There were two important reports on the U.S. economy released this morning. First, data from the Federal Reserve Bank of New York showed that manufacturing activity in the Northeast region of the country slowed considerably this month, with the general business conditions index plunging to -4.21. This was the first negative (contractionary) reading since May and significantly worse than the increase to +2.50 that economists had expected. However, things appear less discouraging under the hood because measures of new orders, shipments, inventories, prices received, total employment, and the average employee workweek all improved this month. Most of the weakness was instead found in the forward-looking indicators, with notable declines seen in surveyed managers’ expectations for total employment, capital expenditures, and technology investment six months from now. Overall, though, this was a mixed report and the first regional manufacturing data released for the month of August, suggesting that there is still no clear end in sight for the “industrial recession” in America that started last year.
Elsewhere, a report from the National Association of Home Builders (NAHB) showed that builders this month were slightly more confident in the market for newly built, single-family homes. Specifically, the NAHB’s housing market index rose from July’s downwardly-revised 58 print to 60 in August, in line with expectations and one of the higher readings of 2016-to-date. Under the hood, prospective buyer traffic cooled this month but gauges of current sales conditions and sales expectations for the next half a year both improved. Regionally, builder sentiment improved over the past three months in the South and the Northeast, was little-changed in the West, and deteriorated in the Midwest.
Sources: Econoday, Twitter, Bloomberg, ZH, FRBNY, NAHB, FRBSLPost author: Charles Couch