• Weekly Market Report

Economic Week in Review

The major U.S. stock indexes rebounded last week despite on-going global economic concerns, including Brexit and the U.S.-China trade war, and some mixed U.S. economic readings.

On the positive side, the Bureau of Economic Analysis reported last week that personal spending increased at a healthy 0.6% in July, which “reflected increases in compensation of employees and government social benefits to persons that were partially offset by a decrease in personal interest income.” Although the gain in personal spending was not matched by the increase in personal income (+0.1%).


Elevated levels of consumer confidence may help support consumer spending going forward, with the Conference Board reporting their consumer confidence index came in at a better than expected 135.1 in  August (down from 135.8 in July) while their present situation index jumped to 177.2 last month, up from 170.9 previously:


U.S. durable goods orders also beat expectations for July, rising 2.1% (as compared to the consensus forecast for 1.2% growth) thanks largely to sharp increases in new orders for transportation and defense capital goods. But even excluding defense and aircraft, so-called core capital goods orders were still up 0.4% in July.


Somewhat less encouraging was the downward revision of estimated 2nd quarter real GDP growth to 2.0% at a seasonally adjusted annual rate, down from the previous estimate of 2.1 growth and down from 3.1% growth in the first quarter. While personal consumption expenditures remains a driver of growth, rising 4.7% in the 2nd quarter, the 6.1% decline in gross private domestic investment and 5.8% drop in exports is of greater concern.

As for economic releases overseas, IHS Markit and Caixin report the manufacturing purchasing managers index (PMI) for China increased slightly from 49.9 in July to 50.4 in August. IHS Markit reports that “Supporting the higher headline index reading was the quickest increase in production for five months. Though only slight overall, the expansion contrasted with broadly unchanged output in July and a reduction in June. This contributed to the first rise in stocks of finished goods in 2019 to date. Companies often mentioned raising output due to signs of firmer demand conditions. After a marginal rise in July, total new work received by Chinese manufacturers was broadly stable during August. Data indicated that improved domestic demand helped to offset a further reduction in export sales. Notably, the latter fell at the quickest pace since last November.”


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