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Morning Report: Manufacturing continues to contract


Vital Statistics:

Stocks are lower this morning on the escalating chip war between the US and China. Bonds and MBS are up small.

There isn’t much in the way of economic data this morning, but we will get the June FOMC minutes at 2:00 pm today. It will be interesting to see the Fed’s thoughts on commercial real estate and any potential impacts on the banking sector. Office is definitely a problem, and we have seen some pain in retail as well.

Manufacturing contracted in June for the 8th consecutive month, according to the ISM Manufacturing Report. The weakness was across the board, with new orders, production, prices and employment all in contraction. “Demand remains weak, production is slowing due to lack of work, and suppliers have capacity. There are signs of more employment reduction actions in the near term. Seventy-one percent of manufacturing gross domestic product (GDP) contracted in June, down from 76 percent in May. More industries contracted strongly, however, as the share of manufacturing GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 44 percent in June, compared to 31 percent in May,” says Fiore.

PeerStreet has filed for bankruptcy. The company built a marketplace for individual loans however rising rates killed the company. It went from 281 employees to 28 over the past year.

Construction spending rose 0.9% MOM and 2.4% YOY to a seasonally adjusted annual rate of $1.93 trillion. Interestingly, residential construction was down over 11% on a year-over-year basis. Single family construction was down 11.6% while multi-family was up 20%.

I talked about whether we are finally seeing the turn in homebuilding in my latest Substack posting.

Wednesday: FOMC Minutes

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