1)June payrolls grew by 850k, 130k more than expected with a combined upward revision of 15k to the two prior months. The private sector added 662k of this which was 57k higher than the forecast. The all in U6 rate did fall to 9.8% and that is the lowest since March 2020 and the number of job leavers jumped again which goes to the large number of job openings and higher wage opportunities elsewhere. Let’s look at average hourly earnings in June 2021 vs June 2019. For all private sector workers, it’s up 8.7%. In the large service sector, it is higher by 9.2% over the past two years. For the goods side, they are up by 6.9%. After losing 22.3mm jobs in March and April, we’ve since recovered 15.6mm of them back.
2)Reestablishing its downward trend, initial jobless claims fell to 364k from 415k last week. The estimate was 388k and last week was revised up from 411k. The 4 week average fell to 393k from 399k. Delayed by two weeks, those still receiving PUA fell by 15k to 5.94mm and those continuing to get the emergency kind declined by 12.1k to 5.26mm.
3)Pending home sales in May rebounded by 8% m/o/m after a 4.4% drop in April. The estimate was for a drop of 1% and this comes in the midst of the important spring selling season. The NAR is claiming that the May decline in mortgage rates was the main catalyst as they got as high as 3.3% in March according to Bankrate.com and got below 3.10% in May. The NAR also said “Home price growth will steadily moderate with increased supply, but a broad and prolonged decline in prices is unlikely.”
4)We can add Fed Governor Waller to the belief of Fed president’s Kaplan, Bullard, Harker and Rosengren that want to start tapering soon. If I were to guess, I’d say they lay the groundwork at the July meeting and start in September.
5)The Conference Board’s consumer confidence index for June rose 10 pts m/o/m to 127.3 and that was well better than the estimate of 119. And, we are getting closer to the February 2020 print of 132.6. The Present Situation rose to 157.7, higher for a 5th month and compares with 173.90 in January 2020. While the Expectations component just got back what it lost last month, it is basically back to the early 2020 pre Covid level. One year inflation expectations rose to 6.7% from 6.5% and that matches the highest since 2008. Those that said jobs were Plentiful rose another 6 pts and has doubled over the past 3 months to the highest level since July 2000. Those that said jobs are Hard to Get fell to the least since September 2000. Notwithstanding this, expectations for more employment fell to a 7 month low and I can’t square that circle. Positively for employees, expectations for higher income rose to the best since March 2020. After falling in May, spending intentions did recover some of what it lost. Intentions to take a vacation increased too but still remains well below the pre Covid levels.
6)South Korea’s manufacturing PMI in June rose a touch to 53.9 from 53.7, Thailand’s to 49.5 from 47.8 and the Philippines to 50.8 from 49.9.
7)In Japan we also saw their quarterly Tankan report where large businesses, both in manufacturing and services, saw confidence gains in Q2 from Q1 but to just under expectations. For smaller companies, q/o/q increases were seen as well to about as expected. Capital spending plans improved further, by 9.6%, above the estimate of 7.2%.
8)In South Korea, because of their strong presence in auto’s and semi’s, both exports and imports were strong and above expectations but could have been even better with more supply.
9)Hong Kong’s trade data for May was about as expected with exports higher by 24% y/o/y and imports up by 26.5%. Exports to China rose 27% and to the US by 6%. A government spokesman said “Looking ahead, the further revival of demand from major economies should auger well for Hong Kong’s export performance in the near term.”
10)In the Eurozone, the June manufacturing PMI was revised to 63.4 from the initial print of 63.1 and up from 63.1 in May. This is the best print ever in the 24 yrs of survey history “as demand surged with the further relaxation of Covid containment measures and vaccination progress drove renewed optimism about the future.” But, nothing is free as “the sheer speed of the recent upsurge in demand has led to a sellers’ market as capacity and transportation constraints limit the availability of inputs to factories, which have in turn driven industrial prices higher at a rate not previously witnessed by the survey. Manufacturers are clearly willing to pay more to ensure sufficient supplies of key inputs.”
11)The Eurozone Economic Confidence index for June rose to 117.9 from 114.5 and that is the highest since May 2000. A further reopening and springtime were all over this as the services component led the way with a 6.6 pt m/o/m gain. Retail too helped with modest gains in manufacturing and construction. Consumer confidence rose to the highest since December 2017.
12)The Eurozone June CPI rose 1.9% y/o/y headline and by .9% core, both as expected. On a m/o/m basis, headline CPI in the Eurozone is running at a 5% annualized rate in the 1st half of 2021.
13)Germany said the number of unemployed workers in June fell by 38k, well more than the expected drop of 20k and the unemployment rate is down to 5.9%.
14)Import prices in Germany further confirms the global nature of inflation right now. Import prices in May rose 1.7% m/o/m after a 1.4% m/o/m gain in April, 1.8% jump in March, a 1.7% m/o/m increase in February and 1.9% spike in January. These are m/o/m moves! Versus last year, they are up 11.8%.
15)Here’s what really happened, //www.youtube.com/watch?v=sEJSp-igWqs
1)The BLS June household survey saw a loss of 18k jobs and when combined with the 151k increase in the size of the labor force, the unemployment rate rose to 5.9% from 5.8% and vs the estimate of 5.6%. There was a decline in hours worked which fell to 34.7 from a revised 34.8 from initially 34.9 last month. This was in part because of the drop in manufacturing hours likely because there aren’t enough parts which then alters shifts and hours worked. Also, there was no change in the participation rate of 61.6% even with the millions of job openings and the average duration of unemployment is now 31.6 weeks vs 26 six months ago. Average hourly earnings rose .3% m/o/m and 3.6% y/o/y as expected but with the drop in hours worked, there was no m/o/m change in weekly earnings while the y/o/y gain was 3.9%.
2)Those filing for pandemic unemployment assistance rose by 3k. Delayed by a week, continuing claims rose to 3.47mm from 3.41mm and that was 130k more than expected. Including PUA and emergency too, those still getting claims of some kind past the initial filing is 14.7mm.
3)The June ISM manufacturing index fell to 60.6 from 61.2 and that was a touch below the estimate of 60.9 and is versus 60.7 in April. Of the 18 industries surveyed, 17 saw growth and one saw no change. The ISM summed up the report by saying this: “Manufacturing performed well for the 13th straight month, with demand, consumption and inputs registering growth compared to May. Panelists’ companies and their supply chains continue to struggle to respond to strong demand due to the difficulty in hiring and retaining direct labor. Continued high backlog levels, too low customers’ inventories and record raw materials lead times are being reported. Labor challenges across the entire value chain continue to be the major obstacles to increasing growth.”
4)From the new Apartment List monthly report: “Our national index increased by 2.3 percent in June, continuing the trend of rapid price growth since the start of the year. So far in 2021, rental prices have grown a staggering 9.2 percent. To put that in context, in previous years growth from January to June is usually just 2 to 3 percent. After this month’s spike, rents have been pushed well above our expectations of where they would have been had the pandemic not disrupted the market.”
5)The MBA said purchases fell 4.8% w/o/w and 17.3% y/o/y to the slowest level since early May 2020. Refi’s have run out of steam too, falling by 8.2% w/o/w and 15% y/o/y. This component is now where it was pre Covid in February 2020.
6)The pace of home price increases accelerated further in April to a y/o/y change of 14.6% according to S&P CoreLogic. Pre Covid prices were rising about 3-4%. S&P said “April’s performance was truly extraordinary. The 14.6% gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data.”
7)Thanks to supply problems, total vehicle sales in June were 15.36mm at a SAAR, about 1mm below expectations.
8)Here are some manufacturing PMI’s in Asia: China’s Caixin fell to 51.3 from 52, India’s to 48.1 from 50.8, Japan to 52.4 from 53, Australia to 58.6 from 60.4, Taiwan to 57.6 from 62, Vietnam plunged to 44.1 from 53.1 and Malaysia to 39.9 from 51.3. Covid outbreaks and selective restrictions were main reason for some countries.
9)China saw moderation in its state sector focused manufacturing and services composite PMI which fell in June to 52.9 from 54.2 with most of the decline seen in services as manufacturing was little changed. That is a 4 month low.
10)The stop and start reopening in Japan was reflected in its labor market data for May where the unemployment rate rose by 2 tenths m/o/m to 3% as the number of employed fell for a 3rd month. The jobs to applicant ratio remained at 1.09.
11)It’s more dated data as it comes from May but South Korea and Japan both reported industrial production figures that missed expectations
12)The UK manufacturing PMI for June was revised to 63.9 from the 1st print of 64.2 and down from 65.6 in May. It was still a good figure as “the reopening of economies at home and overseas supported increased production, new orders and employment.” On the cost side, “The sector is still beset by rising cost inflationary pressures, however, as Brexit related trade issues exacerbated global supply chain delays. The resulting widespread raw material shortages drove purchase prices up to the greatest extent on record, leading to an unprecedented steep rise in selling prices. There are also widespread reports of supply issues causing disruptions to production schedules and impeding the re-building of buffer stocks.”
13)The Nationwide House Price index in the UK for June saw prices rising by 13.4% y/o/y.