Economy

Economic Data Roundup (06/30/2016)

6/30/16 12:00 PM

iStock_000009946822_Small.jpgThere are a few important reports on the U.S. economy worth mentioning today. First, data from the Department of Commerce showed that personal income for Americans increased by 0.2 percent ($37.1 billion) in May, slightly worse than expected, and monthly private wages and salaries growth slowed from $38.7 billion to $11.8 billion. On a year-over-year basis, total personal income has risen by 4.02 percent, the weakest pace of annual growth since March 2015. Despite this, consumer spending, which accounts for almost 70 percent of the U.S. economy (GDP), rose by 0.4 percent in May, a healthy gain following the prior month’s 1.1 percent jump. Personal saving as a percentage of disposable personal income, i.e. the personal saving rate, fell to 5.3 percent last month. The personal consumption expenditures (PCE) core price index, one of the Federal Reserve’s preferred measures of inflation in America, posted a year-over-year gain of 1.62 percent last month. That is little-changed from April and therefore still well-below the Fed’s 2.0 percent “target.”

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Next, the Chicago purchasing managers’ index (PMI) from Market News International (MNI), a measure of regional business activity that is often viewed as an indicator for the overall U.S. economy, surged to 56.8 in June. That is a significantly better rebound than economists had expected following May’s unusually weak print, and the best headline reading since January 2015. Under the hood, measures of new orders, order backlogs, and production all surged this month, and firms reported their first net inventory build in more than half a year. However, demand for labor declined in June, with total employment contracting at the fastest pace since 2009, and surveyed managers’ outlooks on future activity deteriorated slightly. Chief Economist of MNI Indicators Philip Uglow added that “Looking at the three-month average provides a better guide this month to the underlying trend in the economy with activity broadly unchanged between Q1 and Q2. Still, on a trend basis activity over the past four months is running above the very low levels seen around the turn of the year.”

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Elsewhere, the pending home sales index from the National Association of Realtors (NAR) fell by 3.7 percent to 110.8 in May, much worse than the 1.0 percent decline economists had expected and erasing the bulk of the gain from the prior month. With April’s increase also being revised lower, pending home sales actually fell 0.2 percent on a year-over-year basis in May. That is the first annual decline since August 2014 but the index is still near the upper-end of the range for the past year. Sales edged lower across the country last month, with the largest decline occurring in the Northeast (-5.3 percent). NAR chief economist Lawrence Yun added that “With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity. Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.”

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Sources: Econoday, Bloomberg, Twitter, ZH, U.S. Census Bureau, MNI, NAR, FRBSL

Post author: Charles Couch