Flat, but year over year still looking ok.
Continues higher into today’s meeting.
By itself, generally not an important number for the Fed.
Also moving up, even after rebates have gone out.
Better than expected, seems to be holding at muddle through levels.
- Employment up, export orders and prices paid down were largest movers. Number is for July, so employment number doesn’t seem consistent with NFP data for same month.
- Export orders do seem consistent with recent data out of Europe and Japan (Eurozone retail sales for June that came out today showed down 3.1% y/y).
“Our business remains at about the same level as the previous month, with continued focus on cost reduction.” (Finance & Insurance)
“The general state of the home-building industry has not changed since last month; however, with the commodity and code changes going into 2009, we face much higher construction costs and reduced margins across the entire supply chain.” (Construction)
Right, prices to rise even as volumes remain low, as headline leaks into core via cost push.
“Continue to see slowdown in local economy.” (Health Care & Social Assistance)
“While still positive, the overall outlook for 2008 for our company is not as high as earlier in the year.” (Wholesale Trade)
“Governmental spending for services is up this period.” (Professional, Scientific & Technical Services)
Yes, government deficit spending on the rise.
|
July |
June |
|
2008 |
2008 |
| Index |
49.5 |
48.2 |
While below 50, this still implies positive GDP growth and is not collapsing as feared.
| Activity |
49.6 |
49.9 |
| Prices Paid |
80.8 |
84.5 |
Still way high.
| New Orders |
47.9 |
48.6 |
| Employment |
47.1 |
43.8 |
Agreed – not in sync with other employment indicators, but the other numbers reflect large numbers of new entrants to the labor market – a higher labor force participation rate.
So these companies maybe planning employment increases, but falling short of those new people now reported to be looking for work
| Export Orders |
47.5 |
52.0 |
| Imports |
49.0 |
50.5 |
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FOMC Rate Decision (Aug 5)
| Survey |
2.00% |
| Actual |
2.00% |
| Prior |
2.00% |
| Revised |
2.00% |
Fisher voting to hike, and others placated by stronger anti-inflation rhetoric.
History will not be kind to this Fed.
Karim writes:
- Bland statement-1 dissent (Fisher)
- Dovish-
<
- Economic activity ‘expanded’ in the 2nd qtr (no mention of ongoing expansion)
- Labor markets have softened further and markets remain under considerable stress
- No mention that downside risks to growth have diminished (as they did last time)
Hawkish-Upside risks to inflation are also of ‘significant’ concern (new)
Bottom Line: No guidance of anything imminent (i.e., Sep move is off the table). October 29 meeting is 1 week before election and Nov payrolls report, so December meeting earliest likely to see a move, if any.
NEW
Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
OLD
Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.
The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.
The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
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