Financial and Economic Brief - July 25, 2017by © Liberty Publishing, Inc.
Economic Outlook Looking Better
According to the Conference Board, leading economic indicators increased 0.6% in June, beating expectations which were for a 0.4% gain. This is up from an improvement of 0.3% in May. The good news is that the indicators are pointing to an “improving” economic outlook. The index is an indicator for how healthy the U.S. economy is. The Conference Board follows 10 components, including manufacturers’ new orders, stock prices and average weekly initial claims for unemployment insurance.
This Week’s Economic Releases
This week’s economic reports will reveal whether growth accelerated in Q2 after a slow start to 2017. Additionally, the Fed will meet this week but is not expected to raise interest rates as it awaits a “pick-up in inflation.” Existing home sales have grown this year but have been “restrained” by low supply. In May, sales grew 1.1% despite an 8.4% drop in inventories from a year ago, according to Nomura economist Lewis Alexander. Consumer confidence hit a 16-year high in March, but has fallen since. Job growth remains “healthy” and gasoline is inexpensive. The Conference Board is expected to report that its consumer confidence index fell further in July to a “still-sunny” reading.
OPEC Caps Nigerian Oil Output
OPEC has agreed with several non-OPEC producers led by Russia to cut oil production by a combined 1.8 million barrels per day from January 2017 until the end of March 2018. The deal to cut output drove crude prices above $58 a barrel in January but they have fallen to a $45 to $50 range as the effort to drain inventories has taken longer than anticipated. Rising output from U.S. shale producers has offset the impact of the output cuts, as has climbing production from Libya and Nigeria. Russia and Saudi Arabia face pressure to “prop up” oil prices because Russia will be holding a presidential election next year and Saudi Arabia needs higher prices to balance its budget and support next year's planned listing of state oil firm Saudi Aramco.