US Macro Updates
The One Stop Portal for US Macroeconomic Data. Simplified and Summarized!
We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions
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1st Nov 2022
ISM US Manufacturing PMI
Key takeaway: The trend lower in ISM Manufacturing continued in October. The overall index fell from 50.9 to 50.2. But importantly the index is still in expansion territory (the 29th consecutive month of growth!). New order contracted similar to September – but they the sub-index at 49.2 was 2.1 points higher than September’s 47.1. The big upside in this report was the Prices sub-index fell sharply to 46.6 from 51.7 providing solid evidence of easing price pressures. Supplier deliveries have also started accelerating indicating improvements in supply chain. Unfortunately, markets yesterday chose to focus on the fact that the headline indicator has not fallen significantly, that it beat expectations and that the employment sub-index is still strong. Combine that with a still massive JOLTs number and you can understand why the S&P fell 1.5% within minutes of these two numbers coming out yesterday morning!
- ISM Manufacturing PMI at 50.2 in Oct (50.9 in Sep).
Click here to view key takeaway from last month’s release
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The PMI is a composite index based on seasonally adjusted diffusion indices for five indicators with varying weights: New Orders 30%, Production 25%, Employment 20%, Supplier Deliveries 15% and Inventories 10%.
28th Oct 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: There has been a bear market rally of late. Sentiment has turned a bit. Headline 3Q GDP number came in fairly strong and 3Q PCE was also a decent 1.4%. Similarly, the September PCE growth was a decent 0.3%. Unfortunately, this latest PCE report gave scant indications of softening price pressures. Core PCE Price Index still increased 0.5% m-o-m similar to August. In fact the fall in goods prices moderated in September, while Services kept up its pace of increase. To make matters worse, wage growth further accelerated to 0.6% in September from 0.3% in August.
- Personal Income increased 0.4% in Sep 2022
- Personal Consumption Expenditure increased 0.6% in Sep 2022
- Real Personal Consumption Expenditure, adjusted for Inflation increased 0.3% in Sep 2022
- PCE Price Index increased 6.2% y-o-y
- Core PCE Price index rose 5.1% y-o-y
Click here to view key takeaway from last month’s release
26th Oct 2022
Advance Monthly Retail Inventories
Similar to wholesale inventories, retail inventories also grew at a softer rate in September (0.4%). However, the story in Retail inventories was more nuanced. Retail Inventories excluding motor vehicles and parts actually fell 0.1% – which is more reflective of slowing consumer demand. But unfortunately that slowdown in consumption has just not been as swift as the Fed would like it. Similar to the point made in the Wholesale Inventories section below, once these inventories start falling they will contribute significantly to GDP contraction and the lagging indicators showing a slowing economy will be up for everyone to see.
- Core Retail Inventories declined 0.1% m-o-m in Sep 22
- Retail inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Retail Inventories measures the change in the total value of goods held in inventory by Retailers.
The retail inventories figure is key since high or low inventory levels reflect weak or strong consumer demand which consequently determines manufacturing production increases or decreases. Retailers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
26th Oct 2022
Advance Monthly Wholesale Inventories
Key takeaway: Wholesale inventories grew at a soft rate of 0.8% in August – “soft” when compared to the massive inventory growth that has been the key story throughout 2H 2021 and early 2022. However, because consumption is still holding up fairly well, we are simply not seeing the slow down or even fall in inventories which should be typical in a recession. While the slower pace of inventory increases has been contributing negatively to GDP growth, it is only when inventories fall substantially that we would see a full downward impact in GDP (a visible number to indicate recession).
- Wholesale Inventories grew 0.8% m-o-m in Sep 2022
- Merchant wholesalers inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Wholesale Inventories measures the change in the total value of goods held in inventory by wholesalers. The wholesale inventories figure is key since high or low inventory levels reflect weak or strong retail demand which consequently determines manufacturing production increases or decreases. Wholesalers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
26th Oct 2022
New Home Sales
Key takeaway: After an unexpected increase in August, New Home Sales were back down in September – falling to an annualised rate of 603K from 677K in August (minus 10.9%). Mortgage rates had taken a breather in August and were back up in September. In fact rates have spiked even higher in October – an indication of things to come. New home inventory is now the highest since the 2008 crisis period – both from a total number perspective (462K) as well as number of months supply (9.2 months). Given a deteriorating housing market and the large contribution that the housing sector plays in the US economy, it is a matter of time before it starts to reflect in unemployment and job creation / opening data. However, the most important data point in this NHS release was the increase in median home price from $435K in Aug to $470K in September. Remember shelter is the most important component of CPI!
- New Home Sales decreased to a seasonally adjusted annual rate of 603K homes in Sep (Expectations – 585K).
Click here to view key takeaway from last month’s release
New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. New home sales typically account for about 10% of the total market. Data is released around the 25th of each month for the previous month.
25th Oct 2022
The Conference Board – US Consumer Confidence
Key takeaway: After 2 back to back months of increase, the CB Consumer Confidence Index was back down in October. That’s quite expected if considered together with other economic data including softening PMIs, a rise back up in crude oil price and a deteriorating housing market. Yet, the index remains unusually high, in my view, which again highlights a resilient US consumer who continues to buy even in the face of super-charged prices. Once again, I believe, this simply reinforces the Fed’s resolve to keep rates higher and higher for longer.
- The Index decreased to 102.5 from 107.8 in Oct. Expectations were 106.5
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
24th Oct 2022
S&P Global US Purchasing Managers Index
Key takeaway: There were a number of points to note in this PMI report. First – S&P Global PMIs generally have been reflecting a deeper downturn than its peer the ISM PMIs. Recollect that September S&P PMI data broke with this earlier trend and reflected a relatively upbeat economy similar to ISM. October, is however, back to trend reflecting a deeper down drift. Second – While overall PMI is weaker, Manufacturing PMI is specifically in contraction territory for the first time since Covid 2020. Third – the all important New Orders have returned to contraction in October. And last – input price growth has actually scaled up a bit once again. Bad news from the inflation perspective. However, the mitigating factor is that this price is getting passed on the consumers to a lesser degree. Yet, with the recent rise in oil prices, it does not augur well to see a upward shift in input price growth in services and manufacturing PMIs.
- Flash US Composite Output Index at 47.3 (49.5 in Sep).
- Flash US Services Business Activity Index at 46.6 (49.3 in Sep).
- Flash US Manufacturing PMI at 49.9 (52.0 in Sep).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
20th Oct 2022
Existing Home Sales
Key takeaway: Even though Existing home sales have been consistently falling in the past few months, there are still nuances to this story which play an important role in the fight against inflation. Firstly, the fall is EHS has levelled off a bit in the last 3 months. (currently about 4.7mn annualized). Second, even though EHS are falling, home prices are still not falling meaningfully (still up 8% y-o-y). Lastly, existing home inventory still remains extremely tight (at 3.2 months equivalent) which makes a large fall is home prices that much more difficult to occur. In fact the inventory of existing unsold homes fell for the 2nd month in a row. At the end of the day, Shelter inflation is literally the most important and sticky component of the CPI basket!
- Existing Home Sales declined to a seasonally adjusted annual rate of 4.71mn homes in Sep.
Click here to view key takeaway from last month’s release
Existing-home sales data are a monthly measure of the sales volume and prices of existing single-family homes, condos, and co-ops nationwide. Existing-home sales account for more than 90% of total home sales, and the monthly data captures completed transactions. Data is released around the 20th of each month for the previous month.
14th Oct 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: Once again, the Michigan Consumer Index is closely tied to gas prices at the pump. With the recent levelling off in pump prices, it was not surprising to see the Consumer Sentiment Index tick up a bit from 58.6 to 59.8. Similarly the index for current economic conditions improved as well. But what was slightly more concerning was median expected 1 year ahead inflation rate rose from 4.9% to 5.0%. Long run expectations which had declined in the previous months surveys also inched up. Like I had mentioned before, the Fed pays close attention to this survey’s results and they wont like what they see. The rise in inflation expectations over the medium and long term was also seen in the recently released NY Fed Consumer survey.
- Index of Consumer Sentiment at 59.8 (Expectations 59.0)
- Index of Current Economic Conditions at 65.3 (Expectations 59.9)
- Index of Consumer Expectations at 56.2 (Expectations 58.5)
Click here to view key takeaway from last month’s release
14th Oct 2022
US Retail Sales
Key takeaway: US Retail Sales growth is in a steady decline for sure. After a few months of positive surprises, retail sales were down in September (0% m-o-m). But once again, goods consumption is simply not falling at a rate that the Fed would be happy to see. However, the decline in retail sales was across most categories in September. Furniture, building materials, electronics, automobiles, gas stations, sporting goods were all down on a m-o-m basis. While wages have been going up, it is obvious that they have lagged price growth and the slowdown in consumption is bound to occur. The question remains – how soon?
- Retail Sales increased 0.0% m-o-m in Sep 2022 (Expected 0.2%)
- Core Retail Sales increased 0.1% m-o-m in Sep 2022 (Expected -0.1%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
13th Oct 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: Another month – another high CPI print. 8.2% y-o-y. In response, the S&P500 opened almost 2.5% down. But when you dig a bit deeper the report was not that bad! Here’s why. Core CPI m-o-m, which matters the most, increased 0.6% for the third month in a row. That’s uncomfortably high. Shelter increased 0.7% again which is also way too high. However, used car prices fell 1.1%. Apparel fell 0.3% and medical care commodities also fell 0.1%. The transportation index was higher because of an increase of 0.8% in air fares. But air fares had fallen 7.8% and 4.6% in the 2 months before. Even though rent was up 0.7%, private indexes of rent has been falling in the past months and gradually will reflect in the BLS CPI calculations. Medical Care services, is a big component of CPI and has been increasing a lot in the past months. It is expected to moderate post October as well.
Click here to view key takeaway from last month’s release
12th Oct 2022
US Producer Price Index
Key takeaway: Overall, there is no doubt that producer prices have been falling since the past few months. Unfortunately, it has simply not been at the pace that the Fed would have liked to see. September PPI once again came in above expectations. However, that is also partly due to the fact that oil prices levelled off in September compared to the previous 2 months when they were falling from the peak. Some of the core components continue to decelerate. For instance, final demand for goods less food and energy recorded 0% m-o-m. In any case, the bottom line is that the markets and economy, both need producer prices that are falling at a much faster rate than present.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
7th Oct 2022
US Non-Farm Payrolls
Key takeaway: Even though September job creation was one of the lowest numbers in the recent months, it was still way to high to give even a small hit of labor market loosening. No wonder the Dow fell 600 points as investors further realize that the Fed will grow more resolute in tightening. Every other detail in the NFP report was a similar tune as well. Participation rate did not increase. Average workweek remained the same. Average hourly earnings were still elevated at 0.3% m-o-m. The Household survey had shown a large increase in the number of unemployed persons in August which had suggested some possibility of layoffs. But this number was back down in this month’s survey.
- Added 263K jobs (estimate 250K)
- Unemployment rate decreased to 3.5%
- US Participation rate decreased to 62.3% from 62.4%
- Average hourly earnings up 0.3% mom; 5.0% up yoy
- Average workweek same at 34.5
Click here to view key takeaway from last month’s release
5th Oct 2022
ISM US Services PMI
Key takeaway: If I were to choose one economic indicator which still makes me believe a bit in the soft landing scenario, it is still the ISM Services number. Economic activity continues at a decent pace still in the US Services sector. The latest Manufacturing PMI rolled over a bit, but Services continues to grow strong! Economic activity expanded for the 28th month in a row. Most of the sub-indexes, including new orders, were lower than August, but they are still well into expansion territory (above 50). At the same time, price pressures continue to abate in these indexes which will eventually find their way into CPI. Inventories are still low since demand continues to outstrip supply. Unfortunately though, for all the good news, it only makes the Fed more jittery and probably skews their decision making to the tighter end.
- ISM Services PMI at 56.7 in Sep (56.9 in Aug).
Click here to view key takeaway from last month’s release
The ISM Services PMI indicates the overall economic condition for the non-manufacturing sector. The index is based on the diffusion indexes for four indicators with equal weights: Business Activity, New Orders, Employment and Supplier Deliveries. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates contraction.
3rd Oct 2022
ISM US Manufacturing PMI
Key takeaway: The ISM Manufacturing Report had steadfastly remained solid for the past several months when a lot of other economic and market indicators were indicating recession risks ahead. This ISM report was significantly less than stellar. New orders are contracting again, after having expanded in July. New export orders continued contracting. The Employment Index has returned to contraction. Backlog of Orders index is also approaching contraction. Input prices are expectedly coming off. Finally, the overall index is only marginally in expansion territory.
- ISM Manufacturing PMI at 50.9 in Sep (52.8 in Aug).
Click here to view key takeaway from last month’s release
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The PMI is a composite index based on seasonally adjusted diffusion indices for five indicators with varying weights: New Orders 30%, Production 25%, Employment 20%, Supplier Deliveries 15% and Inventories 10%.
30th Sep 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: Unfortunately, similar to the August CPI read, PCE for August also came in worse than expected despite a fall in energy costs. Core PCE, which is the most important indicator for the Fed, rose a significant 0.6% m-o-m. Headline PCE rose 6.2% for the year. These numbers are still far outside the Fed’s comfort zone. But there are a few more points to note. For a few months now, we have had a consistent fall in goods consumption and the goods price index. But that has been more than offset but the consumption and consequent price rise of Services. The second positive point to note was that wage growth moderated to 0.3% (from 0.8% in July).
- Personal Income increased 0.3% in Aug 2022
- Personal Consumption Expenditure increased 0.4% in Aug 2022
- Real Personal Consumption Expenditure, adjusted for Inflation increased 0.1% in Aug 2022
- PCE Price Index increased 6.2% y-o-y
- Core PCE Price index rose 4.9% y-o-y
Click here to view key takeaway from last month’s release
28th Sep 2022
Advance Monthly Retail Inventories
Similar to wholesale inventories, retail inventories also grew at a better than expected rate in August (1.4%). While the growth in inventories will add to GDP calculations, the build up does indicate a slowdown in consumption – especially considering goods prices have actually been falling m-o-m. This is what Cathy Wood has been vocal about since the start of the year. In reality though, while inventories have been piling, consumption has remained very resilient and hence that expected deflation in prices from a rapid inventory accumulation has still not been seen.
- Core Retail Inventories grew 0.6% m-o-m in Aug 22
- Retail inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Retail Inventories measures the change in the total value of goods held in inventory by Retailers.
The retail inventories figure is key since high or low inventory levels reflect weak or strong consumer demand which consequently determines manufacturing production increases or decreases. Retailers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
28th Sep 2022
Advance Monthly Wholesale Inventories
After a couple of months of fairly soft inventory growth, August was a blockbuster number. Monthly inventories, not adjusted for price changes, grew 1.3% m-o-m – against an expected 0.4%. While this is a positive for 3Q GDP calculation, it is deflationary in nature as rising inventories eventually result in falling prices.
- Wholesale Inventories grew 1.3% m-o-m in Aug 2022
- Merchant wholesalers inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Wholesale Inventories measures the change in the total value of goods held in inventory by wholesalers. The wholesale inventories figure is key since high or low inventory levels reflect weak or strong retail demand which consequently determines manufacturing production increases or decreases. Wholesalers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
27th Sep 2022
The Conference Board – US Consumer Confidence
Key takeaway: Month after month, the US consumer continues to display amazing resilience. The Consumer Confidence Index was up once again in September – from 103 to 108. Yes, consumer confidence is very closely tied to prices at the pump. Yet, the index holding up fairly well despite the wealth destruction in risk assets and other gloomy data is quite surprising. The good part is that it continues to build hope in the soft landing narrative. (In fact some other data points were very positive as well this week viz. Capital expenditure orders by US firms). But on the flip side, this simply reinforces the Fed’s resolve to keep rate higher and higher for longer.
- The Index increased to 108.0 from 103.6 in Sep. Expectations were 104.5
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
27 Sep 2022
New Home Sales
Key takeaway: New home sales unexpectedly surged in August to an annualised rate of 685K. By way of comparison, consensus estimate was 500K! But this does not indicate a bullish housing market at all. In fact, median sales price fell from $466K in July to $436K in August – a drop of about 6% ! Home builders are now more willing to drop prices to clear inventory given the lower demand resulting from higher mortgage rates. In fact the S&P Global Case Shiller Housing Index released today showed a fall of 0.4% m-o-m in July – the first such monthly decline since 2012!
- New Home Sales surged to a seasonally adjusted annual rate of 686K homes in Aug (Expectations – 500K).
Click here to view key takeaway from last month’s release
New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. New home sales typically account for about 10% of the total market. Data is released around the 25th of each month for the previous month.
23rd Sep 2022
S&P Global US Purchasing Managers Index
Key takeaway: After breaking with the trends observed in the ISM PMIs for the last few months, the September S&P PMI release was a little bit more in line with ISM. The index still showed a decline in overall output continuing the trend that started 2 months back. But the rate of decline was much softer (Composite Index is up from 44.5 to 49.3). Another major positive was that new orders were in expansion territory again. Input costs continue to grow, but the rate of increase continues to fall in line with recent trends (positive for future inflation). And employment still seems fairly healthy – which still points to a tight labor market.
- Flash US Composite Output Index at 49.3 (44.5 in Aug).
- Flash US Services Business Activity Index at 49.2 (43.7 in Aug).
- Flash US Manufacturing PMI at 51.8 (51.5.0 in Aug).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
21st Sep 2022
Existing Home Sales
Key takeaway: Existing home sales got a bit of a respite in the August release. EHS notched a minor contraction from July of 0.4% to a SA adjusted annualised number of 4.8mn. This was above a consensus estimate of 4.7mn. Nonetheless, Aug marks a 7th continuous month of decline. Total housing inventory still remains fairly tight at 1.28mn units. Unsold inventory sits at 3.2 months supply. Also, remember that these numbers mostly pertain to contracts signed in June and July when the 30 year mortgage rate had climbed up to 5.5-5.8%.
- Existing Home Sales declined to a seasonally adjusted annual rate of 4.8mn homes in Aug.
Click here to view key takeaway from last month’s release
Existing-home sales data are a monthly measure of the sales volume and prices of existing single-family homes, condos, and co-ops nationwide. Existing-home sales account for more than 90% of total home sales, and the monthly data captures completed transactions. Data is released around the 20th of each month for the previous month.
16th Sep 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: This month’s Michigan Consumer survey findings were a non-event. Well, almost! We know that US consumer sentiment is closely tied to gas prices at the pump and gas prices have fallen since the June highs. So it is no surprise that consumer sentiment has steadily gotten better. The Index was kind of unchanged in September. Inflation expectations amongst consumers has fallen as well. Remember that the FOMC does focus a lot on the UMich Survey and they will still be relived to see long run expectations well anchored (in fact they fell to 2.8% – thats below the 2.9% to 3.1% range since July 2021). The U Mich Survey results were quite similar to the NY Fed Survey of Inflation expectations that came out a few days earlier. However, as inflation takes a bite out of everyone’s paycheck, people are also starting to expect home prices to fall and their ability to repay debt to come under pressure!
- Index of Consumer Sentiment at 59.5 (Expectations 60.0)
- Index of Current Economic Conditions at 58.9 (Expectations 60.8)
- Index of Consumer Expectations at 59.9 (Expectations 59.7)
Click here to view key takeaway from last month’s release
15th Sep 2022
US Retail Sales
Key takeaway: Retail Sales growth is in a steady decline for sure. But I dont think it is as swift as the Fed would like it to be. Core retail sales, which strips out auto, fell 0.3% m-o-m in August. But headline retail sales actually grew 0.3% m-o-m. Goods consumption, on a nominal basis, kept increasing. Those huge inventories at Walmart and Target are still being purchased after all! Or may be the Retailers aren’t slashing prices enough! Either ways consumption remaining steely keeps the pressure on inflation. Even gasoline sales did not fall much (down 4.2%) in comparison to the fall in gas prices m-o-m. One last point to note though, was that July reading was revised substantially lower.
- Retail Sales increased 0.3% m-o-m in Aug 2022 (Expected 0.2%)
- Core Retail Sales fell 0.3% m-o-m in Aug 2022 (Expected 0.1%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
14th Sep 2022
US Producer Price Index
Key takeaway: Last month PPI numbers had come in softer than expected similar to that month’s CPI numbers. And equity markets had rallied. Today, the trend repeated itself with a worse off PPI print similar to yesterday’s CPI print. While headline PPI fell 0.1% m-o-m, core PPI beat expectations increasing 0.4% in August vs 0.3% in July. Yet, overall this report was a respite after a brutal CPI yesterday. Producer prices are undoubtedly coming off their highs and will eventually translate to lower prices for the final consumer.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
13th Sep 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: Unbelievable ! This is why forecasting is such a rough game. This inflation report was all about core / sticky / entrenched inflation. Headline (0.1%) came in higher than expected and fuel inflation fell as expected. But it was not enough to offset the rise in the core, sticky components of inflation. The most important being Shelter, which rose a substantial 0.7%. Airline prices fell, but lesser than expected. And medical services prices rose substantially as well. In response to this inflation report, dont get fixated on whether the Fed will raise 75 bps or even 100 next week. What is more important is that it implies higher rates for a much longer period of time that markets were pricing in before this print!
Click here to view key takeaway from last month’s release
6th Sep 2022
ISM US Services PMI
Key takeaway: The dichotomy with the ISM Services PMI and almost every other data point continues in August as well. Just like last month, this was a robust number. Economic activity in the Services sector grew in August for the 27th month in a row registering a solid 56.9%. New orders index increased further to 61.8%. Employment grew, supplier deliveries eased a bit and prices continued to fall. The last ISM Services release had added to existing tailwinds in the equity markets strengthening the belief of a softish landing. This reading further reinforces that belief. Ironically, this month’s ISM Services release coincided with the updated PMI release by S&P Global, which continues to show significant divergence from the ISM PMI. In fact, the S&P Global Services PMI showed a sharp slowdown in August, especially in new orders!
- ISM Services PMI at 56.9 in August (56.7 in July).
Click here to view key takeaway from last month’s release
The ISM Services PMI indicates the overall economic condition for the non-manufacturing sector. The index is based on the diffusion indexes for four indicators with equal weights: Business Activity, New Orders, Employment and Supplier Deliveries. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates contraction.
2nd Sep 2022
US Non-Farm Payrolls
Key takeaway: There were a number of key points to note in the August jobs report. Firstly, NFP grew 315K in August. Expectations were approx. 300K. So right in line. The advantage of a number like this – unlike the last 2 months – is that its is high enough to indicate a strong economy but not high enough to make the Fed worry about further overheating in the jobs market. The other big point was Participation Rate, which ticked up meaningfully 62.1 to 62.4. Still a whole percentage point below pre-covid levels, but almost a percentage point about mid 2021 levels! This is one of the main pillars that Chair Powell is banking on to counter wage inflation pressures. On the downside, the number of unemployed persons grew by a large number 344K, in the Household Survey. While unemployment claims have steadily increased, they have not yet started indicating meaningful signs of a job recession. Hence, a large increased in the number of unemployed persons in the Household survey is key to note.
- Added 315K jobs (estimate 300K)
- Unemployment rate increased to 3.7%
- US Participation rate increased substantially to 62.4% from 62.1%
- Average hourly earnings up 0.3% mom; 5.2% up yoy
- Average workweek slightly down at 34.5
Click here to view key takeaway from last month’s release
1st Sep 2022
ISM US Manufacturing PMI
Key takeaway: Firstly, once again the ISM Manufacturing PMI differed a bit from the S&P Global PMI. Second, in many ways, this was a stellar report and similar to last month, this once again lends support to a “softer landing” thesis. New orders, one of the most important factor in PMI, expanded again in August, after having declined in July. The surveys still show good hiring and no real indications of layoffs. And finally, input prices have continued their downward trend suggesting easing inflationary pressures.
- ISM Manufacturing PMI at 52.8 in Aug (52.8 in July).
Click here to view key takeaway from last month’s release
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The PMI is a composite index based on seasonally adjusted diffusion indices for five indicators with varying weights: New Orders 30%, Production 25%, Employment 20%, Supplier Deliveries 15% and Inventories 10%.
30th Aug 2022
The Conference Board – US Consumer Confidence
Key takeaway: After a brief period when markets were starting to believe in a soft landing / goldilocks outcome, we are back to “good news is bad news” days. Results of consumer confidence surveys, both CB and Michigan, are closely tied to gasoline prices. With the drop in prices at the pump, consumer sentiment bounced back in August. Unfortunately though, more signs that the consumer is holding up only strengthens the Fed’s resolve to either take rates much higher and / or keep them lower for longer. This consumer confidence number also coincided with another major release today. Job openings shot up massively – once again highlighting a continuing tight labor market.
- The Index increased to 103.2 from 95.3 in Aug. Expectations were 97.9
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
26th Aug 2022
Advance Monthly Retail Inventories
Similar to the wholesale inventories read, retail inventories also grew, but at a much softer pace, in line with long term historical averages. Inventory accumulation continued to be strong in auto, but core inventories (which go into the GDP calc) grew just 0.4% m-o-m. From a GDP perspective though, consumption has remained stronger that most people expected. That strong consumption together with a relatively better balance of trade picture, is softening the impact of lower inventory buildup on GDP growth rate.
- Core Retail Inventories grew 0.4% m-o-m in July 22
- Retail inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Retail Inventories measures the change in the total value of goods held in inventory by Retailers.
The retail inventories figure is key since high or low inventory levels reflect weak or strong consumer demand which consequently determines manufacturing production increases or decreases. Retailers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
26th Aug 2022
Advance Monthly Wholesale Inventories
Like we explained before, the wholesale inventories figure is key for 2 reasons – First, a build up of inventories indicates economic activity and hence is positive to GDP. On the other hand, a persistent build-up of inventories also can indicate slowing consumer demand – as is the case right now. However, for the first time in months, wholesale inventories grew at a moderate pace (0.8% m-o-m) in line with historical trends. The past 6-9 months have provided a steady data of growing inventory accumulation but declining pace of inventory accumulation (which contributes to the negative GDP growth prints). The other contributing factor to the relatively low growth in inventories is the persistent consumption growth story!
- Wholesale Inventories grew 0.8% m-o-m in July 2022
- Merchant wholesalers inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Wholesale Inventories measures the change in the total value of goods held in inventory by wholesalers. The wholesale inventories figure is key since high or low inventory levels reflect weak or strong retail demand which consequently determines manufacturing production increases or decreases. Wholesalers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
26th Aug 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: I think this was a mixed report. Here’s why. Firstly, core inflation continued to moderate. Core PCE in July increased only 0.1%. Headline PCE was negative 0.1% m-o-m, but that was expected given the fall in gasoline prices in July. Unfortunately, markets were laser focused today on Powell’s JH hawkish speech and ignored a favorable inflation reading. On the other hand though, compensation increased at a brisk pace of 0.8% in July. Wage price pressures are the key focus area for the Fed and they likely would be concerned with continued wage gains.
- Personal Income increased 0.2% in Jul 2022
- Personal Consumption Expenditure increased 0.1% in Jul 2022
- Real Personal Consumption Expenditure, adjusted for Inflation increased 0.2% in Jul 2022
- PCE Price Index increased 6.3% y-o-y
- Core PCE Price index rose 4.6% y-o-y
Click here to view key takeaway from last month’s release
23rd Aug 2022
S&P Global US Purchasing Managers Index
Key takeaway: The headline point to note is with the latest PMI reading, we have recorded 2 consecutive months of contractionary readings (i.e. below 50). There is no doubt that PMIs are trending lower and indicating lower economic activity. But the devil, once again, is in the details. New order / new export orders fell again. Firms are scaling back hiring and employment at the slowest pace since the start of the year. Backlogs of work, which were a key driver of activity, are drying up as final demand is softening. Lastly one of the most important points to note was also the drop in new orders in the Services segment (which a few months back was mostly only being seen on the manufacturing side).
- Flash US Composite Output Index at 45.0 (47.7 in Jul).
- Flash US Services Business Activity Index at 44.1 (47.3 in Jul).
- Flash US Manufacturing PMI at 51.3 (52.2.0 in Jul).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
23 Aug 2022
New Home Sales
Key takeaway: July new home sales have absolutely tanked as high mortgage rates take their toll! Annualized new home sales now stands at 511K – a multi-year low. Approx. 13% lower on a m-o-m basis. But once again key to remember that this data point tends to be notoriously volatile. The average relative standard errors are significantly large. Nonetheless, the sharp slowdown in the housing market is unmistakable.
- New Home Sales declined to a seasonally adjusted annual rate of 511K homes in July.
Click here to view key takeaway from last month’s release
New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. New home sales typically account for about 10% of the total market. Data is released around the 25th of each month for the previous month.
18th Aug 2022
Existing Home Sales
Key takeaway: Housing recession is centerstage on everyone’s mind now. Existing home sales are now at a multi-year low 4.81mn. To provide some context, the 2018-19 low was 4.93mn (remember this was the last “fed pivot” timeline). On the other side of the spectrum the 2005 high was 7.25mn. This data point should also be viewed together with other cascading housing metrics of new home sales, mortgage applications, etc.
- Existing Home Sales declined to a seasonally adjusted annual rate of 4.81mn homes in July.
Click here to view key takeaway from last month’s release
Existing-home sales data are a monthly measure of the sales volume and prices of existing single-family homes, condos, and co-ops nationwide. Existing-home sales account for more than 90% of total home sales, and the monthly data captures completed transactions. Data is released around the 20th of each month for the previous month.
17th Aug 2022
US Retail Sales
Key takeaway: After first falling in May 2022, US Retail Sales have – for a 2nd month in a row – surprised to the upside. This continues a string of positive data surprises in the US over the last 30 days. Retail Sales, on a nominal basis, were flat year on year. However, Core Retail Sales – which strips out automobiles and parts, were a positive 0.4% on the back of a positive 0.9% last month June. What’s even more interesting is that the large drag on m-o-m Retail Sales was Gasoline which fell 1.8% (remember pump prices fell in July). So, retail sales excluding gasoline have grown fairly well. The 2 final points to remember are – Consumption holding up will not sit well with the aggressive Fed. And finally, it is important to remember that Retail Sales are reported in nominal terms and real consumer spending continues to trend lower (seen from US GDP releases as well).
- Retail Sales increased 0.0% m-o-m in Jul 2022 (Expected 0.1%)
- Core Retail Sales grew 0.4% m-o-m in Jul 2022 (Expected -0.1%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
12th August 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: US consumer sentiment is closely tied to gas prices at the pump. So it is no surprise that consumer sentiment got a big boost in July. But this reading becomes important because of other factors as well. First of all, because this comes on the back of very positive news over the last couple of weeks on both inflation as well as corporate earnings. The important NY Fed’s Survey of Consumer Expectations, just a few days back, also showed a big improvement in consumers’ outlook on inflation. Even the 5 year 5 year forward inflation rate moderated from a high of 2.67% in mid April to 2.09% in late July.
- Index of Consumer Sentiment at 55.1 (Expectations 52.5)
- Index of Current Economic Conditions at 55.5 (Expectations 59.0)
- Index of Consumer Expectations at 54.9 (Expectations 48.4)
Click here to view key takeaway from last month’s release
11th August 2022
US Producer Price Index
Key takeaway: When it rains, it pours ! The sequence of good news continues. Producer prices registered a negative m-o-m print of 0.5% against consensus expectation of +0.2%. Once again, a large portion of the PPI decrease is attributable to energy price decline. However, Core PPI, just like Core CPI, also came in lower than expected.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
10th August 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: Good news finally! Headline CPI was anyways expected to be lower, thanks to the fall in crude oil price in July. However, the big surprise from this July inflation print was monthly Core CPI increase of 0.3% which was lower than expectations and much lower than June’s 0.7%. There are a few points of note though. Firstly, one month does not make a trend. So lets not throw caution to the wind. Second, shelter, which is a stick component of core inflation, still remains quite high. Used car prices came down as well, but need to be tracked in subsequent months. And finally reducing airline fares also had a big contribution to the lower print and they are quite volatile. Risk assets are celebrating though!
Click here to view key takeaway from last month’s release
5th Aug 2022
US Non-Farm Payrolls
Key takeaway: Rip-roaring, Electrifying, Mind-boggling, Hair-raising…. I fall short of adjectives to describe the July jobs number! 528K instead of an expected 250K! More than 2x! Another point to note – June was revised upwards from 372K to 398K as well. In simple words, this just makes the Fed’s job that much harder and puts a 75 basis points hike back on the table for the September meeting. However, it also truly lends some credence to “the soft landing” theory and shows a still resilient economy. Need to watch revisions to this number in the coming months as well.
- Added 528K jobs (estimate 250K)
- Unemployment rate fell to 3.5%
- US Participation rate decreased marginally to 62.1% from 62.2%
- Average hourly earnings up 0.5% mom; 5.2% up yoy
- Average workweek unchanged at 34.6
Click here to view key takeaway from last month’s release
3rd August 2022
ISM US Services PMI
Key takeaway: ISM Services PMI came in better than expected. There were anyways some positive vibes in the equity markets on the back of a perceived dovish Fed July meeting and a better-than-expected ISM number contributed some more! Remember – Services is a larger portion of the US economy. In general, US GDP numbers track Services PMI quite well. The major point in this release was the new orders index increased substantially. Supply chain contraints eased seen from the easing of the supplier deliveries index and input prices further came off as well. Now, there are some variances from the S&P Global PMI. But it is not uncommon to have some differing data between the two PMI sources.
- ISM Services PMI at 56.7 in July (55.3 in May).
Click here to view key takeaway from last month’s release
The ISM Services PMI indicates the overall economic condition for the non-manufacturing sector. The index is based on the diffusion indexes for four indicators with equal weights: Business Activity, New Orders, Employment and Supplier Deliveries. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates contraction.
1st Aug 2022
ISM US Manufacturing PMI
Key takeaway: It may seem a bit repetitive to track both the S&P Global and ISM PMIs. But there is always some good info to screen. On the surface, it seems that the ISM PMI deviates significantly from the S&P Global PMI with the ISM reading still showing manufacturing expansion – for the 26th month in a row. But some of the sub-indices convey a similar message. Most importantly, new orders contracted 2nd month in a row. Raw material prices continue to abate. There are some differences as well. While the ISM employment sub-index is also contractionary, the ISM commentary did not suggest any layoffs or cost cutting initiatives, like the S&P Global PMI. In fact, firms still struggled to fill positions. On the balance though, there is little doubt that US PMIs are trending lower.
- ISM Manufacturing PMI at 52.8 in July (53.0 in Jun).
Click here to view key takeaway from last month’s release
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The PMI is a composite index based on seasonally adjusted diffusion indices for five indicators with varying weights: New Orders 30%, Production 25%, Employment 20%, Supplier Deliveries 15% and Inventories 10%.
29th July 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: After a dip of 0.3% in May, real PCE was back up – but only 0.1%. Disposable Personal Income, meanwhile, is failing to catch up – falling 0.3%. i.e. There is lesser money in people’s pockets for spending. PCE, the preferred Fed inflation gauge, climbed back up again to 6.8% y-o-y in June compared to 6.3% in May (Core inflation also climbed back up again to 4.8% from 4.7%). The monthly PCE increase was a bit of a shocker as well (1.0% compared to 0.6% in May). There will be one more PCE print and 2 more CPI prints before the next Fed meeting on Sep 20th. It is a cliché repeated so very often – but those prints will be key to the “Fed pivot”!
- Personal Income increased 0.6% in Jun 2022
- Personal Consumption Expenditure increased 1.1% in Jun 2022
- Real Personal Consumption Expenditure, adjusted for Inflation increased 0.1% in Jun 2022
- PCE Price Index increased 6.8% y-o-y
- Core PCE Price index rose 4.8% y-o-y
Click here to view key takeaway from last month’s release
28th July 2022
US 2Q GDP Release
Key takeaway: As always, there is so much more to unearth below the headline GDP number. While the headline screams a 0.9% decline, there is in fact a lot more rumbling underneath. A closer look shows that only services spending has really held GDP growth together in Q2. Real PCE grew at a 1% annualized rate in Q2. Services grew 4.1%, but goods consumption actually fell 4.4%. That is on the back of a 0.3% decline in goods PCE in Q1. Most notably though, business investment slowed down substantially in Q2. Residential investment took a sizeable hit too. While the world can haggle over whether this is technically a recession or not, what matters most is that economic data is on a continual decline. From a Fed policy perspective, the more negative the data get, the sooner will be the pivot to normalcy / easing.
- Real GDP decreased at an annual rate of 0.9% in 2Q 2022
- The GDP Price Index increased 8.2% in 2Q 2022
Click here to view previous quarter’s GDP data and commentary
27th July 2022
Advance Monthly Retail Inventories
Similar to the wholesale inventories read, customer inventories continue to grow, but at a moderating pace. Since consumption still remains relatively strong, the inventory to sales ratio remains historically low..
- Core Retail Inventories grew 1.6% m-o-m in Jun 22
- Retail inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Retail Inventories measures the change in the total value of goods held in inventory by Retailers.
The retail inventories figure is key since high or low inventory levels reflect weak or strong consumer demand which consequently determines manufacturing production increases or decreases. Retailers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
27th July 2022
Advance Monthly Wholesale Inventories
Like we explained before, the wholesale inventories figure is key for 2 reasons – First, a build up of inventories indicates economic activity and hence is positive to GDP. However, a persistent build-up of inventories also can indicate slowing consumer demand – as is the case right now. Wholesale inventories continue to increase significantly – 1.9% m-o-m in June. The pile up in inventories is very likely to have a deflationary impact down the road. Yet, because consumption demand remains strong and customer inventories historically low relative to consumption, the inventory build up continues. There is no doubt though that the pace of change of inventories has slowed down substantially (which was also evidenced in the 2Q GDP release).
- Wholesale Inventories grew 1.9% m-o-m in Jun 2022
- Merchant wholesalers inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Wholesale Inventories measures the change in the total value of goods held in inventory by wholesalers. The wholesale inventories figure is key since high or low inventory levels reflect weak or strong retail demand which consequently determines manufacturing production increases or decreases. Wholesalers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
26th July 2022
The Conference Board – US Consumer Confidence
Key takeaway: Consumer confidence continues to fall. The latest reading of 95.7 is down from June reading of 98.4 and is the lowest reading since Feb 2021. Similar to the Michigan Consumer Survey, the Fed has its eye on the CB survey as well. How the consumer feels is as important as what the consumer spends in today’s macro world. Watch this WSJ video for a great explanation on the 2 surveys.
- The Index decreased to 95.7 from 98.4 in June. Expectations were 97.2
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
26th Jul 2022
New Home Sales
Key takeaway: After an unexpected pick up in May, the downward trend of new home sales resumed again in June. An annualized rate of 590K homes, new home sales are close to a 5 year low. The key point really to watch here is how low does it go?
- New Home Sales declined to a seasonally adjusted annual rate of 590K homes in June.
Click here to view key takeaway from last month’s release
New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. New home sales typically account for about 10% of the total market. Data is released around the 25th of each month for the previous month.
22nd July 2022
IHS Markit US Purchasing Managers Index
Key takeaway: It is worth looking at the past 2 year history to put the June 2022 PMI reading into context. US manufacturing and services activity went through a robust expansion throughout 2021. In the early months of 2022, manufacturing and services continued to expand, but there were visible signs of slowdown in demand. Starting 2Q 2022, we saw notable drops in new orders but the overall indexes were still in expansion territory. Finally now, overall index readings in both manufacturing and services are in contractionary territory. New orders / export orders continue to weaken. Similarly, the rate of job creation has slowed down, in part due to cost cutting initiatives – especially by manufacturing firms. The only silver lining is that the rate of input inflation as well as selling prices have started to slow down, though it remains high historically.
- Flash US Composite Output Index at 47.5 (52.3 in Jun).
- Flash US Services Business Activity Index at 47.0 (52.7 in Jun).
- Flash US Manufacturing PMI at 52.3 (52.7.0 in Jun).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
20th Jul 2022
Existing Home Sales
Key takeaway: Existing Home Sales fell to a 2 year low in June. An annualized rate of 5.12mn. Sales were down 5.4% from May. This was the fifth straight month of decline.
- Existing Home Sales declined to a seasonally adjusted annual rate of 5.12mn homes in June.
Click here to view key takeaway from last month’s release
Existing-home sales data are a monthly measure of the sales volume and prices of existing single-family homes, condos, and co-ops nationwide. Existing-home sales account for more than 90% of total home sales, and the monthly data captures completed transactions. Data is released around the 20th of each month for the previous month.
15th July 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: The US consumers’ opinions and expectations conveyed through the Michigan survey have special importance in macro context these days. Chair Powell had specifically referenced the Michigan survey in his last FOMC meeting comments. Even though the readings for the survey remain close to or at all-time lows, there were some positives from this report. The most important being toning down of consumers’ inflation expectations. The survey showed consumers expect inflation to run at 2.8% over a five-year period, the lowest in a year and down from 3.1% in June. Their one-year outlook for price increases moderated to 5.2% from 5.3% a month earlier and was the lowest since February 2022. At the same time, while this is some relief, it does not take 75 basis points off the table for the July Fed meeting.
- Index of Consumer Sentiment at 51.1 (Expectations 49.9)
- Index of Current Economic Conditions at 57.1 (Expectations 52.5)
- Index of Consumer Expectations at 47.3 (Expectations 47.0)
Click here to view key takeaway from last month’s release
15th July 2022
US Retail Sales
Key takeaway: US Retail Sales once again surprised to the upside. Recollect that May was the first in recent months that US Retail Sales had registered a m-o-m decline – indicating wilting consumer demand. June registered a surprisingly strong number. Yet, it is important to remember that Retail Sales are reported in nominal terms and real consumer spending continues to trend lower (seen from US GDP releases as well).
- Retail Sales increased 1.0% m-o-m in Jun 2022 (Expected 0.8%)
- Core Retail Sales grew 1.0% m-o-m in Jun 2022 (Expected 0.6%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
14th July 2022
US Producer Price Index
Key takeaway: Producer prices also registered a stronger than expected number on the back of a scorching CPI. While the headline number was higher than consensus, core producer price inflation was lower than consensus expectations and was lower than May as well. Moreover, a large portion of the PPI increase was still attributable to goods and with crude oil prices having levelled in July, there is a good chance that prices will level off further in the coming months.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
13th July 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: Doom and Gloom! The 1.3% m-o-m increase beat even May’s gigantic 1.0% increase. But what was really worrisome was the continuing increase in core inflation. But this was expected to some extent. Shelter is a sticky component of core CPI and the runaway house prices over the past year are working their way into the shelter component of CPI. Another aspect which was worrisome was the increase in certain goods inflation – like used car prices which were up 1.6% m-o-m. In March, when economists were calling for peak inflation, used car prices had fallen 3.8% m-o-m. Yet, it is probably time to be more optimistic in the markets regarding peak inflation. Dont lose sight of the fact that prices across the entire commodity complex have crashed starting mid-June, inventories have been piling up, retailers started offering discounts in July and gas prices at the pump levelled off as well!
Click here to view key takeaway from last month’s release
8th July 2022
US Non-Farm Payrolls
Key takeaway: This is still a cracker of a number! Frankly speaking, a slightly lower number may have been positive for equity markets. Instead, the number reinforces a solid labour market and will strengthen Fed’s resolve to keep at it on the rates front. No wonder treasury yields are up sharply and the 10 year once again above 3%. Similarly, it is also key to note that the anaemic participation rate shows no signs of improvement. Put that together with the Fed meeting minutes which showed that the FOMC members have pretty much given up on the participation rate going up.
- Added 372K jobs (estimate 268K)
- Unemployment rate remained same at 3.6%
- US Participation rate decreased marginally to 62.2% from 62.3%
- Average hourly earnings up 0.3% mom; 5.1% up yoy
- Average workweek unchanged at 34.5
Click here to view key takeaway from last month’s release
6th July 2022
The Fed Meeting Minutes (Meeting Date: June 14-15, 2022)
Key takeaway: Market participants parse through Fed meeting minutes to try and interpret Fed thought and what is really driving their actions. I think there were a few points to note in the minutes –
- Up until the meeting, the FOMC really had a fairly optimistic view of Q2 GDP – quite in line with economic data available till then. For instance, the Atlanta Fed GDP tracker showed a Q2 growth rate of 2% right before the Fed meeting. Similarly, the 3rd revision to 1Q GDP and the substantial downward revisions to real consumption were not available then. The substantial slowing of the economy since then, will likely be taken into account at the next meeting.
- The Fed also seemed to have given up on participation rate rising anytime soon to loosen labor market tightness. Hence, curbing aggregate demand seems the only alternative to reducing inflation.
- Like we have heard from Chair Powell before, longer term inflation expectations indicators like the Michigan survey and the Fed staff index of common inflation expectations made a special mention in the meeting. It becomes even more important to track these metrics for de-anchoring of inflation expectations
Click here to view key takeaway from last Fed Meeting Minutes
6th July 2022
ISM US Services PMI
Key takeaway: A bit of good news! While Manufacturing PMI (both ISM and S&P Global) have been relatively downbeat in recent months (especially contracting new orders), the ISM Services PMI held up quite well. Firstly, the index at 55.3 outperformed consensus estimate of 54.3. Secondly, remember that a reading above 50 is still expansionary. Also, New Orders index was a good 55.6 – lower than May, but still expansionary. Now why is all this good news? JI probably would not have been standalone. But there was a sequence of relatively good news in the past week. Factory orders were up 1.6% in May (compared to +0.6% in April). The revision to new orders for manufactured durable goods also improved from 0.7% to 0.8% for May. And finally, oil has substantially fallen.
- ISM Services PMI at 55.3 in June (55.9 in May).
Click here to view key takeaway from last month’s release
The ISM Services PMI indicates the overall economic condition for the non-manufacturing sector. The index is based on the diffusion indexes for four indicators with equal weights: Business Activity, New Orders, Employment and Supplier Deliveries. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates contraction.
1st July 2022
ISM US Manufacturing PMI
Key takeaway: The most important takeaway from the ISM PMI is the contraction in new orders ! In yet another clear sign of slowdown, the New Orders Index fell into contractionary territory and the New Export Orders Index fell further from the previous month. The Prices Index and Employment Index both slowed down in a further indication of abating price pressures and waning labour tightness. Overall the PMI was much worse than consensus estimates. When viewed with the other recent data releases – eg. the fall in real consumption in May and deep downward revisions to consumption data in 1Q, the weakness of the overall economy and the likelihood of another negative GDP print in Q2 seems much more plausible.
- ISM Manufacturing PMI at 53.0 in June (56.1 in May).
Click here to view key takeaway from last month’s release
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The PMI is a composite index based on seasonally adjusted diffusion indices for five indicators with varying weights: New Orders 30%, Production 25%, Employment 20%, Supplier Deliveries 15% and Inventories 10%.
30th June 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: It was one of those days in markets, when all news is bad news! Core inflation is showing all the necessary signs of slowing. But more importantly the quantum of these inflation slowing signals is not sufficient for a Fed pivot. Key points from this release : a) Core PCE slowed down to 4.7% (fourth continuous month of decline). b) Revised real consumption numbers now show that consumption in the first 4 months was lower that reported earlier. Those accumulating Target inventories make even more sense now! c) May was the first time in many months that real consumption actually decreased m-o-m! d) Most figures came in lower than consensus estimates.
The next CPI release is on Jul 13th and the Fed meets post that on 26-27th. If headline CPI moderates, there is a good chance that the next rate hike settles at 50 instead of 75!
- Personal Income increased 0.5% in May 2022
- Personal Consumption Expenditure increased 0.2% in May 2022
- Real Personal Consumption Expenditure, adjusted for Inflation decreased 0.4% in May 2022
- PCE Price Index increased 6.3% y-o-y
- Core PCE Price index rose 4.7% y-o-y
Click here to view key takeaway from last month’s release
28th June 2022
Advance Monthly Retail Inventories
The latest release for Monthly Retail Inventories for May 22 is especially interesting when viewed in conjunction with the Advance Monthly Retail Sales number released on 15 June 22. Recall this was the first month in recent history that nominal retail sales actually fell. Retail inventories, on the other hand, increased a robust 1.1% (and 0.8% excl. motor vehicle and parts). A continuing trend of falling sales and building inventories can be taken to be a good leading indicator of a slowing economy.
- Core Retail Inventories grew 0.8% m-o-m in May 22
- Retail inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Retail Inventories measures the change in the total value of goods held in inventory by Retailers.
The retail inventories figure is key since high or low inventory levels reflect weak or strong consumer demand which consequently determines manufacturing production increases or decreases. Retailers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
28th June 2022
Advance Monthly Wholesale Inventories
Like we mentioned before, the wholesale inventories figure is key for 2 reasons. First – a build up of inventories indicates economic activity and hence is positive to GDP. However, a persistent build-up of inventories also can indicate slowing consumer demand – as is the case right now. Wholesale inventories continue to increase significantly. The pile up in inventories is very likely to have a deflationary impact down the road. Yet, because consumption demand remains strong and customer inventories historically low, the tailwinds to manufacturing continue for the time being.
- Wholesale Inventories grew 2.0% m-o-m in May 2022
- Merchant wholesalers inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Wholesale Inventories measures the change in the total value of goods held in inventory by wholesalers. The wholesale inventories figure is key since high or low inventory levels reflect weak or strong retail demand which consequently determines manufacturing production increases or decreases. Wholesalers’ stock levels also indicate whether GDP is expanding or contracting. The Advance report for the previous month is released in the last week of the subsequent month.
28th June 2022
The Conference Board – US Consumer Confidence
Key takeaway: You have to click on the link below to see a visual representation of the declining trend in consumer confidence. The headline index declined to 98.7 from 103.2 last month. Even last month’s reading was revised downwards. The headline index number is now the lowest since Feb 2021. The consumer outlook continues to be driven by increasing concerns about inflation and a slowing economy. Similar to the Michigan consumer survey, the key point to note is that the Fed pays very close attention to these survey results!
- The Index decreased to 98.7 from 103.2 in May. Expectations were 100.4
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
23rd June 2022
IHS Markit US Purchasing Managers Index
Key takeaway: The latest PMI numbers are important for a bunch of reasons. Recall that the trend of weakening data in PMI has been noticeable since Feb / March 2022 (though it was still expansionary). That weakening trend continued. But with some alarming more developments. New orders, which had been resilient even in the past 4 months, contracted for the first time since July 2020. New export orders, an indication of overseas demand, contracted as well. Moreover, cost of inputs and labor continued their upward march which will continue to squeeze business margins. The silver lining though was that the pace of increase of costs slowed down. Lastly, and very importantly, the manufacturing output index fell below 50 indicating a contraction in manufacturing output.
- Flash US Composite Output Index at 51.2 (53.6 in May).
- Flash US Services Business Activity Index at 51.6 (53.4 in May).
- Flash US Manufacturing PMI at 52.4 (57.0 in May).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
24th Jun 2022
New Home Sales
Key takeaway: Sales of new homes jumped unexpectedly 10% in May reversing a downward trend since the last 4 months. Annualized rate of 696K homes. The key point to remember is that this data tends to be notoriously volatile. The average relative standard errors are significantly large.
- New Home Sales increased to a seasonally adjusted annual rate of 696K homes in May.
Click here to view key takeaway from last month’s release
New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. New home sales typically account for about 10% of the total market. Data is released around the 25th of each month for the previous month.
21st Jun 2022
Existing Home Sales
Key takeaway: Existing-home sales declined for the fourth straight month to a seasonally adjusted annual rate of 5.41 million. Sales were down 3.4% from April and 8.6% from one year ago. At $407,600, the median existing-home sales price exceeded $400,000 for the first time and represents a 14.8% increase from one year ago. The inventory of unsold existing homes rose to 1.16 million by the end of May, or the equivalent of 2.6 months at the current monthly sales pace.
- Existing Home Sales declined to a seasonally adjusted annual rate of 5.41mn homes in May.
Click here to view key takeaway from last month’s release
Existing-home sales data are a monthly measure of the sales volume and prices of existing single-family homes, condos, and co-ops nationwide. Existing-home sales account for more than 90% of total home sales, and the monthly data captures completed transactions. Data is released around the 20th of each month for the previous month.
15th June 2022
US Retail Sales
Key takeaway: Finally a number that shows the wilting consumer. US retail sales had been surprisingly resilient for the previous 4 months. Needless to say, since retail sales numbers are not adjusted for inflation, real consumer spending was lower than what the headline suggested. But today finally sales in nominal terms are down m-o-m. Even April was revised down from 0.9% to 0.7%.
- Retail Sales declined 0.3% m-o-m in May 2022 (Expected +0.2%)
- Core Retail Sales grew 0.5% m-o-m in May 2022 (Expected 0.8%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
14th June 2022
US Producer Price Index
Key takeaway: The good news is that the PPI reading for May was lower than consensus. But the good news stops right there. And the reading was only marginally lower than consensus. Just like previous month, PPI remains high enough to keep investor concerns elevated and policy makers hawkish. A couple of other key points. PPI for goods increased in May after having slightly declined in April – which is not a good sign. Prices of processed goods for intermediate demand as well as raw materials for intermediate demand also showed no signs of slowing. Infact, they accelerated on a m-o-m basis. Once again, remember, PPI is a leading indicator for CPI.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
10th June 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: The Consumer Sentiment time series chart is a must see today. The sentiment index is the lowest since 1980! There are a couple of more points to note though in this index of sentiment gloom. First, we always have to recognise that sentiment is heavily influenced by current circumstances (i.e. the war, inflation, etc) and can change with changing circumstances. But second and more important, consumers’ expectations of inflation in one year as well as over the next 5 years is changing. The Fed relies heavily on expectations being anchored and believes that has been a key attribute of successful inflation control in the post Volcker era.
- Index of Consumer Sentiment at 50.2 (Expectations 58.0)
- Index of Current Economic Conditions at 55.4 (Expectations 62.5)
- Index of Consumer Expectations at 46.8 (Expectations 54.5)
Click here to view key takeaway from last month’s release
10th June 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: This was a print worthy of an 800 point drop in the Dow like we saw in the first hour of trading. A rip roaring inflation number! Like I mentioned previously, it is way too early to call a peak in inflation. 1% m-o-m rate of increase is gigantic. Here are some of other finer points you got to know. Used Cars and Apparel both increased m-o-m after having declined in April which indicated that goods demand has not softened as much. Shelter rose 0.6% (4 consecutive months of 0.5% or higher). Remember again – this is a sticky component! Lastly, energy prices roared up again, but that was expected given May oil price gains after brief declines in April. And if the first 10 days of June are any indication of the rest of the month, this component simply gets worse.
Click here to view key takeaway from last month’s release
8th June 2022
Monthly Wholesale Inventories
The wholesale inventories figure is key for 2 reasons. First – a build up of inventories indicates economic activity and hence is positive to GDP. However, a persistent build-up of inventories also can indicate slowing consumer demand – as is the case right now. Which can be a huge negative for GDP when more than 70% of GDP is dependent on the consumer! Wholesale inventories have been consistently rising since mid 2021. (Quite significant if you view these in the context of the recent Target and Walmart debacles!). Yet, so far sales / consumer demand has continued to be resilient. Wholesalers inventories to sales ratios are still substantially below pre-pandemic levels.
- Wholesale Inventories grew 2.2% m-o-m in Apr 2022
- Merchant wholesalers inventory to sales ratio chart
Click here to view key takeaway from last month’s release
Wholesale Inventories measures the change in the total value of goods held in inventory by wholesalers. The wholesale inventories figure is key since high or low inventory levels reflect weak or strong retail demand which consequently determines manufacturing production increases or decreases. Wholesalers’ stock levels also indicate whether GDP is expanding or contracting.
3rd June 2022
US Non-Farm Payrolls
Key takeaway: Even in the previous month of April, jobs creation outperformed consensus estimates and the equity markets dropped in reaction. Today was no different. In another macro backdrop, outperforming jobs gains would have been positive for the equity markets – not right now! 390K jobs added in May compared to estimates of 318K.
There were a few other points to note. Average hourly earnings growth remained steady at 0.3% mom. In other words, a positive that it did not increase! Participation rate edged up to 62.3%. A modest increase but an increase nonetheless. The Fed has squarely wage inflation signs on its tracker lens and the only way to beat it without killing the economy off is by increasing the labour supply. Lastly, employment in Retail Trade sector fell notably by 61K. This shows job losses in general merchandise stores, clothing stores, food, beverage, healthcare stores, etc.
- Added 390,000 jobs (estimate 318,000)
- Unemployment rate remained same at 3.6%
- US Participation rate increased marginally to 62.3% from 62.2%
- Average hourly earnings up 0.3% mom; 5.2% up yoy
- Average workweek unchanged at 34.6
Click here to view key takeaway from last month’s release
1st June 2022
ISM US Manufacturing PMI
Key takeaway: Similar the the recently released Markit Manufacturing PMI, while a reading above 50 still suggests expansion, the trend is clearly downwards. One interesting point to note was that the survey continued to show that customer inventories are still running low. Which is contrary to some of the recent inventory pile up indications from other statistics. In summary, manufacturing is still looking strong, new orders and new business continues to grow and input prices continue to soar.
- ISM Manufacturing PMI at 56.1 in May (55.4 in April).
Click here to view key takeaway from last month’s release
The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. The PMI is a composite index based on seasonally adjusted diffusion indices for five indicators with varying weights: New Orders 30%, Production 25%, Employment 20%, Supplier Deliveries 15% and Inventories 10%.
31st May 2022
The Conference Board – US Consumer Confidence
Key takeaway: Similar to last month’s reading – not a significant change. But the fact remains that consumer confidence is at a multi-year low. Consistently high inflation is eroding consumer purchasing power. The PCE data release a few days back also showed consumers dipping into their savings to keep up consumption.
- The Index decreased slightly to 106.4 from 108.6 in April. Expectations were 103.9.
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
27th May 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: There are lots of key points to note in this release. Firstly, core PCE – which is the Fed’s preferred measure, moderated in April : 4.9% vs 5.2% in March. However, that was not the only positive development. Consumption continued to be strong. Real PCE – adjusted for inflation – increased 0.7% in April. And that on the back of a strong Jan, Feb and March. However, consumers are dipping into their savings. While income rose, it is simply not enough to cover price increases. Savings rate fell to 4.4% from 5% in March 22 (Sep 2021 was 8.1%!)
- Personal Income increased 0.4% in April 2022
- Personal Consumption Expenditure increased 0.9% in April 2022
- Real Personal Consumption Expenditure, adjusted for Inflation increased 0.7% in April 2022
- PCE Price Index increased 6.3% y-o-y
- Core PCE Price index rose 4.9% y-o-y
Click here to view key takeaway from last month’s release
24th May 2022
The Fed Meeting Minutes (Meeting Date: May 3-4, 2022)
Key takeaway: Honestly, there was nothing noteworthy in the Fed meeting minutes that was not already conveyed and priced in from the Fed Chair’s press conference after the meeting. That was probably why equity markets rallied – in the absence of any unfavourable surprises!
A few details from the minutes below.
- Meeting participants’ view of the economy was that the negative 1Q GDP performance was all on account of net exports and inventory investment. And hence was unlikely to be repeated in Q2. Any worsening signals in this assumption would mean more tightening than currently priced in.
- Similar to the above point, the minutes show that all participants are heavily relying on improvement in labour participation and easing of supply chains by the fall. Absent any improvement, markets will readjust their expectations of the neutral level of rates
- The Fed also clearly seemed to suggest that they will re-evaluate data and economic developments after a couple of tightening rounds (of 50 bps)
- Staff economic outlook showed the Fed now projects PCE to be 4.3% in 2022 (from 4% in the March meeting).
- Lastly, the minutes always suggest that while the Fed is watchful of de-anchoring of inflation expectations, it still believes that these measures currently remain well anchored.
Click here to view key takeaway from last Fed Meeting Minutes
24th May 2022
IHS Markit US Purchasing Managers Index
Key takeaway: The trend of weaker data in PMI continued from March to April to May. There are still a few key points to note from the May PMI release. First, new orders and new business continues to grow in the manufacturing and services industries. Remember the PMI is a diffusion index. So, readings above 50 still indicate an expansion and not a contraction. Second, input prices continue to soar – both in manufacturing and services. Third, employment levels and labour costs continue to increase. In summary, while PMI surveys indicate economic expansion, demand is visibly slowing with no let up of input costs or labour inflation.
- Flash US Composite Output Index at 53.8 (56.0 in April).
- Flash US Services Business Activity Index at 53.5 (55.6 in April).
- Flash US Manufacturing PMI at 57.5 (59.2 in April).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
17th May 2022
US Retail Sales
Key takeaway: The US Consumer theme holds consistent – month after month ! Similar to previous months, April retail sales report also shows a slowdown in growth rate of consumption. The increase of 0.9% can mostly be attributed to price increases and not general consumption increase. Nonetheless, the report once again shows that consumers are still resilient. This has been the most important data point supporting the “no immediate recession case” but also means the Fed’s job keeps getting harder!
- Retail Sales grew 0.9% m-o-m in Apr 2022 (Expected 0.9%)
- Core Retail Sales grew 0.6% m-o-m in Apr 2022 (Expected 0.4%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
13th May 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: Recall the Michigan Consumer Sentiment index had unexpectedly improved in April. We had stated then that it was too early to state that consumer confidence is on an upswing with just a one month move. True to that assessment, the consumer sentiment index is back down significantly. At 59.1, it is the lowest since 2011. Right now, the only thing that stands between us and a recession is the US consumer. And hence consumer sentiment is such an important indicator of things to come. And, as mentioned before, the Fed keeps a close eye on this metric of the Consumer Survey.
- Index of Consumer Sentiment at 59.1 (Expectations 64.0)
- Index of Current Economic Conditions at 63.6 (Expectations 70.5)
- Index of Consumer Expectations at 56.3 (Expectations 63.0)
Click here to view key takeaway from last month’s release
12th May 2022
US Producer Price Index
Key takeaway: Just like the April CPI report, PPI in April moderated a bit from March. Bit it still remains high enough to keep investor concerns elevated and policy makers hawkish. Once again, remember, PPI is a leading indicator for CPI.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
11th May 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: This month’s reading is precisely why calling a peak in inflation is so tough and perilous to do (see last month’s comments). In March 2022, core inflation moderated to 0.3% m-o-m. This figure is back up to 0.6% ! Moderating goods inflation was expected – given the economy is opening up. The focus is really on services. For instance, Transportation jumped 3.1% and Medical Care rose 0.5% m-o-m. Shelter, which is a sticky component of core inflation, increased 0.5% for a third month is a row. As the economy shifts back from stay-at-home goods consumption to out-and-about services consumption, entrenched wage inflation becomes supremely paramount.
Click here to view key takeaway from last month’s release
6th May 2022
US Non-Farm Payrolls
Key takeaway: You can be excused if you simply ignored the April NFP report and just referred to the March report instead. You would not have missed much! For anyone looking for a silver lining in the April NFP data – there simply was none! Unemployment rate remains low, job creation remains high, average hourly earnings still increasing at a pretty high rate causing genuine labour inflation concerns, people still missing from the active workforce evidenced by a low participation rate. And this disappointment reflected in the equity markets on Friday. It is amazing that in an all-together different macro environment, 430K jobs added would have been a positive development. Not in this one!
- Added 428,000 jobs (estimate 391,000)
- Unemployment rate remained same at 3.6%
- US Participation rate fell to 62.2% from 62.4%
- Average hourly earnings up 0.3% mom; 5.5% up yoy
- Average workweek unchanged at 34.6
Click here to view key takeaway from last month’s release
29th April 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: The March 22 Personal Income and Outlays release once again shows that the US consumer is very strong. The Feb release had cast some doubt on the strength of consumer spending when Feb real PCE fell 0.4%m-o-m. But the Feb figure was revised upward to +0.1% and March real PCE was up 0.2% m-o-m. Spending on goods fell and spending on service rose – as expected. But, inflation remains stubbornly high, impacting consumers ability and willingness to spend. Real Disposable Personal Income fell 0.4% m-o-m.
- Personal Income increased 0.5% in Mar 2022
- Personal Consumption Expenditure increased 1.1% in Mar 2022
- Real Personal Consumption Expenditure, adjusted for Inflation increased 0.2% in Mar 2022
- The PCE Price Index increased 6.6% y-o-y
Click here to view key takeaway from last month’s release
28th April 2022
US 1Q GDP Release
Key takeaway: Once again, you must look past the headline. Real GDP fell 1.4% in Q1 2022. But a look under the hood reveals a different picture. GDP from consumption expenditure increased a healthy 2.7% – driven by increase in services consumption relative to goods. Business investment grew 9.2%. You get some validation of capex spend of corporates from recently announced bank results as well. The drag on growth was caused by a fall in inventory, higher imports and weak exports – reflection of a stronger US economy and weaker global economy.
But markets, finance, economics – everything is about looking forward ! The past almost doesn’t matter.
Inflation continues to shoot higher. The PCE price index excluding food and energy, a preferred inflation measure for the Fed, rose 5.2% in 1Q 2022. If wages dont keep pace with inflation, consumption is certain to fall.
- This is the 1st Advance Estimate
- Real GDP decreased at an annual rate of 1.4% in 1Q 2022
- The GDP Price Index increased 8.0% in Q1 2022
26th April 2022
The Conference Board – US Consumer Confidence
Key takeaway: Not a significant change from March. Consumer confidence continues to be relatively weak given the inflation fears and the war backdrop. However, the only positive point in the reading was that it did not get worse!
- The Index decreased slightly to 107.3 from 107.6 in March. Expectations were 108.0.
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
22nd April 2022
IHS Markit US Purchasing Managers Index
Key takeaway: Overall April PMI data was weaker than March. However, both Feb and March numbers had been significantly strong post an Omicron led weak January. The most important point to note in the April release was the continuation of increase in new orders which shows business strength. The data is still far from evidencing any meaningful slowdown in consumption demand.
- Flash US Composite Output Index at 55.1 (57.7 in March).
- Flash US Services Business Activity Index at 54.7 (58.0 in March).
- Flash US Manufacturing PMI at 59.7 (58.8 in March).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
14th April 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: The Consumer Sentiment index unexpectedly improved in April. Too early though to state that consumer confidence is on an upswing. But more importantly, consumer expectations of longer term inflation still remained well anchored. And the Fed does keep on eye on this metric of the Consumer Survey.
- Index of Consumer Sentiment at 65.7 (Expectations 59.0)
- Index of Current Economic Conditions at 68.1 (Expectations 68.0)
- Index of Consumer Expectations at 64.1 (Expectations 54.2)
Click here to view key takeaway from last month’s release
14th April 2022
US Retail Sales
Key takeaway: Similar to last month, March retail sales report also shows a slowdown in growth rate of consumption. The increase of 0.5% can mostly be attributed to price increases and not general consumption increase. Nonetheless the report shows that consumers are still resilient and Q1 numbers have held up quite well (Feb retail sales numbers were also revised up sharply)
- Retail Sales grew 0.5% m-o-m in Mar 2022 (Expected 0.6%)
- Core Retail Sales grew 1.1% m-o-m in Mar 2022 (Expected 1.0%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
13th April 2022
US Producer Price Index
Key takeaway: Though core CPI came in a bit softer the day before, a stubbornly high PPI still keeps rising inflation fears centerstage. Remember, PPI is a leading indicator for CPI. Also the magnitude by which actual readings exceeded expectations was key.
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
12th April 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: What matters most from a monetary policy perspective is Core CPI – month over month. And the March print of 0.3% gives hope that core inflation might finally be peaking. However, 2 points of caution to note. First, shelter (i.e. rent) rate of inflation still remains high (0.5% mom). Second, a large portion of the drop in core inflation was due to falling used car prices. This was expected since used car prices had really gone through the roof. In summary, the lower core inflation print gives markets hope. But it is too early to say. Keep tracking!
Click here to view key takeaway from last month’s release
6th April 2022
The Fed Meeting Minutes (Meeting Date: Mar 15-16, 2022)
Key takeaway: Lets get done with the headlines first. USD60bn of Treasuries and USD35bn of Agency MBS will start rolling off as a part of the balance sheet reduction exercise. These caps on roll off would likely be phased over 3 months starting May. Lastly, the Fed will sell MBS as well to achieve its longer-term goal of holding primarily Treasuries in its SOMA portfolio. But that will be done “after BS reduction is well underway” i.e. not anytime soon. Lets look at some more details below.
- In the Jan 22 meeting, the staff review of the economic situation showed cognisance of virus related risks to demand, improvement in supply chains, tepid business fixed investment. In contrast, the Mar 22 minutes show cognisance of simply all factors pointing to higher inflation
- Staff review of the financial situation showed that the Fed believes that financial conditions remain quite accommodative. There were some strains – widening of spreads, deterioration of market depth in treasuries, credit quality in CMBS. But on the whole, financial conditions remain benign
- The staff economic outlook minutes had the most striking changes compared to Jan. PCE in 2022 expected to average 4% compared to 2.6% in Jan. Inflation likely to last longer as 2023 average inflation expected to be 2.3% compared to 2.0% in Jan. Finally and most importantly, an acknowledgement by the Fed staff of the possibility that continued high inflation would cause longer term inflation expectations to become unanchored.
- The minutes of the Participants views on Current Conditions and Economic Outlook really show a wholesale hawkish shift for the entire FOMC
- Virus related risks of demand slowdown have reduced substantially
- Participants expect above trend economic growth and hence a continued strong labor market. Labor remains extremely tight. Consumption and investment continue to rise solidly.
- Participants acknowledged that inflation has become broad-based !
- The notes showed that even though Participants believe that longer term inflation expectations remain anchored, they are cognizant of growing signs and risks of de-anchoring
- The concluding line of the Meeting Minutes sums it all – “All participants underscored the need to remain attentive to the risks of further upward pressure on inflation and longer-run inflation expectations”
- Fun fact 1: The Jan minutes mention “covid, virus or omicron” 32 times. The Mar minutes – 8 times !
- Fun fact 2: The Jan minutes mention “inflation” 49 times. The Mar minutes – 72 times !
- Fun fact 3: The Jan minutes mention “inflation expectations” 3 times. The Mar minutes – 16 times !
Click here to view key takeaway from last Fed Meeting Minutes
1st April 2022
US Non-Farm Payrolls
Key takeaway: Logjam at ports? Lockdowns in Shanghai? Now the Fed cant do anything about that. But, wages increasing 5.6% yoy? The Fed can tamp that down… and it will! Payrolls increased 431,000 in March. A bit less than expected, but large enough to grease the wheels of a 50 basis points May hike. Also, and very importantly, there wasn’t a material enough increase in labour force participation. The challenging hunt for labour for businesses and the upward pressure on wages continues unabated.
- Added 431,000 jobs (estimate 490,000)
- Unemployment rate decreased from 3.8% to 3.6%
- US Participation rate increased marginally to 62.4% from 62.3%
- Average hourly earnings up 0.4% mom; 5.6% up yoy
- Average workweek ticked down to 34.6 hours from 34.7
Click here to view key takeaway from last month’s release
31st March 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: Post this release, a lot of news headlines might scream “consumer spending slows sharply!”. Lets not get carried away yet. This is just one data point. Inflation adjusted consumer spending indeed fell 0.4% m-o-m in February. But, January numbers had been unusually strong (+2.1%). Spending on goods fell and spending on service rose – quite as expected. But if these numbers keep trending down, then the inflationary impact on people’s ability and willingness to spend would become evident! Keep tracking…
- Personal Income increased 0.5% in February 2022
- Personal Consumption Expenditure increased 0.2% in February 2022
- Real Personal Consumption Expenditure, adjusted for Inflation decreased 0.4% in February 2022
- The PCE Price Index increased 6.4% year over year
Click here to view key takeaway from last month’s release
29th March 2022
The Conference Board – US Consumer Confidence
Key takeaway: Taken at face value, the reading is an increase over last month and beat consensus economist expectations. But the reading in isolation does not mean much. A rampant rise in inflation continues to nibble away at future expectations of US consumers. What supports the positive outlook case, is a robust job market which shows no signs of waning. There are 11.3 million job openings in the US. Increasing wages will continue to translate into spending power – till inflation completely erodes it away!
- The Index increased slightly to 107.2 from 105.7 in February. Expectations were 107.
Click here to view key takeaway from last month’s release
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
24th March 2022
IHS Markit US Purchasing Managers Index
Key takeaway: PMI data in January 2022 had come out weak. But the assessment at that time was that it was Omicron related. Feb 22 activity numbers confirmed that view. Now March numbers have reinforced it. Private sector activity and output remained significantly strong in March. Which reaffirms the view that the first quarter has been fairly good for the US economy. But this also means that the upward pressure on both CPI and wage inflation continues!
- Flash US Composite Output Index at 58.5 (55.9 in February).
- Flash US Services Business Activity Index at 58.9 (56.5 in February).
- Flash US Manufacturing PMI at 58.5 (57.3 in February).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
16th March 2022
US Retail Sales
Key takeaway: US Retail Sales slowed down quite a bit in Feb 2022. Still 0.3% m-o-m growth is not bad and conveys the message that the US consumer is healthy and still has substantial disposable income / savings. Note that January 22 Retail Sales increase was also revised upwards from 3.8% to 4.9%! Based on the 1Q data seen so far, it seems like a decent probability that 1Q GDP growth will look good and consequently the earnings results of companies will outperform as well. But it is imperative to keep track of any slowdown in consumption.
- Retail Sales grew 0.3% m-o-m in Feb 2022 (Expected 0.4%)
- Core Retail Sales grew 0.2% m-o-m in Feb 2022 (Expected 0.9%)
Click here to view key takeaway from last month’s release
The Advance Monthly Retail Trade Survey provides an early indication of sales of retail and food service companies. It is key to note that Retail Sales are not stripped for the inflation effect. In other words, the increase in dollar value of retail sales can also be substantially attributed to the increased in prices.
15th March 2022
US Producer Price Index
Key takeaway: Yet another inflation metric being stubbornly high. But there were 3 things to note with this report. 1) The month-on-month inflation index was mostly driven by goods. The Services Index was unchanged on a month-on-month basis. 2) A large part of the final demand goods price index was driven by energy costs. So stripping out energy costs, the PPI increase was not as severe. 3) Overall PPI numbers were better than expected and that might have contributed to the decent rally in stocks that we saw today !
Click here to view key takeaway from last month’s release
PPI is a measure of wholesale inflation. It measures the average change over time in prices received by producers for domestically produced goods, services and construction. So, PPI measures inflation from the Sellers perspective. It is key since it is a leading indicator of CPI.
11th March 2022
Michigan Consumer Sentiment and Expectations Index
Key takeaway: The Consumer Sentiment Index reading at 59.7 was the lowest since 2011. The Current Conditions Index at 67.8 was the lowest since 2009. The measure for Consumer Expectations was 54.4, lowest since 2011. Overall, pretty gloomy numbers. Two things to note – First, the war situation and spiking oil prices does play into the expectations in the survey – so lower numbers can be expected. Second, and importantly, if these index readings stay low going forward, it can very well be a leading indicator of a worsening economy.
- Index of Consumer Sentiment at 59.7 (Expectations 61.4)
- Index of Current Economic Conditions at 67.8 (Expectations 66.0)
- Index of Consumer Expectations at 54.4 (Expectations 58.8)
10th March 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway: A 40-year high! More importantly, this number does not capture much of the massive oil price increase post start of invasion. So the CPI is yet to peak. Far from it. Another key point is the index increase of the “Shelter” component of CPI (which is one of the largest components of the index). It increased 4.7% (largest increase since May 1991). The “Shelter” component in CPI tends to be structural and sticky. Fasten your seat belts. This ride is going higher!
- CPI increased 0.8% over last month (expected 0.8%) and 7.9% year over year (expected 7.9%)
4th March 2022
US Non-Farm Payrolls
Key takeaway: 678,000! Thats big! Reinforces the view that the labor market is strong. However, importantly, average hourly earnings were little changed from last month. Its is key to see how wage gains move from here on. Remember – on an inflation adjusted basis, wages are falling and so will consumer spending if this trend continues. Overall, the report strengthens the case for tightening monetary policy.
- Added 678,000 jobs in February, beating estimates of 400,000
- Unemployment rate decreased from 4.0% to 3.8%
- US Participation rate increased marginally to 62.3% from 62.2% in Jan 2022
- Average hourly earnings almost unchanged over last month; 5.1% up yoy
- Average workweek ticked up to 34.7 hours from 34.6 in Jan 2022
Click here to view key takeaway from last month’s release
25th February 2022
Personal Income and Outlays / PCE Price Index
Key takeaway: Inflation adjusted consumer spending had fallen by 1% in December 2021, probably because of a pull forward of purchases in the holiday season. Consumption in Jan 2022, on the other hand, has surprised to the upside. The rise in nominal spending is then, not just on account of price rises, but also attributable to simply increased consumption. Tailwind for monetary policy tightening!
- Personal Income increased less than 0.1% in January 2022
- Personal Consumption Expenditure increased 2.1% in January 2022
- Real Personal Consumption Expenditure, adjusted for Inflation, also increased 1.5% in January 2022
- The PCE Price Index increased 6.1% year over year
24th February 2022
US GDP Release
Key takeaway: A GDP growth rate of 7% is undoubtedly robust. Personal consumption expenditures continued to drive the GDP growth. However, a large part of this growth in 4Q came from build-up of private inventories. The expectation is that this will continue into 2022. However, if consumption slows down there would be meaningful reduction in inventory build-up and growth
- This is the 2nd Advance Estimate
- Real GDP increased at an annualized rate of 7% in 4Q 2021
- The PCE Price Index increased 6.3% in Q4 2021
22nd February 2022
The Conference Board – US Consumer Confidence
Key takeaway: Consumer Confidence has been trending down over the past several months and that trend continues!
- The Index declined to 110.5 from 111.1 in January. Expectations were 110.
Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.
22nd February 2022
IHS Markit US Purchasing Managers Index
Key takeaway: As expected, business activity picked up substantially in Feb 2022 compared to Jan 2022. This was also evidence that that Jan drop in activity / output was more supply constraint and omicron related, than any kind of reduction in aggregate demand. This further strengthens the case for monetary policy tightening
- Flash US Composite Output Index at 56.0 (51.1 in January).
- Flash US Services Business Activity Index at 56.7 (51.2 in January).
- Flash US Manufacturing PMI at 57.7 (55.5 in January).
Click here to view key takeaway from last month’s release
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
17th February 2022
US Treasury Auction Results (30-year TIPS)
Key takeaway: A positive development because it signals that the Fed’s hawkish approach is working in tamping down longer-term inflation expectations
- The auction result on $10.5 billion of 30 year TIPS was on balance weak.
- Bid to Cover ratio of 2.17x and a long tail of 5.5 bps
16th February 2022
The Fed Meeting Minutes (Meeting Date: Jan 25-26 2022)
Key takeaway: No major details provided on the timing, size and pace of balance sheet reduction!
- Downside risks to the economy continue to be a surge in virus cases and hence to the extent that the pandemic diminishes, the Committee will view it as reduction of downside risks and an inflation tailwind
- Most participants believe the labor market tightness, wage pressures to continue. Wage gains have been broad based and notable gains made in the lower wage and Hispanics and African American categories as well. Labor force participation has edged up over the past few months and the Committee expects it to continue to increase as the pandemic subsides
- Many participants view that the economy is at or close to full employment
- Participants generally expect inflation to moderate over the course of the year as supply demand imbalances ease and monetary policy accommodation is removed
- Some participants remarked that longer-term measures of inflation expectations appeared to remain well anchored, which would support a return of inflation over time to levels consistent with the Committee’s goals.
- While everyone knows that QE purchases will come to an end soon, “most participants” preferred to continue with the December plan of ending QE in early March and not shocking the markets with an abrupt immediate end to QE
- The Committee knows that, compared to 2015, the economic growth outlook is much stronger, inflation is much higher and the labor market is much tighter. Hence tightening will be much faster in comparison.
- Balance sheet reduction to commence “sometime later this year”
- Participants expect a “significant” reduction of the Fed’s balance sheet
- Participants agree that SOMA should hold primarily Treasury Securities in the longer run as opposed to MBS
16th February 2022
US Advance Monthly Retail Sales Data
Key takeaway:
- The Advance Monthly Retail Trade Survey (MARTS) provides an early indication of sales of retail and food service companies
- Frequency: Monthly since 1953; Reported data are for activity taking place during the previous month. Forms are mailed 5 working days before the end of the reporting month and responses are due 2 working days after the reporting month. Smaller and medium sized retailers participate in the survey for about two years and then are replaced with new firms.
- Advance Monthly Retail Sales reports are released about 9 working days after the close of the reference month
- US Retail Sales grew 3.8% in Jan 2022against an expectation of 2%
- Key to note that Retail Sales are not stripped for the inflation effect. In simple words, the increase in dollar value of retail sales can be substantially attributed to the increased in prices. Sales volume might not have improved substantially.
- Data on inflation adjusted personal spending comes out as a part of the Personal Income and Outlays Data released by the Bureau of Economic Analysis
- Nonetheless, the large January 2021 retail sales number also means that Q1 GDP will likely receive a strong boost!
15th February 2022
US Producer Price Index
Key takeaway: Stubbornly high PPI bolsters the case for faster rate hikes
- Producer Prices stayed at record highs indicating persistent economic pressures in the US.
- PPI for Jan 2022 increased 9.7% year over year
- PPI for Jan 2022 increased 1% over prior month
10th February 2022
Consumer Price Index for All Urban Consumers (CPI-U)
Key takeaway:
- CPI increased 0.6% over last month (expected 0.5%) and 7.5% year over year (expected 7.3%)
4th February 2022
US Non-Farm Payrolls
Key takeaway: Labor momentum is definitely strong. Bolsters the case for March rate hike. But keep an eye on the average hours worked. Average hours worked trending down is a deflationary signal
- Added 467,000 jobs in January, beating estimates of 125,000
- Unemployment rate increased marginally from 3.9% to 4%
- US Participation rate increased marginally to 62.2% from 61.9% in December 2021
- Average hourly earnings increased 5.7% over last 12 months
- Average workweek for all employees on US private nonfarm payrolls fell by 0.2 hour to 34.5 hours in January of 2022, the lowest since April of 2020, compared with market expectations of 34.7 hours
24th January 2022
IHS Markit US Purchasing Managers Index
Key takeaway: Business activity slowed substantially in January 2022. But the reasons might be more supply constraint related than lack of or slowing demand
- Flash US Composite Output Index at 50.8 (57.0 in December). 18-month low.
- Flash US Services Business Activity Index at 50.9 (57.6 in December). 18-month low.
- Flash US Manufacturing PMI at 55.0 (57.7 in December). 15-month low.
The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. The Service PMI data are based on surveys of over 400 executives in private sector service companies and cover transport and communication, financial intermediaries, business and personal services, computing & IT, hotels and restaurants. A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
