General

The Conference Board Leading Economic Index for the U.S. edged down 0.3% to 98.8 in June, after staying the same in May. Over the past six months, the LEI has fallen 2.8%, much faster than the 1.3% rate of decline in the prior six months. For the second month in a row, a recovery in stock prices helped buoy the index but was again not enough to offset falling consumer confidence, weak new orders in manufacturing and rising claims for unemployment insurance.

Additionally, the index’s further decline in June puts the six-month growth rate into more negative territory, triggering the index’s recession signal for the third month in a row. Furthermore, a tariff-influenced slowdown in consumer spending is becoming more apparent. Nevertheless, the Conference Board does not anticipate a recession in 2025, although it expects a significant slowdown in economic growth compared to 2024, with U.S. GDP growth forecasted at 1.6%.

Meanwhile, the Coincident Economic Index ticked up 0.3% to 115.1 in June, after no change in May and April. As a result, the CEI has grown 0.8% in the past six months, down from the 1.0% growth rate over the previous six months. The Lagging Economic Index stayed the same in June at 119.9 and has risen 1.4% over the past six months, fully recovering from a 0.8% decline over the previous six months.

Existing home sales decreased 2.7% in June and stayed the same over the year. Housing inventory slipped slightly to 1.53 million units, reflecting a 0.6% decline from May but a 15.9% jump from last year. The median existing home price was $435,300, up 2.0% from last year. The Northeast, Midwest and South registered decreases in existing home sales, while the West posted a modest monthly increase.

Single-family home sales fell 3.0% in June but were up 0.6% over the year, with the median price increasing 2.0% from June 2024 to $441,500. Condo and co-op sales stayed the same over the month at 360,000 units in June, but fell 5.3% from last year. Meanwhile, the median price for condos and co-ops rose 0.8% from the prior year to $374,500.

Homes were typically on the market for 27 days in June, unchanged from May but up from 22 days in June 2024. First-time buyers made up 30% of sales in June, the same as May but up from 29% at the same time last year.

The S&P Global Flash U.S. Manufacturing PMI slipped from 52.9 to 49.5 in July, a seven-month low and below the 50-point marker that signals growth in business conditions. Factory production slowed as new orders fell for the first time this year, being adversely impacted by declines in export orders. Inventories dropped as manufacturers started utilizing some of their holdings that they stockpiled in May and June. Meanwhile, supplier delivery times quickened due to reduced pressure on supply chains. Input costs rose at the second-fastest pace since January 2023 but cooled slightly from June’s post-pandemic peak. Meanwhile, manufacturers’ selling prices grew at the second highest rate since November 2022. Nearly two-thirds of manufacturers linked rising input costs to tariffs, while just under half of respondents linked increased selling prices to tariffs.

Overall business activity rose to a seven-month high, rising from 52.9 in June to 54.6 in July. This growth was isolated mainly to the services sector, wherein business activity rose at the highest rate so far this year, while the manufacturing sector grew more sluggish, making overall growth uneven across the economy. In fact, overall new order growth picked up, with new service sector business more than offsetting a slight drop in factory orders. As seen in manufacturing, prices also increased sharply in services, rising at the second-steepest pace since April 2023.

Meanwhile, optimism about future business conditions dipped again in July, reflecting fears about tariffs and cuts to state funding following federal government policy changes. Even in manufacturing responses, any perceived benefits of import tariffs are outweighed by anxieties about higher prices.

Manufacturing activity in the Fifth District deteriorated in July, at a faster pace than the previous month, with the composite manufacturing index dropping from -8 to -20. Meanwhile, the local business conditions index improved but remained in negative territory, rising from -17 in June to -11 in July. Additionally, manufacturers are still pessimistic about the future, but less so than in the prior month, with the outlook for future local business conditions rising from -7 in June to -2 this month. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments, new orders and employment all remained negative and contracted at a faster pace than in June, dropping to -18, -25 and -16, respectively. The vendor lead time index decreased from 15 to 7. Meanwhile, the share of firms reporting backlogs also worsened, falling from -18 to -30. On the other hand, the average growth rate of prices paid and prices received both declined some.

Looking ahead, firms still expect both price indexes to rise in the next 12 months at a slightly faster pace than forecasted in June. Expectations for future shipments increased from 6 to 11, and new orders ticked up from 6 to 9. Expectations for backlogs also improved, moving from -17 to -9. Meanwhile, firms maintained a cautious approach to equipment and software spending. Expectations for capital expenditures also worsened to -19 from -17. In sum, businesses in the Fifth District are cautiously optimistic about prospects for future growth but are still avoiding making new investment plans.

Manufacturing activity ticked up slightly in the Tenth District in July, with the month-over-month composite index up three points to 1. Meanwhile, expectations for future activity remained expansionary but slipped one point to 8. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. The month-over-month rise in activity was due primarily to increases in nondurable manufacturing, while durable manufacturing continued to fall. New orders modestly increased and turned positive. On the other hand, production contracted. Shipments rose, but at a slower pace than the prior month, falling from 8 to 3. Meanwhile, employment and new orders for exports declined and at a faster pace than in June.

Production fell from 5 to -3, while new orders inched up from -2 to 2. New export orders decreased from -10 to -15 over the month. Employment slumped again in July, falling from -8 to -11, and the average employee workweek also became more negative, declining from -5 to -9. The backlog of orders plummeted from -11 to -30. Both prices received and prices paid for raw materials eased month-over-month, with raw material prices slipping from 51 to 47 and prices received decreasing three points to 18. Over the year, prices received ticked down four points to 58, while prices for raw materials fell from 75 to 67.

In July, survey respondents were asked about profitability and passthrough ability, and the responses on changes in firms’ profit margins were mixed. Thirty-five percent of firms reported slight decreases in profit margins compared to the previous quarter, while 21% reported a significant decline. Meanwhile, 21% reported no change and 20% reported a slight increase. Just 3% of respondents reported a significant increase. When firms were asked about their ability to pass along the costs of rising input prices on to consumers, one-third of firms (33%) shared a slightly increased ability, while another 33% reported no change in passthrough ability. On the other hand, 31% cited an increased hardship passing along higher costs, while 3% found considerably increased ability to pass along prices. Looking to the next 12 months, 32% of firms expect their margins to decrease slightly, 10% expect significant declines, 26% expect no change, 29% expect a slight increase and 3% expect significant increases.

Building permits improved 0.2% in June but fell 4.4% over the year. Permits for single-family homes in June declined 3.7% from May and 8.4% over the year. On the other hand, permits for buildings with five or more units increased 8.1% from May and 2.1% over the year.

In June, housing starts increased 4.6% from May but fell 0.5% from June 2024. Starts for single-family homes declined 4.6% from May and 10.0% over the year. On the other hand, starts for buildings with five or more units soared 30.6% over the month and 25.8% over the year.

Meanwhile, housing completions plummeted 14.7% over the month and 24.1% over the year. Single-family home completions declined 12.5% from May and 15.5% from June 2024. Completions for buildings with five or more units plunged 21.0% over the month and fell 39.8% from one year ago.

U.S. import prices inched up 0.1% in June, after slipping 0.4% in May, with higher nonfuel prices offsetting lower fuel prices. Over the past year, import prices decreased 0.2%. Meanwhile, U.S. export prices increased 0.5% in June, with nonagricultural and agricultural export prices both rising. Over the past year, export prices increased 2.8%.

In June, U.S. import prices for manufacturing rose just 0.2% over the year, but with significant divergences in prices across the industry. Petroleum and coal products manufacturing experienced the most significant over-the-year U.S. import price declines in June, falling 19.0%. On the other hand, the greatest yearly increase in U.S. import prices occurred in primary metal manufacturing, which rose 10.2% from June 2024. Meanwhile, U.S. export prices for manufacturing in June increased 3.4% over the year.

Fuel import prices fell 0.7% over the month in June, following declines of 5.0% in May and 2.6% in April. Lower prices for natural gas more than offset petroleum prices. Prices for fuel imports plummeted 15.7% from June 2024. Import prices for petroleum ticked up 0.1% over the month in June but fell 16.6% from last year. Meanwhile, natural gas prices plunged 26.8% in June but jumped 37.4% over the year.

Nonfuel import prices increased 0.1% in June, after staying the same in May. Higher prices for nonfuel industrial supplies and materials and consumer goods more than offset lower prices for automotive vehicles and foods, feeds and beverages. The price index for nonfuel imports grew 1.2% over the past year and has not declined on a year-over-year basis since February 2024.

After rising 0.3% in May, agricultural export prices increased 0.8% in June, the largest monthly increase since a 2.1% increase in October 2024. Over the past 12 months, agricultural export prices increased 1.5%. Meanwhile, nonagricultural export prices increased 0.5% in June. Higher prices for nonagricultural industrial supplies and materials, consumer goods and automotive vehicles more than offset higher prices for capital goods. Over the past year, nonagricultural export prices advanced 2.9%.

Manufacturing activity in New York state ticked up slightly in July. The headline general business activity index strengthened from June, rising 21.5 points to 5.5, the first positive reading since February. Meanwhile, the new orders and shipments indexes also increased and turned positive, to 2.0 from -14.2 and 11.5 from -7.2, respectively. Unfilled orders improved slightly but remained negative, rising from -8.3 to -6.4, while delivery times lengthened from 1.8 to 8.3. Inventories grew notably, jumping from 0.9 to 15.6, but supply availability continued to worsen, dipping from -8.3 to -11.0.

The index for the number of employees improved from 4.7 to 9.2, while the average employee workweek moved into positive territory, rising from -1.5 to 4.2. Input prices again climbed upward, from 46.8 to 56.0. Meanwhile, selling prices moderated slightly, edging down 0.9 to 25.7 points, a reflection of a slower pace of increase for prices received while the pace of prices paid quickened.

Looking forward, firms’ expectations remained elevated after last month’s jump in optimism. The index for future business activity improved 2.9 points to 24.1. In the next six months, new orders and shipments are still expected to increase, but at a slightly slower pace than anticipated last month, clocking in at 25.3 and 19.3, respectively. Additionally, capital spending plans returned to positive territory, rising 16.5 points to 9.2. Employment expectations also remained positive and little changed, inching up from 10.4 to 11.0, while the average employee workweek outlook strengthened but remained negative, rising from
-1.8 to -0.9. Input prices are expected to remain high but retracted slightly from 59.6 to 58.7. On the other hand, selling price expectations ticked up 0.9 points to 42.2. Meanwhile, supply availability is still forecasted to contract in the next six months but at a slower pace than predicted in June.

In July, Philadelphia’s regional manufacturing activity expanded into positive territory. At 15.9, the index for current general business activity recorded its first positive reading after three months of negative readings. Just 15.8% of firms reported decreased activity this month, while 31.7% saw increases in July, a substantial improvement from the 24.5% reporting increases in June. The indexes for new orders and shipments both improved, rising from 2.3 to 18.4 and from 8.3 to 23.7, respectively. These readings are the highest recorded for these two indexes since February. Meanwhile, employment also turned positive, gaining nearly 20 points and increasing to 10.3 while recovering most of the prior month’s decline.

The prices paid index jumped from 41.4 to 58.8, largely reversing last month’s decline. The prices received index also rose from 29.5 to 34.8. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating manufacturers have been absorbing a portion of those higher costs paid.

Looking ahead, indicators showed expectations for future growth have perked up from the prior month. After dropping nearly 29 points in June, expectations for future general business activity ticked up more than three points to 21.5 in July. Although a lower proportion of firms (41.1%) expect increases in activity, compared to last month’s reading of 45.1%, a lower proportion of firms (19.6%) also anticipate activity will decline, compared to last month’s reading of 26.8%. Meanwhile, the future new orders index expectations rose from 22.1 to 30.0, but the future shipments index weakened from 27.9 to 23.6. The capital expenditures index rose slightly from 14.5 to 17.1. The future prices paid and future prices received indexes both edged up from 68.9 to 75.3 and from 52.5 to 59.4, respectively. Additionally, the index for future employment slipped from 24.6 to 20.1.

The Producer Price Index for final demand (also known as wholesale prices) stayed the same over the month in June, after rising 0.3% in May. Over the year, producer prices moved up 2.3%, down from the 2.7% hike in May. Meanwhile, prices for final demand excluding foods, energy and trade services also stayed the same over the month in June, after inching up 0.1% in May. On the other hand, prices for these goods advanced 2.5% from June 2024.

In June, prices for final demand services edged down 0.1%, while prices for final demand goods rose 0.3%, the largest monthly increase since February. Over half of the decline in final demand services is attributed to a 4.1% drop in traveler accommodation services prices. Meanwhile, over half of the increase in final demand goods arose from the 0.3% gain in final demand for goods less foods and energy. Within the index, prices for communication and related equipment climbed 0.8% over the month and 6.0% from June 2024. In addition, prices for private capital equipment for manufacturing industries jumped 4.2% over the year, the largest yearly increase since October 2023.

Processed goods for intermediate demand rose 0.1% in June, the same rate of increase as May. The rise can be attributed to a 0.6% gain in the index for processed energy goods. Meanwhile, the index for processed foods and feeds fell 0.3%. Over the year, the index grew 1.9%, the largest 12-month increase since the 2.1% rise in February 2023.

Meanwhile, prices for unprocessed goods for intermediate demand advanced 0.7% in June, the largest increase since January. Nearly two-thirds of the June gain can be traced to a 1.4% hike in the prices for unprocessed energy materials. Additionally, prices for unprocessed nonfood materials less energy rose 1.1%. Over the year, prices for unprocessed goods for intermediate demand declined 1.3%.