Economy in Brief

Global financial markets have remained steady over the past few days: equity volatility remains low, credit spreads remain contained and core yields have drifted rather than lurched, even as policy noise—especially around US trade—remains high. Against that backdrop, this week’s flash PMIs describe a resilient but uneven expansion: Germany has inched back into growth, while France has slipped further into contraction, a divergence echoed in bonds where the OAT–Bund spread has widened amid political and fiscal uncertainty (charts 1 and 2). Latest trade data from South Korea reinforce the idea of a tech-led floor under global activity, with semiconductor exports still advancing even as broader shipments remain choppy (chart 3). Labour demand indicators tell a similar story of moderation without fracture: high frequency data for job-postings have flattened in the US and UK and have turned up in Germany (chart 4). Stepping back, the latest US flow-of-funds report show a financing mix still anchored by heavy public borrowing absorbed by foreign investors but offset by a sizeable private-sector surplus—one reason perhaps for why the world economy has remained resilient despite persistent policy uncertainty (charts 5 and 6).

• August sales -0.2% (+1.8% y/y) to 4.0 mil., the second m/m decline in three months.
• Sales patterns show mixed results: down in the Northeast and South, but up in the Midwest and West.
• Median sales price -0.7% (+2.0% y/y) to a 4-month-low $422,600.
• Unsold inventory -1.3% (+11.7% y/y) to 1.53 mil. units; 4.6 months' supply.

• Deficit: $85.5 bil. in August, down $17.3 bil. (-16.8%) from July’s $102.8 bil.
• Exports -1.3%, the third m/m fall in four months, led by a 6.8% drop in consumer goods exports.
• Imports -7.0%, down for the fourth month in five, led by an 18.9% plunge in imports of industrial supplies & materials.

• Durable goods orders unexpectedly rose 2.9% m/m after declines in both June and July.
• Aircraft orders rose 27% m/m, their first increase in three months.
• Orders excluding transportation rose 0.4% m/m in August on top of a solid 1.0% monthly gain in July.
• Core capital goods orders increased 0.6% following a 0.8% rise in July; shipments fell 0.3% m/m, their first decline in four months.

• Real GDP advanced at a 3.8% saar in Q3 in the third estimate, up from 3.3% in the second estimate and 3.0% in the advance report.
• Stronger consumer spending and business fixed investment were the major factors behind the upward revision.
• Meaningful upward revisions to measures of aggregate demand.
• Small upward revision to GDP and PCE inflation.
• Annual benchmark revision benign; annual real GDP growth from 2019 to 2024 was unrevised at 2.4%.

• Initial claims declined 14,000 in latest week.
• Continuing claims edged down slightly.
• Insured unemployment rate holds steady.

• August sales +20.5% (+15.4% y/y) to 800,000; largest m/m gain in 3 yrs.; highest level since Jan. '22.
• Sales up m/m in all four regions; sales down y/y only in the West (-5.7% y/y).
• Median sales price at a 3-month-high $413,500; avg. sales price at a 3-year-high $534,100.
• Months' supply of new homes for sale drops to 7.4 mths., lowest since July '23.