8/23: MetroIntelligence Economic Update by P. DUFFY

August economic output index slips to 50.9, a 3-month low

The seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index dipped from 52.6 in July to 50.9 in August, the slowest pace of expansion for three months.  At 50.9 in August, down from 53.0 in July, the U.S. Services PMI™ also eased to a three-month low.  The U.S. Manufacturing Purchasing Managers’ Index™ (PMI™ registered 49.9 in August, down from 50.4 in July and below the neutral 50.0 threshold for the first time since September 2009.

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July Leading Economic Index rebounded partly due to more housing permits

The US LEI increased in July by 0.5 percent in July to 112.2, following back-to-back modest declines. Housing permits, unemployment insurance claims, stock prices and the Leading Credit Index were the major drivers of the improvement. However, the manufacturing sector continues exhibiting signs of weakness and the yield spread was negative for a second consecutive month.

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Fed meeting minutes show interest rate cut not part of a pre-set course

Federal Reserve officials who voted to lower interest rates three weeks ago agreed that the move shouldn’t be viewed as part of a pre-set course for future cuts.  In fact, most participants saw the cut as part of a simple recalibration in response to changing conditions.  Still, two members wanted a 50-basis point cut, based primarily on the weak inflation readings.

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