The economy is showing more signs of recovery, even as coronavirus cases rise in parts of the U.S.
The New York Federal Reserve reported yesterday that its Empire State Manufacturing Survey was -0.2. That was much better than the -27.5 percent average forecast. It had some other big takeaways:
- Expectations for general business conditions was 56.5, the highest since October 2009. The outlook increased by 27.4 points, the most since the index began 19 years ago.
- The new orders index shot up to 52.9, its strongest reading since August 2005.
- It was the closest to a non-recessionary number since the pandemic started in February. The Empire index is noteworthy because it’s an up-to-date number for June, while most others are a month behind.
In a separate move a few hours later, the Fed announced it would buy individual corporate bonds. That’ll let the central bank lower borrowing rates for companies and prevent contagion in the credit market. Stocks rallied on the news, keeping the S&P 500 above the important 3,000 level.
Housing in Focus
Several more events follow Monday’s double-dose of positive headlines. This morning brings retail-sales activity for May. The National Association of Homebuilders also releases its housing index, which could be even more relevant because it covers June.
As Market Insights has reported, housing is a bright spot for the U.S. economy. It was accelerating before coronavirus hit, and has surged back thanks to low interest rates and a lack of inventory. That’s helped drive a big rebound in construction jobs.
There will be more data tomorrow when the government announces housing starts and building permits. Those are older, covering May.
Fed Chairman Jerome Powell will also testify on Capitol Hill today and tomorrow. His comments may be less impactful than usual because the central bank’s big meeting just occurred last week.
Job Data Improving
Two more up-to-date reports are due Thursday: initial jobless claims and the Philadelphia Fed’s regional manufacturing index for the mid-Atlantic region.
Did you know that last week jobless claims beat estimates for the first time since March 12? (Fewer Americans applied for unemployment benefits.) It followed super-strong payroll rebounds earlier in the month. Friday’s consumer sentiment index (covering June) also surprised to the upside because of optimism about the labor market.
In conclusion, coronavirus has had an unprecedented impact on U.S. business and society. Cases are still rising in some states, but the economy is showing more significant signs of improvement.