- Jobless claims came in this week at 211k. That’s really really good! Continues the longest streak in history below 300k!
- New Home sales for April came in at 673k, which is good, but a bit below expectations. However, the two prior months numbers were revised by a total of 39k higher; that’s really good!
- The PMI (Purchasing Managers Index) Composite (includes manufacturing and services) FLASH (preliminary read) for May came in at a barely expansionary 50.9 (50+ denotes expansion, 50- contraction); that’s bad!
Manufacturing is the most immediately impacted by trade issues and this PMI fell to 50.6, which is 2.0 points below final April and 1.8 points below April’s flash. Key here is outright contraction, that is a sub-50 reading, for new orders. This is an unwelcome first since August 2009 and the last recession. Demand sank for both domestic and foreign orders, while growth slowed for output, employment and pre-production inventories.
The services PMI fell to 50.9 which is 2.1 points below final April and 2.0 points below that month’s flash. Growth in orders slowed as did hiring for this sample.
Overall confidence is now at a 7-year low with overall job growth at a 2-year low. The composite index, at 50.9, is at a 3-year low.
Headlines in today’s report do remain above 50 but only marginally to indicate a falling number of respondents reporting composite growth relative to a rising number reporting monthly contraction. Today’s results are certain to pull down forecasts for the coming ISM reports on manufacturing and non-manufacturing, the former trending toward 52 in prior reports and the latter trending toward 55.
Yes folks, it’s the trade war!
Per the good data this morning, the economy is hanging in there. Per the bad, it won’t continue to if the two sides don’t strike a peace treaty at some point in the not too distant future.