Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080731a.jpg" width="353">
U.S. real GDP growth last quarter improved to 1.9% from 0.9% during 1Q and from the small decline (revised from a slight increase) during 4Q&#39;07. In addition, growth last year and during 2006 was revised down by 0.2 percentage points to 2.0% and 2.8%. Growth last quarter fell short of Consensus expectations for a 2.2% rate of increase.
Corporate profits were not available for 2Q but the rate of change during 1Q was revised down to -4.3% (-1.5% y/y) from -1.3%.
An improved foreign trade deficit added 2.4 percentage points to GDP growth. That was the largest addition since the third quarter of 1980. Exports grew at a strong 9.2% annual rate. The 10.2% y/y growth rate matched that of the prior three quarters. Growth in imports was negative for the third consecutive quarter at -6.6% (-1.7% y/y) and that was the steepest quarterly rate of decline since the recession year of 2001.
Inventory decumulation offset much of the addition from trade and reduced 2Q GDP growth by 1.9 percentage points. That was the largest subtraction in three years.
Growth in final sales to domestic purchasers improved to a still moderate 1.3% from an unrevised 0.1% during 1Q. The y/y growth rate of 0.8% was the weakest since late in 1991.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080731b.jpg" width="353">
Residential construction continued to weigh on domestic demand as it fell at a 15.6% annual rate (-22.2% y/y). That decline subtracted 0.6 percentage points from 2Q GDP growth after single percentage point subtractions during the prior two quarters.
Growth in real personal consumption improved modestly, perhaps due to the issuance of income tax rebate checks, to 1.5% (1.3% y/y) from 0.9% growth during 1Q. Spending on autos &amp; light trucks fell at an 18.5% (-9.4% y/y) annual rate but spending on furniture &amp; other household equipment surged at a 13.4% (6.9% y/y) rate. Spending on apparel rose at a 10.3% (3.5% y/y) rate but spending on recreation rose only at a 0.8% (-0.5% y/y) rate. Growth in real PCE added 1.1 percentage points to 2Q real GDP growth after a 0.6% add during 1Q.
Growth in business fixed investment held steady with 1Q at a 2.3% rate (4.2% y/y). These latest rates of growth are down sharply from 4.9% increases last year and growth above 7.0% during 2006 and 2005. Last quarter, equipment investment fell at a 3.4% (0.1% y/y) rate while structures investment jumped at a 14.3% (12.9% y/y) rate.
The GDP chain price index grew at a 1.1% rate which was less than half the Consensus expectation for a 2.6% rise. The small increase was due to a 2.2% rate of decline in residential investment prices. The PCE price index grew at an accelerated 4.2% (3.7% y/y) rate.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E7/@E701/@E701.HTM">Chained 2000$, % AR</a></th>
<th scope="col">2Q &#39;08</th>
<th scope="col">1Q &#39;08</th>
<th scope="col">4Q &#39;07</th>
<th scope="col">2Q 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">GDP</td>
<td>1.9</td>
<td>0.9</td>
<td>-0.2</td>
<td>1.8</td>
<td>2.0</td>
<td>2.8</td>
<td>2.9</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>-1.9</td>
<td>-0.0</td>
<td>-1.0</td>
<td>-0.6</td>
<td>-0.4</td>
<td>0.0</td>
<td>-0.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.9</td>
<td>0.9</td>
<td>0.8</td>
<td>2.4</td>
<td>2.4</td>
<td>2.8</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">Foreign Trade Effect</td>
<td>2.4</td>
<td>0.8</td>
<td>0.9</td>
<td>1.6</td>
<td>0.6</td>
<td>0.2</td>
<td>0.0</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>1.3</td>
<td>0.1</td>
<td>-0.1</td>
<td>0.8</td>
<td>1.8</td>
<td>2.6</td>
<td>3.1</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>1.1</td>
<td>2.6</td>
<td>2.8</td>
<td>2.0</td>
<td>2.7</td>
<td>3.2</td>
<td>3.3</td>
</tr>
</tbody>
</table>


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U.S. real GDP growth last quarter improved to 1.9% from 0.9% during 1Q and from the small decline (revised from a slight increase) during 4Q'07. In addition, growth last year and during 2006 was revised down by 0.2 percentage points [...]

U.S. 2Q'08 GDP Growth Improved Due to Foreign Trade

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730g.jpg" align="left" border="0" height="265" width="353">
The picture on top captures the path of the industrial sector
and the services sector in EMU. Both have turned sharply lower by mid
2008 after having peaked about one year ago. The overall EMU sentiment
index is now in the 36th percentile of its range nearly at the border
of the bottom third of its range, a weak enough position that makes it
reasonable to talk of downside risks and even recession potential. The
two weakest sectors/areas by their percentile standings are services
(15th percentile) and Consumer confidence (24th percentile). The
industrial and construction sectors are the relative strongest with
standings at about the mid 50s percent of their respective ranges.

In July all sectors fell and most fell sharply. Services with
a seven point fall and retailing with a six point fall made the largest
drops in the month.

The largest EMU and EU countries saw their overall sentiment
gauges fall in the month with only the smallest of the large countries
(Spain) showing month-to-month improvement. In the case of Spain,
however, the &#8216;bounce&#8217; is a bit of a &#8216;dead cat bounce&#8217; since among these
large European economies Spain&#8217;s has the lowest percentile standing for
its overall sentiment reading which stands at a very lowly 14 percent.
At 26 percent the UK is the next lowest and at 27 percent Italy is the
third lowest. France is the relative strongest at a percentile reading
of 46, followed by Germany at 44 percent. The EMU relative reading at
37.4 percent is just slightly above the EU reading which is 36.0
percent.

We focus on these percent percentile readings since each
industry and country has its own range and dynamic in terms of these
net balance readings. By drawing attention to the percentile position
of a reading in a range of the EU net balance outcomes we can compare
across industries and countries with greater confidence that we are
comparing apples with apples or oranges with oranges.

By comparison, look at the raw net balance readings. In July
all the sector net balance readings are negative except services, which
is at zero. But at zero services is relatively weaker in its range than
are the other sector readings (compare their percentiles!). In perusing
the data you might be tempted to see services as the strong sector
since it is zero while the others are negative. But the fact is that
the services gauge is simply less prone to fall into negative territory
and at zero it is signaling greater sector weakness in services than a
-20 reading would be signaling for consumer confidence.

These EC Commission surveys are very comprehensive, covering
the various EU/EMU member countries and all the relevant sectors by
country. A full perusal of this month&#8217;s data reveals a very weak Europe
and one that is in the process of weakening sharply as well. At the
same time the topical inflation report for Germany suggests that
headline inflation is still pushing higher, something that will keep
the ECB back on its heels.

We continue to see the GLOBAL slowdown as a reaction to the
rise in commodity prices &#8211; especially oil - a gain that has taken a
toll on all the major consuming nations. The US slowdown, the global
financial tangle and the rise in oil prices are hitting the world
economies at the same time. It is no wonder that the global business
cycle is back in sync&#8230;or should I say sink?


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="12" scope="col">EU
Sectors and Country level Overall Sentiment </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">EU</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>%tile</td>
<td>Rank</td>
<td>Max</td>
<td>Min</td>
<td>Range</td>
<td>Mean</td>
<td>R-SQ 
w/Overall</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall</td>
<td>88.7</td>
<td>94.5</td>
<td>97.1</td>
<td>98</td>
<td>36.0</td>
<td>225</td>
<td>116</td>
<td>73</td>
<td>43</td>
<td>101</td>
<td style="font-weight: bold;">1.00</td>
</tr>
<tr class="odd">
<td class="firstcol">Industrial</td>
<td>-8</td>
<td>-4</td>
<td>-3</td>
<td>-2</td>
<td>55.9</td>
<td>144</td>
<td>7</td>
<td>-27</td>
<td>34</td>
<td>-6</td>
<td>0.87</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer Confidence</td>
<td>-20</td>
<td>-17</td>
<td>-14</td>
<td>-12</td>
<td>24.1</td>
<td>227</td>
<td>2</td>
<td>-27</td>
<td>29</td>
<td>-10</td>
<td>0.83</td>
</tr>
<tr class="odd">
<td class="firstcol">Retail</td>
<td>-11</td>
<td>-5</td>
<td>-3</td>
<td>-6</td>
<td>37.0</td>
<td>212</td>
<td>6</td>
<td>-21</td>
<td>27</td>
<td>-5</td>
<td>0.48</td>
</tr>
<tr class="odd">
<td class="firstcol">Construction</td>
<td>-17</td>
<td>-14</td>
<td>-11</td>
<td>-11</td>
<td>53.2</td>
<td>154</td>
<td>5</td>
<td>-42</td>
<td>47</td>
<td>-15</td>
<td>0.42</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>0</td>
<td>7</td>
<td>6</td>
<td>6</td>
<td>15.8</td>
<td>129</td>
<td>32</td>
<td>-6</td>
<td>38</td>
<td>17</td>
<td>0.79</td>
</tr>
<tr>
<td style="font-weight: bold;" class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>% m/m</td>
<td>&nbsp;</td>
<td>Jul 
08</td>
<td colspan="2">Based on Level</td>
<td colspan="4">Level</td>
<td style="font-weight: bold;">&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU</td>
<td>-5.6%</td>
<td>-2.9%</td>
<td>0.5%</td>
<td>89.5</td>
<td>37.4</td>
<td>222</td>
<td>117</td>
<td>73</td>
<td>44</td>
<td>101</td>
<td>0.93</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>-4.1%</td>
<td>-1.5%</td>
<td>0.2%</td>
<td>97.3</td>
<td>44.1</td>
<td>158</td>
<td>121</td>
<td>79</td>
<td>42</td>
<td>101</td>
<td>0.64</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>-4.8%</td>
<td>-3.0%</td>
<td>-1.8%</td>
<td>93.5</td>
<td>46.6</td>
<td>188</td>
<td>119</td>
<td>72</td>
<td>47</td>
<td>101</td>
<td>0.81</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>-10.1%</td>
<td>-0.1%</td>
<td>3.3%</td>
<td>85.4</td>
<td>27.6</td>
<td>230</td>
<td>122</td>
<td>71</td>
<td>51</td>
<td>101</td>
<td>0.80</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>1.6%</td>
<td>-7.8%</td>
<td>-0.4%</td>
<td>74.2</td>
<td>14.6</td>
<td>238</td>
<td>118</td>
<td>67</td>
<td>51</td>
<td>100</td>
<td>0.60</td>
</tr>
<tr class="odd">
<td class="firstcol">Memo:UK</td>
<td>-7.8%</td>
<td>2.3%</td>
<td>-5.4%</td>
<td>85.5</td>
<td>26.5</td>
<td>229</td>
<td>132</td>
<td>69</td>
<td>64</td>
<td>102</td>
<td>0.41</td>
</tr>
<tr class="odd">
<td colspan="5" class="firstcol">Since 1990 except Services (Oct
1996):
247</td>
<td>-Count</td>
<td>Services:</td>
<td>142</td>
<td>-Count</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td colspan="12" class="firstcol">Sentiment is an index, sector
readings are net balance diffusion measures</td>
</tr>
</tbody>
</table>
</body></html>

The picture on top captures the path of the industrial sector and the services sector in EMU. Both have turned sharply lower by mid 2008 after having peaked about one year ago. The overall EMU sentiment index is now in the 36th [...]

Rapid Fall Off in EU Indices - Especially for Services

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730d.jpg" align="left" border="0" height="265" width="353">
Nominal retail sales fell by 0.2% in June as inflation pushed
ahead driving real retail sales to a 0.7% drop. Inflation adjusted
sales have been dropping at an increasingly rapid rate. But, Yr/Yr
sales growth is still positive. In the quarter to date, real retail
sales are falling at a 2.8% annual pace. 
 

Japan shows signs of economic slippage as the authorities have
been expressing more concerns. Japan&#8217;s Economics Minister Hiroko Ota
said that weak job data reflected a stalling in Japan's economy.
Government data showed that the jobless rate rose in June to a near
two-year high of 4.1 percent and household spending fell again from a
year earlier, in a sigh of further trouble for an economy already
battered by surging energy costs and faced with slowing exports. Retail
sales adjusted for inflation are another sign in this series of
measures reminding us that Japan is facing severe challenges. 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="9" scope="col">Japan Retail Sales Trends </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">Total Retail Sales</td>
<td>Jun 08</td>
<td>May 08</td>
<td>Apr 08</td>
<td>3MO</td>
<td>6MO</td>
<td>12MO</td>
<td>YrAgo</td>
<td>QTR-to Date</td>
</tr>
<tr class="odd">
<td class="firstcol">Sales SA</td>
<td>0.0%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>-0.8%</td>
<td>0.2%</td>
<td>0.3%</td>
<td>0.6%</td>
<td>-0.8%</td>
</tr>
<tr>
<td class="firstcol">Motor Vehicles</td>
<td>-3.1%</td>
<td>-3.2%</td>
<td>1.7%</td>
<td>-17.0%</td>
<td>-12.1%</td>
<td>-0.7%</td>
<td>-5.3%</td>
<td>-13.0%</td>
</tr>
<tr>
<td class="firstcol">Food &amp; Beverages</td>
<td>-0.3%</td>
<td>2.3%</td>
<td>-0.5%</td>
<td>6.0%</td>
<td>6.4%</td>
<td>3.6%</td>
<td>-0.3%</td>
<td>5.1%</td>
</tr>
<tr>
<td class="firstcol">Fabrics &amp; Apparel</td>
<td>2.2%</td>
<td>-0.2%</td>
<td>-2.5%</td>
<td>-2.2%</td>
<td>4.9%</td>
<td>-1.3%</td>
<td>-4.8%</td>
<td>-9.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Real Retail</td>
<td>-0.7%</td>
<td>-0.7%</td>
<td>0.2%</td>
<td>-4.8%</td>
<td>-2.4%</td>
<td>-1.7%</td>
<td>0.7%</td>
<td>-2.8%</td>
</tr>
<tr>
<td class="firstcol">Memo: CPI</td>
<td>0.7%</td>
<td>0.6%</td>
<td>-0.3%</td>
<td>4.0%</td>
<td>2.6%</td>
<td>2.0%</td>
<td>-0.1%</td>
<td>2.0%</td>
</tr>
</tbody>
</table>
</body></html>

Nominal retail sales fell by 0.2% in June as inflation pushed ahead driving real retail sales to a 0.7% drop. Inflation adjusted sales have been dropping at an increasingly rapid rate. But, Yr/Yr sales growth is still positive. In the [...]

Japan’s Real Retail Sales Fall Sharply

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730e.jpg" width="353">
The retail price for a gallon of regular gasoline fell ten cents last week to $3.96 per gallon, according to the U.S. Department of Energy survey. That added to a five cent decline during the prior week and reduced prices to their lowest level since late May. For all grades of gasoline the average price fell eleven cents to $4.01 per gallon.
Yesterday, the spot market price for a gallon of regular gasoline fell to $2.91 per gallon versus last week&#39;s average of $2.98. That was down from the high two weeks ago above $3.40.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730f.jpg" width="353">
Weekly gasoline prices can be found in Haver&#39;s WEEKLY database, daily prices are in the DAILY database.
According to the U.S. Department of Energy, 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.
The DOE figures are available in Haver&#39;s OILWKLY database.
The price for a barrel of West Texas Intermediate crude oil also declined last week by nine dollars per barrel to an average $126.14, down from $142.46 at the beginning of the month.Yesterday, the price for a barrel of crude was $122.19.
Prices for natural gas slipped for a third week to an average $9.93 per mmbtu (72.3% y/y).
Budget of the United States Government: Browse Fiscal Year 2009 <a href="http://www.gpoaccess.gov/usbudget/fy09/browse.html">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">07/28/08</th>
<th scope="col">07/21/08</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>3.96</td>
<td>4.06</td>
<td>37.5%</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>126.14</td>
<td>135.34</td>
<td>67.7%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
</body>
</html>

The retail price for a gallon of regular gasoline fell ten cents last week to $3.96 per gallon, according to the U.S. Department of Energy survey. That added to a five cent decline during the prior week and reduced prices to their [...]

U.S. Gasoline Prices Down Again With Lower Crude Costs

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730a.jpg" align="left" border="0" height="265" width="353">
The ADP National Employment Report, from the payroll
processor, indicated that July private nonfarm payrolls rose 9,000
after a revised 77,000 worker decline during June. Expectations had
been for a July decline of 60,000.&nbsp;The U.S. Bureau of Labor Statistics will report on July nonfarm payrolls this Friday. Last month, the
77,000 worker decline in ADP's measure of private nonfarm payrolls was
accompanied by a 91,000 worker decline in the BLS measure of private
sector payrolls.

According to ADP and Macro Advisers, the correlation between
the monthly percentage change in the ADP estimate and that in the BLS
data is 0.90.

Higher employment in the service producing industry accounted
for the gain in ADP's measure for July with a 74,000 (1.1% y/y)
increase. Small payrolls rose 56,000 (1.6% y/y) while medium sized
payrolls increased 20,000 (1.2% y/y). Large service producing payrolls
reported a 2,000 (-0.4% y/y) decline which was the seventh drop in the
last eight months.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730b.jpg" align="right" border="0" height="265" width="353">
Goods producing payrolls fell by 65,000 (-2.5% y/y) led by a
large decline of 29,000 (-2.7% y/y) in medium sized payrolls and a
30,000 (-4.3% y/y) worker decline in large payrolls. 
The ADP sub-index for large payrolls overall fell 32,000
(-1.3% y/y) following a 51,000 worker drop during June.
A 9,000 (+0.4% y/y) worker decline in medium sized payrolls
followed a 33,000 shortfall during June.
Small sized payrolls in July rose 50,000 (1.2% y/y) and that
followed a meager 7,000 June uptick.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080730c.jpg" align="left" border="0" height="265" width="353">
ADP compiled the estimate from its database of individual
companies' payroll information. Macroeconomic Advisers, LLC, the St.
Louis economic consulting firm, developed the methodology for
transforming the raw data into an economic indicator.
The ADP National Employment Report data is maintained in
Haver's 
USECONdatabase;
historical data go back to December 2000. The figures in this report
cover only private sector jobs and exclude employment in the public
sector, which rose an average 11,083 during the last twelve months.
The full ADP National Employment Report can be found <a href="http://www.adpemploymentreport.com/pdf/final_report_july_08.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/FINAL_Report_june_09.pdf">here</a>,
and the ADP methodology is explained <a href="http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf" title="blocked::http://www.adpemploymentreport.com/PDF/ADPNERMethodology.pdf">here</a>.
Interpreting the Great Moderation: Changes in the
Volatility of Economic Activity at the Macro and Micro Levels
from the Federal Reserve Bank of New York is available <a href="http://www.newyorkfed.org/research/staff_reports/sr334.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/@EB/@EB25/@EB25.HTM">LAXEPA@USECON</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">Nonfarm Private Payroll
Employment (m/m Chg.)</td>
<td>9,000</td>
<td>-77,000</td>
<td>0.5%</td>
<td>1.1%</td>
<td>1.7%</td>
<td>1.8%</td>
</tr>
</tbody>
</table></body></html>

The ADP National Employment Report, from the payroll processor, indicated that July private nonfarm payrolls rose 9,000 after a revised 77,000 worker decline during June. Expectations had been for a July decline of 60,000. The U.S. [...]

ADP Report: July Payrolls Rose With Service Sector Hiring

ADP Report: July Payrolls RoseWith Service Sector Hiring

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080729k.jpg" align="left" border="0" height="265" width="353">
The IFO is showing more weakness in Germany. Today&#8217;s report
provides more detail from its earlier release. The current situation
index is still strong residing in the 70th percentile since March of
1992. But expectations are down to the 29th percentile of their range
for that period. Business expectations for the next six months are in
their 33rd percentile for overall MFG. The consumer goods MFG
sub-sector lags the most standing only in the 19th percentile of its
range. The sectors construction, wholesaling and retailing stand in the
45th, 39th and 30th percentiles of their respective ranges. All are
below their respective range midpoints. Only construction is still
above its period average. 
 

The IFO finds that current activity is doing better for MFG
activity at a reading in the 51st percentile of its historic range.
Even so the MFG index is below its historic average. MFG demand is
gauged as weak and is in the 37th percentile of its range. Orders on
hand are in the 38th percentile of their range but foreign orders are
much stronger, in the 81st percentile of their range. Domestic weakness
in orders is being offset by strength from abroad despite the overly
strong euro. 
 


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="9" scope="col">IFO
Survey: Germany </th>
</tr>
</thead>
<tbody>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td colspan="5">Percent: Yr/Yr</td>
<td colspan="3">Index Numbers</td>
</tr>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">Biz Climate</td>
<td>-8.5%</td>
<td>-5.4%</td>
<td>-4.6%</td>
<td>-5.8%</td>
<td>-2.7%</td>
<td>97.5</td>
<td>96.0</td>
<td>52.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Current Situation</td>
<td>-5.1%</td>
<td>-2.7%</td>
<td>-2.1%</td>
<td>-4.2%</td>
<td>-0.7%</td>
<td>105.7</td>
<td>95.5</td>
<td>70.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Biz Expectations</td>
<td>-11.7%</td>
<td>-8.0%</td>
<td>-7.1%</td>
<td>-7.2%</td>
<td>-4.7%</td>
<td>90.0</td>
<td>96.7</td>
<td>29.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="9">average
&amp; range since Apr-92</td>
</tr>
<tr class="grey5">
<td class="firstcol"></td>
<td>Jul08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">Biz Climate</td>
<td>-8.5%</td>
<td>-5.4%</td>
<td>-4.6%</td>
<td>-5.8%</td>
<td>-2.7%</td>
<td>97.5</td>
<td>96.0</td>
<td>52.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Current Situation</td>
<td>-5.1%</td>
<td>-2.7%</td>
<td>-2.1%</td>
<td>-4.2%</td>
<td>-0.7%</td>
<td>105.7</td>
<td>95.5</td>
<td>70.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-5.6%</td>
<td>-4.6%</td>
<td>-2.5%</td>
<td>-3.7%</td>
<td>-1.2%</td>
<td>105.2</td>
<td>93.2</td>
<td>80.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate goods</td>
<td>-7.0%</td>
<td>-6.6%</td>
<td>-6.9%</td>
<td>-6.9%</td>
<td>-3.7%</td>
<td>104.2</td>
<td>91.8</td>
<td>75.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital goods</td>
<td>-3.7%</td>
<td>-2.8%</td>
<td>2.1%</td>
<td>1.6%</td>
<td>1.6%</td>
<td>108.0</td>
<td>93.1</td>
<td>85.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer goods</td>
<td>-6.4%</td>
<td>-4.1%</td>
<td>-1.4%</td>
<td>-4.1%</td>
<td>-0.5%</td>
<td>101.9</td>
<td>96.3</td>
<td>65.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Construction</td>
<td>-2.4%</td>
<td>0.6%</td>
<td>-1.1%</td>
<td>-2.7%</td>
<td>-4.0%</td>
<td>111.9</td>
<td>103.4</td>
<td>63.3%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Wholesale</td>
<td>-5.1%</td>
<td>-3.7%</td>
<td>-3.6%</td>
<td>-5.4%</td>
<td>0.0%</td>
<td>111.0</td>
<td>100.1</td>
<td>60.4%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Retail</td>
<td>-5.8%</td>
<td>4.8%</td>
<td>0.6%</td>
<td>-6.7%</td>
<td>3.7%</td>
<td>97.8</td>
<td>95.7</td>
<td>61.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol" colspan="9">Next
6 Mos</td>
</tr>
<tr class="grey6">
<td class="firstcol">Biz Expectations</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-13.7%</td>
<td>-9.5%</td>
<td>-8.3%</td>
<td>-8.3%</td>
<td>-5.6%</td>
<td>87.2</td>
<td>96.4</td>
<td>33.6%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate</td>
<td>-12.0%</td>
<td>-9.1%</td>
<td>-9.2%</td>
<td>-7.0%</td>
<td>-6.6%</td>
<td>87.2</td>
<td>95.8</td>
<td>28.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital</td>
<td>-17.7%</td>
<td>-9.0%</td>
<td>-8.4%</td>
<td>-8.7%</td>
<td>-5.1%</td>
<td>84.7</td>
<td>96.3</td>
<td>36.5%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer</td>
<td>-11.0%</td>
<td>-11.1%</td>
<td>-6.4%</td>
<td>-9.6%</td>
<td>-6.0%</td>
<td>91.2</td>
<td>97.8</td>
<td>19.4%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Construction</td>
<td>-6.4%</td>
<td>-3.6%</td>
<td>-4.9%</td>
<td>-3.7%</td>
<td>-5.0%</td>
<td>98.5</td>
<td>98.4</td>
<td>45.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Wholesale</td>
<td>-9.8%</td>
<td>-7.4%</td>
<td>-9.2%</td>
<td>-8.9%</td>
<td>-6.1%</td>
<td>94.7</td>
<td>97.2</td>
<td>39.3%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Retail</td>
<td>-10.1%</td>
<td>-6.0%</td>
<td>-1.5%</td>
<td>-3.9%</td>
<td>1.5%</td>
<td>89.6</td>
<td>96.1</td>
<td>30.5%</td>
</tr>
<tr class="grey5">
<td class="firstcol" colspan="9">(m/m)</td>
</tr>
<tr class="grey6">
<td class="firstcol">Activity(m/m)</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-6.2%</td>
<td>-5.3%</td>
<td>0.5%</td>
<td>-6.1%</td>
<td>-1.9%</td>
<td>96.6</td>
<td>97.1</td>
<td>51.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate</td>
<td>-5.0%</td>
<td>-4.8%</td>
<td>-1.9%</td>
<td>-6.6%</td>
<td>-3.8%</td>
<td>96.0</td>
<td>96.4</td>
<td>51.8%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital</td>
<td>-5.7%</td>
<td>-7.0%</td>
<td>2.9%</td>
<td>-4.2%</td>
<td>0.4%</td>
<td>98.4</td>
<td>97.3</td>
<td>61.4%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer</td>
<td>-5.9%</td>
<td>-4.5%</td>
<td>0.0%</td>
<td>-9.0%</td>
<td>-1.4%</td>
<td>97.5</td>
<td>98.5</td>
<td>42.5%</td>
</tr>
<tr class="grey6">
<td class="firstcol">Demand M/M</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-9.1%</td>
<td>-9.9%</td>
<td>-2.4%</td>
<td>-11.3%</td>
<td>-4.1%</td>
<td>92.1</td>
<td>97.1</td>
<td>37.1%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate</td>
<td>-6.2%</td>
<td>-7.7%</td>
<td>0.5%</td>
<td>-10.6%</td>
<td>-4.7%</td>
<td>94.7</td>
<td>97.5</td>
<td>42.4%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital</td>
<td>-13.7%</td>
<td>-13.3%</td>
<td>-3.3%</td>
<td>-13.8%</td>
<td>-5.0%</td>
<td>86.6</td>
<td>95.9</td>
<td>36.8%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer</td>
<td>-9.9%</td>
<td>-10.8%</td>
<td>-3.2%</td>
<td>-7.6%</td>
<td>0.5%</td>
<td>94.2</td>
<td>96.6</td>
<td>37.5%</td>
</tr>
<tr class="grey6">
<td class="firstcol">Orders on hand</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-11.0%</td>
<td>-9.8%</td>
<td>-4.7%</td>
<td>-8.8%</td>
<td>-1.0%</td>
<td>92.7</td>
<td>96.5</td>
<td>38.8%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate</td>
<td>-8.3%</td>
<td>-7.6%</td>
<td>-1.5%</td>
<td>-9.8%</td>
<td>-3.4%</td>
<td>94.5</td>
<td>96.6</td>
<td>42.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital</td>
<td>-16.7%</td>
<td>-14.7%</td>
<td>-9.1%</td>
<td>-10.1%</td>
<td>0.5%</td>
<td>88.1</td>
<td>95.8</td>
<td>37.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer</td>
<td>-5.4%</td>
<td>-5.4%</td>
<td>-1.5%</td>
<td>-7.2%</td>
<td>0.5%</td>
<td>98.4</td>
<td>98.6</td>
<td>41.3%</td>
</tr>
<tr class="grey6">
<td class="firstcol">Foreign orders on hand</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-5.3%</td>
<td>-4.8%</td>
<td>-2.9%</td>
<td>-2.0%</td>
<td>-1.0%</td>
<td>105.7</td>
<td>95.3</td>
<td>81.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate</td>
<td>-5.4%</td>
<td>-5.9%</td>
<td>-3.9%</td>
<td>-3.9%</td>
<td>-2.9%</td>
<td>103.3</td>
<td>94.3</td>
<td>72.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital</td>
<td>-5.4%</td>
<td>-5.9%</td>
<td>-3.2%</td>
<td>0.9%</td>
<td>1.4%</td>
<td>107.9</td>
<td>94.4</td>
<td>83.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer</td>
<td>-3.6%</td>
<td>-1.5%</td>
<td>0.0%</td>
<td>-4.5%</td>
<td>-3.6%</td>
<td>107.2</td>
<td>99.0</td>
<td>74.1%</td>
</tr>
<tr class="grey5">
<td colspan="9" class="firstcol">Yr/Yr
percentage changes in
underlying Indices</td>
</tr>
<tr class="grey3">
<td colspan="9" class="firstcol">IFO
outlook for 3-Months
ahead</td>
</tr>
<tr class="grey2">
<td class="firstcol" colspan="9">3-Mos
ahead</td>
</tr>
<tr class="grey5">
<td class="firstcol">Expected Activity</td>
<td>Jul 
08</td>
<td>Jun 
08</td>
<td>May 
08</td>
<td>Apr 
08</td>
<td>Mar 
08</td>
<td>Current</td>
<td>Average</td>
<td>%-ile</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-8.0%</td>
<td>-6.5%</td>
<td>-2.8%</td>
<td>-3.2%</td>
<td>-1.9%</td>
<td>94.9</td>
<td>96.9</td>
<td>54.2%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate goods</td>
<td>-7.0%</td>
<td>-8.4%</td>
<td>-3.2%</td>
<td>-4.9%</td>
<td>-2.8%</td>
<td>95.5</td>
<td>96.4</td>
<td>52.8%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital goods</td>
<td>-9.4%</td>
<td>-7.0%</td>
<td>-2.2%</td>
<td>-0.9%</td>
<td>-2.8%</td>
<td>93.5</td>
<td>96.7</td>
<td>52.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer goods</td>
<td>-7.0%</td>
<td>-4.2%</td>
<td>-3.8%</td>
<td>-3.7%</td>
<td>-1.3%</td>
<td>96.6</td>
<td>98.3</td>
<td>38.0%</td>
</tr>
<tr class="grey1">
<td class="firstcol" colspan="3">Orders
expectations</td>
<td colspan="6">Changes over
12-months</td>
</tr>
<tr class="grey5">
<td class="firstcol">Retail Orders Expectations</td>
<td>-13.0%</td>
<td>1.0%</td>
<td>-4.0%</td>
<td>2.1%</td>
<td>6.0%</td>
<td>-24.1</td>
<td>-17.3</td>
<td>44.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Wholesale</td>
<td>-17.0%</td>
<td>-6.0%</td>
<td>-11.0%</td>
<td>-16.9%</td>
<td>-6.0%</td>
<td>-9.6</td>
<td>-13.2</td>
<td>50.9%</td>
</tr>
<tr class="grey1">
<td colspan="9" class="firstcol">EXPORT Biz Expectations</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-4.3%</td>
<td>-4.7%</td>
<td>-3.8%</td>
<td>-1.8%</td>
<td>-1.5%</td>
<td>99.2</td>
<td>98.6</td>
<td>67.0%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate goods</td>
<td>-5.8%</td>
<td>-6.7%</td>
<td>-5.2%</td>
<td>-2.3%</td>
<td>-1.9%</td>
<td>98.5</td>
<td>99.0</td>
<td>55.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital goods</td>
<td>-3.3%</td>
<td>-2.9%</td>
<td>-3.7%</td>
<td>1.0%</td>
<td>-1.9%</td>
<td>99.2</td>
<td>97.8</td>
<td>73.9%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer goods</td>
<td>-3.8%</td>
<td>-2.4%</td>
<td>-1.0%</td>
<td>-5.2%</td>
<td>-2.4%</td>
<td>100.1</td>
<td>99.2</td>
<td>55.6%</td>
</tr>
<tr class="grey1">
<td colspan="9" class="firstcol">Employment Expectations</td>
</tr>
<tr class="grey5">
<td class="firstcol">MFG</td>
<td>-6.2%</td>
<td>-4.7%</td>
<td>-1.5%</td>
<td>-0.5%</td>
<td>-1.6%</td>
<td>99.9</td>
<td>96.4</td>
<td>61.6%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Intermediate goods</td>
<td>-3.7%</td>
<td>-4.2%</td>
<td>-1.6%</td>
<td>0.0%</td>
<td>-0.6%</td>
<td>101.4</td>
<td>96.4</td>
<td>73.8%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Capital goods</td>
<td>-9.6%</td>
<td>-6.6%</td>
<td>-1.0%</td>
<td>-0.5%</td>
<td>-2.5%</td>
<td>97.6</td>
<td>95.5</td>
<td>52.7%</td>
</tr>
<tr class="grey5">
<td class="firstcol">Consumer goods</td>
<td>-3.0%</td>
<td>-3.1%</td>
<td>1.0%</td>
<td>-1.5%</td>
<td>-3.1%</td>
<td>101.3</td>
<td>95.1</td>
<td>79.6%</td>
</tr>
</tbody>
</table>
</body></html>

The IFO is showing more weakness in Germany. Today’s report provides more detail from its earlier release. The current situation index is still strong residing in the 70th percentile since March of 1992. But expectations are down to [...]

IFO Detail Shows Spreading Weakness

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. 2Q'08 GDP Growth Improved Due to Foreign Trade

U.S. 2Q'08 GDP Growth Improved Due to Foreign Trade

Rapid Fall Off in EU Indices - Especially for Services

Japan’s Real Retail Sales Fall Sharply

U.S. Gasoline Prices Down Again With Lower Crude Costs

ADP Report: July Payrolls Rose With Service Sector Hiring

ADP Report: July Payrolls RoseWith Service Sector Hiring

IFO Detail Shows Spreading Weakness