The ongoing government shutdown has created a data vacuum, delaying key economic reports and clouding visibility for the Federal Reserve ahead of its next meeting. Markets now face the unenviable task of interpreting policy direction with limited official data, relying instead on supplemental and tangential indicators to gauge the economy’s trajectory.

Last week’s economic data painted a mixed picture of the U.S. economy.

The week began with key sentiment data from the S&P Global Manufacturing and Services Purchasing Managers’ Indices (PMIs). Both readings came in slightly below market expectations and last month’s figures, suggesting some softening in forward-looking sentiment. However, with Manufacturing at 52.0 and Services at 53.9, both remain above the 50 threshold, signaling continued expansion in economic activity rather than contraction.

FOMC Decision and Inflation Outlook, Retail Sales and Industrial Production, Housing Market Weakness, and more.

Overall, the data suggests the economy is entering a more balanced phase. Inflation appears to be stabilizing, with price pressures no longer accelerating, while signs of labor market softening are beginning to emerge.

Last week was pivotal for labor market data, with several key reports shaping investor sentiment. Markets also digested fresh survey data as participants assessed the economic outlook.

Last week began with a focus on the housing market, where housing starts for July exceeded expectations, reaching 1.428 million new construction starts.

Last week began with a focus on the housing market, where housing starts for July exceeded expectations, reaching 1.428 million new construction starts.

Economic indicators released this week reflect a complex and evolving macroeconomic landscape, marked by persistent inflationary pressures and a labor market that remains resilient but shows early signs of moderation.

Overall, the data portrays an economy that is still growing but at a slower pace. The services sector is barely expanding, the labor market is stable but showing signs of cooling, and inflation remains moderate yet above the Federal Reserve’s long-term target.