Inflation data came in lower than expected. Several indicators released in July disappointed those looking for signs that the economy may be turning around. This is the slowest growth since early in 1993. Consumer confidence fell unexpectedly to 116.5 from 118.9, a change in the recent trend toward stronger confidence. Most of the drop was in the 'current expectations' component, a reflection that the current weakness is being felt at the consumer level.
Manufacturing remains by far the hardest hit sector.
Most indicators of manufacturing activity showed weakness in July. Purchasing managers were more negative about growth, payrolls were falling, and production levels decreased. Still, there were signs of optimism. Claims for unemployment insurance decreased in each of the last four weeks, and the last two-week average is below trends seen in the second quarter. The housing sector remains very strong, which will help keep consumer spending moving along.