The Data Is Playing Along

The data is playing along.

Knock on wood. Famous last words. And all the usual caveats.

It’s funny — whatever we say prior to Thursday will be dismissed as ludicrous or, at best, irrelevant, if the June jobs report disappoints. So, there’s a certain futility in even talking about the incoming data in the days leading up to nonfarm payrolls.

Read more: Hopefully, So Far, For Now

This is even more true given how critical the June headline print will be in the debate around whether to preserve extra federal unemployment benefits past next month.

But, lacking a crystal ball, all we can do is observe what’s in front of us. To start the week, that was pending home sales, which surged a record 44.3% to a three-month peak.

The dramatic spike comes off a plunge to the lowest level in history in April.

We have still not recovered pre-COVID levels on the index, and this is another example of a data point which is difficult to parse given the confluence of extraordinary factors at work in the economy, but it’s worth noting that the most optimistic estimate from more than two-dozen economists was for a 40% gain.

Who cares? Well, not me, to be honest. But, some are watching the housing market as a barometer of the recovery stateside, and there’s no sense in which Monday’s data was “bad”. In that regard, it’s worth keeping track of everything that could possibly matter when it comes to discerning what the future holds in these highly uncertain times.

“This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership”, said Lawrence Yun, NAR’s chief economist exclaimed, in a statement. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery”.

“Could” being the key word there. At least more Americans will have homes to stay in when the next nationwide lockdown starts. I jest — hopefully.

But that wasn’t the only better-than-expected print Monday. The Dallas Fed beat too, coming in at -6.1 versus expectations for -21.4. You’re reminded that it was briefly the poster child for tumbling PMIs in the US.

The accompanying color is hardly ebullient. “The company outlook index climbed back into positive territory, from -34.6 to 2.7, with 29 percent of manufacturers noting improved outlooks, up from 12 percent last month”, the release reads. “The index measuring uncertainty regarding companies’ outlooks retreated notably again to 9.1–its lowest reading since January. The positive reading still indicates increased uncertainty”.

The problem is that Texas (along with Florida) is now the US epicenter for the virus, which means next month’s survey should be particularly interesting.

Along those lines, the June survey found the Dallas Fed asking Texas business executives a series of supplemental questions about the impact of COVID-19. More than three-quarters of respondents said their revenues were down this month versus a typical June.

Asked when they expect revenues to return to normal, nearly 12% said between one and three months. One imagines that figure will fall if the question is posed again in July.

Data were collected from June 16 to June 24. Governor Greg Abbott closed bars and imposed additional restrictions on June 26.

Asked whether their business was “currently reopening to the maximum allowable level”, 58% said “yes” for the June survey, versus just 46% in May.