It was a light week for economic data following the short, but data intensive, 4th of July holiday week.
Last Friday‘s jobs report for June was positive, both in terms of the June payroll gain, but also in terms of revisions to April and May data. June saw a gain of 195,000 payroll jobs. April and May payroll gains were revised up to 199,000 and 195,000 respectively. The three-month average of 196,300 is a step up from the 180,000 average monthly gain over the second half of 2012. The unemployment rate was unchanged in June at 7.6 percent, essentially stuck there since March. However, if payroll job growth can maintain the near-200,000 per month pace, then the unemployment rate will continue to recede. So far, there is no evidence to say that July will fall off that pace.
Also from last week we saw the June ISM-Manufacturing and Non-Manufacturing Indexes. The ISM Manufacturing Index increased from 49.0 in May to 50.9, indicating a slight improvement in overall manufacturing conditions. The ISM Non-Manufacturing Index dipped from 53.7 in May to 52.2 in June, indicating still-positive conditions for the service sector.
Auto sales had a break-out month in June, stepping up to a 15.9 million unit sales pace after being range-bound near 15.0 million units for the prior seven months. Moderate income growth plus increasing consumer confidence will continue to support auto sales, as will gains in residential construction activity.
This week, the National Federation of Independent Business announced a decline in small business optimism in June after two months of improvement. According to the NFIB survey, business optimism has been on an improving trend through the first half of 2013, but still looks depressed compared to pre-2006 levels.
Initial claims for unemployment insurance for the week ending July 6 increased by 16,000 to hit 360,000. The down-trend in UI claims through the first quarter of 2013 has leveled out. The four-week average of UI claims near 350,000 is consistent with moderate job growth.
Producer prices for finished goods climbed 0.8 percent in June due primarily to higher energy prices. The spot price of West Texas Intermediate crude oil stepped up in early June as political tensions in the Middle East and North Africa increased. Further energy price gains in July will keep upward pressure on the overall PPI. The core PPI (less food and energy) was up a moderate 0.2 percent in June.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here:CMAEconWeekly071213.