Factory Orders came in better than expected in May, rising 1.2% to $347.9bln following a downwardly revised 0.5% increase to $343.8bln in April. Factory Orders Ex-Transports posted a 0.8% increase to $305.5bln while the April figure was revised down to a 0.2% decline to $303bln. Ex-Defense new orders gained 1% over the month following a 0.1% decline in April, Durable Goods orders gained 1.8% to $163.4bln while Ex-Transport Durable Goods Orders posted a 1.1% increase to $121bln.
Factory Orders have now risen three of the past four months but are still down 23.3% on a year-over-year basis. Also of note, Ex-Transport Orders are higher for the first time in three months, while Ex-Defense Orders are higher for the first time in ten months.
May Shipments were revised to show a 2.5% decline to $168.9bln, reflecting the tenth consecutive monthly decline. Unfilled Orders posted a modest 0.2% decline over the month, and are lower for the eight consecutive month.
Inventories posted a 1% decline to $322.1bln in May with inventories of primary metals leading the drop. Inventories of manufactured non-durable goods rose for the first time in eight months.
Nonfarm Payrolls fell more than anticipated in June, dropping 467k following 322k decline in May which was revised up from an initially reported -345k. The extended June decline was led by hastened deterioration in service sector employment was reported a 244k drop over the month which followed an upwardly revised 107k decline prior. June also saw a pickup of government job cuts, which were reported down 52k over the month following downwardly revised 10k decline prior. Education and Health services employment reflected the only major sector posting a net increase over the month.
The June Unemployment Rate rose in line with expectations at 9.5%, the highest since June of ‘83, after an unrevised 9.4% reading in May.
Total private hours worked came in at 33, and is the lowest since record began in 1964. The aggregate index for weekly hours in the manufacturing came in at 75.1 which is the lowest reading on record, while the aggregate index for total private was 99.0, the lowest since 2003.
Since the beginning of the recession job cuts in each the manufacturing, construction, and professional and business services sectors make up three quarters of total job losses.
INITIAL JOBLESS CLAIMS, at 614k, fell 16k from an upwardly revised 630k previous and against an expected 605k. The 4wk moving average of Initial Claims was down slightly at 615,250 versus 618k prior.
New claims were noted in Services, Transportation, Warehousing, and Seasonal Jobs/School Closings.
CONTINUING CLAIMS, at 6.702mln, were down 15k from an upwardly revised 6.755mln and against an expected 6.75mln. The 4wk moving average of Continuing Claims was 6.751mln against a revised 6.765mln. New claims were w/in Services, Transportation, Warehousing and from school closings.
In the week ended June 20, California claims jumped by more than 14.5k, followed by NJ w/ over 3k; MD, MI and IL all saw claims of over 2k. States w/ the largest decrease were MO (-5.7k), PA (-3k), and TX (-2.7k).
Both Initial and Continuing Claims remain well within recent trends…away from their peak levels but still mired in strongly recessionary territory.
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May Construction Spending dropped 0.9% to an annualized level of $964bln – the lowest rate level since Mar-04. Year-over-year, Construction Spending has plummeted nearly 12%.
The decline in Construction Spending was led by additional declines in private residential construction (-3.4%), which drug headline private construction down 1%. Private residential construction is at its lowest level since Dec-95. Nonresidential Construction gained for the 4th consecutive month – rising 0.5% after an upwardly revised increase of 1.3% prior.
May public construction fell 0.6% for the second straight month. State and local construction – which accounts for nearly a third of total construction spending – declined 0.7%. State and local construction spending has helped overall public construction to gain over the past six months. Federal construction, the other component to public construction, declined 0.3% in May after falling 6.2% in April.
Output in the UK’s services sector decreased by 0.1% in April from March, the least negative figure since the industry started contracting in November of last year and a further sign the UK recession may be nearing an end.
The monthly figure missed expectations for modest growth, but was nonetheless an improvement on March’s -0.2% and February’s -0.6%.
The three-monthly figure, at -1.2% also marked an improvement from prior months’ readings. Three-monthly output readings for January through to March were all revised down to -1.6%.
April’s reading, as a consequence, is the best since December, supporting speculation that the recession struck its nadir in the first quarter.
The services sector accounts for about three-quarters of the economy.
German retail sales rose 0.4% m/m in May compared to analysts’ flat forecast and the 0.5% increase the month prior. Retailers sold 2.9% less in May than a year ago vs. the revised 0.3% decrease in April. The Federal Statistics Office said May had one less trading day than a year ago.
Sales of food, drinks and tobacco fell 2.4% from last year. Non-food retail sales decreased 3.0% y/y.
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The Conference Board’s June Consumer Confidence Index fell to 49.3 following 54.8 reading in May which was revised marginally lower. The June decline follows two consecutive months of considerable gains with the May reading more than doubling the recent low of 25.3 in February.
The Present Situations Index fell to 24.8 in June from 29.7 in May, the Expectations Index fell to 65.5 from 71.5 in May.
The Conference Board’s Lynn Franco Says:
“The decline in the Present Situations Index, caused by a less favorable assessment of business conditions and employment., continues to imply that economic conditions, while not as weak as earlier this year, are nonetheless weak. Looking ahead, Expectations continue to suggest less negative conditions in the month’s ahead, as opposed to strong growth.”
– Survey respondents describing business conditions as ‘good’ fell to 8% in June from 8.8% in May
– Survey respondents describing business conditions as ‘bad’ grew to 45.6% from 44.5% in May
– Survey respondents describing jobs as ‘hard to get’ rose to 44.8% in June from 43.9% in May
– Survey respondents describing jobs as ‘plentiful’ fell to 4.5% from 5.8% in May
Year-over-year: Week (w/e 06/27/09 vs year-ago) -4.3%
Year-over-year: Month (June 2009 vs June 2008) -4.4%
Month-over-month: (June 2009 vs May 2009) -4.4%
The Johnson Redbook Retail Sales Index was down 4.3% in the fourth week of June following a 4.2% drop the prior week. Month-to-date, June was down 4.4% compared to June of last year. Month-over-month was a 4.4% drop relative to May. June is a five-week month on the retail calendar ending on July 4th.
With the first official day of summer came more seasonable temperatures, the summer heat in turn promoted customer traffic for seasonal categories such as air conditioners, fans, pool and beach equipment, swim wear and other hot weather apparel as customers seem to be buying according to immediate needs. As we approach Independence Day many retailers have already marked down early in order to lure customers.