Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080723a.jpg" align="left" border="0" height="265" width="353">
The domestic and foreign orders trend lines now both have
discernable downtrends. Growth rate calculations over the key
sequential periods also show that declines are becoming more intense in
both sectors. Over three months, for example domestic orders are
dropping at an 11% pace while foreign orders are dropping at an 18%
pace. Yr/Yr domestic orders are flat while foreign orders are off by
2.5%. Sales trends are losing momentum as well but only for
intermediate goods is the trend negative over three months (flat Yr/Yr). 
 

The Euro-Area result is the weighted average of the country
results. All thee of the largest Zone countries have orders lower over
three months: Germany France and Italy. Yr/Yr France is down the most
followed by Italy with German orders still up over 12-months but by
less than one-percent. 
 

The slowdown in the e-zone is now undeniable and with orders
turning negative Yr/Yr the potential for something deeper than a
slowdown is in the works. The IMF&#8217;s John Lipsky has said that the euro
is now overvalued. The EMU community is being squeezed by a too &#8211;strong
euro rising interest rates high inflation (due to just a few items with
spiking prices however) and a slowing global economy. Through all of
this, EMU growth has been supported by strength in capital goods
output. That is now fading. Consumption remains weak. Thus there is
little to cushion the economy from the slowdown emanating from the
capital goods side. Europe&#8217;s weakness and slippage is a real phenomenon
and it is echoed by earlier surveys form Zew and the IFO. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Euro Area
and UK Industrial Orders &amp; Sales Trends </th>
</tr>
</thead>
<tbody>
<tr class="grey5">
<td class="firstcol">Saar except m/m</td>
<td colspan="3">% m/m</td>
<td>May 
08</td>
<td>May 
08</td>
<td>May 
08</td>
<td>May 
07</td>
<td>May 
06</td>
<td>Qtr-2 
-Date</td>
</tr>
<tr class="grey4">
<td class="firstcol">Euro Area Detail</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>3Mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Saar</td>
</tr>
<tr>
<td class="firstcol">MFG Sales</td>
<td>0.6%</td>
<td>0.4%</td>
<td>0.1%</td>
<td>4.2%</td>
<td>8.2%</td>
<td>5.1%</td>
<td>6.4%</td>
<td>7.9%</td>
<td>4.9%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.2%</td>
<td>0.1%</td>
<td>0.0%</td>
<td>1.3%</td>
<td>1.6%</td>
<td>2.4%</td>
<td>6.4%</td>
<td>7.9%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.3%</td>
<td>3.4%</td>
<td>5.3%</td>
<td>5.2%</td>
<td>4.3%</td>
<td>4.0%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Intermediate</td>
<td>-5.5%</td>
<td>4.6%</td>
<td>-1.9%</td>
<td>-11.4%</td>
<td>-8.9%</td>
<td>0.0%</td>
<td>8.3%</td>
<td>7.1%</td>
<td>3.4%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="10">MFG
Orders</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td>-3.5%</td>
<td>2.0%</td>
<td>-1.0%</td>
<td>-9.8%</td>
<td>-8.3%</td>
<td>-1.0%</td>
<td>8.2%</td>
<td>12.1%</td>
<td>-2.2%</td>
</tr>
<tr>
<td class="firstcol">E-13 Domestic MFG orders</td>
<td>-5.5%</td>
<td>4.6%</td>
<td>-1.9%</td>
<td>-11.4%</td>
<td>-8.9%</td>
<td>0.0%</td>
<td>3.8%</td>
<td>11.3%</td>
<td>2.8%</td>
</tr>
<tr>
<td class="firstcol">E-13 Foreign MFG orders</td>
<td>-3.9%</td>
<td>-0.4%</td>
<td>-0.7%</td>
<td>-18.3%</td>
<td>-14.7%</td>
<td>-2.5%</td>
<td>10.9%</td>
<td>15.2%</td>
<td>-13.6%</td>
</tr>
<tr class="grey4">
<td class="firstcol">Countries:</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>3Mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Qtr-2 
-Date</td>
</tr>
<tr>
<td class="firstcol">Germany:</td>
<td>-1.3%</td>
<td>-1.0%</td>
<td>-0.8%</td>
<td>-11.8%</td>
<td>-9.2%</td>
<td>0.7%</td>
<td>12.5%</td>
<td>13.3%</td>
<td>-10.3%</td>
</tr>
<tr>
<td class="firstcol">France:</td>
<td>-4.6%</td>
<td>4.5%</td>
<td>-6.6%</td>
<td>-24.6%</td>
<td>-9.2%</td>
<td>-4.5%</td>
<td>8.8%</td>
<td>4.5%</td>
<td>-8.8%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td>-3.1%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-13.4%</td>
<td>-8.2%</td>
<td>-1.1%</td>
<td>6.9%</td>
<td>13.6%</td>
<td>-4.4%</td>
</tr>
<tr>
<td class="firstcol">UK (EU)</td>
<td>-9.3%</td>
<td>20.6%</td>
<td>-14.1%</td>
<td>-22.1%</td>
<td>-5.5%</td>
<td>4.8%</td>
<td>3.9%</td>
<td>3.1%</td>
<td>1.1%</td>
</tr>
</tbody>
</table>
</body></html>

The domestic and foreign orders trend lines now both have discernable downtrends. Growth rate calculations over the key sequential periods also show that declines are becoming more intense in both sectors. Over three months, for [...]

Euro Area Orders Drop Sharply in May

Euro Area Orders Drop Sharply inMay

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722f.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s sector indices show that the main all-industry reading
is up in May and stands strongly in the 95th percentile of its range.
The construction index is off sharply and continues to be very weak.
The table plots 12-month changes in the index while the table plots the
index levels. Index levels show construction is still very weak but the
tertiary and over all index are still strong. In terms of momentum all
indices are losing it. On balance the sector indices seem to be holding
up better than other gauges for the Japanese economy. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="10" scope="col">Up to date Japan Industry Surveys </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes: Range</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>May 2008</td>
<td>Apr 2008</td>
<td>Mar 2008</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">All Industry</td>
<td>107.5</td>
<td>107.1</td>
<td>106.2</td>
<td>106.9</td>
<td>106.9</td>
<td>107.3</td>
<td>108.1</td>
<td>93.8</td>
<td>95.8%</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>70.6</td>
<td>71.8</td>
<td>72.5</td>
<td>71.6</td>
<td>71.8</td>
<td>73.4</td>
<td>124.6</td>
<td>70.6</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>110.4</td>
<td>110.6</td>
<td>108.5</td>
<td>109.8</td>
<td>109.7</td>
<td>110.1</td>
<td>110.9</td>
<td>92.0</td>
<td>97.4%</td>
</tr>
<tr>
<td class="firstcol" colspan="10">Ranges, Max, Min since
1993</td>
</tr>
</tbody>
</table>
</body></html>

Japan’s sector indices show that the main all-industry reading is up in May and stands strongly in the 95th percentile of its range. The construction index is off sharply and continues to be very weak. The table plots 12-month changes [...]

Japan’s All-industries Index is Still Very Upbeat

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722h.jpg" align="left" border="0" height="265" width="353">
The Institute of Studies and Economic Analysis's (ISAE) index
of Italian consumer confidence fell 4.1% from June to 95.8 (1980=100)
in July, the lowest value since May 2004. Consumers' biggest concern
appears to be the general economy, the index for which declined 11.5%
in July, next in line is concern over future prospects, the index for
which declined 9.4%. The indexes for current conditions and personal
economic situation were down 0.1% and 0.9% respectively. These major
components of the consumer confidence index are shown in the first
chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722g.jpg" align="right" border="0" height="265" width="353">
Although the decline in confidence was not unexpected, its
magnitude was greater than the consensus expected. Among the reasons
advanced for the deterioration in confidence are the increases in food
and oil prices. The second chart plots the food and the electricity and
fuel components of the Consumer Price Index. They are plotted on a log
scale where percentage changes can be compared. The recent acceleration
in the prices of both food and electricity and fuel is evident. Earlier
this month the declines in purchasing power caused by rising food and
fuel costs led to public demonstrations.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ITALY&nbsp;&nbsp;</th>
<th scope="col">Jul 08</th>
<th scope="col">Jun 08&nbsp;</th>
<th scope="col">Jul 07&nbsp;</th>
<th scope="col">M/M % chg&nbsp;</th>
<th scope="col">Y/Y % chg&nbsp;</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&nbsp;
(1980=100)</td>
<td>95.8</td>
<td>99.9</td>
<td>107.6</td>
<td>-4.10</td>
<td>10.97</td>
<td>108.5</td>
<td>108.7</td>
<td>104.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current Situation</td>
<td>103.0</td>
<td>103.1</td>
<td>115.1</td>
<td>-01.</td>
<td>-10.51</td>
<td>114.3</td>
<td>112.2</td>
<td>106.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Future Conditions</td>
<td>88.4</td>
<td>97.6</td>
<td>98.7</td>
<td>-9.43</td>
<td>-10.44</td>
<td>100.6</td>
<td>104.4</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; General Economic
Situation</td>
<td>72.2</td>
<td>81.6</td>
<td>91.2</td>
<td>-11.52</td>
<td>-20.83</td>
<td>93.8</td>
<td>95.6</td>
<td>85.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Economic Situation</td>
<td>108.9</td>
<td>109.9</td>
<td>112.0</td>
<td>-.91</td>
<td>-6.92</td>
<td>115.9</td>
<td>115.3</td>
<td>113.7</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Jun 08</td>
<td>May 08&nbsp;</td>
<td>Jun 07&nbsp;</td>
<td>M/M % chg&nbsp;</td>
<td>Y/Y % chg&nbsp;</td>
<td>2007</td>
<td>2006</td>
<td>2005</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Price Index (1995=100)</td>
<td>137.1</td>
<td>136.5</td>
<td>132.1</td>
<td>0.44</td>
<td>3.79</td>
<td>132.2</td>
<td>129.8</td>
<td>127.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food&nbsp;</td>
<td>136.2</td>
<td>135.6</td>
<td>129.0</td>
<td>0.44</td>
<td>6.41</td>
<td>128.6</td>
<td>125.0</td>
<td>122.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Electricity
&amp; Fuel</td>
<td>158.8</td>
<td>156.9</td>
<td>140.7</td>
<td>1.21</td>
<td>12.86</td>
<td>141.9</td>
<td>140.0</td>
<td>127.6</td>
</tr>
</tbody>
</table>
</body></html>

The Institute of Studies and Economic Analysis's (ISAE) index of Italian consumer confidence fell 4.1% from June to 95.8 (1980=100) in July, the lowest value since May 2004. Consumers' biggest concern appears to be the general [...]

Italian Consumer Confidence Takes a Dive

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722e.jpg" width="353">
The index of U.S. house prices from the Office of Federal Housing Enterprise Oversight (OFHEO) fell 0.3% during May and prices were down 4.8% from a year earlier. 
During the latest twelve months OFHEO indicated that the decline in home prices was by far the greatest in the Pacific region where prices fell 14.5% y/y. That followed a 1.0% rise in prices last year and several years of double digit gain.
Elsewhere in the country home prices fell one to five percent y/y except in the West South Central region where they rose slightly. Prices in New England and in the Mountain regions fell 5.0%.
The latest report from OFHEO can be found <a href="http://www.ofheo.gov/media/hpi/MonthlyHPI72208F.pdf"> here</a>.
OFHEO figures are available in Haver&#39;s USECON database.
House Prices and the Stance of Monetary Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/07/Jarocinski.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/surveyw/@S2/@S2.HTM">OFHEO House Price Index (Q1 1991=100, SA)</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Purchase Only</td>
<td>214.2</td>
<td>214.9</td>
<td>-4.8%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>9.5%</td>
</tr>
</tbody>
</table>


</html>

The index of U.S. house prices from the Office of Federal Housing Enterprise Oversight (OFHEO) fell 0.3% during May and prices were down 4.8% from a year earlier.

OFHEO House Price Fell Slightly in May, Down 4.8% Year to Year

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722c.jpg" width="353">
Chain store sales, as reported by the International Council of Shopping Centers, ticked a modest 0.1% last week. The uptick followed like moves during each of the prior three weeks and the level of sales in July is up modestly from both the June and the May averages.
During the last ten years there has been a 45% correlation between the y/y change in chain store sales and the change in nonauto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales (stores open for one year) reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the latest week, the leading indicator of chain store sales from ICSC-UBS fell 0.2% (-2.5% y/y) after a 1.5% pop during the week prior.
The chain store sales figures are available in Haver&#39;s SURVEYW database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">07/19/08</th>
<th scope="col">07/12/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain Store Sales</td>
<td>493.4</td>
<td>492.7</td>
<td>2.5%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales, as reported by the International Council of Shopping Centers, ticked a modest 0.1% last week. The uptick followed like moves during each of the prior three weeks and the level of sales in July is up modestly from [...]

U.S. Chain Store Sales Up Modestly

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722a.jpg" width="353">
The retail price for a gallon of regular gasoline dropped five cents last week to $4.06 per gallon, according to the U.S. Department of Energy survey. For all grades of gasoline the average price also fell five cents to $4.12 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline did rise a nickel versus Friday to $3.08 per gallon. The latest price was, however, down sharply from the highs one week ago above $3.40.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database, daily prices are in the DAILY database.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722b.jpg" width="353">
According to the U.S. Department of Energy the demand for gasoline during the latest four weeks fell 2.9% from a year earlier due to the increase in gasoline prices, along with the slowdown in economic growth. Gasoline demand was on the same negative pace as the prior week and it was the weakest reading for gasoline demand in three years.
The DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil fell last week to an average $135.34 per barrel down from $142.46 at the beginning of the month. Yesterday, the price for a barrel of crude was $131.04.
Price for natural gas slipped for a second week. Last week&#39;s price averaged $11.26 per mmbtu (76.9% y/y) and prices fell further yesterday to $10.53.

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<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">07/21/08</th>
<th scope="col">07/14/08</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>4.06</td>
<td>4.11</td>
<td>37.4%</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>135.34</td>
<td>140.16</td>
<td>80.6%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
</html>

The retail price for a gallon of regular gasoline dropped five cents last week to $4.06 per gallon, according to the U.S. Department of Energy survey. For all grades of gasoline the average price also fell five cents to $4.12 per [...]

U.S. Gasoline Price Fell a Nickel, Crude Down $5.00

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722a.jpg" align="left" border="0" height="265" width="353">
The retail price for a gallon of regular gasoline dropped
five cents last week to $4.06 per gallon, according to the U.S.
Department of Energy survey. For all grades of gasoline the average
price also fell five cents to $4.12 per gallon.
Yesterday, the spot market price for a gallon of regular
gasoline did rise a nickel versus Friday to $3.08 per gallon. The
latest price was, however, down sharply from the highs one week ago
above $3.40.
Weekly gasoline prices can be found in Haver's WEEKLY
database, daily prices are in the DAILY
database.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722b.jpg" align="right" border="0" height="265" width="353">
According to the U.S. Department of Energy the demand for
gasoline during the latest four weeks fell 2.9% from a year earlier due
to the increase in gasoline prices, along with the slowdown in economic
growth. Gasoline demand was on the same negative pace as the prior week
and it was the weakest reading for gasoline demand in three years.
The DOE figures are available in Haver's OILWKLY
database.
The price for a barrel of West Texas Intermediate crude oil
fell last week to an average $135.34 per barrel down from $142.46 at
the beginning of the month. Yesterday, the price for a barrel of crude
was $131.04.
Price for natural gas slipped for a second week. Last week's
price averaged $11.26 per mmbtu (76.9% y/y) and prices fell further
yesterday to $10.53.

<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">07/21/08</th>
<th scope="col">07/14/08</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>4.06</td>
<td>4.11</td>
<td>37.4%</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>135.34</td>
<td>140.16</td>
<td>80.6%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
U.S. Chain Store Sales Up Modestly 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722c.jpg" align="left" border="0" height="265" width="353">p
pChain store sales, as reported by the International Council of
Shopping Centers, ticked a modest 0.1% last week. The uptick followed
like moves during each of the prior three weeks and the level of sales
in July is up modestly from both the June and the May averages.p
During the last ten years there has been a 45% correlation
between the y/y change in chain store sales and the change in nonauto
retail sales less gasoline.p
The ICSC-UBS retail
chain-store sales index is constructed using the same-store sales
(stores open for one year) reported by 78 stores of seven retailers:
Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.
During the latest week, the leading indicator of chain store
sales from ICSC-UBS fell 0.2% (-2.5% y/y) after a 1.5% pop during the
week prior.
The chain store sales figures are available in Haver's SURVEYW
database.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM">ICSC-UBS
(SA, 1977=100)</a></th>
<th scope="col">07/19/08</th>
<th scope="col">07/12/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Chain
Store Sales</td>
<td>493.4</td>
<td>492.7</td>
<td>2.5%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>
OFHEO House Price Fell Slightly in
May, Down 4.8% Year to Year 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722e.jpg" align="left" border="0" height="265" width="353">
The index of U.S. house prices from the Office of Federal
Housing Enterprise Oversight (OFHEO) fell 0.3% during May and prices
were down 4.8% from a year earlier. 
During the latest twelve months OFHEO indicated that the
decline in home prices was by far the greatest in the Pacific region
where prices fell 14.5% y/y. That followed a 1.0% rise in prices last
year and several years of double digit gain.
Elsewhere in the
country home prices fell one to five percent y/y except in the West
South Central region where they rose slightly. Prices in New England
and in the Mountain regions fell 5.0%.

The latest report from OFHEO can be found <a href="http://www.ofheo.gov/media/hpi/MonthlyHPI72208F.pdf">
here</a>.
OFHEO figures are available in Haver's USECON database.
House Prices and the Stance of Monetary Policy
from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/07/Jarocinski.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/surveyw/@S2/@S2.HTM">OFHEO
House Price Index (Q1 1991=100, SA)</a></th>
<th scope="col">May</th>
<th scope="col">April</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">Purchase Only</td>
<td>214.2</td>
<td>214.9</td>
<td>-4.8%</td>
<td>1.7%</td>
<td>6.3%</td>
<td>9.5%</td>
</tr>
</tbody>
</table>
 Italian ConsumerConfidence Takes
a Dive 
by <a href="/comment/Curley.html">Louise
Curley</a> July 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722h.jpg" align="left" border="0" height="265" width="353">
The Institute of Studies and Economic Analysis's (ISAE) index
of Italian consumer confidence fell 4.1% from June to 95.8 (1980=100)
in July, the lowest value since May 2004. Consumers' biggest concern
appears to be the general economy, the index for which declined 11.5%
in July, next in line is concern over future prospects, the index for
which declined 9.4%. The indexes for current conditions and personal
economic situation were down 0.1% and 0.9% respectively. These major
components of the consumer confidence index are shown in the first
chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722g.jpg" align="right" border="0" height="265" width="353">
Although the decline in confidence was not unexpected, its
magnitude was greater than the consensus expected. Among the reasons
advanced for the deterioration in confidence are the increases in food
and oil prices. The second chart plots the food and the electricity and
fuel components of the Consumer Price Index. They are plotted on a log
scale where percentage changes can be compared. The recent acceleration
in the prices of both food and electricity and fuel is evident. Earlier
this month the declines in purchasing power caused by rising food and
fuel costs led to public demonstrations.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ITALY&nbsp;&nbsp;</th>
<th scope="col">Jul 08</th>
<th scope="col">Jun 08&nbsp;</th>
<th scope="col">Jul 07&nbsp;</th>
<th scope="col">M/M % chg&nbsp;</th>
<th scope="col">Y/Y % chg&nbsp;</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&nbsp;
(1980=100)</td>
<td>95.8</td>
<td>99.9</td>
<td>107.6</td>
<td>-4.10</td>
<td>10.97</td>
<td>108.5</td>
<td>108.7</td>
<td>104.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Current Situation</td>
<td>103.0</td>
<td>103.1</td>
<td>115.1</td>
<td>-01.</td>
<td>-10.51</td>
<td>114.3</td>
<td>112.2</td>
<td>106.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Future Conditions</td>
<td>88.4</td>
<td>97.6</td>
<td>98.7</td>
<td>-9.43</td>
<td>-10.44</td>
<td>100.6</td>
<td>104.4</td>
<td>101.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; General Economic
Situation</td>
<td>72.2</td>
<td>81.6</td>
<td>91.2</td>
<td>-11.52</td>
<td>-20.83</td>
<td>93.8</td>
<td>95.6</td>
<td>85.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Economic Situation</td>
<td>108.9</td>
<td>109.9</td>
<td>112.0</td>
<td>-.91</td>
<td>-6.92</td>
<td>115.9</td>
<td>115.3</td>
<td>113.7</td>
</tr>
<tr>
<td class="firstcol"></td>
<td>Jun 08</td>
<td>May 08&nbsp;</td>
<td>Jun 07&nbsp;</td>
<td>M/M % chg&nbsp;</td>
<td>Y/Y % chg&nbsp;</td>
<td>2007</td>
<td>2006</td>
<td>2005</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Price Index (1995=100)</td>
<td>137.1</td>
<td>136.5</td>
<td>132.1</td>
<td>0.44</td>
<td>3.79</td>
<td>132.2</td>
<td>129.8</td>
<td>127.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food&nbsp;</td>
<td>136.2</td>
<td>135.6</td>
<td>129.0</td>
<td>0.44</td>
<td>6.41</td>
<td>128.6</td>
<td>125.0</td>
<td>122.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Electricity
&amp; Fuel</td>
<td>158.8</td>
<td>156.9</td>
<td>140.7</td>
<td>1.21</td>
<td>12.86</td>
<td>141.9</td>
<td>140.0</td>
<td>127.6</td>
</tr>
</tbody>
</table>
Japan&#8217;s All-industries Index is
Still Very Upbeat 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 22, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080722f.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s sector indices show that the main all-industry reading
is up in May and stands strongly in the 95th percentile of its range.
The construction index is off sharply and continues to be very weak.
The table plots 12-month changes in the index while the table plots the
index levels. Index levels show construction is still very weak but the
tertiary and over all index are still strong. In terms of momentum all
indices are losing it. On balance the sector indices seem to be holding
up better than other gauges for the Japanese economy. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="10" scope="col">Up to
date Japan Industry Surveys </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol"></td>
<td colspan="3">Recent Months</td>
<td colspan="3">Moving Averages</td>
<td colspan="3">Extremes: Range</td>
</tr>
<tr>
<td class="firstcol">&nbsp;</td>
<td>May 
2008</td>
<td>Apr 
2008</td>
<td>Mar 
2008</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Max</td>
<td>Min</td>
<td>%-Tile</td>
</tr>
<tr>
<td class="firstcol">All Industry</td>
<td>107.5</td>
<td>107.1</td>
<td>106.2</td>
<td>106.9</td>
<td>106.9</td>
<td>107.3</td>
<td>108.1</td>
<td>93.8</td>
<td>95.8%</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>70.6</td>
<td>71.8</td>
<td>72.5</td>
<td>71.6</td>
<td>71.8</td>
<td>73.4</td>
<td>124.6</td>
<td>70.6</td>
<td>0.0%</td>
</tr>
<tr>
<td class="firstcol">Tertiary</td>
<td>110.4</td>
<td>110.6</td>
<td>108.5</td>
<td>109.8</td>
<td>109.7</td>
<td>110.1</td>
<td>110.9</td>
<td>92.0</td>
<td>97.4%</td>
</tr>
<tr>
<td class="firstcol" colspan="10">Ranges,
Max, Min since
1993</td>
</tr>
</tbody>
</table>

</body></html>

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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250801A4.jpg

250801D4.jpg

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.

250801C4.jpg

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.

250801X4.jpg

250801F4.jpg

- 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

250801F20.jpg

250801G20.jpg

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.

250801H20.jpg

250801I20.jpg

- 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

250801A.jpg

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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: July 2008

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