Week In Review 6.21.2019

Leading Indicators—After two modest monthly gains, the index of leading economic indicators, a composite of ten forward-looking components, was flat in May. The index has been flat, more or less, since September of 2018, which suggests that US economic growth is likely to continue, but at a moderate pace.

The Housing Market Index, a gauge of builder opinion on the relative level of current and future single-family home sales, came in slightly lower-than-expected in June. However, its reading of 64 indicates that builders remain optimistic. The index is a diffusion index, which means that a reading above 50 equates to a favorable outlook on home sales.

Existing Home Sales increased 2.5% to a 5.34 million annualized pace in May. Resales continue to gradually improve alongside declining mortgage rates and an upturn in mortgage applications. However, sales are down -1.1% year to date, but the overall trend is showing improvement.

Housing Starts fell -0.9% in May. Despite the drop, prior month’s data were revised higher, and single-family permits rose for the first time in six months.

Jobless Claims fell -6K in the June 15 week to 216K which is at the low end of consensus estimates. Continuing claims for the June 8 week fell -37K and the 4-week average has fallen -5.3K. In sum, labor market data remains robust.

U.S. oil prices surged over 9% for the week, due in large part to concerns of a military confrontation between Iran and the U.S., following the downing of a U.S. military drone by Iran. Recent attacks on oil tankers in the Straits of Hormuz, through which 1/3 of all shipped oil passes, have also pressured prices.