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Chief Economist Scott Brown discusses the latest market data.

Nonfarm payrolls rose by 943,000 in the initial estimate for July (-133,000 before seasonal adjustment), following a 938,000 gain in June, boosted partly by a seasonal quirk in education (less hiring at the start of the school year resulted in fewer seasonal layoffs in June and July). Ex-education, payrolls rose by 672,000, following a 668,000 gain in June, with an ongoing recovery (+380,000) in leisure and hospitality. The unemployment rate fell to 5.4% (from 5.9%), with the rate for prime-age workers (25-54) down to 4.9% (from 5.5% in June). In contrast to the strength in the Bureau of Labor Statistics data, the ADP estimate of private-sector payrolls slowed to a 330,000 gain in July.

The ISM Manufacturing Index edged down to 59.5 in July, vs. 60.6 in June. The ISM Services Index rose to 64.1, vs. 60.1. Both surveys showed ongoing supply chain issues, input cost pressures and hiring difficulties. The trade deficit widened to a record $75.7 billion in June, reflecting further strength in imports. Unit motor vehicle sales fell to a 14.8 million seasonally adjusted annual rate in July (vs. 15.4 million in June), down 19.4% in the last three months.

Next week: The focus will likely be on the Consumer Price Index (CPI). Higher gasoline prices should add to the CPI in July. Core inflation ought to be more moderate than in recent months. Base effects (the rebound from low inflation a year ago) have begun to fade. (The CPI rose 1.0% in the 12 months ending July 2020, core up 1.6%.) Bottleneck pressures are still with us. Used motor vehicle prices appear to have turned the corner after rising sharply (+30.4%) over the previous three months. Anecdotal info suggests a mixed ability for firms to pass higher costs along.

Indices

Consumer Money Rates

Currencies

Commodities

Bond Rates

Treasury Yield Curve – 08/06/2021

As of close of business 08/05/2021

S&P Sector Performance (YTD) – 08/06/2021

Economic Calendar

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