Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617g.jpg" width="353">
Industrial production unexpectedly fell 0.2% last month following an unrevised 0.7% April drop. The latest decline was counter to the Consensus expectation for a 0.1% rise and it lowered the level of output 1.4% below its January peak.
The May decline in the total was due to a 1.8% (-0.6% y/y) drop in utility output. Factory output was unchanged (-0.3% y/y) but that followed the sharp, downwardly revised 0.9% decline during April. Output has now fallen 1.6% since its peak in July of 2007 and the three-month rate change was a negative 2.5% (AR).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617h.jpg" width="353">
Production in the high tech sector again was firm and rose 1.1% (25.0% y/y). Production of computers &amp; office equipment rose a lessened 0.8% (16.7% y/y) because the three-month growth rate slowed to 8.1% (AR). Output of communications equipment rose 0.8% and three-month growth totaled 17.8%.
The trend in output outside the high-tech sector has been decidedly weak. Less high-tech, factory output fell 0.1% last month and three-month output growth was a negative 4.1% (AR). Output of motor vehicles &amp; parts did rise 1.0% in May but three-month growth was a negative 36.2%. May output of furniture fell 0.4% and at an 8.8% rate during the last three months. Electrical equipment turned a bit of a corner with a 1.2% increase. During the last three months output here is up 9.9% (AR). Machinery output fell quite hard, again. A 1.5% May decline followed a 2.4% shortfall in April.
In the nondurables area output was unchanged and that was due to a 0.6% rise in chemical production. It&#39;s risen at a 3.2% rate during the last three months. Conversely, apparel output fell 0.9% and at a 14.2% rate during the last three months. Petroleum output also is down at a 5.7% since February and plastics are down 5.3%.
Capacity utilization fell again to 79.4% from 79.6% during April. Utilization in the factory sector fell to 77.5%, its lowest also since late-2004.
Inertial Taylor Rules: The Benefit of Signaling Future Policy from the Federal Reserve Bank of St. Louis can be found <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Carlstrom.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">INDUSTRIAL PRODUCTION (SA)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.2</td>
<td>-0.7</td>
<td>-0.1</td>
<td>1.7</td>
<td>2.2</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-0.8</td>
<td>0.0</td>
<td>-0.3</td>
<td>1.7</td>
<td>2.4</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Consumer Goods</td>
<td>-0.2</td>
<td>-1.1</td>
<td>-1.6</td>
<td>1.7</td>
<td>0.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Business Equipment</td>
<td>0.0</td>
<td>-1.7</td>
<td>2.2</td>
<td>3.3</td>
<td>10.4</td>
<td>7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp; Construction Supplies</td>
<td>-0.2</td>
<td>-1.4</td>
<td>-5.6</td>
<td>-2.5</td>
<td>2.2</td>
<td>4.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.4</td>
<td>0.7</td>
<td>0.8</td>
<td>3.3</td>
<td>-0.6</td>
<td>2.1</td>
</tr>
</tbody>
</table>


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Industrial production unexpectedly fell 0.2% last month following an unrevised 0.7% April drop. The latest decline was counter to the Consensus expectation for a 0.1% rise and it lowered the level of output 1.4% below its January [...]

U.S. Industrial Output Fell Unexpectedly in May

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617a.jpg" width="353">
Housing starts fell slightly more-than-expected last month. The 3.3% m/m decline to 975,000 units (AR) was from a downwardly revised 1,008 units in April. The latest level was the lowest since January 1991 and Consensus expectations had been for 980,000 starts in May.
Single-family starts continued weak and fell 1.0% from April to 674,000, also the lowest since 1991. So far 2Q starts are down at a 25% annual rate from 1Q.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617b.jpg" width="353">
By region the decline in single-family starts was led last month by an 18.0% (-48.7% y/y) drop in the West. Elsewhere in the country, starts rose. In the Northeast single-family starts rose 11.9% (-38.3% y/y) and made up all of the prior month&#39;s decline. In the Midwest starts rose 5.7% (-42.8% y/y) to the highest level since January. Finally, single-family starts in the South ticked up just 2.9% (-37.7% y/y) and made up nearly half of the decline in April.
Multi-family starts last month declined 8.0% and reversed half of the April increase.
Building permits slipped 1.3% after a 5.4% rise during April. Single-family permits fell 4.0% to a new low for this cycle.
Inflation and the Size of Government from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Han.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/@E901/@E90101/@E90101.HTM">Housing Starts (000s, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>975</td>
<td>1,008</td>
<td>-32.1%</td>
<td>1,344</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>674</td>
<td>681</td>
<td>-41.2%</td>
<td>1,039</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>301</td>
<td>327</td>
<td>3.8%</td>
<td>304</td>
<td>338</td>
<td>354</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>969</td>
<td>982</td>
<td>-36.3%</td>
<td>1,371</td>
<td>1,842</td>
<td>2,159</td>
</tr>
</tbody>
</table>
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Housing starts fell slightly more-than-expected last month. The 3.3% m/m decline to 975,000 units (AR) was from a downwardly revised 1,008 units in April. The latest level was the lowest since January 1991 and Consensus expectations [...]

U.S. Housing Starts Lowest Since 1991

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617g.jpg" align="left" border="0" height="265" width="353">
Industrial production unexpectedly fell 0.2% last month
following an unrevised 0.7% April drop. The latest decline was counter
to the Consensus expectation for a 0.1% rise and it lowered the level
of output 1.4% below its January peak.
The May decline in the total was due to a 1.8% (-0.6% y/y)
drop in utility output. Factory output was unchanged (-0.3% y/y) but
that followed the sharp, downwardly revised 0.9% decline during April.
Output has now fallen 1.6% since its peak in July of 2007 and the
three-month rate change was a negative 2.5% (AR).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617h.jpg" align="right" border="0" height="265" width="353">
Production in the high tech sector again was firm and rose
1.1% (25.0% y/y). Production of computers &amp; office equipment
rose a lessened 0.8% (16.7% y/y) because the three-month growth rate
slowed to 8.1% (AR). Output of communications equipment rose 0.8% and
three-month growth totaled 17.8%.
The trend in output outside the high-tech sector has been
decidedly weak. Less high-tech, factory output fell 0.1% last month and
three-month output growth was a negative 4.1% (AR). Output of motor
vehicles &amp; parts did rise 1.0% in May but three-month growth
was a negative 36.2%. May output of furniture fell 0.4% and at an 8.8%
rate during the last three months. Electrical equipment turned a bit of
a corner with a 1.2% increase. During the last three months output here
is up 9.9% (AR). Machinery output fell quite hard, again. A 1.5% May
decline followed a 2.4% shortfall in April.
In the nondurables area output was unchanged and that was due
to a 0.6% rise in chemical production. It's risen at a 3.2% rate during
the last three months. Conversely, apparel output fell 0.9% and at a
14.2% rate during the last three months. Petroleum output also is down
at a 5.7% since February and plastics are down 5.3%.
Capacity utilization fell again to 79.4% from 79.6% during
April. Utilization in the factory sector fell to 77.5%, its lowest also
since late-2004.
Inertial Taylor Rules: The Benefit of Signaling
Future Policy from the Federal Reserve Bank of St. Louis can
be found <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Carlstrom.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">INDUSTRIAL
PRODUCTION (SA)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>-0.2</td>
<td>-0.7</td>
<td>-0.1</td>
<td>1.7</td>
<td>2.2</td>
<td>3.3</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp; Manufacturing</td>
<td>-0.8</td>
<td>0.0</td>
<td>-0.3</td>
<td>1.7</td>
<td>2.4</td>
<td>4.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Consumer Goods</td>
<td>-0.2</td>
<td>-1.1</td>
<td>-1.6</td>
<td>1.7</td>
<td>0.3</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Business Equipment</td>
<td>0.0</td>
<td>-1.7</td>
<td>2.2</td>
<td>3.3</td>
<td>10.4</td>
<td>7.3</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;&nbsp;
Construction Supplies</td>
<td>-0.2</td>
<td>-1.4</td>
<td>-5.6</td>
<td>-2.5</td>
<td>2.2</td>
<td>4.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Utilities</td>
<td>0.4</td>
<td>0.7</td>
<td>0.8</td>
<td>3.3</td>
<td>-0.6</td>
<td>2.1</td>
</tr>
</tbody>
</table>
U.S. PPI Increase Largest Since
November, Gain in Core Prices Eased 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617i.jpg" align="left" border="0" height="265" width="353">
U.S. finished producer prices jumped 1.4% last month and the
increase was the largest since a 2.6% rise last November. The increase
surpassed Consensus expectations for a 1.0% rise.
Finished energy prices surged 4.9% (19.4% y/y) as gasoline
prices jumped 9.3% (26.3% y/y). Natural gas prices also were quite
strong and they rose 3.1% (12.4% y/y) while home heating oil prices
increased 8.0% (58.4% y/y). Residential electric power costs rose 0.6%
(4.8% y/y).
Finished consumer food prices were strong again and rose 0.8%
(6.6% y/y). The strength was led by fresh vegetables (17.1% y/y), pasta
products (37.8% y/y) and dairy products (7.0% y/y). Meat prices
continued to decline.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617j.jpg" align="right" border="0" height="265" width="353">
Less food &amp; energy, the gain in finished goods prices
eased to 0.2% from 0.4% in April. The latest figure matched
expectations. Prices of core finished consumer goods rose 0.3% (3.5%
y/y) and the annual rate of increase leveled out. Durable consumer
goods prices reversed the April increase and fell 0.4% (1.7% y/y).
Capital equipment prices rose 0.1% (2.3% y/y).
Intermediate goods prices surged by 2.9% after the 0.9% April
increase. Excluding food &amp; energy these prices spiked another
2.0%.
The crude materials PPI jumped 6.7% due to a 13.1% (67.0% y/y)
spike in energy prices. Crude food prices also were strong and jumped
1.8% (16.7% y/y). Crude petroleum prices have more than doubled y/y
while natural gas prices also surged by 17.0% (49.7% y/y).
Inflation Regimes and Inflation Expectations
from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Gagnon.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/@E8/@E802/@E80201/@E80201.HTM">Producer
Price Index</a> (%)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Finished Goods</td>
<td>1.4</td>
<td>0.2</td>
<td>7.2</td>
<td>3.9</td>
<td>3.0</td>
<td>&nbsp;4.9&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>0.2</td>
<td>0.4</td>
<td>3.0</td>
<td>1.9</td>
<td>1.5</td>
<td>2.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate Goods</td>
<td>2.9</td>
<td>0.9</td>
<td>12.5</td>
<td>4.1</td>
<td>6.4</td>
<td>&nbsp;8.0</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>2.0</td>
<td>1.2</td>
<td>7.4</td>
<td>2.8</td>
<td>6.0</td>
<td>&nbsp;5.5</td>
</tr>
<tr class="odd">
<td class="firstcol">Crude Goods</td>
<td>6.7</td>
<td>3.2</td>
<td>41.7</td>
<td>12.1</td>
<td>1.4</td>
<td>14.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Core</td>
<td>5.0</td>
<td>7.9</td>
<td>&nbsp;33.2</td>
<td>15.7</td>
<td>20.8</td>
<td>4.9</td>
</tr>
</tbody>
</table>
U.S. Housing Starts Lowest Since
1991 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617a.jpg" align="left" border="0" height="265" width="353">
Housing starts fell slightly more-than-expected last month.
The 3.3% m/m decline to 975,000 units (AR) was from a downwardly
revised 1,008 units in April. The latest level was the lowest since
January 1991 and Consensus expectations had been for 980,000 starts in
May.
Single-family starts continued weak and fell 1.0% from April
to 674,000, also the lowest since 1991. So far 2Q starts are down at a
25% annual rate from 1Q.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617b.jpg" align="right" border="0" height="265" width="353">
By region the decline in single-family starts was led last
month by an 18.0% (-48.7% y/y) drop in the West. Elsewhere in the
country, starts rose. In the Northeast single-family starts rose 11.9%
(-38.3% y/y) and made up all of the prior month's decline. In the
Midwest starts rose 5.7% (-42.8% y/y) to the highest level since
January. Finally, single-family starts in the South ticked up just 2.9%
(-37.7% y/y) and made up nearly half of the decline in April.
Multi-family starts last month declined 8.0% and reversed half
of the April increase.
Building permits slipped 1.3% after a 5.4% rise during April.
Single-family permits fell 4.0% to a new low for this cycle.
Inflation and the Size of Government from
the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Han.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/@E901/@E90101/@E90101.HTM">Housing
Starts (000s, AR)</a></th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total</td>
<td>975</td>
<td>1,008</td>
<td>-32.1%</td>
<td>1,344</td>
<td>1,812</td>
<td>2,073</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Single-Family</td>
<td>674</td>
<td>681</td>
<td>-41.2%</td>
<td>1,039</td>
<td>1,474</td>
<td>1,719</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Multi-Family</td>
<td>301</td>
<td>327</td>
<td>3.8%</td>
<td>304</td>
<td>338</td>
<td>354</td>
</tr>
<tr>
<td class="firstcol">Building Permits</td>
<td>969</td>
<td>982</td>
<td>-36.3%</td>
<td>1,371</td>
<td>1,842</td>
<td>2,159</td>
</tr>
</tbody>
</table>
U.S. Gasoline Price Still Above
$4.00 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 17, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617k.jpg" align="left" border="0" height="265" width="353">
The retail price for a gallon of regular gasoline rose
another four cents last week to $4.08 per gallon, according
to the U.S. Department of Energy survey. The rise followed the previous
week's six cent increase. For all grades of gasoline the average price
also rose last week by four cents to an average $4.13 per gallon.
Yesterday, the spot market price for a gallon of regular
gasoline slipped yesterday to $3.33, but that was still up five cents
from last week's average.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617l.jpg" align="right" border="0" height="265" width="353">
Weekly gasoline prices can be found in Haver's WEEKLY
database, daily prices are in the DAILY
database.
According to the U.S. Department of Energy the increase in
gasoline prices, along with the slowdown in economic growth, have
lowered the demand for gasoline during the latest four weeks by 1.7%
from a year earlier. Refinery production of gasoline is down 0.8%
year-to-year.
The DOE figures are available in Haver's OILWKLY
database.
During all of last week, the price of a barrel of WTI crude
oil rose to an average of $134.73 but yesterday the price held above
$130 at $134.62.
Natural gas prices slipped to $12.601/mmbtu up 67.43% versus a
year earlier.


Crude
Awakening: Behind the Surge in Oil Prices from
the Federal Reserve Bank of Dallas can be found <a href="http://dallasfed.org/research/eclett/2008/el0805.html">
here</a>.
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/WEEKLY/@W4/@W4.HTM">Weekly
Prices</a></th>
<th scope="col">06/16/08</th>
<th scope="col">06/09/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Retail Regular Gasoline ($ per
Gallon)</td>
<td>4.08</td>
<td>4.04</td>
<td>35.7%</td>
<td>2.80</td>
<td>2.57</td>
<td>2.27</td>
</tr>
<tr>
<td class="firstcol">Light Sweet Crude Oil,
WTI&nbsp; ($ per bbl.)</td>
<td>134.73</td>
<td>128.14</td>
<td>102.1%</td>
<td>72.25</td>
<td>66.12</td>
<td>56.60</td>
</tr>
</tbody>
</table>
Two Surveys Of German EconomicSentiment Show Significant Declines&nbsp; 
by <a href="/comment/Curley.html">Louise
Curley</a> June 9,2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617c.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617d.jpg" border="0" height="265" width="312">

Two measures of Business Confidence in Germany were released
today--the closely watched ZEW and the less well known DIHK. Both show
a sharp loss of confidence in the outlook and a continued deterioration
in the appraisal of current conditions.
The excess of pessimists among German institutional investors
and analysts, represented in the ZEW measure, rose to 52.4% in June
from 41.4% in May. The current excess of pessimists is the highest
since October, 1992. In June of last year, there was an excess of
optimists of 20.3% regarding the outlook. There is still an excess of
optimists regarding current conditions. The percent balance in June was
37.6% down 1 percentage point from May, but down 51.2 percentage points
from June 2007. The current conditions and expectations of the ZEW
participants are shown in the first chart.
Among the members of the Association of German Chambers of
Industry and Commerce (DIHK) there is still an excess of optimists, 6%,
regarding the outlook but it is down 4 percentage points from February
and 18 percentage points from June of last year. A similar trend is
apparent in the appraisal of current conditions. The excess of
optimists is down 6 percentage points from February and 11 points from
June of last year. The current conditions and expectations of the DIHK
members are shown in the second chart. (We have interpolated the data
to show a smooth trend.)
The two surveys differ in sample size and in occupations. In
June ZEW canvassed 264 individuals in the financial community while
DIHK canvassed the 25,000 members of the Association of German Chambers
of Industry and Commerce, 35% of whom were in industry, 6% in
construction, 24% in wholesale and retail trade and 35% in services.
ZEW surveys its members monthly while DIHK surveys its members three
times a year in February, June and October. Because of the differences
in timing, comparisons between the two series are not easy. If we
aggregate the ZEW data to a quarterly basis and compare it to the
interpolated series of the DIHK data we have a rough comparison. For
what is worth, the rough comparison between the appraisals of current
conditions in the two series shows a close correlation, but the rough
comparison between the appraisals of expectations in the two indicators
shows very little correlation as can be seen in the third and fourth
charts.
<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617e.jpg" border="0" height="265" width="312"><img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080617f.jpg" border="0" height="265" width="312">
<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">GERMANY:
CONFIDENCE INDICATORS&nbsp;</th>
<th scope="col">Jun 08</th>
<th scope="col">May 08&nbsp;</th>
<th scope="col">Jun 07&nbsp;</th>
<th scope="col">M/M Chg</th>
<th scope="col">Y/Y Chg</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol" colspan="9">ZEW
Indicator (%
balance)</td>
</tr>
<tr class="odd">
<td class="firstcol">Current
Conditions&nbsp;</td>
<td>37.6</td>
<td>38.6</td>
<td>88.7</td>
<td>-1.0</td>
<td>-51.1</td>
<td>75.9</td>
<td>18.3</td>
<td>-61.8</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations&nbsp;</td>
<td>-52.4</td>
<td>-41.4</td>
<td>20.3</td>
<td>-11.0</td>
<td>-72.7</td>
<td>-3.0</td>
<td>22.3</td>
<td>34.8</td>
</tr>
<tr>
<td class="firstcol">DIHK Indicator (%
balance)</td>
<td>Jun 08</td>
<td>Feb&nbsp; 08&nbsp;</td>
<td>Oct&nbsp; 07&nbsp;</td>
<td>Jun 07</td>
<td>Feb 07</td>
<td>Oct 06</td>
<td>Feb to 
June Chg</td>
<td>Y/Y Chg</td>
</tr>
<tr class="odd">
<td class="firstcol"> Current
Conditions&nbsp;</td>
<td>24</td>
<td>30</td>
<td>31</td>
<td>35</td>
<td>36</td>
<td>24</td>
<td>-6</td>
<td>-11</td>
</tr>
<tr class="odd">
<td class="firstcol">Expectations</td>
<td>6</td>
<td>10</td>
<td>15</td>
<td>24</td>
<td>17</td>
<td>9</td>
<td>-4</td>
<td>-18</td>
</tr>
</tbody>
</table>
</body></html>

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616g.jpg" width="353">
The National Association of Home Builders&#39; (NAHB) indicated that its Composite Housing Market Index in June fell slightly to 18 from 19 in May. So far this year, the series has shown some signs of stability, averaging 18, 20 and 18 during the last three quarters. Nevertheless, the levels are more than two-thirds lower than the highs of 2004.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616h.jpg" width="353">
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.
The index for single family detached homes in June was stable month-to-month but the 2Q average level still was near the series&#39; 20-year low. Builders saw modest improvement in single family home sales during the next six months, up from the lows of the prior two quarters.
Despite modest improvement in the builders&#39; index in most of the country&#39;s regions, continued decline was registered in the Northeast.
Traffic of prospective home buyers remained quite low.
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>.

<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">June</th>
<th scope="col">May &nbsp;</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">Composite Housing Market Index</td>
<td>18</td>
<td>19</td>
<td>28</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
</body>
</html>

The National Association of Home Builders' (NAHB) indicated that its Composite Housing Market Index in June fell slightly to 18 from 19 in May. So far this year, the series has shown some signs of stability, averaging 18, 20 and 18 [...]

U.S. NAHB Housing Market Index Down A Bit Further

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616d.jpg" align="left" border="0" height="265" width="353">
Ever since Germany revised up its preliminary HICP for May the
EMU HICP preliminary result has been on notice for an upward revision
too. Today that rate was revised up to 3.7% from 3.6%, a small uptick,
yes, but in the wrong direction and at the wrong time. The ECB already
is very concerned about inflation and recent labor market activity saw
wage inflation rise to 2.7% in 2008-Q1 from a pace of 2.2% in 2007-Q4.
Various ECB commentators keep reminding us that the ECB could raise
rates at its next meeting. 
 

Still the ECB is doing well, as well as can be expected, on
inflation. Its &#8216;core&#8217; inflation rate, what we could call core ex-sin
inflation since it excludes alcohol and tobacco as well, is under
control. On this measure the ECB is doing well as inflation on this
core measure ticked up to 1.7% from 1.6% previously. It stands under
the ECB&#8217;s ceiling rate much as the Core CPI in the US stands inside the
Fed&#8217;s so-called comfort zone. Except the ECB has NO SEPARATE ceiling
for core inflation. So, to the ECB, this moderate core pace is no cause
to celebrate, at least not in public. 
 

Last week we heard from two ECB members on the subject of
prospective ECB rate hikes. Jurgin Stark, a notable hawk, said that the
ECB was not planning a series of rate hikes. 
 

What I infer from all this ECB jockeying around is that
inflation in the zone is actually quite contained apart from the
uncontrollable short term commodity prices that are in the mix.. The
ECB has a ceiling rate at 2% and has been violating it for far too
long. It feels, for credibility&#8217;s sake, it must do something. It has
been prevailed upon to defer hiking rates while the banking crisis was
so bad but now it will do something. 
 

Still the ECB is not under any illusions. It knows that it
cannot in any quick way get inflation back below its ceiling as long as
we are in such a strong transition period for oil prices. To try and
squeeze inflation back to 2% in a short period would be more forceful
and act for the economy than even the old Bundesbank would have
contemplated. 
 

It seems that the ECB has opted to live with the inflation
overshoot and to hike rates again to give a clear signal that it is
still fighting to reduce the rate of inflation. Its rhetoric may
continue after the rate hike since the ECB is desperately concerned
with getting control of inflation again and with anchoring inflation
expectations. In the meantime it must at least continue to posture
against the overshoot with verbiage and maybe even occasional actions
if the price shocks continue. But there is no program of rate
tightening in store that is intended to corral the rogue HICP headline.
Energy&#8217;s dramatic rise makes that strategy simply too dangerous even
for the world class inflation hawks. 


<table border="0" cellspacing="0" width="100%">
</table>

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="8" scope="col">Trends in HICP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="4">% saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</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>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-13</td>
<td>0.6%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>4.2%</td>
<td>3.5%</td>
<td>3.7%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>2.5%</td>
<td>2.4%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>0.8%</td>
<td>0.6%</td>
<td>1.4%</td>
<td>11.8%</td>
<td>5.3%</td>
<td>4.5%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>3.7%</td>
<td>2.5%</td>
<td>2.6%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="8">HICP</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>1.9%</td>
<td>3.0%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.5%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>4.6%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.4%</td>
<td>0.0%</td>
<td>0.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.7%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>4.1%</td>
<td>4.3%</td>
<td>4.7%</td>
<td>2.4%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="8">Core excl Food Energy
&amp; Alcohol</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.3%</td>
<td>-0.5%</td>
<td>0.4%</td>
<td>0.8%</td>
<td>1.2%</td>
<td>1.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.7%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>2.7%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>3.3%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
</body></html>

Ever since Germany revised up its preliminary HICP for May the EMU HICP preliminary result has been on notice for an upward revision too. Today that rate was revised up to 3.7% from 3.6%, a small uptick, yes, but in the wrong [...]

EMU HICP Spurts as ‘Core’ Edges Higher

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616a.jpg" width="353">
The Federal Reserve Bank of New York reported that its June index of manufacturing activity, in the Empire State, fell further into negative territory. The decline to -8.68 followed an unrevised -3.23 during May and it was the fourth negative reading this year. A less negative reading of -1.8 for June had been the Consensus expectation.
The figure is a diffusion index. Since the series&#39; inception in 2001 there has been a 55% correlation between the index level and the three-month change in U.S. factory sector industrial production.
Most of the index&#39;s components were negative with the shipments index, at -6.54, at its lowest level since the recession of 2001. The new orders index, at -5.48, was at its lowest level since February.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616b.jpg" width="353">
The employment rose remained slightly positive at a low 1.16. In the (perhaps too) short seven year history of the NY employment index, there has been an 86% correlation between it and the three-month growth in overall factory sector employment.
Like the Philadelphia Fed Index of General Business Conditions, the Empire State Business Conditions Index reflects answers to an independent survey question; it is not a weighted combination of the components.
Pricing pressure eased slightly m/m to a reading of 66.28 but that still was near its record high reached last month. The latest index level was 66.28. Since the series&#39; inception in 2001 there has been an 81% correlation between the index of prices paid and the three-month change in the core intermediate materials PPI.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616c.jpg" width="353">
Core Inflation: A Review of Some Conceptual Tools from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Wynne.pdf"> here</a>.
The Empire State index of expected business conditions in six months improved further following its May increase and was at the highest level since December.
The Empire State Manufacturing Survey is a monthly survey of manufacturers in New York State conducted by the Federal Reserve Bank of New York. Participants from across the state in a variety of industries respond to a questionnaire and report the change in a variety of indicators from the previous month. Respondents also state the likely direction of these same indicators six months ahead.
For more on the Empire State Manufacturing Survey, including methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.
Big, Not Better? from the Centre for Policy Studies in London can be found <a href="http://www.cps.org.uk/latestpublications/"> 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/@S511/@S511.HTM">Empire State Manufacturing Survey</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June &#39;07&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions (diffusion index, %)&nbsp;&nbsp;</td>
<td>-8.68</td>
<td>-3.23</td>
<td>23.48</td>
<td>17.23</td>
<td>20.24</td>
<td>15.53</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>66.28</td>
<td>69.57</td>
<td>42.55</td>
<td>35.64</td>
<td>41.88</td>
<td>44.74</td>
</tr>
</tbody>
</table>


</html>

The Federal Reserve Bank of New York reported that its June index of manufacturing activity, in the Empire State, fell further into negative territory. The decline to -8.68 followed an unrevised -3.23 during May and it was the fourth [...]

U.S. Empire State Index Negative Again

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616a.jpg" align="left" border="0" height="265" width="353">
The Federal Reserve Bank of New York reported that its June
index of manufacturing activity, in the Empire State, fell further into
negative territory. The decline to -8.68 followed an unrevised -3.23
during May and it was the fourth negative reading this year. A less
negative reading of -1.8 for June had been the Consensus expectation.
The figure is a diffusion index. Since the series' inception
in 2001 there has been a 55% correlation between the index level and
the three-month change in U.S. factory sector industrial production.
Most of the index's components were negative with the
shipments index, at -6.54, at its lowest level since the recession of
2001. The new orders index, at -5.48, was at its lowest level since
February.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616b.jpg" align="right" border="0" height="265" width="353">
The employment rose remained slightly positive at a low 1.16.
In the (perhaps too) short seven year history of the NY employment
index, there has been an 86% correlation between it and the three-month
growth in overall factory sector employment.
Like the Philadelphia Fed Index of General Business
Conditions, the Empire State Business Conditions Index reflects answers
to an independent survey question; it is not a weighted combination of
the components.
Pricing pressure eased slightly m/m to a reading of 66.28 but
that still was near its record high reached last month. The latest
index level was 66.28. Since the series' inception in 2001 there has
been an 81% correlation between the index of prices paid and the
three-month change in the core intermediate materials PPI.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616c.jpg" align="left" border="0" height="265" width="353">
Core Inflation: A Review of Some Conceptual Tools
from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/review/08/05/part2/Wynne.pdf">
here</a>.
The Empire State index of expected business
conditions in six months improved further following its May
increase and was at the highest level since December.
The Empire State Manufacturing Survey is a monthly survey of
manufacturers in New York State conducted by the Federal Reserve Bank
of New York. Participants from across the state in a variety of
industries respond to a questionnaire and report the change in a
variety of indicators from the previous month. Respondents also state
the likely direction of these same indicators six months ahead.
For more on the Empire State Manufacturing Survey, including
methodologies and the latest report, click <a href="http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html">here</a>.


Big, Not Better? from the Centre for Policy
Studies in London can be found <a href="http://www.cps.org.uk/latestpublications/"> 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/@S511/@S511.HTM">Empire
State Manufacturing Survey</a></th>
<th scope="col">June</th>
<th scope="col">May</th>
<th scope="col">June '07&nbsp;</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">General Business Conditions
(diffusion index, %)&nbsp;&nbsp;</td>
<td>-8.68</td>
<td>-3.23</td>
<td>23.48</td>
<td>17.23</td>
<td>20.24</td>
<td>15.53</td>
</tr>
<tr>
<td class="firstcol">Prices Paid</td>
<td>66.28</td>
<td>69.57</td>
<td>42.55</td>
<td>35.64</td>
<td>41.88</td>
<td>44.74</td>
</tr>
</tbody>
</table>
U.S. NAHB Housing Market Index
Down A Bit Further 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 16, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616g.jpg" align="left" border="0" height="265" width="353">
The National Association of Home Builders' (NAHB) indicated
that its Composite Housing Market Index in June fell slightly to 18
from 19 in May. So far this year, the series has shown some signs of
stability, averaging 18, 20 and 18 during the last three quarters.
Nevertheless, the levels are more than two-thirds lower than the highs
of 2004.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616h.jpg" align="right" border="0" height="265" width="353">
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.
The index for single family detached homes in June was stable
month-to-month but the 2Q average level still was near the series'
20-year low. Builders saw modest improvement in single family home
sales during the next six months, up from the lows of the prior two
quarters.
Despite modest improvement in the builders' index in most of
the country's regions, continued decline was registered in the
Northeast.
Traffic of prospective home buyers remained quite low.
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>.

<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">June</th>
<th scope="col">May
&nbsp;</th>
<th scope="col">June '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>18</td>
<td>19</td>
<td>28</td>
<td>27</td>
<td>42</td>
<td>67</td>
</tr>
</tbody>
</table>
EMU HICP Spurts as &#8216;Core&#8217;
EdgesHigher 
by <a href="/comment/Brusca.html">Robert
Brusca</a> June 16, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616d.jpg" align="left" border="0" height="265" width="353">
Ever since Germany revised up its preliminary HICP for May the
EMU HICP preliminary result has been on notice for an upward revision
too. Today that rate was revised up to 3.7% from 3.6%, a small uptick,
yes, but in the wrong direction and at the wrong time. The ECB already
is very concerned about inflation and recent labor market activity saw
wage inflation rise to 2.7% in 2008-Q1 from a pace of 2.2% in 2007-Q4.
Various ECB commentators keep reminding us that the ECB could raise
rates at its next meeting. 
 

Still the ECB is doing well, as well as can be expected, on
inflation. Its &#8216;core&#8217; inflation rate, what we could call core ex-sin
inflation since it excludes alcohol and tobacco as well, is under
control. On this measure the ECB is doing well as inflation on this
core measure ticked up to 1.7% from 1.6% previously. It stands under
the ECB&#8217;s ceiling rate much as the Core CPI in the US stands inside the
Fed&#8217;s so-called comfort zone. Except the ECB has NO SEPARATE ceiling
for core inflation. So, to the ECB, this moderate core pace is no cause
to celebrate, at least not in public. 
 

Last week we heard from two ECB members on the subject of
prospective ECB rate hikes. Jurgin Stark, a notable hawk, said that the
ECB was not planning a series of rate hikes. 
 

What I infer from all this ECB jockeying around is that
inflation in the zone is actually quite contained apart from the
uncontrollable short term commodity prices that are in the mix.. The
ECB has a ceiling rate at 2% and has been violating it for far too
long. It feels, for credibility&#8217;s sake, it must do something. It has
been prevailed upon to defer hiking rates while the banking crisis was
so bad but now it will do something. 
 

Still the ECB is not under any illusions. It knows that it
cannot in any quick way get inflation back below its ceiling as long as
we are in such a strong transition period for oil prices. To try and
squeeze inflation back to 2% in a short period would be more forceful
and act for the economy than even the old Bundesbank would have
contemplated. 
 

It seems that the ECB has opted to live with the inflation
overshoot and to hike rates again to give a clear signal that it is
still fighting to reduce the rate of inflation. Its rhetoric may
continue after the rate hike since the ECB is desperately concerned
with getting control of inflation again and with anchoring inflation
expectations. In the meantime it must at least continue to posture
against the overshoot with verbiage and maybe even occasional actions
if the price shocks continue. But there is no program of rate
tightening in store that is intended to corral the rogue HICP headline.
Energy&#8217;s dramatic rise makes that strategy simply too dangerous even
for the world class inflation hawks. 


<table border="0" cellspacing="0" width="100%">
</table>
<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Trends in
HICP </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td colspan="3">% mo/mo</td>
<td colspan="4">% saar</td>
</tr>
<tr class="even">
<td class="firstcol">&nbsp;</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>
<td>Yr Ago</td>
</tr>
<tr class="odd">
<td class="firstcol">EMU-13</td>
<td>0.6%</td>
<td>0.0%</td>
<td>0.5%</td>
<td>4.2%</td>
<td>3.5%</td>
<td>3.7%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Core</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>2.5%</td>
<td>2.4%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Goods</td>
<td>0.8%</td>
<td>0.6%</td>
<td>1.4%</td>
<td>11.8%</td>
<td>5.3%</td>
<td>4.5%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Services</td>
<td>0.4%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>2.6%</td>
<td>3.7%</td>
<td>2.5%</td>
<td>2.6%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="8">HICP</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.6%</td>
<td>-0.4%</td>
<td>0.4%</td>
<td>2.3%</td>
<td>1.9%</td>
<td>3.0%</td>
<td>2.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.5%</td>
<td>0.1%</td>
<td>0.5%</td>
<td>4.6%</td>
<td>3.8%</td>
<td>3.7%</td>
<td>1.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.4%</td>
<td>0.0%</td>
<td>0.6%</td>
<td>3.8%</td>
<td>4.0%</td>
<td>3.7%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.7%</td>
<td>-0.1%</td>
<td>0.4%</td>
<td>4.1%</td>
<td>4.3%</td>
<td>4.7%</td>
<td>2.4%</td>
</tr>
<tr class="even">
<td class="firstcol" colspan="8">Core
excl Food Energy
&amp; Alcohol</td>
</tr>
<tr class="odd">
<td class="firstcol">Germany</td>
<td>0.3%</td>
<td>-0.5%</td>
<td>0.4%</td>
<td>0.8%</td>
<td>1.2%</td>
<td>1.8%</td>
<td>2.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">France</td>
<td>0.1%</td>
<td>0.1%</td>
<td>0.4%</td>
<td>2.4%</td>
<td>2.6%</td>
<td>2.4%</td>
<td>1.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Italy</td>
<td>0.2%</td>
<td>-0.1%</td>
<td>0.7%</td>
<td>3.1%</td>
<td>2.9%</td>
<td>2.7%</td>
<td>1.9%</td>
</tr>
<tr class="odd">
<td class="firstcol">Spain</td>
<td>0.3%</td>
<td>-0.1%</td>
<td>0.3%</td>
<td>2.2%</td>
<td>2.7%</td>
<td>3.3%</td>
<td>2.5%</td>
</tr>
</tbody>
</table>
 Italian Labor Costs Up Sharply In
First Quarter 
by <a href="/comment/Curley.html">Louise
Curley</a> June
16,2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616e.jpg" align="left" border="0" height="265" width="353">
On a seasonally adjusted basis, total labor costs in Italy
increased by 4.0% in the first quarter of 2008. This was the largest
quarter to quarter increase in the history of the series, which extends
back to the first quarter of 1996. Labor costs in industry, including
construction rose 4.2% and those in the services rose 3.2%. These are
also record increases as shown in the first chart.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080616f.jpg" align="right" border="0" height="265" width="353">
On a seasonally unadjusted basis the year to year increase in
total labor costs was 5.6% in the first quarter, Labor costs in
industry including construction were up 6.0% on a year to year basis
and labor costs in services were up 5.3%. Again these increases are the
largest ever recorded as can be seen in the second chart.
The unadjusted data provide more information on the trends in
labor costs in particular industries and services. The rise in labor
costs was particularly marked in financial intermediation services,
which rose 14% on a year to year basis in the first quarter. Among
other services, labor costs in transport, storage and communication
were up 5.1% on a year to year basis. Labor costs in the wholesale,
retail trade and repairs were among the smallest increases,3.6%. In the
industry sector, labor costs in the electric gas and water supply
sector rose 7.1%, in manufacturing, 6.4% and in construction, 4.6%.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol">ITALY&nbsp;</th>
<th scope="col">Q1 08</th>
<th scope="col">Q4 07&nbsp;</th>
<th scope="col">Q1 07&nbsp;</th>
<th scope="col">Q/Q Chg</th>
<th scope="col">Y/Y Chg</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" colspan="9">Labor
Costs (SA)
(2000=100)</td>
</tr>
<tr>
<td class="firstcol">Total Industry and
Services</td>
<td>125.4</td>
<td>120.6</td>
<td>118.5</td>
<td>3.98</td>
<td>--</td>
<td>119.6</td>
<td>116.9</td>
<td>113.8</td>
</tr>
<tr>
<td class="firstcol">Industry Incl.
Construction</td>
<td>128.6</td>
<td>123.4</td>
<td>120.8</td>
<td>4.21</td>
<td>--</td>
<td>122.1</td>
<td>118.8</td>
<td>114.6</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>121.3</td>
<td>117.6</td>
<td>115.5</td>
<td>3.15</td>
<td>--</td>
<td>116.6</td>
<td>114.3</td>
<td>112.3</td>
</tr>
<tr class="odd">
<td class="firstcol" colspan="9">Labor
Costs (NSA)
(2000=100)</td>
</tr>
<tr>
<td class="firstcol">Total Industry and
Services</td>
<td>116.2</td>
<td>137.4</td>
<td>110.0</td>
<td>--</td>
<td>5.64</td>
<td>119.6</td>
<td>116.9</td>
<td>113.8</td>
</tr>
<tr>
<td class="firstcol">Industry Incl.
Construction</td>
<td>119.9</td>
<td>142.2</td>
<td>113.1</td>
<td>--</td>
<td>6.01</td>
<td>122.1</td>
<td>118.4</td>
<td>114.6</td>
</tr>
<tr>
<td class="firstcol">Services</td>
<td>112.1</td>
<td>132.2</td>
<td>106.3</td>
<td>--</td>
<td>5.26</td>
<td>116.6</td>
<td>114.3</td>
<td>112.3</td>
</tr>
<tr>
<td class="firstcol">Manufacturing</td>
<td>121.0</td>
<td>146.7</td>
<td>113.7</td>
<td>--</td>
<td>6.42</td>
<td>123.6</td>
<td>119.8</td>
<td>115.5</td>
</tr>
<tr>
<td class="firstcol">Electricity, Gas and
Water</td>
<td>114.1</td>
<td>129.3</td>
<td>106.5</td>
<td>--</td>
<td>7.14</td>
<td>122.3</td>
<td>117.6</td>
<td>114.0</td>
</tr>
<tr>
<td class="firstcol">Construction</td>
<td>124.5</td>
<td>136.6</td>
<td>119.0</td>
<td>--</td>
<td>4.62</td>
<td>124.1</td>
<td>119.7</td>
<td>116.6</td>
</tr>
<tr>
<td class="firstcol">Wholesale and Retail
Trade</td>
<td>110.0</td>
<td>136.8</td>
<td>106.2</td>
<td>--</td>
<td>3.58</td>
<td>119.4</td>
<td>116.0</td>
<td>114.1</td>
</tr>
<tr>
<td class="firstcol">Financial
Intermediation</td>
<td>129.2</td>
<td>135.9</td>
<td>113.2</td>
<td>--</td>
<td>14.13</td>
<td>122.6</td>
<td>120.4</td>
<td>120.0</td>
</tr>
</tbody>
</table>
</body></html>

<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN">
<html><head>
<style>
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background-color:#edf5ff;
}
.even{
background-color:#dde5ef;
}
.grey1{
background-color:#f0f0f0;
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<body>
 



<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613d.jpg" align="left" border="0" height="265" width="353">
The Bank of France business indicator fell to 97 from 100.4 in
May. After seeing the result the Bank of France cut its growth estimate
for GDP to +0.2% down from +0.3% previously for the Q/Q gain. In the
latest month production was weak. The survey respondents rated it in
the bottom one percent of all production ratings since 1988. Even
capital equipment was rated as low in the month.

The production outlook fared better with roughly mid-range
rankings. Capital goods and consumer goods were particularly strong,
above their range mid-points. The consumer goods ranking was in the top
14% of its historic range &#8211; a surprisingly strong result.

Demand was rated as solid overall with overall order books
assessed as being above their range point in the top 40% of their
range. But FOREIGN order books were assessed as very low, in the bottom
4% of its range.

New orders are mixed but weak. Total orders are in the bottom
6% of their range. Capital goods new orders were in the bottom quarter
of their range. Consumer goods were in the 47th range percentile,
nearly at neutral.

Stocks of goods on hand are mid range or higher as for capital
goods and autos. Capacity use is rated as low, a bottom third of range
response. Hiring, last month, was in the 33rd percentile of its range;
the outlook is still much stronger, in its 80th percentile.

About the ranking percentiles: To derive the ranking
percentiles we rank the various components from Jan 1988 to date then
express the rank as a percentile of the total with 10% being strong and
zero % weak. Ranking percentiles are a bit more useful than range
percentiles because they place an observation in a ranking queue
instead of being influenced by only the range extremes of high and low
as with range percentiles. A bottom 23.7% ranking is a ranking is in
the bottom twenty-three percent (bottom quarter of the range) of all
readings since 1988.


<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr>
<th colspan="7" scope="col">Bank of
France Monthly INDUSTRY Survey </th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>Since Jan-87</td>
<td>Ranking</td>
</tr>
<tr class="grey6">
<td class="firstcol">&nbsp;</td>
<td>May-08</td>
<td>Apr-08</td>
<td>Mar-08</td>
<td>12-MO AVERAGE</td>
<td>Average</td>
<td>Percentile</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="7">Production-latest
mo</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Industry</td>
<td>-12.41</td>
<td>2.44</td>
<td>-0.22</td>
<td>4</td>
<td>7</td>
<td>0.8%</td>
</tr>
<tr>
<td class="firstcol">Semi-Finished</td>
<td>-15.57</td>
<td>7.01</td>
<td>-4.1</td>
<td>4</td>
<td>6</td>
<td>0.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>-9.09</td>
<td>11.17</td>
<td>1.36</td>
<td>8</td>
<td>7</td>
<td>4.5%</td>
</tr>
<tr>
<td class="firstcol">Auto</td>
<td>-29.94</td>
<td>-13.88</td>
<td>-3.31</td>
<td>-4</td>
<td>7</td>
<td>6.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>-6.5</td>
<td>0.87</td>
<td>3.67</td>
<td>7</td>
<td>8</td>
<td>2.9%</td>
</tr>
<tr>
<td class="firstcol">Agricultural &amp; Food</td>
<td>0.32</td>
<td>-8.28</td>
<td>1.94</td>
<td>4</td>
<td>10</td>
<td>9.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="7">Production
Outlook</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Industry</td>
<td>14.51</td>
<td>6.02</td>
<td>14.13</td>
<td>15</td>
<td>15</td>
<td>43.7%</td>
</tr>
<tr>
<td class="firstcol">Semi-Finished</td>
<td>12.55</td>
<td>3.55</td>
<td>10.84</td>
<td>14</td>
<td>13</td>
<td>46.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>18.86</td>
<td>13.35</td>
<td>19.97</td>
<td>20</td>
<td>17</td>
<td>50.2%</td>
</tr>
<tr ="">
<td class="firstcol">Auto</td>
<td>16.63</td>
<td>12.77</td>
<td>14.39</td>
<td>17</td>
<td>15</td>
<td>47.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>22.95</td>
<td>-7.77</td>
<td>16.03</td>
<td>12</td>
<td>17</td>
<td>86.9%</td>
</tr>
<tr>
<td class="firstcol">Agric&amp;Food</td>
<td>3.54</td>
<td>8.23</td>
<td>9.49</td>
<td>13</td>
<td>17</td>
<td>0.8%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="7">Demand</td>
</tr>
<tr class="odd">
<td class="firstcol">Overall order books</td>
<td>12.1</td>
<td>16.01</td>
<td>17.7</td>
<td>24</td>
<td>5</td>
<td>59.2%</td>
</tr>
<tr>
<td class="firstcol">Foreign Orders</td>
<td>-7.36</td>
<td>10.21</td>
<td>2.1</td>
<td>8</td>
<td>8</td>
<td>4.5%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="7">New
Orders</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Industry</td>
<td>-4.65</td>
<td>8.46</td>
<td>1.59</td>
<td>8</td>
<td>9</td>
<td>6.1%</td>
</tr>
<tr>
<td class="firstcol">Semi-Finished</td>
<td>-8.92</td>
<td>0.9</td>
<td>-0.27</td>
<td>6</td>
<td>7</td>
<td>9.0%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>3.69</td>
<td>14.81</td>
<td>5.4</td>
<td>10</td>
<td>9</td>
<td>25.7%</td>
</tr>
<tr>
<td class="firstcol">Auto</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
<td>--</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>10.63</td>
<td>9.18</td>
<td>7.8</td>
<td>13</td>
<td>11</td>
<td>47.8%</td>
</tr>
<tr>
<td class="firstcol">Agric&amp;Food</td>
<td>-3.13</td>
<td>-6.77</td>
<td>-0.44</td>
<td>5</td>
<td>11</td>
<td>5.7%</td>
</tr>
<tr class="grey4">
<td class="firstcol" colspan="7">Stocks:
Finished Gds</td>
</tr>
<tr class="odd">
<td class="firstcol">Total Industry</td>
<td>-1.72</td>
<td>0.71</td>
<td>0.66</td>
<td>-2</td>
<td>-2</td>
<td>48.6%</td>
</tr>
<tr>
<td class="firstcol">Semi-Finished</td>
<td>-4.82</td>
<td>-1.43</td>
<td>-2.28</td>
<td>-2</td>
<td>-2</td>
<td>20.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>-1.29</td>
<td>-0.12</td>
<td>-3.97</td>
<td>-2</td>
<td>-3</td>
<td>64.9%</td>
</tr>
<tr>
<td class="firstcol">Auto</td>
<td>4.85</td>
<td>10.82</td>
<td>17.42</td>
<td>-2</td>
<td>-3</td>
<td>75.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>0.19</td>
<td>1.23</td>
<td>2.19</td>
<td>-1</td>
<td>0</td>
<td>44.9%</td>
</tr>
<tr>
<td class="firstcol">Agricultural &amp; Food</td>
<td>-0.21</td>
<td>12.17</td>
<td>0.33</td>
<td>1</td>
<td>0</td>
<td>46.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capacity Utilization</td>
<td>82.04</td>
<td>83</td>
<td>82.99</td>
<td>83</td>
<td>83</td>
<td>31.8%</td>
</tr>
<tr>
<td class="firstcol">Hiring</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Latest Mo</td>
<td>-4.39</td>
<td>-0.55</td>
<td>-2.58</td>
<td>-1</td>
<td>-1</td>
<td>33.5%</td>
</tr>
<tr>
<td class="firstcol">Outlook</td>
<td>-3.38</td>
<td>-2.96</td>
<td>-3.88</td>
<td>-2</td>
<td>-3</td>
<td>80.8%</td>
</tr>
<tr class="odd">
<td class="firstcol">Industry Sentiment
Index</td>
<td>96.65</td>
<td>100.4</td>
<td>103.91</td>
<td>105</td>
<td>106</td>
<td>23.7%</td>
</tr>
<tr class="grey1">
<td colspan="7">Ranges, percentiles since January of
1988</td>
</tr>
</tbody>
</table>
</body></html>

The Bank of France business indicator fell to 97 from 100.4 in May. After seeing the result the Bank of France cut its growth estimate for GDP to +0.2% down from +0.3% previously for the Q/Q gain. In the latest month production was [...]

Readings Drop in May: Index to 96.6 in Bottom Quarter of Rank Range

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: June 2008

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U.S. Industrial Output Fell Unexpectedly in May

U.S. Housing Starts Lowest Since 1991

U.S. Industrial Output Fell Unexpectedly in May

U.S. NAHB Housing Market Index Down A Bit Further

EMU HICP Spurts as ‘Core’ Edges Higher

U.S. Empire State Index Negative Again

U.S. Empire State Index Negative Again

Readings Drop in May: Index to 96.6 in Bottom Quarter of Rank Range