Bankinter: The leading Indicator deteriorated more than expected in July (-0.6% month-on-month from -0.2% previously and -0.4% expected). The Leading Indicator fell by – 0.6% (month-on-month) in July; in year-on-year terms -5.2%, which broke with the slight trend of improvement of the last six months. From a historical perspective, the indicator registers the lowest level since November 2016 (one tenth below April 2020).
By components, the improvement in Consumer Orders (+0.1% month-on-month) and the moderation of Unemployment Claims ( -0.2% month-on-month) are positively surprising. Average Hours Worked, on the other hand, moderated – 0.5% month-on-month and especially negative the evolution of Building Permits (-4% month-on-month).
Opinion of Bankinter’s analysis team: Bad data that shows a leading indicator at historically low levels. Despite this, the components were consistent with the good Retail Sales data (+1% month-on-month from +0.7% previously) and last week’s poor housing data. Today’s statement from M. Daly (San Francisco Fed) hinted that the economy ‘is not headed for a sharp slowdown’, which would be consistent with a gradual tapering from September onwards. The market is awaiting Powell’s statements this Friday from Jackson Hole (Kansas).
