The US has delivered better economic data of late than was predicted. All of a sudden, commentators are suggested that the forecast recession that almost everyone was expecting might not arrive for a while…or at all!
Purchases of new homes in June climbed at the fastest annual rate in more than a year, durable goods orders topped estimates and consumer confidence reached the highest level since the start of 2022, according to recent reports. Another release showed housing prices in the US rose for a third-straight month.
While the data don’t reject the possibility of a recession in the coming year, they do give reason to believe a downturn isn’t around the corner, let alone a foregone conclusion. The latest reports on retail sales, inflation-adjusted consumer spending, and the job market also support that notion.
Source: The Conference Board
Consumer confidence improved in June to its highest level since January 2022. Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Assessments of the present situation rose, with more optimistic views of both business and employment conditions. Likewise, expectations for the next six months improved materially, reflecting greater confidence about future business conditions and job availability.
While homeowners are reluctant to move and take on a greater mortgage, prospective buyers have adjusted to the shift and are increasingly seeking out new construction instead. Purchases of new homes increased 12.2% last month, marking the third-straight monthly advance beating estimates. The robust confidence and homebuying data are rooted in a strong labour market. Unemployment is historically low and job openings are still plentiful.
Orders placed with US factories for business equipment rose in May for a second month, indicating companies continue to make longer-term investments despite high borrowing costs and economic uncertainty.
Shipments of nondefense capital goods, which are a proxy for actual spending, jumped 3.4%, the biggest increase since the end of 2020.
All this is good news and probably accounts for the share market’s resilience. But as we know, conditions can change quickly, and uncertainties remain ahead.
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