Latest news with #StephenStanley
Reuters
6 days ago
- Business
- Reuters
US business equipment spending appears to have slowed sharply in second quarter
WASHINGTON, July 25 (Reuters) - New orders for key U.S.-manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately, suggesting that business spending on equipment slowed considerably in the second quarter. Front-loading of activity ahead of President Donald Trump's aggressive and broad tariffs on imports resulted in business spending on equipment growing in the first quarter at the fastest pace since the third quarter of 2020. While some of the tariff-related spending to avoid even higher goods prices has persisted, uncertainty over where tariff levels will eventually settle has prompted some businesses to hold off capital expenditures. "This softness is consistent with the torrent of anecdotal reports in recent months that businesses are delaying their investment plans until they have more clarity on tariffs and the rest of the policy landscape," said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7% last month after an upwardly revised 2.0% rebound in May, the Commerce Department's Census Bureau said on Friday. Economists polled by Reuters had forecast that these so-called core capital goods orders would rise 0.2% after a previously reported 1.7% jump in May. Shipments of core capital goods, which go into the calculation of the equipment spending component in the gross domestic product report, increased 0.4% after rising 0.5% in May. Those figures are not adjusted for inflation. Economists said the data, when accounting for inflation, suggested that business spending on equipment sharply moderated to low single-digit growth last quarter after surging at a 23.7% annualized rate in the first quarter. Some of them even projected a contraction. Unfilled core capital goods orders dipped after barely rising in May, consistent with economists' expectations for weakness in the second half of this year. "Nominal core shipments have risen steadily since late last year, but almost all of this increase has reflected higher capital goods prices rather than stronger volumes," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "Underlying equipment investment probably will continue to grind lower, despite the tax advantages granted by the One Big Beautiful Bill, as uncertainty around trade policy will prompt many companies to keep capex projects on hold." The nonpartisan Congressional Budget Office has estimated that the One Big Beautiful Bill's tax cuts and spending provisions would add $3.4 trillion to the nation's $36.2 trillion debt and only increase inflation-adjusted GDP by an average of 0.5% over 10 years. Trump signed the bill into law earlier this month. The data did not change economists' expectations that the Federal Reserve would keep its benchmark overnight interest rate in the 4.25%-4.50% range at the end of a two-day policy meeting on Wednesday. Trump, who is pressuring the U.S. central bank to resume its rate cuts, visited its headquarters in Washington on Thursday. Referring to his discussion with Fed Chair Jerome Powell during the visit, Trump told reporters on Friday, "I think we had a very good meeting on interest rates." Stocks on Wall Street were trading higher. The dollar advanced versus a basket of currencies. U.S. Treasury yields were largely flat. A survey from S&P Global on Thursday showed its flash manufacturing PMI contracted in July for the first time since December. S&P Global noted that "any protectionist benefits of import tariffs were often outweighed by concerns over higher prices and rising costs." The Atlanta Fed is forecasting economic growth rebounded at a 2.4% annualized rate in the second quarter, largely reflecting a reversal in tariff-related import flows, which contributed to GDP contracting at a 0.5% pace in the first quarter. The government is scheduled to publish its advance estimate of second-quarter GDP next week. Nondefense capital goods orders plunged 24.0% in June after vaulting 50.0% in May. Shipments of these orders declined 0.9% after being unchanged in May. Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, decreased 9.3% as commercial aircraft bookings came off their lofty levels. That partially reversed the 16.5% surge notched in May. Commercial aircraft orders tumbled 51.8% last month after soaring 231.6% in the prior month. They were in part boosted by an order for 150 commercial planes placed with Boeing by Qatar Airways during Trump's visit to the Gulf Arab country in May. Boeing (BA.N), opens new tab reported on its website that it had received orders for 116 planes in June compared to 303 in May. The planemaker stands to benefit from trade deals being sought by the Trump administration. "This may keep orders somewhat elevated, which should support production of planes," said Veronica Clark, an economist at Citigroup. "Deliveries of planes internationally would boost GDP through exports rather than business investment." Orders for motor vehicles and parts increased 0.9% in June. Overall transportation equipment orders dropped 22.4% after jumping 48.5% in May. Orders excluding transportation rose 0.2% after gaining 0.6% in May. They were lifted by a 0.4% increase in machinery orders. Demand for computers and electronic products increased 0.6%, slowing from the 1.7% increase in May. Orders for electrical equipment, appliances and components edged up 0.1%. "Tariffs are pushing up the cost of investment, and policy uncertainty remains pervasive," said Michael Pearce, deputy chief U.S. economist at Oxford Economics. "That is consistent with business equipment investment declining outright in the second half of the year."
Globe and Mail
6 days ago
- Business
- Globe and Mail
U.S. core capital goods orders unexpectedly fall; shipments rise moderately
New orders for key U.S.-manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately, suggesting that business spending on equipment slowed considerably in the second quarter. Front-loading of activity ahead of President Donald Trump's aggressive and broad tariffs on imports resulted in business spending on equipment growing in the first quarter at the fastest pace since the third quarter of 2020. While some of the tariff-related spending to avoid even higher goods prices has persisted, uncertainty over where tariff levels will eventually settle has prompted some businesses to hold off capital expenditures. 'This softness is consistent with the torrent of anecdotal reports in recent months that businesses are delaying their investment plans until they have more clarity on tariffs and the rest of the policy landscape,' said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7% last month after an upwardly revised 2.0% rebound in May, the Commerce Department's Census Bureau said on Friday. Economists had forecast that these so-called core capital goods orders would rise 0.2% after a previously reported 1.7% jump in May. Shipments of core capital goods, which go into the calculation of the equipment spending component in the gross domestic product report, increased 0.4% after rising 0.5% in May. Those figures are not adjusted for inflation. Economists said the data, when accounting for inflation, suggested that business spending on equipment sharply moderated last quarter after surging at a 23.7% annualized rate in the first quarter. Some even projected a mild contraction. 'Nominal core shipments have risen steadily since late last year, but almost all of this increase has reflected higher capital goods prices rather than stronger volumes,' said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. 'Underlying equipment investment probably will continue to grind lower, despite the tax advantages granted by the One Big Beautiful Bill, as uncertainty around trade policy will prompt many companies to keep capex projects on hold.' The non-partisan Congressional Budget Office has estimated that the One Big Beautiful Bill's tax cuts and spending provisions would add $3.4 trillion to the nation's $36.2 trillion debt and only increase inflation-adjusted GDP by an average of 0.5% over 10 years. Trump signed the bill into law earlier this month. A survey from S&P Global on Thursday showed its flash manufacturing PMI contracted in July for the first time since December. S&P Global noted that 'any protectionist benefits of import tariffs were often outweighed by concerns over higher prices and rising costs.' The Atlanta Fed is forecasting economic growth rebounded at a 2.4% annualized rate in the second quarter, largely reflecting a reversal in import flows, which contributed to GDP contracting at a 0.5% pace in the first quarter. The government is scheduled to publish its advance estimate of second-quarter GDP next week. Nondefense capital goods orders plunged 24.0% in June after vaulting 50.0% in May. Shipments of these orders declined 0.9% after being unchanged in May. Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, decreased 9.3% in June as commercial aircraft bookings came off their lofty levels. That partially reversed the 16.5% surge notched in May. Commercial aircraft orders tumbled 51.8% last month after soaring 231.6% in the prior month. They were in part boosted by an order for 150 commercial planes placed with Boeing by Qatar Airways during Trump's visit to the Gulf Arab country in May. Boeing reported on its website that it had received orders for 116 planes in June compared to 303 in May. The plane maker stands to benefit from trade deals being sought by the Trump administration. 'This may keep orders somewhat elevated, which should support production of planes,' said Veronica Clark, an economist at Citigroup. 'Deliveries of planes internationally would boost GDP through exports rather than business investment.'
Reuters
6 days ago
- Business
- Reuters
US core capital goods orders unexpectedly fall; shipments rise moderately
WASHINGTON, July 25 (Reuters) - New orders for key U.S.-manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately, suggesting that business spending on equipment slowed considerably in the second quarter. Front-loading of activity ahead of President Donald Trump's aggressive and broad tariffs on imports resulted in business spending on equipment growing in the first quarter at the fastest pace since the third quarter of 2020. While some of the tariff-related spending to avoid even higher goods prices has persisted, uncertainty over where tariff levels will eventually settle has prompted some businesses to hold off capital expenditures. "This softness is consistent with the torrent of anecdotal reports in recent months that businesses are delaying their investment plans until they have more clarity on tariffs and the rest of the policy landscape," said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7% last month after an upwardly revised 2.0% rebound in May, the Commerce Department's Census Bureau said on Friday. Economists had forecast that these so-called core capital goods orders would rise 0.2% after a previously reported 1.7% jump in May. Shipments of core capital goods, which go into the calculation of the equipment spending component in the gross domestic product report, increased 0.4% after rising 0.5% in May. Those figures are not adjusted for inflation. Economists said the data, when accounting for inflation, suggested that business spending on equipment sharply moderated last quarter after surging at a 23.7% annualized rate in the first quarter. Some even projected a mild contraction. "Nominal core shipments have risen steadily since late last year, but almost all of this increase has reflected higher capital goods prices rather than stronger volumes," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "Underlying equipment investment probably will continue to grind lower, despite the tax advantages granted by the One Big Beautiful Bill, as uncertainty around trade policy will prompt many companies to keep capex projects on hold." The nonpartisan Congressional Budget Office has estimated that the One Big Beautiful Bill's tax cuts and spending provisions would add $3.4 trillion to the nation's $36.2 trillion debt and only increase inflation-adjusted GDP by an average of 0.5% over 10 years. Trump signed the bill into law earlier this month. A survey from S&P Global on Thursday showed its flash manufacturing PMI contracted in July for the first time since December. S&P Global noted that "any protectionist benefits of import tariffs were often outweighed by concerns over higher prices and rising costs." The Atlanta Fed is forecasting economic growth rebounded at a 2.4% annualized rate in the second quarter, largely reflecting a reversal in import flows, which contributed to GDP contracting at a 0.5% pace in the first quarter. The government is scheduled to publish its advance estimate of second-quarter GDP next week. Nondefense capital goods orders plunged 24.0% in June after vaulting 50.0% in May. Shipments of these orders declined 0.9% after being unchanged in May. Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, decreased 9.3% in June as commercial aircraft bookings came off their lofty levels. That partially reversed the 16.5% surge notched in May. Commercial aircraft orders tumbled 51.8% last month after soaring 231.6% in the prior month. They were in part boosted by an order for 150 commercial planes placed with Boeing by Qatar Airways during Trump's visit to the Gulf Arab country in May. Boeing (BA.N), opens new tab reported on its website that it had received orders for 116 planes in June compared to 303 in May. The planemaker stands to benefit from trade deals being sought by the Trump administration. "This may keep orders somewhat elevated, which should support production of planes," said Veronica Clark, an economist at Citigroup. "Deliveries of planes internationally would boost GDP through exports rather than business investment."
Business Times
6 days ago
- Business
- Business Times
US new-home sales remain tepid on affordability constraints
[WASHINGTON] Sales of new homes in the US remained weak in June as builders' heavier use of sales incentives failed to motivate buyers put off by high costs. Contract signings on new single-family homes increased 0.6 per cent to an annualised rate of 627,000 last month, according to government data released on Thursday (24 Jul). That fell short of the 650,000 median estimate in a Bloomberg survey of economists. June's results show US homebuilders are struggling to offset an ugly mix of high prices and borrowing costs by offering incentives and subsidising customers' mortgage rates, which risk eroding profit margins. This week, Atlanta-based PulteGroup posted better-than-expected earnings, despite reporting a slowdown in orders. Sales incentives have grown to 8.7 per cent of its houses' gross sale price, more than double a 'normal' incentive load, executives said on an earnings call. 'I long for the days of more normal incentive loads of 3 per cent to 3.5 per cent,' chief executive officer Ryan Marshall said on the earnings call. 'Hopefully as we get out into kind of future years, that will become possible again.' An industry survey showed 37 per cent of homebuilders reporting cutting prices in June, and climbed even higher in July to a record in monthly data back to 2022. That poll also revealed weak trends in traffic of prospective buyers amid affordability constraints, which similarly restrained sales of previously owned homes last month. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up 'In line with yesterday's soft existing home sales figure, these numbers underscore that housing demand has downshifted in recent months,' Stephen Stanley, chief economist at Santander US Capital Markets, said in a note. 'Barring a steep fall in mortgage rates, which seems unlikely, there is little reason to expect a quick revival.' Thursday's government report showed the supply of new homes for sale in June increased to 511,000, still the highest level since 2007. In recent months, a growing inventory has caused many builders to pull back on groundbreaking, with new single-family construction falling last month to the lowest level in a year. The supply of completed homes for sale edged up in June to the highest since 2009. The median sales price of a new home decreased 2.9 per cent from a year ago to US$401,800 – marking the fifth annual decline in the last six months. While new-home prices have softened the last couple years, they remain more than 23 per cent higher than the early months of the pandemic. Selling prices are 'still too much for most Americans to afford as long as mortgage rates stay near 7 per cent,' Heather Long, chief economist at Navy Federal Credit Union, said in a note. 'The encouraging news is there are more new homes for sale this summer than last year, and prices are inching down a bit. But it will take a lot more relief to see the real estate market unfreeze.' Sales in the South, the biggest US homebuilding region, increased 5.1 per cent last month after falling 15 per cent a month earlier. Purchases also rose in the Midwest, while contract signings in the West dropped to the slowest pace in seven months. New-home sales are seen as a more timely measurement than purchases of existing homes, which are calculated when contracts close. However, the data are volatile. The government report showed 90 per cent confidence that the change in new-home sales ranged from a 12.7 per cent decline to a 13.9 per cent gain. Residential investment is expected to be a drag on overall economic activity, when the government publishes its initial estimate of second-quarter gross domestic product on Wednesday. Also that day, the National Association of Realtors will release a report on June contract signings in the home resale market. BLOOMBERG
Daily Mail
02-07-2025
- Business
- Daily Mail
Housing market hits milestone not seen since 2009
The housing market has reached a milestone it has not seen for 15 years, and it could be good news for buyers. The number of newly built homes on the market is at the highest level it has been since 2009. Home builders are struggling to find buyers in the frozen housing market, as elevated interest rates disincentive existing owners moving, and keep mortgages out of reach for many first time buyers. Coupled with house prices remaining at their most unaffordable level in recent history, the result is an unusually high inventory of new-build homes available. Home builders are offering discounts and perks as they try to offload them, according to Marketwatch. The typical home buyer cannot afford to pay current prices and current interest rates on a mortgage. 'The big story in the housing sector remains the inventory situation,' Stephen Stanley, chief economist at Santander U.S wrote in a note to investors. Stanley says the inventory is now 'bloated' and has been since last spring when the market tends to pick up pace. Despite builders efforts to entice buyers, success has been limited, according to Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. 'Mortgage rates remain too high for sales to climb significantly higher, while the softening labor market likely will limit the flow of potential home buyers,' Allen wrote in a note. 'With housing payments at an all-time high, many buyers are feeling priced out,' Redfin chief economist Daryl Fairweather (pictured) told earlier this year. 'But sellers still need to move, which means they're increasingly offering concessions to get deals done — especially on condos and townhomes.' Major builder Lennar have said they will look to lower prices in order to move its existing inventory. And Lennar is not alone. Around 30 percent of builders cut home prices in January, the National Association of Home Builders (NAHB) reported — by an average of 5 percent. 61 percent of builders also offered sales incentives in January, the NAHB survey revealed. Incentives include mortgage-rate buydowns and smaller floor plans. Sales of newly built homes did grow in 2024 compared to 2023, according to federal government data, but inventory remains elevated. By contrast, 2024 was the worst year for sales in 30 years for the resale home market. Inventory in the resale home category is also rising, up 16.2 percent from a year ago, which gives buyers more options too. The South and West of the country are the most attractive regions for prospective new construction buyers, a new report from revealed. The regions have larger shares of new build homes available on the market, lower new construction premiums, and more opportunities for mortgage rate buydowns, the report found.
