Economic Update 08/05/13

JOBS REPORT SENDS MIXED SIGNALS

Unemployment sank to a 4½-year low of 7.4% last month, even as the pace of hiring declined a bit from spring. The Labor Department’s July report showed non-farm payrolls expanding by 162,000 jobs, with retail, bar and restaurant hires accounting for most of the gain. The ranks of the self-employed grew 2.6% last month. With jobs data like this, some analysts are wondering if the Federal Reserve will reconsider its plan to reduce asset purchases later this year.

HOUSEHOLD SPENDING MEETS EXPECTATIONS

Consumer spending rose 0.5% in June, matching the consensus forecast of economists polled by Reuters; consumer incomes grew 0.3%. The Commerce Department also said the economy grew at a 1.7% annual pace in Q2, up from 1.1% in Q1. July’s Conference Board consumer confidence index came in at 80.3 last week; economists polled by MarketWatch had expected a reading of 81.1.

ISM FINDS JUMP IN MANUFACTURING GROWTH

The Institute for Supply Management’s manufacturing index hit 55.4% in July, much improved from 50.9% in June. Economists surveyed by MarketWatch had anticipated a 52.0 reading.    

HOME SALE CONTRACTS DECREASE, BUT PRICES RISE

The National Association of Realtors said pending home sales dipped 0.4% for June after rising 5.8% for May. May’s edition of the S&P/Case-Shiller Home Price Index offered better news, however: a 12.2% overall annualized gain.      

MORE RECORDS SET ON WALL STREET

On Friday, the S&P 500 settled at 1,709.67 – its highest close ever – thanks to a 1.07% weekly advance. The Dow closed at 15,658.36 Friday, the NASDAQ at 3,689.59; they respectively gained 0.64% and 2.12% last week.

THIS WEEK: ISM’s July non-manufacturing PMI arrives Monday, along with earnings reports from HSBC, Tyson Foods, Jamba, Fidelity and Scripps. Q2 results from Molson Coors, OfficeMax, Starwood Properties, CVS and Fossil appear Tuesday. Wednesday, earnings reports arrive from Novatel, Time Warner, Rosetta Stone, Prudential and Ralph Lauren. Thursday brings the latest initial claims numbers and earnings from Priceline, Sports Chalet, Nvidia, T-Mobile and Orbitz. On Friday, we get the Census Bureau’s June wholesale inventories report and the latest inflation and industrial production data from China.