At least the PMIs are holding up.
Following disappointing data out of Europe, where the economic rebound appears to be losing steam in the face of travel- and leisure-linked upticks in coronavirus cases, flash PMIs for the US in August printed solidly ahead of expectations.
IHS Markit’s services and manufacturing gauges came in at 54.8 and 53.6, respectively, easily beating estimates of 51 and 52.
“Total new business rose for the first time since February and at a solid rate”, the color accompanying the survey reads. “Manufacturing firms registered a steeper expansion in new order inflows than in July, while service providers signaled a renewed increase in sales”.
This comes at the end of a week that featured disappointments on both the Empire and Philly Fed gauges. In that regard, it’s good news (or cognitive dissonance, depending on your penchant for skepticism).
Another encouraging bit of color from the preliminary read for August finds IHS Markit noting that “firms signaled an accelerated rise in hiring, as greater new business inflows led to increased pressure on capacity”. Some companies, Markit notes, “also mentioned that time taken to establish safe businesses practices had now allowed them to expand their workforce numbers”.
In addition to painting a brighter picture than what the market got from the latest read on jobless claims Thursday, that excerpt speaks to the notion that establishing safety protocols is conducive to recovery, even if it takes some time. August marks the first comfortably-expansionary services print on the IHS Markit gauge since the onset of the pandemic.
This comes with all of the usual caveats, both about the reliability of PMIs in exigent circumstances such as those which persist currently, and the distinct possibility that the stimulus deadlock in Washington will ultimately dent confidence among businesses.
“Expectations regarding output over the coming year dipped slightly from July due to uncertainty stemming from the pandemic and the upcoming election”, economist Siân Jones cautioned.
Meanwhile, the US housing market continues to be a bright spot. Existing home sales registered a record 24.7% gain in July.
The 5.86 million pace is the highest since December 2006 (i.e., the highest since the housing bubble).
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days”, Lawrence Yun, NAR’s chief economist, beamed. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021”.
Of course, record-low rates help. What happens if they rise?
Anyway, good news is good news, I suppose. The median existing-home price for all housing types in July was $304,100. That was up 8.5% YoY, and marks the first time in history that national median home prices breached the $300,000 level.
Finally, it’s worth mentioning that while the comparison is apples-to-oranges, University of Michigan sentiment now sticks out as being perceptibly disconnected from measures of business activity.
Again, that’s apples-to-oranges, but “it is what it is”, as the president would say.