Tom Moeller

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The Chicago Fed National Activity Index (CFNAI) dropped to -0.15 during December from 0.44 in November, revised from 0.37. In 2021, the index improved to 0.33 from -0.48 in 2020.

The index's three-month moving average eased in December to 0.33 from 0.40. During the last 10 years, there has been an 75% correlation between the change in the Chicago Fed Index and quarterly growth in real GDP.

The Personal Consumption & Housing component moved lower to -0.19 from -0.02 in November. The Production & Income component weakened to -0.13 from 0.25 in November. The Employment, Unemployment & Hours component eased to 0.13 from 0.16. The Sales, Orders & Inventories index slipped to 0.03 from 0.05 in November.

The CFNAI diffusion index, which measures the breadth of movement in the component series, fell to 0.37 in December from 0.42 in November. The diffusion index averaged 0.28 in 2021, up from 0.19 in 2020.

The CFNAI is a weighted average of 85 monthly indicators of national economic activity. It is constructed to have an average value of zero and a standard deviation of one. Since economic activity tends toward trend growth rate over time, a positive index reading corresponds to growth above trend and a negative index reading corresponds to growth below trend. The CFNAI was constructed using data available as of October 25, 2021. Fifty of the 85 indicators had been published at that time. For all missing data, estimates were used in constructing the index.

The index is constructed by the Federal Reserve Bank of Chicago. These figures are available in Haver's **SURVEYS** database.

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- First negative reading since April 2021.
- Production & personal consumption again lead downturn.
- Trend level of total index weakens.

Chicago Fed National Activity Index Turns Negative in December

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The Conference Board's Composite Leading Economic Indicators index rose 0.8% (8.5% y/y) during December after increasing 0.7% in November, revised from 1.1%. The latest increase matched expectations in the Action Economics Forecast Survey. The Leading Index is comprised of 10 components which tend to precede changes in overall economic activity.

Eight of the index components contributed positively to the December increase including unemployment insurance claims, the ISM orders index, building permits, the leading credit index and the interest rate spread between 10-year Treasuries and Fed funds. Orders for consumer goods & materials, nondefense capital goods orders as well as stock prices also contributed positively. The index of consumer expectations for business & economic conditions fell while average factory sector hours held steady.

The Index of Coincident Economic Indicators improved 0.2% (3.2% y/y) during December after edging 0.1% higher in November, revised from 0.3%. Nonagricultural employment, personal income less transfers and real manufacturing & trade sales contributed positively but industrial production had a negative influence on the overall index change.

The Index of Lagging Economic Indicators edged 0.1% higher during December (0.9% y/y), the same as it did in November which was revised from -0.1%. The average duration of unemployment, the manufacturing & trade inventory-to-sales ratio and real C&I loans outstanding contributed positively to the index change. The change in labor costs per unit of output, the six-month change in the services CPI and the consumer installment/personal income ratio contributed negatively. The banks' prime rate held steady.

The Conference Board figures are available in Haver's **BCI** database; the components are available there, and most are also in **USECON**. The expectations are in the **AS1REPNA** database. Visit the Conference Board's [site](http://www.conference-board.org/) for coverage of leading indicator series from around the world.

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- Component increases are widespread.
- Coincident indicators rise, despite dip in production.
- Lagging indicators increase minimally.

U.S. Leading Economic Indicators Improve Again in December

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Initial claims for unemployment insurance rose to 286,000 (-67.7% y/y) during the week ended January 15 from 231,000 in the prior week, revised from 230,000. It was the highest level of filings since the third week of October. Estimates in the Action Economics Forecast Survey averaged 213,000 claims for the latest week. The 4-week moving average of claims rose to 231,000 from 211,000 in the previous week. These figures cover the survey week for January nonfarm payrolls and they rose sharply from December's survey week.

Initial claims for the federal Pandemic Unemployment Assistance (PUA) program, which expired on September 6, 2020, are no longer included in this report. This program provided benefits to individuals who were not eligible for regular state unemployment insurance benefits, such as the self-employed.

In the week ended January 8, seasonally adjusted continued weeks claimed for regular state unemployment insurance rose to 1.635 million (-67.7% y/y) from 1.551 million in the prior week. They remained near the lowest reading since April 1973.

The insured unemployment rate rose to 1.2% from the record low of 1.1% in the prior week. The series dates back to 1971.

Continued claims for both the PUA program and for Pandemic Emergency Unemployment Compensation (a program for those unemployed who had exhausted their state benefits) are no longer included in this report as both programs have expired.

In the week ended January 1, the not seasonally adjusted total number of continuing weeks claimed in all programs rose to 2.129 million from 1.949 million in the previous week.

The state insured rates of unemployment in regular programs vary widely. In the week ending January 1, the highest insured unemployment rates were in Alaska (3.14%), Minnesota (2.77%), New Jersey (2.63%), New York (2.57%), California (2.45%) and Illinois (2.07%). The lowest rates were in Virginia (0.23%), North Carolina (0.38%), Alabama (0.40%), Arizona (0.50%) and Kansas (0.51%). Other state insured rates of unemployment in regular programs included Pennsylvania (1.85%), Ohio (1.14%), Texas (0.99%) and Florida (0.58%). These state rates are not seasonally adjusted.

Data on weekly unemployment claims going back to 1967 are contained in Haver's **WEEKLY** database, and they are summarized monthly in **USECON**. Data for individual states are in **REGIONW**. The expectations figure is from the Action Economics Forecast Survey and is in the **AS1REPNA** database.

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* **Strength of initial claims accompanies spread of Omicron virus.**
* **Continued claims rise modestly.**
* **Insured unemployment rate edges higher.**

U.S. Initial Unemployment Insurance Claims Unexpectedly Rise

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Existing home sales declined 4.6% (-7.1% y/y) to 6.180 million units (SAAR) in December after rising to 6.480 million in November, revised from 6.460 million, according to the National Association of Realtors (NAR). For all 2021, sales averaged a record 6.132 million, up 8.4% from 2020. The Action Economics Forecast Survey expected a fall in sales to 6.42 million units in December. These data are compiled when existing home sales close.

The decline in existing home sales included a 4.3% fall (-6.8% y/y) in single-family home sales to 5.520 million from 5.770 million in November. Sales of condos and co-ops weakened 7.0% (-9.6% y/y) to 660,000 from 710,000.

Sales declined across the country. Sales in the West weakened 6.8% (-10.2% y/y) to 1.230 million following a 1.5% November gain. In the South, sales declined 6.3% (-5.3% y/y) to 2.770 million in December after rising 4.0% in November. Sales in the Midwest fell 1.3% (-2.6% y/y) to 1.500 million after a 0.7% November improvement. Sales in the Northeast were off 1.3% (-15.7% y/y) to 750,000 after holding steady in November.

The median price of an existing home increased 1.0% (15.8% y/y) to $358,000 in December. During all of 2021, the median price rose 16.5% to $343,992 after gaining 9.4% in 2020. In the West, prices were fairly steady last month (8.4% y/y) for a second month at $507,100. December home prices in the Northeast rose 0.8% (6.3% y/y) to $384,600. Prices in the South rose 2.1% in December (20.2% y/y) to $323,000. In the Midwest, prices eased 0.8% last month (+10.0% y/y) to $256,900. The price data are not seasonally adjusted.

The number of existing homes on the market dropped 18.0% (NSA) in December to 910,000 units (-14.2% y/y). The supply of homes on the market fell to 1.8 months in December. That was well below the high of 4.6 months in May 2020. These figures date back to January 1999.

The data on existing home sales, prices and affordability are compiled by the National Association of Realtors. The data on single-family home sales extend back to February 1968. Total sales and price data and regional sales can be found in Haver's **USECON** database. Regional price and affordability data and national inventory data are available in the **REALTOR** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

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- Sales fall as Omicron sets in.
- Regional declines are broad-based.
- Median price nears record.

U.S. Existing Home Sales Decline in December

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The Mortgage Bankers Association's Loan Applications Index rose 2.3% (-37.3% y/y) in the week ended January 14 following a 1.4% increase in the previous week. Purchase applications strengthened 7.9% (-12.2% y/y) after a 2.2% rise in the previous week. Applications for loans to refinance fell 3.1% (-49.2% y/y) after easing 0.1% in the previous week.

The share of applications for refinancing fell to 60.3% in the week ended January 14 from 64.1% in the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 3.8% from 3.1% in the prior week.

The effective interest rate on a 30-year mortgage rose to 3.77% in the week ended January 14 from 3.65% in the previous week. It was the highest level since March 2020. The effective rate on a 15-year mortgage increased to 3.05% from 2.82% while the rate on a Jumbo 30-year mortgage increased to 3.67% from 3.53%. The interest rate on a 5-year adjustable-rate mortgage increased to 3.13%, after surging to 3.10% in the previous week.

Applications for fixed-rate loans rose 1.5% (-38.4% y/y) in the second week of 2022, the same as in the previous week. Applications for adjustable-rate mortgages soared 24.9% (16.7% y/y) after falling in both of the previous two weeks.

The average size of a mortgage loan increased 2.6% (5.9% y/y) to $346,800 in the week ended January 14 following a 1.0% rise in the previous week. The average size of a loan for purchase jumped 4.2% (9.0% y/y) to $418,500 in the latest week. The average size of a refinanced loan fell 0.9% last week (-2.0% y/y) to $299,500.

This survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's **SURVEYW** database.

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- Purchase applications rise again while refinancing applications fall for third week.
- 30-year mortgage interest rate continues to increase.

U.S. Mortgage Applications Increase Again

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Housing starts rose 1.4% (2.5% y/y) during December to 1.702 million units (SAAR) from 1.678 million in November, revised from 1.679 million. They reached the highest level since March of 2021. During all of last year, 1.598 million units were started, up 14.4% from 1.397 million in 2020 and the most since 2006. A December level of 1.660 million starts had been expected in the Action Economics Forecast Survey.

The rise in starts overall in December reflected a 10.6% gain (53.2% y/y) in multi-family starts to 530,000, the highest level since February 2020. During all of 2021, multi-family starts rose 20.0% to 472,000. Starts of single-family units declined 2.3% in December (-10.9% y/y) to 1.172 million, but for the whole year, single-family starts rose 12.3% to 1.127 million.

Building permits increased 9.1% (6.5% y/y) to 1.873 million from 1.717 million in November. It was the highest level of permits since January 2021. During all of 2021, permits rose 15.8% to 1.713 million. Permits to build single-family homes gained 2.0% in December (-8.5% y/y) to 1.128 million. Permits to build multi-family homes rose 21.9% (41.9% y/y) in December to 745,000.

By region, housing starts in the Northeast rose 20.2% (0.7% y/y) in December to 137,000. Starts in the Midwest increased 36.5% (17.1% y/y) to 288,000. Working lower were housing starts in the South by 1.9% (+9.3% y/y) to 915,000. Starts in the West fell 13.8% (-18.1% y/y) to 362,000.

The housing starts and permits figures can be found in Haver's **USECON** database. The expectations figure is contained in the **AS1REPNA** database.

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- Multi-family starts increase while single-family building eases.
- Regional changes are mixed.
- Building permits strengthen.

U.S. Housing Starts Are Unexpectedly Strong in December

Sandy Batten

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Retail gasoline prices edged up 0.3% w/w to $3.31 per gallon (39.0% y/y) in the week ended January 17 from $3.30 per gallon in the previous week. It was the highest price since the second week of December. Haver Analytics adjusts the gasoline price series for normal seasonal variation. The seasonally adjusted price was unchanged at $3.40 per gallon.

The price of West Texas Intermediate crude oil increased 4.8% w/w (54.5% y/y) to $81.57 per barrel in the week of January 14, the highest weekly price since the week of November 12. This was the fourth consecutive weekly rise. Yesterday, the price rose to $85.43 per barrel, its highest since October 25, 2021. The average price of Brent crude oil rose 3.9% w/w (50.0% y/y) to $83.85 in the week of January 14, the highest price since the week of October 29. The price rose further to $87.90 per barrel yesterday, its highest since October 13, 2014.

The price of natural gas soared 16.3% m/m (56.7% y/y) to $4.42/mmbtu in the week of January 14 on top of a 6.7% w/w jump in the previous week. While this is the fifth weekly increase in the past six weeks, the current price remains well below the recent high of $5.87/mmbtu reached in early October 2021. Yesterday, the price increased to $4.55/mmbtu.

In the four weeks ended January 7, growth in gasoline demand slowed to 11.8% y/y from 15.2% y/y in the previous week. Growth in demand for all petroleum products slowed to 10.8% y/y in the same week from 14.4% y/y in the prior week. Crude oil input to refineries rose 9.8% y/y, down from 10.9% y/y in the previous week. Gasoline inventories fell 1.9% y/y, while crude oil inventories declined 10.1% y/y.

The supply of gasoline inventories in the week ending January 7 rose to 27.7 days, its highest level since March 2021, from 25.6 days. The supply of crude oil slipped to 26.3 days in the same week from 26.5 days in the prior week. The latest reading was the lowest level since January 2020.

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 edged up to highest in five weeks.
- Crude oil prices rose again to highest in nine weeks.
- Natural gas prices soared on top of big increase in the previous week.

U.S. Energy Prices Continued to Rise

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The Empire State Manufacturing Index of General Business Conditions fell sharply to -0.7 in January from 31.9 in December as New York became the epicenter of the Omicron outbreak. A decline to 25.5 had been expected in the Action Economics Forecast Survey. A greatly lessened 22.1% of respondents reported improved business conditions in January versus 45.2% in December, while 22.8% reported that conditions had worsened, increased from 13.2% in December. The latest survey was conducted between January 3 and January 10.

Haver Analytics constructs an ISM-adjusted Empire State diffusion index using methodology similar to the ISM series. The latest reading fell to 54.4 in January from 60.8 in December. It was well below the July high of 63.4. A reading above 50 signifies growth. In contrast to the ISM index, the headline Empire Index reflects the answer to a single question, not calculated from its components.

Declines in the Empire State component series were widespread in January. The new orders measure fell from 27.1 to -5.0, the first negative reading since August 2020. Shipments fell to 1.0 from 27.1 as 23.1% reported a decline in shipments versus 17.3% in December and 24.1% of respondents reported higher shipments versus 44.4% in the prior month. The delivery time index fell to 21.6 after declining sharply to 23.1 in December. A lessened 29.3% of respondents reported increased delivery times versus 34.7% in December, while 7.8% reported shorter deliver times versus 11.6% in December. The unfilled orders series fell to 12.1 from 19.0 in December. Working higher was the inventory index to 10.3, its highest level in three months.

Employment indicators weakened sharply this month. The number of employees index fell to 16.1 from 21.4 in December. Twenty percent of respondents reported increases in employment versus 26.7% in December, while 3.9% reported a decline in employment after 5.3% did so in December. The average workweek series eased to 10.3 this month after falling sharply in December to 12.1.

Inflation pressures weakened in January. The prices paid index declined to 76.7, its lowest point since September of last year. The record high was 83.5 in May 2021. A lower 77.6% of respondents paid higher prices, down from 81.8% in December while a lessened 0.9% paid less. The prices received measure fell sharply to 37.1 from 44.6 in December.

The index of expected business conditions in six months eased to 35.1 in January from 36.4 in December, compared to 72.0 in October. Expectations for shipments, delivery times and employment fell while expectations for prices received rose. Expectations for both capital spending and technology spending improved slightly.

The Empire State data, reported by the Federal Reserve Bank of New York, reflect business conditions in the manufacturing sector in New York, northern New Jersey and southern Connecticut. The headline measure is constructed from the answer to a single question on business conditions. The Empire State figures are diffusion indexes, which are calculated by subtracting the percent of respondents reporting declines from the percent reporting gains. The data are available in Haver's **SURVEYS** database. The ISM-adjusted headline index dates back to 2001. The Action Economics Forecasts can be found in Haver's **AS1REPNA** database.

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- Negative reading is worst since May 2020.
- Component declines include new orders, shipments & employment.
- Prices paid & received indexes weaken.

U.S. Empire State Index Weakens 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

Winnie Tapasanun

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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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