Retail sales accelerated, but overall economic activity slowed in June. Here are the five things we learned from U.S. economic data released during the week ending July 19.
Retail sales shined in June. U.S. retail and food services sales grew 0.4 percent during the month to a seasonally adjusted $519.9 billion, per the Census Bureau. This matched May’s 0.4 percent sales gain and left the measure up 3.4 percent over the past 12 months. Sales at auto dealers & parts stores jumped 0.7 percent but fell 2.8 percent at gas stations (due to lower prices at the pump). Net of sales at auto dealers & parts stores and gas stations, core retail sales expanded 0.7 percent in June and 3.8 percent over the past year. Virtually every retail sector enjoyed sales gains during the month, led by restaurants/bars (+0.9 percent) and matching 0.5 percent jumps at furniture retailers, building materials/garden stores, grocery stores, apparel retailers, and health/personal care stores. Sales fell at department stores (-1.1 percent) and electronics/appliance retailers (-0.3 percent).
Forward-looking economic indicators suggest the U.S. economy may have hit the brakes in June. The Conference Board’s Leading Economic Index (LEI) shed 3/10ths of a point to a reading of 111.5 (up 1.6 percent from a year earlier), the measure’s first drop since last December. Even with the slide, six of ten LEI components improved during the month. The coincident index increased 1/10th of a point to 105.9 (+1.6 percent versus June 2018) as three of four index components made a positive contribution. The lagging index jumped 6/10ths of a point to 107.7 (+2.6 percent versus June 2018) with four of seven components making a positive contribution. The press release noted that the “LEI suggests [economic] growth is likely to remain slow in the second half of the year.”
Manufacturing output grew in June. The Federal Reserve reports that manufacturing output rose 0.4 percent on a seasonally adjusted basis, up from the 0.2 percent bump in May and April’s 0.7 percent drop. Durable goods production advanced 0.4 percent while that for nondurables increased 0.5 percent. Boosting the former were sizable output gains of motor vehicles, nonmetallic mineral products, and computers/electronics while the latter expanded thanks to a jump for petroleum and coal products. Overall industrial production was flat during June. Mining output eked out a 0.2 percent gain while utilities saw output fall 3.6 percent (thanks to moderate summer weather during June). Overall industrial production has grown a modest 1.3 percent over the past year while 12-month comparable for manufacturing output was a tepid +0.4 percent.
Housing starts slowed in June, thanks to multifamily units. The Census Bureau places its seasonally adjusted annualized estimate of housing starts at 1.253 million units, a 0.9 percent decline from May but up 6.2 percent from a year earlier. Even if the headline figure declined, starts of single-family homes grew 3.5 percent—those of multifamily units fell 9.4 percent. Looking towards the future, the annualized count of issued housing permits slumped 6.1 percent to 1.220 million (-6.6 percent versus June 2018). Issued permits for future single-family homes edged up 0.4 percent but plummeted 20.7 percent for properties of five or more units. Housing completions dropped 4.8 percent during June to an annualized 1.161 million units.
Homebuilder sentiment solidified in July. The National Association of Home Builders’ Housing Market Index (HMI) added one point during the month to a seasonally adjusted 65. This was a rebound from the two-point drop in June and the 61st straight month of the HMI staying above a reading of 50, indicative of more builders seeing the housing market as “good” versus being “poor.” The HMI grew in the West and South but lost ground in the Midwest and Northeast. Adding a point each were indices that track single-family home sales (72), expected home sales (71), and traffic of prospective buyers (48). The press release noted builders were reporting “solid demand for single-family homes.”
Other U.S. economic data released over the past week:
– Jobless Claims (week ending July 13, 2019, First-Time Claims, seasonally adjusted): 216,000 (+8,000 vs. previous week; +4,000 vs. the same week a year earlier). 4-week moving average: 218,750 (-0.1% vs. the same week a year earlier).
– Import Prices (June 2019, All Imports, not seasonally adjusted): -0.9% vs. May 2019, -2.0% vs. June 2018. Nonfuel Imports: -0.3% vs. May 2019, -1.4% vs. June 2018.
– Export Prices (June 2019, All Exports, not seasonally adjusted): -0.7% vs. May 2019, -1.6% vs. June 2018. Nonagricultural Exports: -1.1% vs. May 2019, -1.6% vs. June 2018.
– University of Michigan Surveys of Consumers (July 2019-preliminary, Index of Consumer Sentiment, seasonally adjusted): 98.4 (June 2019: 98.2, July 2018: 97.9).
– Treasury International Capital Flows (May 2019, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): -$5.7 billion (vs. April 2019: +$36.4 billion, vs. May 2018: +$20.2 billion.
– State Employment (June 2019, Nonfarm Payrolls, seasonally adjusted): Vs. May 2019: Increased in 4 states, essentially unchanged in 46 states and the District of Columbia. Vs. June 2018: Increased in 28 states, essentially unchanged in 22 states and the District of Columbia.
– Business Inventories (May 2019, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.036 trillion (+0.3% vs. April 2019, +5.3% vs. May 2018.
– Beige Book
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What We Learned About the U.S. Economy Last Week 