It's becoming a farce now: if it is a day ending in -y, Goldman has to tweak their Q1 GDP tracking forecast. Sure enough...
BOTTOM LINE: Philadelphia Fed index improves less than expected and remains significantly negative. Existing home sales much weaker than expected in June, although house prices show another gain. We lowered our Q2 GDP tracking estimate from 1.2% to 1.1%.
KEY POINTS:
1. The Philadelphia Fed index improves less than the consensus had expected, from -16.6 to -12.9 (versus -8.0 expected). The composition of the report was a bit more favorable than the headline would suggest as new orders and shipments both improve (up from -18.8 to -6.9, and up from -16.6 to -8.6, respectively). However, both indices remain in negative territory. Furthermore, the employment index declines (from 1.8 to -8.4) and the index for firms’ expectations for capital spending in six months’ time declined sharply (down from 19.4 to 3.3); the latter figure is the lowest since September 2009.
2. Existing home sales decline by -5.4% (month-over-month) in June, much weaker than the consensus had expected. The level of existing home sales (4.37m at an annualized rate) is also lower than expectations (4.62m), despite upward revisions to the May figure (from 4.55m to 4.62m). Like last month, the decline was again driven by weakness in both single family homes and condos (down 5.1% and 7.8%, respectively). On the other hand, median sales price of all existing homes increased by 7.9% (yoy) to $189,400 in June. This is the highest growth rate since February 2006 and the highest level since September 2008, pointing to a continuing slow pickup in house prices.
3. Following the weaker-than-expected existing home sales report, we lowered our Q2 GDP tracking estimate from 1.2% to 1.1%.
Who would have though High Frequency Economics would truly live up to its name...