• U.S. prices are cooling as demand weakens: Commodity, lumber, gasoline, metals, and shipping costs are all down so far in August.
• Prices remain relatively high, however, and our real-time economic indicators, particularly consumer spending and sentiment, remain weak.
• Market participants' long-term inflation expectations picked up moderately for the week ended Aug. 8, though they are down sharply from recent peaks on the back of lower energy prices.

Virus and mobility

COVID-19 cases:  Average new cases in the U.S. declined for two weeks in a row, decreasing by almost 13% in the last seven days and by 19% in the last two weeks (as of Aug. 8; the number of cases stood at 105,538). Over the month, new cases have increased by a mere 1% and remain 87% below the peak on Jan. 15. The average number of deaths has also declined by 3% over the week, though deaths are up 15% for the month. As of Aug. 8, the average daily number of deaths stood at 489. Vaccination rates have stabilized since June: Currently about 67% of the total population is fully vaccinated, while around 78% have received at least one dose.

Mobility:  The Google Mobility Trends overall retail and recreation subindex as of July 29 was almost 8% below the pre-pandemic baseline, changing little over the previous two months. It has improved significantly since its low of 21% on Jan. 7, during the omicron wave. According to the Oxford Stringency Index, stringency in the U.S. has been around 38.9 since late May (100=strictest), which is still higher than for countries like Canada, France, Italy, Germany, and the U.K. Due to its "zero tolerance" policy, China's stringency index is currently 79.2, the highest among countries we track.

People-facing COVID-19-sensitive

OpenTable:  Nationally, seated diners are only about 3% below the pre-pandemic baseline and below their near-term high of 8% (above the pre-pandemic reading) on June 20. Several of the U.S. states we track are operating well above pre-COVID levels, with Florida and Texas 20% and 12% above their baselines, respectively. That said, states like Illinois and New York are still operating 26% and 28% below the pre-COVID levels, pulling down the country average.

Air traffic:  Air traffic trends in the U.S. have been moving sideways, with travelers passing through airport security checkpoints hovering around 11% below the pre-pandemic level in the past month. Leisure travel has come back, and business travel has also improved. But while ticket sales for business travel have been rising in the post-pandemic recovery phase, according to a recent report by Airlines for America, demand for corporate and long-haul travel still trails pre-COVID times.

Hotel occupancy:  The occupancy rate climbed above the 2019 average of 66.1% to 69.90% for the week ended Aug. 6. The rate slipped from the previous week by 2.0 percentage points after reaching a new post-pandemic high of 71.9 the week of July 30.

Current and future activity

Weekly Economic Index (WEI):  The WEI is in the process of adjusting to its pre-COVID levels as spending patterns and business activity absorb higher prices and interest rates. The WEI for the week ended Aug. 6 came in at 3.17% year over year, which was 8.0 percentage points down from its all-time high of 11.21% (year over year) as of May 1 but has held close to 3.0% since mid-June.

Taiwan Purchasing Managers' Index (PMI) measures:  The Taiwan Manufacturing PMI slipped into contraction territory for the first time to a record 47.80 in July, after expanding for 24 months in a row, as demand softens. Manufacturing activity has been down by almost 6 percentage points since June (when the index was at 53.60), mainly owing to a steep decline in new orders. The new orders index, a leading indicator of business activity, has been in contraction territory for the past four months and, at 36.60 in July, contracted by almost 11 percentage points over the month--its fastest decline since June 2020.

U.S. PMI measures:  The U.S. manufacturing and services PMIs both were in expansion territory for July. The manufacturing PMI decelerated to 52.8 (the lowest level since June 2022), down from 53 in June and well below its March 2021 high of 63.70. This slump mainly stemmed from a contraction in the new orders index, which fell further into contraction territory in July, dropping by 1.2 points to 48.0 in July. This comes after it dropped below its 50-point neutral market to 49.2 in June. The nonmanufacturing PMI increased to 56.70 in July from 55.30 in June. In contrast, the new orders index for nonmanufacturing climbed by 4.3 points over its June reading to 59.9 in July.

Raw steel capacity:  Raw steel capacity utilization came in at 78.2% for the week ended Aug. 6, which was 2.5 percentage points below the 2019 average. This was the third consecutive week that utilization was below the pre-pandemic level, reflecting weakness in demand for steel.

Home mortgage applications:  For the week ended Aug. 5, the mortgage applications index stood at 205.40, the lowest level since May 2020. This was down by almost 3 points compared with the previous week and by 50 points since the start of May, as mortgage rates (currently 4.99%) remain higher than the 2019 average (3.94%). The Mortgage Credit Availability Index fell by 9% in July, indicating tighter lending standards. Lenders have reduced funding in response to lower demand for home loans.

Johnson Redbook Same-Store Sales Index:  The Same-Store Sales Index has been on a declining trend after it reached its all-time high of 18.5% (year over year, four-week moving average) in early January. That said, the index has held up well despite high inflation (9.0% in June), recording 13.5% year-over-year growth for the week ended Aug. 6.

Rigs count:  The number of active drilling rigs in the U.S. declined for the first time in the last nine weeks to 598 for the week ended Aug. 5, from 605 a week prior, marking the biggest drop since September 2020. Falling gasoline consumption in the U.S. and higher inventory have forced energy firms to slash production.

Consumer confidence:  The University of Michigan Consumer Sentiment Index's final reading for July climbed to 51.5 from its historic low of 50 in June. However, it remained approximately 45 points below the 2019 average. The Conference Board Consumer Confidence Survey declined to 95.7 in July from 98.4 in June. The biweekly Ipsos-Forbes Advisor U.S. Consumer Confidence Tracker, at 49.6 on Aug. 11, is trending near its two-year low of 46.9 from June 30. Overall sentiment has weakened due to high inflation and higher interest rates. The expectations subindex improved, though it sits below its pandemic and historical averages.

Prices

Lumber futures:  As of Aug. 8, lumber futures traded at $519/1,000 board feet, which was approximately 69% lower than their all-time peak on May 7, 2021, but still 18% above the pre-pandemic level. After increasing for two years, lumber prices have plunged owing to the cooldown in the housing market.

CRB-BLS Metals Price Index:  The Metals Price Index has been on a downward trend since April. Prices have dropped by almost 26% through Aug. 6 from the peak on April 4, but they remained 33% above the 2019 average. Despite the drop in prices, volatility remains; for instance, the index has declined by 2% since the start of August, after increasing by 5% in the last half of July.

Freightos Baltic Index:  The Freightos Baltic Index further dropped to $5,989 per point on Aug. 9, down from its record high of $11,137 per point in September 2021 and down by almost 8% since the beginning of July. However, the index remains almost four times above its pre-pandemic average.

Gasoline prices:  Gasoline prices for the week ended Aug. 8 came in at $4.04 per gallon, down by $1.00 from the all-time high on June 13 and by $0.45 compared with a week prior. A drop in global demand and the resumption of crude oil exports from Libya after three months have put pressure on prices. Gasoline prices are still $1.50 higher than the average price during the first two months of 2020, before the pandemic set in.

Forward inflation expectations:  Five- and 10-year inflation expectations climbed by 3 and 2 basis points over the past week, respectively, to 2.31% and 2.48% on Aug. 8. However, they have declined by 36 and 54 basis points from their April 21 peaks of 2.67% and 3.02%, respectively, mainly on the back of declining oil prices. The one-year inflation expectation reading was 5.2% in July, close to its 41-year high of 5.4% in March and April. The five-year inflation expectation reading was 2.9% in July, just under its 11-year high of 3.1% in June.

Labor market

Initial jobless claims versus Indeed job postings:  For the week ended Aug. 6, initial jobless claims increased by an expected 14,000 from the previous week, to 262,000. This was the highest level since January, though still extremely low, reflecting a still-strong labor market with the unemployment rate currently at 3.6%. Indeed job postings remained elevated compared with Feb. 1, 2020. However, postings continued to trend lower through early August, down by 10.4 percentage points from their all-time high of 63.5% (above the Feb. 1, 2020, level) recorded on Dec. 31, 2021. As of July 30, Indeed job postings were 53.1% up from the Feb. 1, 2020, baseline.