Sectoral shift in US job openings

Meteoric rise in AI-related semiconductor exports fueling South Korea's export boom

Regional Fed surveys showing further manufacturing acceleration in August

Sharp drop in China demand for oil helping to limit impact of Middle East conflict on the price

Decades high real price of copper posing physical challenge to investment boom

Rising US long-term real yields point to strong demand for investment funding

US retail sales accelerate even as consumers remain gloomy

Retail gasoline price still well above pre-conflict level and now rising again

PMIs showing widespread revival of global economy

Crude oil price has returned to pre-conflict level but traffic through Hormuz still subpar

Surging orders for computers and electronics propelling durable goods orders

Next year's inflation forecasts are on the rise and above target

Disrupted global supply chains placing upward pressure on US goods prices

Construction of data centers has overtaken transportation construction in US

Elevated energy prices putting intense upward pressure on input prices around the globe

US is big leader in global surge in private AI investment

Larger-than-usual income tax refunds this year are supporting consumer spending

Sharply rising share of AI-related jobs

Inflationary impact of surge in oil prices larger in Europe than in the US

Futures market thinks the price of oil will recede significantly over the next six months

Recent pickup in US defense orders could help support overall growth ahead

Cost of transporting crude oil has soared to series high

Market-based inflation expectations have not yet reflected recent surge in oil prices

Global equity markets are fearing a major economic disruption from soaring oil prices

Is recent drop in sentiment signaling softer growth ahead?

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Winnie Tapasanun

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Total factory orders rose a more-than-expected 0.9% m/m in July, the first monthly rise since April, reversing a 0.2% decline in June, according to data from the U.S. Census Bureau. The Action Economics Forecast Survey had expected a 0.5% m/m July increase. The year-on-year growth rate accelerated to 9.9% in July, the highest since April, from 7.6% in June (+1.6% in July 2025), while remaining far below the April 2021 peak of 39.6%. Factory orders excluding defense rebounded 1.0% (8.8% y/y), up for the first time in three months, following a 0.3% June decrease. Factory orders excluding the transportation sector rose 0.6% (9.2% y/y), the eighth m/m gain in nine months, after a 0.1% June downtick.

Notably, orders for nondefense aircraft & parts jumped 12.7% in July following a 2.9% decline in June and a 51.1% plunge in May; orders for defense aircraft & parts increased 4.9% (53.5% y/y), the fifth m/m rise in six months, after a 7.0% June drop and an 8.9% May gain. Additionally, orders for ships & boats climbed 5.3% in July after rising 7.5% and 3.5% in the prior two months.

Durable goods orders advanced 1.1% (12.0% y/y) in July after a 0.6% increase in June (matching +1.1% m/m in the advance report on August 26), marking the fourth m/m rise in five months. The July m/m gain was led by a 2.3% rebound (13.7% y/y) in transportation equipment, followed by increases of 2.0% (19.1% y/y) in primary metals, 0.8% (15.3% y/y) in machinery, 0.7% (1.6% y/y) in furniture & related products, and 0.6% (10.9% y/y) in fabricated metal products. In contrast, durable goods orders for computers & electronic products (-1.1%; +14.8% y/y) and electrical equipment, appliances & components (-0.3%; +6.7% y/y) declined m/m in July.

Nondurable goods orders, which equal nondurable goods shipments, rose 0.7% (7.9% y/y) in July, the seventh m/m gain in eight months, after a 0.9% decline in June. The July m/m increase was driven by a 2.4% rebound (+26.2% y/y) in petroleum & coal products, followed by rises of 1.7% (+2.3% y/y) in textile products, 1.2% (-0.5% y/y) in printing, 0.7% (+2.7% y/y) in paper products, 0.6% (+2.2% y/y) in beverage & tobacco products, 0.4% (-4.7% y/y) in textile mills, 0.1% (+7.7% y/y) in chemical products, 0.1% (+1.4% y/y) in food products, and 0.1% (+3.1% y/y) in plastics & rubber products. To the downside, nondurable goods shipments for leather & allied products (-1.9%; -1.0% y/y) and apparel (-0.5%; +5.5% y/y) fell m/m in July.

Total shipments increased 0.8% (8.3% y/y) in July, up for the seventh time in eight months, after no change in June. Excluding transportation, shipments rose 0.7% (8.1% y/y), the eighth m/m gain in nine months, following a 0.1% June easing. Shipments of durable goods industries grew 0.9% (8.6% y/y), the eighth straight m/m rise, after a 1.0% June increase. This reflected m/m gains in almost all durable goods shipments categories, led by a 2.9% advance (12.6% y/y) in machinery, alongside rises of 1.9% (16.8% y/y) in primary metals, 1.3% (9.1% y/y) in transportation equipment, 1.1% (2.4% y/y) in wood products, 0.8% (7.0% y/y) in miscellaneous durable goods, 0.7% (2.0% y/y) in furniture & related products, and 0.2% (6.6% y/y) in fabricated metal products. In contrast, durable goods shipments for computers & electronic products (-1.2%; +8.1% y/y) and nonmetallic mineral products (-0.7%; +1.5% y/y) fell m/m in July, while those for electrical equipment, appliances & components were virtually unchanged (+5.5% y/y) following five successive m/m increases.

Unfilled orders rose 0.6% (8.9% y/y) in July, the 12th consecutive m/m increase, after rising at the same pace in June. Excluding transportation, unfilled orders climbed 0.9% (6.4% y/y), also up for the 12th straight month, on top of a 1.0% June rise. Backlogs of durable goods grew 0.6% (8.9% y/y) in July, reflecting gains of 1.9% (8.2% y/y) in primary metals, 1.1% (6.8% y/y) in fabricated metal products, and 1.0% (5.9% y/y) in computers & electronic products, partially offset by a 0.2% decline (-2.2% y/y) in furniture & related products.

Inventories advanced 0.4% (2.0% y/y) in July, the ninth successive m/m rise, after a 0.1% uptick in June. Excluding transportation, inventories rose 0.4% (2.1% y/y), up for the sixth consecutive month, following a 0.1% June increase. Durable goods inventories grew 0.4% (2.3% y/y) in July, the 10th straight m/m gain, after a 0.4% rise in June, while nondurable goods inventories rebounded 0.3% (1.4% y/y), the fifth m/m increase in six months, following a 0.3% June decline.

The factory sector data are available in Haver’s **USECON** database. The Action Economics Forecast Survey is in the **AS1REPNA** database.

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- Factory orders +0.9% (+9.9% y/y) in July, first m/m increase since Apr.; 15.2% above the Jan. ’24 low.
- Durable goods orders +1.1%, fourth m/m rise in five mths.; nondurable goods orders +0.7% and shipments +0.8%, seventh m/m gains in eight mths.
- Transportation orders +2.3%, led by a 12.7% jump in nondefense aircraft orders.
- Unfilled orders +0.6%, 12th straight m/m increase.
- Inventories +0.4%, ninth consecutive m/m rise.

U.S. Factory Orders Rebound More Than Expected in July on Strong Nondefense Aircraft Orders

Kathleen Stephansen, CBE

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Mortgage applications rose 0.8% w/w (-9.2% y/y) in the week ending August 28, after declining 1.0% w/w (-11.1% y/y) in the week ending August 21, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. Applications for loans to purchase a house rose 2.2% w/w (-0.6% y/y) in the latest week, after inching down 0.3% w/w (-5.7% y/y) in the August 21 week.  Applications for loan refinancing fell 1.1% w/w (-18.8% y/y) in the August 28 week following a decline of 2.0% w/w (-17.1% y/y) in the August 21 week.

The effective interest rate on a 30-year fixed-rate loan edged up 1bp to 6.98% in the week ending August 28 from 6.97% in the week ending August 21, remaining at levels not seen since July/August 2025. The rate on 15-year fixed-rate mortgages rose 4bps to 6.36% in the August 28 week from 6.32% in the August 21 week. The 30-year Jumbo rate inched down1bp to 6.87% in the latest week from 6.88% in the August 21 week. The rate on a 5-year ARM dropped by 12bps to 6.18% in the August 28 week from 6.30% in the August 21 week.

The share of applications for refinancing an existing loan fell to 41.8% of total applications in the week of August 28 from 42.0% in the week ending August 21. The adjustable-rate mortgage (ARM) share of activity rose to 8.0% in the latest week from 7.9% in the August 21 week.

The average size of a mortgage fell 0.9% w/w (-3.2% y/y) to $372,500 in the week ending August 28, after inching up 0.5% w/w (-1.8% y/y) to $376,000 in the week ending August 21. The average size of a purchase loan declined 1.1% w/w to $439,200 in the August 28 week after rising 0.8% w/w to $444,100 in the August 21 week. The average size of a loan to refinance a mortgage fell 0.8% w/w to $279,800 in the week ending August 28 after declining 0.1% w/w to $282,000 in the August 21 week.

The Mortgage Bankers Association Survey covers 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 **SURVEYS** database.

- Applications for loans to purchase rose and applications for loan refinancing declined in the latest week.
- Interest rate on 30-year fixed-rate loans edged up 1bp to 6.98%.
- Average loan size fell moderately in the August 28 week.

U.S. Mortgage Applications Rose in the August 28 Week

Michael J. Moran

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The manufacturing index published by the Institute for Supply Management (ISM) fell 1.0 index point in August, but the reading of 54.6 still suggested a solid performance in the manufacturing sector. (The index can range from 0 to 100, with 50 representing the critical point separating expansion from contraction.) August marked the eighth consecutive month with a reading above 50, and the past two observations were the best of the year thus far (chart, above left). 

The performance of the index this year represents a marked improvement from that in the prior three years. Indeed, the headline index was at 50 or above in only two months during the 2023-25 time span (and barely so at that: 50.5 and 50.0 in January and February 2025).

The new orders component accounted for most of the softening in the headline measure in August, falling 3.0 points to 53.7 (chart, above right). Still, the new orders index remained within the range of  observations so far this year, and the average reading of 55.46 in the past eight months easily exceeds the average of 47.69 in the prior three years. The slowdown in new orders led to a similar-sized drop in the backlog of bookings, as this index fell 3.2 points to 51.8 (this item is not seasonally adjusted). Like new orders, the backlog index remained within the range of observations this year and represented a far better performance than that in the prior three years.

The slowdown in orders had little effect on the pace of production, as this component fell only marginally (down 0.2 point to 58.3) and remained comfortably above results in the first six months of the year (which averaged of 54.07). The employment component registered a slightly larger response, dropping 1.6 points to 51.2. Despite the easing in the employment index, the reading above 50 was encouraging, as this measure was below the expansion/contraction threshold in the first six months of the year. In fact, July and August marked the first above-50 readings since September 2023.

The prices index, which is not a component of the headline measure and is not seasonally adjusted, was unchanged at 71.7. A reading far above the critical point of 50 might seem striking, but this measure often runs high; readings above 80 are not uncommon. In fact, the recent high was 84.6 in April and the index touched 92.1 during the inflationary burst in 2021-22. Much of the pressure, no doubt, reflects the jump in energy prices this year and supply chain disruptions stemming from the conflict in the Middle East. Problems with supply chains were evident in the supplier delivery index, which rose 0.4 point to 59.3 (higher values in this measure signal slower delivery times). The latest observation remained below the recent highs of 60.6 in April and May, but those observations were above readings in other recent years, signaling difficulty in securing supplies (charts, below).

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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- New orders accounted for most of the easing in the headline index.
- The production index showed a small decline; the employment index posted a moderate drop.
- The prices index was unchanged at an elevated level, but still below recent peaks.

ISM Manufacturing: A Dip in August, but still Signaling Expansion

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The value of construction put in place unexpectedly fell 0.5% m/m in July to a seasonally adjusted annual rate of $2,157.6 billion following no change in June (-0.1% initially) and May (unrevised), according to data from the U.S. Census Bureau. The July reading was the first m/m fall since April (-1.4%). A flat reading for July had been expected in the Action Economics Forecast Survey. The year-on-year rate was -3.8% in July, the 12th straight y/y decline and the deepest in three months, after -3.1% in June (+0.1% in July 2025), remaining well below a high of 13.1% in November 2023 and a peak of 18.5% in April 2022.

Private construction slid 0.5% (-5.5% y/y) to $1,614.2 billion in July, the fourth consecutive m/m slide and the sixth in seven months, after a 0.1% downtick in June (unrevised). Residential private construction fell 1.3% (-7.3% y/y) to $859.0 billion in July, down for the fourth month running, after a downwardly revised 0.5% decline in June (-0.3% initially). Single-family building dropped 3.2% (-6.5% y/y), the third successive m/m fall, after a 0.1% June downtick; it was 46.0% of the residential private construction. Home improvement building, however, rebounded 0.3% (-10.2% y/y), the first m/m gain since March, following a 0.8% June decline; it was 40.6% of the residential private construction. Multi-family building rose 0.2% (-0.9% y/y), the first m/m rise in four months, after a 0.7% June decrease; it was 13.4% of the residential private construction.

Nonresidential private construction grew 0.4% (-3.3% y/y) to $755.2 billion in July, the third consecutive m/m increase, after an upwardly revised 0.4% rise in June (+0.1% initially). The July gain reflected m/m increases in nonresidential private construction categories for office (+3.3%; +21.3% y/y), communication (+0.6%; +3.3% y/y), utilities (+0.5%; +6.5% y/y), lodging (+0.3%; -9.9% y/y), and transportation (+0.3%; -1.6% y/y). Significantly, within the office category, private construction for data center jumped 6.2% (57.2% y/y) in July, the eighth straight m/m gain, on top of a 7.7% advance in June. To the downside, the following nonresidential private construction categories fell m/m in July, including educational (-1.0%; -5.0% y/y), religious (-1.0%; +19.2% y/y), manufacturing (-0.8%; -21.7% y/y), amusement & recreation (-0.6%; +3.4% y/y), health care (-0.4%; -5.3% y/y), and commercial (-0.2%; -4.7% y/y).

The value of public construction was down 0.2% (+1.7% y/y) to $543.4 billion in July, the first m/m decrease since December, after an upwardly revised 0.1% increase in June (0.0% initially), reflecting declines of 0.4% (-5.2% y/y) in residential public construction and 0.2% (+1.9% y/y) in nonresidential public construction. Several nonresidential public construction categories fell m/m in July, led by conservation & development (-1.4%; +26.9% y/y), followed by transportation (-0.8%; +3.3% y/y), health care (-0.7%; +7.9% y/y), educational (-0.2%; +0.4% y/y), office (-0.2%; -7.9% y/y), and amusement & recreation (-0.1%; +2.5% y/y). Notably, spending on highways & streets, which accounted for 27.7% of public construction spending, declined 0.2% (+4.5% y/y) following a 0.1% June easing and two successive m/m gains. In contrast, the following public constructions rose m/m in July, led by commercial (+2.5%; -8.7% y/y), followed by water supply (+0.5%; +1.1% y/y), public safety (+0.4%; -8.4% y/y), sewage & waste disposal (+0.4%; -1.1% y/y), and utilities (+0.1%; -3.7% y/y).

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

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- Headline -0.5% m/m in July, first decrease since Apr.; -3.8% y/y, 12th straight y/y drop.
- Residential private construction -1.3% m/m, driven by a 3.2% fall in single-family building.
- Nonresidential private construction +0.4% m/m, third consecutive monthly gain, boosted by data center office construction.
- Public construction -0.2% m/m, led by a 0.4% decline in residential public building.

U.S. Construction Spending Declines in July, Led by Residential Weakness

Robert Brusca

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There's a good deal of concern about the development of inflation globally and across individual areas where central banks are making decisions on what to do with policy. In the euro area in August, the headline rate rose by 0.4%, with the core rising by just 0.2%. The three-month inflation rate for headline HICP inflation is 3.3% annualized while the pace for the core is only 2.4% annualized. That's excessive relative to the 2% target but not a particularly strong acceleration for inflation. It's not the kind of number that says to the ECB that it has to raise rates right now.

Sequentially, the headline rate goes from 3.3% to 4.3% to 3.3% over 12 months, six months, and three months on an annualized basis. These are all too high and too uncomfortable, topping 3% and in one case topping 4%. These are the kinds of numbers that require some kind of remedy. However, core inflation posts a very different set of numbers that go from 2.4% to 2.5% to 2.4% over 12 months, six months, and three months, again all annualized. These numbers show inflation skimming too high over the target but not even half a percentage point too high. It’s the kind of thing that a central bank might be willing to continue to tolerate for a while. There's nothing about a 2% target that says 2.4% is an outrageous miss and requires a monetary policy remedy. On the other hand, the fact that that's happening and the headline rate is cruising at a much higher pace over the top of the target may be something that will cause the central bank to say, well, core inflation is too high and I'm also concerned that headline inflation is going to pull it even higher, so maybe it is time to act. These sorts of considerations will keep the market a little bit off balance and wondering what the ECB is going to do.

The Big Four economies in the monetary union all have year-over-year inflation rates for the headline that are excessive compared to the target set for the entire community. France has the lowest 12-month headline pace at 2.7%. Spain has the highest at 4.5%. Over three months, both France and Italy run headline inflation near a pace of 1.5%, while German inflation runs hot at 3.7% and Spanish inflation sizzles at a 7.0% pace.

Once again, however, core is a better-behaved series, at a 12-month pace of 2.9% for Spain, 1.4% for Italy, and with German ex-energy inflation up at a 12-month pace of 2.2%. Over three months, the ex-energy or core paces run at 0.4% for Italy, 2.0% for Germany, and 2.6% for Spain.

**Bottom line**
European inflation is too high. The inflation rate in the community appears to be irregular, just judging by the Big Four countries and all their variation. Core inflation is mostly contained, but the headline is not. Still, core inflation is running mildly hot. It is decision time for the ECB. The safe course would seem to hike rates again to be sure. But nothing here is clear. Stay tuned.

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Europe

EMU Inflation Is Too High but Not Jet-setting

Economy in Brief: December 2015

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