- Personal Spending for June rose .4% versus estimates of a .4% increase and an upwardly revised .6% gain in May.
- The PCE Core for June rose .2% versus estimates of a .2% increase and a .2% gain in May.
- Construction Spending for June rose .3% versus estimates of a .1% increase and no change in May.
- ISM Manufacturing for July rose to 54.7 versus estimates of 53.5 and a reading of 53.8 in June.
- ISM Prices Paid for July rose to 78.5 versus estimates of 75.3 and a reading of 76.5 in June.
- Pending Home Sales for June rose .4% versus estimates of a .5% decline and a 1.4% gain in May.
BOTTOM LINE: US personal spending and incomes met expectations in June, Bloomberg reported. Spending on services, which account for two-thirds of the economy, rose .1% versus a .4% gain in May. The PCE Core, the Fed’s favorite inflation gauge, rose 2.4% from a year ago. I continue to believe spending is slowing to more averages levels from robust rates. Incomes will likely grow around current levels over the intermediate-term. I still believe inflation fears have peaked for the year.
US construction spending increased in June by the most in three months as companies built more factories and offices at the same time homebuilding slowed, Bloomberg said. Private non-residential construction rose 2.7% and is up 22% from year-ago levels, which bodes well for continued capital spending by companies. I continue to see construction decelerating as home construction slows, but is offset to some extent by increased commercial building.
Growth in UN manufacturing unexpectedly accelerated in July as production rebound, Bloomberg said. The prices paid component of the index rose to 78.5 versus a reading of 76.5 in June. The new orders component of the index fell to 56.1 versus 57.9 the prior month. The employment component of the index rose to 50.7 from 48.7 the prior month. I continue to see manufacturing slowing, but remaining relatively healthy as companies rebuild low inventories.
Contracts to buy previously owned homes in the US unexpectedly rose for a second month in June, suggesting the slowdown in housing will be gradual, Bloomberg reported. Pending re-sales rose 1.9% in the Mid-west and 2.5% in the South. Pending re-sales fell 6.3% in the Northeast and were unchanged in the West. This report adds to evidence that the housing market is just slowing to more healthy sustainable levels.
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