Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804f.jpg" width="353">
Factory inventories surged 1.0% during June, thanks to the surge in oil prices. The value of inventories at petroleum refineries rose 9.5% (37.2% y/y) in June and the value is up by more than one-half since December as prices have surged. Less petroleum, factory inventories rose 0.4% (5.1% y/y) in June and YTD they rose 4.6%.
Less oil, the rate of inventory slowed. Automobile inventories fell at a 31.7% annual rate during the last three months. Inventory accumulation in the machinery sector also dropped to a 1.8% growth rate. Accumulation in the computer &amp; electronics areas fell as well to a 1.0% rate of growth.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804g.jpg" width="353">
Factory shipments also surged, by 1.6%, due to oil. Shipments of petroleum surged by 5.6% (52.5% y/y). Less petroleum shipments rose (2.2% y/y) after a 0.5% May decline.
Total factory orders jumped by 1.7%, which was double expectations, again reflecting stronger petroleum orders (which equal shipments). Less petroleum, shipments did surge 1.0% (1.8% y/y) though the gain was making up for weakness earlier this year. Durable orders rose 0.8% which was the same as reported in the advance report, after a 0.1% May uptick.
Overall unfilled orders rose 0.9%, the same as they did in May. Order backlogs for civilian aircraft, which have been rising at a 25.3% rate, have started to cool. They were up just 0.4% in June Excluding the transportation sector altogether unfilled orders still rose 1.2% in June and at a 12.8% rate during the last three months. Accelerated growth in backlogs of machinery still account for much of that strength.

<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/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory Survey</a> (NAICS, %)</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">Inventories</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>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>1.0</td>
<td>0.5</td>
<td>5.9</td>
<td>2.7</td>
<td>7.9</td>
<td>8.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.7</td>
<td>0.9</td>
<td>7.1</td>
<td>1.9</td>
<td>6.2</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>2.3</td>
<td>0.8</td>
<td>11.7</td>
<td>1.2</td>
<td>7.4</td>
<td>11.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.6</td>
<td>0.3</td>
<td>7.5</td>
<td>1.2</td>
<td>5.9</td>
<td>10.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding Transportation</td>
<td>1.6</td>
<td>0.9</td>
<td>10.1</td>
<td>1.5</td>
<td>6.7</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.9</td>
<td>0.9</td>
<td>15.3</td>
<td>17.1</td>
<td>15.3</td>
<td>15.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Transportation</td>
<td>1.2</td>
<td>0.7</td>
<td>10.1</td>
<td>8.2</td>
<td>16.0</td>
<td>9.2</td>
</tr>
</tbody>
</table>
</body>
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Factory inventories surged 1.0% during June, thanks to the surge in oil prices. The value of inventories at petroleum refineries rose 9.5% (37.2% y/y) in June and the value is up by more than one-half since December as prices have [...]

U.S. Factory Inventories Up With Oil Prices

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804h.jpg" width="353">
Job cut announcements during July recovered their June decline with a 26.4% m/m rise, according to the Challenger, Grey &amp; Christmas survey. The three-month level layoffs rose further, to the highest level since early-2006.
A rise in the three-month average of job cut announcements in the financial, automotive, transportation and telecommunication sectors led the recent strength.
During the last ten years there has been a 76% (inverse) correlation between the three-month moving average of announced job cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans rose sharply m/m but they were still down 90.2% y/y.
What Determines An Output Drop after an Energy Price Increase? Household or Firm Energy Share? by Rajeev Dhawan and Karsten Jeske for the Federal Reserve Bank of Atlanta and it is available <a href="http://www.frbatlanta.org/filelegacydocs/wp0720.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger, Gray &amp; Christmas</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>
<td class="firstcol">Announced Job Cuts</td>
<td>103,312</td>
<td>81,755</td>
<td>140.8%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
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</tbody>
</table>
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Job cut announcements during July recovered their June decline with a 26.4% m/m rise, according to the Challenger, Grey & Christmas survey. The three-month level layoffs rose further, to the highest level since early-2006. A rise in [...]

Challenger Layoffs Near Recent High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804c.jpg" width="353">
Nominal personal income inched up 0.1% last month following a revised 1.8% May surge which was due to the first installment of the government&#39;s tax rebate checks being mailed out. During May, the government distributed $48.1 billion in economic stimulus checks. Last month, the government sent $27.9 billion worth of checks. The June gain in income exceeded Consensus expectations for a 0.2% decline. Excluding rebates income rose just 0.4%.
Disposable personal income fell 1.9% last month after the 5.7% spike during May. Net taxes jumped 18.6% in June following the 24.4% May decline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804d.jpg" width="353">
Wage &amp; salary income rose a minimal 0.2% (4.5% y/y) after a 0.3% rise during May. These moderate increases reduced the annualized three-month growth in wages to 2.8% versus a 5.8% rise during 2007 and a 6.3% 2006 gain. Factory sector wages rose 0.1% (1.5% y/y) after a 0.2% May uptick. Wages &amp; salaries in the private service-providing industries ticked up 0.2% (5.1% y/y). Wages in the government sector, however, have been strong and they posted a 0.5% (5.4% y/y) rise and three-month growth rose to 5.3%.
Interest income fell 0.7% (-1.8% y/y) and that was the ninth consecutive month of decline. Year-to-year growth fell to -1.8% after a 7.9% rise during all of 2007. Dividend income rose 0.6% (8.4% y/y) after a 12.4% rise last year and a 21.7% gain during 2006.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804e.jpg" width="353">
The PCE chain price index jumped 0.8% driven higher by rising energy prices. Some spillover to other prices may be apparent as the core PCE price index rose 0.3%. That exceeded Consensus forecasts for a 0.2% rise. Three-month growth in core prices rose to 2.3% from the recent low of 1.9%. Durable goods prices fell at a 2.0% rate during the last three months but services prices rose at an accelerated 4.3% annual rate.
Personal consumption expenditures rose another 0.6% after the 0.8% during May. Adjusted for price inflation, however, real spending fell 0.2% after a 0.3% May increase. Three-month growth in real spending amounted to just 0.9% (AR).
The personal savings rate halved versus May to 2.5% as a result of the rebate checks started being been spent.
The Changing Nature of the U.S. Balance of Payments from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci14-4.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/@E7/@E711/@E71102/@E71102.HTM">Disposition of Personal Income</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">Personal Income</td>
<td>0.1</td>
<td>1.8</td>
<td>5.7</td>
<td>6.1</td>
<td>7.1</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Disposable Personal Income</td>
<td>-1.9</td>
<td>5.7</td>
<td>7.6</td>
<td>5.5</td>
<td>6.4</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption</td>
<td>0.6</td>
<td>0.8</td>
<td>5.3</td>
<td>5.5</td>
<td>5.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.5</td>
<td>4.9</td>
<td>0.5 (June &#39;07)</td>
<td>0.5</td>
<td>0.7</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.8</td>
<td>0.5</td>
<td>4.1</td>
<td>2.6</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less food &amp; energy</td>
<td>0.3</td>
<td>0.2</td>
<td>2.3</td>
<td>2.2</td>
<td>2.3</td>
<td>2.1</td>
</tr>
</tbody>
</table>
</body>
</html>

Nominal personal income inched up 0.1% last month following a revised 1.8% May surge which was due to the first installment of the government's tax rebate checks being mailed out. During May, the government distributed $48.1 billion [...]

U.S. Income Gain Modest after May Surge

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804a.jpg" width="353">
U.S. sales of light vehicles in July fell another 8.3% from June, according to the Autodata Corporation. The latest sales level of 12.55M units was the lowest since early-1992 and it pulled sales down 21.5% so far this year. The level of vehicle sales also was lower than Consensus expectations for sales of 13.7M.
Sales of domestically made light vehicles overall, at 8.94M, fell 8.5% last month from June and they were off 24.7% YTD. The level of domestic sales was at the lowest since January 1987.
The relatively fuel inefficient domestically made light trucks continued to feel most the effect of higher gasoline prices and sales fell 9.1% from June. That pulled the decline in sales since December to 32.3% and it left the level of light truck sales at the lowest since late-1992.
Sales of U.S. made cars also felt the effect of higher gas prices. They about repeated their June decline with a 7.8% m/m drop to 4.35M units. Using data from Ward&#39;s Automotive News, that was lowest level of car sales since the late 1950s.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804b.jpg" width="353">
Sales of imported light vehicles also showed the effect of higher gasoline prices, and weaker consumer spending generally. They fell by 7.8% to 3.61 million after June&#39;s 0.1% uptick.
Sales of imported autos fell 9.0%, to 2.54M, after the revised 4.1% increase during June. Despite the monthly decline, sales of the relatively fuel efficient imported cars are up 1.9% year-to-year.
Not impervious to the rise in gasoline prices, sales of imported light trucks fell 5.0% (-24.5% y/y) last month while they were off 4.6% since December.
As a result of the greater decline in sales of U.S. made vehicles, import&#39;s share of the U.S. light vehicle market rose again to another record level of 28.8%. (Imported vehicles are those produced outside the U.S. and does not include vehicles with the nameplate of a foreign manufacturer produced within the U.S.) Imports&#39; share of the U.S. car market ticked slightly lower from the June record to 36.9% while import&#39;s share of the light truck market rose to 18.9%, near the record of 19.3%.
U.S. auto exports on the rise from the Federal Reserve Bank of Chicago can be found <a href="http://midwest.chicagofedblogs.org/"> 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/@ED/@ED09/@ED0901/@ED0901.HTM">Light Vehicle Sales (SAAR, Mil. Units)</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">Total</td>
<td>12.55</td>
<td>13.69</td>
<td>-18.9%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>6.88</td>
<td>7.50</td>
<td>-5.6</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>4.35</td>
<td>4.72</td>
<td>-9.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>2.54</td>
<td>2.79</td>
<td>1.9</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.67</td>
<td>6.18</td>
<td>-30.8</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp; Domestic</td>
<td>4.59</td>
<td>5.05</td>
<td>-32.1</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Imported</td>
<td>1.07</td>
<td>1.13</td>
<td>-24.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
</body>
</html>

U.S. sales of light vehicles in July fell another 8.3% from June, according to the Autodata Corporation. The latest sales level of 12.55M units was the lowest since early-1992 and it pulled sales down 21.5% so far this year. The level [...]

U.S. Light Vehicle Sales Lowest Since 1992

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804c.jpg" align="left" border="0" height="265" width="353">
Nominal personal income inched up 0.1%
last month following a revised 1.8% May surge which was due to the
first installment of the government's tax rebate checks being mailed
out. During May, the government distributed $48.1 billion in economic
stimulus checks. Last month, the government sent $27.9 billion worth of
checks. The June gain in income exceeded Consensus expectations for a
0.2% decline. Excluding rebates income rose just 0.4%.
Disposable personal income fell 1.9% last
month after the 5.7% spike during May. Net taxes jumped 18.6% in June
following the 24.4% May decline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804d.jpg" align="right" border="0" height="265" width="353">
Wage &amp; salary income rose a minimal 0.2% (4.5% y/y)
after a 0.3% rise during May. These moderate increases reduced the
annualized three-month growth in wages to 2.8% versus a 5.8% rise
during 2007 and a 6.3% 2006 gain. Factory sector wages rose 0.1% (1.5%
y/y) after a 0.2% May uptick. Wages &amp; salaries in the private
service-providing industries ticked up 0.2% (5.1% y/y). Wages in the
government sector, however, have been strong and they posted a 0.5%
(5.4% y/y) rise and three-month growth rose to 5.3%.
Interest income fell 0.7% (-1.8% y/y) and that was the ninth
consecutive month of decline. Year-to-year growth fell to -1.8% after a
7.9% rise during all of 2007. Dividend income rose 0.6% (8.4% y/y)
after a 12.4% rise last year and a 21.7% gain during 2006.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804e.jpg" align="left" border="0" height="265" width="353">
The PCE chain price index jumped 0.8%
driven higher by rising energy prices. Some spillover to other prices
may be apparent as the core PCE price index rose
0.3%. That exceeded Consensus forecasts for a 0.2% rise. Three-month
growth in core prices rose to 2.3% from the recent low of 1.9%.
Durable goods prices fell at a 2.0% rate during the last three months
but services prices rose at an accelerated 4.3% annual rate.
Personal consumption expenditures rose another 0.6% after the
0.8% during May. Adjusted for price inflation, however, real
spending fell 0.2% after a 0.3% May increase. Three-month
growth in real spending amounted to just 0.9% (AR).
The personal savings rate halved versus May to 2.5% as a
result of the rebate checks started being been spent.
The Changing Nature of the U.S. Balance of Payments
from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci14-4.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/@E7/@E711/@E71102/@E71102.HTM">Disposition
of Personal Income</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">Personal Income</td>
<td>0.1</td>
<td>1.8</td>
<td>5.7</td>
<td>6.1</td>
<td>7.1</td>
<td>5.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Disposable
Personal Income</td>
<td>-1.9</td>
<td>5.7</td>
<td>7.6</td>
<td>5.5</td>
<td>6.4</td>
<td>4.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Personal Consumption</td>
<td>0.6</td>
<td>0.8</td>
<td>5.3</td>
<td>5.5</td>
<td>5.9</td>
<td>6.2</td>
</tr>
<tr>
<td class="firstcol">Saving Rate</td>
<td>2.5</td>
<td>4.9</td>
<td>0.5 (June '07)</td>
<td>0.5</td>
<td>0.7</td>
<td>0.3</td>
</tr>
<tr class="odd">
<td class="firstcol">PCE Chain Price Index</td>
<td>0.8</td>
<td>0.5</td>
<td>4.1</td>
<td>2.6</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Less food
&amp; energy</td>
<td>0.3</td>
<td>0.2</td>
<td>2.3</td>
<td>2.2</td>
<td>2.3</td>
<td>2.1</td>
</tr>
</tbody>
</table>
U.S. Light Vehicle Sales Lowest
Since 1992 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804a.jpg" align="left" border="0" height="265" width="353">
U.S. sales of light vehicles in July fell another 8.3% from
June, according to the Autodata Corporation. The latest sales level of
12.55M units was the lowest since early-1992 and it pulled sales down
21.5% so far this year. The level of vehicle sales also was lower than
Consensus expectations for sales of 13.7M.
Sales of domestically made light vehicles
overall, at 8.94M, fell 8.5% last month from June and they were off
24.7% YTD. The level of domestic sales was at the lowest since January
1987.
The relatively fuel inefficient domestically
made light trucks continued to feel most the effect of higher gasoline
prices and sales fell 9.1% from June. That pulled the decline in sales
since December to 32.3% and it left the level of light truck sales at
the lowest since late-1992.
Sales of U.S. made cars also felt the effect of higher gas
prices. They about repeated their June decline with a 7.8% m/m drop to
4.35M units. Using data from Ward's Automotive News, that was lowest
level of car sales since the late 1950s.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804b.jpg" align="right" border="0" height="265" width="353">
Sales of imported light vehicles also
showed the effect of higher gasoline prices, and weaker consumer
spending generally. They fell by 7.8% to 3.61 million after June's 0.1%
uptick.
Sales of imported autos fell 9.0%, to 2.54M, after the revised
4.1% increase during June. Despite the monthly decline, sales of the
relatively fuel efficient imported cars are up 1.9% year-to-year.
Not impervious to the rise in gasoline prices, sales of
imported light trucks fell 5.0% (-24.5% y/y) last month while they were
off 4.6% since December.
As a result of the greater decline in sales of U.S. made
vehicles, import's share of the U.S. light vehicle
market rose again to another record level of 28.8%. (Imported vehicles
are those produced outside the U.S. and does not include vehicles with
the nameplate of a foreign manufacturer produced within the U.S.)
Imports' share of the U.S. car market ticked slightly lower from the
June record to 36.9% while import's share of the light truck market
rose to 18.9%, near the record of 19.3%.
U.S. auto exports on the rise from the
Federal Reserve Bank of Chicago can be found <a href="http://midwest.chicagofedblogs.org/"> 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/@ED/@ED09/@ED0901/@ED0901.HTM">Light
Vehicle Sales (SAAR, Mil. Units)</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">Total</td>
<td>12.55</td>
<td>13.69</td>
<td>-18.9%</td>
<td>16.17</td>
<td>16.54</td>
<td>16.96</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Autos</td>
<td>6.88</td>
<td>7.50</td>
<td>-5.6</td>
<td>7.58</td>
<td>7.77</td>
<td>7.65</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.35</td>
<td>4.72</td>
<td>-9.5</td>
<td>5.07</td>
<td>5.31</td>
<td>5.40</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>2.54</td>
<td>2.79</td>
<td>1.9</td>
<td>2.51</td>
<td>2.45</td>
<td>2.25</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Light Trucks</td>
<td>5.67</td>
<td>6.18</td>
<td>-30.8</td>
<td>8.60</td>
<td>8.78</td>
<td>9.32</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Domestic</td>
<td>4.59</td>
<td>5.05</td>
<td>-32.1</td>
<td>7.12</td>
<td>7.42</td>
<td>8.12</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Imported</td>
<td>1.07</td>
<td>1.13</td>
<td>-24.5</td>
<td>1.48</td>
<td>1.37</td>
<td>1.20</td>
</tr>
</tbody>
</table>
U.S. Factory Inventories Up With
Oil Prices 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804f.jpg" align="left" border="0" height="265" width="353">
Factory inventories surged 1.0% during June, thanks to the
surge in oil prices. The value of inventories at petroleum refineries
rose 9.5% (37.2% y/y) in June and the value is up by more than one-half
since December as prices have surged. Less petroleum, factory
inventories rose 0.4% (5.1% y/y) in June and YTD they rose 4.6%.
Less oil, the rate of inventory slowed. Automobile inventories
fell at a 31.7% annual rate during the last three months. Inventory
accumulation in the machinery sector also dropped to a 1.8% growth
rate. Accumulation in the computer &amp; electronics areas fell as
well to a 1.0% rate of growth.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804g.jpg" align="right" border="0" height="265" width="353">
Factory shipments also surged, by 1.6%, due to oil. Shipments
of petroleum surged by 5.6% (52.5% y/y). Less petroleum shipments rose
(2.2% y/y) after a 0.5% May decline.
Total factory orders jumped by 1.7%, which was double
expectations, again reflecting stronger petroleum orders (which equal
shipments). Less petroleum, shipments did surge 1.0% (1.8% y/y) though
the gain was making up for weakness earlier this year. Durable orders
rose 0.8% which was the same as reported in the advance report, after a
0.1% May uptick.
Overall unfilled orders rose 0.9%, the same as they did in
May. Order backlogs for civilian aircraft, which have been rising at a
25.3% rate, have started to cool. They were up just 0.4% in June
Excluding the transportation sector altogether unfilled orders still
rose 1.2% in June and at a 12.8% rate during the last three months.
Accelerated growth in backlogs of machinery still account for much of
that strength.

<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/@ED01/@ED0101/@ED01016/@ED01016.HTM">Factory
Survey</a> (NAICS, %)</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">Inventories</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>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.0</td>
<td>0.5</td>
<td>5.9</td>
<td>2.7</td>
<td>7.9</td>
<td>8.1</td>
</tr>
<tr class="odd">
<td class="firstcol">New Orders</td>
<td>1.7</td>
<td>0.9</td>
<td>7.1</td>
<td>1.9</td>
<td>6.2</td>
<td>11.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>2.3</td>
<td>0.8</td>
<td>11.7</td>
<td>1.2</td>
<td>7.4</td>
<td>11.7</td>
</tr>
<tr class="odd">
<td class="firstcol">Shipments</td>
<td>1.6</td>
<td>0.3</td>
<td>7.5</td>
<td>1.2</td>
<td>5.9</td>
<td>10.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Excluding
Transportation</td>
<td>1.6</td>
<td>0.9</td>
<td>10.1</td>
<td>1.5</td>
<td>6.7</td>
<td>11.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Unfilled Orders</td>
<td>0.9</td>
<td>0.9</td>
<td>15.3</td>
<td>17.1</td>
<td>15.3</td>
<td>15.4</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding
Transportation</td>
<td>1.2</td>
<td>0.7</td>
<td>10.1</td>
<td>8.2</td>
<td>16.0</td>
<td>9.2</td>
</tr>
</tbody>
</table>
Challenger Layoffs Near Recent High 
by <a href="/comment/Moeller.html">Tom
Moeller</a> August 4, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080804h.jpg" align="left" border="0" height="265" width="353">
Job cut announcements during July recovered their June decline
with a 26.4% m/m rise, according to the Challenger, Grey &amp;
Christmas survey. The three-month level layoffs rose further, to the
highest level since early-2006.
A rise in the three-month average of job cut announcements in
the financial, automotive, transportation and telecommunication sectors
led the recent strength.
During the last ten years there has been a 76% (inverse)
correlation between the three-month moving average of announced job
cuts and the three-month change payroll employment.
Job cut announcements differ from layoffs. Many are achieved
through attrition, early retirement or just never occur.
Challenger also reported that announced hiring plans rose
sharply m/m but they were still down 90.2% y/y.
What Determines An Output Drop after an Energy Price
Increase? Household or Firm Energy Share? by Rajeev Dhawan
and Karsten Jeske for the Federal Reserve Bank of Atlanta and it is
available <a href="http://www.frbatlanta.org/filelegacydocs/wp0720.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S3/@S301/@S301.HTM">Challenger,
Gray &amp; Christmas</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>
<td class="firstcol">Announced Job Cuts</td>
<td>103,312</td>
<td>81,755</td>
<td>140.8%</td>
<td>768,264</td>
<td>839,822</td>
<td>1,072,054</td>
</tr>
</tbody>
</table>
Some Recent Data From New Zealand by <a href="/comment/Curley.html">Louise
Curley</a> August 4, 2008


<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">


</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801j.jpg" align="left" border="0" height="265" width="353">
The Markit/NTC PMIs show a clear pattern of weakness in the
manufacturing sector. Among the major PMI reporters only Germany and
Greece still post PMI values above 50, the ostensible neutral mark. If
we calculate where the various PMIs stand in their respective historic
ranges we find that only Germany is above its range midpoint. Spain,
Ireland and the UK are on all time lows since this measure has been
reported going back to March 2000. We use March 2000 since it is the
date from which all the above PMIs are available although some
individual country reports go back farther. We want to compare them
over a common time horizon.
On this basis most of the PMIs for manufacturing are in the
lower third of their range or weaker. The EMU measure has slid to the
lower third of its range. Europe&#8217;s manufacturing sector continues to
erode. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Markit/NTC Manufacturing Indexes </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>May-08</td>
<td>3Mo</td>
<td>6Mo</td>
<td>12Mo</td>
<td>Percentile</td>
</tr>
<tr>
<td class="firstcol">Euro-13</td>
<td style="color: red;">47.38</td>
<td style="color: red;">49.16</td>
<td style="color: red;">50.60</td>
<td>49.05</td>
<td>50.38</td>
<td>51.62</td>
<td style="color: red;">27.0%</td>
</tr>
<tr>
<td class="firstcol">Germany</td>
<td style="color: red;">50.90</td>
<td style="color: red;">52.56</td>
<td style="color: red;">53.57</td>
<td>52.34</td>
<td>53.35</td>
<td>53.69</td>
<td style="color: red;">50.8%</td>
</tr>
<tr>
<td class="firstcol">France</td>
<td style="color: red;">47.05</td>
<td style="color: red;">49.24</td>
<td style="color: black;">51.48</td>
<td>49.26</td>
<td>50.76</td>
<td>51.54</td>
<td style="color: red;">22.6%</td>
</tr>
<tr>
<td class="firstcol">Italy</td>
<td style="color: red;">45.32</td>
<td style="color: red;">46.91</td>
<td style="color: red;">48.05</td>
<td>46.76</td>
<td>48.10</td>
<td>49.90</td>
<td style="color: red;">13.9%</td>
</tr>
<tr>
<td class="firstcol">Spain</td>
<td style="color: red;">39.20</td>
<td style="color: red;">40.61</td>
<td style="color: red;">43.79</td>
<td>41.20</td>
<td>43.66</td>
<td>47.04</td>
<td style="color: red;">0.0%</td>
</tr>
<tr>
<td class="firstcol">Austria</td>
<td style="color: red;">46.97</td>
<td style="color: red;">48.39</td>
<td style="color: red;">49.76</td>
<td>48.37</td>
<td>50.12</td>
<td>52.14</td>
<td style="color: red;">23.5%</td>
</tr>
<tr>
<td class="firstcol">Greece</td>
<td style="color: red;">51.63</td>
<td style="color: black;">53.81</td>
<td style="color: red;">53.77</td>
<td>53.07</td>
<td>53.11</td>
<td>53.31</td>
<td style="color: red;">42.3%</td>
</tr>
<tr>
<td class="firstcol">Ireland</td>
<td style="color: red;">43.39</td>
<td style="color: red;">44.71</td>
<td style="color: black;">45.21</td>
<td>44.44</td>
<td>45.63</td>
<td>48.58</td>
<td style="color: red;">0.0%</td>
</tr>
<tr>
<td class="firstcol">Netherlands</td>
<td style="color: red;">47.99</td>
<td style="color: red;">51.07</td>
<td style="color: black;">51.46</td>
<td>50.17</td>
<td>51.17</td>
<td>53.14</td>
<td style="color: red;">31.8%</td>
</tr>
<tr class="odd">
<td colspan="8" class="firstcol">EU</td>
</tr>
<tr>
<td class="firstcol">UK</td>
<td style="color: red;">44.26</td>
<td style="color: red;">45.92</td>
<td style="color: red;">49.23</td>
<td>46.47</td>
<td>48.54</td>
<td>51.06</td>
<td style="color: red;">0.0%</td>
</tr>
</tbody>
</table>
</body></html>

The Markit/NTC PMIs show a clear pattern of weakness in the manufacturing sector. Among the major PMI reporters only Germany and Greece still post PMI values above 50, the ostensible neutral mark. If we calculate where the various [...]

Manufacturing PMIs: Falling in Concert in Europe

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801h.jpg" width="353">
The value of construction put in place fell 0.4% during June after having been unchanged in May. The decline was as-expected.Year-to-year construction was down 5.9% but the level of activity so far this year has been roughly stable.
Residential building activity, however, continued to decline in June by 1.8%. Since it&#39;s peak it has fallen by more than one-third. Single-family construction continued quite weak as it fell another 3.7% (-39.1% y/y). Building activity on multi-family units edged down 0.4% (-8.0% y/y). Spending on improvements has been edging higher since last November but it&#39;s still off 2.0% y/y.
During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.
The value of nonresidential building activity rose another 0.8% led by a 1.2% (37.9% y/y) jump in lodging spending. Spending on health care facilities rose 0.6% (10.0% y/y) but office construction was roughly unchanged (12.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801i.jpg" width="353">
Public construction fell a slight 0.2%. The y/y gain of 5.2% is down from 12.3% growth last year. Nevertheless, spending on office structures continued quite firm at 26.5% y/y. The value of construction spending on highways &amp; streets was roughly unchanged y/y. (The value of construction on highways &amp; streets is roughly one third of the value of total public construction spending.) Building activity of educational facilities fell 1.5% (+4.2% y/y) during June.
The more detailed categories of construction represent the Census Bureau&#146;s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.
Are Inflation Targets Good Inflation Forecasts? from the Federal Reserve Bank of Chicago is available <a href="http://www.chicagofed.org/publications/economicperspectives/ep_2qtr2008_part3_diron_mojon.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/@E9/@E907/@E907.HTM">Construction</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>-0.4</td>
<td>0.0</td>
<td>-5.9</td>
<td>-2.7</td>
<td>6.3</td>
<td>11.2</td>
</tr>
<tr>
<td class="firstcol">Private</td>
<td>-0.4</td>
<td>0.0</td>
<td>-9.6</td>
<td>-6.9</td>
<td>5.5</td>
<td>12.7</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Residential</td>
<td>-1.8</td>
<td>-1.1</td>
<td>-26.7</td>
<td>-19.8</td>
<td>1.0</td>
<td>14.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Nonresidential</td>
<td>0.8</td>
<td>1.1</td>
<td>15.0</td>
<td>19.6</td>
<td>16.2</td>
<td>7.8</td>
</tr>
<tr>
<td class="firstcol">Public</td>
<td>-0.2</td>
<td>0.1</td>
<td>5.2</td>
<td>12.3</td>
<td>9.3</td>
<td>6.2</td>
</tr>
</tbody>
</table>
</body>
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The value of construction put in place fell 0.4% during June after having been unchanged in May. The decline was as-expected.Year-to-year construction was down 5.9% but the level of activity so far this year has been roughly stable. [...]

U.S. Construction Spending Fell in June, Stable This Year

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080801g.jpg" align="left" border="0" height="265" width="353">
Add German retail sales trends to the list of items turning
out more negative prospects for the e-Zone. Retail sales ex-autos as
well as real retail sales ex autos saw sales drop by 1.4%
month-to-month in June of 2008. Over three-months and six-months and
12-months retail ex-auto retail sales are declining.
In the current quarter real retail sales excluding autos are
falling at a sharp 3.8% annual rate.
All the major components of retail sales are showing declines
in 2008-Q2 compared to Q1. The industrial data are slowing and now the
consumer side data are slowing as well. There does not appear to be a
part of the economy prepared to step up and make up for the weakness
elsewhere. Europe is slipping. Germany is leading the way.



<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">German
Real and Nominal Retail Sales </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Nominal</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>YrAgo</td>
<td>Qtr Saar</td>
</tr>
<tr>
<td class="firstcol">Retaill Ex auto</td>
<td>-1.4%</td>
<td>0.9%</td>
<td>0.8%</td>
<td>0.8%</td>
<td>2.3%</td>
<td>1.0%</td>
<td>-2.8%</td>
<td>-1.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Food Bev &amp; Tobacco</td>
<td>1.0%</td>
<td>-1.8%</td>
<td>-0.3%</td>
<td>-4.0%</td>
<td>6.9%</td>
<td>1.2%</td>
<td>-3.4%</td>
<td>-3.2%</td>
</tr>
<tr>
<td class="firstcol">Clothing footwear</td>
<td>-9.6%</td>
<td>14.3%</td>
<td>-0.3%</td>
<td>12.8%</td>
<td>0.2%</td>
<td>-1.4%</td>
<td>-0.5%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Real</td>
</tr>
<tr>
<td class="firstcol">Retail Ex auto</td>
<td>-1.4%</td>
<td>0.5%</td>
<td>0.7%</td>
<td>-0.8%</td>
<td>-0.8%</td>
<td>-1.8%</td>
<td>-3.1%</td>
<td>-3.8%</td>
</tr>
</tbody>
</table>
</body></html>

Add German retail sales trends to the list of items turning out more negative prospects for the e-Zone. Retail sales ex-autos as well as real retail sales ex autos saw sales drop by 1.4% month-to-month in June of 2008. Over three- [...]

German Retail Sales Wither

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. Factory Inventories Up With Oil Prices

Challenger Layoffs Near Recent High

U.S. Income Gain Modest after May Surge

U.S. Light Vehicle Sales Lowest Since 1992

U.S. Income Gain Modest after May Surge

Manufacturing PMIs: Falling in Concert in Europe

U.S. Construction Spending Fell in June, Stable This Year

German Retail Sales Wither