Comerica Economic Weekly, July 5, 2019

Robert A. Dye, Ph.D.


Daniel Sanabria

Cars in a car show room

Economic data was mostly positive this week, capped by a solid jobs report for June. A net 224,000 payroll jobs were added to the U.S. economy in June...

Economic data was mostly positive this week, capped by a solid jobs report for June. 

A net 224,000 payroll jobs were added to the U.S. economy in June. April now shows a net gain of 216,000 jobs, while May payrolls are up by just 72,000. The three-month moving average through June is +171,000 jobs per month which is still a solid number. The unemployment rate ticked up in June to 3.7 percent, back to the rate first reached in September 2018. Average hourly earnings increased by 0.2 percent for the month and are up 3.1 percent over the previous 12 months. Wages are still increasing but they are not accelerating despite the scarcity of available workers. The average workweek was unchanged in June at 34.4 hours. The labor force participation rate of 62.9 percent has been stable over the last year. 

Initial claims for unemployment insurance fell by 8,000 for the week ending June 29, to hit 221,000. This is still a very low level, but it has been creeping up after a late-April trough. Continuing claims also dropped by 8,000 for the week ending June 22, to hit 1,686,000, also still a very low level. 

The ISM Manufacturing Index dipped to 51.7 in June, down from 52.1 in May. The June reading is still positive, but the index is trending down. Twelve of eighteen industries reported expansion for the month. The five industries reporting contraction were apparel, primary metals, wood products, transportation equipment and fabricated metals. Anecdotal comments featured concerns about trade tariffs for many industries.

The ISM Non-Manufacturing Index for June eased to a still-positive 55.1 indicating moderate ongoing expansion for the nation’s service sector. This is the weakest ISM Non-MF number since June 2017. In June, nine out of ten sub-indexes were positive, including business activity, new orders and employment. Imports were neutral for the month. Anecdotal comments were mixed, with concerns expressed about trade tariffs. Sixteen out of seventeen industries reported growth, only arts and entertainment reported contraction. 

The U.S. international trade gap widened in May to -$55.5 billion as imports surged. Imports increased by $8.5 billion with gains in automotive, industrial supplies and capital goods. Exports increased by $4.2 billion for the month with increases in capital goods, consumer goods and foods. Despite tariffs, the U.S. trade balance is still fighting the headwinds of a strong dollar and a cooler global economy. 

The total value of construction put in place in May fell by 0.8 percent as all three major categories declined. Construction spending has been flat over the last 12 months, weighed down by a falling trend in the value of private residential construction. In May, private residential construction fell by 0.6 percent, with weaker single-family home construction. Private non-residential construction dropped by 0.9 percent. Public construction also dipped by 0.9 percent in May. 

Total mortgage applications eased by 0.1 percent for the week ending June 28 as refi apps dipped by 1.2 percent. Purchase apps increased 1.1 percent. On a four-week moving average basis, refis were up by 90.3 percent over the previous year, fueled by lower mortgage rates. Purchases were up by 8.4 percent for the year. According to the Mortgage Bankers Association the rate for a 30-year fixed-rate mortgage notched up to 4.07 percent.

Vehicle sales were better than expected in June, holding up at a 17.2 million unit rate after a strong May rate of 17.4 million. Auto sales inched up for the month while light truck sales receded.

For a PDF version of this report, please click here: Comerica Economic Weekly, July 5, 2019.

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July 5, 2019
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

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