There were a few important reports on the U.S. economy released this morning. First, data from Challenger, Gray & Christmas showed that 28,307 corporate layoffs were announced in America last month. That is a 9.0 percent decline from June, the smallest monthly total since November, and 37.6 percent lower compared to this same period last year. Year-to-date, employers announced 255,307 planned job cuts, down 28.9 percent from the first seven months of 2016. There are still job cuts occurring, though, and the retail sector is leading the way with 63,989 announced layoffs so far in 2017. That is up 46.7 percent compared to this same period last year but John A. Challenger, chief executive officer of Challenger, Gray & Christmas, added that “While retailers are cutting the most jobs this year, those companies are also announcing the most hiring. These jobs are not the typical retail job, as consumers increasingly turn to online shopping.” Overall this was a solid report which is supported by initial jobless claims remaining near historic lows. However, Mr. Challenger cautioned that “While we have yet to see the large-scale layoffs of previous years, especially as oil and tech rebound, the specter of a downturn is on the horizon and could spell massive cuts as we head into the fourth quarter and into next year.”
Elsewhere, the purchasing managers' index (PMI) from IHS Markit for the U.S. services sector, which accounts for a larger share of the overall economy than manufacturing, ended July at 54.7. That was the fourth monthly improvement in a row, better than economists had anticipated, and the highest headline reading since January. Under the hood, the pace of new business growth rose at the fastest pace in two years, and employment expanded by the most in 2017. Further, July survey data indicated robust business confidence, which surveyed managers attributed to improving economic conditions and strengthening client demand. A lot less encouraging was the Institute for Supply Management’s (ISM’s) non-manufacturing index, also released this morning, which fell to 53.9 in July, significantly worse than expected. Measures of production, new orders, inventories, and employment all deteriorated last month and input cost pressures (inflation) rose. On the bright side, comments from surveyed managers were generally positive in July.
Sources: Econoday, Bloomberg, ZH, Twitter, Challenger, Gray & Christmas, U.S. DoL, IHS Markit, ISM, FRBSLPost author: Charles Couch