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Investors survived a week of economic famine to be rewarded with some actual data to chew on.
And the cherry on the cake is that it (mostly) surprised to the upside.
At least on the surface.
First, business activity in the United States continued to expand this month, and at an unexpectedly accelerated clip, all told.
True, S&P Global's advance "Flash" July Purchasing Managers' Index (PMI) showed the manufacturing side USMPMP=ECI shedding 0.1 point to 53.8, instead of gaining 0.4 point, as expected.
But the services sector USMPSP=ECI more than compensated by jumping 2.4 points to 53.6, well north of the 51.5 consensus.
Taken together, the composite measure USPMCF=ECI gained momentum, rising to 53.6 from 51.9, marking the fastest monthly acceleration since last November.
All metrics are comfortably above 50, the PMI dividing line between contraction and expansion.
Domestic demand drove the growth, with firms citing FIFA World Cup-related spending and stronger-than-usual July 4 activity as reasons behind the bump in sales.
On the other hand, price pressures also intensified, reaching a 14-month high due to the Middle East conflict.
"The month saw an encouraging return to hiring by companies, with employment rising for the first time in three months," wrote Chris Williamson, S&P Global's chief business economist.
But Williamson suggests this "may not be the start of an improving trend."
"Events over recent days in the Middle East will have only further exacerbated these supply chain and price worries and raise downside risks to the near-term outlook for the economy," he says.
Moving to the struggling housing sector, the sales of freshly constructed single-family U.S. homes USHNS=ECI increased by 1.6% in June to 628,000 units at a seasonally adjusted annualized rate (SAAR), according to the Commerce Department.
That's about 3% more than the 610,000 units SAAR economists predicted and marked a partial rebound from the previous month's decline, softened to -4.3% from the previously stated -7.3%.
The gain stands in contrast to the 2.4% drop in sales of pre-owned single-family homes in June, as reported by the National Association of Realtors earlier this month.
Of the four major U.S. regions, a 22.4% drop in the West is the eye-catcher, mitigated by a 9.9% jump in the South (the largest region by volume), with 3.6% and 2.5% respective increases in the Northeast and Midwest.
A 9.5% drop in the average selling price, likely the result of aggressive incentives, helped buyers clear the affordability hurdle, with the 30-year fixed mortgage rate nearing its fourth year north of 6%.
At June's sales rate, it would take 9.3 months to sell every new single-family home on the market, down from 9.4 months in May.
"After two monthly declines, new home sales finally picked up a bit," says Carl Weinberg, chief economist at High Frequency Economics. "However, the median price of new homes sold in May declined for the fifth time in the last six months, or the eighth month in the last ten."
"Since Fed funds rates back at pandemic levels are not coming back at any time soon, the housing market remains jammed up," Weinberg adds. "People sitting in existing homes with 2% mortgages cannot afford to flip their homes, not even into new homes."
(Stephen Culp)
