A Mixed Bag Of US Economic Data For May… So Far
James Picerno | May 22, 2015 07:45AM ET
How’s that second-quarter rebound holding up? Well, it’s shaky. The economic reports in the weeks ahead could tell us otherwise, but the numbers published so far for May offer a mixed bag of results for the US economy.
Let’s start with the good news. The outlook is certainly positive from the vantage of jobless claims. But using other numbers to guesstimate this month’s macro pace temper any optimism that May will deliver solid improvement over April’s sluggish profile. It’s still early and so the tepid results overall are subject to change in the weeks ahead. But for now, the figures in hand suggest that second-quarter growth will be modest.
On the plus side, jobless claims continue to trend lower and two of three regional Fed indexes that track business sentiment are moderately positive. The initial estimate of Markit’s business survey data for manufacturing, however, reveals that growth decelerated in May to the slowest pace in 16 months. Meantime, consumer sentiment slumped in May. Perhaps, then, it’s no surprise that the Atlanta Fed’s May 19 estimate for second-quarter GDP growth is stuck at a tepid 0.7%–slightly higher vs. Q1’s stall-speed increase of just 0.2%, but still well below a pace that inspires confidence that growth is set to revive in a meaningful degree.
Here’s a closer look at the key indicators available to date for the May economic profile:
Markit Flash US Manufacturing PMI
Manufacturing activity remains moderately positive in May, but the flash estimate of Markit’s purchasing managers’ index for this corner of the US economy dipped to the slowest pace of growth in 16 months. “Manufacturers reported their weakest growth since the start of 2014 in May, with the survey results adding to fears that the strong dollar is weighing on the US economy and hitting corporate earnings,” said Chris Williamson, Chief Economist at Markit Economics.
Jobless Claims
New filings for unemployment benefits continue to trend lower, dispensing a bullish signal for the labor market and, by extension, the US economy. Although jobless claims increased last week, filings remain close to a 15-year low. Meanwhile, claims fell by nearly 16% last week vs. the year-earlier level, signaling that payrolls are on track for a solid rate of growth in the near-term future.
Regional Fed Indexes
Two of three business-activity benchmarks via regional Fed banks are in positive territory this month, albeit mildly so. Notably, the New York Fed’s index moved above zero this month after a mild retreat below zero in April. Meanwhile, the Kansas City Fed Index fell deeper into the red in May. The median change for the May data published to date posted its first rise since February.
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