- We expect EURUSD to weaken by 8% to 1.18 by year-end, as the Fed eases faster than the ECB.
- Initial claims likely rose last week; public holidays depress them less now than seasonal adjustment assumes.
- The ISM services index is an unreliable guide to activity, but a weak employment balance points to trouble ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The drop in the Atlanta Fed Q2 GDPNow estimate says very little; it's still far more model than tracking.
- April's JOLTS report brings further signs of labor market normalization. Lower wage growth is likely to follow.
- ADP's data and the employment index of the ISM services survey are hopeless indicators of payrolls.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Manufacturing recovery fizzling out before it has even begun.
Oliver Allen (Senior US Economist)US
- The quits rate likely remained just below its 2015-to-19 average in April, signalling slower ECI growth ahead.
- Construction spending has stagnated this year, the boom in S&L and manufacturing spending is over.
- The ISM manufacturing slipped again in May. And a plunge in new orders signals more bad news ahead.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
A headscratcher, but an unreliable signal for the broader economy.
Oliver Allen (Senior US Economist)US
Real incomes, spending and core prices increases are all slowing.
Oliver Allen (Senior US Economist)US
A housing market recovery is still some way off.
Oliver Allen (Senior US Economist)US
GDP details better than the headline, but growth is slowing.
Oliver Allen (Senior US Economist)US
- We expect a 0.23% rise in the core PCE deflator in April, but a rounded 0.3% print would be no great surprise.
- Real personal consumption probably rose by just 0.1%, given the drop in retail sales in April.
- Final domestic sales growth was strong in Q1, despite the low GDP headline, but that's about to change.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Q1 GDP growth will be revised down sharply today, thanks mostly to weaker consumption.
- Final sales still rose at a decent pace, but momentum is fading, and the labor market will reflect the downshift.
- Jobless claims probably are trending higher; look out for a hefty drop in pending home sales.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
A decent bounce, but the headwinds to consumption are mounting.
Oliver Allen (Senior US Economist)US
- State and local government investment spending has slowed sharply; soon it will fall outright…
- ...Both tax revenues and federal government payments to S&L are falling; cashflow is evaporating.
- The rebound in consumers' confidence likely will prove unsustainable if job growth weakens as we expect.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Better headline numbers, but the underlying trend is still weak.
Oliver Allen (Senior US Economist)US
The drop in sales is probably noise, but the underlying trend is weak.
Oliver Allen (Senior US Economist)US
- Ignore the rise in the composite PMI in May it has been a poor guide to GDP growth since the pandemic...
- ...The failure of the employment index to reverse April's plunge adds to signs of slowing payroll growth.
- We look for a small rise in core capital goods shipments in April, due to a calendar quirk, not an improving trend.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Sales likely to stagnate for the next few months, at best.
Oliver Allen (Senior US Economist)US
- S&P's employment index has a poor long-term correlation with payrolls, but markets are paying attention now.
- Leading indicators leave us looking for an above-consensus 230K initial claims print today.
- "Various" FOMC members signalled willingness to hike in the minutes, but the data has moved on since then.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We see existing home sales unchanged last month, but the outlook for the rest of Q2 is dim.
- The May rise in Manheim used car prices looks like a blip; sluggish sales will lead to a further margin squeeze.
- Fed minutes unlikely to change market perceptions about easing timing.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Our Homebase model points to an initial estimate of a subpar 150K rise in private payrolls in May.
- The Redbook measure of year-over-year growth in retail sales has been remarkably strong lately...
- ...But it has often overstated the trend in the official retail sales data in the recent past; we think it is again.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Not definitive, but consistent with the idea that the trend is starting to rise.
Ian Shepherdson (Chief Economist, Chairman and Founder)US