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In June, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 1.9% annual gain, the slowest pace since summer 2023. The 10-City Composite saw an annual increase of 2.6% in June, down from 3.4% the previous month, while the 20-City Composite rose 2.1% year-over-year, down from 2.8%. Among the 20 cities, New York again posted the highest annual gain at 7.0%, followed by Chicago at 6.1% and Cleveland at 4.5%. Tampa again recorded the lowest annual return, with prices falling 2.4%.

On a month-over-month basis, the U.S. National Index ticked up 0.1% before seasonal adjustment. On the other hand, the 10-City and 20-City Composites decreased 0.1% and 0.04%, respectively. Meanwhile, after seasonal adjustment, the National Index and 20-City Composite both dropped 0.3%, while the 10-City Composite slipped 0.1%. This marks the fourth consecutive month of seasonally adjusted declines for the National Composite Index.

For the first time in years, home price gains are below the rate of inflation. Price growth in the Midwest and Northeast is now an outlier, as several Western markets have turned negative. Cities that saw pandemic highs but now experience weakness include Tampa (down 2.4%), San Diego (down 0.6%), Dallas (down 1.0%) and San Francisco (down 2.0%).

This housing cycle seems to be settling into a similar trajectory that aligns more closely with economic fundamentals compared to the tremendous gains homeowners experienced between 2020 and 2022, where housing appreciation is generally aligned with inflation. Furthermore, demand is reorienting toward traditional industrial centers and away from the markets that boomed during the pandemic.

Consumer confidence decreased 1.3 points in August to 97.4. Despite dipping slightly, the Consumer Confidence Index remained at a level similar to those of the past quarter. Among its components, the Present Situation Index and Expectations Index declined slightly, with consumers’ pessimism about the future job availability inching up while partially being offset by stronger expectations for business conditions.

The Present Situation Index, reflecting current business and labor market conditions, fell 1.6 points to 131.2. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, declined 1.2 points to 74.8, still below the recession signal threshold of 80.

Views of the current labor market situation are still poor and getting worse, with 29.7% of consumers saying jobs were “plentiful,” down slightly from July (29.9%), while 20.0% said jobs were “hard to get,” up from 18.9% the prior month and from 14.5% in January. Looking to the future, 26.8% anticipate fewer available jobs in the next six months, up slightly from 25.1% the prior month.

Mentions of tariffs were still prevalent in written responses, with consumers expressing fears they will lead to higher prices. Additionally, mentions of high prices and inflation rose again in August, and consumers’ 12-month inflation expectations picked up to 6.2% from 5.7% in July. Meanwhile, 54% of consumers, compared to 53.1% in July, expect interest rates to rise, and fewer consumers (20.9% vs. 21.4% in July) expect rates to fall.

Buying plans for cars increased in August, while buying plans for homes were stable after declining in July. Consumers’ plans for buying big-ticket items were mixed but down slightly overall in August, especially for TVs and tablets, but plans to buy washers and dryers increased. Overall, consumers’ views of their current and future financial situation improved slightly from July.

Manufacturing activity in the Fifth District deteriorated in August, but at a slower pace than the previous month, with the composite manufacturing index rising from -20 to -7. Meanwhile, the local business conditions index improved, increasing from -11 in July to 0 in August. On the other hand, manufacturers are still pessimistic about the future, and more so than in the prior month, with the outlook for future local business conditions declining from -2 in July to -10 in August. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments, new orders and employment all remained negative but contracted at a slower pace than in July, climbing to -5, -6 and -11, respectively. The vendor lead time index increased from 7 to 11. The share of firms reporting backlogs improved but remained negative, rising from -30 to -12. Meanwhile, the average growth rate of prices paid rose notably, while prices received declined slightly.

Looking ahead, firms expect the growth rate of prices paid to remain elevated and anticipate the growth rate of prices received to rise in the next 12 months. Expectations for future shipments increased from 11 to 13, while new orders stayed the same at 9. Expectations for backlogs worsened slightly, moving from -9 to -10. Meanwhile, firms maintained a cautious approach to equipment and software spending. Expectations for capital expenditures improved to -15 from -19. In sum, businesses in the Fifth District are pessimistic about prospects for future growth and are still avoiding making new investment plans.

Manufacturing activity was mostly unchanged in the Tenth District in August, with the month-over-month composite index at 1, the same as July. Meanwhile, expectations for future activity remained expansionary, rising 3 points to 11. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. Durable manufacturing activity was relatively flat month-over-month, while nondurable manufacturing activity declined slightly. New orders increased modestly, while production ticked up. Shipments rose, and at a faster pace than the prior month, rising from 3 to 6.

Production improved from -3 to 0, while new orders inched up from 2 to 5. New export orders remained negative, staying the same at -15. Employment remained flat in August, rising from -11 to 0, and the average employee workweek turned positive, increasing from -9 to 3, indicating more hours worked. Backlog of orders remained negative but improved from  -30 to -15. Prices received for finished product grew from 18 to 21, while prices paid for raw materials eased month-over-month, slipping from 47 to 43. Over the year, both prices received and prices for raw materials rose from 58 to 61 and from 67 to 69, respectively.

In July, survey respondents were asked about changes in purchasing activity and product demand expectations, and the responses were mixed. Thirty-six percent of firms reported slight decreases in purchase volumes compared to the previous quarter, while 9% noted a significant decline. Meanwhile, 17% cited no change and 34% reported a slight increase. Just 3% of respondents noted a significant increase. When firms were asked about customer purchases and services, 34% reported a slight decrease, while 27% noted no change. On the other hand, 24% cited a slight increase in customer purchases, while 2% reported a significant increase. Conversely, a higher share (13%) noted a significant decrease.

In August, Texas factory activity continued to expand but at a slower pace than the prior month. The production index fell from 21.3 to 15.3 but remained well above average. Meanwhile, other measures also indicated solid growth. The new orders index turned positive for the first time since January, advancing 9.4 points to 5.8. Capacity utilization slipped 3.6 points to 13.7 but remained elevated, while shipments jumped 11.5 points to 14.2.

Perceptions of manufacturing business conditions worsened slightly in August, with the general business conditions index declining nearly 3 points to -1.8, while the outlook improved but at slower pace, with the company outlook index dropping 1.4 points to 3.3. Meanwhile, the uncertainty index, alternatively, climbed more than 7 points to 18.3, above the series average of 17.2.

Labor market indicators suggested an increase in headcounts and longer workweeks in August, with the employment index inching up 0.4 points to 8.8, while the hours worked index surged to 15.0 from 7.7. Twenty percent of firms reported net hiring, while a smaller percentage (11.2%) noted net layoffs.

Historically high upward pressure on prices accelerated in August, while wage growth also quickened. The prices paid for raw materials index increased slightly, from 41.7 to 43.7. Meanwhile, the prices received for finished goods index rose 4.0 points to 15.1. The wages and benefits index edged up 2.2 points to 15.4 but stayed below the series average of 21.0.

The outlook for future manufacturing activity strengthened from July, with the future production index soaring from 30.3 to 40.4. Furthermore, the future general business activity index and the future company outlook index both improved, rising to 24.8 and 26.8, respectively.

The NFIB Small Business Optimism Index ticked up 1.7 points to 100.3 in July, remaining above the 51-year average of 98. July’s increase stemmed primarily from an improvement in business conditions and reports that it was a good time to expand. Of the 10 components included in the index, six increased, two decreased and two stayed the same. Meanwhile, the Uncertainty Index rose eight points to 97, indicating a notable worsening of small business uncertainty and remaining well above the 51-year average (68) and the average since 2016 (80).

Labor quality ranked first in the list of concerns for small business owners in July, with 21% reporting it as the most important problem, up five points from June. On the other hand, fewer small business owners reported jobs they could not fill in July, down three points from June to 33%. Following the passage of the tax bill, taxes fell in the rankings of top small business concerns in July to second after being the top concern in June, with 17% reporting them as their most important problem, down two points from the month prior. Inflation and poor sales tied for third in the list of concerns, with 11% reporting it as a top concern.

A net 27% of small business owners reported raising compensation, down six points in July after jumping seven points in June. Meanwhile, just 17% of small business owners plan to increase compensation in the next three months, down two points from June. The cost of labor on inflation is easing, but profitability remains under pressure, with a net negative 22% reporting positive profit trends, the same percentage as in June. Of those reporting lower profits, 34% claimed weaker sales, 13% cited increased material costs and 11% claimed labor costs. A net 24% of small business owners planned price hikes in July, down five points from June but remaining above the average of net 13%. Meanwhile, 4% reported their last loan was harder to get than previous attempts, down one point from June, and a net 5% of owners reported paying a higher rate on their most recent loan, down four points from the prior month.

The outlook for general business conditions soared fourteen points to 36%, a very positive reading by historical standards. Additionally, the share of firms saying it is a good time to expand rose five points to 16% in July. With the Uncertainty Index at elevated levels, tariffs, inflation and geopolitical tensions all remain sources of doubt influencing hiring, pricing and investment decisions. Small businesses are hopeful that the next six months will provide some clarity to these issues, which would provide an incentive to invest.

U.S. import prices increased 0.4% in July, after slipping 0.1% in June, with both higher nonfuel and fuel prices driving the increase. Over the past year, import prices decreased 0.2%. Meanwhile, U.S. export prices ticked up 0.1% in July, with nonagricultural export prices driving the increase. Over the past year, export prices increased 2.2%.

In July, U.S. import prices for manufacturing rose just 0.2% over the year, but with significant divergences in prices across the industry. Petroleum and coal products manufacturing experienced the most significant over-the-year U.S. import price declines in July, falling 12.9%. On the other hand, the greatest yearly increase in U.S. import prices occurred in primary metal manufacturing, which rose 10.0% from July 2024. Meanwhile, U.S. export prices for manufacturing in July increased 2.8% over the year, with primary metal manufacturing export prices exhibiting the largest rise (26.3%).

Fuel import prices rose 2.7% over the month in July, following a 0.8% increase in June and a 5.0% decline in May. Higher prices for petroleum and natural gas drove the increase, rising 2.4% and 4.7%, respectively. Despite the over-the-month increase, prices for fuel imports plummeted 12.1% from July 2024. Import prices for petroleum fell 13.7% from last year. Meanwhile, natural gas prices jumped 62.2% over the year.

Nonfuel import prices increased 0.3% in July, following a 0.3% decrease in June. Higher prices for nonfuel industrial supplies and materials, consumer goods and capital goods more than offset lower prices for automotive vehicles and foods, feeds and beverages. The price index for nonfuel imports grew 0.9% over the past year and has not declined on a year-over-year basis since February 2024.

After rising 0.8% in June, agricultural export prices stayed the same in July. Over the past 12 months, agricultural export prices increased 3.4%. Meanwhile, nonagricultural export prices inched up 0.1% in July. Higher prices for capital goods, consumer goods and automotive vehicles more than offset lower prices for nonagricultural industrial supplies and materials. Over the past year, nonagricultural export prices advanced 2.0%.

Manufacturing activity in New York state grew modestly in August. The headline general business activity index strengthened from July, rising 6.4 points to 11.9. Meanwhile, the new orders and shipments indexes also increased, to 15.4 from -2.0 and 12.2 from 11.5, respectively. Unfilled orders improved slightly but remained negative, rising from -6.4 to -5.5, while delivery times lengthened from 8.3 to 17.4. Inventories declined notably, plunging from 15.6 to -6.4, but supply availability improved, rising from -11.0 to -5.5.

The index for the number of employees declined from 9.2 to 4.4, while the average employee workweek was relatively unchanged at 0.2. Input prices fell from 56.0 to 54.1, while selling prices also moderated slightly, edging down 2.8 to 22.9 points, a reflection of a slower pace of increase for prices received and prices paid.

Looking forward, firms’ expectations worsened but remained positive. The index for future business activity decreased 8.1 points to 16.0. In the next six months, new orders and shipments are still expected to increase, but at a slightly slower pace than anticipated last month, clocking in at 16.3 and 17.9, respectively. On the other hand, capital spending plans returned to negative territory, falling 10.1 points to -0.9.

Employment expectations remained but declined from 11.0 to 6.9, while the average employee workweek outlook strengthened, rising from -0.9 to 0. Input prices are expected to climb higher, rising from 58.7 to 64.2. On the other hand, selling price expectations ticked down 0.9 points to 41.3. Meanwhile, supply availability is still forecasted to contract in the next six months but at a slower pace than predicted in July.

Industrial production edged down 0.1% in July, while manufacturing output stayed the same as June. At 100.2% of its 2017 average, manufacturing production in July rose 1.4% from the same month last year. Capacity utilization for manufacturing dipped to 76.8%, down 0.1 percentage points from June but increased 1.2% over the past year. Capacity remains 1.4 percentage points below its long-term average from 1972 to 2024.

In July, major market groups posted mixed results. Consumer goods production increased 0.1%, while business equipment output rose 0.5%. Among consumer goods, the production of automotive products advanced 0.7%, while the index for appliances, furniture and carpeting decreased 1.5%. Among business equipment, the gain was supported by a 1.8% and 0.3% rise in the index for transit equipment and industrial and other equipment, respectively. On the other hand, the indexes for nonindustrial supplies and materials both declined 0.3%, led by a 2.0% decline in textile materials in July.

Durable goods manufacturing rose 0.3% in July and 2.7% from the year prior. Monthly growth was greatest for aerospace and miscellaneous transportation equipment (1.7%), while primary metals, machinery and motor vehicles and parts posted the largest declines at 0.3% each. Meanwhile, led by a 2.1% drop in textile and product mills output, nondurable goods manufacturing decreased 0.4% in July but rose 0.6% from July 2024.

The Producer Price Index for final demand (also known as wholesale prices) surged 0.9% over the month in July, the largest monthly jump since March 2022, after prices stayed the same in June. Over the year, producer prices moved up 3.3% in July, up from the 2.4% hike in June. Meanwhile, prices for final demand excluding foods, energy and trade services increased 0.6% over the month in July, after staying the same in June. Prices for these goods advanced 2.8% from July 2024.

Within final demand, prices for services advanced 1.1% in July, accounting for more than three-quarters of the headline increase. Meanwhile, prices for goods rose 0.7%. Over half of the increase in prices for services is attributed to a 2.0% rise in margins for trade services, indicating companies are absorbing a smaller percentage of those higher costs. Meanwhile, 40% of the increase in goods arose from the 1.4% gain in foods. Within the final demand goods index, prices for industrial material handling equipment climbed 0.6% over the month and 6.0% from July 2024. In addition, prices for private capital equipment for manufacturing industries jumped 4.4% over the year, the largest yearly increase since September 2023.

Processed goods for intermediate demand rose 0.8% in July, the largest rate of increase since January. Over half of the rise can be attributed to an 11.8% gain in the diesel fuel index. Meanwhile, the index for processed foods and feeds fell 0.1%. Over the year, the index grew 2.1%, the largest 12-month increase since the 2.1% rise in February 2023.

Meanwhile, prices for unprocessed goods for intermediate demand advanced 1.8% in July, after rising 2.6% in June. Nearly two-thirds of the July gain can be traced to a 2.9% hike in the prices for unprocessed foodstuffs and feedstuffs. Additionally, prices for unprocessed nonfood materials less energy rose 2.0