Today's U.S. Data-Bites

Today's data releases include weekly same-store sales, the Richmond Fed manufacturing index for July and house prices (OFHEO).

Same-store sales The weekly Redbook measure of same-store sales (stores open at least 12 months) for the week ended July 19 showed a year-over-year rise of 2.6%, down from the prior week's 2.7% and the early-July peak of 2.9%. The time series shows that year-over-year activity troughed at 0.1% in early March and rose from 1.3% in the week ended April 29 (the last week before the tax rebate cheques went out) to the 2.9% peak in early July, which represented a high since August 2007. We expect that sales will continue to wane as tax-rebate spending wears off and consumers remain squeezed by high food and gas prices.

Richmond Fed manufacturing index The Richmond Fed manufacturing index fell unexpectedly in July to -16 (consensus -9; prior -12), a new low since April 2003 and the seventh lowest print in data back to 1993. Only two of the eight sub-indexes rose - wages went up 2 to +8 and the number of employees rose 7 to -5. Wages was the only one of the eight sub-indexes that was positive at +8. This report suggests a renewed downward momentum in growth near-term, consistent with our view that the economy will see another wave of softening by year-end.

The OFHEO house price index The OFHEO house price index for May dropped 0.3% month-over-month (consensus -0.8%), causing the year-over-year rate to drop to 4.8%, a new low since data collection began in 1991. The key driver regions were New England -0.8%, South Atlantic -1.2%, West South Central -1.0% and Pacific +0.3%. Prices will likely continue to decline in coming months as the elevated inventory (10.8 months, just off its April 2008 high of 11.2 months) continues to burn off.

RBC Financial Group
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The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.