Consumer spending was uninspired during the first days of summer. Here are the five things we learned from U.S. economic data released during the week ending July 21.
1. Retail sales wobbled in June. Retail and food services sales grew 0.2 percent to a seasonally adjusted $689.5 billion. The Census Bureau measure, not adjusted for inflation, was up a tepid 1.5 percent from a year earlier. Sales at auto dealers/parts stores advanced 0.3 percent, while lower prices at the pump pulled down gas station sales by 1.4 percent. Net of both, core retail sales increased 0.3 percent in June and 3.9 percent from a year earlier. Sales grew at retailers focused on furniture (+1.4 percent), electronics/appliances (+1.1 percent), and apparel (+0.6 percent). Retail activities declined at department stores (-2.4 percent), building materials retailers (-1.2 percent), sporting goods/hobby retailers (-1.0 percent), grocery stores (-0.7 percent), and health/personal care stores (-0.1 percent).
Sales of previously owned homes fell in June. The National Association of Realtors indicates that existing home sales declined 3.3 percent to a seasonally adjusted annualized rate (SAAR) of 4.160 million. Sales were 18.9 percent under their year-ago level. Sales fell in the South and West, held steady in the Midwest, and improved in the Northeast. Inventories of unsold homes remained at 1.080 million (-13.6 percent versus June 2022), translating to a tight 3.1 month supply. The median sales price of $410,200 was 0.9 percent below a year earlier. The press release notes, “[t]here are simply not enough homes for sale.”
Housing starts slumped in June. The Census Bureau estimates housing starts fell 8.0 percent to a seasonally adjusted annualized rate (SAAR) of 1.434 million. Starts were 8.1 percent off from their year-ago pace. Single-family and multi-family home starts declined 8.0 percent and 11.6 percent, respectively. Looking towards the future, issued building permits dropped 3.7 percent to an annualized 1.440 million, although single-family permits were up 2.2 percent. There were 15.3 percent fewer permits compared to a year earlier. Completions slowed 3.3 percent to an annualized 1.468 billion. Even with the decline, completions were up 5.5 percent from June 2022.
Manufacturing production slowed in June. The Federal Reserve reports that manufacturing production declined a seasonally adjusted 0.3 percent after decreasing 0.2 percent in May. Output fell for both durable (-0.1 percent) and nondurable (-0.6 percent) goods. Overall industrial production dropped 0.5 percent, matching its May decline. Output fell for mining (-0.2 percent) and utilities (-2.6 percent). Manufacturing production was off 0.3 percent from a year earlier, while the 12-month comparable for overall industrial production was -0.7 percent.
Forward-looking economic measures signal a pending downturn. The Conference Board’s Leading Economic Index (LEI) declined 0.7 percent in June to 106.1 (2016=100). The LEI has fallen 4.1 percent over the past six months. Only two of ten LEI components made positive contributions: stock prices and new orders for consumer goods. The Coincident Economic Index (CEI) held steady at 110.0. The CEI has gained 0.6 percent over the past six months. Three of four CEI components improved in June. The Lagging Economic Index also held steady at 118.4 and was up 0.1 percent from last December. Three of seven index components improved during the month. The Conference Board continues to expect the U.S. economy to fall into a recession during the latter half of this year.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 15, 2023, First-Time Claims, seasonally adjusted): 228,000, -9,000 vs. the previous week, +15,000 vs. the same week a year earlier). 4-week moving average: 237,500 (+10.6% vs. the same week a year earlier).
- Housing Market Index (June 2023, Index (>50=More Homebuilders View the Housing Market As Good Vs. Bad, seasonally adjusted): 56 (May 2023: 50, June 2022: 67).
- State Employment (June 2023, Nonfarm Payrolls, seasonally adjusted): Increased in 5 states, decreased in 2 states, and held steady in 43 states and the District of Columbia vs. May 2023. Increased in 41 states and held steady in 7 states and the District of Columbia vs. June 2022.
- Business Inventories (May 2023, Manufacturing and Trade Inventories, seasonally adjusted): $2.546 trillion (+0.2% vs. April 2023, +3.5% vs. May 2022).
- Treasury International Capital Flows (May 2023, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$59.7 billion (vs. April 2023: +$97.6 billion, vs. May 2022: +$132.5 billion).
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What We Learned About the U.S. Economy Last Week 