Consumer credit outstanding grew $12.40 billion during June following an $18.30 billion May increase, revised from $18.42 billion. During the past ten years, there has been a 49% correlation between the y/y growth in consumer credit and y/y growth in personal consumption expenditures.
Nonrevolving credit usage softened, rising $8.27 billion (5.8% y/y) after an $11.42 billion gain. It was the smallest increase in twelve months. (…) Revolving consumer credit balances rose $4.13 billion (5.5% y/y) after a $6.87 billion increase. (…)
The Conference Board said its employment trends index rose to 133.77 in July from its revised June reading of 132.42. The July figure represents a 4.8% gain from last year.
The Conference Board’s employment trends index combines eight market indicators, including industrial-production figures from the Federal Reserve, job openings from the Bureau of Labor Statistics and jobless claims from the U.S. Department of Labor. The index filters out volatility in data to more clearly reveal underlying trends in employment conditions. (…)
All eight of the components of the index were positive in July, with the “percentage of firms with positions not able to fill right row” contributing the largest positive reading. The component flipped from June, when it posted the biggest decline in the basket.
‘Gig Economy’ Companies Working Harder to Attract Employees Companies such as Uber, Lyft and DoorDash that rely on part-time workers are offering richer benefits and perks to attract and retain workers amid a hot labor market.
Prime-age employment-to-population ratio almost back to 2007 peak:
The OECD’s composite leading indicator for its 34 member countries was steady at 100. (…)
Across the Group of 20 largest economies, which account for most of the world’s output, growth firmed in the final three months of 2016 and stayed at that faster pace in the first three months of 2017.
Growth figures for the second quarter are incomplete, but those available for the U.S., the eurozone and China point to a further pickup. Indeed, Capital Economics estimates that on an annualized basis, global economic growth accelerated to 3.7% in the three months to June from 3.2% in the first quarter.
The leading indicator for the U.S. was unchanged at 99.7 for the third straight month, signaling that its growth outlook has steadied, albeit at a weaker rate than normal. This is an improvement on indicators published in July, which hinted at a U.S. slowdown, and implies global economic prospects could be boosted as U.S. trade flows pick up.
The Paris-based research body’s gauge of future activity, based on data for June, continued to point to faster growth in Germany, France, China and Brazil. (…)
OECD pdf here.
China’s Economy Gets Smaller Boost From Trade China’s exports in July grew 7.2%, slowing from June’s 11.3% jump
China’s exports increased 7.2% in July from a year earlier, down from an 11.3% gain in June while imports expanded 11.0% from a year earlier, slower than June’s 17.2% expansion, the General Administration of Customs said Tuesday. (…)
Slower shipments to the U.S. and EU weighed on July’s export growth. China’ exports to U.S. and EU grew 8.5% and 9.5% in July from a year earlier, respectively, compared with double-digit expansions in June. Exports to Southeast Asian nations rose 1.6% in July from a year earlier, following a 0.6% drop in June. (…)
Germany’s industrial production took an unexpected step lower in June, but its upward thrust is still in place with only the sense of relentless momentum diminished. German IP is now up by 2.5% over 12 months, at a 7.7% pace over six months, and at 3.3% pace over three months. Previously, the three-month pace was at an 8.4% annual rate. With the backing off in June, Germany’s growth rates settle into a more moderate framework of sustainability. (…)
On the month, German IP stepped back in consumer goods, capital goods and intermediate goods. Construction output is now lower for three months running. Manufacturing IP has a 1.7% rate of growth over 12 months and a 1.1% annualized pace over three months. (…)
On a quarter-to-date basis, all these signals are more in tune with manufacturing IP up at a 5.3% pace, real orders up at a 3.2% pace and real sales up at a 6.1% pace. (…)
Other economic reports for Germany, like the Markit manufacturing PMI reading, have been positive but not effusive. These readings now all seem to coexist better as German growth is solid and it is not running way ahead of the rest of Europe as it may previously have hinted.
…but German construction biz is booming:
Growth was broad-based across residential, commercial and civil engineering, and new business rose strongly. Subsequently, construction firms boosted employment and usage of sub-contractors during the month, with the latter increasing their charges at the second-fastest rate in the survey history. (…)
The volume of new orders received by German construction firms rose for the ninth consecutive month in July. The rate of expansion strengthened since June and was among the strongest signalled by the survey to date.
Republicans struggling to pass a major tax overhaul that doesn’t add to the federal deficit are discussing a kind of compromise: mixing permanent revisions with temporary rate cuts for individuals and businesses.
Officials on the House and Senate tax committees are talking with the White House about a hybrid approach that would combine lasting tax code changes to deter offshore profit shifting by corporations with lower rates for a number of years, according to three people familiar with the discussions. (…)
The co-founder and chief executive officer of DoubleLine Capital LP says risky assets such as junk bonds and emerging-market debt are overvalued. He’s reducing those positions in DoubleLine funds and investing more in higher-quality credits with less sensitivity to rising interest rates, mindful that doing so may mean he gives up some performance for a while.
Gundlach, 57, says he can’t predict what event or development will trigger a change in investor sentiment. Like Howard Marks, the co-chairman of Oaktree Capital Group LLC, who last month warned that markets had crossed into “too-bullish territory,” Gundlach says it’s better to be cautious now than to hold on until it’s too late. (…)
The complacency in markets is understandable. Gundlach acknowledges that there are no obvious signs of a recession within six months, the only thing he says would bring about a major correction in asset prices. Everything from consumer confidence to employment to gauges of manufacturing health are strong.
He expects the Federal Reserve to raise rates again in December and in successive quarters so long as the data are supportive. He doesn’t see the unwinding of the Fed’s balance sheet as a threat because Chair Janet Yellen and others have communicated their plans “extremely well.”
Also, while optimism for tax reform and infrastructure spending have faded, Gundlach said it’s not clear when doubts about the Trump presidency will start to weigh heavily on investors.
“I don’t see the big drop, unless there’s something out of left field, like some sort of really escalating conflict,” he said. “I think you’re supposed to be gradualistically moving toward the exits.”
Did you miss EARNINGS AND YEARNINGS?
Very impressive then and now comps. (Tks Terry)