rate is at 7.3% and really accelerating. Core UK inflation
also is blowing up at a 2.2% rate Yr/Yr, 2.9% over six months and 3.9%
over three months. 
 

The breakdown in global oil prices is good news for all
central banks, but the ECB is still in a bit of an inflation fix. The
ECB is getting in a more nettlesome position since its economy is
starting to show more pronounced weakness as core inflation abates. It
challenge &#8211; one it has not faced yet -- might be how to deal with
fading but still over-the-top inflation as growth begins to unwind more
sharply. 
 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Trends in HICP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="4">% SAAR</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>Jun-08</td>
<td>May-08</td>
<td>Apr-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>12-Mo</td>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-13</td>
<td>0.5%</td>
<td>0.6%</td>
<td>0.0%</td>
<td>4.1%</td>
<td>4.1%</td>
<td>4.0%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>0.2%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>1.3%</td>
<td>2.3%</td>
<td>2.5%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>0.4%</td>
<td>0.8%</td>
<td>0.6%</td>
<td>7.6%</td>
<td>6.0%</td>
<td>4.9%</td>
<td>1.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>0.3%</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>2.2%</td>
<td>2.5%</td>
<td>2.5%</td>
<td>2.6%</td>
</tr>
<tr>
<td class="firstcol" colspan="8">HICP</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.5%</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>2.7%</td>
<td>3.2%</td>
<td>3.4%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.5%</td>
<td>0.5%</td>
<td>0.1%</td>
<td>4.5%</td>
<td>4.0%</td>
<td>4.0%</td>
<td>1.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.6%</td>
<td>0.4%</td>
<td>0.0%</td>
<td>4.2%</td>
<td>4.6%</td>
<td>4.0%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>0.6%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>7.3%</td>
<td>5.4%</td>
<td>3.8%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.6%</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>4.9%</td>
<td>4.5%</td>
<td>5.0%</td>
<td>2.4%</td>
</tr>
<tr>
<td class="firstcol" colspan="8">Core excl FE&amp;A</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.1%</td>
<td>0.3%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>0.8%</td>
<td>1.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.4%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>1.9%</td>
<td>3.1%</td>
<td>3.0%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">UK</td>
<td>0.3%</td>
<td>0.3%</td>
<td>0.4%</td>
<td>3.9%</td>
<td>2.9%</td>
<td>2.2%</td>
<td>2.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.3%</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>2.2%</td>
<td>2.6%</td>
<td>3.4%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
</body></html>

The inflation story in EMU/EU is clear but not uncomplicated. Inflation at 4% Yr/Yr has accelerated in terms of its headline the only measure the ECB claims to have designs on. But oil prices have dropped. That should pave the way for [...]

Euro Headline Inflation is Unruly; Core Setting Down

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813c.jpg" width="353">
U.S. retail sales last month dipped 0.1%, right on Consensus expectations. The decline followed an upwardly revised June rise of 0.3%. On a three-month basis overall retail sales rose at a 4.1% annual rate, even with last year&#39;s 4.0% increase.
The overall gain was diminished by another sharp decline in sales of motor vehicles &amp; parts. A 2.4% drop (-10.5% y/y) followed the 2.1% June decline (revised shallower) and they are down at a 19.7% annual rate during the last three months.
Retail sales excluding autos rose 0.4% in July. That increase about equaled Consensus expectations.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813d.jpg" width="353">
Higher gas prices again lifted retail sales last month. Sales at gasoline service stations increased 0.8% (24.6% y/y) after gains of 4.0% and 3.3% during the prior two months. 
Less gasoline &amp; autos, retail sales rose 0.3% (3.4% y/y) following an upwardly revised 0.4% increase during June. Still, the latest increase was the weakest since February. Sales on a three-month basis rose at a firm 6.4% annual rate.
Purchases made from home continued strong as July sales of nonstore retailers (internet &amp; catalogue) jumped 1.1% (7.7% y/y). That followed an unrevised 0.8% June increase. On a three-month basis these sales rose at a 12.4% annual rate.
Sales at general merchandise stores rose 0.3% (5.2% y/y) following an upwardly revised 0.6% gain during June. Sales offurniture, home furnishings &amp; appliance reversed the June decline and rose 0.9% (-0.2% y/y). Sales of furniture &amp; home furnishings rose 1.0% (-4.8% y/y). Apparel store sales ticked up 0.2% (0.9% y/y).
Building materials &amp; garden equipment sales reversed their June decline and rose 0.3% (-1.0% y/y).
Unanchored Expectations? Interpreting the Evidence from Inflation Surveys from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-23.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">&nbsp;</th>
<th scope="col">July</th>
<th scope="col">June</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>-0.1%</td>
<td>0.3%</td>
<td>2.6%</td>
<td>4.0%</td>
<td>5.8%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>0.4%</td>
<td>0.9%</td>
<td>6.0%</td>
<td>4.5%</td>
<td>6.8%</td>
<td>7.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>0.3%</td>
<td>0.4%</td>
<td>3.4%</td>
<td>4.1%</td>
<td>6.2%</td>
<td>6.4%</td>
</tr>
</tbody>
</table>


</html>

U.S. retail sales last month dipped 0.1%, right on Consensus expectations. The decline followed an upwardly revised June rise of 0.3%. On a three-month basis overall retail sales rose at a 4.1% annual rate, even with last year's 4.0% [...]

U.S. Retail Sales Dipped As Expected, Internet & Catalogue Sales Jumped

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080813b.jpg" align="left" border="0" height="265" width="353">
Officials in Japan have become more worried in recent weeks
even saying that they cannot be sure that the economy is not now in
recession. It&#8217;s GDP for 2008-Q2 tells that story. GDP is declining at a
weak 2.4% pace in Q2 (Saar). The Yr/Yr pace of GDP growth has slowed
from an already weak 1.4% in 2007-Q4 to 1.2% in 2008-Q1 and now to 1.0%
in 2008-Q2. 
 

Private consumption is falling at a 1.9% pace. Gross fixed
capital formation is falling at a 6% rate. The investment rate for
capital equipment is -0.9% and for housing it&#8217;s a very weak -13%. Trade
is making a small subtraction from overall growth as imports are
dropping at better than a 10% rate as exports are falling at a nearly
9% ate. That results in a GDP subtraction because exports are so much
larger than imports in real terms than the smaller percentage decline
in exports is still a larger drop in real terms than the drop in
imports. 
 

Moreover, domestic demand in Japan is falling at a 2.5% annual
rate in 2008-Q2 and is falling year/year for the second quarter in a
row. No wonder Japan&#8217;s authorities are concerned and stimulus package
is being prepared. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="11" scope="col">Japan GDP
</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td colspan="2">Consumption</td>
<td colspan="3">Capital
Formation</td>
<td colspan="3">Trade&nbsp;</td>
<td>Domestic</td>
</tr>
<tr class="grey3">
<td class="firstcol">&nbsp;</td>
<td>GDP</td>
<td>Private</td>
<td>Public</td>
<td>Gross 
Fix 
Capital</td>
<td>Plants 
&amp;Eqpt</td>
<td>Housing</td>
<td>X-M: 
lbns E</td>
<td>Exports</td>
<td>Imports</td>
<td>Demand</td>
</tr>
<tr class="grey3">
<td colspan="11" class="firstcol">%
change Q/Q at annual
rates of change; X-M is Q/Q change in Bil Real Yen</td>
</tr>
<tr>
<td class="firstcol">Q2-08</td>
<td>-2.4%</td>
<td>-1.9%</td>
<td>0.3%</td>
<td>-6.0%</td>
<td>-0.9%</td>
<td>-13.0%</td>
<td>-0.4</td>
<td>-8.9%</td>
<td>-10.7%</td>
<td>-2.5%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q1-08</td>
<td>3.2%</td>
<td>2.8%</td>
<td>-1.8%</td>
<td>2.8%</td>
<td>-0.2%</td>
<td>18.2%</td>
<td>2.4</td>
<td>14.4%</td>
<td>4.8%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">Q4-07</td>
<td>2.4%</td>
<td>1.4%</td>
<td>3.4%</td>
<td>-2.5%</td>
<td>4.3%</td>
<td>-33.8%</td>
<td>1.9</td>
<td>11.1%</td>
<td>3.3%</td>
<td>1.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q3-07</td>
<td>1.0%</td>
<td>0.0%</td>
<td>0.3%</td>
<td>-4.2%</td>
<td>2.3%</td>
<td>-26.3%</td>
<td>2.5</td>
<td>11.0%</td>
<td>-1.2%</td>
<td>-1.0%</td>
</tr>
<tr class="odd">
<td colspan="11" class="firstcol">%
change Yr/Yr; X-M is
Yr/Yr change in Gap in Bil Real Yen</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q2-08</td>
<td>1.0%</td>
<td>0.5%</td>
<td>0.5%</td>
<td>-2.6%</td>
<td>1.3%</td>
<td>-15.8%</td>
<td>6.3</td>
<td>6.5%</td>
<td>-1.2%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">Q1-08</td>
<td>1.2%</td>
<td>1.3%</td>
<td>0.7%</td>
<td>-3.6%</td>
<td>-0.6%</td>
<td>-16.6%</td>
<td>7.6</td>
<td>11.0%</td>
<td>2.9%</td>
<td>-0.2%</td>
</tr>
<tr class="grey1">
<td class="firstcol">Q4-07</td>
<td>1.4%</td>
<td>1.2%</td>
<td>1.4%</td>
<td>-3.8%</td>
<td>-0.2%</td>
<td>-21.5%</td>
<td>7.2</td>
<td>10.4%</td>
<td>2.3%</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Q3-07</td>
<td>1.8%</td>
<td>1.8%</td>
<td>0.2%</td>
<td>-1.4%</td>
<td>0.4%</td>
<td>-11.3%</td>
<td>6.0</td>
<td>8.5%</td>
<td>1.5%</td>
<td>0.6%</td>
</tr>
<tr class="grey1">
<td class="firstcol">5-Yrs</td>
<td>2.0%</td>
<td>1.5%</td>
<td>0.8%</td>
<td>0.5%</td>
<td>4.4%</td>
<td>-4.0%</td>
<td>na</td>
<td>9.4%</td>
<td>4.3%</td>
<td>1.2%</td>
</tr>
</tbody>
</table>
</body></html>

Officials in Japan have become more worried in recent weeks even saying that they cannot be sure that the economy is not now in recession. It’s GDP for 2008-Q2 tells that story. GDP is declining at a weak 2.4% pace in Q2 (Saar). The [...]

Japan's GDP Slows and Contracts

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: 2008

Jump to:

U.S. CPI Up 0.8% in July, Y/Y by 5.6%. Boost from Gasoline Prices Now Easing

EMU IP is FLAT

U.S. Business Inventory Gain the Strongest Since January Distorted by Oil Prices

U.S. Total Import Prices Jumped Again

Euro Headline Inflation is Unruly; Core Setting Down

U.S. Retail Sales Dipped As Expected, Internet & Catalogue Sales Jumped

U.S. Retail Sales Dipped As Expected, Internet & Catalogue Sales Jumped

Japan's GDP Slows and Contracts