- The details of the August ISM manufacturing survey are bleak, despite the uptick in the headline.
- Weakness in the manufacturing sector looks set to remain a small drag on payrolls and growth.
- The July JOLTS report will reinforce the message that the labor market is cooling.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
An unreliable bellwether for the national picture.
Oliver Allen (Senior US Economist)US
Undershooting the Fed’s June core PCE forecast for the third straight month.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Housing market activity likely to remain very weak.
Oliver Allen (Senior US Economist)US
Drag from trade on Q3 GDP growth likely to be offset elsewhere.
Oliver Allen (Senior US Economist)US
The rising trend has flattened off; expect a run of lower numbers this fall.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The core PCE deflator undershot the Fed’s forecast yet again in July; expect more benign prints in H2.
- Recent strength in consumption lacks solid foundations; the saving rate will be higher a year from now.
- The ISM probably remained soft in August, pointing to weak growth in manufacturing employment
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The small recent rise in continuing claims suggests July’s unemployment rate was overestimated.
- We are pencilling in a 0.1pp dip in the rate to 4.2% in August, despite the worsening trend.
- The rapid 2.9% growth in consumers’ spending in Q2 looks unsustainable; expect a sharp slowdown.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- We look for little change in in initial jobless claims today, and a run of lower numbers this fall…
- …Leading indicators have improved and the seasonals will help; but lower hiring will slow job gains.
- The hit to growth from the rising trade deficit will be offset by boosts from inventories and investment.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Consumers unlikely to remain so upbeat.
Oliver Allen (Senior US Economist)US
- We look for a 0.13% rise in the July core PCE deflator, implying downside risk to the 0.2% consensus.
- Real consumption probably rose by 0.3% in July, setting up a strong base for growth in Q3…
- …But we expect a slowdown ahead, due to weak income growth and rising the saving rate.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Ignore the headline, the underlying trend is very weak.
Oliver Allen (Senior US Economist)US
- Ignore the near-10% surge in headline durable goods orders in July; the details were weak…
- …Real core capital goods shipments fell by 0.5%, pointing to falling equipment investment in Q3.
- A hit to sentiment among Republicans probably weighed on overall consumer confidence in August.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
New home sales unlikely to keep rising.
Oliver Allen (Senior US Economist)US
Expect a small rise in H2 sales, but the weakening labor market will constrain activity.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Clearer signs that services sector employment is rolling over.
Oliver Allen (Senior US Economist)US
Underlying claims have plateaued, and will probably slip back in the near term.
Oliver Allen (Senior US Economist)US
- Chair Powell probably will indicate at Jackson Hole that multiple rate cuts are likely this year.
- The S&P Global composite PMI has joined the raft of indicators pointing to weaker hiring.
- Existing home sales rebounded in July, but a sustained near-term recovery is unlikely.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The only question for September is the size of the Fed move; we still expect 25bp, but hope for 50.
- The downward revision to March payrolls is big, but this tells us very little about the near-term outlook.
- Existing home sales probably bounced in July, but are unlikely to climb much further in Q3.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Leading indicators suggest that the upturn in initial claims in recent months is petering out.
- But the slowdown in employment growth will likely continue, as companies continue to reduce hiring.
- Benchmark payroll revisions are unforecastable, but have been small in recent years.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
