Comerica Economic Weekly, August 7, 2020

Robert A. Dye, Ph.D.

,

Daniel Sanabria

Economic Chart

U.S. labor data was in focus this week, showing continued improvement. However, we expect the dramatic improvement in U.S. data this summer to fade as we experience both the lingering after-effects of the spring shutdowns and the ongoing impact of the coronavirus pandemic this fall. 

July payrolls increased by 1.8 million workers, better than the consensus estimate of 1.48 million, but clearly a step down from the 4.8 million jobs gained in June. Despite the massive call back of workers in June and July, July payrolls remained 12.9 million, or 8.4 percent, below the February peak. The unemployment rate fell from 11.1 percent in June, to 10.2 percent in July, still well above the 3.5 percent low from February. 

Initial claims for unemployment insurance fell by 249,000 for the week ending August 1, to hit a still-very-high 1,186,000. Continuing claims fell by 844,000 for the week ending July 25, to hit 16.1 million, consistent with an unemployment rate near 10 percent. 

The ISM Non-Manufacturing Index for July improved to a solid 58.1, indicating better conditions for most of the nation’s businesses. Seven out of ten sub-indexes showed improvement. These included production and new orders. Three out of eighteen industries reported contraction in July. They were other services, mining and professional, scientific and technical services. Fifteen industries reported growth for the month. Most anecdotal comments were cautiously optimistic.

The ISM Manufacturing Index hit 54.2 in July after reaching 52.6 in June. Seven out of ten index components were above 50, including new orders and production. Thirteen out of eighteen industries reported growth in July. The three industries reporting contraction were transportation equipment, machinery and fabricated metals. Anecdotal comments were mixed, ranging from very positive (computers and electronics), to very negative (transportation equipment). 

U.S. light vehicles sales increased for the third consecutive month in July, hitting a 15.0 million unit rate after collapsing to a 9.0 million unit rate in April. Sales are still well below the February rate of 18.0 million units.

Total construction spending for June dipped by 0.7 percent. The level of total construction spending this June was little changed over the previous 12 months, up just 0.1 percent. Spending on private residential projects fell by 1.5 percent as single-family projects dropped by 3.6 percent. Private non-residential construction projects inched up by 0.2 percent in June, held down by weaker spending for amusement and recreation projects. Spending on public construction projects fell by 0.7 percent in June as highway and street projects gave up 1.7 percent. 

The U.S. international trade gap for June narrowed by $4.1 billion, to -$50.7 billion. Exports increased by $13.6 billion, while imports gained $9.5 billion. Over the previous 12 months, real exports of goods were still weak, down 18 percent. Real imports of goods were down 14 percent for the year. 

Total mortgage applications fell by 5.1 percent for the week ending July 31. Purchase apps fell by 1.8 percent, the second straight weekly decline, and the fifth decline in the last seven weeks. Refi apps fell by 6.8 percent, also their second straight loss. On a four-week moving average basis, purchase apps were up 19 percent and refis were up 108 percent from a year ago. According to the Mortgage Bankers Association, the rate for a 30-year fixed rate mortgage eased to 3.14 percent. 

Total railcar loadings for the week ending August 1 continued their recent improving trend, but were still down 18.3 percent from a year ago. 



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August 7, 2020
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist