1)Delayed by two weeks, those still getting pandemic unemployment assistance fell by 553k and those continuing to receive the emergency kind declined by 576k.
2)Housing starts in June totaled 1.643mm, 53k more than anticipated, partially offset by a 26k unit downward revision to May to 1.546mm. Breaking it down, single family starts made up 1.16mm of this which is just above the 6 month average of 1.13mm. Multi family starts were 483k and which compares with the 6 month average of 454k.
3)Manheim said used vehicle prices fell 1.7% in the 1st 15 days of July vs the month of June. They are still up though 25% y/o/y.
4)The Eurozone July manufacturing and services composite index rose to 60.6 from 59.5 but the components were mixed as manufacturing fell .8 pts m/o/m, offset by a 2.1 increase in services. The estimate was 60.0. Markit said the manufacturing decline was “linked in many cases to worsening supply lines” and “backlogs of work rose at a joint survey record rate amid capacity constraints.” Delta is a worry as “Business confidence…took a hit from rising concerns over the delta variant, pushing sentiment for the year ahead to a 5 month low…Average selling prices for goods and services meanwhile rose at a near survey record pace in July, primarily reflecting constrained supply at a time of rapid demand growth. Supplier delivery times continued to lengthen at one of the sharpest rates ever recorded by the survey, playing a key role in driving input costs higher. Manufacturers’ input prices rose to a degree unsurpassed since survey data were available in 1997. Service sector input cost inflation eased modestly but remained the 2nd highest in 13 years.”
5)The UK CBI industrial orders index for July fell 2 pts m/o/m to 17 though 1 pt above the estimate. CBI said “Business optimism growth remained strong by historical standards, despite slowing from last quarter…However, concerns about the availability of materials/components, skilled labor, and plant capacity as factors likely to limit output next quarter were at their most heightened since the mid 1970’s.
6)French business confidence in July was as expected but down 1 pt from a 1 pt upward revision to June. Manufacturing continued to improve but services was flat m/o/m and retail fell 1 pt. Employment was up again to the best since 2019.
7)South Korea said its exports in the 1st 20 days of July rose 33% y/o/y after a 29.5% rise in June. They can’t ship enough semi’s and auto’s. Exports of petro products and telecom equipment also helped. Imports jumped by 46% y/o/y after a 41% increase in June.
8)Exports out of Taiwan in June rose 31.1% y/o/y, just above the estimate.
9)Japanese exports in June spiked by 49% y/o/y vs the estimate of 46% led by auto’s, steel and semi equipment. Imports grew by 46%, well more than the forecast of up 29%.
10)Japan said its consumer price index remained muted in June as expected with a headline y/o/y increase of .2% and a core/core decrease of .2% which is mostly because of the decline in mobile phone charges which is taking off up to 5 tenths from the headline figure.
1)After increasing its balance sheet by $103b last week, the Fed goosed it by another $39b this week to a new record high of $8.24 Trillion.
2)The US Markit July manufacturing and services composite index softened to 59.7 from 63.7 with a mixed bag of these two main components. Manufacturing rose 1 pt m/o/m to 63.1 but services fell to 59.8 from 63.7. Markit said weaker services was seen where “firms linked this to labor shortages and difficulties acquiring stock” and blame inflation “as some firms noted customer hesitancy amid significant hikes in selling prices.” Manufacturing remained solid but the inability to fully delivery product led to another rise in backlogs and “lead times lengthened markedly and to the 2nd greatest extent on record. Supply chain disruption was reflected once again in efforts to increase purchasing activity and build safety stocks. Stronger demand for inputs globally and a scarcity of materials led to the fastest rise in cost burdens on record. Subsequently, the rate of charge inflation accelerated to a fresh series high.”
3)Initial jobless claims jumped to 419k from 368k and that was well above the estimate of 350k. Smoothing out the weekly noise, the 4 week average was 385k, up slightly from 384.5k last week. Those filing for PUA rose 14k m/o/m. Continuing claims totaled 3.236mm, down 30k from the week prior but 136k more than expected.
4)Zillow said this week in their June report: “Rent growth maintained widespread momentum in June, with the Zillow Observed Rent Index (ZORI) up 1.8% month over month, pushing typical U.S. rents to $1,799/month in June. A strong recovery in the rental market over the past few months pushed year-over-year rent growth up 7.1% — the largest annual increase in the series’ history reaching back to 2015. Even discounting a weakened market last year, rents have risen 5.1% since March, the fastest quarterly growth in Zillow’s data.”
5)Purchase applications gave back almost all of last week’s gains with a 6.4% w/o/w drop. They are lower by 18% y/o/y. Refi’s fell by 2.8% w/o/w but held on to most of last week’s 20% increase. They are still down 18% too y/o/y.
6)Single family permits slowed to 1.063mm, the lowest since August 2020 and about 100k below the 6 month average. Multi family permits were 535k vs 549k. While that is a 6 month low, it’s not much below the 6 month average of 570k.
7)The July NAHB home builder index fell 1 pt to 80. The estimate was for no change. While Present Conditions fell 1 pt, the Outlook rose 2 pts with maybe the drop in lumber prices helping the mood. The negative within the report was the 6 pt drop in Prospective Buyers Traffic which now sits at 65, the lowest since last August. The NAHB stated the challenges for the builders on the supply side, “Builders continue to grapple with elevated building material prices and supply shortages, particularly the price of oriented strand board, which has skyrocketed more than 500% above its January 2020 level.” They are also dealing with shortages of “buildable lots and skilled labor as well as a challenging regulatory environment.” And then this filters into pricing and demand as “this is putting upward pressure on home prices and sidelining many prospective home buyers even as demand remains strong in a low inventory environment.”
8)Existing home sales in June, likely reflecting mostly contracts signed in March, April and May totaled 5.86mm, just under the estimate of 5.9mm and vs 5.78mm in May (revised from 5.8mm). The median home price rose 23.4% y/o/y but assume that in the aggregate it is more like 15%. It is these aggressive price increases, along with growing competition from ‘professional investors’ that 1st time home buyers made up 31% of purchases for the 4th month in the past 5. All cash buyers took 23% of purchases. Months’ supply rose to 2.6 from 2.5 but remains well below the long term average of around 6. The NAR said with regards to that 1st time buyer, “Huge wealth gains from both housing equity and the stock market have nudged up all cash transactions, but 1st time buyers who need mortgage financing are being uniquely challenged with record high home prices and low inventory. Although rates are favorably low, these hurdles have been overwhelming to some potential buyers.”
9)The Langer US Consumer Comfort index fell to 51.5, down for a 4th straight week and the lowest since late March.
10)ECB president Lagarde and many of her colleagues keep doubling down just as the Bank of Japan and others have but hoping to find a different result.
11)German said its PPI in June jumped 1.3% m/o/m after rising by 1.5% in May, .8% in April, .9% in March, .7% in February and 1.4% in January. That’s a 6 month annualized increase of 13.2%.
12)In the UK, both its manufacturing and service PMI’s fell m/o/m in July. The country balanced the full reopening with the Delta flare up. Supply shortages too are inhibiting the flow of goods and services. With respect to supply and pricing in manufacturing, “delivery times continued to signal severe supply chain delays…but the latest downturn in vendor performance was the least marked since April. Input price inflation also eased from June’s peak, but factory gate charges increased at the fastest pace since this index began in November 1999.” With services, businesses are also having difficulty in filling vacancies and a “subsequent increase in wage inflation added to pressure on operating expenses across the service economy. Measured overall, input prices rose at the fastest pace since this index began in July 1996.”
13)Australia’s shutdowns again were clearly reflected in its service component which plunged to 44.2 from 56.8 while manufacturing slipped by 1.8 pts to 56.8. Markit said “Various Australian states experienced increased movement restrictions in July, leading to the sharp contraction of both domestic and foreign demand for services.” With manufacturing, new orders and production slowed and this was said about supply and inflation: “Lead times meanwhile continued to lengthen at a marginally slower, but still severe, rate. Concurrently, price pressures sustained for Australian manufacturers with input price inflation accelerating. Over and above the disruption of renewed Covid restrictions, firms highlighted supply constraints weighing on their outlook for the next 12 months.”
14)South Korea said its PPI in June jumped 6.4% y/o/y after a 6.6% increase in May. Ag, forestry, and manufactured product price increases in the double digits led the way.