U.S. soft-landing signals stay uneven across factories, expectations, and mortgages
The Philadelphia Fed survey showed stronger activity and hiring but slower orders; the LEI edged up in July while consumer expectations kept dragging; and mortgage rates remained above year-earlier levels.
Economics & Markets··Midday
The regional factory pulse shows acceleration and cooling at once
In the Philadelphia Fed’s August survey, the diffusion indexes — measures that subtract the share reporting decreases from the share reporting increases — showed general activity rising from 41.4 to 47.4 and employment from 10.0 to 27.9. In the same survey, new orders fell from 37.0 to 30.1, shipments from 33.7 to 27.7, prices paid from 53.9 to 40.9, and prices received from 27.4 to 17.7. That means production momentum and demand flow are not moving in the same direction in the Philadelphia region, and this regional survey on its own does not describe all U.S. manufacturing.[1]
Leading indicators are positive, but the expectations leg is still weak
The Conference Board’s LEI, calculated on a 2016=100 base, rose 0.2 per cent in July to 99.5, and the total change from January through July was also 0.2 per cent. In the same release, the coincident index rose 0.2 per cent to 114.8 and the lagging index also rose 0.2 per cent to 120.4, but the organization said consumer expectations continued to exert notable downward pressure on the overall measure. In other words, the national leading picture is moving forward without flashing recession, but the expectations component still does not justify declaring a clean and completed soft landing.[2]
Mortgage rates eased slightly, but the household hurdle is still high
According to Freddie Mac, the average 30-year fixed mortgage rate fell this week from 6.67 per cent to 6.65 per cent, while the 15-year rate edged down from 5.96 per cent to 5.95 per cent. But both remained above their year-earlier levels of 6.58 per cent and 5.69 per cent. Because the weekly easing was so small, household borrowing costs do not yet look fully relieved, which suggests that the partial improvement in production and expectations data has still not fully passed through the housing-finance channel.[3]
