Rover's Weekly Market Brief — 7/20/2018

Economy

Retail sales were up +0.5% (+6.6% Y/Y) in June, which came on top of an upward revision of May’s sales from +0.8% to +1.3%. Automobile sales were up +0.9% (+4.6% Y/Y), and excluding automobiles brought overall sales down to +0.4% (+7.1% Y/Y). Increases in gasoline prices helped boost gasoline sales by +1.0% (+21.6% Y/Y), and excluding gasoline sales as well as automobiles brought overall sales down to a +0.3% (+5.6% Y/Y) gain. For other retailers sales were up in health and personal care (+2.2% M/M, +6.7% Y/Y), restaurants (+1.5% M/M, +8.0% Y/Y), non-store (e.g. online) retailers (+1.3% M/M, +10.2% Y/Y), and building supplies (+0.8% M/M, +6.2% Y/Y). Sales fell in June for sporting goods and hobby stores (-3.2% M/M, -4.7% Y/Y), clothing (-2.5% M/M, + 4.0% Y/Y), general merchandise (-0.8% M/M, +2.3% Y/Y), and electronics (-0.4$ M/M, +2.1% Y/Y).

Industrial production rebounded to a +0.6% (+3.8% Y/Y) gain in June after a downwardly revised -0.5% drop in May. May’s drop was largely due to a disruption at a parts supplier which caused a sharp drop in motor vehicle production (-8.6%), and June’s motor vehicle production rebounded sharply (+7.8%). Utilities output was down -1.5% (+5.0% Y/Y), while mining was up +1.2% (+12.9% Y/Y) for its fifth consecutive month of gains, and manufacturing rose +0.8% (+1.9% Y/Y), reversing it’s downwardly revised -1.0% drop in the previous month. Durable goods manufacturing was up +3.2% Y/Y, with gains for computers (+6.4% Y/Y), motor vehicles (+3.7% Y/Y), and machinery (+2.7% Y/Y), and drops for furniture (-1.0% Y/Y) and transportation equipment (-0.8% Y/Y). Overall capacity utilization was up +0.3% to 78.0%, with manufacturing capacity up +0.5% to 75.5%, mining capacity up +0.6% to 92.7%, and utility capacity down -0.3% to 78.9%.

The seasonally adjusted annual rate (SAAR) of housing starts in June was 1.173 million, down -12.3% from a downwardly revised 1.337 million SAAR in May. On a yearly basis, housing starts were down in the Northeast (-40.0%), the Midwest (-23.5%), and the West (-3.3%), but a +13.4% increase in the South, which includes the largest amount of housing construction, limited nationwide housing starts to a -4.2% Y/Y drop. New permits were down -3.0% for the year, with a +4.6% gain in single family permits ameliorating the effect of a -2.7% drop for 2-4 unit buildings and a -16.2% drop for 5 or more unit buildings. The sharpest drop in new permit requests was in the Midwest (-19.8% Y/Y), with a smaller drop in the West (-7.1% Y/Y), and gains in the Northeast (+6.7% Y/Y) and the South (+3.3% Y/Y). More units were completed in the West (+13.5% Y/Y) and the South (+13.0% Y/Y), but fewer were finished in the Northeast (-26.9%) and the Midwest (-24.2%).

Upcoming Economic Reports:

Thursday July 26 – Durable Goods Orders

Friday July 27 – First estimate 2018 Q2 GDP

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Alphabet (GOOGL)	Verizon (VZ)	Facebook (FB)	Amazon.com (AMZN)	Chevron (CVX)
HDFC Bank (HDB)	AT&T (T)	Visa (V)	Royal Dutch Shell (RDS.A)	Merck & Co (MRK)