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Registered Investment Adviser Caleb Lawrence

Mixed economic data sent the major averages into the final hour with small gains. Construction spending fell 1.3% in June, a 2nd large decline for the quarter that is expected to shave .2% off the Gross Domestic Product figure. Another substantial decline in public construction led to the expectations miss, residential construction slipped as well, nonresidential construction managed to gain .1%, but has fallen 4 of the last 6-months.

The Institute for Supply Management Manufacturing Index declined 1.5 points in July to 56.3 on weakness in new orders, production, and employment. Led by large gains in energy prices during the month prices paid jumped 7 points to 62.

Personal income was unchanged in June missing expectations as the downtrend continues following last month’s gain. Income gains were led be rental, earned, and social welfare payments. The inflation measuring Personal Consumption Expenditures or PCE Deflator was unchanged in June, on a year ago basis this index is up just 1.4% far below the Fed’s 2% target as price pressures have slipped notably since the beginning of the year. Despite the income gains personal spending was unchanged in June. Annual revisions to the series slashed the savings rate from 5.5% to just 3.8% implying that consumers have a much smaller financial cushion should things go south.

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