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Layoff Announcements Rise Sharply in July

We look at recent and upcoming economic reports.

Last Week
Labor Markets. Layoff announcements rose sharply in July, according to the latest Challenger, Gray & Christmas survey. Transportation and financial-services firms led the way, while CEO John Challenger said that job-cut announcements have spread to a wider majority of industries in recent months. Year-to-date, the number of jobs included in layoff announcements has risen 33% above year-earlier levels. The July 2008 total was over twice as high as in July 2007, and up 26% from June 2008.

Initial claims for unemployment insurance rose sharply in the last two reporting weeks, mainly due to a program decision to extend benefits and cushion the impact of the economic slowdown. In other words, special factors may have artificially boosted the overall total, but the special factors were themselves reflective of economic weakness.

Housing. The National Association of Realtors reported that its pending home sales index (which tracks contract signings) rose 5% from May to June. The trend in this index has flattened out in the past six months or so, after falling 10% in 2006 and 14% in 2007. Still, the latest index result remained about 12% below year-earlier levels.

Overall/Inflation. Personal spending declined in June in real terms, as an uptick in growth in nominal dollars was more than outweighed by higher prices. The price index for personal consumption spending rose at its fastest single monthly rate since 1981. Things aren't as dramatic on a smoothed/trend basis, but the year-on-year change in this index has risen from 2% to 4% over the past year.

In June, the price index for the ISM Non-manufacturing Survey, a survey of purchasing managers in the services sector, climbed to the highest level in the survey's history. (The ISM started this survey in 1997, modeled on its long-running and successful survey of manufacturing firms.) In July, this index declined a bit, but remained quite high.

The FOMC left the fed funds target unchanged at 2% in its meeting Tuesday. One participant dissented, preferring higher rates now.

This Week
Consumer. The Department of Commerce report on retail sales in July comes out Wednesday. The University of Michigan's consumer sentiment survey comes out Friday, with preliminary results for August.

Manufacturing. The New York "Empire State Index" from a survey of purchasing managers in the region comes out Friday. The monthly Federal Reserve report on industrial production comes out Friday as well.

Overall/Inflation. The Department of Commerce report on international trade comes out Tuesday, and its measure of export and import prices comes out Wednesday. The Bureau of Labor Statistics reports the Consumer Price Index on Wednesday.

Labor Markets. The Labor Department reports weekly unemployment insurance claims on Thursday.

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