There were two important reports on the U.S. economy released this morning. First, data from the Federal Reserve Bank of Dallas showed that business activity in the southern region of the country rebounded in July, as the general activity index rose by more than expected to +16.8. Under the hood, measures of production, capacity utilization, new orders, business growth, shipments, employment, and hours worked all improved this month but gauges of wages/benefits and capital expenditures deteriorated. Manufacturers’ outlooks on the future (six months ahead) firmed in July, and comments from surveyed managers were mostly positive.
Elsewhere, the pending home sales index from the National Association of Realtors (NAR), a forward-looking indicator based on contract signings, rose by 1.5 percent to 110.2 in June. That was much better than the 0.9 percent gain economists had anticipated, the first monthly increase since February, and the highest headline reading since March. Regionally, sales fell in the Midwest (-0.5%) last month but rose in the West (+2.9%), the South (+2.1%), and the Northeast (+0.7%). June’s uptick in sales was a welcome turnaround following several months of weakness but supply issues will likely continue to be a headwind going forward. NAR chief economist Lawrence Yun added that “It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market. Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford. However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market.”
Sources: Econoday, FRBD, NARPost author: Charles Couch