Economic Update 06/08/15

NO LETUP IN HIRING IN MAY

Last Thursday, the International Monetary Fund took the unusual step of offering the Federal Reserve some advice – it urged the central bank not to raise interest rates until 2016. Given the large hiring gains this spring, the Fed may choose to ignore that recommendation. U.S. employers added 280,000 new workers last month; since the labor force participation rate slightly increased, the jobless rate ticked up to 5.5% in May with the broader U-6 rate (unemployed+ underemployed) remaining at 10.8%. According to Labor Department data, 120,000 of the new jobs were in the leisure & hospitality and service industry sectors, but there were also 47,000 hires in the health care sector.

CONSUMER SPENDING WAS FLAT IN APRIL

This news was a disappointment after the 0.5% advance the Commerce Department measured for March. Consumer incomes, however, improved 0.4% in April; in March, there was no gain.

 ISM: SERVICES PMI SLIPS, FACTORY PMI RISES

Falling 2.1 points to 55.7 in May, the Institute for Supply Management’s services sector PMI came in below the 57.0 reading projected by economists polled by MarketWatch. ISM’s manufacturing PMI rose 1.3 points in May to 52.8, beating the MarketWatch consensus forecast by a full point.

A RETREAT ON WALL STREET

The first trading week of June saw the S&P 500 slip 0.69% across five days to 2,092.83. From June 1-5, the Nasdaq lost just 0.03% to 5,068.46 while the Dow declined 0.90% to 17,849.46. Oil slumped 1.9% – its first down week in three months – to a settlement of $59.13 on the NYMEX Friday. COMEX gold gave back 1.8% for the week, closing Friday at $1,168.00 an ounce.

THIS WEEK: On Monday, Sears Holdings, H&R Block, Dave & Buster’s and Casey’s General Stores present earnings and Apple kicks off its worldwide developer conference. Tuesday offers earnings from Lululemon Athletica, Converse, Pep Boys, Hovnanian, Burlington Stores and Quiksilver and a Commerce Department report on April wholesale inventories. Krispy Kreme and Men’s Wearhouse announce earnings Wednesday. On Thursday, the Commerce Department releases May retail sales numbers; the latest initial jobless claims report also arrives, plus earnings from Restoration Hardware and Korn/Ferry. Friday, May’s Producer Price Index and the initial June University of Michigan consumer sentiment index appear.