The Texas Manufacturing survey showed declines this month.

Current and future production

We are pretty much guaranteed at this point to see a week national ISM on Thursday and likely a loss of manufacturing jobs on Friday.

As I mentioned before this is historical precursor for a recession. Perhaps, more importantly right now, manufacturing was a major bright spot in the US recovery and it is now weakening.

Personal Consumption Expenditures (PCE) came in at a strong increase of 0.8% in July. However, this was driven largely by a 2% increase in the consumption of durable goods.

The strong assumption, of course, is that this is a reflection of the rebound in auto sales. Again, we are expecting and absolutely need this if we are to avoid recession. So, while this is good to hear, it doesn’t get us out of the woods by any means and PCE in total is not yet on track for a strong third quarter.

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