The Fed will welcome this report as it suggests that slower economic growth will be extended into the third quarter. The probability of an August rate increase continues to diminish and is now below 50 percent.
More Quotes from Steven Wood:
While the auto sector appears to have corrected its inventory overhang, other sectors have not been nearly as successful, particularly high tech, ... As business sales slow, it will be even more difficult to bring inventories into line.Steven Wood
Housing fundamentals are deteriorating. Mortgage rates have been flat since the beginning of the year. Job creation and income growth has slowed. Equity markets have plunged over the past year. And consumer confidence has tumbled. Moreover, mortgage applications have trailed off. All of these suggest that home sales should weaken over the next several months.
Steven Wood
The FOMC (Federal Open Market Committee, the Fed's policy-making arm) will look at these data as being benign, ... No change in interest rates is expected at next week's meeting although the committee will retain its bias toward tightening.
Steven Wood
There is a clear improving trend in orders which provides support for the recovering manufacturing sector, ... Although some of the inventory building that occurred was likely Y2K related and will be reversed in the new year, the acceleration of both shipments and backlogs suggests that the manufacturing recovery has substantial staying power.
Steven Wood
Housing-related activity has definitely slowed and its contributions to economic growth, both direct and indirect, will fade over the next couple of quarters.
Steven Wood
Despite this gain the outlook is still for sluggish growth over the next six months,
Steven Wood
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