Weekly economic review & outlook
Rising new coronavirus infections muddies positive economic data
July 13, 2020
You Need to Know
Week in review
Service sector enters expansion territory
The ISM nonmanufacturing index rose sharply to 57.1 in June, well above the 50.0 level that delineates expansion. Growth in business activity and new orders led the reading higher.
Producer prices fall in June despite a jump in energy prices
A sharp drop in food prices and lower core prices offset a jump in energy prices and caused the producer price index to unexpectedly fall in June.
CPI should see large jump for June, led by energy prices
Rebounding energy prices should lead to strong growth in the consumer price index, but we expect only a small rise in the core rate.
Retail sales set for second straight month of massive growth
Another very strong month of retail sales is expected for June as more retailers opened their doors and the economy added a record number of jobs.
The sharp rise in COVID-19 cases clouded the recovery’s prospects last week even though the economic data were mostly positive. Milestones such as 60,000 new cases per day and passing the three million case watershed dampened optimism surrounding the post-lockdown re-opening of the economy. Still, the economic data showed robust service sector expansion, yet another decline in continuing jobless claims, and a drop in core PPI inflation (but building raw material inflation). While many bumps are expected on the road to recovery, the trend for the economy remains upward.