Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613e.jpg" width="353">
The preliminary reading of June consumer sentiment from the University of Michigan fell 5.4% from May to a level of 56.7. The decline was greater-than-expected and it pulled sentiment 41.5% below the latest peak in early-2007.
During the last ten years there has been a 47% correlation between the level of sentiment and the three month change in real consumer spending.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613f.jpg" width="353">
The June current conditions index dropped 6.3% after a 4.8% decline. This index is down 38.3% from early 2007. The view of current personal finances plummeted 18.8% (-40.9% y/y). Conversely, the index of whether now is a good time to buy large household goods improved by 1.8% (-27.9% y/y).
The expectations component of overall sentiment dropped the same 4.1% as it did in May. The index fell to its lowest level since late-1990. Expectations for personal finances dropped sharply to the lowest level since 1980 while expectations for business conditions during the next five years also fell sharply to the lowest level since 1991.
Opinions about government policy, which apparently influence economic expectations, reversed the May plummet and the index increased 23.5%. The percentage of those surveyed who indicated that they thought government was doing a good job recovered to all of 8% of respondents and a fewer 45% thought a poor job was being done versus 55% in May.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613g.jpg" width="353">
The mean expected rate of inflation during the next twelve months fell to 6.6% after the surge last month to 7.0%. During the next five years the expected inflation rate slipped to 3.9%.
The University of Michigan survey is not seasonally adjusted.The reading is based on telephone interviews with about 500 households at month-end; the mid-month results are based on about 300 interviews. The summary indexes are in Haver&#39;s USECON database, with details in the proprietary UMSCA database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University of Michigan</a></th>
<th scope="col">June (Prelim.)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">June 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">Consumer Sentiment</td>
<td>56.7</td>
<td>59.8</td>
<td>62.6</td>
<td>-33.5% </td>
<td>85.6</td>
<td>87.3</td>
<td>88.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>68.7</td>
<td>73.3</td>
<td>77.0</td>
<td>-32.6%</td>
<td>101.2</td>
<td>105.1</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>49.0</td>
<td>51.1</td>
<td>53.3</td>
<td>-34.4%</td>
<td>75.6</td>
<td>75.9</td>
<td>77.4</td>
</tr>
</tbody>
</table>
</body>
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The preliminary reading of June consumer sentiment from the University of Michigan fell 5.4% from May to a level of 56.7. The decline was greater-than-expected and it pulled sentiment 41.5% below the latest peak in early-2007. During [...]

Michigan Consumer Sentiment Still in Freefall

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613a.jpg" width="353">
The Bureau of Labor Statistics reported that the May consumer price index (CPI-U) rose 0.6%. The increase was the strongest since last November and it was slightly ahead of expectations for a 0.5% rise. Year-to-year, prices rose 4.1% but during the last three months the increase has been a faster 4.9%.
Energy prices surged 4.4% last month, the gain lifted by a 5.7% (20.8% y/y) seasonally adjusted jump in gasoline prices. (Not seasonally adjusted gasoline prices rose 9.5% m/m last month and are up another 6.4% so far in June.) Fuel oil prices more than doubled the April rise and increased 7.9% (50.7% y/y). Natural gas &amp; electricity prices also were strong and rose 2.3% (8.8% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613b.jpg" width="353">
Food &amp; beverage prices continued to rise and posted a 0.3% increase. The year-to-year increase was stable at a firm 5.0% which was the strongest since 1990, but the three-month rate of increase is an even firmer 5.9%. Prices for cereals &amp; bakery products led last month&#39;s strength with a 1.6% (10.5% y/y) jump. Other food prices were under control. Prices for meats poultry &amp; fish rose 0.1% (2.6% y/y) after a 0.9% April increase. Dairy product prices also cooled and fell 0.1% after the 1.2% spike during April. Prices still were up 11.0% y/y.
Less food &amp; energy, consumer prices matched expectations and increased 0.2% during May after a 0.1% April uptick. During the last three months this inflation measure rose at a 1.8% annual rate, down from the 2.3% gain last year<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613c.jpg" width="353">
Core goods prices fell 0.1% after having been unchanged in April. The three-month rate of decline of 0.9% was the weakest showing for core prices since May of last year. Prices for new &amp; used motor vehicles fell 0.1% and declined at a 1.5% rate during the last three months. Apparel prices also were weak. They declined 0.3% and fell at a 4.3% annual rate during the last three months. Prices for household furnishings &amp; operations rose just 0.2% but lately have shown some strength. They posted a 2.7% gain during the last three months versus a 0.1% decline during all of last year.
Core services prices firmed last month and posted 0.3% increase which was the largest rise since January. The strength was led by a 2.3% (10.2% y/y) surge in public transportation prices. Medical care services prices also rose a strong 0.5% (4.7% y/y). Still tame were shelter prices which rose 0.2% (2.6% y/y). Owners equivalent rent of primary residence, a measure not equivalent to other house price measures, rose 0.1% (2.6% y/y) and rents rose 0.2% (3.5% y/y). Education costs rose another 0.4% and here prices rose at an accelerated 4.2% rate during the last three months following a 2.4% rise during 2007.
The chained CPI, which adjusts for shifts in consumption patterns, rose 0.6% which was near the April increase. Less food and beverages chained prices were unchanged.
Does stabilizing inflation contribute to stabilizing economic activity? is a speech by Fed Governor Frederic S. Mishkin and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20080225a.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer Price Index</a> (%)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May Y/Y&nbsp;</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&nbsp;</td>
<td>0.6</td>
<td>0.2</td>
<td>0.3</td>
<td>4.1</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>0.2</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food &amp; Energy</td>
<td>-0.1</td>
<td>0.0</td>
<td>-0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Services less Energy</td>
<td>0.3</td>
<td>0.1</td>
<td>0.2</td>
<td>3.2</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>4.4</td>
<td>-0.0</td>
<td>1.9</td>
<td>16.9</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp; Beverages</td>
<td>0.3</td>
<td>0.9</td>
<td>0.2</td>
<td>5.0</td>
<td>4.0</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td>&nbsp;&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained CPI: Total (NSA)</a>&nbsp;</td>
<td>0.6</td>
<td>0.5</td>
<td>0.8</td>
<td>3.6 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food &amp; Energy&nbsp;</td>
<td>0.0</td>
<td>0.1</td>
<td>0.5</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
</body>
</html>

The Bureau of Labor Statistics reported that the May consumer price index (CPI-U) rose 0.6%. The increase was the strongest since last November and it was slightly ahead of expectations for a 0.5% rise. Year-to-year, prices rose 4.1% [...]

U.S. Consumer Price Index Acceleration Driven by Energy

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613a.jpg" align="left" border="0" height="265" width="353">
The Bureau of Labor Statistics reported that the May consumer
price index (CPI-U) rose 0.6%. The increase was the strongest
since last November and it was slightly ahead of expectations for a
0.5% rise. Year-to-year, prices rose 4.1% but during the last three
months the increase has been a faster 4.9%.
Energy prices surged 4.4% last month, the
gain lifted by a 5.7% (20.8% y/y) seasonally adjusted jump in gasoline
prices. (Not seasonally adjusted gasoline prices rose 9.5% m/m last
month and are up another 6.4% so far in June.) Fuel oil prices more
than doubled the April rise and increased 7.9% (50.7% y/y). Natural gas
&amp; electricity prices also were strong and rose 2.3% (8.8% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613b.jpg" align="right" border="0" height="265" width="353">
Food &amp; beverage prices continued to
rise and posted a 0.3% increase. The year-to-year increase was stable
at a firm 5.0% which was the strongest since 1990, but the three-month
rate of increase is an even firmer 5.9%. Prices for cereals &amp;
bakery products led last month's strength with a 1.6% (10.5% y/y) jump.
Other food prices were under control. Prices for meats poultry
&amp; fish rose 0.1% (2.6% y/y) after a 0.9% April increase. Dairy
product prices also cooled and fell 0.1% after the 1.2% spike during
April. Prices still were up 11.0% y/y.
Less food &amp; energy, consumer prices
matched expectations and increased 0.2% during May after a 0.1% April
uptick. During the last three months this inflation measure rose at a
1.8% annual rate, down from the 2.3% gain last year<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613c.jpg" align="left" border="0" height="265" width="353">
Core goods prices fell 0.1% after having
been unchanged in April. The three-month rate of decline of 0.9% was
the weakest showing for core prices since May of last year. Prices for
new &amp; used motor vehicles fell 0.1% and declined at a 1.5% rate
during the last three months. Apparel prices also were weak. They
declined 0.3% and fell at a 4.3% annual rate during the last three
months. Prices for household furnishings &amp; operations rose just
0.2% but lately have shown some strength. They posted a 2.7% gain
during the last three months versus a 0.1% decline during all of last
year.
Core services prices firmed last month and
posted 0.3% increase which was the largest rise since January. The
strength was led by a 2.3% (10.2% y/y) surge in public transportation
prices. Medical care services prices also rose a strong 0.5% (4.7%
y/y). Still tame were shelter prices which rose 0.2% (2.6% y/y). Owners
equivalent rent of primary residence, a measure not equivalent to other
house price measures, rose 0.1% (2.6% y/y) and rents rose 0.2% (3.5%
y/y). Education costs rose another 0.4% and here prices rose at an
accelerated 4.2% rate during the last three months following a 2.4%
rise during 2007.
The chained CPI, which adjusts for shifts in consumption
patterns, rose 0.6% which was near the April increase. Less food and
beverages chained prices were unchanged.
Does stabilizing inflation contribute to stabilizing
economic activity? is a speech by Fed Governor Frederic S.
Mishkin and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/mishkin20080225a.htm">
here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80101/@E80101.HTM">Consumer
Price Index</a> (%)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">March</th>
<th scope="col">May Y/Y&nbsp;</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&nbsp;</td>
<td>0.6</td>
<td>0.2</td>
<td>0.3</td>
<td>4.1</td>
<td>2.9</td>
<td>3.2</td>
<td>3.4</td>
</tr>
<tr class="odd">
<td class="firstcol">Total less Food &amp; Energy</td>
<td>0.2</td>
<td>0.1</td>
<td>0.2</td>
<td>2.3</td>
<td>2.3</td>
<td>2.5</td>
<td>2.2</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Goods less Food
&amp; Energy</td>
<td>-0.1</td>
<td>0.0</td>
<td>-0.1</td>
<td>0.1</td>
<td>-0.4</td>
<td>0.2</td>
<td>0.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp;
Services less Energy</td>
<td>0.3</td>
<td>0.1</td>
<td>0.2</td>
<td>3.2</td>
<td>3.4</td>
<td>3.4</td>
<td>2.8</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Energy</td>
<td>4.4</td>
<td>-0.0</td>
<td>1.9</td>
<td>16.9</td>
<td>5.6</td>
<td>11.0</td>
<td>17.0</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Food &amp;
Beverages</td>
<td>0.3</td>
<td>0.9</td>
<td>0.2</td>
<td>5.0</td>
<td>4.0</td>
<td>2.3</td>
<td>2.5</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td></td>
<td></td>
<td></td>
<td>&nbsp;&nbsp;</td>
<td></td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E8/@E801/@E80113/@E80113.HTM">Chained
CPI: Total (NSA)</a>&nbsp;</td>
<td>0.6</td>
<td>0.5</td>
<td>0.8</td>
<td>3.6 </td>
<td>2.5</td>
<td>2.9 </td>
<td>2.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;Total less Food
&amp; Energy&nbsp;</td>
<td>0.0</td>
<td>0.1</td>
<td>0.5</td>
<td>2.0</td>
<td>2.0</td>
<td>2.2</td>
<td>1.9</td>
</tr>
</tbody>
</table>
Michigan Consumer Sentiment Still
in Freefall 
by <a href="/comment/Moeller.html">Tom
Moeller</a> June 13, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613e.jpg" align="left" border="0" height="265" width="353">
The preliminary reading of June consumer sentiment from the
University of Michigan fell 5.4% from May to a level of 56.7. The
decline was greater-than-expected and it pulled sentiment 41.5% below
the latest peak in early-2007.
During the last ten years there has been a 47% correlation
between the level of sentiment and the three month change in real
consumer spending.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613f.jpg" align="right" border="0" height="265" width="353">
The June current conditions index dropped 6.3% after a 4.8%
decline. This index is down 38.3% from early 2007. The view of current
personal finances plummeted 18.8% (-40.9% y/y). Conversely, the index
of whether now is a good time to buy large household goods improved by
1.8% (-27.9% y/y).
The expectations component of overall sentiment dropped the
same 4.1% as it did in May. The index fell to its lowest level since
late-1990. Expectations for personal finances dropped sharply to the
lowest level since 1980 while expectations for business conditions
during the next five years also fell sharply to the lowest level since
1991.
Opinions about government policy, which apparently influence
economic expectations, reversed the May plummet and the index increased
23.5%. The percentage of those surveyed who indicated that they thought
government was doing a good job recovered to all of 8% of respondents
and a fewer 45% thought a poor job was being done versus 55% in May.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080613g.jpg" align="left" border="0" height="265" width="353">
The mean expected rate of inflation during the next twelve
months fell to 6.6% after the surge last month to 7.0%. During the next
five years the expected inflation rate slipped to 3.9%.
The University of Michigan survey is not seasonally
adjusted.The reading is based on telephone interviews with about 500
households at month-end; the mid-month results are based on about 300
interviews. The summary indexes are in Haver's USECON database,
with details in the proprietary UMSCA database.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF14/@EF1402/@EF1402.HTM">University
of Michigan</a></th>
<th scope="col">June (Prelim.)</th>
<th scope="col">May</th>
<th scope="col">April</th>
<th scope="col">June 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">Consumer Sentiment</td>
<td>56.7</td>
<td>59.8</td>
<td>62.6</td>
<td>-33.5% </td>
<td>85.6</td>
<td>87.3</td>
<td>88.5</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Current Conditions</td>
<td>68.7</td>
<td>73.3</td>
<td>77.0</td>
<td>-32.6%</td>
<td>101.2</td>
<td>105.1</td>
<td>105.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Expectations</td>
<td>49.0</td>
<td>51.1</td>
<td>53.3</td>
<td>-34.4%</td>
<td>75.6</td>
<td>75.9</td>
<td>77.4</td>
</tr>
</tbody>
</table>
Readings Drop in May: Index to
96.6 in Bottom Quarter of Rank Range&nbsp; 
by <a href="/comment/Brusca.html">Robert
Brusca</a> June 13, 2008


<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>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612i.jpg" align="left" border="0" height="265" width="353">
In April EMU-wide industrial output rose by 0.3% but that was
after a drop of 0.6% in March. While the Yr/Yr growth rate seems a lot
higher at 2.9% in April compared to 1.4% in March, growth is actually
fading. The monthly gain in April does not make up for the weakness in
March. As a result the quarter to date growth in EMU-wide IP is running
at a negative rate of 0.3%, a slight annual rate decline in 2008-Q2.
Consumer goods output is dropping at -0.5% annual rate clearly
the weak sector in 2008-Q2, despite a sharp gain of 1.7% in April.
Intermediate goods output is nearly flat and has been choppy in recent
months. Capital goods output remains as it has been, the driver of
industrial growth, rebounding sharply by 2% in April after a 1.6% drop
in March and growing at a 6.5% annual rate in 2008-Q2.
The chart on the left shows that this month&#8217;s rebound in
output comes in the face of a clear declining trend for output of
consumer and intermediate goods. For capital goods the trend is not
clear except that this month&#8217;s sharp gain arrests, for at least one
month, what had seemed to be the onset of a declining trend there.
Instead, all we can say is that capital goods output has become very
volatile. This has come at a time that weather effects and the calendar
placement of Easter have been beneficial to the euro-economy. So if
these sorts of ephemeral factors are responsible for the monthly
rebound we could see the onset of true trend and weaker growth in the
months ahead.

<table border="0" cellspacing="0" width="100%">
<colgroup></colgroup>
<thead><tr><th colspan="11" scope="col">Euro Area MFG IP </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">SAAR except m/m</td>
<td colspan="3">Mo/Mo</td>
<td>Apr 08</td>
<td>Mar 08</td>
<td>Apr 08</td>
<td>Mar 08</td>
<td>Apr 08</td>
<td>Mar 08</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">Euro Area Detail</td>
<td>Apr 08</td>
<td>Mar 08</td>
<td>Feb 08</td>
<td>3Mo</td>
<td>3Mo</td>
<td>6mo</td>
<td>6mo</td>
<td>12mo</td>
<td>12mo</td>
<td>Q-2- Date</td>
</tr>
<tr class="odd">
<td class="firstcol">MFG</td>
<td>0.3%</td>
<td>-0.6%</td>
<td>0.1%</td>
<td>-0.7%</td>
<td>3.0%</td>
<td>1.6%</td>
<td>2.2%</td>
<td>2.9%</td>
<td>1.4%</td>
<td>-0.3%</td>
</tr>
<tr>
<td class="firstcol">Consumer</td>
<td>0.4%</td>
<td>-0.6%</td>
<td>-0.4%</td>
<td>-2.1%</td>
<td>-0.4%</td>
<td>-0.3%</td>
<td>-0.8%</td>
<td>0.6%</td>
<td>-1.1%</td>
<td>-0.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">C-Durables</td>
<td>1.7%</td>
<td>-1.6%</td>
<td>-0.1%</td>
<td>-0.1%</td>
<td>1.2%</td>
<td>-0.3%</td>
<td>-3.4%</td>
<td>1.1%</td>
<td>-3.2%</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">C-Nondurables</td>
<td>0.2%</td>
<td>-0.5%</td>
<td>-0.4%</td>
<td>-2.4%</td>
<td>-0.6%</td>
<td>-0.1%</td>
<td>-0.4%</td>
<td>0.6%</td>
<td>-0.6%</td>
<td>&nbsp;</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>0.3%</td>
<td>-0.5%</td>
<td>0.3%</td>
<td>0.1%</td>
<td>2.1%</td>
<td>1.2%</td>
<td>1.9%</td>
<td>2.5%</td>
<td>0.6%</td>
<td>0.1%</td>
</tr>
<tr>
<td class="firstcol">Capital</td>
<td>2.0%</td>
<td>-1.6%</td>
<td>0.5%</td>
<td>3.4%</td>
<td>5.9%</td>
<td>6.0%</td>
<td>4.0%</td>
<td>7.5%</td>
<td>3.6%</td>
<td>6.5%</td>
</tr>
</tbody>
</table>
</body></html>

In April EMU-wide industrial output rose by 0.3% but that was after a drop of 0.6% in March. While the Yr/Yr growth rate seems a lot higher at 2.9% in April compared to 1.4% in March, growth is actually fading. The monthly gain in [...]

EMU Area IP Growth Confirms the Strength Across Countries

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612g.jpg" width="353">
Total business inventories increased 0.5% after a little-revised 0.2% gain during March. The April rise was greater than expectations for a 0.3% increase. Annualized, three-month growth in inventories backed off further to 4.7% from the elevated 8.2% growth rate in February.
Retail inventories rose 0.4% following two month of decline. The three-month growth rate remained negative at -1.2%. Inventories of motor vehicle &amp; parts fell at a 4.2% annual rate during the last three months due to further production cutbacks. Outside of autos, retail inventories rose 0.2% after a 1.1% drop during March and they are essentially unchanged during the last three months.
The industry detail in the retail sector indicated that furniture inventories fell at an annual rate of 1.2% during the last three months. Clothing &amp; accessory store inventories fell hard at a 4.9% rate while general merchandise stores&#39; inventories dropped at a 2.6% rate.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612h.jpg" width="353">
Factory inventories fell just slightly in April and three-month growth fell to 6.2% (AR) which was half the growth earlier this year. Despite the rise in oil prices, petroleum inventories fell at a 2.6% rate over the last three months after spiking earlier this year. Elsewhere, factory inventory accumulation has been fairly steady in 2008 at a 6.9% rate.
Wholesale inventories have risen at a 10.2% rate during the last three months, juiced by the rise in oil prices. Less petroleum, inventories still have been firm, however, rising at a 9.8% rate which was twice the rate of increase during all of last year.
Total business sales surged again, by 1.4% led by a 2.2% surge in factory shipments. Three-month growth held steady at a 6.2% annual rate.
The inventory-to-sales ratio for all business fell to 1.25 in April from 1.27 during 1Q and from 1.27 during the prior three years.
Protecting Consumers in the Credit Marketplace is yesterday&#39;s speech by Fed Governor Randall S. Kroszner and it can be found <a href="http://www.federalreserve.gov/newsevents/speech/kroszner20080611a.htm">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@ED/@ED06/@ED0601/@ED0601.HTM">Business Inventories</a></th>
<th scope="col">April</th>
<th scope="col">March</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>0.5%</td>
<td>0.2%</td>
<td>5.4%</td>
<td>3.8%</td>
<td>5.9%</td>
<td>6.0%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Retail</td>
<td>0.4%</td>
<td>-0.6%</td>
<td>2.5%</td>
<td>2.6%</td>
<td>3.5%</td>
<td>2.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Retail excl. Auto</td>
<td>0.7%</td>
<td>-0.4%</td>
<td>2.3%</td>
<td>2.7%</td>
<td>4.9%</td>
<td>3.9%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Wholesale</td>
<td>1.3%</td>
<td>0.1%</td>
<td>8.1%</td>
<td>5.5%</td>
<td>8.3%</td>
<td>7.3%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Manufacturing</td>
<td>-0.0%</td>
<td>0.9%</td>
<td>6.0%</td>
<td>3.7%</td>
<td>6.4%</td>
<td>8.9%</td>
</tr>
</tbody>
</table>
</body>
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Total business inventories increased 0.5% after a little-revised 0.2% gain during March. The April rise was greater than expectations for a 0.3% increase. Annualized, three-month growth in inventories backed off further to 4.7% from [...]

U.S. Business Inventories Rose, Recent Trend Growth Slower

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612f.jpg" width="353">
U.S. import prices, overall, surged another 2.3% last month and the gain was right in-line with expectations. It followed a like 2.4% April increase which was upwardly revised from 1.8%. During the last three months import prices have risen at a 35.4% annual rate which was the quickest since late 1990.
Petroleum prices jumped further by 7.8% and imported crude petroleum prices already are up another 10% this month versus May.
Less petroleum, the gain in import prices eased to 0.5% from an upwardly revised 1.3% during April. Pushed higher by the lower foreign exchange value of the dollar, the price increases during the last three months are the fastest on record. 
 During the last ten years there has been a 66% (negative) correlation between the nominal trade-weighted exchange value of the US dollar vs. major currencies and the y/y change in non oil import prices. The correlation is a reduced 47% against a broader basket of currencies.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612e.jpg" width="353">
Prices for industrial supplies &amp; materials excluding oil surged another 1.8% (17.0% y/y) in May. These prices are up at a 36.5% rate so far this year due to strength in finished metal, chemicals and agricultural prices. The detailed import price series can be found in the Haver USINT database. 
Capital goods import prices increased 0.3% after an upwardly revised 0.9% April rise. So far this year prices have risen at a 2.9% rate after a 0.4% increase last year, but less the lower prices of computers, capital goods prices have risen at a 7.1% in 2008 through May. That&#39;s after a 2.7% rise during all of 2007. Prices of computers, peripherals and accessories have fallen at a 6.4% rate this year after the 5.1% 2007 decline.
Finally, prices for nonauto consumer goods imports have risen at a 5.5% in 2008 after the 1.6% increase last year. This year&#39;s gain in prices is the quickest since 1992 and has been notable for durables (5.9%), apparel (2.4%) and other nondurable products (9.6%).
Total export prices increased 0.3% as agricultural prices rose 0.3% (33.3% y/y) after a 2.1% April drop. Nonagricultural export prices rose 0.4% (5.7% y/y). 

<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/@E807/@E807.HTM">Import/Export Prices (NSA)</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">Import - All Commodities</td>
<td>2.3%</td>
<td>2.4%</td>
<td>17.8%</td>
<td>4.2%</td>
<td>4.9%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>7.8%</td>
<td>5.9%</td>
<td>68.8%</td>
<td>11.6%</td>
<td>20.6%</td>
<td>37.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Non-petroleum</td>
<td>0.5%</td>
<td>1.3%</td>
<td>6.6%</td>
<td>2.7%</td>
<td>1.7%</td>
<td>2.7%</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>0.3%</td>
<td>0.5%</td>
<td>8.0%</td>
<td>4.9%</td>
<td>3.6%</td>
<td>3.2%</td>
</tr>
</tbody>
</table>


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U.S. import prices, overall, surged another 2.3% last month and the gain was right in-line with expectations. It followed a like 2.4% April increase which was upwardly revised from 1.8%. During the last three months import prices have [...]

U.S. Total Import Price Surge Quickest Since 1990

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612d.jpg" width="353">
Initial claims for unemployment insurance rose 25,000 last week to 384,000 from an upwardly revised level of 359,000 during the prior week. Consensus expectations had been for a lesser increase to 365,000 claims.
The four week moving average of initial claims rose slightly week-to-week to 371,500 (19.4% y/y) and the recent average was up slightly from April when claims averaged 364,000. These numbers are down from March when initial claims averaged 375,000.
A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last ten years there has been a (negative) 76% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.
Continuing claims for unemployment insurance rose 58,000 and made up all of a revised 28,000 decline during the prior week. The latest level was the highest since February 2004. The four week average of continuing claims rose to 3,099, 250 and the number provides some indication of workers&#39; ability to find employment.
The continuing claims numbers lag the initial claims figures by one week.
The insured rate of unemployment rose to 2.4% after six weeks at 2.3%. The latest was the highest since mid-2004.
Lessons for Central Bankers from a Phillips Curve Framework is yesterday&#39;s speech by Fed Vice Chairman Donald L. Kohn and it is available <a href="http://www.federalreserve.gov/newsevents/speech/Kohn20080611a.htm"> 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/@W5/@W507/@W507.HTM">Unemployment Insurance (000s)</a>&nbsp;</th>
<th scope="col">06/07/08</th>
<th scope="col">05/31/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006&nbsp;</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr>
<td class="firstcol">Initial Claims</td>
<td>&nbsp;384</td>
<td>359</td>
<td>22.3%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,139</td>
<td>25.6%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
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Initial claims for unemployment insurance rose 25,000 last week to 384,000 from an upwardly revised level of 359,000 during the prior week. Consensus expectations had been for a lesser increase to 365,000 claims. The four week moving [...]

U.S. Initial Unemployment Insurance Claims Up

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612a.jpg" width="353">
U.S. retail sales last month were stronger-than-expected, boosted by early receipts of the government&#39;s tax rebate checks - $600 per person and $300 per child for families. A 1.0% May jump in sales followed an upwardly revised 0.4% April increase, initially reported as a 0.2% decline. On a three-month basis overall retail sales were down 2.0% (AR).
Sales of motor vehicles &amp; parts ticked up 0.3% (-7.0% y/y) following three months of decline. The increase accompanied a 1.1% decline in unit motor vehicle sales.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612b.jpg" width="353">
Retail sales excluding autos rose 1.2% and the April rise of 1.0% was double last month&#39;s estimate. The gain also exceeded Consensus expectations for a 0.6% increase.
Higher prices for gasoline boosted sales at service stations by 2.6% (13.8% y/y). Nevertheless, less gasoline &amp; autos, retail sales still surged 1.0% (3.7% y/y) and the April increase was about doubled to 1.1% (3.7% y/y). On a three-month basis these sales jumped at a 10.7% annual rate.
May sales of nonstore retailers (internet &amp; catalogue) surged 1.6% (10.0% y/y) after very much upwardly revised gains during the prior two months of 3.2% and 1.7%.<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080612c.jpg" width="353">
Sales of discretionary items improved. Sales at general merchandise stores surged 1.2% (5.1% y/y) following gains between 0.4% and 1.0% during the prior three months.Furniture, home furnishings &amp; appliance store sales rose 0.6% (-0.7% y/y) for the second month. The gain, however, followed four months when sales were unchanged or down. The rise reflected higher sales of electronics &amp; appliances which rose 0.7% (3.7% y/y) after a 1.1% April jump. Sales of furniture &amp; home furnishings increased just 0.4% (-4.9% y/y) after a year of monthly declines. Apparel store sales rose 0.5% (-0.1% y/y) but the April increase was lessened to 0.1%.
Building materials &amp; garden equipment sales surged again by 2.4% (-3.2% y/y) following a like increase during April.
Restaurant and drinking places sales also jumped, by 0.8% (5.1% y/y) last month after an upwardly revised 1.2% increase.
The latest Beige Book covering regional economic conditions from the Federal Reserve Board can be found <a href="http://www.federalreserve.gov/fomc/beigebook/2008/20080611/default.htm"> here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol">&nbsp;</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"><a href="http://www.haverselect.com/dlx/usecon/@ED/@ED04/@ED0401/@ED0401.HTM">Retail Sales &amp; Food Services</a></td>
<td>1.0%</td>
<td>0.4%</td>
<td>2.5%</td>
<td>4.0%</td>
<td>5.8%</td>
<td>6.4%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Excluding Autos</td>
<td>1.2%</td>
<td>1.0%</td>
<td>4.9%</td>
<td>4.5%</td>
<td>6.8%</td>
<td>7.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp;&nbsp;&nbsp; Less Gasoline</td>
<td>1.0%</td>
<td>1.1%</td>
<td>3.7%</td>
<td>4.1%</td>
<td>6.2%</td>
<td>6.4%</td>
</tr>
</tbody>
</table>
</body>
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U.S. retail sales last month were stronger-than-expected, boosted by early receipts of the government's tax rebate checks - $600 per person and $300 per child for families. A 1.0% May jump in sales followed an upwardly revised 0.4% [...]

U.S. Retail Sales Firmed

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.

250801P40.jpg

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

Jump to:

Michigan Consumer Sentiment Still in Freefall

U.S. Consumer Price Index Acceleration Driven by Energy

U.S. Consumer Price Index Acceleration Driven by Energy

EMU Area IP Growth Confirms the Strength Across Countries

U.S. Business Inventories Rose, Recent Trend Growth Slower

U.S. Total Import Price Surge Quickest Since 1990

U.S. Initial Unemployment Insurance Claims Up

U.S. Retail Sales Firmed