I had a dream. Crazy dream

Anything I wanted to know
Any place I needed to go

Hear my song people don't you listen now?

Any little song that you know

Everything that's small has to grow

And it's gonna grow

The song remains the same

Led Zeppelin- “The Song Remains the Same”

ISM-Purchasing Managers Index (PMI)

The story remains the same, the economy continues to grow at a good clip.  The ISM Manufacturing Index increased to 60.2, above expectations of 58.5 and May’s reading of 58.7.  A PMI above 43.2% tends to indicate an expansion in the overall economy.  A reading over 50% indicates that the manufacturing economy is expanding.  Looking back the PMI indicates growth in the overall economy for 110 consecutive months and growth in the manufacturing sector for 22 straight months.   “The past relationship between the PMI^® and the overall economy indicates that the PMI^® for June (60.2 percent) corresponds to a 5.2 percent increase in real gross domestic product (GDP) on an annualized basis.”  New orders, production and employment continue to lead the expansion.

Comments from correspondents:

• “Business is strong in all regions. Materials are tight. Trucking continues to be a major challenge.” (Chemical Products)
• “Transportation costs are going through the roof right now, which definitely impacts the decisions we’re making with regard to quantities we’re bringing in versus truckload and LTL.” (Furniture & Related Products)
• “The economy and product demand still continue to be strong. Having trouble finding people [to fill] blue collar positions. Lead times for parts and materials are moving out, and we are seeing commodity cost pressures increases with the threat of tariffs. Additionally, suppliers are asking for more price increases.” (Machinery)

Construction Spending

Construction spending in May increased 0.4% (consensus was 0.6%) following a 0.9% increase in April.  Year over year construction spending rose 4.5%. 

Private construction rose 0.3%, led by residential construction (0.8%)

• Single family construction increasing 0.8%
• Multi-family increased 1.6%   

We are hopeful construction will keep growing and help alleviate the home supply constraints in the current housing market.