Data from the Commerce Department showed retail sales dropping 0.3% in June, rather than rising 0.2% as economists had expected. Core sales also fell, down 0.1%. Despite the downturn in June, sales rose 1.5% in the second quarter as a whole after a 1.0% decline in the first quarter, with core sales up 1.0% after a meagre 0.3% gain in the first three months of the year.
The data therefore support the view that the economy will have grown quite impressively in the second quarter, with GDP up by around 2.5% on an annualised basis, but the worry is that this to a large extent merely reflects a rebound from the weather-related slump in the first quarter. The weakness of the sales data in June, alongside disappointing PMI survey data and a smaller-than-hoped-for rise in non-farm payrolls, all points to the economy having moved down a gear after this rebound, settling into a far weaker underlying pace of growth than was seen throughout much of last year.
Markit’s Business Outlook survey (released this week) also found optimism among US companies to have failed to recover from the post-recession low seen at the start of the year, fuelling further concern about the strength of economic growth in coming months. Companies are anxious about the impact of the strong dollar and higher interest rates, as well as the potential for the eurozone crisis and slumping demand in emerging markets to hurt US economic growth.
Manufacturing last month excluding the output of automobiles rose 0.3 percent after a 0.1 percent decline, the Federal Reserve’s report showed Wednesday. Total industrial production, which also includes mines and utilities, climbed 0.3 percent after a 0.2 percent decrease. (…)
The output of motor vehicles and parts decreased 3.7 percent after a 2.3 percent increase a month earlier. Excluding autos and parts, total industrial production rose 0.5 percent, the first gain in four months. (…) (Chart from CalculatedRisk)
U.S. Producer Prices Rise 0.4% in June U.S. companies fetched higher prices for goods and services in June, a sign inflation is slowly picking up from historically weak levels.
Core prices, which strip out volatile energy and food components, grew 0.3% in June, the biggest jump since October.
Overall prices were down 0.7% in June from a year earlier, though core prices were up 0.8%.
According to Standard & Poor’s, S&P 500 revenues fell 2.3% y/y during Q1 mostly as a result of the plunge in the revenues of the Energy Sector, and also the strength of the dollar. On a same company basis for both periods, we calculate that S&P 500 revenues fell 3.0% y/y during Q1, but rose 2.4% excluding the Energy sector. A similar pattern is likely for Q2. Industry analysts currently estimate a 4.0% decline in revenues during the quarter, but a small gain of 1.5% excluding Energy.
The y/y growth rate in S&P 500 revenues tends to be highly correlated with the comparable growth rate in manufacturing and trade sales. The latter was down 2.2% in May, but up 1.9% excluding petroleum.
China Surprises With 7% Growth China’s growth remained at 7% in the second quarter, a level economists had deemed unlikely, amid broad signs that Beijing’s policies to jump-start the economy had yet to take hold.
(…) Other statistics released Wednesday by the National Bureau of Statistics showed little sign of turnaround in a quarter that started against the backdrop of a broad stock rally and ended under the shadow of that rally’s collapse.
Value-added industrial production grew 6.3% year-over-year in the first half, down from the 6.4% growth in the first quarter, while growth in fixed-asset investment fell to 11.4% from 13.5%, and retail-sales gains slowed to 10.4% from 10.6%, the statistics bureau said. (…)
Several economists have constructed alternate measures of growth based on freight rates, electricity output and other data. Citibank said recently that it believes China’s actual growth rate could be closer to 5%. (…)