1)Reflecting the reopenings, spending rebounded in May by 8.2% m/o/m after the drop of 12.6% in April and 6.6% fall in March. With the revisions it was about as expected. The goods side led the rebound with a 14% gain after two months of 12% declines. Services bounced more modestly by 5.4% as that will take more time to recover. Personal income fell 4.2% m/o/m after the 10.8% jump in April helped by federal government transfer payments but that wasn’t as much as expected. As some private sector jobs came back, wages here rose 3.7% m/o/m after an 8.5% fall in April and 4.4% decline in March.
2)Core durable goods orders in May rose 2.3% m/o/m after a 6.5% drop in April in the heart of the shutdown. The key components rebounded somewhat from the March and April fall. The decline vs last year is 6.5%.
3)New home sales in May, measuring contract signings thus much more up to date than existing home sales, totaled 676k, 36k more than expected but April was revised down by 43k to 580k so call it a push relative to expectations. Smoothing out the difficult few months for the economy has the 3 month average at 623k vs the 6 month average of 682k and the 12 month average of 693k.
4)The June Richmond manufacturing index got back to zero from -27 in May and that was slightly better than the estimate of -2.
5)The ECB said bank lending to non financial companies rose 7.3% y/o/y vs a 6.6% increase in April. Lending to households though remain more subdued and held at a 3% y/o/y rate. Reflecting the rise in the ECB balance sheet, money supply growth spiked by 8.9% y/o/y from 8.2% in April and that was above the estimate of up 8.6%.
6)The Eurozone manufacturing and services PMI rose to 47.5 for June from 31.9 and that was better than the estimate of 43. Both components remain below 50 but got close with manufacturing at 46.9 and services at 47.3. Simply, “The Eurozone economic downturn eased markedly for a 2nd successive month in June as lockdowns to prevent the spread of Covid were further relaxed.”
7)The UK manufacturing index got to the 50 level at 50.1 from 40.7 in May and 5 pts above the estimate. Services jumped to 47 from 29 and that was 7 pts higher than forecasted. The composite index is now at 47.6 from 30 vs expectations of 41.2. Something any of us could have written: “Survey respondents mainly noted that the easing of restrictions related to the pandemic had a favorable impact on economic activity, with business operations gradually resuming in a number of sectors and staff brought back from furlough. However, there were also widespread reports that underlying demand remained very subdued and cutbacks to client spending had acted as continued drag on overall business activity.”
8)In the UK, its retail sentiment index from CBI rose to -37 from -50 in June, about as expected. With the figure still deeply negative, CBI said “Despite retailers working flat out to make sure they are safe and ready to open their doors, outside the grocery sector most retailers expect sales to be far below where they were this time last year.”
9)The German IFO rose to 86.2 from 79.7 and that was a touch above the estimate of 85 with most of the gain coming from the Expectations component. The IFO said succinctly “German business sees light at the end of the tunnel.”
10)German consumer confidence bounced to -9.6 from -18.6 and that was 2.5 pts better than expected.
11)The French business confidence index in June rose 18 pts m/o/m to 78, 6 pts better than expected. The services and retail sectors bounced the most with gains also seen in manufacturing and employment. For perspective, this index was 94 in March and 105 in February.
12)Australia’s manufacturing and services composite index almost doubled m/o/m to 52.6 from 28.1 with services back above 50 and manufacturing just shy of it at 49.8.
13)Japan’s manufacturing June PMI was basically flat at 37.8 vs 38.4 last month while services jumped to 42.3 from 26.5 which drove the combined index to 37.9 from 27.8. Here is what Markit said about the differential: “The rate of decline in manufacturing order books remained severe, hinting that the shape of the recoveries in the services and manufacturing sector could be very different. A two-speed recovery would undermine a sustainable return to pre Covid levels of economic activity.”
14) South Korea said in the 1st 20 days of June, exports fell 7.5% y/o/y while imports were lower by 12% y/o/y. That is certainly an improvement from May however and helped by the reopening in China (exports rose 15% y/o/y). Exports to the US were down by 10% and to the EU by 14%.
1)Initial jobless claims totaled 1.48mm, above the estimate of 1.32mm but down from 1.54mm last week (revised from 1.508mm). Delayed by a week, continuing claims came in at 19.5mm, down from 20.29mm in the week prior and about 500k below the estimate.
2)The final UoM June consumer confidence index was 78.1 vs the initial print of 78.9 and below the forecast of 79.2. It is though up from 72.3 in May and 71.8 in April but down from the 2020 high in February of 101. The improvement from May was in both Current Conditions and Future Expectations. One year inflation expectations fell to 3% from 3.2% but that is still above the one year average of 2.6%. Reflecting the reopenings and jobs coming back, the unemployment component rose 42 pts m/o/m but on the flip side Net Income expectations fell to the lowest since 2014. Spending intentions improved from May.
3)There was improvement in the Markit’s June US manufacturing and services PMI but were a bit below expectations. Manufacturing rose to 49.6 from 39.8 while services grew to 46.7 from 37.5. With this composite index still below 50 at 46.8, it reflects a situation where “the overall pace of decline eased among goods producers and service providers” according to Markit rather than reflecting an expansion at least right now.
4)US exports of goods in May fell 5.8% m/o/m after the collapse in the prior two months. Imports fell for a 5th straight month.
5)Existing home sales in May, likely reflecting contract signings in January thru April, totaled 3.91mm annualized and that is below the estimate of 4.09mm and down from 4.33mm in April. This is the slowest pace since 2010 but we of course know the main reason. The supply did increase which it always does in the Spring but combined with the lower sales count brought the months’ supply up to 4.8 from 4.0. First time buyers made up 34% of total sales vs 36% in April , 34% in March and 32% in February. After pretty robust price gains in the 1st 4 months of the year (again measuring closings, not contract signings so pre covid), the median home price rose 2.3% y/o/y.
6)The June UK CBI industrial orders index only improved by 4 pts m/o/m to -58 from -62 and that was below the estimate of a gain to -50. CBI said “Output volumes declined at a new record pace and export order books fell to an all time low, reflecting the significant fall in demand in the UK and abroad. Firms are again hoping that this will ease somewhat in the next three months.”
7)Singapore said its industrial production in May fell 16.5% m/o/m and 7.4% y/o/y worse than the estimate of down 5.6% m/o/m and 7.4% y/o/y. Pharma was the one bright spot and semis saw a slight gain but offset by weakness everywhere else.