Several economic indicators brightened in June—but will the advances hold? Here are the five things we learned from U.S. economic data released during the week ending July 17.
Retail enjoyed broad gains in June. The Census Bureau reports that retail and food services sales swelled 7.5 percent during the month to a seasonally adjusted $524.3 billion (+1.1 percent versus June 2019). Reflecting the damage inflicted so far in the pandemic, retail sales in Q2 were 8.1 percent below that of the same three months in 2019. During June, car dealers/parts stores saw sales grow 8.7 percent while gas stations reported a 15.3 percent gain. Net of both, core retail sales were up 6.7 percent for the month. Sales bloomed at retailers focused on electronics/appliances (+37.4 percent), furniture (+32.5 percent), sporting goods (+26.5 percent), and health/personal care (+3.5 percent). Also reporting growth were restaurants/bars (+20.0 percent) and department stores (+19.8 percent). Sales dropped 1.6 percent at grocery stores and slowed 2.4 percent among nonstore retailers (reflecting brick-and-mortar stores reopening).
Industrial production further rebounded in June. The Federal Reserve estimates industrial production swelled 5.4 percent during the month following a 1.4 percent bounce in May. Manufacturing output jumped 7.2 percent, following a 3.8 percent advance in May. Growth for durable and nondurable manufacturing was 11.6 and 3.4 percent, respectively. Motor vehicle production more than tripled in June but remained 24.6 percent below year-ago levels. Utility output expanded 4.2 percent while mining output slowed 2.9 percent, with oil/gas drilling down 18 percent. Relative to a year ago, industrial production was down 10.8, manufacturing was 11.2 percent off the pace, mining dropped 16.9 percent, and utilities were up 0.6 percent.
Gasoline and food led June’s jump in inflation. The consumer price index (CPI) surged 0.6 on a seasonally adjusted basis during the month, the largest single-month gain for the Bureau of Labor Statistics measure since August 2012. Energy CPI rose 5.1 percent (as gasoline prices blossomed 12.3 percent) and food CPI advanced 0.6 percent (with higher prices for five of six grocery categories—dairy was the exception). Net of energy and food, core CPI grew 0.2 percent (its biggest gain since February). Prices jumped for transportation services (+2.1 percent), apparel (+1.7 percent), medical care services (+0.5 percent), medical care commodities (+0.2 percent), and shelter (+0.1 percent). Prices for new vehicles held steady and dropped 1.2 percent for used cars/trucks. Over the past year, CPI has risen a modest 0.6 percent while the 12-month comparable for core CPI was +1.2 percent.
Housing starts jumped again in June. The Census Bureau reports housing starts rose 17.3 percent during the month to a seasonally adjusted annualized rate of 1.186 million units. Even with the rise, housing starts were 4.0 percent behind their year-ago pace. Single-family home starts jumped 17.2 percent while that for multi-family units climbed 18.6 percent. Looking towards the future, the annualized count of issued building permits increased 2.1 percent to 1.241 million, which was off 2.5 percent from June 2019 levels. Permits for single-family homes advanced 11.8 percent bull fell 14.0 percent from multi-family dwellings. Home completions picked up 4.3 percent during the month to an annualized 1.174 million (+5.1 percent vs. June 2019).
Homebuilders’ confidence rebounded back to pre-COVID levels. The National Association of Home Builders’ Housing Market Index (HMI) jumped by 14 points during the month to a seasonally adjusted reading of 72. A reading above 50 is indicative of a higher percentage of homebuilders seeing the housing market as “good” versus being “poor.” This was the HMI’s best reading since March and placed the measure seven points above its year-ago mark. The HMI rose in all four Census regions. Also advancing were measures for current sales of single-family homes (up 16 points to 79), expected home sales (up seven points to 75), and traffic of prospective buyers (up 15 points to 58). The press release included a quote that “[w]hile the housing market is clearly rebounding, challenges exist.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 11, First-Time Claims, seasonally adjusted): 1,300,000 (-10,000 vs. the previous week, +1,083,000 vs. the same week a year earlier). 4-week moving average: 1,375,000 (+539.3% vs. the same week a year earlier).
- University of Michigan Surveys of Consumers (July 2020-preliminary, Index of Consumer Sentiment (1966Q1=100), seasonally adjusted): 73.2 (June 2020: 78.1, July 2019: 98.4).
- Import Prices (June 2020, All Imports): +1.4% vs. May 2020, -3.8% vs. June 2019. Nonfuel Imports: +0.3% vs. May 2020, -0.2% vs. June 2019.
- Export Prices (June 2020, All Exports): +1.4% vs. May 2020, -4.4% vs. June 2019. Nonagricultural Exports: +1.4% vs. May 2020, -4.4% vs. June 2019.
- Small Business Optimism (June 2020, Index (1986=100), seasonally adjusted): 100.6 (May 2020: 94.4, June 2019: 103.3).
- Treasury Budget (June 2020, Deficit for 1st Nine Months of Fiscal Year): -$2.744 trillion (vs. -$747.1 billion).
- State Employment (June 2020, Nonfarm Payrolls, seasonally adjusted): Up in all 50 states and the District of Columbia vs. May 2020. Down in all 50 states and the District of Columbia.
- Treasury International Capital (May 2020, Foreign Purchases of U.S. Securities, not seasonally adjusted): +$68.0 billion (Vs. April 2020: -$153.0 billion, Vs. May 2019: -$3.6 billion.
- Beige Book
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What We Learned About the U.S. Economy Last Week 