Another day with lots of economic data releases.   On the housing front, mortgage applications decreased 2.6% for the week ending July 27.  Refinancing was down 2% and Purchases declined 3%. Thirty one percent of all applications were for refinancing, a decrease from 36.8% in the prior week.  Adjustable rate mortgages (ARM) increased to 6.4% of total applications as loan amounts increased.

Construction Spending

June total private construction spending decreased 0.4%. Year over year, total construction spending is up 6.1%.   However, there were upward revisions to May spending, which helped offset the lower June numbers. 

Residential spending was down .5% and nonresidential dipped 0.3%.  Single family home construction was down 0.4% and multifamily construction dropped 2.8%.  Year over year, private construction spending is up 6.5%.

Total public construction dropped 3.5%, which was due to a decline in non-residential spending, primarily a decrease of 1.3% in highway and street spending and a decline in educational spending of 11%. Year over year, public construction spending is up 4.9%.

Manufacturing

The ISM Manufacturing Index dropped to 58.1% in from 60.2% in June. A reading above 50 indicates expansion. 

• The New Orders Index declined to 60.2% from 63.5%
• The Production Index fell to 58.5% from 62.3%
• The Employment Index increased to 56.5% from 56.0%
• The New Export Orders Index dropped to 55.3% from 56.3%
• The Backlog of Orders Index dipped to 54.7% from 60.1%
• The Prices Index declined to 73.2% from 76.8%
• Seventeen of 18 industries saw expansion, only primary metals contracted.

Concerns/Comments

Tariffs

“Reviewing the business case for importing manufactured parts from China, as new tariffs will lead to increased costs that we will pass along to our domestic customers.” (Transportation Equipment)

Labor Shortage

“Labor continues to be a struggle to fill open positions.”

“However, internationally, nationally and locally, we are finding many manufacturers behind schedule due to capacity constraints. They are stating their order intake is heavy and/or they cannot find qualified employees to get all the work done.” (Machinery)

Oil

The weekly report from the Energy Information Administration (EIA) confirmed a build of 3.8 million barrels of oil were added last week for a total of 408.7 million barrels.  At this level, crude oil inventories are below the 5-year seasonal average.  Gasoline declined 2.5 million barrels, while distillates increased 3 million barrels.  WTI is currently down 1.40% to $67.80 as stockpiles coupled with trade concerns pressures the commodity.

The Federal Reserve rate decision is due out at 2 pm ET.  Expectations are that rates will remain unchanged.