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Utah Labor Market Indicators - June 2008 (May/Apr/Mar/Feb/Jan 08)

• Global Business Confidence
• Global business confidence has remained in a tight range since late May, consistent with a global economy that is barely growing. Developed economies, including the U.S., Europe and Japan, are contracting moderately, while most developing economies are expanding moderately. This is an improvement since late April, however, when global business confidence fell to a record low. The most measurable improvement has been among real estate operations, financial services companies, and business service firms. These firms are still dour, but not nearly so. As has been the case for the past year, the most negative responses are to the broad questions concerning present conditions and the outlook.

• US Consumer Confidence
• According to the ABC News/Washington Post consumer comfort index, sentiment held at -41 in the week ending July 13. Although consumer pessimism about the state of the economy rose, feelings about personal finances provided a balance to leave the index unchanged. The stabilization is encouraging, but sentiment is still indicative of households under severe strain.

• Manufacturers Alliance/MAPI Survey
• The Manufacturers Alliance/MAPI composite index for June 2008 fell to 50% from 57% in March. The index is at its lowest level since the 2001 recession, and reflects an even split between manufacturers that expect growth and those that expect contraction.

• Industrial Production
• Industrial production rose a larger than expected 0.5% in June, following a 0.2% decline in May. Manufacturing output was boosted by a rebound in motor vehicle production: The American Axle strike was resolved in late May and this lift to output was centered in June. Manufacturing production outside of motor vehicles was subdued, falling 0.1%. Capacity utilization rose for the first time this year. Utility and mining output both rose strongly, contributing to increases in total production and utilization.

• Treasury International Capital Flows
• Although net long-term TIC flows in May declined to $67 billion from $111.9 billion the prior month, the fairly stable pattern of increases in foreign holdings indicates that foreign appetite for U.S. financial assets is still healthy and sufficient to finance the U.S. trade deficit.

• PPI
• Producer prices for finished goods rose by a large 1.8% in June as expected, following a 1.4% increase in May. Inflation was led once again by large price increases among food and energy products. Excluding food and energy, prices for core finished producer goods rose by 0.2% for the second month in a row. Price increases slowed down at earlier stages of processing. Core prices for intermediate products rose by 1.3%, while core prices for crude materials fell by 0.2%.

• Consumer Price Index
• The top-line CPI index for June finished 1.1% higher than in May and 4.9% higher than in June 2007, a higher than expected increase. Core inflation for the CPI also edged upward to 0.3% for the month and 2.4% for the year since June 2007. Most of the increase in top-line inflation came from a jump in energy prices, which finished 6.6% higher for the month and 24.7% higher after one year. Food price inflation also edged up to 0.8% per month and 5.3% for the year. These summary numbers indicate that inflation cost pressures are increasing and may well push inflation beyond the Fed's comfort zone.

• Jobless Claims
• Initial claims reversed a portion of last week's large drop, rising 18,000 to 366,000. This may be the first in a series of increases over the next several weeks that will bring claims closer to their prior trend of 380,000 to 400,000.

• NAHB Housing Market Index
• The Housing Market Index for July came in at 16, a decrease from June's value of 18 and another record low as housing demand remains at bottom. The fall in the overall index is accentuated by decreases in its individual components. Present single-family home sales, six-month expectations of home sales, and prospective buyer traffic all fell by mid-July. The current environment of falling home prices and tighter bank lending has reduced buyer activity to a barely perceptible minimum.

• New Residential Construction (C20)
• Housing permits for June came in at 1.091 million, an increase from May but still substantially below June 2007 totals. Housing starts totaled 1.066 million, also above May totals but still more than 20% below June 2007 numbers. Completions for June totaled 1.167 million, also above May numbers. For June at least, housing construction seems to have resisted the trend of falling home sales and prices, but this is unlikely to last given the latest news on housing demand and mortgage applications.

• MBA Mortgage Applications Survey
• The MBA market composite indices finished mixed for the week ending July 11. The purchase index fell by 1.7%, but the refinancing index increased by 6.9% as contract rates fell across the board. The overall market index finished up by 1.7%. Falling home prices deter purchase applications, but the same decrease is also prompting refinancing for those borrowers who can do so.

• Retail Sales (MARTS)
• Total retail sales inched up 0.1% in June, following a revised 0.8% gain in May (originally 1%) as a decline in sales at auto dealers offset strong growth at gasoline stations. Sales excluding autos rose 0.8% after gaining 1.2% in May. Gasoline stations led growth in June. Core sales rose 0.2%.

• Chain Store Sales
• Chain store sales increased a slight 0.2% in the week ending July 12 according to the ICSC, the third consecutive small gain. Year-over-year growth dipped to 2.2%, but has changed little over the past five weeks. Store traffic reportedly favored sellers of necessities.

• Natural Gas Storage Report
• Working gas in underground storage rose by 104 billion cubic feet during the week ending July 11, well above consensus expectations of an 88 bcf build. At 2,312 bcf, inventories were 361 bcf lower than a year ago and 49 bcf below the five-year average for this time of year.

• Oil and Gas Inventories
• Crude oil inventories rose by 3 million barrels for the week ending July 11, according to the Energy Information Administration, contradicting expectations of a 2.2 million barrel decline. Gasoline inventories rose by 2.4 million barrels, far surpassing estimates of a small decline. Distillate supplies rose by a robust 3.2 million barrels, exceeding expectations. Refinery operating capacity rose 0.3% to 89.5%. Total domestic petroleum demand fell. This report will send oil prices lower.

Source: Economy.com 2008