MACRO FLASH REPORT

The auto sector’s decline in sales and production, coupled with rising inventories, signals weaker consumer demand. If affordability issues persist, steel demand from this sector may remain subdued in the near term, though the upcoming rate cuts this month could offer a positive boost down the line.

Yesterday’s first of the month data provided an update on manufacturing activity. As we anticipated, given the soft Regional FED Manufacturing surveys throughout the month of August, both Manufacturing PMI’s (ISM & S&P Global) remain in contraction territory. Elevated borrowing costs and election uncertainty continue to stand in the way of a full recovery.

This week’s data highlight soft activity in manufacturing and a standoff in housing. Most importantly, inflation data came in better than expected, providing further support for the interest rate cutting cycle to begin shortly.

The second revision for Q2 2024 GDP underscores a stable consumer as the primary driver of economic growth, while all other components were revised lower. Going forward, we anticipate further cooling on the consumer side. However, other areas like fixed investment, business spending, and inventories are likely to improve as interest rates begin their decline.

Additional data suggest that Imports have reverted to their downtrend while domestic production surges ahead of planned outages. Domestic HRC prices continued to slowly grind higher as we exit the seasonal summer slowdown.

July Durable Goods new orders show a rebound in transportation, the primary component of the dataset, while the additional sectors declined.