Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629b.jpg" width="353">
Chain store sales fell a huge 1.2% last week, the largest one week decline since late March, according to the International Council of Shopping Centers (ICSC)-UBS.
The decline in this the last full week of June pulled month-to-date sales 0.7% below the May average.
During the last ten years there has been a 59% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.
The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart. <img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629a.jpg" width="353">
Improvement in sales may be portended by the recent slide in petroleum prices. Brent crude oil dropped yesterday to $33.25 on news of the Iraq power handover. Crude prices are down further today, off 15% from the May peak of $39.07.

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<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/surveyw/@S2/@S2.HTM"> ICSC-UBS (SA, 1977=100)</a></th>
<th scope="col">06/26/04</th>
<th scope="col">06/19/04</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Total Weekly Retail Chain Store Sales</td>
<td>434.7</td>
<td>439.8</td>
<td>4.2%</td>
<td>2.9%</td>
<td>3.6%</td>
<td>2.1%</td>
</tr>
</tbody>
</table>
Consumer Confidence Rose to 2-Year High in June 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 29, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629c.jpg" width="353">
The Conference Board&#146;s Index of Consumer Confidence for June rose 9.5% to 101.9 versus Consensus expectations for a slight rise to 95.0. June was the highest confidence level since June 2002. May was little revised.
During the last ten years there has been a 55% correlation between consumer confidence and the y/y change in nonfarm payrolls.
The present situation index surged 15.8% to 104.8 (+63.2% y/y). The index of consumer expectations also was firm, up 5.5% to 100.0 (+3.7% y/y).
Jobs were viewed as hard to get by 26.5% of respondents. That was down from 30.3% the prior month and was the lowest level since September 2002.
Expectations for business conditions in six months rose further in June following increases in the prior two months.
The June Confidence reading was firmer than the June reading of Consumer Sentiment reported by the University of Michigan.
During the last ten years there has been a 67% correlation between the level of consumer confidence and the y/y % change in real PCE.
The Conference Board&#146;s survey isconducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1401/@EF1401.HTM"> Conference Board</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
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</thead>
<tbody>
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<td class="firstcol">Consumer Confidence</td>
<td>101.9</td>
<td>93.1</td>
<td>22.0%</td>
<td>79.8</td>
<td>96.6</td>
<td>106.6</td>
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Chain store sales fell a huge 1.2% last week, the largest one week decline since late March, according to the International Council of Shopping Centers (ICSC)-UBS. The decline in this the last full week of June pulled month-to-date [...]

Chain Store Sales Slide Big

Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040629d.jpg" width="353">
The latest report on retail sales in Japan suggests that the rise in household consumption in the first quarter Gross Domestic Product may not be sustained in the second quarter. May retail sales were -2.47% below sales of a year ago and April sales were almost 1% below year ago sales. In the first quarter of this year retail sales averaged 0.22% above the average for the first quarter of 2003.
It is important to remember, however, that retail sales are volatile and they are probably affected much more than total consumption by deflation. In the comparison between retail sales and household expenditures in current yen, such expenditures as household maintenance, education, and health, are much less likely to be affected by deflation than items such as food and clothing that make up much of the retail sales series. Chart 2 shows retail sales as a percentage of total household expenditures. Over the past 5 years, the ratio has declined from about 51% to 46%. Thus a decline in retail sales need not portend a similar decline in total consumption.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">Retail Sales</th>
<th scope="col">May 04</th>
<th scope="col">Apr 04</th>
<th scope="col">Mar&nbsp; 04</th>
<th scope="col">Feb&nbsp; 04</th>
<th scope="col">Jan&nbsp;04</th>
<th scope="col">2003 %</th>
<th scope="col">2002&nbsp; %</th>
<th scope="col">&nbsp;2001 %</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Year over year %</td>
<td>-2.79</td>
<td>-0.98</td>
<td>-1.70</td>
<td>1.76</td>
<td>0.92</td>
<td>-194</td>
<td>-394</td>
<td>-1.88</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<tr class="odd">
<td class="firstcol">Household Consumption</td>
<td>Q1 04</td>
<td>&nbsp; Q4 03</td>
<td>&nbsp; Q3 03</td>
<td>Q2 03</td>
<td>&nbsp;Q1 03</td>
<td>2003 %</td>
<td>&nbsp; 2002 %</td>
<td>&nbsp; 2001 %</td>
</tr>
<tr>
<td class="firstcol">Year over year %</td>
<td>1.77</td>
<td>0.18</td>
<td>-1.61</td>
<td>-.072</td>
<td>-.026</td>
<td>-0.60</td>
<td>-0.33</td>
<td>0.44</td>
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The latest report on retail sales in Japan suggests that the rise in household consumption in the first quarter Gross Domestic Product may not be sustained in the second quarter. May retail sales were -2.47% below sales of a year ago [...]

Retail Sales in Japan Decline in May. Does This Mean a Decline in Second Quarter Total Household Spending?

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040628a.jpg" width="353">
Personal income rose the same 0.6% (+5.8% y/y) last month as in April. Consensus expectations had been for a 0.5% gain.
For the second month the upside surprise was slight. Wages &amp; salaries, however, have been notably firm rising 0.7% (5.1% y/y) in May and 0.6% in April reflecting the recent improvement in jobs growth. Firm wage gains were logged across industries but service industries rose a notable 1.0% (5.8% y/y).
Personal disposable income rose 0.6% for the second consecutive month (6.4% y/y). After accounting for a 2.5% y/y rise in prices, real disposable income rose 3.8%, down some from the recent peaks in the 4-6% range.
Consumer spending surged 1.0% in May as unit light vehicle sales jumped 8.7% m/m. A 0.8% gain in PCE had been expected. Nondurable goods spending also rose a strong 1.2% (9.9% y/y) as gasoline prices jumped and services rose 0.7% (5.5% y/y). 
The PCE chain price index rose 0.5% following an upwardly revised 0.2% April gain. Less food &amp; energy, prices rose 0.2% (1.6% y/y) for the sixth month in the last eight.
The savings rate fell to 2.2% from the upwardly revised 2.6% in April. 

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<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">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Personal Income</td>
<td>0.6%</td>
<td>0.6%</td>
<td>5.8%</td>
<td>3.3%</td>
<td>2.3%</td>
<td>3.4%</td>
</tr>
<tr>
<td class="firstcol">Personal Consumption</td>
<td>1.0%</td>
<td>0.2%</td>
<td>6.7%</td>
<td>5.0%</td>
<td>4.8%</td>
<td>4.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Savings Rate</td>
<td>2.2%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>2.1%</td>
<td>2.3%</td>
<td>1.7%</td>
</tr>
<tr>
<td class="firstcol">PCE Chain Price Index</td>
<td>0.5%</td>
<td>0.2%</td>
<td>2.5%</td>
<td>1.8%</td>
<td>1.4%</td>
<td>2.0%</td>
</tr>
</tbody>
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Personal income rose the same 0.6% (+5.8% y/y) last month as in April. Consensus expectations had been for a 0.5% gain. For the second month the upside surprise was slight. Wages & salaries, however, have been notably firm rising 0.7% [...]

U.S. Personal Income Firm

Carol Stone, CBE

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625d.jpg" width="353">
Analysts had projected that Japan&#39;s core CPI for Tokyo would finally stop falling in June. But it did not. It was down, just a little, but still down by 0.1% from a year ago. On the heels of this report, which also included widespread deflation in the national CPI for May, the monetary policy committee of the Bank of Japan voted unanimously to maintain their zero-interest rate policy. It had been thought that some subtle move away from the potentially limitless provision of liquidity that accompanies that rate target might have been forthcoming if the CPI finally stabilized. Such was not the case. And unlike most of the other major economies of the world, Japan is not yet facing a sudden new burden of inflationary pressure.
The deflation in Japan does seem to be dissipating. Clothing prices, for instance, rose sharply in Tokyo and several sectors are experiencing much less downward price pressure than they have been. Press reports indicated that some of the softness in the Tokyo numbers reflected sales promotions in electronics, ahead of the introduction of new models. This could well be just a transitory force, then, with recently firmer demand possibly allowing net price gains to show through &quot;soon&quot;.
The last year-on-year rise in the national &quot;general CPI&quot; was in August 1999. In the headline series, the core rate in the Tokyo area, the last such increase was in August 1998. In the Japanese array of CPI data, the core is defined as the general CPI less fresh food.

<table border="0" cellspacing="0" width="100%">
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<th scope="col" class="firstcol">% Changes</th>
<th scope="col">June 2004</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">General CPI, SA, mo/mo</td>
<td>N.A.</td>
<td>-0.2</td>
<td>-0.3</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>N.A.</td>
<td>-0.5</td>
<td>-0.4</td>
<td>-0.4</td>
<td>-0.3</td>
<td>-1.2</td>
</tr>
<tr class="odd">
<td class="firstcol">Core CPI, SA, mo/mo</td>
<td>N.A.</td>
<td>-0.2</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>N.A.</td>
<td>-0.3</td>
<td>-0.2</td>
<td>0.0</td>
<td>-0.7</td>
<td>-0.9</td>
</tr>
<tr class="odd">
<td class="firstcol">Tokyo CPI, SA, mo/mo</td>
<td>+0.2</td>
<td>-0.1</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>-0.1</td>
<td>-0.3</td>
<td>-0.3</td>
<td>-0.4</td>
<td>-0.3</td>
<td>-1.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Tokyo Core CPI, SA, mo/mo</td>
<td>-0.1</td>
<td>0.0</td>
<td>-0.1</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; NSA, yr/yr</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.1</td>
<td>-0.7</td>
<td>-1.0</td>
</tr>
</tbody>
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Analysts had projected that Japan's core CPI for Tokyo would finally stop falling in June. But it did not. It was down, just a little, but still down by 0.1% from a year ago. On the heels of this report, which also included widespread [...]

Consumer Prices Still Weak in Japan

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625a.jpg" width="353">
US real GDP growth in 1Q was revised down to 3.9% (AR) from the preliminary report of 4.4% growth. The Consensus expectation was for little revision. Next month, the GDP figures back to 1Q 2001 will undergo the regular annual revision.
The trade sector is now estimated to have subtracted 0.7 percentage points from 1Q GDP growth. Import growth was revised up to 10.4% (AR, 9.0% y/y) from 5.9%. Export growth of 7.5% (8.9% y/y) also was revised up.
Growth in domestic final demand was little revised as personal consumption expenditures grew 3.8% (AR, 4.3% y/y), though growth in nonresidential fixed investment growth was reduced to 5.3% (AR, 8.9% y/y). Investment in equipment &amp; software was lowered to 9.2% (12.4% y/y) from 9.8%. Residential investment growth was revised up to 4.6% (9.5% y/y).
Growth in before tax corporate profits with inventory valuation adjustment (IVA) &amp; capital consumption adjustment (CCA) was revised slightly higher to 7.1% from 4.9% (AR, 32.3% y/y). Growth in operating profits for nonfinancial corporations grew 6.9% (AR, 38.8% y/y) and was revised up from 3.6%, though profit margins were unrevised. They still show no expansion versus 4Q but are about two thirds higher than in 2001.
Inflation was revised up slightly to 2.8% as the gain in the PCE chain price index was revised up to 3.2% (1.6% y/y). Business equipment &amp; software prices were revised down to a 0.3% decline (0.0% y/y).Less food &amp; energy the GDP chain price index rose 2.4% after the 1.4% rise in 4Q.

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<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
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<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"> 1Q &#39;04 (Final)</th>
<th scope="col"> 1Q &#39;04 (Prelim.)</th>
<th scope="col"> 4Q &#39;03 &nbsp; &nbsp;(Final)</th>
<th scope="col"> Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">GDP</td>
<td>3.9%</td>
<td>4.4%</td>
<td>4.1%</td>
<td>&nbsp;4.8%</td>
<td>3.1%</td>
<td>2.2%</td>
<td>0.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Inventory Effect</td>
<td>0.7%</td>
<td>0.8%</td>
<td>0.7%</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>-0.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Final Sales</td>
<td>3.2%</td>
<td>3.7%</td>
<td>3.4%</td>
<td>4.6%</td>
<td>3.2%</td>
<td>1.8%</td>
<td>1.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Trade Effect</td>
<td>-0.7%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>-0.2%</td>
<td>-0.6%</td>
<td>-0.2%</td>
</tr>
<tr class="odd">
<td class="firstcol">Domestic Final Demand</td>
<td>3.8%</td>
<td>3.9%</td>
<td>3.6%</td>
<td>4.8%</td>
<td>3.4%</td>
<td>2.4%</td>
<td>1.6%</td>
</tr>
<tr>
<td class="firstcol">Chained GDP Price Index</td>
<td>2.8%</td>
<td>2.6%</td>
<td>1.5%</td>
<td>1.8%</td>
<td>1.7%</td>
<td>1.5%</td>
<td>2.4%</td>
</tr>
</tbody>
</table>
U.S. Consumer Sentiment Up 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625c.jpg" width="353">
The University of Michigan&#146;s consumer sentiment index for June improved to95.6, up slightly from the mid-month read of 95.2. Consensus expectations had been for 95.0.
During the last ten years there has been a 75% correlation between the level of consumer sentiment and the y/y change in real PCE.
Improvement in the expectations sub-index versus the mid-month reading as well as versus May drove the rise in overall consumer sentiment. The index of current economic conditions actually fell versus the mid-month read but was still up 3.0% versus May.
The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.

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<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM"> University of Michigan</a></th>
<th scope="col"> June</th>
<th scope="col"> May</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Consumer Sentiment</td>
<td>95.6</td>
<td>90.2</td>
<td>6.1%</td>
<td>87.6</td>
<td>89.6</td>
<td>89.2</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Current Conditions</td>
<td>106.7</td>
<td>103.6</td>
<td>14.1%</td>
<td>97.2</td>
<td>97.5</td>
<td>100.1</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp; Consumer Expectations</td>
<td>88.5</td>
<td>81.6</td>
<td>0.6%</td>
<td>81.4</td>
<td>84.6</td>
<td>82.3</td>
</tr>
</tbody>
</table>
Existing Home Sales Rose To Record High 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625b.jpg" width="353">
The National Association of Realtors reported that sales of existing single family homes in May rose 2.6% to a record high of 6.80M. Consensus expectations had been for sales 6.50M. April sales were revised down slightly.
Sales were mixed across the nation. In the South they rose 3.8% (+19.0% y/y) and in the West sales rose 5.5% (22.9% y/y). However in the Northeast sales fell 1.4% (+7.5% y/y), unchanged since February, and in the Midwest sales fell 0.7% (+6.1% y/y).
The median price of an existing home rose 3.7% m/m to $183,600 (+10.3% y/y).
The figures reflect closings of home sales in earlier months.
The latest release from the National Association of Realtors is available <a href="http://www.realtor.org/publicaffairsweb.nsf/Pages/MayEHS04?OpenDocument"> 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/@E905/@E90501/@E90501.HTM"> Existing Home Sales (000, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Existing Single-Family</td>
<td>&nbsp;6,800</td>
<td>&nbsp;6,630</td>
<td>15.8%</td>
<td>6,098</td>
<td>5,593</td>
<td>5,290</td>
</tr>
</tbody>
</table>
Mass Layoffs Down Sharply 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 25, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040625e.jpg" width="353">
Mass layoffs in the US as reported to the Bureau of Labor Statistics fell sharply in May, continuing a downtrend begun in 2001.
The number of firms reporting mass layoffs in May fell to 988 from 1,458 in April and from a monthly average of 1,580 last year.
These layoffs generated 87,501 initial claims for unemployment insurance in May. That was down from 157,410 initial claims generated each month last year.
Since the series inception in 1995 there has been a (negative) 47% correlation between the number of initial claims generated by mass layoffs and the one month change in non-farm payrolls.
The Mass Layoff Statistics (MLS) program collects reports on mass layoff actions that result in workers being separated from their jobs. Monthly mass layoff numbers are from establishments which have at least 50 initial claims for unemployment insurance (UI) filed against them during a 5-week period. Extended mass layoff numbers (issued quarterly) are from a subset of such establishments--where private sector non-farm employers indicate that 50 or more workers were separated from their jobs for at least 31 days.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF10/@EF1001/@EF1001.HTM"> Mass Layoffs</a></th>
<th scope="col"> May</th>
<th scope="col"> April</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Number of Events: All Industries</td>
<td>988</td>
<td>1,458</td>
<td>-42.0%</td>
<td>18,963</td>
<td>20,277</td>
<td>21,467</td>
</tr>
<tr>
<td class="firstcol">Numbers of Persons Filing Initial Unemployment Insurance Claim: All Industries</td>
<td>87,501</td>
<td>157,314</td>
<td>-49.8%</td>
<td>1,888,926</td>
<td>2,245,051</td>
<td>2,514,862</td>
</tr>
</tbody>
</table>
</body>
</html>

US real GDP growth in 1Q was revised down to 3.9% (AR) from the preliminary report of 4.4% growth. The Consensus expectation was for little revision. Next month, the GDP figures back to 1Q 2001 will undergo the regular annual [...]

Higher Imports Reduced Estimate of 1Q GDP Growth

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040624a.jpg" width="353">
The CBI Industrial Trends Survey for the UK shows some moderation in orders and expected output in June from May. Orders, after turning briefly positive in May at +1, slipped back to negative territory with a -6 reading for June. Output planned over the next three months has been positive all year long, but it eased from +22 to +15 in this latest report. More companies do anticipate, however, that they will be able to charge higher prices for orders booked in the coming three months.
At the same time, all three of these major components of the monthly survey of the Confederation of British Industry, even the order books that are still decreasing, are showing distinct improvements from their generally weak performance over the past four to six years. Price expectations, for instance, have been positive for the last three months, their strongest showing since early 1998. Similarly, the May figure for orders was the first positive one since February 1998; as recently as last October, the reading was -40.
Thus, British industry is working hard toward outright recovery. And this survey suggests that positive trends may emerge in actual numerical data on industrial output. As seen in the accompanying graph, planned output closely traces overall movements in data on industrial production (IP). The monthly data are very jagged, but on a quarterly basis, the year-on-year change in IP tends to follow the planned output reading by about a quarter. Correlation between the coincident figures has been a notable 76% over the last 25 years. The entire first half of 2004 includes firmly positive readings in anticipated production, which, according to this historical pattern, would lead to outright growth in actual production in just the next few months. Indeed, that measure has already improved to basically flat from a protracted deeply negative period since the middle of 2001.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Diffusion Indexes for Volume &amp; Prices</th>
<th scope="col">June 2004</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</th>
<th scope="col">June 2003</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Order Book</td>
<td>-6</td>
<td>+1</td>
<td>-14</td>
<td>-27</td>
<td>-29</td>
<td>-27</td>
<td>-26</td>
</tr>
<tr>
<td class="firstcol">Output over Next 3 Months</td>
<td>15</td>
<td>22</td>
<td>12</td>
<td>-6</td>
<td>-3</td>
<td>5</td>
<td>-6</td>
</tr>
<tr class="odd">
<td class="firstcol">Prices of Orders Booked over Next 3 Months</td>
<td>5</td>
<td>3</td>
<td>2</td>
<td>-15</td>
<td>-12</td>
<td>-13</td>
<td>-16</td>
</tr>
</tbody>
</table>
</body>
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The CBI Industrial Trends Survey for the UK shows some moderation in orders and expected output in June from May. Orders, after turning briefly positive in May at +1, slipped back to negative territory with a -6 reading for June. [...]

British Industry Survey Suggests Recovery Near

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040624e.jpg" width="353">
Initial claims for jobless insurance rose 13,000 last week to 349,000. The prior week&#39;s decline of 15,000, which may have been influenced by the Reagan Funeral, was unrevised. Consensus expectations had been for 340,000 claims.
The 4-week moving average of initial claims ticked up to 344,250 (-18.3% y/y).
Continuing claims for unemployment insurance rose 75,000 following a 28,000 increase the prior week which was revised down slightly.
The insured rate of unemployment rose slightly to 2.4%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"> <a href="http://www.haverselect.com/dlx/WEEKLY/@W5/@W507/@W507.HTM"> Unemployment Insurance (000s)</a></th>
<th scope="col">6/19/04</th>
<th scope="col">6/12/04</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;&nbsp; 349</td>
<td>336</td>
<td>-13.8%</td>
<td>403</td>
<td>404</td>
<td>406</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>&nbsp;&nbsp; --</td>
<td>2,967</td>
<td>-18.8%</td>
<td>3,533</td>
<td>3,573</td>
<td>3,023</td>
</tr>
</tbody>
</table>
U.S. Durable Goods Orders Fell Unexpectedly 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040624d.jpg" width="353">
Durable goods orders fell 1.6% last month versus Consensus expectations for a 1.5% increase. April orders were little revised, down 2.6%.
Weakness in transportation sector orders, down 4.1% in May and 4.6% in April, accounts for much of the slide in total orders. But orders still fell excluding the transportation sector, down 0.7% (+15.7% y/y) in May and down 1.7% in April.
Non-defense capital goods orders also were weak, off 2.6% in May and 1.2% in April. Excluding aircraft and parts orders dropped 3.0% (+10.5% y/y) following a 2.0% April skid.
During the last ten years there has been a 74% correlation between the y/y change in orders for non-defense capital goods less aircraft and the change in industrial production of capital goods.
Motor vehicle orders fell 4.0% (+8.2% y/y) following a 3.0% decline in April. That was offset by a 7.8% (-3.7% y/y) May jump in orders for aircraft &amp; parts.
Orders for computers &amp; electronic products slid 1.8% (+12.7% y/y) for the second month, though the April decline was revised from the -4.1% advance report. Orders for computers fell 3.6% (8.7% y/y) and orders for communications equipment dropped 12.5% (9.9% y/y).
Machinery orders also were lower, down 0.6% (+20.4% y/y), and orders for electrical equipment, appliances &amp; components slid 3.7% (+9.9% y/y).
Shipments of durable goods fell for the second month, down 0.7% (11.7% y/y). Shipments excluding the transportation sector fell 0.9% (+13.2% y/y).
Durable inventories rose 0.4% (-0.1% y/y) for the seventh gain in the last eight months.

<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/@ED0101.HTM"> NAICS Classification</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col"> 2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Durable Goods Orders</td>
<td>-1.6%</td>
<td>-2.6%</td>
<td>12.6%</td>
<td>2.6%</td>
<td>-1.7%</td>
<td>-10.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Non-defense Capital Goods</td>
<td>-2.6%</td>
<td>-1.2%</td>
<td>12.4%</td>
<td>5.6%</td>
<td>-7.2%</td>
<td>-15.5%</td>
</tr>
</tbody>
</table>
Lower Prices (?) Spurred May New Home Sales To Record High 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040624c.jpg" width="353">
The median price of a new single family home dropped 9.0% in May to $198,400 (+1.5% y/y). It was the second m/m price decline in the last three months.
Perhaps in response, sales of new one-family homes surged 14.8% m/m in May to a new record of 1.369M. Consensus estimates had been for a lesser increase to 1.115 million. April sales were revised up.
These new home sales data from the US Census Department reflect current sales. The existing home sales figures, to be reported tomorrow, reflect closings on past sales. 
Sales gains spread across the country&#39;s regions but were strongest in the Northeast where they rebounded 53.2% from a few months of softness (+63.5% y/y). Sales in the South also rose a strong 20.3% (+25.3% y/y) and sales rose 6.5% (16.3% y/y) in the West.
&quot;Monetary Policy Transmission to Residential Investment&quot; from this 2002 study done by the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/epr/02v08n1/0205mcca.pdf"> here</a> .
&quot;How Money Matters&quot; from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20040601/cover.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/@E904/@E90401/@E90401.HTM"> Homes Sales (000s, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2003</th>
<th scope="col">2002</th>
<th scope="col">2001</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">New Single-Family</td>
<td>1,369</td>
<td>1,192</td>
<td>25.3%</td>
<td>1,088</td>
<td>977</td>
<td>907</td>
</tr>
</tbody>
</table>
Help-Wanted Advertising Up A Bit 
by <a href="/comment/Moeller.html">Tom Moeller</a> June 24, 2004


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040624b.jpg" width="353">
The Conference Board&#146;s National Index of Help-Wanted Advertising rose slightly last month to 39 from 38 in April.
During the last ten years there has been a 92% correlation between the level of help-wanted advertising and the year-to-year change in non-farm payrolls.
The proportion of labor markets with rising want-ad volume improved to 69% versus 30% averaged during the prior two months.
The Conference Board surveys help-wanted advertising volume in 51 major newspapers across the country every month. 

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/CBDB/@C3/@C3.HTM">Conference Board</a></th>
<th scope="col"> May</th>
<th scope="col">April</th>
<th scope="col">May &#39;03</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">National Help Wanted Index</td>
<td>39</td>
<td>38</td>
<td>36</td>
</tr>
</tbody>
</table>
</body>
</html>

Initial claims for jobless insurance rose 13,000 last week to 349,000. The prior week's decline of 15,000, which may have been influenced by the Reagan Funeral, was unrevised. Consensus expectations had been for 340,000 claims. The [...]

Initial Claims for Unemployment Insurance Rebound

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/040623b.jpg" width="353">
Japanese trade flows are growing with some vigor. Exports rose a steep 7.3% in May to &yen;5.24 billion, a record high outstripping by 7.2% the previous record of &yen;4.89 billion, which was only just reached last December. Press reports accompanying this data release today highlighted this strong export gain and accompanying widening of the trade surplus to &yen;1.28 billion. Indeed, this performance implies that world demand is strengthening.
Japanese imports have also been strong in recent months, and this development has received less attention. The monthly increase in May wasn&#39;t so large, &quot;just&quot; 1.5%, but imports having been gaining at a double-digit pace, gauged on a year-on-year basis. Their May total of &yen;3.96 billion is the second highest ever, with the record barely higher at &yen;3.98 billion in December 2000.
The current growth in imports is not in petroleum, which is in fact down from a year ago. Instead, raw materials, especially metals, and machinery, particularly parts and audio/video equipment are rising rapidly, albeit somewhat erratically. Thus, manufacturers look to be stocking up in anticipation of further production gains; possibly, also, consumer demand for televisions and similar items is picking up, even as those latter products are now frequently imported into Japan from elsewhere in Asia. These are both signs of broadening economic recovery in Japan and elsewhere.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Billion Yen, except as noted</th>
<th scope="col">May 2004</th>
<th scope="col">Apr 2004</th>
<th scope="col">Mar 2004</th>
<th scope="col">May 2003</th>
Monthly Average or December/December
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">2003</td>
<td>2002</td>
<td>2001</td>
</tr>
<tr>
<td class="firstcol">Trade Balance</td>
<td>1.28</td>
<td>0.98</td>
<td>1.00</td>
<td>0.87</td>
<td>0.85</td>
<td>0.82</td>
<td>0.55</td>
</tr>
<tr class="odd">
<td class="firstcol">Exports</td>
<td>5.24</td>
<td>4.89</td>
<td>4.86</td>
<td>4.46</td>
<td>4.55</td>
<td>4.34</td>
<td>4.08</td>
</tr>
<tr>
<td class="firstcol">Year/Year %Change</td>
<td>9.8%</td>
<td>10.8%</td>
<td>13.2%</td>
<td>--</td>
<td>8.5%</td>
<td>15.3%</td>
<td>-14.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Imports</td>
<td>3.96</td>
<td>3.90</td>
<td>3.86</td>
<td>3.59</td>
<td>3.70</td>
<td>3.52</td>
<td>3.53</td>
</tr>
<tr>
<td class="firstcol">Year/Year %Change</td>
<td>4.9%</td>
<td>6.6%</td>
<td>12.3%</td>
<td>--</td>
<td>17.%</td>
<td>14.3%</td>
<td>-13.4%</td>
</tr>
</tbody>
</table>
</body>
</html>

Japanese trade flows are growing with some vigor. Exports rose a steep 7.3% in May to ¥5.24 billion, a record high outstripping by 7.2% the previous record of ¥4.89 billion, which was only just reached last December. Press reports [...]

Japanese Exports and Imports Both Grow in May

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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

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The NFIB Small Business Optimism Index rose 0.5% (10.5%) to 100.8 in August after strengthening 1.7% to an unrevised 100.3 in July and easing 0.2% to 98.6 in June, according to the Small Business Economic Trends survey conducted by the National Federation of Independent Business. Four of the ten index components increased last month. The NFIB Small Business Uncertainty Index fell 4.1% (+1.1% y/y) to 93 after rising 9.0% in July.

The outlook for business conditions was mixed in the latest survey. The net balance of respondents expecting the economy to improve stood at 34% last month after rising to 36% in July. A higher 12% expected higher real sales in six months, compared to 6% in July. A lessened 14%, compared to 16% in July, of respondents indicated that now was a good time to expand the business. The figure remained up from 4% last September.

Plans to make capital outlays eased to 21% of firms after rising to 22% in July. Plans to add to inventories were unchanged at 1% of survey respondents, having been negative or zero early in the year. The index of expected credit conditions held steady with five of the prior six months at -4%. It remained up from a low of -11 in November 2023. On the labor front, the percent planning to increase employment edged up to 15% from 14% in July. The increase was to the highest level since February. It was increased from a low of 12% in both March and May, but stood substantially below its high of 32% in August 2021. A lessened 43% of businesses reported few or no qualified workers to fill job openings in August, down from the most recent high of 50% in June. These readings remained below a high of 56% in August of last year.

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The net percent of firms reporting higher earnings improved to -19% last month after holding steady at 22% in July. The figure was increased from the August 2024 low of -37%.

On the pricing front, the net percent raising their average selling prices fell to 21% last month from 24% in July. It had grown to 32% in February. The percentage planning to raise prices declined to 26% in August, down from a 32% high in June. Worker compensation improved as a net 29% of respondents lifted compensation during the last three months versus 27% in the last survey. Compensation gains peaked at 50% of firms in January 2022. A higher net 20% of firms are making plans to raise worker compensation in the next three months, below November’s high of 28%.

Taxes were reported by a steady 17% of member firms as the single most important issue facing small businesses. Also steady was the 11% citing inflation as the most important problem. Other major concerns were the cost of labor reported by 9% of firms and government requirements, also at 9%.

According to the Small Business Administration, there are 33 million small businesses in the United States, which employ 62 million workers. The NFIB surveys anywhere from 500 to 2000 respondents each month and the typical firm employs 10 people and reports gross sales of about $500,000 a year. The NFIB figures can be found in Haver’s **SURVEYS** database.

- Sales & employment expectations improve.
- Economic & business expansion plans ease.
- Percent raising prices and price expectations decline.

U.S. NFIB Small Business Optimism Index Improves in August

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Retail gasoline prices for all grades rose to $3.32 per gallon (-1.2% y/y), on average, last week after rising to $3.30 per gallon one week earlier. Gasoline prices are at the highest level since the fourth week of June, and above their low of $3.13 in the week of December 9. The recent high was $3.79 in the week ending April 22, 2024. Their all-time high of $5.11 occurred in the week ending June 13, 2022. The retail price for on-highway diesel fuel increased to $3.77 per gallon (5.9% y/y) last week after rising to $3.73 in the prior week. The latest diesel price stood well below a high of $4.63 in the week ending September 18, 2023 and a peak of $5.81 in the week ending June 20, 2022.

The price of West Texas Intermediate crude oil fell to $63.73 per barrel (-8.4% y/y) in the week ended September 5 after rising in the prior week to $64.16 per barrel. Prices remained below a high of a $74.17 during the third week of June. The cost of crude oil peaked at $120.46 in the week of June 10, 2022. Yesterday, the price was $62.26 per barrel. The price of European Brent crude fell to $66.85 per barrel (-11.2% y/y) in the week of September 5 from $67.77 in the prior week. Prices remained below a recent high of $95.61 in the week of September 29, 2023 and below a peak of $127.40 in June 2022. The price yesterday was $65.44 per barrel.

Natural gas prices rose an average $2.97/mmbtu (47.0% y/y) in the week ended September 5, after steadying at an average $2.85/mmbtu in the prior week. Prices remained well above a low of $1.40/mmbtu in the week of March 15, 2024 but below their peak of $9.56 in the week of August 26, 2022. Yesterday, the price was $3.10 per mmbtu.

Gasoline demand declined 0.8% y/y in the four weeks ending August 29, following a 1.1% y/y decline in the prior four weeks. Demand for all petroleum products rose 2.5% y/y in the four weeks ending August 29, after a 2.5% y/y increase in the previous four-week period. Crude oil input to refineries rose 1.8% y/y in the four weeks ending August 29, after a 3.0% y/y gain in the prior four weeks.

Gasoline inventories eased 0.3% y/y in the week ending August 29 after rising 1.8% y/y in the prior week. Residual fuel oil inventories fell 22.5% y/y in the week of August 29, after falling 23.8% y/y in the prior week. Crude oil inventories rose 3.4% y/y in the week of August 29 after a 2.4% y/y rise in the previous week.

Measured in days’ supply, gasoline inventories fell to 24.1 days in the week of August 29 from 24.6 days in the prior week. The recent low was 22.9 days in the week of November 8, 2024. The supply of crude oil edged higher to 24.7 days in the week of August 29 from 24.5 days in the prior week and remained below a high of 31.9 days in the week of March 3, 2023.

These data are reported by	 the Energy Information Administration of the U.S. Department of Energy. The price and supply/demand data can be found in Haver’s **WEEKLY** & **USENERGY** database.

- Gasoline prices increase to late-June high.
- Crude oil prices ease after prior week’s increase.
- Natural gas prices rise to four-week high.

U.S. Energy Prices Are Mixed Last Week

Robert Brusca

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The end of summer is turning out to be a difficult time for France even though industrial output is in a seemingly solid trend. Output in June rose by 3.5%, it did that after a weak May when output fell by 1.1% and now in July output is falling by 1.6%. By itself, the manufacturing trend is simply not that worrisome, but it is built upon somewhat more convoluted trends with July’s drop. Add this complication to a political environment that is quite difficult as in real time, in September, France's government is being dissolved, the Prime Minister is being dismissed, and President Macron is under pressure. There is a decidedly split and fractured legislature to deal with as he is going to have to appoint yet another prime minister, the second lost government in less than a year. Macron continues to resist calling elections or stepping down himself.

France has been called out by the markets for the size of its government sector and its debt as Macron’s earlier tax cuts produced fiscal deficits not growth. French deficits continue to push up bond yields toward levels being paid by Italy. The U.K. is also under pressure for its substantial indebtedness and its inability to get control of its economy and generate growth. None of these are new trends and certainly not foreign to anyone in the United States where large fiscal deficits, concerns about future fiscal deficits, and President Trump's own concern about deficits as exhibited by his attempt to try to push interest rates down to reduce the interest cost of the debt. This has pushed the fiscal budgeting process into the mainstream of making monetary policy creating a clash over central bank independence in the United States- with reverberations abroad.

The best way to keep debt or the size of the government sector from becoming a problem is to control it and none of these governments seem to have been able to do that. A country that is going to rely on debt and increasing indebtedness is pushing the day of reckoning out on the future generations. That becomes increasingly unpalatable as population growth has been slowing. Slowing population growth and rising debt levels are an extremely bad combination and yet we see these as real international trends.

In France, the one-year trend for industrial production in manufacturing is still relatively solid at 1.5% growth over 12 months, stepping up to 4.5% at an annual rate over six months and up to 8.2% annualized over three months. On the face of these figures, if they hold up, the progression for growth is pretty good. However, when we see what produces these results in the table, which is a sharp drop in May and July, with a sharper increase sandwiched in between, we are left wondering whether the sequential trend is going to hold up at all. Consumer durable goods output trends are one of the reasons that that output trend in manufacturing is so strong with positive growth in May, June and July; the sector logs 12-month growth of 3.7%, 6-month growth at 9.2% at an annualized rate, and 3-month growth at a stunning 17% annual rate. That would seem to be a lot of strength to carry the day, but consumer nondurables output trends point in the opposite direction with -0.6% over 12 months, a -1.2% annual rate decline over six months and then -5.7% at an annual rate over three months. The capital goods sector sides with growth with a 4% rate over 12 months and an 8.5% pace over six months and that largely holds up at 8.1% over three months. However, the sequential growth rate for intermediate goods shows a drop in output of 0.8% over 12 months, a nice rebound with a 3.9% annual rate over six months and then the declining pace of 1% annualized over three months – a bit less coherence.

Transportation output in France is considerably stronger than the trends in motor vehicle registrations. Even though output in the auto sector continues to be quite firm to strong, registrations are weakening. That can’t be good.

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France is clearly in a difficult spot with President Macron also caught between a political rock and a hard place given the importance of Algerians in the French economy and given the conflict in Israel involving Hamas in the Gaza Strip. His political base domestically is severely fractured, and economic performance now is spotty. One good bit of news for the European Monetary Union is that, while inflation runs mildly over the top of its target, it is not accelerating; the ECB seems content to let inflation set at a pace slightly above its target as long as it continues to mind its business there.

It's certainly a bad time for France to be dealing with geopolitical tensions in the Middle East and Ukraine and with these political divisions at home they're deepened by those kinds of divisions as well as an economy that's showing signs of stress, signs that have been inevitable to show up in the wake of the recovery from COVID since governments did so much to try to bail their economies out. The unwinding of those actions has been destined, for some time, to create management problems for the economy and for continuing growth globally. For the time being, governments have managed the situation by tolerating inflation overshoots and pretending that having inflation over target is fine. However, Trump's tariffs seem to be calling the bluff on that to some extent. Tariffs will exacerbate inflation pressures and probably chill growth prospects at least by increasing uncertainty in the short run. This means that the risk of a downturn has risen but it's not clear that it's risen to a point that should be concerning although it certainly could be. It's more likely to be an issue and economies that have continued to place a great deal of emphasis on government efforts to sustain growth.

The next few months could be pivotal for global growth not just in France, as we begin to see what challenges tariffs are going to propose for local economies in terms of adversely affecting growth and adversely affecting inflation. The problems have been manageable so far, will that continue? That essentially is the question for the outlook.

France

French IP Is Expanding But Had a Tough Month

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Consumer credit outstanding increased $16.0 billion (2.2% y/y) during July after rising $9.6 billion in June, revised from $7.4 billion, and $7.9 billion in May, revised from $5.1 billion. A $10.3 billion July rise had been expected in the Action Economics Forecast Survey. As a percentage of disposable personal income, consumer credit outstanding of 22.4% in July was steady with June and compared to 22.9% one year earlier. It reached a high of 26.4% during all of 2017. The figures are reported by the Federal Reserve Board.

In July, revolving credit outstanding, which includes credit cards, rose $10.5 billion (3.1% y/y) after rising $0.8 billion in June, revised from a $1.0 billion decline, and falling $1.6 billion in May, revised from down $3.8 billion. Revolving credit outstanding held by depository institutions fell a steady 2.3% y/y. Revolving credit held by finance companies fell 13.8% y/y in July after falling 15.0% y/y in June, while credit union debt rose a steady 4.1% y/y in July.

Nonrevolving credit outstanding rose $5.5 billion (1.8% y/y) in July after increasing $8.8 billion in June, revised from $8.4 billion, and increasing $9.5 billion in May, revised from $8.9 billion. Nonrevolving credit held by depository institutions declined 7.7% y/y in July after falling 8.1% y/y in June. Finance company debt holdings fell 1.3% y/y after a 0.4% slip, while credit union holdings rose a steady 11.1% y/y in July. Nonrevolving debt of the federal government rose 3.9% y/y in July following a 4.1% y/y rise in June.

The consumer credit figures from the Federal Reserve Board are break-adjusted and calculated by Haver Analytics. The breaks in the series in 2005, 2010 and 2015 are the result of the incorporation of data from the Census and the Survey of Finance Companies, as well as changes in the seasonal adjustment methodology. The consumer credit data are available in Haver’s **USECON** database. The Action Economics forecast figures are contained in the **AS1REPNA** database.

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- Notable gain in credit usage follows two months of moderate growth.
- Revolving credit picks up as nonrevolving credit eases.

U.S. Consumer Credit Surges in July

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The **Industrial Materials Price Index** from the Foundation for International Business and Economic Research (FIBER) declined 1.0% during the last four weeks, after weakening 1.9% in the prior four weeks. Despite these declines, prices rose 0.5% during the last twelve months. During July, factory sector production held steady but rose an improved 1.4% y/y.

**Crude Oil & Benzene** group costs continued to lead the overall price weakening as they moved 1.9% lower (-10.3% y/y) in the latest four week period. The price of West Texas Intermediate crude oil declined 1.7% to $64.27 per barrel and remained 8.9% lower y/y. It had fallen to a low of $58.50 per barrel in the second week of May. The cost of the petrol-chemical benzene, used for making plastics & synthetic fibers, weakened 6.5% (-31.7% y/y). Excluding crude oil, the industrial commodity price index weakened 0.9% (+1.1% y/y) during the last four weeks.

Lower **Miscellaneous** group prices followed with a 4.0% decline in the latest four week period, but prices remained up 1.8% y/y. Lumber prices fell 21.2% (+10.2% y/y) during the last four weeks, and tallow costs (used in the soap industry) declined 3.9% (+34.4% y/y). Moving higher, the cost of rubber rose 2.8% in four weeks, but fell 18.6% y/y.

**Metals** group prices rose 1.7% (4.1% y/y) over four weeks. Copper scrap prices rose 2.3% (9.6% y/y). Aluminum prices increased 1.3% in four weeks (9.1% y/y), and the cost of zinc moved up 3.8% in four weeks, and did the same y/y. Tin prices rose 4.8% (13.1% y/y) in four weeks. Lead prices edged up 0.7% (-2.3% y/y) but steel scrap costs fell 1.9% (-6.3% y/y) over the same period.

Prices in the **Textile** group moved 0.5% higher (1.6% y/y) during the last four weeks. Burlap costs surged 6.9% (22.2% y/y), but cotton prices fell 1.3% (-3.4% y/y).

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's **DAILY**, **WEEKLY**, **USECON** and **CMDTY** databases.

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- Decline extends last month’s weakness. 
- Crude oil costs & lumber costs decline.
- Metals prices improve.

Economy in Brief: 2004

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