
Positives
1)Those filing for PUA fell to 99k from 114k. Continuing claims were down by 145k from the week prior and at 3.34mm, it is the lowest since pre Covid. Those still receiving PUA declined by 111k and that is the 7th week in the past 8 that has seen a drop to 5.8mm. Continuing emergency claims fell by 354k to under 5mm at 4.9mm, a 5 month low.
2)The number of job openings in May totaled 9.21mm and because April was revised down by about 100k to just under that at 9.19mm, it is a revised record high. For perspective, last Friday’s June payroll report said there were 9.48mm unemployed and a pool of available labor totaling 15.9mm. Hiring is still a problem though as they fell by 85k in May and after a sharp jump in the two prior months of 609k, the number of quitters fell by 388k. At 2.5% the quit rate is still historically high but off the boil of 2.8% in April. This compares with the 25 year average of 1.9%.
3)The Eurozone June services PMI was revised to 58.3 for June from the 1st print of 58 and that was up from 55.2 in May and 50.5 in April as the economies in the region fully open up. Markit said “Once again, all nations recorded noticeable increases in activity, led by Ireland and Spain. The general easing of Covid restrictions helped to support market activity, according to panelists.”
4)The UK services PMI for June was revised up by .7 pts to 62.4 but down .5 pt from May. Part of the decline though was because of “capacity constraints and staff shortages” where backlogs are at “the steepest since the survey began in July 1996.” With inflation, “the rise in total operating expenses was the steepest since the survey began 25 years ago. Service providers noted that higher staff wages, increased raw material prices and greater transportation charges were the main factors pushing up costs.”
5)The German industrial production decline in May was as expected when we include the April upward revision.
6)Retail sales in the euro area rebounded by 4.6% m/o/m in May after a 3.9% drop in April, about as expected.
7)A short term positive, the PBOC cut its RRR by 50 bps to 12% to encourage more lending to businesses. Aggregate financing in China in June totaled 3.67 Trillion, well above the estimate of 2.89 Trillion. Bank loans made up 2.12 Trillion of this. M2 growth was 8.6% y/o/y vs the estimate of up 8.2% and vs 8.3% in May.
8)Reflecting its dominance in semi production, exports in Taiwan rose by 35.1% y/o/y in June, a bit above the estimate of up 33%. Exports to China rose 38% and to the US by 35%. Imports jumped by 42.3% y/o/y vs the forecast of up 34.5%.
9)The Reserve Bank of Australia is scaling back its QE to A$4b per week from A$5b.
Negatives
1)Initial jobless claims totaled 373k, 23k more than expected but little changed with 371k last week (revised up from 364k). This brings the 4 week average to 395k, unchanged with the week prior and vs 399k in the week before that.
2)The MBA said that the average 30 yr mortgage rate fell back by 5 bps to 3.15% but purchases and refi’s fell again w/o/w and y/o/y. Purchases were down by 1.1% w/o/w and 14% y/o/y. Refi’s were lower by 2.3% w/o/w and 8.1% y/o/y.
3)The June ISM services PMI fell to 60.1 from 64 and that was below the estimate of 63.5 and at a 4 month low. Of 18 industries surveyed, 16 saw growth vs all 18 in May. ISM summed up the report by saying what we already know, “The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month’s all time high. Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions.”
4)What used to be the ABC weekly consumer confidence poll, then a Bloomberg one, that is now the Langer Consumer Comfort index fell to 53.3 from 55.1 in the week prior. That is the lowest since mid April with all three components lower. Those components are ‘State of Economy, ‘Personal Finances’, and ‘Buying Climate.’
5)The ECB having failed at achieving its previous arbitrary inflation goal, is moving the goal posts and further doubling down.
6)The German ZEW investor confidence index in their economy for July fell unexpectedly to 63.3 from 79.8 and that was well below the estimate of 75.2 but still elevated. But, the Current Situation is quite opposite, rising to 21.9 from -.91 and well better than the forecast of 5.5. ZEW said “The economic development continues to normalize. In the meantime, the situation indicator for Germany has clearly overcome the coronavirus related decline. Although the ZEW Indicator of Economic Sentiment has once again fallen significantly, it is still at a very high level. The financial market experts therefore expect the overall economic situation to be extraordinarily positive in the coming six months.”
7)German factory orders were weaker than expected in May.
8)Old news but reflecting the same product and material shortages seen everywhere, manufacturing production in the UK in May was softer than expected, falling .1% m/o/m vs the estimate of up 1%. It was partially offset by a 3 tenths upward revision to April.
9)Italian IP in May also missed expectations.
10)A long term negative, the PBOC cut its RRR by 50 bps to 12% to encourage more lending to businesses. Aggregate financing in China in June totaled 3.67 Trillion, well above the estimate of 2.89 Trillion. Bank loans made up 2.12 Trillion of this. M2 growth was 8.6% y/o/y vs the estimate of up 8.2% and vs 8.3% in May.
11)China’s private sector focused services PMI from Caixin fell to 50.3 from 55.1 and well below the estimate of 54.9. Caixin cited “an uptick in Covid cases and reduced travel dampened demand.”
12)Singapore’s June PMI fell to 50.1 from 54.4. India’s declined to 41.2 from 46.4. Hong Kong’s dropped to 51.4 from 52.5.
13)Producer prices rose 8.8% y/o/y in China in June as expected, reflecting the same exact inflationary pressures that we are feeling. Chinese business is having a more difficult time than others in passing on these costs as CPI rose just 1.1% y/o/y, one tenth less than expected. Non food prices were higher by 1.7% though and ex both energy and food they were up by .9%.