US consumer spending remains strong but other data less so

Yesterday's economic news provided some indications of a possible economic slowdown, but mixed with some indications of relatively robust growth.

For the US, Reuters reported a fall in auto sales in August.

... Perhaps because the allure of heavy auto promotions had worn off, auto sales for last month proved less robust than July's record. On an annualized basis, sales reported so far added up to about 13.3 million cars, sharply below the 17.16 million sold in July and beneath forecasts for about 14.25 million.

However, Reuters reported that consumer spending was strong in July.

... [A] 1 percent increase in personal consumption...took the U.S. personal saving rate into negative territory. The saving rate...was a negative 0.6 percent, the lowest savings rate since monthly records began in 1959, the Commerce Department said... Personal income advanced 0.3 percent after a 0.5 percent June increase, the Commerce Department said.

The department's measure of consumer inflation advanced 0.3 percent, but the core PCE price index -- which excludes food and energy -- edged up just 0.1 percent, with the year-on-year increase slipping a notch to a 1.8 percent gain.

But not construction spending.

Not only did home sales appear to have reached a peak in mid-summer, but construction spending for July proved flat, confounding forecasts of a 0.5 percent gain.

The same report also mentioned that weekly claims for unemployment insurance rose last week.

Data for last week...showed first-time claims for jobless benefits climbed to 320,000 in the week ended August 27. That was their highest level in two months and up from a revised 317,000 the prior week. A four-week moving average of claims...rose for the third straight week, to 316,750 from 315,500 the previous week.

The report also touched on indications that:

...factory output was already expanding less robustly. The Institute for Supply Management's national manufacturing barometer retreated to 53.6 in August from 56.6 in July.

The Institute for Supply Management has more details on its survey.

Other PMI data provided by NTC Research shows that the euro-zone PMI edged down to 50.4 in August from 50.8 in July, the UK PMI rose to 50.1 from 49.5 while China's PMI "dipped to a series-low of 50.6 in August". Other PMI news included a fall in Australia's by 5.4 points to 43.3 in August, the lowest reading since the monthly survey started in May 2001, but a slight uptick in Singapore's to 52.2 from 52.1 the previous month.

And as another indication that manufacturing isn't doing too badly, semiconductor sales were up in July, although prices declined.

All this, of course, may change with the impact of Hurricane Katrina and new highs in oil prices.