Louise Curley

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721d.jpg" width="353">
Five countries, Portugal, Switzerland, Russia, Estonia and Slovenia, reported June data for producer price indexes today.Among the five countries, inflation at the producer level measured by the year-over-year increase in the producer price index remains highest in Russia where the year-to-year increase in the producer price index rose to 27.6% in June from 24.7% in May and is now at its highest level since December 2004 as can be seen in the first chart.
The other four countries show producer price inflation low in comparison with Russia, but generally high and rising in comparison with their own recent experiences, as shown in the second chart. Estonia is the exception with inflation declining from the peak of 9.11% reached in October, 2007 to 7.45% in June, 2008.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721e.jpg" width="353">
For Portugal and Slovenia, members of the Euro Area, their producer price inflation rates--at 7.5% for Portugal and 6.6% for Slovenia--are among the highest rates in the Euro Area. Switzerland stands out with the lowest producer price inflation rate, 4.4%, of the group.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PRODUCER PRICE INFLATION (%)&nbsp;</th>
<th scope="col">Jun 08</th>
<th scope="col">May&nbsp; 08&nbsp;</th>
<th scope="col">Apr&nbsp; 08&nbsp;</th>
<th scope="col">Mar&nbsp;&nbsp;&nbsp;&nbsp; 08&nbsp;</th>
<th scope="col">Feb&nbsp;&nbsp;&nbsp;&nbsp; 08&nbsp;</th>
<th scope="col">Jan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 08</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Russia</td>
<td>27.64</td>
<td>24.71</td>
<td>26.91</td>
<td>26.66</td>
<td>26.42</td>
<td>25.23</td>
<td>14.0</td>
<td>12.41</td>
</tr>
<tr>
<td class="firstcol">Estonia</td>
<td>7.45</td>
<td>7.18</td>
<td>7.33</td>
<td>8.14</td>
<td>8.43</td>
<td>8.32</td>
<td>8.27</td>
<td>4.48</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovenia</td>
<td>6.59</td>
<td>6.33</td>
<td>6.16</td>
<td>5.71</td>
<td>5.54</td>
<td>6.42</td>
<td>5.37</td>
<td>2.34</td>
</tr>
<tr>
<td class="firstcol">Portugal</td>
<td>7.47</td>
<td>6.74</td>
<td>6.10</td>
<td>6.95</td>
<td>6.02</td>
<td>6.21</td>
<td>3.19</td>
<td>4.68</td>
</tr>
<tr class="odd">
<td class="firstcol">Switzerland</td>
<td>4.39</td>
<td>3.93</td>
<td>3.58</td>
<td>3.42</td>
<td>3.33</td>
<td>3.44</td>
<td>2.36</td>
<td>2.05</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
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<td></td>
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Five countries, Portugal, Switzerland, Russia, Estonia and Slovenia, reported June data for producer price indexes today.Among the five countries, inflation at the producer level measured by the year-over-year increase in the producer [...]

Producer Price Inflation in Five European Countries

Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721b.jpg" width="353">
The composite index of leading economic indicators, reported by the Conference Board, dipped 0.1% during June after a revised 0.2% decline in May. The decline lowered the leaders by 0.9% so far in 2008.
The leaders still may not yet indicate that the U.S. economy is entering recession. Since their peak in early 2006, the leading index has fallen 2.9%. Prior to the recession of 2001 the leading index declined a greater 3.7% over a shorter, roughly ten month span.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
The breadth of one month increase amongst the leaders&#39; 10 components improved slightly to 40% from 30% in May. Over a six month period the breadth of gain amongst the leaders&#39; components held steady for the fourth month at a low 30%.
Last month higher claims for unemployment insurance, lower stock prices and a lower real money supply made the largest negative contributions to the leaders&#39; decline. These were offset by improved new orders for consumer goods and higher building permits which made the largest positive contributions.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721c.jpg" width="353">
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate was revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.1% and recovered their 0.1% May downtick. Most of the coincident series&#39; components rose last month and over the last six months half were up and half were down. So far this year the series is down 0.3%. Declines of 1% to 2% have been associated with past recessions. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth.
The lagging index fell 0.3% after declines during the prior two months. The 0.5% recent rate of increase in the index is much reduced from the 2.0% to 3.5% growth rates during the past four years. The ratio of coincident to lagging indicators (a measure of economic excess) ticked up slightly but remained near its lowest level since early 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
Mortgage Originations: 2000-2006 from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20080801/mtpub.pdf"> here</a>.
Why Are Exchange Rates So Difficult to Predict? from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2008/el0806.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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">March, 6 Month % (AR)</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">Leading</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-0.9%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>1.7%</td>
<td>2.4%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>0.5%</td>
<td>2.9%</td>
<td>3.1%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>


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The composite index of leading economic indicators, reported by the Conference Board, dipped 0.1% during June after a revised 0.2% decline in May. The decline lowered the leaders by 0.9% so far in 2008. The leaders still may not yet [...]

U.S. Leading Economic Indicators Dipped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721a.jpg" width="353">
The Chicago Federal Reserve Bank indicated that its Chicago Fed National Activity Index (CFNAI) for June was again negative. The reading of -0.60 was, however, the least negative since January. It left the three-month moving average of the figure at -0.93, which also was its least negative since January.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_july2008.pdf">here</a> and the historical data are available in Haver&#39;s SURVEYS database.
The improvement in June again owed to production-related indicators. Employment, consumption and housing continued to make roughly the same negative contributions to the CFNAI during June.
Thirty-one of the of the eighty-five indicators in the index made positive contributions to the June index while 54 made negative contributions.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
Are inflation targets good inflation forecasts? from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/economicperspectives/ep_2qtr2008_part3_diron_mojon.pdf">here</a>.
Monetary Policy&#39;s Third Interest Rate from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20080701/mtpub.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.60</td>
<td>-1.06</td>
<td>-0.19</td>
<td>-0.42</td>
<td>-0.05</td>
<td>0.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-0.93</td>
<td>-1.08</td>
<td>-0.22</td>
<td></td>
<td></td>
<td>&nbsp;</td>
</tr>
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</table>
</body>
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The Chicago Federal Reserve Bank indicated that its Chicago Fed National Activity Index (CFNAI) for June was again negative. The reading of -0.60 was, however, the least negative since January. It left the three-month moving average [...]

Chicago Fed Index Improved Somewhat

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721a.jpg" width="353">
The Chicago Federal Reserve Bank indicated that its Chicago Fed National Activity Index (CFNAI) for June was again negative. The reading of -0.60 was, however, the least negative since January. It left the three-month moving average of the figure at -0.93, which also was its least negative since January.
An index level at or below -0.70 typically has indicated negative U.S. economic growth. A zero value of the CFNAI indicates that the economy is expanding at its historical trend rate of growth of roughly 3%. During the last twenty years there has been a 68% correlation between the level of the CFNAI and q/q growth in real GDP.
The complete CFNAI report is available <a href="http://www.chicagofed.org/economic_research_and_data/files/cfnai_july2008.pdf">here</a> and the historical data are available in Haver&#39;s SURVEYS database.
The improvement in June again owed to production-related indicators. Employment, consumption and housing continued to make roughly the same negative contributions to the CFNAI during June.
Thirty-one of the of the eighty-five indicators in the index made positive contributions to the June index while 54 made negative contributions.
The CFNAI is a weighted average of 85 indicators of economic activity. The indicators reflect activity in the following categories: production &amp; income, the labor market, personal consumption &amp; housing, manufacturing &amp; trade sales, and inventories &amp; orders.
Are inflation targets good inflation forecasts? from the Federal Reserve Bank of Chicago can be found <a href="http://www.chicagofed.org/publications/economicperspectives/ep_2qtr2008_part3_diron_mojon.pdf">here</a>.
Monetary Policy&#39;s Third Interest Rate from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/mt/20080701/mtpub.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S5/@S503/@S503.HTM">Chicago Fed</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">CFNAI</td>
<td>-0.60</td>
<td>-1.06</td>
<td>-0.19</td>
<td>-0.42</td>
<td>-0.05</td>
<td>0.26</td>
</tr>
<tr>
<td class="firstcol">&nbsp; 3-Month Average</td>
<td>-0.93</td>
<td>-1.08</td>
<td>-0.22</td>
<td></td>
<td></td>
<td>&nbsp;</td>
</tr>
</tbody>
</table>
U.S. Leading Economic Indicators Dipped 
by <a href="/comment/Moeller.html">Tom Moeller</a> July 21, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721b.jpg" width="353">
The composite index of leading economic indicators, reported by the Conference Board, dipped 0.1% during June after a revised 0.2% decline in May. The decline lowered the leaders by 0.9% so far in 2008.
The leaders still may not yet indicate that the U.S. economy is entering recession. Since their peak in early 2006, the leading index has fallen 2.9%. Prior to the recession of 2001 the leading index declined a greater 3.7% over a shorter, roughly ten month span.
During the last ten years there has been a 59% correlation between the y/y change in the leading indicators index and the lagged change in real GDP.
The breadth of one month increase amongst the leaders&#39; 10 components improved slightly to 40% from 30% in May. Over a six month period the breadth of gain amongst the leaders&#39; components held steady for the fourth month at a low 30%.
Last month higher claims for unemployment insurance, lower stock prices and a lower real money supply made the largest negative contributions to the leaders&#39; decline. These were offset by improved new orders for consumer goods and higher building permits which made the largest positive contributions.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721c.jpg" width="353">
The method of calculating the contribution to the leading index from the spread between 10 year Treasury securities and the Fed funds rate was revised. A negative contribution will now occur only when the spread inverts rather than when declining as in the past. More details can be found <a href="http://www.conference-board.org/pdf_free/economics/bci/lei0705.pdf">here</a>.
The leading index is based on eight previously reported economic data series. Two series, orders for consumer goods and orders for capital goods, are estimated.
The coincident indicators rose 0.1% and recovered their 0.1% May downtick. Most of the coincident series&#39; components rose last month and over the last six months half were up and half were down. So far this year the series is down 0.3%. Declines of 1% to 2% have been associated with past recessions. Over the last ten years there has been an 86% correlation between the y/y change in the coincident indicators and real GDP growth.
The lagging index fell 0.3% after declines during the prior two months. The 0.5% recent rate of increase in the index is much reduced from the 2.0% to 3.5% growth rates during the past four years. The ratio of coincident to lagging indicators (a measure of economic excess) ticked up slightly but remained near its lowest level since early 1991. 
Visit the Conference Board&#39;s <a href="http://www.conference-board.org">site</a> for coverage of leading indicator series from around the world.
Mortgage Originations: 2000-2006 from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/mt/20080801/mtpub.pdf"> here</a>.
Why Are Exchange Rates So Difficult to Predict? from the Federal Reserve Bank of Dallas is available <a href="http://dallasfed.org/research/eclett/2008/el0806.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/BCI/BCI.HTM">Business Cycle Indicators</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">March, 6 Month % (AR)</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">Leading</td>
<td>-0.1%</td>
<td>-0.2%</td>
<td>-0.9%</td>
<td>-0.4%</td>
<td>1.3%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Coincident</td>
<td>0.1%</td>
<td>-0.1%</td>
<td>-0.3%</td>
<td>1.7%</td>
<td>2.4%</td>
<td>2.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Lagging</td>
<td>-0.3%</td>
<td>-0.2%</td>
<td>0.5%</td>
<td>2.9%</td>
<td>3.1%</td>
<td>3.1%</td>
</tr>
</tbody>
</table>
Producer Price Inflation in Five European Countries 
by <a href="/comment/Curley.html">Louise Curley</a> July 21, 2008


<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721d.jpg" width="353">
Five countries, Portugal, Switzerland, Russia, Estonia and Slovenia, reported June data for producer price indexes today.Among the five countries, inflation at the producer level measured by the year-over-year increase in the producer price index remains highest in Russia where the year-to-year increase in the producer price index rose to 27.6% in June from 24.7% in May and is now at its highest level since December 2004 as can be seen in the first chart.
The other four countries show producer price inflation low in comparison with Russia, but generally high and rising in comparison with their own recent experiences, as shown in the second chart. Estonia is the exception with inflation declining from the peak of 9.11% reached in October, 2007 to 7.45% in June, 2008.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080721e.jpg" width="353">
For Portugal and Slovenia, members of the Euro Area, their producer price inflation rates--at 7.5% for Portugal and 6.6% for Slovenia--are among the highest rates in the Euro Area. Switzerland stands out with the lowest producer price inflation rate, 4.4%, of the group.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">PRODUCER PRICE INFLATION (%)&nbsp;</th>
<th scope="col">Jun 08</th>
<th scope="col">May&nbsp; 08&nbsp;</th>
<th scope="col">Apr&nbsp; 08&nbsp;</th>
<th scope="col">Mar&nbsp;&nbsp;&nbsp;&nbsp; 08&nbsp;</th>
<th scope="col">Feb&nbsp;&nbsp;&nbsp;&nbsp; 08&nbsp;</th>
<th scope="col">Jan&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 08</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Russia</td>
<td>27.64</td>
<td>24.71</td>
<td>26.91</td>
<td>26.66</td>
<td>26.42</td>
<td>25.23</td>
<td>14.0</td>
<td>12.41</td>
</tr>
<tr>
<td class="firstcol">Estonia</td>
<td>7.45</td>
<td>7.18</td>
<td>7.33</td>
<td>8.14</td>
<td>8.43</td>
<td>8.32</td>
<td>8.27</td>
<td>4.48</td>
</tr>
<tr class="odd">
<td class="firstcol">Slovenia</td>
<td>6.59</td>
<td>6.33</td>
<td>6.16</td>
<td>5.71</td>
<td>5.54</td>
<td>6.42</td>
<td>5.37</td>
<td>2.34</td>
</tr>
<tr>
<td class="firstcol">Portugal</td>
<td>7.47</td>
<td>6.74</td>
<td>6.10</td>
<td>6.95</td>
<td>6.02</td>
<td>6.21</td>
<td>3.19</td>
<td>4.68</td>
</tr>
<tr class="odd">
<td class="firstcol">Switzerland</td>
<td>4.39</td>
<td>3.93</td>
<td>3.58</td>
<td>3.42</td>
<td>3.33</td>
<td>3.44</td>
<td>2.36</td>
<td>2.05</td>
</tr>
<tr>
<td class="firstcol"></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
</tbody>
</table>


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Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718e.jpg" align="left" border="0" height="265" width="353">
WEAKNESS!! French and Italian industrial orders fell sharply
in May joining the chorus of Euro signals that are screaming
&#8216;weakness!&#8217; For each country both domestic and foreign orders fell
sharply. Each country had posted an increase in domestic orders in
April. Yet in May Yr/Yr orders are off and France&#8217;s orders are off very
sharply. Both have foreign orders off sharply Yr/Yr.

Square one? One thing that seems clear is that the setback to
growth is just beginning. Yet, ECB President Trichet says that EMU
could hit its low in Q2 or Q3 then begin a moderate recovery. This is a
very upbeat view of the economic circumstances given that it is July
and the data for May and June are just beginning to show significant
setbacks while more topical outlook surveys have been faltering for
some time.

Boom/Bust - The average of French and Italian foreign orders
growth is the weakest since May of 2003. The falloff is from a 20%
Yr/Yr increase in June of 2007 to a Yr/Yr decline in foreign orders of
6.1%, just 11 months later. This is a clear boom/bust scenario for
foreign orders in these two key EMU nations. The risk in such a sharp
turnaround is that problems can develop and spread since firms usually
cannot predict and be prepared for such a sharp change in trend. Both
Italy and France are affected by a sharp deceleration in order growth.

Undue optimism? On balance, the risk to e-Zone growth seems
highly likely to extend past Q2 and probably past Q3 as well. Italy and
France are likely very representative of the condition other EMU
nations. Trichet seems to be promoting a &#8216;best case&#8217; scenario of sorts
even as growth in the world economy is just coming into the grip of a
decelerating phase. Monetary policies have not shifted to accommodation
so the expectation of a bottom seems premature and without foundation
especially for the e-zone where the last policy act was a rate HIKE and
where the currency is still moving higher.

Monetary stimulus: lacking or ineffective - Only in the US
where the Fed cut official rates has there been an attempt at
stimulative central bank action of any degree. But the Fed&#8217;s policy
shift has been &#8216;undone&#8217; by private sector credit policy decisions that
have result in higher market rates as official rates were cut. The
attempt at stimulus seems to have been blunted. In its recent outlook
the IMF hiked various world regional growth estimates based on water
under the bridge (experienced Q1;Q2 growth), but registered increased-
not diminished &#8211; concerns for the period ahead &#8211; especially for the
individual quarters of the second half.

Fiscal stimulus, ditto - On balance, it is hard to see what
creates the quick turnaround that Trichet foresees and the IMF does
not. Only in the US has there been a stimulative fiscal policy
response, although the UK seems to be considering rule changes that
might give it some flexibility to act on that front as well. For the
most part the slide to weaker growth seems to be in its infancy not in
a mature stage that is about to run its course. To the grief of China
the weakness could come in its most intense form just as the Olympics
are getting not gear.

Decoupling view decouples from reality - All views of
de-coupling from the US down-cycle have been cast aside. Wall Street
strategists that recommended a de-coupling investment strategy have
rescinded their support of it. That should be enough to underline how
much the private sector disagrees with the view held by Mr Trichet. Not
only will Europe not evade the encroaching slowdown or snap out of it
quickly, but there is increasing concern about the impact of the
slowdown on the fast growing &#8216;developing world&#8217;.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy
Orders </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar exept m/m</td>
<td>MAY-08</td>
<td>APR-08</td>
<td>MAR-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>-3.1%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-13.4%</td>
<td>-8.2%</td>
<td>-1.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>-2.0%</td>
<td>-1.6%</td>
<td>-0.8%</td>
<td>-16.6%</td>
<td>-12.6%</td>
<td>-3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Domestic</td>
<td>-3.6%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>-11.4%</td>
<td>-5.7%</td>
<td>0.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Sales</td>
<td>-1.7%</td>
<td>2.2%</td>
<td>-1.6%</td>
<td>-4.3%</td>
<td>3.3%</td>
<td>0.5%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">French Orders</td>
</tr>
<tr class="grey1">
<td class="firstcol">Saar exept m/m</td>
<td>MAY-08</td>
<td>APR-08</td>
<td>MAR-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>-4.6%</td>
<td>4.5%</td>
<td>-6.6%</td>
<td>-24.6%</td>
<td>-9.2%</td>
<td>-4.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>-8.4%</td>
<td>5.3%</td>
<td>-6.1%</td>
<td>-32.5%</td>
<td>-12.0%</td>
<td>-8.8%</td>
</tr>
</tbody>
</table>
</body></html>

WEAKNESS!! French and Italian industrial orders fell sharply in May joining the chorus of Euro signals that are screaming ‘weakness!’ For each country both domestic and foreign orders fell sharply. Each country had posted an increase [...]

French and Italian Orders Scream WEAKNESS!!

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718a.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) reported that its July Composite Housing Market Index fell to 16 from 18 in June. The latest level was the lowest in the series&#39; history which extends back to 1984 and it was more than two-thirds lower than the high during 2004.
During the last twenty years there has been a 76% correlation between the y/y change in the Composite Index and the change in single family housing starts.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718b.jpg" width="353">
The index for single-family detached homes also fell to a new series&#39; low while builders&#39; view of single-family home sales during the next six months fell to the series&#39; low.
Except for a modest uptick in the Northeast, the builders&#39; index in the country&#39;s regions continued to decline.
Traffic of prospective home buyers declined and hit a new low for the series.
The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions good than poor.
Visit the <a href="http://www.nahb.org">National Association of Home Builders</a>.
The Mortgage Crisis: Let Markets Work, But Compensate the Truly Needy from the Federal Reserve Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2008/c/pdf/mortgage.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat&#39;l Association of Home Builders</a></th>
<th scope="col">July</th>
<th scope="col">June &nbsp;</th>
<th scope="col">July &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>16</td>
<td>18</td>
<td>24</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Association of Home Builders' (NAHB) reported that its July Composite Housing Market Index fell to 16 from 18 in June. The latest level was the lowest in the series' history which extends back to 1984 and it was more than [...]

U.S. NAHB Housing Market Index Fell To A Record Low

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718c.jpg" width="353">
The Philadelphia Federal Reserve Bank indicated that its July Index of General Business conditions in the manufacturing sector held roughly stable at -16.3. The prior month&#39;s index reading was a low -17.1 and a level of -15 had been expected for this month.
The Philadelphia Fed constructs a diffusion index for total business activity and each of the sub indexes. The business conditions index reflects a separate survey question, not the sub-indexes.
During the last ten years there has been a 61% correlation between the level of the Philadelphia Fed Business Conditions Index and the three-month growth in factory sector industrial production. There has been a 43% correlation with q/q growth in real GDP.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718d.jpg" width="353">
The new orders sub-index held at its June level. The reading of -12.1 was still, however, up off the absolute low of -18.8 in April. The shipments index showed the same pattern at -8.0.
The employment index, at -7.3, recently showed the same pattern as orders and shipments.Though a somewhat improved 16.9% of respondents expected to increase employment levels, 24.2% expected to decrease them.
The prices paid index again surged, to the highest level since early-1980. During the last ten years there has been a 67% correlation between the prices paid index and the three-month growth in the intermediate goods PPI. There has been an 82% correlation with the change in core intermediate goods prices.
The separate index of expected business conditions in six months fell for the second month, to 18.0. The recent levels of index were well below the full-year, 2007 reading of 24.7. Expectations for unfilled orders and delivery times fell sharply while new orders were unchanged and employment rose. The prices slipped after the June surge.
The latest Business Outlook Survey from the Federal Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/bos/bos0708.html">here</a>.
The Changing Nature of the U.S. Balance of Payments from the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci14-4.pdf"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">Philadelphia Fed (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-16.3</td>
<td>-17.1</td>
<td>16.9</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>75.6</td>
<td>&nbsp;69.3</td>
<td>&nbsp;25.8</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
</table>
</body>
</html>

The Philadelphia Federal Reserve Bank indicated that its July Index of General Business conditions in the manufacturing sector held roughly stable at -16.3. The prior month's index reading was a low -17.1 and a level of -15 had been [...]

Philadelphia Fed Index Stable & Low, Prices Surged

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718c.jpg" align="left" border="0" height="265" width="353">
The Philadelphia Federal Reserve Bank indicated that its July
Index of General Business conditions in the manufacturing sector held
roughly stable at -16.3. The prior month's index reading was a low
-17.1 and a level of -15 had been expected for this month.
The Philadelphia Fed constructs a diffusion index for total
business activity and each of the sub indexes. The business conditions
index reflects a separate survey question, not the sub-indexes.
During the last ten years there has been a 61% correlation
between the level of the Philadelphia Fed Business Conditions Index and
the three-month growth in factory sector industrial production. There
has been a 43% correlation with q/q growth in real GDP.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718d.jpg" align="right" border="0" height="265" width="353">
The new orders sub-index held at its June level. The reading
of -12.1 was still, however, up off the absolute low of -18.8 in April.
The shipments index showed the same pattern at -8.0.
The employment index, at -7.3, recently showed the same
pattern as orders and shipments.Though a somewhat improved 16.9% of
respondents expected to increase employment levels, 24.2% expected to
decrease them.
The prices paid index again surged, to the highest level since
early-1980. During the last ten years there has been a 67% correlation
between the prices paid index and the three-month growth in the
intermediate goods PPI. There has been an 82% correlation with the
change in core intermediate goods prices.
The separate index of expected business conditions in six
months fell for the second month, to 18.0. The recent levels of index
were well below the full-year, 2007 reading of 24.7. Expectations for
unfilled orders and delivery times fell sharply while new orders were
unchanged and employment rose. The prices slipped after the June surge.
The latest Business Outlook Survey from the Federal
Reserve Bank of Philadelphia can be found <a href="http://www.philadelphiafed.org/files/bos/bos0708.html">here</a>.
The Changing Nature of the U.S. Balance of Payments from
the Federal Reserve Bank of New York can be found <a href="http://www.newyorkfed.org/research/current_issues/ci14-4.pdf">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">Philadelphia
Fed (%)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Activity Index</td>
<td>-16.3</td>
<td>-17.1</td>
<td>16.9</td>
<td>5.1</td>
<td>8.1</td>
<td>11.5</td>
</tr>
<tr>
<td class="firstcol">Prices Paid Index</td>
<td>75.6</td>
<td>&nbsp;69.3</td>
<td>&nbsp;25.8</td>
<td>26.4</td>
<td>36.6</td>
<td>40.1</td>
</tr>
</tbody>
</table>
U.S. NAHB Housing Market Index
Fell To A Record Low 
by <a href="/comment/Moeller.html">Tom
Moeller</a> July 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718a.jpg" align="left" border="0" height="265" width="353">
The National Association of Home Builders' (NAHB) reported
that its July Composite Housing Market Index fell to 16 from 18 in
June. The latest level was the lowest in the series' history which
extends back to 1984 and it was more than two-thirds lower than the
high during 2004.
During the last twenty years there has been a 76% correlation
between the y/y change in the Composite Index and the change in single
family housing starts.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718b.jpg" align="right" border="0" height="265" width="353">
The index for single-family detached homes also fell to a new
series' low while builders' view of single-family home sales during the
next six months fell to the series' low.
Except for a modest uptick in the Northeast, the builders'
index in the country's regions continued to decline.
Traffic of prospective home buyers declined and hit a new low
for the series.
The NAHB index is a diffusion index based on a survey of
builders. Readings above 50 signal that more builders view conditions
good than poor.
Visit the <a href="http://www.nahb.org">National
Association of Home Builders</a>.
The Mortgage Crisis: Let Markets
Work, But Compensate the Truly Needy from the Federal Reserve
Bank of St. Louis is available <a href="http://stlouisfed.org/publications/re/2008/c/pdf/mortgage.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYS/@S4/@S4.HTM">Nat'l
Association of Home Builders</a></th>
<th scope="col">July</th>
<th scope="col">June
&nbsp;</th>
<th scope="col">July '07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Composite Housing Market Index</td>
<td>16</td>
<td>18</td>
<td>24</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
French and Italian Orders ScreamWEAKNESS!! 
by <a href="/comment/Brusca.html">Robert
Brusca</a> July 18, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080718e.jpg" align="left" border="0" height="265" width="353">
WEAKNESS!! French and Italian industrial orders fell sharply
in May joining the chorus of Euro signals that are screaming
&#8216;weakness!&#8217; For each country both domestic and foreign orders fell
sharply. Each country had posted an increase in domestic orders in
April. Yet in May Yr/Yr orders are off and France&#8217;s orders are off very
sharply. Both have foreign orders off sharply Yr/Yr.

Square one? One thing that seems clear is that the setback to
growth is just beginning. Yet, ECB President Trichet says that EMU
could hit its low in Q2 or Q3 then begin a moderate recovery. This is a
very upbeat view of the economic circumstances given that it is July
and the data for May and June are just beginning to show significant
setbacks while more topical outlook surveys have been faltering for
some time.

Boom/Bust - The average of French and Italian foreign orders
growth is the weakest since May of 2003. The falloff is from a 20%
Yr/Yr increase in June of 2007 to a Yr/Yr decline in foreign orders of
6.1%, just 11 months later. This is a clear boom/bust scenario for
foreign orders in these two key EMU nations. The risk in such a sharp
turnaround is that problems can develop and spread since firms usually
cannot predict and be prepared for such a sharp change in trend. Both
Italy and France are affected by a sharp deceleration in order growth.

Undue optimism? On balance, the risk to e-Zone growth seems
highly likely to extend past Q2 and probably past Q3 as well. Italy and
France are likely very representative of the condition other EMU
nations. Trichet seems to be promoting a &#8216;best case&#8217; scenario of sorts
even as growth in the world economy is just coming into the grip of a
decelerating phase. Monetary policies have not shifted to accommodation
so the expectation of a bottom seems premature and without foundation
especially for the e-zone where the last policy act was a rate HIKE and
where the currency is still moving higher.

Monetary stimulus: lacking or ineffective - Only in the US
where the Fed cut official rates has there been an attempt at
stimulative central bank action of any degree. But the Fed&#8217;s policy
shift has been &#8216;undone&#8217; by private sector credit policy decisions that
have result in higher market rates as official rates were cut. The
attempt at stimulus seems to have been blunted. In its recent outlook
the IMF hiked various world regional growth estimates based on water
under the bridge (experienced Q1;Q2 growth), but registered increased-
not diminished &#8211; concerns for the period ahead &#8211; especially for the
individual quarters of the second half.

Fiscal stimulus, ditto - On balance, it is hard to see what
creates the quick turnaround that Trichet foresees and the IMF does
not. Only in the US has there been a stimulative fiscal policy
response, although the UK seems to be considering rule changes that
might give it some flexibility to act on that front as well. For the
most part the slide to weaker growth seems to be in its infancy not in
a mature stage that is about to run its course. To the grief of China
the weakness could come in its most intense form just as the Olympics
are getting not gear.

Decoupling view decouples from reality - All views of
de-coupling from the US down-cycle have been cast aside. Wall Street
strategists that recommended a de-coupling investment strategy have
rescinded their support of it. That should be enough to underline how
much the private sector disagrees with the view held by Mr Trichet. Not
only will Europe not evade the encroaching slowdown or snap out of it
quickly, but there is increasing concern about the impact of the
slowdown on the fast growing &#8216;developing world&#8217;.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Italy
Orders </th>
</tr>
</thead>
<tbody>
<tr class="grey4">
<td class="firstcol">Saar exept m/m</td>
<td>MAY-08</td>
<td>APR-08</td>
<td>MAR-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>-3.1%</td>
<td>0.5%</td>
<td>-0.9%</td>
<td>-13.4%</td>
<td>-8.2%</td>
<td>-1.1%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>-2.0%</td>
<td>-1.6%</td>
<td>-0.8%</td>
<td>-16.6%</td>
<td>-12.6%</td>
<td>-3.4%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Domestic</td>
<td>-3.6%</td>
<td>1.6%</td>
<td>-0.9%</td>
<td>-11.4%</td>
<td>-5.7%</td>
<td>0.2%</td>
</tr>
<tr class="grey2">
<td class="firstcol">Memo</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="grey3">
<td class="firstcol">Sales</td>
<td>-1.7%</td>
<td>2.2%</td>
<td>-1.6%</td>
<td>-4.3%</td>
<td>3.3%</td>
<td>0.5%</td>
</tr>
<tr class="grey1">
<td colspan="7" class="firstcol">French
Orders</td>
</tr>
<tr class="grey1">
<td class="firstcol">Saar exept m/m</td>
<td>MAY-08</td>
<td>APR-08</td>
<td>MAR-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
</tr>
<tr class="grey3">
<td class="firstcol">Total</td>
<td>-4.6%</td>
<td>4.5%</td>
<td>-6.6%</td>
<td>-24.6%</td>
<td>-9.2%</td>
<td>-4.5%</td>
</tr>
<tr class="grey3">
<td class="firstcol">Foreign</td>
<td>-8.4%</td>
<td>5.3%</td>
<td>-6.1%</td>
<td>-32.5%</td>
<td>-12.0%</td>
<td>-8.8%</td>
</tr>
</tbody>
</table>
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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: July 2008

Jump to:

Producer Price Inflation in Five European Countries

U.S. Leading Economic Indicators Dipped

Chicago Fed Index Improved Somewhat

Chicago Fed Index Improved Somewhat

French and Italian Orders Scream WEAKNESS!!

U.S. NAHB Housing Market Index Fell To A Record Low

Philadelphia Fed Index Stable & Low, Prices Surged

Philadelphia Fed Index Stable & Low, Prices Surged