CEIC Leading Indicator for the US lowest in two years

The CEIC Indicator for the US fell to its lowest level in two years, according to the July flash estimate. The non-smoothed indicator decreased by 3.7 points m/m to 87.8 marking the third consecutive month of the performance below 100 which separates expansion from contraction. The smoothed CEIC Leading Indicator fell 3.9 points m/m to 89.2, signalling that the US business cycle has fallen into a downturn phase. This performance was in line with the real GDP growth of the US in the last two quarters which turned negative and signalled a technical recession.

July marked another month of declining vehicle sales in the US, as they dropped by 11.3% y/y, the twelfth consecutive double-digit decline. The housing market index plummeted to 55, the sharpest drop since April 2020 as interest rate hikes are pushing mortgage rates up and home prices increase rapidly. The Conference Board consumer confidence index fell again in July, triggered by deterioration in the present situation index, which fell to 141.3 from 147.2, while the expectation index declined only slightly, to 65.3 from 65.8. The deterioration in consumer confidence can be explained by the rising food and energy inflation. The ISM PMI eased slightly in July and has been mostly decelerating since September 2021 due to continuous supply chain constraints. The number of jobless claims in July continued to increase steadily, although the US labour market remains tight, with job openings and the unemployment rate at pre-pandemic levels. The Standard & Poors 500 stock market index closed in July at 4,130.3, managing to recover the losses in June.

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