Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805j.jpg" width="353">
As expected, the Federal Open Market Committee left the Federal funds rate unchanged today at 2.00%. The action was as widely expected.
The discount rate also was left unchanged at 2.25%.
The Fed&#39;s statement showed the distinct balance of factors which led to the decision to leave rates unchanged.1) &quot;Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress.&quot;2) &quot;Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.&quot;3) &quot;Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
The decision was unanimous except that Richard W. Fisher, President of the Federal Reserve Bank of Dallas, preferred an increase in the target for the federal funds rate at this meeting.
For the complete text of the Fed&#39;s latest press release please follow this <a href="http://www.federalreserve.gov/newsevents/press/monetary/20080805a.htm"> link</a>.
Profits and Balance Sheet Developments at U.S. Commercial Banks in 2007 from the latest Federal Reserve Bulletin is available <a href="http://www.federalreserve.gov/pubs/bulletin/2008/pdf/bankprofit08.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">Current</th>
<th scope="col">Last</th>
<th scope="col">July</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Federal Funds Rate, % (Target)</td>
<td>2.00</td>
<td>2.00</td>
<td>2.00</td>
<td>5.05</td>
<td>4.96</td>
<td>3.19</td>
</tr>
<tr>
<td class="firstcol">Discount Rate, %</td>
<td>2.25</td>
<td>2.25</td>
<td>2.25</td>
<td>5.86</td>
<td>5.96</td>
<td>4.19</td>
</tr>
</tbody>
</table>
</body>
</html>

As expected, the Federal Open Market Committee left the Federal funds rate unchanged today at 2.00%. The action was as widely expected. The discount rate also was left unchanged at 2.25%. The Fed's statement showed the distinct [...]

FOMC Left Funds Rate at 2.00% - The Balance of Factors

Louise Curley

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805h.jpg" align="left" border="0" height="265" width="353">
The indexes of retail trade in the Euro Area and the European
Union, exclude the sales of motor vehicles and motor cycles. There are
two indexes of total retail sales: one includes repairs of personal and
household repairs and the other excludes them. The most quoted index
excludes the repairs.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805i.jpg" align="right" border="0" height="265" width="353">
The index of value of retail trade, excluding repairs, in the
Euro Area declined by a mere 0.06% in June from May, but the volume
declined by 0.6%. Although the value of retail sales increased 1.4%
from June of 2007 to June of 2008, the volume declined by 3.1%. Over
this period, sales of food declined by 4.4% and sales of non food
items, by 2.2%.The value and volume of retail trade in the Euro Area
are shown in the first chart.
As some of the Non Euro Area countries in the European Union,
particularly those in eastern Europe, chalked up substantial year over
year increases in the volume of retail trade, the decline in the volume
of sales over the last year was less than that for the European Union--
-1.1% vs.-3.1%. Among these, Romania showed a whopping 23.3% increase
in the volume of retail sales, while Slovenia, Poland and the Czech
Republic showed more moderate increases of 5.7%, 5.2% and 5.1%,
respectively. The value of retail trade in the entire European Union
was unchanged from May to June while the volume was down 1.1%. The
value and volume of retail trade in the European Union are shown in the
second chart.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">EURO
AREA (15) EU (27)&nbsp;&nbsp;(2000=100)</th>
<th scope="col">Jun 08</th>
<th scope="col">May 08&nbsp;</th>
<th scope="col">Jun 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">EURO AREA</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey2">
<td class="firstcol">Volume of
Retail Sales ex Repairs (NSA)</td>
<td>104.9</td>
<td>106.7</td>
<td>108.24</td>
<td>--</td>
<td>-3.1</td>
<td>109.5</td>
<td>108.5</td>
<td>106.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Volume of
Retail Sales ex Repairs (SA)</td>
<td>107.8</td>
<td>108.4</td>
<td>109.9</td>
<td>-0.6</td>
<td>--</td>
<td>109.5</td>
<td>108.5</td>
<td>106.8</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Value of
Retail Sales ex Repairs (NSA)</td>
<td>120.7</td>
<td>121.9</td>
<td>119.1</td>
<td>--</td>
<td>1.4</td>
<td>120.4</td>
<td>117.5</td>
<td>114.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Value of
Retail Sales ex Repairs (NSA)</td>
<td>122.8</td>
<td>122.9</td>
<td>120.3</td>
<td>-0.06</td>
<td>--</td>
<td>120.4</td>
<td>117.5</td>
<td>114.2</td>
</tr>
<tr class="grey2">
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td class="firstcol">EUROPEAN
UNION&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Volume of
Retail Sales ex Repairs (NSA)</td>
<td>115.1</td>
<td>116.9</td>
<td>116.3</td>
<td>--</td>
<td>-1.1</td>
<td>117.9</td>
<td>115.2</td>
<td>112.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Volume of
Retail Sales ex Repairs (SA)</td>
<td>117.8</td>
<td>119.1</td>
<td>118.6</td>
<td>-1.0</td>
<td>--</td>
<td>117.9</td>
<td>115.2</td>
<td>112.2</td>
</tr>
<tr class="grey2">
<td class="firstcol">&nbsp; Value of
Retail Sales ex Repairs (NSA)</td>
<td>129.4</td>
<td>130.4</td>
<td>126.3</td>
<td>--</td>
<td>-0.74</td>
<td>127.8</td>
<td>122.4</td>
<td>118.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Value of
Retail Sales ex Repairs (NSA)</td>
<td>131.6</td>
<td>131.6</td>
<td>127.6</td>
<td>0.0</td>
<td>--</td>
<td>127.8</td>
<td>122.4</td>
<td>118.0</td>
</tr>
</tbody>
</table>
</body></html>

The indexes of retail trade in the Euro Area and the European Union, exclude the sales of motor vehicles and motor cycles. There are two indexes of total retail sales: one includes repairs of personal and household repairs and the [...]

Retail Trade in the Euro Area and the European Union

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805f.jpg" align="left" border="0" height="265" width="353">
Central banks are not having good luck with inflation. Of
course, critics will say that inflation fighting has little to do with
luck and that is true enough. The PPI is not a targeted rate by the ECB
so in some sense it can be anything and it doesn&#8217;t matter. But we know
it matters and that PPI prices feed into sectors and become costs for
consumer prices so a surging PPI is not good news at all. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Euro Area
and UK PPI Trends </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="2">M/M</td>
<td colspan="4">Saar</td>
</tr>
<tr class="odd">
<td class="firstcol">Euro Area -13</td>
<td>Jun-08</td>
<td>May-08</td>
<td>3-Mo</td>
<td>6-Mo</td>
<td>Yr/Yr</td>
<td>Y/Y Yr Ago</td>
</tr>
<tr>
<td class="firstcol">Total excl Constructions</td>
<td>0.9%</td>
<td>1.2%</td>
<td>12.8%</td>
<td>11.1%</td>
<td>8.0%</td>
<td>2.3%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.4%</td>
<td>0.3%</td>
<td>4.4%</td>
<td>5.5%</td>
<td>4.0%</td>
<td>3.1%</td>
</tr>
<tr>
<td class="firstcol">Capital Goods</td>
<td>0.2%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>3.0%</td>
<td>2.0%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">Consumer Goods</td>
<td>0.2%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>3.6%</td>
<td>4.5%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Intermediate &amp; Capital
Goods</td>
<td>0.4%</td>
<td>0.4%</td>
<td>5.6%</td>
<td>6.5%</td>
<td>3.8%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">Energy</td>
<td>2.7%</td>
<td>4.1%</td>
<td>41.9%</td>
<td>29.9%</td>
<td>21.4%</td>
<td>-0.5%</td>
</tr>
<tr>
<td class="firstcol">MFG</td>
<td>0.7%</td>
<td>1.3%</td>
<td>11.0%</td>
<td>9.5%</td>
<td>6.9%</td>
<td>2.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Germany</td>
<td>0.9%</td>
<td>1.0%</td>
<td>12.5%</td>
<td>10.9%</td>
<td>6.7%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.3%</td>
<td>0.4%</td>
<td>3.9%</td>
<td>4.5%</td>
<td>3.0%</td>
<td>2.8%</td>
</tr>
<tr class="grey2">
<td class="firstcol">France</td>
<td>0.7%</td>
<td>1.3%</td>
<td>11.7%</td>
<td>9.2%</td>
<td>7.3%</td>
<td>1.9%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.4%</td>
<td>0.3%</td>
<td>3.9%</td>
<td>4.7%</td>
<td>3.8%</td>
<td>2.6%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Italy</td>
<td>0.8%</td>
<td>1.5%</td>
<td>11.1%</td>
<td>10.8%</td>
<td>8.2%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.5%</td>
<td>0.2%</td>
<td>5.1%</td>
<td>6.4%</td>
<td>4.2%</td>
<td>3.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">UK</td>
<td>2.0%</td>
<td>2.6%</td>
<td>32.2%</td>
<td>22.0%</td>
<td>19.5%</td>
<td>1.2%</td>
</tr>
<tr>
<td class="firstcol">Excl Energy</td>
<td>0.8%</td>
<td>1.4%</td>
<td>12.9%</td>
<td>11.3%</td>
<td>7.2%</td>
<td>2.9%</td>
</tr>
<tr class="grey1">
<td colspan="4">Euro Area 13 Harmonized PPI
excluding Construction</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">The EA 13
countries are Austria,
Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, Slovenia</td>
</tr>
</tbody>
</table>
</body></html>

Central banks are not having good luck with inflation. Of course, critics will say that inflation fighting has little to do with luck and that is true enough. The PPI is not a targeted rate by the ECB so in some sense it can be [...]

EMU PPI Surges Again

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805e.jpg" width="353">
Chain store sales, according to the International Council of Shopping Centers, held onto the strong gain during the prior week. The unchanged level of sales in early-August followed a 1.2% w/w jump at the end of July. It left the level of sales at its record high which was up 1.0% from the July average. That followed July&#39;s 0.4% rise.
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.
The leading indicator of chain store sales from ICSC-UBS continued to weaken and fell 1.5% (-5.3% y/y) after a 0.9% decline during the week prior.
The chain store sales figures are available in Haver&#39;s SURVEYW database.
Can Young Americans Compete in a Global Economy? from the Federal Reserve Bank of San Francisco is available <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-22.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">ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">08/08/08</th>
<th scope="col">07/26/08</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>499.2</td>
<td>499.2</td>
<td>2.9%</td>
<td>2.8%</td>
<td>3.3%</td>
<td>3.6%</td>
</tr>
</tbody>
</table>


</html>

Chain store sales, according to the International Council of Shopping Centers, held onto the strong gain during the prior week. The unchanged level of sales in early-August followed a 1.2% w/w jump at the end of July. It left the [...]

U.S. Chain Store Sales Held the High Ground

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805c.jpg" width="353">
The pump price for a gallon of regular gasoline fell eight cents last week versus the prior period. At $3.88 per gallon, according to the U.S. Department of Energy survey, the price has now fallen by 23 cents, or 5.6%, from the peak just four weeks ago. Last week&#39;s price for a gallon of regular gas was the lowest since late-May. For all grades of gasoline the average price fell eight cents to $3.94 per gallon.
Yesterday the spot market price for a gallon of regular gasoline rose four cents, from Friday, to $3.06 per gallon. That was versus last week&#39;s average of $3.00. It still was down from the high two weeks ago above $3.40.
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database, daily prices are in the DAILY database.
According to the U.S. Department of Energy, though the demand for gasoline was unchanged last week from the prior period, gasoline demand during the latest four weeks fell 3.2% from a year earlier. That y/y decline nearly equaled the decline in gasoline demand three years ago when Hurricane Katrina struck and it limited gasoline supplies.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805d.jpg" width="353">
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 $124.21 per barrel.
Prices for natural gas fell further w/w to an average $9.16 per mmbtu (+45.8% y/y).
Unanchored Expectations? Interpreting the Evidence from Inflation Surveys from the Federal Reserve Bank of San Francisco can be found <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"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly Prices</a></th>
<th scope="col">08/04/08</th>
<th scope="col">07/28/08</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>3.88</td>
<td>3.96</td>
<td>36.7%</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>124.21</td>
<td>126.14</td>
<td>63.3%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
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The pump price for a gallon of regular gasoline fell eight cents last week versus the prior period. At $3.88 per gallon, according to the U.S. Department of Energy survey, the price has now fallen by 23 cents, or 5.6%, from the peak [...]

U.S. Gasoline Prices Lowest Since Late-May

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805a.jpg" width="353">
The Composite Index for the non-manufacturing sector, from the Institute for Supply Management, ticked up in July to 49.5 from an unrevised 48.2 during June. Nevertheless, the figure remained below the 2Q average of 50.6. Consensus expectations had been for a slightly lower July reading of 48.8.
Beginning with the January 2008 Non-Manufacturing <cite>Report On Business</cite>&reg;, a composite index is now calculated as an indicator of the overall economic condition for the non-manufacturing sector. It is a composite index based on the diffusion indexes for four of the indicators (business activity, new orders, employment and supplier deliveries) with equal weights. The latest report from the ISM can be found <a href="http://www.ism.ws/ISMReport/NonMfgROB.cfm">here</a>.
The non-manufacturing business activity sub-index fell slightly to 49.6 from 49.9. These readings were down from 56.0 averaged during all of last year. Since the series&#39; inception in 1997 there has been a 48% correlation between the level of the business activity index for the non-manufacturing sector and the Q/Q change in real GDP for the services and the construction sectors.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080805b.jpg" width="353">
The new orders sub-index also fell to 47.9 from 48.6 during June. The latest was the lowest level since January.
The employment index bucked the trend and rose off its historic low to 47.1. Since the series&#39; inception in 1997 there has been a 56% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service-producing plus the construction industries.
Pricing power eased slightly to a reading of 80.8 after the June surge. Since inception ten years ago, there has been a 60% correlation between the price index and the q/q change in the GDP services chain price index.
ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates back to July 1997.
Economy in Low Gear Through 2008 from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/fedletter/cflaugust2008_253a.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/USECON/@EF/@EF03/@EF03.HTM">ISM Nonmanufacturing Survey</a></th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Index</td>
<td>49.5</td>
<td>48.2</td>
<td>53.1</td>
<td>53.5</td>
<td>55.7</td>
<td>58.0</td>
</tr>
<tr>
<td class="firstcol">Prices Index</td>
<td>80.8</td>
<td>84.5</td>
<td>63.1</td>
<td>63.8</td>
<td>65.3</td>
<td>68.0</td>
</tr>
</tbody>
</table>


</html>

The Composite Index for the non-manufacturing sector, from the Institute for Supply Management, ticked up in July to 49.5 from an unrevised 48.2 during June. Nevertheless, the figure remained below the 2Q average of 50.6. Consensus [...]

U.S. ISM Non-Manufacturing Index Ticked Up

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804i.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804j.jpg" border="0" height="265" width="312">

Shortly after the late June report of a first quarter 0.6%
decline in New Zealand's Real Gross Domestic Product, the New Zealand
Institute of Economic Research (NZIER) reported that its second quarter
opinion survey showed that the pessimists on the outlook outweighed the
optimists by 64%, the same balance as in the first quarter. (See the
first chart).
Seasonally unadjusted data on the trade balance showed a
$NZ295 million improvement in June over June of last year. Exports were
up $NZ 846 million and imports $NZ 550 million. The trade balance tends
to vary considerably from month to month so that it is useful to look
at the trend adjusted data, which at present is pointing downward, as
can be seen in the second chart.
Public sector wages and salaries in New Zealand continued to
rise in the second quarter of 2008, while wages and salaries in the
private sector declined slightly. Wages and salaries in the public
sector have generally increased faster than those in the private sector
as can be seen in the third chart.
The exchange rate has depreciated 12% against the dollar from
the peaks earlier this year and while the Stock Market declined by
almost 25% from January 4 to July 15, it has since risen by 10%, as
seen in the last chart.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804l.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804k.jpg" border="0" height="265" width="312">

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Shortly after the late June report of a first quarter 0.6% decline in New Zealand's Real Gross Domestic Product, the New Zealand Institute of Economic Research (NZIER) reported that its second quarter opinion survey showed that the [...]

Some Recent Data From New Zealand

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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:

FOMC Left Funds Rate at 2.00% - The Balance of Factors

Retail Trade in the Euro Area and the European Union

EMU PPI Surges Again

U.S. Chain Store Sales Held the High Ground

U.S. Gasoline Prices Lowest Since Late-May

U.S. ISM Non-Manufacturing Index Ticked Up

FOMC Left Funds Rate at 2.00% - The Balance of Factors

Some Recent Data From New Zealand