Tom Moeller

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911h.jpg" width="353">
The U.S. government&#39;s August budget deficit of $111.9B was roughly equal to the deficit of last August of $117.0B. Moreover, based on expectations formed by Public Debt Transactions from the Daily Treasury Statement, the budget surplus roughly equaled the Consensus forecast for a deficit of $105B. The Treasury Statement figures are available in Haver&#39;s DAILY database.
Like prior months, however, that is where the good news ends on the Federal budget front. For the first eleven months of FY08 the government ran a budget deficit of $483.4B which was up from the deficit of $274.4B during the first eleven months of FY07. The weak economy has limited government receipts and swelled expenditures.
For the fiscal year to date federal receipts fell 1.4% from a year earlier, the third negative comparison in a row and it compared to positive 7.5% y/y growth during the first eleven months of FY07. Higher unemployment pulled the growth in individual income tax receipts (44% of total receipts) to a negative 2.7% this year versus positive 11.5% growth during all of FY07. That was the weakest growth since a shortfall in mid-2004. Despite higher unemployment, withheld income taxes still grew 3.3%, but that was about one-third the growth of a year earlier. Growth in non-withheld taxes similarly fell to just 5.1%, also one-third of the growth during the first eleven months of FY07.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911i.jpg" width="353">
Lower corporate profitability provided a further crimp to government revenues. Corporate income taxes (13% of total receipts) fell 6.9% from receipts during the first eleven months of FY07. During FY07 they rose 8.5% during the first eleven months.
Unemployment insurance contributions fell 3.3% FYTD due to negative employment growth while Federal excise taxes fell 2.3%. Estate and gift taxes rose 11.8%.
U.S. net outlays grew 7.0% during the first eleven months of FY08, up from 5.3% growth during FY07&#39;s first eleven months. Growth in defense spending (19% of total outlays) led the acceleration with an 11.7% gain, up from 7.0% growth one year earlier. Transportation spending grew 6.2%, up from 4.2% growth in FY07&#39;s first eleven months.
As unemployment rose, growth in outlays for income security (15% of outlays) surged to 17.7% from 5.7% one year earlier. Medicare expenditures (12% of outlays) grew a slower 4.4% but health spending (10% of total outlays) was near-constant at a 4.8% growth rate. Growth in interest expense also held steady at 4.5%.
The Government&#39;s financial data is available in Haver&#39;s USECON database.
The Budget and Economic Outlook: An Update from the Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/97xx/doc9706/09-08-Update.pdf">here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US Government Finance</a> &nbsp;</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2005 &nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-111.9B</td>
<td>$-102.8B</td>
<td>$-117.0B (8/07)</td>
<td>-$162.0B</td>
<td>-$248.2B</td>
<td>-$318.7B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$157.0</td>
<td>$160.5B</td>
<td>-5.7%</td>
<td>6.7%</td>
<td>11.8%</td>
<td>14.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$268.9</td>
<td>$263.3B</td>
<td>-5.1%</td>
<td>2.8%</td>
<td>7.4%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>


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The U.S. government's August budget deficit of $111.9B was roughly equal to the deficit of last August of $117.0B. Moreover, based on expectations formed by Public Debt Transactions from the Daily Treasury Statement, the budget [...]

U.S. Budget Deficit Stable in August, Swelled Year-to-Date

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911f.jpg" width="353">
Initial claims for unemployment insurance slipped last week to 445,000 but the prior week&#39;s level was revised higher to 451,000.
The four-week moving average held roughly stable at 440,000 (35.4% y/y) and remained near the highest level since near the end of the 2001 recession. During July claims averaged 393,000.
A claims level below 400,000 typically has been associated with positive 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. Over the longer period of time, the level of claims for jobless insurance has not trended higher with the size of the labor force due to a higher proportion of self-employed workers who are not eligible for benefits.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911g.jpg" width="353">
Continuing claims for unemployment insurance during the latest week rose 122,000 to a new cycle-high. Continuing claims provide some indication of workers&#39; ability to find employment and they lag the initial claims figures by one week.
The insured rate of unemployment ticked higher to 2.6%, the highest level since late-2003.

<table border="0" cellspacing="0" width="100%">
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<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">09/05/08</th>
<th scope="col">08/30/08</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;445</td>
<td>451</td>
<td>38.2%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,525</td>
<td>35.7%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
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Initial claims for unemployment insurance slipped last week to 445,000 but the prior week's level was revised higher to 451,000. The four-week moving average held roughly stable at 440,000 (35.4% y/y) and remained near the highest [...]

U.S. Initial Claims for Jobless Insurance Slipped But Remained High

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911d.jpg" width="353">
U.S. import prices overall slid 3.7% last month. The decline followed a revised 0.2% July uptick and gains between 2.0% and 3.0% during the prior four months. The August decline was double expectations for a 1.5% drop.
The decline was paced by a 12.8% drop in petroleum prices and the price index returned nearer to its April level. This month imported crude petroleum prices already are down another 10% .
Less petroleum, import prices slipped 0.3 after a downwardly revised 0.7% July increase. During the last three months prices rose at a 4.6% annual rate, down sharply from the 12-13% growth of this past spring. 
 Growth in import prices, eventually, will slow further given the recent rise in the foreign exchange value of the dollar. 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/080911e.jpg" width="353">
Prices for industrial supplies &amp; materials excluding oil fell 1.7% and reversed the July gain. Three-month growth of 13.7% (AR) is down due to slower gains in prices for iron &amp; steel products, unfinished metals and chemicals. These detailed import price series can be found in the Haver USINT database. 
Capital goods import prices slipped 0.1% after a downwardly revised 0.2% increase during July. On a three-month basis prices were unchanged. Less the lower prices of computers, capital goods prices rose 0.2% after a 0.7% July rise. Three month growth of 4.4% was half its peak and they rose 2.7% last year. Prices of computers, peripherals &amp; accessories fell 1.0% last month, about as they did during the prior three months.
Finally, prices for nonauto consumer goods were unchanged last month and the 1.5% rate of increase during the last three months is down from the 5.9% peak earlier this year. The diminished rate of increase for durables of 1.6% is notable.
Total export prices reversed their July surge and fell 1.7% as agricultural prices slumped 9.6% (+24.8% y/y). Nonagricultural export prices reversed their July increase and fell 0.7% (+6.7% 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">August</th>
<th scope="col">July</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>-3.7</td>
<td>0.2%</td>
<td>16.0%</td>
<td>4.2%</td>
<td>4.9%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-12.8</td>
<td>-1.0</td>
<td>52.0</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>-0.3</td>
<td>0.7</td>
<td>7.5</td>
<td>2.7</td>
<td>1.7</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>-1.7</td>
<td>1.5</td>
<td>8.2</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 slid 3.7% last month. The decline followed a revised 0.2% July uptick and gains between 2.0% and 3.0% during the prior four months. The August decline was double expectations for a 1.5% drop. The decline was [...]

U.S. Total Import Prices Fell With Oil Price Decline

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911a.jpg" width="353">
The U.S. foreign trade deficit for July reversed its earlier improvement and deepened to $62.2B after shrinking to $58.8B in June which was deeper than reported last month. A deficit of $58.0B had been the Consensus expectation for July. So far this year the monthly trade deficit has averaged $60.0B, slightly deeper than the $59.4B averaged during the first seven months of 2007.
Adjusted for price inflation, the July trade deficit in goods deepened slightly to $41.2B from $40.1B in June. Year-to-date the real deficit has narrowed by more than $10.0B versus 2007 to an average $45.7B as exports surged and real import growth dropped.
During 2Q08 a narrower trade deficit added 3.1 percentage points to real GDP growth after a 0.8 point addition during 1Q. U.S. exports again were strong in July and they rose 2.0% m/m after a downwardly revised 3.6% increase during June.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911b.jpg" width="353">
Goods exports rose during July by 3.9% (23.2% y/y) after a little-revised 4.9% jump during June. Adjusted for prices, chained dollar exports rose 2.0% (12.1% y/y). Real exports of nonauto consumer goods continued strong and surged 5.0% (17.4% y/y) after a like increase during June. Real exports of capital goods again were strong and increased 2.0% (7.8% y/y). Exports of autos, parts &amp; engines jumped 12.6% (10.9% y/y) but real exports foods, feeds &amp; beverages fell 7.1% (+6.3% y/y).
Exports of services again were strong and they rose 1.8% (11.5% y/y). Travel exports rose 2.0% (18.8% y/y) as during June and passenger fares rose 1.6% (31.4% y/y).
Overall, imports posted a strong 3.9% jump as petroleum imports surged 13.7% due to higher prices. Imports have nearly doubled since one year earlier. Adjusted for the higher prices, petroleum imports rose a lesser 8.0% (3.8% y/y) during July. The quantity of energy-related imports of petroleum products jumped 4.5% y/y while the average cost for a barrel of crude oil during July was $124.66 (90.1% y/y). Since July prices have fallen significantly and that should begin to reverse much of the trade deficit&#39;s deterioration.
Month-to-month, imports of nonpetroleum products during July rose 1.1% after a little-revised 1.3% decline during June. Measured in chained 2000 dollars nonoil imports inched up 0.3% (-2.7% y/y) after a revised 2.0% drop during June. In chained dollars imports of capital goods reversed just part of their June decline with a 1.2% (2.9% y/y) increase. Real imports of automotive vehicles &amp; parts were weak again and they fell by 0.6% (-10.6% y/y).Chained imports of nonauto consumer goods fell for the second consecutive month, in July by 0.4% (+2.1% y/y).<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911c.jpg" width="353">
Services imports increased 1.7% (8.4% y/y) as travel imports jumped 1.5% (9.2% y/y) and passenger fares increased 3.0% (18.0% y/y).
The U.S. trade deficit in goods with China deepened slightly m/m to $21.4B. The deficit with China during the first seven months of this year was roughly the same as during the first seven months of 2007. Growth in exports to China spiked to 34.3% y/y in July and imports rose 9.5%. That was down from the 11.7% increase during all of 2007. With Japan, the trade deficit deepened slightly to $6.3B as exports fell 5.8% (+16.2% y/y) and imports dropped 1.2% (-6.2% y/y).
Did Large Recalls of Chinese Consumer Goods Lower U.S. Imports from China? from the Federal Reserve Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-17.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign Trade&nbsp;</a></th>
<th scope="col">July</th>
<th scope="col">June</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">U.S. Trade Deficit</td>
<td>$62.2B</td>
<td>$58.8B</td>
<td>$57.3B (7/07)</td>
<td>$700.3</td>
<td>$753.3</td>
<td>$711.6B</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp; Services</td>
<td>3.3%</td>
<td>3.7%</td>
<td>20.1%</td>
<td>13.0%</td>
<td>13.5%</td>
<td>10.6%</td>
</tr>
<tr>
<td class="firstcol">Imports - Goods &amp; Services</td>
<td>3.9%</td>
<td>2.1%</td>
<td>16.8%</td>
<td>6.1%</td>
<td>10.8%</td>
<td>12.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>13.7%</td>
<td>16.4%</td>
<td>88.8%</td>
<td>9.4%</td>
<td>20.1%</td>
<td>39.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>1.1%</td>
<td>-1.3%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>9.1%</td>
<td>10.3%</td>
</tr>
</tbody>
</table>
</body>
</html>

The U.S. foreign trade deficit for July reversed its earlier improvement and deepened to $62.2B after shrinking to $58.8B in June which was deeper than reported last month. A deficit of $58.0B had been the Consensus expectation for [...]

U.S. Trade Deficit Deepened As Oil Prices Rose

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911a.jpg" align="left" border="0" height="265" width="353">
The U.S. foreign trade deficit for July reversed its earlier
improvement and deepened to $62.2B after shrinking to $58.8B in June
which was deeper than reported last month. A deficit of $58.0B had been
the Consensus expectation for July. So far this year the monthly trade
deficit has averaged $60.0B, slightly deeper than the $59.4B averaged
during the first seven months of 2007.
Adjusted for price inflation, the July trade deficit in goods
deepened slightly to $41.2B from $40.1B in June. Year-to-date the real
deficit has narrowed by more than $10.0B versus 2007 to an average
$45.7B as exports surged and real import growth dropped.
During 2Q08 a narrower trade deficit added 3.1 percentage
points to real GDP growth after a 0.8 point addition during 1Q. U.S.
exports again were strong in July and they rose 2.0% m/m after a
downwardly revised 3.6% increase during June.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911b.jpg" align="right" border="0" height="265" width="353">
Goods exports rose during July by 3.9% (23.2% y/y) after a
little-revised 4.9% jump during June. Adjusted for prices, chained
dollar exports rose 2.0% (12.1% y/y). Real exports of nonauto consumer
goods continued strong and surged 5.0% (17.4% y/y) after a like
increase during June. Real exports of capital goods again were strong
and increased 2.0% (7.8% y/y). Exports of autos, parts &amp;
engines jumped 12.6% (10.9% y/y) but real exports foods, feeds
&amp; beverages fell 7.1% (+6.3% y/y).
Exports of services again were strong and they rose 1.8%
(11.5% y/y). Travel exports rose 2.0% (18.8% y/y) as during June and
passenger fares rose 1.6% (31.4% y/y).
Overall, imports posted a strong 3.9% jump as petroleum
imports surged 13.7% due to higher prices. Imports have nearly doubled
since one year earlier. Adjusted for the higher prices, petroleum
imports rose a lesser 8.0% (3.8% y/y) during July. The quantity of
energy-related imports of petroleum products jumped 4.5% y/y while the
average cost for a barrel of crude oil during July was $124.66 (90.1%
y/y). Since July prices have fallen significantly and that should begin
to reverse much of the trade deficit's deterioration.
Month-to-month, imports of nonpetroleum products during July
rose 1.1% after a little-revised 1.3% decline during June. Measured in
chained 2000 dollars nonoil imports inched up 0.3% (-2.7% y/y) after a
revised 2.0% drop during June. In chained dollars imports of capital
goods reversed just part of their June decline with a 1.2% (2.9% y/y)
increase. Real imports of automotive vehicles &amp; parts were weak
again and they fell by 0.6% (-10.6% y/y).Chained imports of nonauto
consumer goods fell for the second consecutive month, in July by 0.4%
(+2.1% y/y).<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911c.jpg" align="left" border="0" height="265" width="353">
Services imports increased 1.7% (8.4% y/y) as travel imports
jumped 1.5% (9.2% y/y) and passenger fares increased 3.0% (18.0% y/y).
The U.S. trade deficit in goods with China deepened slightly
m/m to $21.4B. The deficit with China during the first seven months of
this year was roughly the same as during the first seven months of
2007. Growth in exports to China spiked to 34.3% y/y in July and
imports rose 9.5%. That was down from the 11.7% increase during all of
2007. With Japan, the trade deficit deepened slightly to $6.3B as
exports fell 5.8% (+16.2% y/y) and imports dropped 1.2% (-6.2% y/y).
Did Large Recalls of Chinese Consumer Goods
Lower U.S. Imports from China? from the Federal Reserve
Bank of San Francisco can be found <a href="http://www.frbsf.org/publications/economics/letter/2008/el2008-17.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EE/@EE01/@EE01.HTM">Foreign
Trade&nbsp;</a></th>
<th scope="col">July</th>
<th scope="col">June</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">U.S. Trade Deficit</td>
<td>$62.2B</td>
<td>$58.8B</td>
<td>$57.3B (7/07)</td>
<td>$700.3</td>
<td>$753.3</td>
<td>$711.6B</td>
</tr>
<tr>
<td class="firstcol">Exports - Goods &amp;
Services</td>
<td>3.3%</td>
<td>3.7%</td>
<td>20.1%</td>
<td>13.0%</td>
<td>13.5%</td>
<td>10.6%</td>
</tr>
<tr>
<td class="firstcol">Imports - Goods &amp;
Services</td>
<td>3.9%</td>
<td>2.1%</td>
<td>16.8%</td>
<td>6.1%</td>
<td>10.8%</td>
<td>12.8%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>13.7%</td>
<td>16.4%</td>
<td>88.8%</td>
<td>9.4%</td>
<td>20.1%</td>
<td>39.6%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Nonpetroleum Goods</td>
<td>1.1%</td>
<td>-1.3%</td>
<td>4.5%</td>
<td>4.8%</td>
<td>9.1%</td>
<td>10.3%</td>
</tr>
</tbody>
</table>
U.S. Total Import Prices Fell With
Oil Price Decline 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 11, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911d.jpg" align="left" border="0" height="265" width="353">
U.S. import prices overall slid 3.7% last month. The decline
followed a revised 0.2% July uptick and gains between 2.0% and 3.0%
during the prior four months. The August decline was double
expectations for a 1.5% drop.
The decline was paced by a 12.8% drop in petroleum prices and
the price index returned nearer to its April level. This month imported
crude petroleum prices already are down another 10% .
Less petroleum, import prices slipped 0.3 after a downwardly
revised 0.7% July increase. During the last three months prices rose at
a 4.6% annual rate, down sharply from the 12-13% growth of this past
spring.

 Growth
in import prices, eventually, will slow further given the recent rise
in the foreign exchange value of the dollar. 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 src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911e.jpg" align="right" border="0" height="265" width="353">
Prices
for industrial supplies &amp; materials excluding oil fell 1.7% and
reversed the July gain. Three-month growth of 13.7% (AR) is down due to
slower gains in prices for iron &amp; steel products, unfinished
metals and chemicals. These detailed import price series can be found
in the Haver USINT database. 
Capital goods import prices slipped 0.1% after a downwardly
revised 0.2% increase during July. On a three-month basis prices were
unchanged. Less the lower prices of computers, capital goods prices
rose 0.2% after a 0.7% July rise. Three month growth of 4.4% was half
its peak and they rose 2.7% last year. Prices of computers, peripherals
&amp; accessories fell 1.0% last month, about as they did during
the prior three months.
Finally, prices for nonauto consumer goods were unchanged last
month and the 1.5% rate of increase during the last three months is
down from the 5.9% peak earlier this year. The diminished rate of
increase for durables of 1.6% is notable.
Total export prices reversed their July surge and fell 1.7% as
agricultural prices slumped 9.6% (+24.8% y/y). Nonagricultural export
prices reversed their July increase and fell 0.7% (+6.7% 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">August</th>
<th scope="col">July</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>-3.7</td>
<td>0.2%</td>
<td>16.0%</td>
<td>4.2%</td>
<td>4.9%</td>
<td>7.5%</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Petroleum</td>
<td>-12.8</td>
<td>-1.0</td>
<td>52.0</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>-0.3</td>
<td>0.7</td>
<td>7.5</td>
<td>2.7</td>
<td>1.7</td>
<td>2.7</td>
</tr>
<tr>
<td class="firstcol">Export- All Commodities</td>
<td>-1.7</td>
<td>1.5</td>
<td>8.2</td>
<td>4.9</td>
<td>3.6</td>
<td>3.2</td>
</tr>
</tbody>
</table>
U.S. Initial Claims for Jobless
Insurance Slipped But Remained High 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 11, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911f.jpg" align="left" border="0" height="265" width="353">
Initial claims for unemployment insurance slipped last week to
445,000 but the prior week's level was revised higher to 451,000.
The four-week moving average held roughly stable at 440,000
(35.4% y/y) and remained near the highest level since near the end of
the 2001 recession. During July claims averaged 393,000.
A claims level below 400,000 typically has been associated
with positive 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. Over
the longer period of time, the level of claims for jobless insurance
has not trended higher with the size of the labor force due to a higher
proportion of self-employed workers who are not eligible for benefits.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911g.jpg" align="right" border="0" height="265" width="353">
Continuing claims for unemployment insurance during the latest
week rose 122,000 to a new cycle-high. Continuing claims provide some
indication of workers' ability to find employment and they lag the
initial claims figures by one week.
The insured rate of unemployment ticked higher to 2.6%, the
highest level since late-2003.

<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">09/05/08</th>
<th scope="col">08/30/08</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;445</td>
<td>451</td>
<td>38.2%</td>
<td>322</td>
<td>313</td>
<td>331</td>
</tr>
<tr>
<td class="firstcol">Continuing Claims</td>
<td>--</td>
<td>3,525</td>
<td>35.7%</td>
<td>2,552</td>
<td>2,459</td>
<td>2,662</td>
</tr>
</tbody>
</table>
U.S. Budget Deficit Stable in
August, Swelled Year-to-Date 
by <a href="/comment/Moeller.html">Tom
Moeller</a> September 11, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911h.jpg" align="left" border="0" height="265" width="353">
The U.S. government's August budget deficit of $111.9B was
roughly equal to the deficit of last August of $117.0B. Moreover, based
on expectations formed by Public Debt Transactions from the Daily
Treasury Statement, the budget surplus roughly equaled the Consensus
forecast for a deficit of $105B. The Treasury Statement figures are
available in Haver's DAILY database.
Like prior months, however, that is where the good news ends
on the Federal budget front. For the first eleven months of FY08 the
government ran a budget deficit of $483.4B which was up from the
deficit of $274.4B during the first eleven months of FY07. The weak
economy has limited government receipts and swelled expenditures.
For the fiscal year to date federal receipts fell 1.4% from a
year earlier, the third negative comparison in a row and it compared to
positive 7.5% y/y growth during the first eleven months of FY07. Higher
unemployment pulled the growth in individual income tax receipts (44%
of total receipts) to a negative 2.7% this year versus positive 11.5%
growth during all of FY07. That was the weakest growth since a
shortfall in mid-2004. Despite higher unemployment, withheld income
taxes still grew 3.3%, but that was about one-third the growth of a
year earlier. Growth in non-withheld taxes similarly fell to just 5.1%,
also one-third of the growth during the first eleven months of FY07.<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911i.jpg" align="right" border="0" height="265" width="353">
Lower corporate profitability provided a further crimp to
government revenues. Corporate income taxes (13% of total receipts)
fell 6.9% from receipts during the first eleven months of FY07. During
FY07 they rose 8.5% during the first eleven months.
Unemployment insurance contributions fell 3.3% FYTD due to
negative employment growth while Federal excise taxes fell 2.3%. Estate
and gift taxes rose 11.8%.
U.S. net outlays grew 7.0% during the first eleven months of
FY08, up from 5.3% growth during FY07's first eleven months. Growth in
defense spending (19% of total outlays) led the acceleration with an
11.7% gain, up from 7.0% growth one year earlier. Transportation
spending grew 6.2%, up from 4.2% growth in FY07's first eleven months.
As unemployment rose, growth in outlays for income security
(15% of outlays) surged to 17.7% from 5.7% one year earlier. Medicare
expenditures (12% of outlays) grew a slower 4.4% but health spending
(10% of total outlays) was near-constant at a 4.8% growth rate. Growth
in interest expense also held steady at 4.5%.
The Government's financial data is available in Haver's USECON
database.
The Budget and Economic Outlook: An Update from
the Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/97xx/doc9706/09-08-Update.pdf">here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead><tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@E1/@E106/@E10602/@E106021.HTM">US
Government Finance</a> &nbsp;</th>
<th scope="col">August</th>
<th scope="col">July</th>
<th scope="col">Y/Y</th>
<th scope="col">FY 2007</th>
<th scope="col">FY 2006</th>
<th scope="col">FY 2005 &nbsp;</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Budget Balance</td>
<td>$-111.9B</td>
<td>$-102.8B</td>
<td>$-117.0B (8/07)</td>
<td>-$162.0B</td>
<td>-$248.2B</td>
<td>-$318.7B</td>
</tr>
<tr>
<td class="firstcol">Net Revenues</td>
<td>$157.0</td>
<td>$160.5B</td>
<td>-5.7%</td>
<td>6.7%</td>
<td>11.8%</td>
<td>14.1%</td>
</tr>
<tr class="odd">
<td class="firstcol">Net Outlays</td>
<td>$268.9</td>
<td>$263.3B</td>
<td>-5.1%</td>
<td>2.8%</td>
<td>7.4%</td>
<td>7.6%</td>
</tr>
</tbody>
</table>
Japan Machinery Orders Go Sour 
by <a href="/comment/Brusca.html">Robert
Brusca</a> September 11, 2008


<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080911j.jpg" align="left" border="0" height="265" width="353">
Japan&#8217;s machinery orders fell sharply in July while the so
called core order series fell, but by less than had been expected.
Domestic orders have been listless for a year while foreign orders have
been getting quite weak since early this year. Japan's two largest
export markets are China and the US and both are slowing. The US
slowdown has hit Japan especially hard. Still, orders is a volatile
series. Even the so-called core is very volatile once the large
projects are removed.

<table border="0" cellspacing="0" width="100%"> <colgroup></colgroup>
<thead><tr>
<th colspan="8" scope="col">Japan
Machinery Orders </th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">&nbsp;</td>
<td colspan="3">m/m %</td>
<td colspan="4">Saar %</td>
</tr>
<tr>
<td class="firstcol">SA</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>May-08</td>
<td>3-Mos</td>
<td>6-Mos</td>
<td>12-Mos</td>
<td>12-Mo Ago</td>
</tr>
<tr>
<td class="firstcol">Total</td>
<td>-8.5%</td>
<td>-4.8%</td>
<td>10.8%</td>
<td>-13.3%</td>
<td>-36.6%</td>
<td>-4.7%</td>
<td>8.0%</td>
</tr>
<tr>
<td class="firstcol">Core Orders*</td>
<td>-3.9%</td>
<td>-2.6%</td>
<td>10.4%</td>
<td>13.9%</td>
<td>-23.1%</td>
<td>-4.8%</td>
<td>7.8%</td>
</tr>
<tr>
<td class="firstcol">Total Orders</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td class="firstcol">Foreign Demand</td>
<td>-14.4%</td>
<td>-12.1%</td>
<td>21.1%</td>
<td>-30.8%</td>
<td>-51.8%</td>
<td>-7.4%</td>
<td>13.3%</td>
</tr>
<tr>
<td class="firstcol">Domestic demand</td>
<td>-5.2%</td>
<td>3.6%</td>
<td>2.3%</td>
<td>2.0%</td>
<td>-12.1%</td>
<td>-2.4%</td>
<td>4.7%</td>
</tr>
<tr class="grey1">
<td colspan="8" class="firstcol">*Excluding
ships and electric power.</td>
</tr>
</tbody>
</table>
</body></html>

Robert Brusca

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<img src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080910e.jpg" align="left" border="0" height="265" width="353">
French IP made a surprise jump of 1.2% in July but only after
a larger decline in June and in the wake of a plunge in May and so that
the rise has not restored any momentum to the outlook.
The sequential growth rates show a steady weakening in
output across sectors with the overall output measure decelerating
steadily from 12 months to 6 months to 3 months. The sector paths are a
little more uneven than that with consumer goods output even showing an
increase over three months. That sector also is posting a gain in the
quarter-to-date calculations and it&#8217;s the only one to do so. That is
largely because auto output is up in the quarter and was up very
strongly in July (a 5.1% pace!).
On balance French measures of economic activity have held up
well until just before mid-year. The EU has today downgraded the growth
outlook for most European countries. It projects what are essentially
recessions in Germany, Spain and the UK. However, Italy and France have
escaped that list. But France is starting to feel the blow of weaker
growth later than some of the others so the jury is still out on how
weak France will be and how soon the weakness will manifest itself.

<table border="0" cellspacing="0" width="100%">
<colgroup><col></colgroup>
<thead><tr>
<th colspan="8" scope="col"> French IP Excluding Construction</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Saar except m/m</td>
<td>Jul-08</td>
<td>Jun-08</td>
<td>May-08</td>
<td>3-mo</td>
<td>6-mo</td>
<td>12-mo</td>
<td>Quarter-to-date</td>
</tr>
<tr class="odd">
<td class="firstcol">IP total</td>
<td>1.2%</td>
<td>-0.6%</td>
<td>-3.0%</td>
<td>-9.5%</td>
<td>-3.8%</td>
<td>-2.0%</td>
<td>-1.5%</td>
</tr>
<tr class="odd">
<td class="firstcol">Consumer</td>
<td>1.3%</td>
<td>0.6%</td>
<td>-1.5%</td>
<td>1.6%</td>
<td>-2.1%</td>
<td>-2.8%</td>
<td>7.4%</td>
</tr>
<tr class="odd">
<td class="firstcol">Capital</td>
<td>0.6%</td>
<td>-1.6%</td>
<td>-1.4%</td>
<td>-9.2%</td>
<td>0.5%</td>
<td>-0.2%</td>
<td>-5.6%</td>
</tr>
<tr class="odd">
<td class="firstcol">Intermediate</td>
<td>1.1%</td>
<td>-0.6%</td>
<td>-3.1%</td>
<td>-10.5%</td>
<td>-6.0%</td>
<td>-3.2%</td>
<td>-2.7%</td>
</tr>
<tr>
<td class="firstcol" colspan="8">Memo</td>
</tr>
<tr class="odd">
<td class="firstcol">Auto</td>
<td>5.1%</td>
<td>-2.8%</td>
<td>-8.0%</td>
<td>-21.9%</td>
<td>-14.7%</td>
<td>-3.5%</td>
<td>1.2%</td>
</tr>
</tbody>
</table>
</body></html>

French IP made a surprise jump of 1.2% in July but only after a larger decline in June and in the wake of a plunge in May and so that the rise has not restored any momentum to the outlook. The sequential growth rates show a steady [...]

French IP is Jumping but not for Joy

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080910c.jpg" width="353">
The total number of mortgage applications jumped 9.5% last week after a 7.5% increase during the week prior, according to the Mortgage Bankers Association. As a result, applications in early-September were 15.3% above the August average and the rise recovered an 11.5% decline during that month.
The latest figures include an adjustment to account for the Labor Day Holiday. On an unadjusted basis, the index decreased 13.6% compared with the previous week and was down 24.4% compared with the same Labor Day week one year earlier. In early September the level of all mortgage applications was down by one-quarter from the year-ago level.
Purchase applications rose by 6.4% after the prior week&#39;s 10.5% increase. Early this month applications rose 15.4% from August during which they declined 6.1%.
During the last ten years there has been a 61% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.
Applications to refinance a home mortgage jumped 15.4%. Applications began this month 14.8% above the August average after that month&#39;s 19.9% decline.<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080910d.jpg" width="353">
The effective interest rate on a conventional 15-year mortgage declined to 5.98% following an average of 6.29% last month. For a thirty year mortgage, rates fell to 6.26%. Interest rates on 15 and 30 year mortgages are closely correlated (&gt;90%) with the rate on 10-year Treasury securities. For an adjustable rate 1-Year mortgage the rate fell to 7.08% from 7.22% averaged last month.
During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site <a href="http://www.mbaa.org">here</a>.
How Much Have House Prices Fallen? from the Federal Reserve Bank of St. Louis is available <a href="http://research.stlouisfed.org/publications/net/20080801/cover.pdf">here</a>.

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/SURVEYW/@S5/@S5.HTM">MBA Mortgage Applications (3/16/90=100)</a></th>
<th scope="col">09/05/08</th>
<th scope="col">08/29/08</th>
<th scope="col">Y/Y</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td class="firstcol">Total Market Index</td>
<td>496.2</td>
<td>453.1</td>
<td>-24.5%</td>
<td>652.6</td>
<td>584.2</td>
<td>708.6</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Purchase</td>
<td>371.5</td>
<td>349.0</td>
<td>-17.1%</td>
<td>424.9</td>
<td>406.9</td>
<td>470.9</td>
</tr>
<tr class="odd">
<td class="firstcol">&nbsp; Refinancing</td>
<td>1,222.9</td>
<td>1,059.7</td>
<td>-34.8%</td>
<td>1,997.9</td>
<td>1,634.0</td>
<td>2,092.3</td>
</tr>
</tbody>
</table>
</body>
</html>

The total number of mortgage applications jumped 9.5% last week after a 7.5% increase during the week prior, according to the Mortgage Bankers Association. As a result, applications in early-September were 15.3% above the August [...]

U.S. Mortgage Applications Jumped

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<img align="left" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080910a.jpg" width="353">
The Bureau of Labor Statistics reported in the July Job Openings &amp; Labor Turnover Survey (JOLTS) that the number of job openings fell a revised 2.3% (-17.0% y/y) from June. The drop followed a revised 3.7% June decline which was much larger than reported initially. Since the peak in January of 2007, the number of job openings have fallen 21%.
The job openings rate fell to 2.4% from a downwardly revised 2.5% in June. The latest figures are down from near 3% one year ago. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings.
The actual number of job openings in the construction sector fell 16.0% (-48.1% y/y) while the number of job openings in the manufacturing sector fell at the same rate as in June, by 3.3% (-29.6% y/y). Professional &amp; business services job openings fell 10.4% (-12.4% y/y) while openings in the education &amp; health sectors slipped 1.2% (-2.6% y/y) after an upwardly revised June increase of 5.2%. Openings in retail trade also reversed the prior month&#39;s decline with a 16.1% increase (-1.1% y/y).<img align="right" border="0" height="265" src="https://haver-commentaries.s3.eu-west-1.amazonaws.com/comments/080910b.jpg" width="353">
By region, openings in the Northeast fell by 3.3% (-19.8% y/y). They were down by 5.6% (-15.1% y/y) in the South and off 4.3% (-15.3% y/y) in the Midwest.In the West openings rose by 5.3% (-20.2% y/y).
The hires rate fell to 3.0% from an upwardly revised June rate of 3.2%. The latest matched the low for this cycle and it was the lowest since early-2003.The hires rate is the number of hires during the month divided by employment.The actual number of hires fell 8.5% (-15.7% y/y). Hires in the construction sector fell by one-quarter m/m and they were off by one-third from last July. In the factory sector hires fell 11.2% (-28.7% y/y) and in the professional &amp; business services sector they fell by 11.4% (-10.4% y/y). In the leisure and hospitality sector hires rose 4.6% during July but they still were off 10.8% y/y.
The job separations rate fell to 3.1%, the lowest since 2003 and down from 3.7% at the peak. Separations include quits, layoffs, discharges, and other separations as well as retirements. The level of job separations fell 3.5% y/y.
The JOLTS survey dates only to December 2000 but has since followed the movement in nonfarm payrolls, though the actual correlation between the two series is low.
A description of the Jolts survey and the latest release from the U.S. Department of Labor is available <a href="http://www.bls.gov/news.release/pdf/jolts.pdf">here</a>.
The Budget and Economic Outlook: An Update from the Congressional Budget Office can be found <a href="http://www.cbo.gov/ftpdocs/97xx/doc9706/09-08-Update.pdf">here</a>

<table border="0" cellspacing="0" width="100%">
<colgroup><col><col><col><col><col><col></colgroup>
<thead>
<tr>
<th scope="col" class="firstcol"><a href="http://www.haverselect.com/dlx/USECON/@EB/@EB14/@EB14.HTM">JOLTS</a> (Job Openings &amp; Labor &nbsp;Turnover Survey)</th>
<th scope="col">July</th>
<th scope="col">June</th>
<th scope="col">July &#39;07</th>
<th scope="col">2007</th>
<th scope="col">2006</th>
<th scope="col">2005</th>
</tr>
</thead>
<tbody>
<tr class="even">
<td class="firstcol">&nbsp;</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">Job Openings, Total&nbsp;&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>2.4</td>
<td>2.5</td>
<td>2.9</td>
<td>2.8</td>
<td>3.0</td>
<td>2.8</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>3,416</td>
<td>3,497</td>
<td>4,116</td>
<td>3,974</td>
<td>4,272</td>
<td>3,863</td>
</tr>
<tr class="odd">
<td class="firstcol">Hires, Total</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Rate (%)</td>
<td>3.0</td>
<td>3.2</td>
<td>3.5</td>
<td>41.9</td>
<td>43.4</td>
<td>43.1</td>
</tr>
<tr>
<td class="firstcol">&nbsp; Total (000s)</td>
<td>4,062</td>
<td>4,438</td>
<td>4,818</td>
<td>57,771</td>
<td>59,153</td>
<td>57,501</td>
</tr>
</tbody>
</table>


</html>

The Bureau of Labor Statistics reported in the July Job Openings & Labor Turnover Survey (JOLTS) that the number of job openings fell a revised 2.3% (-17.0% y/y) from June. The drop followed a revised 3.7% June decline which was much [...]

JOLTS: U.S. Job Openings Fell in July

US production rebounded in Q2, but demand continued to slow

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

Negative US inflation surprises leading G10 down

Deflation continues in China

Incoming data surprising on downside in US; positive surprises elsewhere

FOMC expects more inflation and less growth than in March

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

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

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

Apart from the US, productivity is moribund

Financial market concerns ebb even though policy uncertainty continues to soar

US tariff revenues nearly doubled in April

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

USD/EUR exchange rate uncoupling from interest rate differential

Widespread downgrading of 2025 GDP outlook

Trade and fiscal policy uncertainty has exploded with the new administration

Much lower US electricity costs gives it a competitive advantage

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

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

US policy gyrations boosting policy uncertainty worldwide

Expected tariff hikes have boosted inflation expectations

US and Japan ended 2024 on solid ground in contrast to Europe

US economy expected to outperform other major economies in 2025

Only modest evidence of AI-related surge in US productivity growth

Previous Trump tariffs fading. A boost from new tariffs ahead?

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Nonfarm payrolls increased 73,000 during July after rising 14,000 in June, revised from 147,000, and 19,000 in May, revised from 144,000. Expectations had been for a 102,000 rise in the Action Economics Forecast Survey. The three-month average change in payrolls of 35,000 compared to 64,000 in June. The Bureau of Labor Statistics indicates that monthly revisions result from additional reports received from businesses and government agencies since the last published estimates.

Average hourly earnings rose an expected 0.3% during July after unrevised gains of 0.2% and 0.4% in June & May. Earnings growth of 3.9% y/y is little changed over twelve months, but has been trending lower from its 5.9% high in March 2022.

The unemployment rate, measured in the household survey, edged up m/m to an expected 4.2% from 4.1% and compared to 4.2% in the previous three months. It reached a low of 3.4% in April 2023. The unemployment rate, including employees working part-time for economic reasons plus all marginally-attached workers, rose to 7.9% last month from 7.7% In June. It was 6.6% in April 2023.

In the **establishment survey**, private-sector employment in July rose 83,000, factory sector jobs declined 11,000, off for the third straight month. Construction sector employment increased 2,000, after rising 3,000 in June. The number of mining & logging industry jobs declined 4,000 after falling in both of the prior two months. 

Private service sector employment increased 96,000 July after improving 16,000 in June. Increases varied greatly amongst service sector categories. Private education & health sector employment rose 79,000 last month, following a 52,000 increase in June. The number of trade, transportation & utilities jobs gained 11,000, following a 22,000 decline and financial activities employment improved 15,000 after a 2,000 drop, while leisure & hospitality employment rose just 5,000 after a 4,000 gain. The number of professional & business services jobs fell 14,000, down for the third straight month.  Information sector employment fell 2,000, after holding steady in June.

Government sector payrolls declined 10,000 last month and revered June’s 11,000 rise. Federal government employment weakened 12,000 and has fallen for six straight months. Local government employment eased 3,000 after rising 10,000 in June while state government payrolls rose 5,000 after increasing 10,000.

Private-sector average hourly earnings rose 0.3% (3.9% y/y) in July. Earnings in the goods-producing sector edged up 0.1% (3.6% y/y). In construction, earnings rose 0.2% (3.7% y/y) following a 0.4% rise, but factory sector earnings eased 0.1% (+3.6% y/y). In the service sector, earnings rose 0.4% (4.0% y/y) in July after increasing 0.2% in June.

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The length of the average workweek rose to 34.3 hours in July from 34.2 hours in June. The workweek in the goods-producing sector lengthened to 39.9 hours from 39.7 hours. The construction sector average workweek rose to 39.1 hours from 38.9 while the factory sector workweek held steady at 40.1 hours. The average workweek in the private service sector edged up to 33.2 hours from 33.1 hours.

In the **household survey**, the unemployment rate increased to 4.2% in July after falling to 4.1% as employment fell 260,000 after rising 93,000 in June and the size of the labor force declined 38,000, off for the third straight month. The labor force participation rate eased to 62.2% last month from 62.3% and remained below the high of 63.3% early in 2020. The rate for teenagers declined to 35.0%, after plunging to 35.1%. For workers aged 20-24, the rate declined to 70.9%. For workers aged 25-54, the participation rate eased to 83.4%. For individuals 55 and over, the rate improved slightly to 38.1% but remained near a 20-year low of 38.0% in June.

The employment/population ratio for all workers slipped to 59.6% last month. It remained below the peak reading of 61.1% in February, 2020 just prior to the pandemic. For men, the rate fell to 64.7% in July from 64.9% and for women, the rate eased to 54.7% from 54.8% in June.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's **USECON** database. Detailed figures are in the **EMPL** and **LABOR** databases. The expectations figures are in the **AS1REPNA** database.

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- Recent job growth reduced by fewer factory & government jobs.
- Earnings gain remains steady y/y.
- Jobless rate reverses June decline.

U.S. Employment Report Shows Weakness in July, While Revisions Reduce Earlier Gains; Jobless Rate Picks Up

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U.S. light vehicle sales increased 7.6% (6.0% y/y) to 16.87 million units (SAAR) in July after falling 0.3% to 15.68 million units in June. The gain followed three straight months of decline. The improvement in July vehicle sales accompanied a 1.7% y/y rise in real disposable income through June, which compared to 2.1% growth last year.

Increases in sales were broad-based last month. Light truck sales rose 7.7% (10.0% y/y) in July to 14.02 million units, after easing 0.2% to 13.02 million in June and weakening 8.7% in May to 13.04 million. Purchases of domestically-made light trucks improved 7.1% (12.0% y/y) to 10.79 million units, after falling 1.0% in June to 10.07 million. Sales of imported light trucks rose 9.8% (3.8% y/y) to 3.24 million units, following a 3.9% rise in June.

Trucks’ record 83.1% share of the light vehicle market last month compared to 83.0% in June and 80.1% in July of last year. The share averaged 80.3% during all of 2024 versus 53.3% ten years earlier.

Auto sales rose 6.4% last month, down 9.8% y/y, to 2.84 million units (SAAR) following a 0.4% June decline. Purchases of domestically-produced cars rebounded 10.1% (-6.4% y/y) last month to 2.18 million units, after declining 2.5% in June. Sales of imported autos fell 2.9% (-20.5% y/y) to 0.66 million units, after a 4.6% June gain.

Imports' 23.1% share of the U.S. light vehicle market edged down from 23.2% in June. These compare to a May 2023 low of 22.9% and a high of 26.3% in November of 2023. Imports' share of the passenger car market fell to 23.2% last month and compared to 26.4% in July of last year. It reached a high of 38.7% in September 2021. Imports' share of the light truck market rose to 23.1% last month after rising to 22.7% in June.

U.S. vehicle sales figures can be found in Haver's **USECON** database. Additional detail by manufacturer is in the **INDUSTRY** database.

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- Both light truck and auto sales recover.
- Domestic and imports each increase.
- Imports' market share steadies.

U.S. Light Vehicle Sales Rebound in July

Winnie Tapasanun

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The ISM U.S. manufacturing PMI fell to 48.0 in July from 49.0 in June and 48.5 in May, according to the Institute for Supply Management. The July manufacturing PMI, below the 50 expansion-contraction dividing line, indicated that the U.S. manufacturing sector contracted for the fifth consecutive month and to the lowest level since October 2024. The July reading, while slightly higher than a low of 46.9 in October and 47.0 in July of last year, was below its recent high of 50.9 in January and a peak of 63.8 in March 2021. A reading of 49.5 for July had been expected in the Action Economics Forecast Survey.

The production index rose to 51.4 in July after rising to 50.3 in June, suggesting production expanded for the second successive month and to the highest level since January; it was up from its most recent low of 44.0 in April but slightly below a high of 53.7 in March 2024. Twenty percent (NSA) of respondents reported higher production in July while 19.2% reported lower.

The new orders index increased to 47.1 in July after falling to 46.4 in June, indicating new orders contracted for the sixth straight month but at a slightly less severe pace. The Index, while below its recent high of 55.1 in January, was up from a low of 42.7 in January 2023. Nearly nineteen percent (NSA) of respondents reported higher new orders in July while 25.9% reported declines. The inventories index, however, fell to 48.9 in July after rising to 49.2 in June, showing inventories contracted for the third consecutive month. The index was down from its recent high of 53.4 in March and a high of 56.5 in July 2022. Meanwhile, the supplier deliveries index fell to 49.3 in July from 54.2 in June, indicating faster delivery performance following seven straight months in slower territory. An 8.7% (NSA) of respondents reported slower delivery speeds in July while an increased 10.2% reported faster speeds.

On the labor front, the employment index fell to 43.4 in July after falling to 45.0 in June, indicating employment contracted for the sixth straight month and to the lowest level since June 2020. The index was down from its recent high of 50.3 in January and a high of 56.5 in March 2022. A 12.6% (NSA) of respondents reported higher employment in July while an increased 25.0% reported less hiring.

On the pricing front, the prices paid index declined to 64.8 (NSA) in July after rising to 69.7 in June, indicating raw materials prices rose for the 10th straight month but at the slowest rising rate since February. The July index remained well above a low of 39.4 in December 2022 but meaningfully below a high of 87.1 in March 2022 and a peak of 92.1 in June 2021. A decreased 35.4% (NSA) of respondents reported higher prices in July while 5.8% reported price declines.

In other ISM series not included in the composite index, the new export orders index slipped to 46.1 in July after increasing to 46.3 in June, indicating new export orders contracted for the fifth straight month. It was down from its recent high of 52.4 in January and a high of 57.1 in February 2022. The imports index edged up to 47.6 in July after rising to 47.4 in June, remaining at a contraction level for the fourth consecutive month; it was down from its recent high of 52.6 in February and a high of 55.4 in February 2022. The order backlog index increased to 46.8 (NSA) in July after declining to 44.3 in June, indicating falling backlog levels since October 2022. It was up from a low of 37.5 in May 2023 but down from a peak of 70.6 in May 2021.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. The figures from the Institute for Supply Management can be found in Haver’s **USECON** database; further detail is found in the **SURVEYS** database. The expectations number is available in Haver’s **AS1REPNA** database.

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- 48.0 in July vs. 49.0 in June; the fifth consecutive month of contraction.
- Production (51.4) expands to a six-month high.
- New orders (47.1) contract for the sixth successive month.
- Employment (43.4) contracts to the lowest level since June ’20.
- Prices Index (64.8) indicates prices rise for the 10th straight month; exports & imports contracting.

U.S. ISM Manufacturing PMI Contracts in July to a Nine-Month Low

Michael J. Moran

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Total construction activity fell 0.4 percent in June, continuing a soft trend that began in the middle of last year. After peaking in May 2024, total outlays have declined 3.6%. The retreat was modest at first, but the softness began to intensify last fall. Activity has now declined in nine of the past ten months, with the drop over this span totaling 3.1%. The private sector accounts for nearly all of the softness, with both residential and nonresidential contributing; public construction has continued to advance, although gains in recent months have been modest.

Private residential construction fell 0.7% in June, marking the 12th decline in the past 13 months and leaving activity 7.3% below the peak in May 2024. Hints of softness in private residential construction first appeared in mid-2023, when multi-family construction first stalled and then moved notably downward throughout 2024. Following the swoon in 2024, multi-family activity has stabilized in recent months.

However, single family building has taken the lead in pulling activity lower, declining for four consecutive months with pronounced retreats in the past three (average of -1.8%). Prospects for single-family construction do not seem bright, as the ups and downs in single-family housing starts have left little net growth in the past year; the past four months have been especially soft.

Improvements to existing structures contributed to weakness with sharp declines early in the year, but this area has posted small gains in the past three months. Home improvements (i.e. additions and renovations) should not be ignored in assessing residential construction, as they typically represent 35 to 40 percent of private activity.

Private nonresidential construction fell 0.3 percent in June, reinforcing the downward drift that has been in place since the start of 2024. This sector has posted 11 declines in the past 18 months. While activity grew in several months over this span, most of the increases were minuscule. The net effect of the ups and downs was a drop of 6.6% (annual rate of 4.4%). Total nonresidential activity has several components, and some have advanced in the past year or so, but none has posted an impressive performance. Two areas, lodging (hotel, motels, resorts) and commercial (retail and wholesale), have been notably soft.

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The public sector has started to sputter after two years of strong activity. Building was vigorous in 2023, growing 21.8% (December to December), and activity advanced an additional 2.4% in 2024. Growth so far this year has been modest on balance. Most months have registered gains, but they offset declines in the closing months of last year by only a small margin. Activity in June was 0.1% above the reading in October (the high point in 2024). Both state and Local governments and the federal sector have posted similar performances: robust in 2023, moderate in 2024, and hesitating this year.

The construction figures can be found in Haver's **USECON** database. The expectations figure is from the Action Economics Forecast Survey in **AS1REPNA**.

- Private building, both residential and nonresidential, drifting lower.
- Public construction hesitating after two strong years.

U.S. Construction: Sluggish in June

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Manufacturing PMIs in the S&P framework were mixed in July. However, the median reading edged slightly higher rising to 48.6 in July from 48.5 in June. But both of these are significantly weaker than the 49.1 reading in May. Manufacturing continues to post PMI readings that are below 50 indicating sector contraction on a fairly broad basis in July among the 17 reporting countries in the table plus the euro area. Only India and Vietnam reported PMI readings above 50 indicating sector expansion in July. In June, three of these jurisdictions showed readings above 50; in May, only three had readings above 50 as well. It remains a difficult time for manufacturing globally.

The readings for the manufacturing PMIs also show slippage in the medians from 12-months to six-months to three-months. The 12-month median is 49.2, the six-month median at 48.8, and the three-month median at 48.7. The bottom line is that most manufacturing sectors show contraction, and the contractions are generally getting slightly worse.

However, on an individual basis over three months about two-thirds of the reporters showed an improvement. Over six months just under 40% showed improvement and over a year about 44% of them showed improvement compared to the year before. Only the three-month versus six-month comparison shows a majority of reporters indicating better performance in July.

The ranked or queue standings metrics that place these individual readings for July in their queue of data over the last 4 ½ years, show standings above 50% which put the individual readings above their medians for this period. And only six of these eighteen reporting jurisdictions sported readings above 50%. Those were for the euro area, Germany, France, and India. India has a rating well above 50% at its 96th percentile; Malaysia has a reading above 50% and Vietnam has a reading well above 50% at its 74th percentile.

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The global economy has been put through the ringer with shocks from a war in Ukraine, stepped up military action in the Middle East, threats in the Straits of Hormuz, and an aggressive tariff policy from the United States, affecting global trade- a significant factor for manufacturing. These events have wrong-footed manufacturing globally. During this period, the inflation threat has dissipated; however, in most countries, inflation still slightly overshoots its target where central banks have such targets.

The U.S. has a particularly large number of policy changes afoot. Its manufacturing sector is still struggling. And recent employment data there indicate what appears to be a broader slowdown in the economy. Job growth in the U.S. has slowed and U.S. trends now show consumer spending slowing along with weaker and downwardly revised job growth. Put together, these are signals to watch closely.

Economy in Brief: September 2008

Jump to:

U.S. Budget Deficit Stable in August, Swelled Year-to-Date

U.S. Initial Claims for Jobless Insurance Slipped But Remained High

U.S. Total Import Prices Fell With Oil Price Decline

U.S. Trade Deficit Deepened As Oil Prices Rose

U.S. Trade Deficit Deepened As Oil Prices Rose

French IP is Jumping but not for Joy

U.S. Mortgage Applications Jumped

JOLTS: U.S. Job Openings Fell in July