In posts yesterday and Monday, we made note of the increasingly disappointing economic data out of the US relative to expectations so far in 2019. This week’s data only added to the woes as the Citi Economic Surprise Index for the US now sits only 0.73% above its April low.
Over half of this week’s releases came in worse than the prior period of estimates. The Chicago Fed’s National Activity Index was the first release this week showing improvements from the April data and coming in above estimates, but the indicator is still showing contracting activity (reading below zero). The Dallas Fed’s Manufacturing Activity index also was out on Monday showing far weaker results. Later in the week, on Thursday, the Kansas City Fed released their own manufacturing activity index completing our Five Fed Composite which is painting a bleak picture for the manufacturing sector. There was also a good amount of housing data this week with overall solid results including stronger than expected home prices (via the FHFA index and S&P CoreLogic’s Case-Shiller Index) but disappointing new home sales on Tuesday, improved MBA Mortgage Applications on Wednesday, and a much better Pending Home Sales print on Thursday. Chicago PMI dropped below 50 on Friday, which is a sign of contraction, but Michigan Confidence beat estimates. One other major release this week was the third and final release of quarterly GDP, which held steady at 3.1% QoQ but was below estimates of an increase to 3.2%.
Despite a shortened week due to the July 4th holiday, next week is set up to be a busy one. On Monday, Markit will release their final June PMI on manufacturing alongside the ISM reading later that morning. While Markit measures on manufacturing are expected to hold steady at 50.1, ISM data is anticipated to fall 1.1 down to 51. The only release Tuesday will be data on vehicle sales, which are expected to fall to 17 mm SAAR. On Thursday, there will be no releases and US markets will be shuttered in observance of the July 4th holiday. Additionally, markets will close early (1:00 PM EST) on Wednesday. In spite of this shortened session and day off, there is a huge slug of data to be released Wednesday. Following up the manufacturing PMIs, Markit and ISM non-manufacturing indicators are all due out on Wednesday. In the late morning, final May data on Factory, Durable, and Capital Goods Orders are also going to be released. Alongside the standard Wednesday release of MBA Mortgage Applications, other weekly data that is typically released on Thursday will be pushed ahead one day including Initial Jobless Claims and Bloomberg Consumer Comfort. ADP employment numbers are expected to show improvements when it releases on Wednesday ahead of Friday’s Nonfarm payrolls report, which is also forecasting a solid improvement from the previous month. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.