Jump in new orders obscured underlying weakness.
Oliver Allen (Senior US Economist)US
Further falls in prices likely needed to get sales moving again.
Oliver Allen (Senior US Economist)US
Jump in underlying orders looks unsustainable.
Oliver Allen (Senior US Economist)US
Bigger falls in sales likely lie ahead.
Oliver Allen (Senior US Economist)US
A September easing looks nailed on, with more likely to follow.
Oliver Allen (Senior US Economist)US
- A weak month at Boeing likely hit headline orders, but orders ex-transportation probably were soft too.
- Tariff-related uncertainty still seems to be weighing heavily on companies’ capex plans.
- A big inventory overhang points to a further decline in new residential construction ahead.
Oliver Allen (Senior US Economist)US
The rebound in growth implied by the PMI looks too good to be true.
Oliver Allen (Senior US Economist)US
Labor market slack is gradually building.
Oliver Allen (Senior US Economist)US
July’s weak employment report means inflation worries look overblown.
Oliver Allen (Senior US Economist)US
- The S&P Global PMI points to underlying growth returning to the rapid pace seen in 2024.
- That seems unlikely to us, given the many headwinds to growth, mostly due to tariffs.
- We doubt the jump in services inflation suggested by the PMI will materialize either.
Oliver Allen (Senior US Economist)US
July bounce in starts likely noise; underlying trends remain weak.
Oliver Allen (Senior US Economist)US
- Home sales have remained very weak despite recoveries in both supply and mortgage applications.
- That suggests to us that asking prices are too high, and need to come down for the market to clear.
- Home prices have already fallen by about 1% since March and we think a further grind lower lies ahead.
Oliver Allen (Senior US Economist)US
- The One Big Beautiful Bill Act includes sharp cuts to federal health spending, mostly affecting Medicaid.
- That will probably be a minor long-term headwind for the sector in the coming years.
- But the hit will take time to arrive, and the long-term tailwind from an ageing population looks far bigger.
Oliver Allen (Senior US Economist)US
THE ECONOMY WILL REMAIN STUCK IN A LOW GEAR IN H2
- UNEMPLOYMENT WILL WORRY THE FED MORE THAN INFLATION
Oliver Allen (Senior US Economist)US
The outlook for homebuilding remains grim.
Oliver Allen (Senior US Economist)US
- Foreigners are not “paying” for President Trump’s tariffs: pre-tariff import prices are holding steady…
- …That leaves US consumers and businesses shouldering nearly all of the additional costs.
- Homebase data point to a rebound in private payrolls, but likely give a misleading signal.
Oliver Allen (Senior US Economist)US
Collapsing response rate casts doubt, but the backdrop looks weak.
Oliver Allen (Senior US Economist)US
- We look for a 1% gain in headline retail sales in July, mostly due to a rebound in auto sales…
- …But underlying sales likely were relatively weak again, with control sales volumes broadly stagnating.
- We think consumers' spending will grow by ½-to-1% in Q3, in keeping with the subdued pace in H1.
Oliver Allen (Senior US Economist)US
Flattered by GDP distortions in Q2, but the underlying trend still is solid.
Oliver Allen (Senior US Economist)US
