It was a relatively quiet week for economic data, with only a handful of noteworthy releases. Among them was the Conference Board’s Leading Economic Index (LEI), which came in at -0.3% (exp = -0.3%). This marks the 38th negative reading out of the past 41 months, underscoring persistent headwinds in the “soft-data”. Initial jobless claims for the week were reported at 217,000—slightly better than consensus expectations of 226,000.
This week did bring a slew of manufacturing data. Activity in the Richmond Fed region declined sharply in July, posting its largest monthly contraction since September 2024. This survey contrasts with recent improvements we saw in the New York and Philadelphia Fed surveys released earlier this month. Continuing on manufacturing, S&P Global’s Composite Purchasing Manager’s Index (PMI), a survey of over 1,100 manufacturers and service providers, saw a sharp increase for the month. However, the uptick was largely driven by services, while the manufacturing component declined from June’s 37-month high. This points to a fresh weakening in factory activity not seen since December. Analysts often turn to manufacturing data for early signs of pricing pressure. This month, price increases registered the second-strongest monthly rise since September 2022. Survey respondents cited tariffs and labor costs as key drivers behind the increase.
The housing market continued its slump, with U.S. existing home sales falling to a nine-month low. Housing affordability remains a drag as prices stay elevated due to limited supply and mortgage rates stagnating near 7%. U.S. Durable Goods orders, a key proxy for future business investment, declined by 9.3%. These orders typically cover items expected to last at least three years, suggesting a cautious stance by businesses toward larger capital expenditures.
Looking ahead, next week should offer more market-moving potential. The FOMC rate decision comes Wednesday. Markets are currently only pricing in just a 2.6% chance of a rate cut, but it will be interesting to see if they signal potential for additional cuts later in the year. Also on deck are the advance Q2 GDP report, non-farm payrolls, updated unemployment figures, PCE, and the JOLTS survey.
Have a great weekend!
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Dillon Wiedemann
Senior Vice President of FSG
The Baker Group LP
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