Weekly Economic Report
This slow data week featured a new round of early IHS Markit PMI estimates for around the world and housing and durable goods data for the US. None of it pointed to either a strong rebound or an impending slump. It was more of the meandering mix of slightly better signals from the front end of the economy (housing) and still sluggish to worsening signals from the back end (nondefense capital goods ex aircraft). PMIs from around the world see China as surprising to the upside, though still weak, the US holding right at a near zero growth rate for our relatively small manufacturing sector, better growth in France at the front end of the European economy, and poor readings out of Germany and Japan – the epicenter for global manufacturing weakness and caboose of the global economy. To us this looks like an economy that had been in trouble due to the trade shock last September, but is now dealing with it – including an almost universal expectation that the Federal Reserve will lower rates twenty-five basis points next week. Meanwhile, in an import earnings week for Wall Street the S&P500 took a run at its all time high on Friday. This lead indicator of the economy is buying none of the pessimism seen from extrapolating the trade drag forward.