Economy

Economic Data Roundup (05/26/2016)

5/26/16 12:00 PM

iStock_000009946822_Small.jpgThere were several reports on the economy worth mentioning this morning. First, data from the Census Bureau showed that new orders for U.S.-manufactured durable goods increased by $7.7 billion (3.4 percent) in April to $235.9 billion. This is significantly better than economists had expected and March’s month-over-month gain was revised sharply higher. However, core durable goods orders, which exclude the volatile transportation component, rose by only 0.4 percent in April and have actually declined on a year-over-year basis for fifteen consecutive months, a pattern rarely seen outside of a recession. Further, orders for nondefense capital goods excluding aircraft, i.e. core capital expenditures, an important gauge of business spending, fell by 0.8 percent last month and are 5.0 percent lower compared to this same period last year. Russell Price, a senior economist at Ameriprise Financial, added that “Business investment is going to continue to weigh on economic growth. Companies are worried about the outlook. Until we see some traction, especially on corporate profits, we won’t get an acceleration.”

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Next, the pending home sales index from the National Association of Realtors (NAR) surged by 5.1 percent to 116.3 in April, much better than the 0.8 percent gain economists had expected and the highest overall reading since 2006. The March print was revised slightly higher and sales as a result were up 4.6 percent over the past year, the 20th month in a row of annual growth. Sales edged lower in the Midwest but expanded everywhere else in April, with notable gains in the Southern (+6.8 percent) and Western (+11.4 percent) regions of the country. NAR chief economist Lawrence Yun added that “The ability to sign a contract on a home is slightly exceeding expectations this spring even with the affordability stresses and inventory squeezes affecting buyers in a number of markets. The building momentum from the over 14 million jobs created since 2010 and the prospect of facing higher rents and mortgage rates down the road appear to be bringing more interested buyers into the market.”

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Elsewhere, the Federal Reserve Bank of Kansas City’s composite manufacturing index slid from -4.0 in April to -5.0 this month, little-changed but still the 15th negative (contractionary) reading in a row. Under the hood, nondurable goods production and exports declined while shipments, new orders, and employment were stable, albeit at relatively low levels. Most gauges of future activity deteriorated this month but capital expenditure plans continued to rise. Some surveyed managers stated that “the strong U.S. dollar continues to be a problem,” and “all things oil related are still very difficult.”

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Sources: Econoday, Bloomberg, Twitter, ZH, U.S. BEA, NAR, FRBKC, FRBSL

Post author: Charles Couch