More Good Economic & Market News

Nonfarm productivity surged 6.4% in Q2 while prior quarters were revised down. The surge is typical at a time when the economy is turning from recession to recovery.

The trade balance widened $1bn in June to -$27.0bn, with both exports and imports rising in the month. However, in real terms the deficit narrowed slightly.

As expected, the FOMC left short rates unchanged, noting modest economic improvement. The committee continues to expect a sluggish recovery and subdued inflation.

Retail sales disappointed in July, in both headline (-0.1%) and ex autos (-0.6%). Away from autos, which likely benefitted from the cash for clunkers program, weakness was fairly widespread. Coupled with modest revisions to May and June figures, the drop in July adds to signs that GDP in Q2 could be
revised lower than the -1.0% on record.

July Consumer Prices remained muted, rising only 0.005% (-2.1% yoy). The cash for clunkers program had no visible impact on new car prices which rose another 0.5%. Firmer than expected apparel prices helped to push Core CPI up 0.09%.

Industrial production rose 0.5% in July (-13.1% yoy). However, the increase was heavily skewed towards auto output which drove the manufacturing sector higher 1.0%.

Capacity utilization improved to 68.5% from 68.1% in June.