The number of Americans filing for unemployment fell last week, marking the first decrease in a month. According to the latest statistics from U.S. Labor Department, jobless claims fell by 3,000 to 247,000 for the week ending in July 8. The 4-week average increased slightly to 1.949 million.
The unemployment rate for insured workers remains unchanged at 1.4 percent.
In total, the report signaled a strong demand for labor in the United States.
According to the June 2017 Employment Situation release by the US Department of Labor, employment is rising while hourly earnings are flat lining.
US hiring hit its strongest pace since February, with 222,000 new jobs added in the month of June. The leap in new jobs was led by the service sector, with professional and business services growing by 35,000. Government jobs also grew at a solid pace after a previous period of uneven results, increasing by 35,000.
Hours increased to an overall level of 34.5 weekly hours coupled with a slight 0.1 percent increase in unemployment. However, despite the increase, unemployment remained relatively low at 4.4 percent with the number of available workers also decreasing to 12.4 million.
In contrast, earnings only increased by 0.2 percent from the previous month, with a weak yearly growth of 2.5 percent.
According to June PMI data from BME and IHS Markit, the German manufacturing sector is continuing to grow at the strongest rate in over six years. The PMI rose to 59.6 up from 59.5 in May, reaching a 74 month high.
The rising index reflected a large increase in new orders as well as a lengthening in supplier delivery times. German manufacturers experienced the fastest growth in new orders since March 2011, marking the sixth acceleration in seven months. Purchasing activity also rose sharply in June, placing higher demands on suppliers and leading to the greatest lengthening of delivery times since April 2011.
Average input costs continued to increase in June as a result of high prices for raw materials. However, while output inflation quickened to the second fastest rate since July 2011, the total inflation rate continued to decline to a 7 month low.
In total, the report highlights the current strength of the German manufacturing sector and suggests that manufacturing will continue to act as a positive force in second quarter German GDP.
The U.S. economy slowed less than initially anticipated, according to Thursday’s third GDP estimate released by the Bureau of Economic Analysis. In this final estimate, GDP increased at an annual rate of 1.4 percent in the first quarter, an upward revision from previous estimates of 1.2 and 0.7 percent.
The upward revision was due mostly to a change in reported levels of consumer spending. Accounting for more than two thirds of economic activity in the U.S., consumer spending grew at a rate of 1.1 percent. This marks the weakest consumer showing in four years, but the final growth rate is almost double the initial estimate of 0.6 percent.
The final estimate also reflected positive contributions from nonresidential fixed investment, exports, PCE and residential fixed investment. These positive forces were somewhat offset by negative contributions from private inventory investment, federal government spending, and state and local government spending leading to a tepid, though stronger than anticipated level of growth in the first quarter.
According to the most recent survey from the Munich-based Ifo Institute, business sentiment has reached increasingly high levels in Germany. The Business Climate Index rose to 115.1 points in June 2017 from a previous level of 114.6 points in May. The increase points to a high level of satisfaction among German businesses regarding the country’s current business climate as well as a strong level of optimism for the future.
In the manufacturing sector, the index rose slightly as assessments of the current business situation remained relatively stable at a high level.
In the wholesaling sector, the index rose for the third month in a row. June’s reading marks the highest level since December 2010.
The index most notably improved in the retail sector, showing a high level of optimism about the short term business outlook among German retailers.
The index declined for the construction sector as contractors marginally decreased their assessments of both the current business situation as well as their expectations for the future.
In total, June’s reading reflects the strong performance of the German economy this quarter.
Often seen as a marker for business investment, U.S. durable goods orders fell for the second month in May 2017. According to a report by the U.S. Commerce Department, durable goods (items meant to last a minimum of three years) fell 1.1 percent between April and May, dropping to $228.2 billion.
May’s decline marks the largest drop in six months and is greatly attributed to a decrease in orders for aircraft. While previously a strength, aircraft orders have declined for the second time in two months with a 12 percent decrease in orders for commercial aircraft and a 31 percent decrease in orders for defense aircraft, a notoriously volatile category.
Core capital goods were another area of weakness in May with an unexpected 0.2 decline in both orders and shipments for this category.
In contrast, there was a 0.6 percent increase in machine orders, a 1.2 percent increase in vehicle orders, and a 0.8 percent gain in total shipments.
Excluding the category of transportation (which does not include aircraft), durable goods orders also rose very slightly, increasing by 0.1 percent/
While not completely negative, May’s readings point to a lack of confidence in business prospects in the United States.
The latest Monthly New Residential Construction Report from the U.S. Census Bureau brings some negative news for the U.S. housing sector. Housing starts hit an eight month low in May 2017, falling 5.5 percent, to a rate of 1.092 million.
Housing permits also decreased 4.9 percent to 1.168 million.
There were declines across all individual components, with single-family starts falling 3.9 percent to a rate 794,000 and permits falling 1.9 percent to 779,000. Correspondingly, multi-family starts fell 9.7 percent to 298,000 and permits dropped 10.4 percent to 389,000.
In contrast, housing completions rose 5.6 percent, coming in at a rate of 1.164 million, adding supply to a thin market.
The overall decline in construction activity suggests that residential investment will be a negative factor in second quarter GDP.
The latest data release from Eurostat, shows that seasonally adjusted industrial production has risen 0.5% in the euro zone between April and May 2017. The annual rate has risen by 1.4% in both the euro area and the EU28.
Source: Eurostat
This is largely due to a 4.7% increase in the production of energy, with a 0.6% rise in the production of durable consumer goods, a 0.2% rise in the production of non-durable consumer goods and a 0.1% rise in the production of intermediate goods making up for a 0.7% decrease in the production of capital goods.
The 0.5% total increase was spurred by a 1% country-level increase in Germany, covering smaller decreases in France (down 0.6%), Italy (down 0.4%) and Spain (down 0.1%). Although, among member states for which data are available, the highest country-level increases were reported in Ireland (+7.7%), Malta (+2.9%), and Portugal (+2.0%). The highest decrease was recorded in Slovakia (-10.9%),
In total, aggregate euro zone industrial production is increasing and the goods sector is predicted to experience a stable second quarter.
According to the latest data available from the Office of National Statistics, a 0.3% monthly increase in the UK Consumer Price Index has lifted the annual inflation rate to 2.9% in May 2017, a slight increase from the 2.7% estimated by the Bank of England.
This marks the highest reading since April 2012, continuing a trend of increased prices after a period of low inflation in 2015. It also marks the 5th consecutive month where inflation has exceeded the Bank of England’s target rate of 2%.
The increase in the CPI is mainly attributed to a rise in the prices of recreational and cultural goods, most notably video games. Overall prices in this category rose 0.9% between April and May, the largest increase in all categories measured. This was coupled with modes price increases for food, clothing, electricity, furniture and household goods.
These increases were partially offset by a decrease in transportation prices, especially in air and sea fares.
The latest Jobless Claims report available from the US Department of Labor points to a strong demand in the labor market. The number of Americans filling for unemployment benefits fell 10,000 in the first week of June, dropping to 245,000.
The four week moving average rose slightly to 242,000, an increase of 2,500 from the previous week.
The seasonally adjusted insured unemployment rate was reported at 1.4%, unchanged from the previous week.
The seasonally adjusted insured unemployment decreased 2,000 to the record low level of 1,917,000.
