US Equity And Economic Review: The Data Is Now Very Mixed

Personal spending had its strongest monthly increase in 4 years. The BEA reported that personal consumption expenditures rose an inflation-adjusted .6% in April, which confirms the strong 1.3% rise in retail sales recently reported by Census Bureau. Durable goods purchases – which had been weaker over the last few months – increased a strong 2.2%. Non-durable sales are still increasing weakly, this time rising .7%. And service spending was up .4%. Finally, personal income increased a solid 3.7%. 

The Institute for Supply Management released both manufacturing and service reports this week.The PMI was 51.3, with a solid new orders component (down .1 to 55.7) and positive production reading (down 1.6 to 52.6).12 of 18 industries are expanding.The anecdotal comments are nearly all positive:

  • "Business conditions remain strong with the exception of South America. Continued expectation for a strong year even with the headwinds of currency and economic slowdown." (Food, Beverage & Tobacco Products)
  • "Consistent sales growth in greater China, North Asia, Southeast Asia, Canada and Mexico. Flat for the Americas and Europe." (Chemical Products)
  • "Slowdown in Chinese economy causing low orders." (Computer & Electronic Products)
  • "Continued brisk order flow for our business." (Fabricated Metal Products)
  • "Steady to slightly up production rates vs. prior month." (Machinery)
  • "Business is still good, but slowing." (Transportation Equipment)
  • "Business conditions are stable; demand is steady for our products." (Miscellaneous Manufacturing)
  • "Our business remains to be strong, but many of my suppliers are telling me their business is flat." (Plastics & Rubber Products)
  • "Oil & Gas continues to struggle to meet cost controls required in the new low-oil price environment." (Petroleum & Coal Products)
  • "Market is improving steadily in both orders and pricing." (Wood Products)
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