Week In Review 8.23.2019

Leading Indicators — The Conference Board’s Leading Economic Index (LEI) rose 0.5% in July, the most in ten months, and above the consensus of 0.3%. It was led by stronger building permits and lower initial jobless claims. Notably, over half of the LEI’s components increased last month, and seven were higher than six months ago, indicating that strength among individual indicators remains broad-based. Year-on-year, however, the LEI dropped to 1.6%, its slowest pace since December 2016, and below its 2.2% per annum average.Housing — Lower mortgage rates continue to provide the housing market a modest lift. In July, existing home sales rose 2.5% to 5.4 million units, as price appreciation continued to moderate. New home sales, on the other hand, dipped -12.8% but fell from the strongest pace of the cycle in June. Also, prior month new home sales were revised substantially higher to 728K units, the strongest since 2007, which softened the overall impact of July’s month-on-month decline.

Jobless Claims — Initial claims for unemployment insurance fell -12K last week to 209K, below the consensus of 217K. They continue to hover near their lowest level since 1969, indicating tight labor market conditions. Low claims remain a positive tailwind for personal income and consumer spending.

Concerns about Brexit intensified after new PM Boris Johnson’s request to the EU to renegotiate the current Brexit deal was denied. Additionally, an internal U.K. government study warned that the country could face food, fuel, and medicine shortages should a no-deal Brexit occur.