Comerica Economic Weekly

U.S. economic data was generally a little softer than expected this week. This is not surprising given the spate of stronger-than-expected data we have seen through early summer. Even though data was soft, it remains consistent with our view that the U.S. economy bounced back quickly from a dismal first quarter, and will maintain a moderate growth trajectory for the remainder of this year.

Retail sales for June increased by just 0.2 percent, even after a jump in unit auto sales to a 17.0 million unit rate for the month. In a data disconnect, the dollar value of retail auto sales fell by 0.3 percent in June. Building materials sales fell by 1.0 percent, consistent with softer housing starts. The commonality there might be the weather. June was very rainy in some areas. Other categories of retail sales were within normal ranges.

Housing starts fell by 9.3 percent in June to 893,000. Permits were down 4.2 percent to 963,000. However, builder confidence increased in July.

Industrial production also gained an uninspired 0.2 percent in June. Utility output declined for the fifth consecutive month, after seasonal adjustment. Manufacturing output was weaker than expected, up just 0.1 percent, weighed down by a decline in energy products.

The June producer price index for final demand increased by a stronger-than-expected 0.4 percent, due to higher energy prices. We may see some relief in energy prices in the July and August PPI data.

Initial claims for unemployment insurance for the week ending June 12 fell by 3,000 to hit 302,000. This number is consistent with a falling unemployment rate.

Business inventories gained 0.5 percent in May, suggesting that the Q1 inventory drag is dissipating and adding support to our expectation of a Q2 GDP rebound. The first estimate of Q2 GDP will  be released July 30.

The Conference Board’s Leading Economic Index gained 0.3 percent in June, also below consensus expectations. It was held down by building permits.

For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly 07-18-14.

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