Economy

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US housing starts rose 6.3% m/m in June, or 1643K v 1590K expected. Building permits were 1766K v 1750K expected. However Building permits fell 5.1% m/m, a leading economic indicator falling across all regions for single-family units

The preliminary July reading for the University of Michigan Index of Consumer Sentiment fell to 80.8 (consensus 86.3) from the final reading of 85.5 for June. This is the lowest reading since February as consumer sentiment declined as consumers' inflation expectations rose.

The US trade deficit increased 3.1% to $71.2 billion in May as rebuilding inventories for rising demand in a reopening economy pulled in imports. Goods imports rose 1.2% to $234.7 billion and exports of goods gained 0.3% to $145.5 billion, a record high.

US in June added 850K non-farm payrolls jobs more than forecasted 720k, May prev 559k was revised to 583k. US June ADP employment +692K was higher than +600K expected. Unemployment rate rose to 5.9% from 5.8%. US Average Hourly Earnings (M/M) 0.3% unchanged.

US Personal income decreased 2.0% month-over-month in May. The fall was driven by an 11.8% decline in government social benefits. The Core-PCE Price Index, which excludes food and energy, rose 0.5% and was up 3.4% year-over-year (versus 3.1% in April).

US May existing and new home sales both came out much lower than expected. It shouldn't be that big a surprise given just how much prices have risen and how many people have been financially crippled by the COVID lockdown. Low inventory also frustrated potential buyers.

Ahead of Wednesday's FOMC Fitch Ratings said a faster-than-expected global economic recovery is boosting prices as supply chains have struggled to keep up. However slower growth, supply adjustments in bottleneck sectors, a switch back towards services consumption, and fading impacts from US fiscal stimulus should see inflation decline in 2022.

US Consumer price inflation (CPI) continues to accelerate, all be it off low Covid lockdown bases. Annual CPI hit 5% in May, highest since August 2008. Biggest price increases again were energy with gasoline up 56.2% and utility gas service up 13.5%.

The EIA with a nod to inflation risk the agency said higher prices and more gasoline consumption would result in the average U.S. household spending about $570 (38%) more on motor fuel in 2021 compared with 2020. Crude oil and other commodity prices are inputs to key sectors of the economy.

The number of job openings in the US increased to a record highs 9.286 million in April 2021 by +998,000 or 6.0 percent. Market expectations was 8.3 million. Largest job openings were in accommodation and foodservices (+349,000), other services (+115,000), and durable goods manufacturing (+78,000).

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