Construction spending weak, ISM strong
Besides pending home sales, we learned that construction spending dropped 0.2% in July. That missed expectations for a flat reading; moreover, June's number was revised down to +0.1% from +0.3%. Private residential spending rose 2.3%, but private nonresidential spending dropped 1.2%. This fits with other evidence that residential real estate is stabilizing, while commercial isn't.
The ISM Manufacturing index, on the other hand, topped forecasts. It came in at 52.9 in August compared with 48.9 in July and expectations for a reading of 50.5. The new orders subindex vaulted to 64.9 from 55.3, while the production subindex climbed to 61.9 from 57.9. The prices paid indicator of inflation also came in hot -- at 65 vs. 55 a month earlier. The employment index inched up to 46.4 from 45.6.
Net/net, the market index is a bit of a rise in stocks and a sharp drop in bonds. Long bond futures were recently down 28/32, in fact.