Economic data balances out again

If you viewed last week as an old-timey scale with the midweek Juneteenth federal holiday as a fulcrum, the bowls would hang equally. Admittedly, this is an odd way of breaking down the data points. But it is decent visualization of the mix of positive and negative reports. 

Retail sales for May were released on Tuesday morning and disappointed to the weak side. The headline number came in at 0.1% month-over month (m/m) while the market was looking for 0.3%. The core version, which excludes the more volatile components and is incorporated into GDP, was 0.4% m/m, also less than the projected of 0.5%. This report gives weight to the argument that the economy is cooling off, as consumer sales have been strong for many months now. 

This data was balanced by two reports on the other side of the holiday. While initial jobless claims have been creeping up over the past few weeks, with the 4-week average of claims increased to 232,750 from 227,250 in the prior week, they continue to sit at historically low levels. Purchasing manager indexes (PMIs) added to this positive economic story. June PMIs came in more robust than expected, with the composite at 54.6 compared to the consensus for 53.4 while services were 55.1 vs average expectations of 53.5. These argue for an economy that is not decelerating enough to warrant a Federal Reserve hike. 

The visual could serve as a symbol for the last few years of strong and weak economic reports that seem to cancel each other out. Perhaps the Fed, like Lady Justice, are blind to which way the macroeconomic scales are tipping.