Construction spending
rose 0.4% month over month in April which left Q2 GDP tracking estimate
unchanged at 1.1% quarter over quarter. Significant revisions to prior months
were a small negative for the Q1 tracking estimate, subtracting 0.1pp,
concentrated in the private non-residential component. Previously, revisions to
wholesale and retail inventories, published on Friday, were, on the whole,
mildly positive for Q1 GDP growth, adding a tenth to our tracking estimate.
Release date | Indicator | Period | Q1 tracking | Q2 tracking |
16-May | CPI | Apr | 2.6 | 1.7 |
16-May | Housing starts | Apr | 2.6 | 1.5 |
24-May | Durable goods orders | Apr | 2.6 | 1.4 |
30-May | GDP | Q1-2nd | 2.4 | 1.4 |
31-May | Personal spending | Apr | 2.4 | 1.4 |
31-May | Retail sales revisions | -- | 2.3 | 1.1 |
31-May | Inventory revisions | -- | 2.4 | 1.1 |
3-Jun | Construction spending | Apr | 2.3 | 1.1 |
3-Jun | Vehicle sales | May | -- | -- |
Source: BEA
US Manufacturing Falls Below 50 in May
The US manufacturing ISM fell
to 49.0 in May, below consensus estimate of 51.0 and after a print of 50.7 in
April. The decline was broad-based, as there were sharp drops in
production (48.6, previous: 53.5) and new orders (48.8, previous: 52.3). The
employment index was little changed, with a print of 50.1 (previous: 50.2), but
remains below its six-month average of 52.2. Surveys of manufacturing
activity were mixed in May; while the ISM, Philadelphia Fed, and Empire State
indices printed below their breakeven levels, the Chicago PMI showed a strong
improvement and the Markit PMI moved further into expansionary territory.
Incoming data should determine whether they suggest a slowing in Q2
manufacturing activity growth or an outright contraction.
US Construction Remains Bumpy
Construction spending increased by 0.4% m/m in April below
the consensus forecast of 0.9%. A gain in the private non-residential component
(2.2%) offset declines in private residential (-0.1%) and public outlays
(-1.2%), which is a sizeable revision to prior months number. For example,
private residential construction now appears to have been somewhat stronger
during Q1 – up 3.8% in February and 1.4% in March (previously 2.3% and 0.4%) –
but private non-residential outlays were notably weaker – down 2.3% in February
and 1.1% in March. Both trends were partly reversed in April, suggesting that
the path of the construction recovery in the private sector remains bumpy,
albeit on an upward trajectory. Meanwhile, public sector outlays remain
subdued, with declines at both federal and state & local levels in April
and in Q1 as a whole.