Tom Moeller

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The Census Bureau reported that new single-family home sales rose 10.6% (5.6% y/y) during July to 739,000 (SAAR) after improving 0.3% to 668,000 during June, revised from 617,000. Sales fell 9.5% in May to 666,000, revised from 621,000. Earlier figures also were revised. The Action Economics Forecast Survey expected new home sales of 625,000 for July. Sales remained 28.3% below their peak of 1.031 million in October 2020. The latest rise in sales accompanied a decline in the average 30-year fixed-rate mortgage to 6.85% last month from 6.92% in June. It has since fallen to an August average of 6.54% according to Freddie Mac.

The median sales price of a new home rose 3.1% (-1.4% y/y) in July to $429,800 (NSA) 	from $416,700 in June, after falling 1.7% in May. The median sales price remained 6.6% below its October 2022 peak of $460,300. The average sales price of a new home increased 2.6% (1.4% y/y) to $514,800 in July after rising 0.8% to $501,700 in June. The average price was 4.9% below its peak of $541,200 in July 2022.  These sales price data are not seasonally adjusted.

New home sales rose throughout the country last month. New home sales in the West surged 33.8% (9.0% y/y) to 194,000 after falling in four of the prior five months. In the Northeast, sales increased 6.9% (3.3% y/y) in July to 31,000 after rebounding 31.8% in June, a rise which recaptured most of a May decline. Sales in the Midwest rose 9.9% (17.1% y/y) to 89,000 after falling moderately in both of the prior two months. Sales in the South rose 2.9% (2.2% y/y) to 425,000 after rising 0.7% in June. 

The number of unsold new homes on the market fell 1.1% (+8.2% y/y) to 462,000 in July following stability in June. It was the lowest level in six months. The seasonally adjusted months' supply of new homes for sale fell sharply to 7.5 months in July from 8.4 months in June. It remained up from a low of 6.9 months in May 2023.

The median number of months a new home stayed on the market edged higher to 2.4 months in July from 2.2 months in June. The reading remained up from the record low of 1.5 months in both September and October of 2022 but down from a high of 5.1 months in March 2021. These figures date back to January 1975.

New home sales are recorded when the sales contract is signed. New home sales activity and prices are available in Haver's **USECON** database. The consensus expectation figure from Action Economics is available in the **AS1REPNA** database.

Review & Outlook from Federal Reserve Chair Jerome H. Powell can be found [here](https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm)



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- Sales are highest since May 2023.
- Median sales price strengthens to four-month high.
- Sales improve throughout country.


U.S. New Home Sales Post Strong Increase in July

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Sales of existing homes rose 1.3% during July (-2.5% y/y) to 3.950 million units (SAAR) from 3.90 million in June, revised from 3.89 million units after declining an unrevised 0.7% during May. Sales had fallen for four consecutive months before the July increase. The latest rise came as 30-year fixed rate mortgages averaged 6.85% last month versus 6.92% in June. These rates are below the high of 7.62% averaged last October, according to Freddie Mac. Sales remained up from their low of 3.85 million in October 2023. The Action Economics Forecast Survey expected July sales of 3.91 million units. The sales figures are based on closings of sales signed in earlier months.

The median price of all existing homes (NSA) eased 1.0% in July (+4.2% y/y) to $422,600 after rising to a record $426,900 in June. Prices remained almost double their level of $221,600 ten years earlier. The median price of an existing single-family home fell 1.0% (+4.2% y/y) in July to $428,500 after rising 2.5% to a record $432,900 in June. The median price for condos & co-ops declined 1.1% (+2.7%) to $367,500, after rising 0.7% in June. By region, existing home prices ranged from $629,500 (3.4% y/y) in the West to $505,100 (8.3% y/y) in the Northeast to $372,500 (2.3% y/y) in the South and to $321,300 (4.5% y/y) in the Midwest.

Single-family home sales rose 1.4% (-1.4% y/y) last month to 3.57 million units, after four straight months of decline. Sales were 39.0% below their high of 5.85 million in October 2020. Condo and co-op sales held steady (-11.6% y/y) at 380,000 following a 5.0% June decline. These sales have declined 48.6% since the January 2021 high of 740,000.

During July, sales in the South improved 1.1% (-3.8% y/y) to 1.79 million following four consecutive months of decline. In the Northeast, sales rose 4.3% (2.1% y/y) to 490,000 after falling 2.1% in June. In the West, sales improved 1.4% both m/m and y/y to 750,000 after falling 2.6% in June. Sales in the Midwest held steady (-5.2% y/y) at 920,000 after declining 8.0% in June.
The number of existing homes for sale (NSA) rose 0.8% (19.8% y/y) to 1.33 million in July after rising 3.1% in June. The supply of homes on the market at the current selling rate (NSA) eased to 4.0 months from 4.1 months in June. The record low in supply of 1.6 months was reached in January, 2022. 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. Mortgage interest rates can be found in the **WEEKLY** database. The expectations figure is from the Action Economics Forecast Survey, reported in the **AS1REPNA** database.

Measurement and Theory of Core Inflation from the Federal Reserve Bank of New York can be found [here](https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1115.pdf?sc_lang=en)



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- Sales rise after four months of decline.
- Home prices back away from record.
- Sales rise in most regions of the country.


U.S. Existing Home Sales Edge Higher in July; Prices Decline

Sandy Batten

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The Federal Reserve Bank of Kansas City reported that its index of manufacturing sector activity rose to -3 in August from -13 in July. The headline index has not been positive since September 2022. Haver Analytics calculates an index based on the Kansas City results which is comparable to the ISM PMI series. This index rose to 47.4 (NSA) in August, its third consecutive month below the 50 reading that separates expansion from contraction.

The August survey was open for a six-day period from August 14-19, 2024 and included 92 responses from plants in Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico, and western Missouri.

Nondurable manufacturing was essentially flat, while durable goods manufacturing fell somewhat, driven by transportation equipment, fabricated metal, and machinery. The month-over-month indexes were lackluster, but all increased from last month’s readings. Production rebounded from -12 to 6 while the volume of new orders stayed negative at -12 (vs -21 in July) and backlogs posted a reading of -19 (vs -24). The two employment indexes also declined further in August but at a slower pace than in July with the employment index increasing to -7 from -12 and the average workweek index rising to -10 from -17. 

The year-over-year composite index for factory activity ticked down to -14 from -13 as production, shipments, and new orders all continued to fall considerably. Employment levels decreased moderately while capital expenditures stayed steady with a reading of 1 vs 5 in July.

Inflation indicators rose slightly in August. Prices paid for raw materials edged up to 18 from 17 in July. Prices received for finished products jumped to 6, its highest reading in three months, from zero in July.

The composite index of expectations in six months increased to 8 in August, the highest reading since January, from 5 in July. Key components generally increased. Expected production rose to 20 from 13; employment increased to 17 from 13; new orders climbed to 12 from 8. However, expected capital expenditures fell to -4, the first negative reading since November 2023, from 10 in July.

The series dates back to July 2001. The diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Data for the Kansas City Fed Survey can be found in Haver’s **SURVEYS** database.


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- The index rose to -3 from -13, indicating that the pace of decline had slowed.
- Expectations for future activity remained positive, rising in August from July.
- The production index increased to 6, the first positive reading in six months.
- All other major components of the headline index improved in August but remained at zero or below.


FRB Kansas City Manufacturing Activity Continued to Decline in August

Kathleen Stephansen, CBE

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The Chicago Federal Reserve Bank reported that its National Activity Index (CFNAI) decreased to -0.34 in July from -0.09 in June, revised from 0.05. The recent high of +0.35 was reached in February. The three-month moving average of the index remained unchanged in July at -0.06. During the last 20 years, there has been a 91% correlation between the three-month index level and the q/q change in real GDP.

The report stated that of the four broad categories of indicators used to construct the index decreased from June, and three categories made negative contributions in July. The Production & Income category contributed -0.28 in July, down from -0.02 in June. It remained up from a January low of -0.49. The Employment, Unemployment & Hours series contributed -0.08 from -0.02 in June. It has been trending sideways for a year. The Sales, Orders and Inventories measure was -0.01 in July, a slight improvement from -0.02 in June. It remained higher than the January low of -0.27. The Personal Consumption & Housing series’ contribution was +0.03 last month from -0.02 in June and the highest this year.

The diffusion index of the CFNAI, which measures the breadth of component change, increased to -0.11 in July from -0.13 in June and remained above the low of -0.32 registered in October of last year.

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.

These figures are available in Haver's **SURVEYS** database.


- Weaker trend sets in.
- Three categories made negative contributions in July.


Chicago Fed National Activity Index decreases in July

Carol Stone, CBE

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Initial claims for unemployment insurance were 232,000 seasonally adjusted, in the week ended August 17, up 4,000 from the previous week’s 228,000; that earlier amount was revised just slightly from 227,000 reported a week ago. The Action Economics Forecast Survey had expected 235,000 in this latest week. The four-week moving average of initial claims was 236,000 in the August 17 week, down from 236,750 the week before.

In the week ended August 10, the total number of beneficiaries of unemployment insurance, also known as “insured unemployment” or “continuing claims,” was 1.863 million, up from 1.859 million in the prior week. That earlier amount was revised from 1.864 million previously reported. The four-week moving average of continuing claims was 1,865,500 as of the August 10 week, up from 1,860,750 the week before.

The insured unemployment rate was still 1.2% in the August 10 week. That is the number of insured unemployed as a percentage of covered employment. It has been steady at 1.2% since the week ended March 11, 2023.

Economic conditions vary widely across individual states and territories, as shown by the insured unemployment rates. In the week ended August 3, the highest rates were in New Jersey (2.75%), Puerto Rico (2.60%), Rhode Island (2.59%), California (2.21%) and Minnesota (2.05%). The lowest rates were in South Dakota (0.26%), Kansas (0.39%), Florida (0.43%), Virginia and North Dakota (each 0.44%) and North Carolina and Kentucky (each 0.46%). Rates in other notable states include Pennsylvania (1.86%), New York (1.72%), Illinois (1.62%), Texas (1.20%) and Ohio (0.82%).

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986. The expectations figure is from the Action Economics Forecast Survey in the **AS1REPNA** database.

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- Initial claims modestly less than forecast.
- Continuing claims up 4,000 in August 10 week.
- Insure unemployment rate still holds at 1.2%.


U.S. Unemployment Insurance Claims Up Just 4,000 in August 17 Week

Andrew Cates

**Copper prices and global growth**
Incoming data for global growth have been frequently missing forecasters’ expectations on the downside over the past few weeks. That’s why Citigroup’s global growth surprise index has lately declined to a near 3 year low (chart 1). Copper prices - often regarded as a good barometer of global growth conditions - have also lost some ground over the past couple of months notwithstanding some solid structural underpinning (e.g. from the global energy transition).

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**Oil prices and interest rates**
Weaker-than-expected global demand may offer one explanation for why oil prices have also been softening over the past few weeks. But inasmuch as this has eased inflation fears and might leave more scope for looser monetary policy, this may have helped to drive US bond yields to lower levels as well (chart 2).

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**China’s property market**
One of the more well-known pockets of global economic fragility concerns China’s property market. Last week’s data certainly suggested that a decline in house prices has continued unabated. Our nominal GDP-weighted index for China’s largest 70 cities, for example, revealed a 4.7% y/y drop in new property prices in July, and an 8.5% decrease in existing prices. This ongoing decline has persisted despite efforts by authorities to boost demand and address a supply glut.

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**Japan’s financial flows and the carry trade**
As noted, financial market conditions have stabilized in recent weeks in part because the unwinding of Japan’s carry trade – a key factor that had amplified the instability in early August - has subsided. Early August data specifically show that Japanese residents' net purchases of foreign assets has picked up, while non-residents' net sales of Japanese assets have declined. Although these flows are not directly tied to carry trade activity, they provide insights into investor sentiment regarding the yen’s underlying funding costs and the impact of changes in interest differentials.

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**The UK housing market and the BoE**
One of the key obstacles that has been hampering efforts to ease monetary policy in recent months is sticky service sector inflation. This has not been helped, at least in the UK, by the big feedback loops that exist between high levels of rental price inflation in the housing market, the wage demands of homeowners, landlords and tenants, and interest rates (chart 5). Still, with the Bank of England having reduced its policy rate in August and potentially now embarking on an easing cycle in the coming months, that vicious cycle between interest rates, wage inflation and services inflation could now move into reverse.

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**Demographic change**
Our final chart below this week illustrates the interplay between demographic factors such as the projected median age in 2025 and population growth (in the 10 years to 2025). The implications of these trends are arguably profound, affecting everything from economic growth and labour markets to social security systems and healthcare. Countries such as Japan and Italy, located at the far right of the chart, will likely experience significant demographic challenges, with ageing populations and shrinking workforces. But on the other end of the scale, Nigeria stands out with a very low median age and extremely high projected population growth. This underscores the demographic dividend that Nigeria ought to benefit from if it can effectively harness this demographic potential.

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_We will not be publishing ‘Charts of the Week’ and our accompanying podcast next week._
Financial markets have remained in much calmer waters in recent weeks following the bout of volatility that earmarked the first week of August. That’s partly thanks to the release of some reassuring inflation data together with some dovish signals from several central banks. However, concerns about the global growth outlook persist. That’s partly because incoming growth data have continued to surprise forecasters on the downside (charts 1, 2 and 3). Lingering uncertainty about how a further unwinding of Japan’s carry trade might amplify financial instability in the period ahead could also be weighing on confidence (chart 4). In the meantime, while incoming inflation data have offered some reassurance that monetary policy will be loosened in the US and Europe in the coming months, still-sticky service sector inflation is generating some doubt about the scope and the scale (chart 5). Finally, and looking beyond these cyclical issues, there remain several structurally-rooted headwinds that could be knocking growth optimism off course, including ageing demographics (chart 6).

<iframe style="border-radius:12px" src="https://open.spotify.com/embed/episode/3ScB97Jovdem17fOB8X2EY?utm_source=generator" width="100%" height="152" frameBorder="0" allowfullscreen="" allow="autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture" loading="lazy"></iframe>

Charts of the Week: Growth Alert

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Mortgage loan applications declined 10.1% (+22.2% y/y) in the week ended August 16, following an unrevised 16.8% rise in the week ended August 9. Applications for home purchase loans fell 5.2% (-8.0% y/y) following a 2.8% rise during the prior week. Applications to refinance a mortgage backpedaled 15.2% (+90.0% y/y) last week after surging 34.5%. These data are from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The effective interest rate on 30-year fixed-rate loans was fairly steady at 6.67% in the week ended August 16, but has fallen from a high of 7.48% at the end of April. It was the lowest rate since the first week of May 2023, down from an 8.12% high in the third week of October, 2023. The effective rate on 15-year fixed-rate loans rose to 6.22% in the latest week from 6.13% the week before. The rate on 30-year Jumbo loans slipped to 6.84% from 6.88% in the week of August 9. In contrast, the rate on 5-year ARM loans rose w/w to 6.46% from 6.36%. It remained below the 7.31% high last October.

The share of applications to refinance an existing loan fell to 46.3% in the week of August 16 from 48.6% in the prior week. The latest figures are increased from a low of 27.2% averaged in April 2023. The share of applications for ARMs fell to 5.5% last week from 7.3% in the prior week. A recent low for the ARM share was 5.4% in the week ended January 5.

The average size of mortgage loans declined 7.5% (+2.8% y/y) to $372,600 in the week of August 16 after rising to a record $403,000 during the prior week. The average size of a loan to purchase a home eased 0.2% (+4.6% y/y) to $426,300 last week and has been roughly steady for three weeks. The size of a refinanced loan fell 17.8% (+21.9% y/y) to $310,300 in the week of August 16 after surging to $377,600 during the previous 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.

The minutes of the latest FOMC meeting can be found [here](https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240731.pdf).

 

- Purchase & refinancing applications decline.
- Interest rate on 30-year fixed-rate loan remains near May 2023 low.
- Average loan size declines.


U.S. Mortgage Applications Fall Sharply Last Week; 30-year Fixed-Rate Steadies

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Online retail sales rose a seasonally adjusted 1.3% in Q2’24 following a 1.6% gain in Q1 and 1.3% growth in Q4’23, according to the U.S. Census Bureau. Sales rose 6.7% y/y after 10.0% growth in 2023 compared to 5.7% growth in 2022. E-Commerce sales accounted for 16.0% of total retail sales last quarter compared to 15.3% last year and 14.4% in 2022. The percentage was 6.4% in 2014.

The following details of the E-Commerce data by sector are not seasonally adjusted.
Sales of nonstore retailers, which accounted for 60.8% of total E-Commerce, rose 7.2% y/y in Q2, following a 15.1% y/y rise in 2023. 

General merchandise store sales rose 12.7% y/y after a 10.2% gain in 2023. Food & beverage store sales improved 8.0% y/y after a 4.8% y/y 2023 rise while sales of building materials & garden equipment rose 3.8% y/y after a 4.2% y/y rise last year. Electronics & appliance store sales rose 7.9% y/y following 2.8% growth in 2023. Sales of motor vehicles & parts rose 1.8% y/y after falling 3.2% in 2023. Clothing accessory store sales improved 0.1% y/y after no change in 2023. Miscellaneous sales, including gasoline stations, rose 8.3% y/y following a 1.9% rise in 2023.

Elsewhere, sales declined. Furniture & home furnishing sales fell 6.6% y/y after declining 16.7% in 2023, while and sporting goods, hobby, musical instrument & book sales weakened 0.6 y/y after rising 0.6% y/y in 2023. Health & personal care store sales fell 4.5% y/y after a 1.0% decline in 2023. 

E-commerce sales are goods and services ordered over an internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online and sometimes sale & price are negotiated. Total sales estimates are adjusted for seasonal variation, but not for price changes. They are also adjusted for trading-day differences and moving holidays.

E-Commerce sales data can be found in Haver's **USECON** database.


- Online sales share of total remains high.
- Nonstore retail sales moderate.
- Electronics & general merchandise firm y/y.


U.S. E-Commerce Sales Firm in Q2’24

Recent rise in global supply chain pressures could augur a pickup in global inflation pressures

Underperforming German economy generating increased policy uncertainty relative to Europe and the US

Resilient US economy is pushing up longer-term inflation expectations and interest rates

Positive US economic data surprises leading to upward adjustment of interest rate expectations

Recent aggressive policy easing in China has given a massive boost to equity prices

FOMC expects much more easing now than in June

US is clear world leader in business capital spending on artificial intelligence

Blue Chip forecasters expect US to lead aggressive policy rate cuts over coming year—apart from Japan

Ratio of job openings to the number unemployed in the US now below pre-pandemic level

U.S. layoffs not showing as much cooling in labor markets as unemployment rate

While goods prices have moderated, service price inflation remains elevated and sticky

Since Jan 2023, BCEI US outlook has improved, worsened for Japan and the euro area

Persistent negative US economic surprises leading to big rate-cut expectations

Germany is Euro area weakling

Flash PMIs show good start to Q3 in US; loss of momentum in the euro area

Chinese economy on downtrend could threaten global economy

Working age population labor force participation near all-time high as retirements increase

Blue Chip forecasters look for widespread policy rate cuts just ahead

Flash June PMIs point to a widespread slowdown apart from the US

Announcement of snap French election is causing concern across Europe

The UK economy’s post-pandemic under-performance relative to its pre-pandemic trend

US Beveridge Curve back to near pre-pandemic levels

Negative economic surprises in the US but positive in Europe, especially the UK

Latest PMIs show US losing momentum while RoW is gaining momentum

Sticky services prices behind sticky overall PCE inflation

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Nonfarm payrolls increased 12,000 (1.3% y/y) in October after rising 223,000 in September, revised from 254,000, and 78,000 in August, revised from 159,000. Expectations had been for a 125,000 rise in the Action Economics Forecast Survey. The damage from Hurricanes Milton & Helene plus the Boeing strike pulled the three-month average change to 104,000, the weakest since a decline in June 2020.

Average hourly earnings increased 0.4% last month following a rise of 0.3% in September, revised from 0.4%. Earnings growth rose to 4.0% y/y from 3.9% in September. It was the strongest y/y increase since May, but remained below the 5.9% high in March 2022. A 0.3% October increase had been expected.

The unemployment rate, measured in the household survey, held at an expected 4.1% in October. It reached a low of 3.4% in April of last year.  Household employment fell 368,000 after increasing 430,000 in September. The labor force declined 220,000 after a 150,000 September gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, was unchanged at 7.7%.

In the **payroll survey**, private-sector employment declined 28,000 (+1.2% y/y) in October after rising 192,000 in September. Construction sector employment increased 8,000 (2.7% y/y) last month after rising 27,000 in September. Factory sector payrolls fell 46,000 (-0.4% y/y) after falling 6,000.

Private service-producing employment improved 9,000 in October (1.3% y/y) after a 169,000 September rise. Increases varied greatly amongst service sector categories. Private education & health service jobs rose 57,000 (3.8% y/y) but leisure & hospitality employment fell 4,000 (+1.4% y/y). Professional & business service jobs weakened 47,000 (-0.1% y/y), down for the fourth straight month. Within that category, the number of temporary jobs fell 48,500 (-7.6% y/y) and have fallen consistently since a March 2022 high. Trade, transportation & utilities employment fell 1,000 (+0.6% y/y) while financial activities jobs held steady (+0.3% y/y). Information sector employment increased 3,000 last month (0.3% y/y).

Government sector payrolls improved 40,000 in October (2.0% y/y) after increasing 31,000 in September. Local government jobs improved 21,000 (2.0% y/y) while state government employment rose 18,000 (2.3% y/y). The number of federal government jobs increased 1,000 (1.7% y/y).

The 0.4% October rise in private-sector average hourly earnings reflected a 0.3% gain (4.7% y/y) in the goods-producing sector. Earnings in construction improved 0.3% (4.6% y/y) while factory sector earnings rose 0.3% (4.8% y/y). In the services sector, earnings rose 0.4% last month (3.9% y/y). Information sector earnings strengthened 1.4% (5.1% y/y) while professional & business service-sector earnings increased 0.6% (5.1% y/y). Leisure & hospitality earnings rose 0.2% (3.6% y/y). Financial sector earnings increased 0.5% (4.4% y/y). Private education & health services earnings edged 0.1% higher (2.9% y/y) while trade, transportation and utilities pay jumped 0.5% (3.1% y/y) in October.

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The length of the average workweek in the private sector stood at 34.3 hours in October for the third straight month. The workweek in the goods-producing sector of 39.7 hours compared to 39.8 hours in the previous two months. The construction sector average workweek eased to 39.0 hours from 39.2. The factory sector workweek was little changed at 39.9 hours while the average workweek in the private service sector was steady at 33.2 hours. The aggregate weekly hours index in the private sector, a key indicator of production and income, increased slightly versus the third quarter.

In the **household survey**, the steady 4.1% jobless rate occurred as employment fell 0.2% and the size of the labor force eased 0.1%. The labor force participation rate of 62.6% compared to three straight months at 62.7%. The rate for teenagers dropped to 35.8%, while for individuals aged 20-24, the rate rose to 71.8%, a six-month high. The participation rate for workers aged 25-54 the rate fell to 83.5%, down from a high of 84.0% three months earlier, but for workers 55 and over, it was 38.6 hours for the third straight month.

The employment/population ratio for all workers eased to 60.0% in October from 60.2% in September. It remained below its high of 61.1% in February 2020, just prior to the pandemic.

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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- Hurricanes close businesses & reduce production.
- Increase in earnings extends trend of improved growth.
- Unchanged jobless rate remains below July peak.

U.S. Payroll Employment Reduced by Storms & Strike During October; Earnings Improve & Jobless Rate Steadies

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U.S. light vehicle sales rose 0.8% (4.1% y/y) to 16.18 million units (SAAR) in October after rising 4.9% to 16.05 million in September, revised from 16.13 million. It was the highest level of sales in six months. The rise in October vehicle sales accompanied 3.1% y/y growth in real disposable income through September which compared to 4.7% growth logged last year. Earlier figures were revised.

Sales of light trucks rose 1.5% (4.8% y/y) during October to 12.98 million units (SAAR) after rising 4.4% in September. Purchases of domestically-made light trucks rose 1.6% (5.4% y/y) to 9.89 million units, after rising 4.7% in September. Sales of imported light trucks increased 1.0% (1.6% y/y) to 3.09 million units following September’s 3.7% rise.

Trucks’ 80.2% share of the light vehicle market last month compared to 79.7% in September and 79.6% in October of last year. The share was 79.3% during all of 2023.

Auto sales fell 1.5% (+0.9% y/y) to 3.20 million units (SAAR) in October following a 6.2% September increase. Purchases of domestically-produced cars fell 1.7% (+4.9% y/y) last month to 2.34 million units after rising 7.2% in September. Sales of imported autos declined 3.4% (-9.6% y/y) to 0.85 million units after rising 4.8% in September.

Imports' share of the U.S. light vehicle market eased to 24.4% in October from 24.6% in September. It compared to a May 2023 low of 22.9% after it reached a high of 26.3% in November of last year. Imports' share of the passenger car market eased to 26.6% last month from 27.1% in September. It reached a high of 38.7% in September 2021. Imports' share of the light truck market eased to 23.8% last month from 23.9% in September.

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

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- Light truck purchases improve, but auto sales decline.
- Total domestic vehicle sales increase; imports are little changed.
- Imports' market share slips.

U.S. Light Vehicle Sales Rise Modestly in October

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The ISM Purchasing Managers Index of activity in the manufacturing sector slipped to 46.5 during October from 47.2 in September. It was the lowest level since July of last year and below the break-even level of 50.3 reached in March. A level of 47.6 in October had been expected by the Action Economics Forecast Survey.

Performance of the component indexes was mixed last month. The production index declined to 46.2 after rising to a four-month high of 49.8 in September. Seventeen percent of respondents reported higher production while 23.9% reported it lower. The inventories reading eased to 42.6 from 43.9, both readings down sharply from a high of 50.3 in August. The supplier delivery index slipped to 52.0 from 52.2, after hitting a high of 52.6 in July. Working higher, the new orders index rose to 47.1 from 46.1 in September. Twenty percent of respondents had increased orders but 29% realized declines. The employment reading rose to 44.4 from 43.9 in October, but it remained down from a high of 51.1 in May.

The prices index, which is not part of the composite series, rose to 54.8 (NSA) from 48.3 in September. An increased 19.8% of respondents reported higher prices last month while a lessened 10.3% reported lower prices.

In other series, export orders fell to a little-changed 45.5, down from a March high of 51.6. The imports index remained at 48.3, also off a March of 53.0 while order the order backlog index declined to 42.3, a three-month low.

The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. 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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- Index down sharply from March high.
- Production & inventories indexes lead decline, orders & employment rise.
- Prices reading improves.

U.S. ISM Manufacturing Index Eases in October

Winnie Tapasanun

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The value of construction put in place edged up 0.1% m/m in September after an upwardly revised 0.1% increase in August (-0.1% initially) and a 0.04% downtick in July (-0.5% previously), according to the U.S. Census Bureau. The September reading matched the forecast in the Action Economics Forecast Survey. A 1.1% drop in June followed a string of m/m gains during the May 2024 to November 2022 period. The year-on-year rate decelerated to 4.6% in September, the lowest since May 2023, from 4.8% in August. The latest y/y figure was lower than 7.4% in September 2023, having remained below its recent high of 9.8% in January 2024 and a peak of 18.6% in April 2022.

Private construction was virtually unchanged (3.8% y/y) in September following an upwardly revised 0.2% rise in August (-0.2% initially) and an upwardly revised 0.5% decline in July (-0.7% previously). Residential private construction increased 0.2% (4.1% y/y) in September following a 0.3% gain in August (-0.3% initially) and two successive m/m drops. Single-family building rose 0.4% (0.9% y/y), the first m/m rise since February, after a 1.3% August decrease; it was 45.8% of the residential private construction. Multi-family building, however, dipped 0.1% (-8.1% y/y), the 10th straight m/m decline, on top of a 0.3% August decrease; it was 13.9% of the residential private construction. Home improvement building was essentially unchanged (+13.5% y/y) in September following a 2.3% advance in August; it was 40.2% of the residential private construction.

Nonresidential private construction eased 0.1% (+3.5% y/y) in September, the second m/m decline in three months, following a 0.04% uptick in August. The September easing reflected m/m drops in the following nonresidential private constructions. These included health care (-1.1%; -0.4% y/y), communication (-0.3%; -0.9% y/y), office (-0.3%; +0.1% y/y), manufacturing (-0.2%; +20.2% y/y), transportation (-0.1%; +12.5% y/y), and utilities (-0.1%; +5.8% y/y). In contrast, the following private constructions rose m/m in September: religious (2.5%; -1.3% y/y), educational (0.6%; 3.1% y/y), commercial (0.2%; -14.8% y/y), and lodging (0.1%; -8.0% y/y). Meanwhile, amusement & recreation private construction was essentially unchanged (-1.5% y/y) in September following two consecutive m/m declines.

The value of public construction rose 0.5% (7.0% y/y) in September after a 0.04% uptick in August (+0.3% initially) and a 1.4% rebound in July (+0.5% previously), reflecting gains of 2.3% (8.3% y/y) in residential public construction and 0.4% (7.0% y/y) in nonresidential public construction. The September rise reflected m/m increases in the following nonresidential public constructions. These included health care (1.4%; 6.2% y/y), transportation (1.3%; 4.9% y/y), office (1.0%; 10.2% y/y), commercial (0.7%; 33.2% y/y), sewage & waste disposal (0.5%; 5.2% y/y), water supply (0.4%; 18.2% y/y), and educational (0.3%; 3.9% y/y). Notably, spending on highways & streets, which made up 28.5% of public construction spending, rose 0.5% (1.7% y/y) in September following a 0.8% rise in August and four straight m/m decreases. To the downside, the following public constructions fell m/m in September: conservation & development (-1.4%; -4.2% y/y), utilities (-0.7%; +9.6% y/y), public safety (-0.3%; +33.7% y/y), and amusement & recreation (-0.2%; +25.2% 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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- September construction spending +0.1% m/m (+4.6% y/y); August and July revised up.
- Residential private construction +0.2% m/m, led by a 0.4% rebound in single-family building.
- Nonresidential private construction -0.1% m/m, down for the second month in three.
- Public sector construction +0.5% m/m, reflecting m/m rises in both residential & nonresidential public buildings.

U.S. Construction Spending Up Marginally in September for the Second Straight Month

Robert Brusca

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Unemployment remains low in the euro area in September. It is tied for its all-time record low since the union was formed. So, the ranking of the rate is in its 0.3-percentile that says it has been this low or lower only 0.3% of the time. That is much lower than for any EMU member in the table. The lowest ranking (highest standing) in the table is Italy at 1.6% followed by Ireland at 7.4%. The reason the EMU rate ranks so much lower is that it is the confluence of all these low unemployment rates that is unusual making the EMU-wide rate even lower.

**Trends**
The sequential trends from 12-month to 6-months to 3-months shows five of 12 countries in the table with falling rates of unemployment. Only four show unemployment falling on balance over six months with one having unemployment unchanged. Five have unemployment unchanged over three months as well. This shows the trend for unemployment rate to fall is still in place and that may seem surprising given the weakness in some of the recent economic data from Europe. Of course, one reason for this is also that Europe’s large economy Germany has its unemployment rate rising over 12 months and six months and it is on a different trend that the EMU area- that seems unsustainable.

Over the most recent three months, we see the unemployment rate falls in six countries month-to-month in August compared to only three in September. September has five countries with the unemployment rate rising that compares to only three in August.

The labor market trends may be running out of gas as far as lowing the unemployment rate is concerned. Still, the ECB is still cutting rates to provide economic support. But the labor trend does not show decay sequentially. The annualized monthly drops are all in the same ballpark for 12-month, 6-month, and 3-month changes. But the situation with Germany needs to be resolved since it will be hard for the euro area to perform well if Germany can’t.