Tom Moeller

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The Autodata Corporation reported that light vehicle sales during January increased 19.3% (-10.0% y/y) to 15.16 million units (SAAR). Sales were at the highest level since June of last year but remained 18.1% below the April '21 peak of 18.50 million units.

Sales of light trucks rose 21.6% (-7.1% y/y) last month to 12.05 million units, the highest level since last May. Purchases of domestically-made light trucks rose 20.8% in January (-7.4% y/y) to 9.40 million units. Adding to this increase was a 24.4% rise (-6.0% y/y) in sales of imported light trucks to 2.65 million units, though they remained below the April '21 record of 3.30 million unit sales.

Trucks' share of the light vehicle market increased to 79.5% last month but remained below an 80.4% share in October. For all of last year, the share was 77.5%, up from a low of 48.1% during all of 2009.

Passenger car sales rose 11.1% (-19.6% y/y) in January to 3.11 million units, the highest level since last August. Purchases of domestically-produced cars rose 10.1% last month (-21.8% y/y) to 2.08 million units following a 1.1% December increase. Sales of imported autos rose 13.2% in last month (-14.9% y/y) to 1.03 million units, the highest level since August.

Imports' share of the U.S. vehicle market rose in January to 24.3%, though that remained down from a 27.9% September high. Imports' share of the passenger car market rose to 33.1% last month but remained below the September high of 38.1%. Imports' share of the light truck market increased to 22.0%, the highest level since September.

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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- Light truck sales rebound to eight month high.
- Auto sales rise for third straight month.
- Imports' share improves.

U.S. Light Vehicle Sales Strengthen in January

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**Retail gasoline prices** rose to $3.37 per gallon (39.8% y/y) in the week ended January 31 from $3.32 per gallon in the previous week. Prices have risen from a low of $3.28 at the end of December. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price increased to $3.49 per gallon.

The price of **West Texas Intermediate crude oil** improved to $86.37 per barrel (64.4% y/y) in the week of January 28 from $86.11 in the prior week. It was the highest price since the second week of October, 2014. Yesterday, the price rose to $88.15 per barrel. The average price of **Brent crude oil** rose to $88.60 (59.3% y/y). The price increased to $89.15 per barrel yesterday.

The price of **natural gas** rose to $4.60/mmbtu (69.7% y/y) in the week of January 28 after improving to $4.50 in the previous week. Yesterday, the price surged to $5.56/mmbtu.

In the four weeks ended January 21, growth in **gasoline demand** rose 6.1% y/y, down from 17.1% y/y late in December. Growth in demand for **all petroleum products** has been steady around 11.6% y/y. **Crude oil input to refineries** rose 6.6% y/y, half the growth in late October. **Gasoline inventories** edged up 0.1% y/y, but **crude oil inventories** declined 9.7% y/y.

The **supply of gasoline** inventories in the week ending January 21 rose to 30.2 days, its highest level since February 2021. The supply of crude oil was little changed at 26.7 days.

These data are reported by the Energy Information Administration of the U.S. Department of Energy. The price data can be found in Haver's **WEEKLY** and **DAILY** databases. Greater detail on prices, as well as the demand, production and inventory data are in **USENERGY**.

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- Gasoline prices continue to rise.
- The cost of crude oil increases slightly.
- Natural gas prices strengthen.

U.S. Energy Prices Rise

Sandy Batten

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The Bureau of Labor Statistics reported that on the last business day of December, the total number of job openings rose 1.4% m/m from November to 10.925 million, a little above expectations. This was the third highest total openings on record, exceeded only by July and October 2021, and clearly well above pre-pandemic norms. The job openings rate, calculated as job openings as a percent of the sum of total employment and openings, was unchanged at 6.8%, the second highest on record. New hires fell 5.0% m/m in December to 6.263 million, the lowest level since May 2021, with the hiring rate slipping to 4.2% from 4.4% in November. The number quitting their job fell 3.6% m/m to 4.338 million in December from the record 4.499 million recorded in November. The quit rate, quits as a percent of total employment, edged down to 2.9% in December from a record 3.0% in November. Layoffs and discharges fell 10.7% m/m in December to 1.169 million, the lowest level on record. The JOLTS figures date back to December 2000.

Private-sector job openings rate rose 1.3% m/m in December to fell to 9.882 million with the private-sector job openings rate edging up to 7.2% from 7.1%. Job openings increased in several industries with the largest increases in accommodation and food services (+133,000 or 9.5%), information (+40,000 or 22.6%), and nondurable goods manufacturing (+31,000 or 9.0%). Job openings decreased in finance and insurance (-89,000 or -21.9%) and in wholesale trade (-48,000 or -14.9%) and were little changed in manufacturing. Private-sector hiring fell 5.4% m/m in December, its largest monthly decline since December 2020, to 5.87 million. Hiring fell in each major sector in December.

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Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers' willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm. Private-sector quits declined 3.6% m/m in December to 4.129 million. This was the second decline in the past three months. Still, quits remain quite elevated relative to before the pandemic, indicating ongoing labor-market tightness.

This tightness was further supported by an 11.9% m/m decline in private-sector layoffs and discharges to 1.097 million, the lowest on record. Sectoral declines were in construction; trade, transportation and utilities; professional and business services; and leisure and hospitality. Increases were recorded in manufacturing, information, financial activities and education and health services. In total, all private-sector separations fell 5.3% m/m to 5.548 million in December.

The Job Openings and Labor Turnover Survey (JOLTS) are available in Haver's **USECON** database.

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- Job openings up slightly; third highest level on record.
- Biggest monthly decline in hiring since December 2020.
- Quits recede after November record surge.
- Layoffs and discharges fall to record low.

December U.S. JOLTS: Job Market Remains Tight

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Consumer spending & income were disappointing last month. Personal consumption expenditures during December fell 0.6% (+13.3% y/y) following a 0.4% November increase, revised from 0.6%. A 0.5% decline had been expected in the Action Economics Forecast Survey. Adjusted for price inflation, spending fell 1.0% last month (+7.1% y/y) after easing 0.2% in November.

Real spending on durable goods plummeted 4.9% in December (+4.6% y/y) after November's 1.7% decline. The decline was led by a 6.2% fall (+4.4% y/y) in real outlays on furniture & appliances, off for the third month in the last four. Motor vehicle & parts buying weakened 3.3% in real terms (-7.4% y/y), about as it did in November. Real purchases of recreational goods & vehicles weakened 4.9% (+14.7% y/y) after falling 1.2% in November. Real nondurable goods buying fell 2.1% (+7.8% y/y) after a 0.7% November easing. Real clothing outlays weakened 6.2% (+15.3% y/y) after a 2.2% decline. Food & beverage expenditures declined 1.3% (+4.6% y/y) after falling 0.8% in November but spending on gasoline & other energy products rose 0.8% (15.4% y/y), about as they did in November. Real outlays on services ticked 0.1% higher last month (7.5% y/y) after rising 0.2% in November. Real recreation services outlays surged 1.0% and by one-third y/y. The rise followed three consecutive months of strong increase. Real transportation outlays rose 1.5% (31.7% y/y) following a 0.5% rise. Real health care outlays improved a steady 0.6% in December (5.1% y/y) while housing & utilities spending weakened 0.2% (+0.6% y/y) after rising 0.4% in November. Real spending at hotels & restaurants eased 0.4% last month (+30.9% y/y) after a 0.2% November gain.

The PCE chain price index rose 0.4% last month (5.8% y/y) following two months of 0.6% gain. The price index excluding food and energy rose 0.5%, the same as in November. The 4.9% y/y increase was the strongest since September 1983. Durable goods prices rose 0.9% (10.5% y/y) owing to a second straight 1.8% surge (22.8% y/y) in motor vehicle prices. Home furnishings & appliance prices improved 1.0% (8.8% y/y) in December. Recreational goods & vehicle prices eased 0.6% (+1.3% y/y). Nondurable goods prices gained 0.3% (7.7% y/y) after two straight months of 1.2% increase. The services price index rose 0.4% (4.2% y/y) after a 0.5% gain. Gasoline prices eased 0.5% (+47.9% y/y). Energy prices overall eased 0.4% (+29.9% y/y) while food & beverage prices rose 0.3% (5.7% y/y).

Personal income rose 0.3% (7.3% y/y) in December after increasing 0.5% in November, revised from 0.4%. A 0.5% rise had been expected. Wages & salaries rose 0.7% last month (9.2% y/y) after a 0.6% rise while rental income rose 0.8% (7.5% y/y). Earnings on assets improved 0.6% ( 1.3% y/y) as dividend income increased 0.8% (-0.8% y/y) and interest income rose 0.5% (3.0% y/y). Proprietors earnings declined 1.4% (+13.5% y/y). Transfer payments were stable last month (6.5% y/y) following a 0.6% November gain. Disposable personal income increased 0.2% in December (5.6% y/y) after two months of stronger increase. Adjusted for price inflation, disposable income declined 0.2% (-0.2% y/y) for the third straight month.

The personal savings rate rose to 7.9% in December from 7.2% in November. It remained down from a high of 33.8% in April of last year. The level of personal savings rose 10.2% last month but has fallen 40.8% during the last twelve months.

The personal income and consumption figures are available in Haver's **USECON** database with detail in the **USNA** database. The Action Economics figures are in the **AS1REPNA** database.

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- Outlays on goods decline as services spending slows.
- Core price inflation is steady & strong.
- Wage & salary growth firms.

U.S. Personal Spending Declines as Income Growth Weakens in December

Kathleen Stephansen, CBE

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As the U.S. economy continues to improve, employment costs continue to rise. The employment cost index (ECI) for civilian workers increased 1.0% q/q (4.0% y/y) in Q4. That follows a quarterly jump of 1.3% (3.7% y/y) in the third quarter, its largest quarterly gain since Q1 2001. Action Economics Forecast Survey consensus had looked for a slightly stronger gain of 1.2% q/q in Q4.

The overall increase was driven by robust gains in both wages and salaries and benefits. Wage and salaries rose 1.1% q/q (4.5% y/y) in Q4, following the 1.5% q/q (4.2% y/y) rise in Q3, which was the largest quarterly increase since Q1 1984. Benefits were up 0.9% q/q (2.8% y/y), following the 0.9% q/q (2.5% y/y) rise in Q3.

Private sector compensation rose 1.2% q/q (4.4% y/y) in Q4, following the 1.4% q/q (4.1% y/y) rise in Q3, which was the largest quarterly gain since Q1 2001. Private sector wages and salaries advanced 1.2% q/q (5.0% y/y) up from a 1.6% (4.6% y/y) rise in Q3, which was also the largest quarterly gain since Q3 1982. Private sector benefits rose 1.0% q/q (2.9% y/y), after the 1.1% q/q (2.6% y/y) rise in Q3.

Compensation in goods-producing industries increased 0.9% q/q (3.7% y/y) in Q4, after a similar rise of 0.9% q/q (3.3% y/y) in Q3. Compensation in service-providing industries gained 1.1% q/q (4.1% y/y) following a jump of 1.3% q/q (3.7% y/y) in Q3, which was the largest quarterly rise in this series' short history dating back to 2003.

The employment cost index measures the change in the cost of labor, free from the influence of employment shifts across occupations and industries. It is provided by the Bureau of Labor Statistics and is available in Haver's **USECON** database. Consensus estimates from the Action Economics survey are in Haver's **AS1REPNA** database.

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- Overall compensation rose 1.0% q/q in Q4, though shy of the 1.3% Q3 gain.
- Wages and salaries rose 1.1% q/q.
- Benefits increased 0.9% q/q in Q4, a similar gain to Q3.

U.S. Employment Costs Continued to Post Robust Gains in Q4

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The economy remained on a firm footing in 2021. Real GDP growth in Q4:21 accelerated to 6.9% (SAAR) from 2.3% in Q3. It was the strongest growth since Q3:20. During all of 2021, growth picked up to 5.7%, the fastest increase since 1984. A 5.5% GDP rise in Q4 had been expected in the Action Economics Forecast Survey.

Inventory accumulation added 4.9 percentage points to Q4 growth following a 2.2 point addition in Q3. The rise was the strongest since Q3:20 and close to the post WWII record. International trade had no effect on growth last quarter after subtractions in the prior five quarters. Exports grew 24.5% (5.3% y/y) while imports rose 17.7% (9.6% y/y).

Domestic final sales growth picked up to 1.9% last quarter (5.3% y/y) from 1.3% in Q3 as consumer spending rose 3.3% (7.1% y/y). Spending on services rose 4.7% (7.1% y/y) as recreation outlays jumped 20.1% (28.7% y/y) and transportation spending surged 20.2% (30.2% y/y). Housing & utilities spending edged 0.2% higher (1.0% y/y). Spending on durable goods rose 1.6% (6.4% y/y) including a 6.6% decline (-4.0% y/y) in motor vehicle buying and an 11.8% surge (13.3% y/y) in spending on recreational goods. Nondurable goods spending eased 0.1% (+7.7% y/y) as apparel outlays fell 2.4% (+16.1% y/y).

Business fixed investment grew 2.0% last quarter (6.3% y/y) after rising 1.6% in Q3. Structures investment fell 11.4% (-3.5% y/y) but equipment outlays rose 0.8% (5.9% y/y). Investment in intellectual property strengthened 10.6% (11.9% y/y) in Q4.

Residential investment outlays weakened 0.8% in Q4 (-2.2% y/y) after falling sharply in the prior two quarters.

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- Real GDP growth strengthened by inventory building.
- Private domestic final demand growth picks up slightly.
- Price inflation accelerates.

U.S. GDP & Prices Rise More Than Expected in Q4:21

Winnie Tapasanun

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The Pending Home Sales Index (PHSI) fell 3.8% m/m (-6.9% y/y) to 117.7 in December after a 2.3% decline in November (-2.2% initially) and a 7.5% rebound in October, according to the National Association of Realtors (NAR). For all of 2021, pending home sales rose 2.6% after having gained 6.9% in 2020 and 1.0% in 2019. The NAR reported that existing home sales are expected to fall 2.8% in 2022 with home prices expected to rise 5.1% “due to the ongoing housing shortage, even as builders ramp up production.”

Pending home sales decreased in all the major regions of the country in December. Sales in the West slid 10.0% (-16.2% y/y), the deepest m/m slide since February 2021, after a 2.1% decline. Sales in the Midwest fell 3.7% (-1.2% y/y), the third m/m fall in four months, after a 6.1% drop. Sales in the South decreased 1.8% (-3.9% y/y) on top of a 1.0% decline. Sales in the Northeast fell 1.2% (-10.5% y/y) following a 0.1% downtick.

The pending home sales index measures sales at the time the contract for the purchase of an existing home is signed, similar to the Census Bureau's new home sales data. In contrast, the National Association of Realtors' existing home sales data are recorded when the sale is closed, which is usually a couple of months after the sales contract has been signed. In developing the pending home sales index, the NAR found that the level of monthly sales contract activity leads the level of closed existing home sales by about two months.

The series dates back to 2001 and are available in Haver's **PREALTOR** database. Weekly mortgage interest rates from the Mortgage Bankers Association can be found in the **SURVEYW** database.

- Pending home sales -3.8% m/m, the second straight monthly drop and the largest since April.
- The December index at 117.7, the lowest level since September.
- Sales fall m/m and y/y in all the major regions with the deepest fall in the West (-10.0% m/m; -16.2% y/y).

U.S. Pending Home Sales Unexpectedly Decline in December

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The Federal Reserve Bank of Kansas City reported that its manufacturing sector business activity index rose to 24 during January following two months at 22. The series dates back to July 2001. The ISM-Adjusted Index (NSA) eased to 59.0 this month, below last April's high of 66.7.

The employment measure rose to 24 after falling in each of the prior two months. It remained below a high last April of 30. The production measure improved to 20, the highest level in six months.

Working lower was the new orders measure to 14, but it remained above the November low of -2. The shipments measure also fell to 5 from 13. The figure has trended lower since hitting a high of 34 last April.

Inflation pressures intensified this month. The prices received index for finished products rose to 49 after falling to 46 in December. It remained below, however, the record level of 57 in August. The raw materials index declined to 64 in January and remained below the record of 88 last May.

The expectations reading for six months ahead rose to 37, an eight-month high. The employment measure surged to a record high while broad-base gains were exhibited in all of the other component series.

The latest survey was conducted in the five-day period from January 19-24 and included 104 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Data for the Kansas City Fed Survey can be found in Haver's **SURVEYS** database.

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- Employment & production increase.
- New orders & shipments ease.
- Price power improves.

Kansas City Fed Manufacturing Index Improves in January

Equity market exuberance outpacing macroeconomic data

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

US production rebounded in Q2, but demand continued to slow

US leader, Germany trailer for real GDP growth over past 3 years

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

With escalation of Israel/Iran conflict, geopolitical risk has recently surged while US trade policy uncertainty has ebbed

Renewed supply chain pressures point to a rebound in global inflation ahead

Apart from Japan, Blue Chip forecasters look for further significant monetary policy easing

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

Even with expected tariff-induced increases in inflation, BCFF forecasters look for a more aggressive round of monetary easing

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

Wage growth slowing in the US and Euro area; elevated and sticky in the UK

Stagflation-lite: Blue Chip forecasts below-trend growth and elevated inflation

US policy gyrations boosting policy uncertainty worldwide

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

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The Housing Market Index, compiled by the National Association of Home Builders/Wells Fargo, eased 3.0% (-17.9% y/y) to 32 in August, reversing the 3.1% July rise to 33. It remained below the break-even point of 50, where it’s been since May of last year. The index remains below a July 2023 high of 56 and a November 2020 peak of 90.

The rate on a 30-year fixed rate mortgage averaged 6.61% in the first two weeks of August versus 6.72% during all of July. It fell to 6.58% last week and remained below the high of 7.79% in the last week of October 2023, according to Freddie Mac.

The single-family sales measure declined 2.8% (-20.5% y/y) this month to 35, after rising 2.9% in July. The prospective sales in six months measure held steady (-12.2% y/y) at 43, after rising 7.5% in July. The traffic of prospective buyers’ index rose 10.0% (-12.0% y/y) to 22 in August, after declining 4.8% in July.

Housing weakness centered in the Northeast this month with the index declining 18.8% (-15.2% y/y) to 39, after rising 9.1% in July. It was the lowest level since January 2023.  In the West, the index rose 4.0% (-29.7% y/y) to 26, its highest level in three months. The index for the Midwest held steady (+13.2% y/y) at 43, and matched the highest level in four months. The index in the South also held steady at 29 (-25.6% y/y), after falling in each month of this year.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's **SURVEYS** database.

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- Overall reading matches lowest level since December 2022.
- Current sales slip, expectations steady, while traffic improves.
- Lower Northeast reading accounts for overall index decline.

U.S. Home Builders Index Edges Lower in August

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Consumers remain in a spending mood. Total retail sales increased 0.5% (3.9% y/y) during July after rising 0.9% in June, revised from 0.6%, and falling 0.8% in May, revised from down 0.9%. The overall rise matched expectations in the Action Economics Forecast Survey. Sales excluding autos rose an expected 0.3% last month (3.7% y/y) following a 0.8% June gain, revised from 0.5%, and a 0.1% dip during May, revised from -0.2%.

Sales in the retail control group, which excludes autos, building materials, gasoline and food services, rose 0.5% (4.8% y/y) last month after increasing 0.8% in June, revised from 0.5%, and 0.3% in May, revised from 0.2%. These sales are used in the construction of personal consumption expenditures in the NIPA accounts. These sales rose 3.9% (AR) last quarter following a 3.7% Q1 rise.

Light vehicle sales increased 1.6% (4.7% y/y) in July after rising 1.4% in June, following a 3.8% decline in May. This compares to a 7.6% (6.0% y/y) rise in unit sales of motor vehicles last month which followed declines in each of the prior three months. Gasoline service station sales eased 0.7% (-2.9% y/y) during July after a 0.6% rise during June. Gasoline prices fell 1.2% (-9.8% y/y) last month after holding steady in June. Sales of building materials & garden equipment declined 1.0% (-2.6% y/y) after a 1.3% rise during June.

Elsewhere, sales were mixed last month. Furniture & home furnishings sales increased 1.4% (5.1% y/y) after rising 0.1% in June. Nonstore retail sales rose 0.8% (8.0% y/y) after increasing 0.9% in June. Sporting goods & hobby shop sales increased 0.8% (2.3% y/y) following a 0.7% decline. Apparel store sales increased 0.7% (5.0% y/y) during July following a 1.1% gain. General merchandise store sales rose 0.4% (2.3% y/y) after they moved 0.5% higher in June, and department store sales improved 0.9% (-0.8% y/y) after falling 0.6% in June.

Working lower, miscellaneous store sales fell 1.7% (+10.6% y/y) during July after strengthening 2.7% in June. Electronics & appliance store sales eased 0.6% (-2.3% y/y) last month after two consecutive months of moderate decline.

In the nondiscretionary sales sector, food & beverage store sales rose 0.5% (2.5% y/y) last month following a 0.8% rise in June. Health & personal care store sales also rose 0.4% (5.6% y/y) last month after strengthening 1.0% in June.

Restaurant & drinking establishment sales fell 0.4% (+5.6% y/y) in July after rising 0.6% in June.

Retail sales data can be found in Haver’s **USECON** database. The expectations figures are from the Action Economic Forecast Survey in **AS1REPNA**.

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- Strong vehicle sales pace the increase.
- Nonauto sales are mixed. 
- Sales in the retail control group (used to estimate PCE) increase.

U.S. Retail Sales Post Solid Increase in July; June Gain Revised Up

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Industrial production (IP) dipped 0.1% m/m in July after upwardly revised increases of 0.4% in June (+0.3% initially) and 0.1% in May (0.0% previously), data from the Federal Reserve Board showed. A 0.0% m/m for July had been expected in the Action Economics Forecast Survey. The year-on-year rate of increase accelerated to 1.4% in July from 0.7% in June; it was well above -0.2% y/y in July 2024. The July IP index was at 104.0, marginally down from 104.1 in June (the highest since September 2018) and 2.5% above a low of 101.5 in January 2024.

By **industry groups**, manufacturing production was virtually unchanged (+1.4% y/y) in July following rises of 0.3% in June (+0.1% initially) and 0.2% in May (+0.3% previously). Durable goods production grew 0.3% (2.7% y/y) in July, the second m/m gain in three months, following a 0.1% downtick in June. Within durables, the following categories rose m/m in July, including output increases of 1.7% (8.9% y/y) in aerospace & miscellaneous transportation equipment, 1.3% (-1.7% y/y) in miscellaneous durables goods, 1.0% (-2.0% y/y) in electrical equipment, appliances & components, 1.0% (-0.2% y/y) in furniture & related products, 0.7% (1.7% y/y) in wood products, 0.6% (-1.3% y/y) in nonmetallic mineral products, 0.2% (-0.3% y/y) in fabricated metal products, and 0.1% (5.6% y/y) in computer & electronic products. Notably, aircraft & parts production climbed 1.1% (11.4% y/y) in July, the ninth straight m/m rise, on top of a 2.3% gain in June. To the downside, the following durable goods categories fell for the third time in four months in July, including machinery (-0.3%; +0.9% y/y), motor vehicles & parts (-0.3%; +8.3% y/y), and primary metals (-0.3%; +4.0% y/y).

Nondurable goods production fell 0.4% (+0.6% y/y) in July, down for the third month in four, following a 0.7% rebound in June, reflecting m/m output falls of all nondurable goods categories. These included output declines of 2.1% (-4.7% y/y) in textiles & product mills, 1.7% (-5.5% y/y) in apparel & leather goods, 0.8% (-3.1% y/y) in plastics & rubber products, 0.5% (0.0% y/y) in paper, 0.5% (+0.7% y/y) in petroleum & coal products, 0.4% (+2.5% y/y) in chemicals, 0.2% (+0.3% y/y) in food, beverages & tobacco, and 0.1% (-1.3% y/y) in printing & related support activities.

Mining activity slid 0.4% (+1.9% y/y) in July, the third m/m slide in four months, after an unrevised 0.3% decrease in June. Utilities output declined 0.2% (+0.8% y/y), down for the second month in three, following a downwardly revised 1.8% June gain (+2.8% initially), with a 0.3% decrease (+1.6% y/y) in electric utilities output and a 0.5% rebound (-5.3% y/y) in natural gas utilities output.

By **market groups**, materials production fell 0.3% (+1.8% y/y) in July, the first m/m fall since March, after a 0.5% advance in June. Construction supplies production declined 0.2% (+2.0% y/y) following a 0.3% June increase. To the upside, business equipment output rose 0.5% (3.8% y/y) in July, the ninth consecutive m/m rise, after a 0.1% uptick in June. Consumer goods output edged up 0.1% (0.6% y/y) after a 0.3% June rebound, reflecting increases of 0.1% (2.5% y/y) in durable consumer goods and 0.1% (0.1% y/y) in nondurable consumer goods.

In **special classifications**, factory output of selected high-tech industries rose 1.4% (14.0% y/y) in July on top of an upwardly revised 0.9% gain in June (+0.5% initially), posting the fourth successive m/m rise and the seventh in eight months. Meanwhile, manufacturing production excluding selected high-tech industries dipped 0.1% (+1.1% y/y) in July, the first m/m easing since April, following a 0.3% increase in June; manufacturing production excluding selected high-tech and motor vehicles & parts slipped 0.1% (+0.6% y/y), the third m/m decline in four months, following a 0.5% June rebound.

Capacity utilization fell to 77.5% in July from a three-month-high 77.7% in June (77.6% previously). The Action Economics Forecast Survey forecasted 77.6%. The July reading was 2.1 percentage points below its long-run (1972–2024) average. Manufacturing capacity utilization dipped to 76.8% in July from an unrevised 76.9% in June; the July rate was 1.4 percentage points below its long-run average.

Industrial production and capacity data are in Haver’s **USECON** database. Additional detail on production and capacity utilization can be found in the **IP** database. The expectations figures come from the **AS1REPNA** database.

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- July IP -0.1% (+1.4% y/y), led by a 0.4% decline in mining activity.
- Mfg. IP unchanged, w/ durables up 0.3% and nondurables down 0.4%.
- Utilities output -0.2%, the second m/m fall in three months.
- Key categories in market groups post mixed results.
- Capacity utilization down 0.2%pt. to 77.5%; mfg. capacity utilization down 0.1%pt. to 76.8%.

U.S. Industrial Production Eases in July

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The Empire State Manufacturing Index of General Business Conditions unexpectedly advanced more than 6 points to 11.9 in August after having jumped nearly 22 points to 5.5 in July, according to the Empire State Manufacturing Survey released by the Federal Reserve Bank of New York. This is the highest reading since November 2024 and indicates a pickup in the pace of economic activity in New York State. A reading of -1.0 for August had been expected by the Action Economics Forecast Survey. The percentage of respondents reporting an increase in general business conditions rose to 34.7% in August from 32.4% in July while the percentage reporting a decrease fell to 22.8% in August, the lowest reading since February, from 26.9% in July. The August survey was conducted between August 4 and August 11.

The headline index just reflects the answer to a single question concerning the state of economic activity and is not calculated from the components. Haver Analytics calculates a composite index from the five major components, which is comparable to the ISM manufacturing index. This calculated index slipped to 54.3 in August from 54.7 in July, still well above the critical 50 level that separates expansion from contraction but indicating that the components were not quite as strong as the headline index in August. The calculated index is the average of five diffusion indexes: new orders, shipments, employment, supplier deliveries and inventories with equal weights (20% each).

The August increase was led by a more than 13-point increase in the new orders index, to 15.4 from 2.0. Thirty-six percent of respondents reported an increase in orders, up slightly from 35% in July. However, only 20.4% reported a decline in orders, down markedly from 32.9% in July and a recent high of 40.2% in March. The shipments index was little changed in August but remained at a solid 12.2. Inventories reversed course sharply, falling to -6.4, the first negative reading since last August, from 15.6 in July. Employment also slowed with the index falling to 4.4 from 9.2 in July.

Indications of supply-chain disruptions continued to emerge. Delivery times lengthened markedly with the index jumping to 17.4 in August, its highest reading since May 2022, from an already elevated 8.3 in July. Twenty percent of respondents reported an increase in delivery times, up from nearly 15% in July, while only 2.8% reported a shortening versus 6.4% in July. Moreover, the supply availability index remained in negative territory at -5.5 versus -11.0 in July.

Inflation indexes softened a bit in August but remained elevated. The prices paid index edged down to 54.1 from 56.0 in July while the prices received index slid to 22.9 from 25.7 in July. Both remain significantly elevated relative to the beginning of the year.

Firm optimism about the future (the next six months) soured a bit in August. The index for future general business conditions fell eight points to 16.0, suggesting that businesses expect activity to increase in the months ahead, but firms were less optimistic than they were last month. New orders and shipments were expected to increase. Two-thirds of respondents expect input prices to pick up further over the next six months. Of some concern, capital spending plans were soft with the expectations index plunging to -0.9 in August from 9.2 in July.

The indexes in this report are diffusion indexes and measure the percentage of respondents indicating an increase minus the percentage indicating a decrease with zero separating expansion from contraction.

The New York Fed survey data are contained in Haver’s **SURVEYS** database. The expectations series is in Haver’s **AS1REPNA** database.

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- The highest reading since November 2024.
- The August rise was led by stronger new orders and continued gains in shipments.
- More evidence of nascent supply-chain problems.
- Outlook six months ahead faded slightly.

FRBNY Empire State Manufacturing Index Unexpectedly Advances in August

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Import prices unexpectedly increased 0.4% m/m (-0.2% y/y) in July after declines of 0.1% m/m in June and 0.4% m/m in May, according to the Bureau of Labor Statistics. An unchanged reading had been expected by the Action Economics Forecast Survey. Export prices edged up 0.1% m/m (2.2% y/y) in July following a 0.5% monthly gain in June. The Action Economic Forecast Survey had also looked for an unchanged reading.

For imports, prices for imported fuel advanced 2.7% m/m in July following an increase of 0.8% m/m in June and a decrease of 5.0% m/m in May. The July increase was the largest monthly advance since the index rose 3.0% m/m in January 2025. Higher prices for imported petroleum and natural gas drove the July increase, advancing 2.4% m/m and 4.7% m/m, respectively. Imported fuel prices fell 12.1% y/y in July 2025 with imported petroleum prices down 13.7% y/y while imported natural gas prices soared 62.2% y/y.

Apart from imported fuel, prices for nonfuel imports advanced 0.3% m/m percent in July, following a decrease of 0.3% m/m in June. Higher prices for nonfuel industrial supplies and materials (1.0% m/m), consumer goods (0.4% m/m), and capital goods (0.1% m/m) more than offset lower prices for automotive vehicles (-0.2% m/m) and foods, feeds, and beverages (-0.1% m/m). Nonfuel import prices increased 0.9% y/y in July and have not declined on an over-the-year basis since a 0.6% decrease in February 2024. Higher prices for nonfuel industrial supplies and materials; capital goods; and foods, feeds, and beverages contributed to the year-over-year advance.

Higher prices for nonagricultural exports drove the July increase in overall export prices. The price index for agricultural exports was unchanged in July following a 0.8% m/m increase in June. Higher prices for meat (1.1% m/m) and vegetables (3.4% m/m) lower prices for corn (-1.9% m/m) and animal feeds (-1.6% m/m). The price index for agricultural exports increased 3.4% y/y in July, the largest 12-month rise since a 5.3% y/y advance in January 2023. Nonagricultural export prices ticked up 0.1% m/m in July, after rising 0.5% m/m in June and falling 0.8% m/m in May. Higher prices for automotive vehicles (0.7% m/m), capital goods (0.2% m/m), and consumer goods (0.2% m/m) more than offset lower prices for nonagricultural industrial supplies and materials (-0.1% m/m). Prices for nonagricultural exports increased 2.0% y/y in July. Higher prices for nonagricultural industrial supplies and materials, capital goods, and automotive vehicles drove the year-over-year advance.

These import and export price series are not seasonally adjusted; they can be found in Haver’s **USECON** database. Detailed figures are available in the **USINT** database. The expectations figure from the Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Import prices rose 0.4% m/m in July against expectations of no change after declines in both May and June.
- Higher prices for imported petroleum and natural gas drove the July rebound. 
- Export prices ticked up 0.1% m/m, largely reflecting higher prices for nonagricultural exports.

U.S. Import Prices Rebounded in July

Economy in Brief: 2022

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