Tentative signs of recovery in the multi-family sector, but single-family starts look set to fall further.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Equipment investment likely leapt by about 7% in Q2, driven by surging transport and computer spending...
- ...But these components are volatile; high borrowing costs will weigh on capex unrelated to the AI boom.
- The jump in jobless claims was due to auto plant closures and Hurricane Beryl, but the trend is rising too.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The manufacturing downturn is over, but growth in output in the second half of this year will be sluggish.
- High mortgage rates and excess new home inventory suggest single-family housing starts will fall further.
- We look today for a pick-up in initial jobless claims, but the data are prone to unpredictable swings in July.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
The single-family construction boom seems to be fading.
Oliver Allen (Senior US Economist)US
Real consumption likely grew at a near-2% rate in Q2, down from 2023’s rapid pace.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- The jump in core retail sales in June has the hallmarks of a weather-related blip; expect a pullback in July.
- We expect partial recoveries in June housing starts and building permits, but a poor outturn for Q2 overall.
- Manufacturing output likely grew briskly in both June and Q2, but the recovery will slow in Q3.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Output lacking momentum, but goods inflation still very much in check.
Oliver Allen (Senior US Economist)US
- Our Homebase model points to a 200K rise in private payrolls, but its errors in prior Julys have been big...
- ...So we will place more weight this time on the NFIB, S&P Global, ISM and regional Fed business surveys.
- Headline retail sales probably fell in June, due to a slump in sales of autos and gasoline.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Depressed again by the shift to web-based data collection.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Summer distortions hide the underlying trend.
Oliver Allen (Senior US Economist)US
- The June core PCE deflator likely undershot the Fed’s implied forecast pace for a second straight month.
- The jump in PPI trade services looks like noise; margins likely will come under renewed pressure in Q3.
- People expect higher unemployment and lower inflation; the Fed needs to ease, soon.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Plunging airline fares flattered June’s tiny rise in the core CPI, but most services prices were subdued too.
- CPI data and our PPI forecasts map to a 0.17% rise in the core PCE deflator, but our estimate will shift today.
- The Michigan consumer sentiment index probably rose slightly in July, lifted by a surging stock market.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Auto insurance prices likely rebounded in June, driving a 0.3% increase in the core CPI...
- ...But we look for chunky falls in vehicle prices and a modest increase in core-core services prices.
- We look for a rise in jobless claims today, as auto plant and school closures overwhelm the seasonals.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
A slight improvement from a weak base, but challenges remain.
Oliver Allen (Senior US Economist)US
- Mr. Powell still wants more good inflation data, but the tiring job market is gaining more of his attention.
- The NFIB survey ticked up in June, but pressure on the economy from high rates remains intense.
- The pick-up in Redbook sales almost certainly overstates current momentum in consumers’ spending.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Job gains are no longer “strong”; Powell might signal rates will be cut swiftly if the slowdown continues.
- Consumers are increasingly worried about losing their jobs, and for good reason.
- NFIB survey likely to suggest that small businesses remain under pressure from high rates.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
Weakening in private payroll growth points to multiple rate cuts in H2.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
- Private payroll growth slowed sharply in Q2; revisions could easily worsen the picture.
- Tight monetary policy is the primary cause; employment growth will slow further in Q3.
- Wage growth now is consistent with the 2% inflation target; the Fed will ease multiple times in H2.
Ian Shepherdson (Chief Economist, Chairman and Founder)US
