Not Explosive: July 1 – 5

Employers added to their payrolls in June, but April and May saw sharp downward revisions. Here are the five things we learned from U.S. economic data released during the week ending July 5.

Payrolls expanded again (but at a slower pace) in June. Nonfarm payrolls swelled by a seasonally adjusted 206,000, slightly below May’s 218,000 gain but ahead of April’s 108,000 increase. The Bureau of Labor Statistics has downwardly revised its April and May job adds by a combined 111,000 from previously reported levels. Private sector payrolls expanded by 136,000 jobs, including 117,000 in the service sector. Adding the most jobs was health care/social assistance (+82,400), while professional/business services (-17,000) and retail (-8,500) both shed workers. Government employment jumped by 70,000. Average weekly earnings of $1,200.50 represented a 3.6 percent increase from a year earlier.

A separate survey of households found that the unemployment rate increased by 1/10^th of a percentage point to 4.1 percent. The unemployment rate was at 3.6 percent one year ago. The labor force grew by 277,000, increasing the participation rate by 1/10^th of a percentage point to 62.6 percent (matching June 2023’s reading). Also growing was the 25 to 54 participation rate, adding 1/10^th of a percentage point to 82.7 percent (June 2023: 83.5 percent). The median length of unemployment jumped by 9/10^ths of a week to 9.8 weeks (June 2023: 8.8 weeks). The number of part-time workers seeking full-time work contracted by 199,000 to 4.220 million (June 2023: 4.198 million). The broadest measure of labor underutilization (the “U-6” series) held steady at 7.4 percent (June 2023: 6.9 percent).

The number of unfilled jobs grew in May. The Bureau of Labor Statistics reports that there were a seasonally adjusted 8.140 million open jobs, up 222,000 for the month but 12.6 percent below year-ago levels. Private sector employers had 7.055 million unfilled positions, with health care/social assistance and professional/business services each reporting more than a million open jobs. Hiring increased by 141,000 to 5.615 million (-6.7 percent versus May 2023). Private sector employers filled 5.379 million positions, with professional/business services, health care/social assistance, and accommodation/food services hiring the most workers. 5.422 million workers separated from their jobs, up 85,000 for the month but down 7.3 percent from a year earlier. This includes 3.459 million people who quit their jobs (+7,000 versus April 2024 and -13.7 percent versus May 2023) and 1.654 million workers laid off (+112,000 versus April 2024 and +8.0 percent versus May 2023).

Manufacturing activity contracted in June. The Institute for Supply Management’s Manufacturing PMI slipped 2/10^ths of a point to 48.5. The Manufacturing PMI has been below 50.0—the threshold between an expanding and shrinking manufacturing sector—for 19 of the past 20 months (including the last three). While the index for new orders jumped, those for production, employment, and inventories fell during the month. Eight of 17 tracked manufacturing industries expanded in June, led by printing, petroleum/coal products, and primary metals. The press lease noted that “demand remains subdued,” with companies unwilling to invest in capital or inventory “due to current monetary policy and other conditions.”

The service sector also reported a slowdown in June. The ISM’s Services PMI slumped 5.0 points to 48.8. The Services PMI failed to break the 50.0 threshold twice over the past three months. Falling sharply were measures for business activity/production, new orders, and inventories (the employment index suffered a smaller decline). Eight of 16 tracked service-sector industries reported growth, including management of companies/support services, health care/social assistance, and construction. Survey respondents said, “business is flat or lower” and that they faced “significantly higher costs” for some commodities.

The trade deficit widened in May. Exports declined 0.7 percent to a seasonally adjusted $261.7 billion and imports slowed 0.3 percent to $336.7 billion. The resulting trade deficit of -$75.1 billion was up 0.8 percent for the month. The Census Bureau and the Bureau of Economic Analysis measure totaled -$354.0 billion for the first five months of 2024, up 4.2 percent from the comparable 2023 months. The goods deficit expanded $0.9 billion to -$100.2 billion, while the services surplus increased by $0.3 billion to +$25.1 billion. Exports fell for industrial supplies/materials (e.g., nonmonetary gold, fuel oil) and automobiles/trucks, while imports fell for pharmaceutical preparations and automobiles/trucks. Crude oil and nuclear fuel material imports rose. The U.S. had its biggest goods deficits with China, the European Union, Mexico, and Vietnam.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending June 29, 2024, First-Time Claims, seasonally adjusted): 238,000, +5,000 vs. the previous week, -10,000 vs. the same week a year earlier). 4-week moving average: 238,500 (-5.3% vs. the same week a year earlier).
• Factory Orders (May 2024, New Orders for Manufactured Goods, seasonally adjusted): $583.1 billion (-0.5% vs. April 2024; +0.9% vs. May 2023.
• Construction Spending (May 2024, Value of Construction Put in Place, seasonally adjusted annualized rate): $2.140 trillion (-0.1% vs. April 2024; +6.4% vs. May 2023).
• Vehicle Sales (June 2024, Automobiles and Light Trucks, seasonally adjusted annualized rate): 15.290 million (-4.0% vs. May 2024; -4.8% vs. June 2023).

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