Investing Your Money

MANUFACTURING & OUTPUT

• The pace of growth in the manufacturing economy continues to show signs of moderating, as the Institute for Supply Management’s PMI slipped from a 56.2% in June to a 55.5% for July.  Indices for new orders and production both decelerated from the prior month, but the employment index increased. 
• After falling a revised 0.1% in June, Industrial Production bounced back in July rising a better-than-expected 1.0%.  Leading the charge was a 1.1% gain in factory output thanks to a substantial rise in the production of motor vehicles and parts.  Mining output increased 0.9% in July, while utilities production advanced 0.1%.  Capacity utilization rose to 74.8%; while that remains 5.8 percentage points lower than the historical average, it does represent an increase of 5.7 percentage points from one year ago.

LABOR MARKETS

• The unemployment rate was unchanged at 9.5% for July, while total nonfarm payroll employment fell by 131,000.  The decline reflects the departure of 143,000 temporary federal government employees hired for the decennial census.  Private payrolls rose 71,000 for the month.  Manufacturing employment gained 36,000 jobs, but construction payrolls continued to decline (-11,000).  Among the service-providing industries, health care added another 27,000 jobs, while transportation and warehousing gained 12,000.  Employment in financial activities declined by 17,000 in July, and temporary help services payrolls slipped a modest 6,000.
• The average workweek increased in July, and the average hourly earnings rose by $0.04, or 0.2%.  Year over year, average hourly earnings have increased by 1.8%.

PRICES

• U.S. import prices rose 0.2% for July, driven by higher prices for fuel imports (+2.1%).  Rising petroleum and natural gas prices contributed to the increase.  Nonfuel prices declined by 0.3% for the month.  Export prices declined 0.2%.
• The Producer Price Index for Finished Goods was up 0.2% in July.  Wholesale prices for food increased 0.7%, while the index for energy declined 0.9% on lower gasoline prices.  Core PPI rose 0.3% for the month.
• After falling for three consecutive months, the Consumer Price Index increased 0.3% in July.  Food prices declined 0.1% for the month; the energy index, however, posted its first gain since January, up 2.6%.  Excluding food and energy, core CPI advanced 0.1%.  Over the past twelve months, CPI increased 1.2% while core CPI rose 0.9%.

SALES

• Retail sales advanced 0.4% from June to July, led by a 1.6% gain in auto sector sales.   Sales excluding the auto sector rose 0.2% primarily on the 2.3% gain in gas station sales.  Sales at food and drink establishments increased 0.2%, while health & personal care stores were unchanged for the month.  In nearly every other major category fell including department stores (-1.0%), clothing stores (-0.7%), home furnishings stores (-0.3%), home improvement stores (-0.3%), and electronics & appliance stores (-0.1%).

THE FEDERAL RESERVE

• At the August 10, 2010 meeting, the Federal Open Market Committee voted to maintain the target federal funds rate range of 0% to 0.25%, noting a more modest pace of economic recovery than had been previously expected.  Continuing to dissent, Thomas M. Hoenig believes that the modest recovery is progressing as expected.