Friday July 22 2016
US Markit manufacturing PMI at 9-Month High
Markit | Joana Taborda |

The Markit Flash US Manufacturing PMI came in at 52.9 in July of 2016, up from 51.3 in June and much better than market expectations of 51.6. It is the highest reading since October last year as output and new business growth accelerated and payrolls rose the most in 12 months.

Higher levels of manufacturing production have now been recorded for the past two months, with the latest expansion the fastest since November 2015. Survey respondents commented on strong sales growth, the launch of new products and generally favourable domestic economic conditions. Some firms noted that weak demand from the energy sector and uncertainty related to the presidential election remained growth headwinds. 

An acceleration of production growth was driven by a robust rise in new business volumes in July. The latest expansion was the fastest for nine months and close to its post-crisis average. Meanwhile, new export orders rose at a weaker pace than seen for overall new business, suggesting that domestic markets remained the main driver of growth in July. However, although only modest, the latest rise in new export orders still compared favourably with the stagnation seen on average over the past year-and-a-half. 

Improved demand conditions and greater production volumes encouraged further job creation across the manufacturing sector in July. The latest survey highlighted a solid upturn in employment numbers, with the pace of expansion the fastest for exactly one year.

Manufacturers also boosted their input buying in response to greater workloads. Higher levels of purchasing activity have now been recorded for three months running, but the latest survey indicated that input stocks were depleted again. Finished goods inventories also decreased in July, which firms linked to deliberate stock reduction policies and associated efforts to boost efficiency. 

Meanwhile, the latest survey signalled a solid pace of input cost inflation across the manufacturing sector. Increased input prices have now been recorded for four months in a row and the rate of inflation picked up to its strongest since November 2014. 

Anecdotal evidence suggested that higher steel prices and rising staff salaries had contributed to upward pressure on average cost burdens. Despite a faster rise in input costs, July data signalled that output charge inflation remained marginal and eased since the previous month.

Thursday July 21 2016
US Jobless Claims Fall to 3-Month Low
DOL | Joana Ferreira |

The number of Americans filing for unemployment benefits decreased by 1,000 to 253,000 in the week ended July 16th compared with the previous week's unrevised level of 254,000. The figure came in way below market expectations of 265,000 and hit its lowest level since April.

This marks 72 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The 4-week moving average was 257,750, a decrease of 1,250 from the previous week's unrevised average of 259,000.

The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending July 9, a decrease of 0.1 percentage point from the previous week's unrevised rate. 

The continuing claims drawn by workers for more than a week (the advance number for seasonally adjusted insured unemployment) during the week ending July 9 was 2,128,000, a decrease of 25,000 from the previous week's revised level. The previous week's level was revised up 4,000 from 2,149,000 to 2,153,000. The 4-week moving average was 2,141,250, a decrease of 2,750 from the previous week's revised average. The previous week's average was revised up by 1,000 from 2,143,000 to 2,144,000.

Tuesday July 19 2016
US Housing Starts at 4-Month High of 1189K
U.S. Census Bureau | Joana Taborda |

US housing starts jumped 4.8 percent to a seasonally adjusted annualized rate of 1189 thousand in June from May of 2016, after falling an upwardly revised 1.7 percent in the previous period. Figures came much better than market expectations of a 0.5 percent gain, reaching the highest in four months, as groundbreaking on single-family homes rebounded.

Starts grew in the Northeast (+46.3 percent) and in the West (+17.4 percent), offsetting falls in the Midwest (-5.2 percent) and the South (3.4 percent). 

Groundbreaking on single-family homes, the largest segment of the market, grew 4.4 percent to 778 thousand. The Northeast recorded the biggest increase (up 31.6 percent), followed by the Midwest (+7.3 percent), the West (+3.1 percent) and the South (+0.5 percent). Housing starts for the volatile multi-family segment went up 1.6 percent to 392 thousand, the highest since September last year. 

Building permits rose 1.5 percent to a seasonally adjusted annual rate of 1153 thousand. Single-family authorizations increased 1 percent to 738 thousand, boosted by the Northeast (+13.7 percent) and the West (+0.6 percent) while single-family permits were flat in Midwest and fell 0.3 percent in the South. Multi-family building permits increased 1.9 percent. 

Year-on-year, housing starts fell 2 percent and building permits were down 13.6 percent.

Friday July 15 2016
US Consumer Sentiment Falls to 3-Month Low
University of Michigan | Joana Taborda |

The University of Michigan's consumer sentiment for the United States came in at 89.5 in July 2016, down from 93.5 in June and well below market expectations of 93.5. It is the lowest reading since April as current conditions worsened, the future outlook reached the lowest since September of 2014 and inflation expectations rose, preliminary figures showed.

The barometer of consumer expectations went down to 77.1 from 82.4 in the previous month and the gauge of current economic conditions declined to 108.7 from 110.8 in June.

Americans expect the inflation rate in the next year to be 2.8 percent, up from 2.4 percent in June. Over the next 5 years, they expect consumer prices to accelerate to 2.6 percent from 2.3 percent in June. 

Friday July 15 2016
US Industrial Output Posts Biggest Gain in 1 Year
Federal Reserve | Joana Ferreira |

Industrial production in the United States increased 0.6 percent in June from May 2016, recovering from a downwardly revised 0.3 percent drop in the previous period and better than market expectations of a 0.2 percent gain. It was the biggest gain since July last year, as output of manufacturing, mining and utilities moved up.

Manufacturing output rose 0.4 percent in June; for the second quarter, however, factory output decreased at an annual rate of 1.0 percent. The production of durables jumped 0.9 percent in June, the production of nondurables edged down 0.1 percent, and the production of other manufacturing (publishing and logging) fell 1.5 percent. Within durables, gains of greater than 1 percent were registered by machinery; electrical equipment, appliances, and components; and motor vehicles and parts. Within nondurables, apparel and leather, paper, chemicals, and plastics and rubber products recorded declines that were largely offset by increases elsewhere; the largest gain was registered by printing and support.

The index for utilities rose 2.4 percent as a result of warmer weather than is typical for June boosting demand for air conditioning.

The output of mining moved up 0.2 percent for its second consecutive small monthly increase following eight straight months of decline. A rise in the index for oil well drilling and servicing and a second consecutive large monthly increase in the index for coal more than offset declines in oil and gas extraction and in non-metallic mineral mining.

At 104.1 percent of its 2012 average, total industrial production in June was 0.7 percent lower than its year-earlier level.

Capacity utilization for the industrial sector increased 0.5 percentage point in June to 75.4 percent, a rate that is 4.6 percentage points below its long-run (1972–2015) average.

Friday July 15 2016
US Retail Sales Rise for 3rd Straight Month
US Census Bureau | Joana Ferreira |

Retail sales in the United States advanced 0.6 percent in June from May 2016, following a downwardly revised 0.2 percent gain in the previous period and beating market expectations of 0.1 percent rise. It was the third straight month of gains as sales of motor vehicles, furniture and building material rebounded.

Sales at motor vehicle and part dealers edged up 0.1 percent compared to a 0.5 percent contraction in May. Sales at furniture and home furniture stores grew 0.5 percent, following a 0.1 percent contraction in the previous month; and those at building material and garden equipment and supplies dealers increased 3.9 percent after falling by 2.5 percent in May. Additional upward pressure came from sales at gasoline stations (+1.2 percent); nonstore retailers (+1.1 percent); miscellaneous store retailers (+0.9 percent); sporting goods, hobby, book and music stores (+0.8 percent); health and personal care stores (+0.7 percent); food and beverage stores (+0.5 percent). By contrast sales at clothing and clothing accessories stores fell 1 percent and those at electronics and appliance stores were flat.

Retail sales, excluding automobiles, gasoline, building materials and food services, which correspond most closely with the consumer spending component of GDP, went up 0.5 percent last month after a 0.5 percent increase in May.

Compared with the same month of the previous year, retail sales advanced 2.7 percent, accelerating from a 2.5 percent gain in May.

Friday July 15 2016
US Inflation Rate Steady at 1% in June
BLS | Joana Taborda |

Consumer prices in the United States increased 1 percent year-on-year in June of 2016, the same as in the previous month and slightly below market expectations of a 1.1 percent rise. Inflation accelerated for shelter and medical care and energy prices fell at a slower pace while food inflation reached the lowest in more than 6 years.

Year-on-year, prices of services less energy increased 3.2 percent, the same as in May: while inflation accelerated for shelter (3.5 percent from 3.4 percent in May) and medical care (3.8 percent from 3.5 percent in May), cost of transportation services increased at a slower pace (3 percent from 3.2 percent in May). Food inflation eased for the second straight month to 0.3 percent from 0.7 percent in May, reaching the lowest since March of 2010 while energy prices fell less (-9.4 percent from -10.1 percent in May).

Annual core inflation which excludes food and energy went up to 2.3 percent from 2.2 percent in the previous month.

Monthly inflation came in at 0.2 percent, the same as in May and lower than market expectations of 0.3 percent. The food index fell 0.1 percent, with the food at home index declining 0.3 percent. The index for energy rose 1.3 percent, due mainly to a 3.3 percent increase in the gasoline prices while cost for natural gas and electricity declined.  

Excluding food and energy, consumer prices also went up 0.2 percent. The shelter index rose 0.3 percent, and a broad array of indexes also increased, including medical care, education, airline fares, motor vehicle insurance, and recreation. In contrast, the indexes for used cars and trucks, apparel, communication, and household furnishings and operations all declined in June.   

Thursday July 14 2016
Initial Jobless Claims Unchanged at 254K in Latest Week
DOL | Joana Taborda |

The number of Americans filing for unemployment benefits held steady at 254,000 in the week ended July 9th, the lowest since early April. Figures came better than market expectations of 265 thousand, suggesting further labour market strength. It is the 71st straight week initial claims are below 300,000, the longest streak since 1973.

The 4-week moving average was 259,000, a decrease of 5,750 from the previous week's unrevised average of 264,750.

The advance seasonally adjusted insured unemployment rate was 1.6 percent for the week ending July 2, an increase of 0.1 percentage point from the previous week's revised rate. The previous week's rate was revised down by 0.1 from 1.6 to 1.5 percent.

The advance number for seasonally adjusted insured unemployment during the week ending July 2 was 2,149,000, an increase of 32,000 from the previous week's revised level. The previous week's level was revised down by 7,000 from 2,124,000 to 2,117,000.

The 4-week moving average was 2,143,000, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised down by 2,000 from 2,148,250 to 2,146,250. 

Wednesday July 13 2016
US Budget Surplus Narrows in June
US Treasury | Joana Taborda |

The United States recorded a USD 6 billion budget surplus in June of 2016, much lower than a USD 50 billion surplus a year earlier and market expectations of USD 24 billion. Outlays rose 10.6 percent while receipts fell 3.8 percent.

Outlays totaled USD 323 billion. Interest on debt accounted for USD 27 billion; Medicare for USD 46 billion; defense for USD 49 billion; social security for USD 81 billion and other outlays for the remaining USD 121 billion.

Receipts totaled USD 330 billion: individual income taxes accounted for the largest share (USD 134 billion), followed by social security and other payroll taxes (USD 111 billion), corporate income taxes (USD 61 billion) and other taxes and duties (USD 23 billion). 

When accounting for calendar adjustments, June showed a USD 10 billion surplus compared with an adjusted USD 50 billion surplus a year earlier.

The current fiscal year-to-date deficit was USD 401 billion, up 26.9 percent from a USD 316 billion deficit at this time last year.

Friday July 08 2016
US Job Growth Strongest in 8-Months
BLS | Joana Taborda |

Total nonfarm payroll employment in the United States increased by 287,000 in June of 2016, much higher than a downwardly revised 11,000 in May when a strike in Verizon led to job losses in information. Figures came well above market expectations of 175,000, easing concerns about labour market strength. Job growth occurred in leisure and hospitality, health care and social assistance, financial activities and information, largely reflecting the return of workers from the strike.

Leisure and hospitality added 59,000 jobs in June, following little employment change in the prior month. In June, employment increased in performing arts and spectator sports (+14,000), after edging down in May. Employment in food services and drinking places changed little over the month (+22,000). Job gains in leisure and hospitality have averaged 27,000 per month thus far this year, down from an average of 37,000 in 2015, reflecting slower job growth in food services and drinking places. 

Health care and social assistance added 58,000 jobs in June. Health care employment increased by 39,000 over the month. Job gains occurred in ambulatory health care services (+19,000) and hospitals (+15,000), about in line with average monthly gains over the prior 12 months in each industry. Within social assistance, child day care services added 15,000 jobs in June.

Employment in financial activities rose by 16,000 in June and has risen by 163,000 over the year.

Employment in information increased by 44,000 in June. Employment rose in telecommunications (+28,000), largely reflecting the return of workers from a strike. Employment increased in motion picture and sound recording industries (+11,000), after a decrease of similar magnitude in May. 

Employment in professional and business services continued to trend up in June (+38,000). Thus far this year, the industry has added an average of 30,000 jobs per month, compared with an average monthly gain of 52,000 in 2015. 

Employment in retail trade edged up by 30,000 in June, after changing little over the prior 2 months. In June, job gains occurred in general merchandise stores (+9,000) and in health and personal care stores (+5,000). Retail trade has added 313,000 jobs over the year.

Employment in mining continued to trend down in June (-6,000). Since reaching a peak in September 2014, mining has lost 211,000 jobs.

Employment in other major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, and government, showed little or no change in June.

In June, the average workweek for all employees on private nonfarm payrolls was 34.4 hours for the fifth consecutive month. The manufacturing workweek (40.7 hours) and manufacturing overtime (3.3 hours) were also unchanged over the month. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours. 

In June, average hourly earnings for all employees on private nonfarm payrolls edged up (+2 cents) to $25.61, following a 6-cent increase in May. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.51 in June.