U.S. Auto Sales Keep Climbing Low interest rates and a brighter economy helped drive U.S. auto sales 1% higher in June. The month’s annualized selling rate reaching nearly 17 million vehicles, positioning the industry for strong second-half sales.
Industry-wide auto sales rose 1.2% to 1.4 million in June, pushing the annualized selling rate to 16.98 million, its highest pace since July 2006, according to market research firm, Autodata Corp.
For the first half of the year, auto makers sold a total of 8.2 million vehicles in the U.S., up 4.3% over the same year-ago period.
Vehicle production for 3Q is scheduled to increase at a +10.3% Q/Q a.r.
Cyclical peak?
(Private Sector Creates 281,000 Jobs U.S. businesses went on a hiring spree in June, according to a survey of hiring released Wednesday. The higher-than-expected increase in private-sector payrolls could raise expectations for the government’s employment report, due Thursday.
Businesses added 281,000 new jobs in June, according to a national employment report compiled by payroll processor Automatic Data Processing Inc. ADP -0.34% and forecasting firm Moody’s Analytics. (…)
Wednesday’s unexpectedly high ADP result may prompt economists to reconsider their June nonfarm payrolls estimates. Forecasters look at ADP as a guide for payrolls, but the private-sector report has a history of large misses when it comes to anticipating the Labor Department data.
According to ADP, firms employing between 1-49 workers added 117,000 new workers last month. Medium-size businesses with payrolls of 50-499 workers increased payrolls by 115,000 employees. Large firms, businesses with 500 or more employees, hired 49,000 more workers.
Service-sector payrolls increased by 230,000 workers last month. The factory sector added 12,000 positions. Construction payrolls increased by 36,000 slots. (Chart from Zerohedge)
Factories Close Quarter on Solid Note
The Institute for Supply Management said Tuesday that its broad Purchasing Managers Index, in which a reading of more than 50 indicates expansion, fell to 55.3 last month from 55.4 in May. The index had accelerated in each of the previous four months. Some 15 of 18 manufacturing industries grew in June.
The PMI averaged 55.2 for the second quarter, up from the first-quarter level of 52.7. The report signals a “solid but unspectacular expansion in manufacturing activity in the coming months,” said Bricklin Dwyer, an economist at BNP Paribas.
The employment index was unchanged from May, suggesting only a small gain in June factory payrolls, similar to the 10,000 jobs added in May.
(See also the more detailed Markit’s PMI which, incidentally, sees higher employment levels in June..
ISI’s truckers survey, which has the highest correlation with GDP, ticked up +0.6 this week to 63.7, highest level since Dec 2005.
Apartment Rents Continue to Rise Apartment landlords continued to push through hefty rent hikes in the second quarter, squeezing U.S. households that already are struggling financially after four years of steady increases.
The average monthly rent for an apartment rose to $1,099 in the second quarter, up 0.8% from the first quarter, according to data to be released Wednesday by real-estate research firm Reis Inc. REIS -0.87% That was the 18th consecutive quarter of rent increases. For the 12-month period ended in June, rents rose 3.4%.
Effective rents—which tend to be lower than asking rents—were up in all 79 U.S. metro areas tracked in the Reis report. West Coast cities that have been the model of recovery continued to top the list of highest rent growth for the quarter and over the past 12 months. (…)
While apartment vacancies, a barometer of demand, fell in more than half of the 79 metro areas included in the Reis report, they were unchanged nationally at 4.1% in the second quarter. That could mean supply is finally starting to catch up with demand, a sign that rent growth could slow at some point. According to the Reis report, the market is expected to deliver 180,000 new multifamily units this year. (…) (Chart below from CalculatedRisk)
Euro-Zone Producer Prices Slip
Prices of goods leaving the euro zone’s factory gates fell for the fifth straight month in May, an indication that the currency area won’t soon escape a period of low inflation that may hinder its recovery.
The European Union’s statistics agency said Wednesday that producer prices fell 0.1% from April, and 1% from May 2013. (…) The decline in producer prices was largely down to energy suppliers reducing their prices by 0.3% from April. But even excluding energy, factory-gate prices were flat on the month.
EARNINGS WATCH
Factset catches up on a metric I have been highlighting for a while:
- The percentage of companies issuing negative EPS guidance is 76% (84 out of 111). While this percentage is above the 5-year average (66%), it would also mark the lowest percentage of companies issuing negative EPS guidance for a quarter since Q4 2012 (70%).
- On average, companies have issued EPS guidance that has been 6.9% below the mean EPS estimate. This percentage decline is smaller than the 5-year average of -10.7%.
- For the current fiscal year, 168 companies have issued negative EPS guidance and 82 companies have issued positive EPS guidance.
- At the sector level, the Consumer Discretionary sector has not only witnessed the largest increase in the number of companies issuing negative EPS guidance (+9) relative to its five-year average, but also has seen the largest decrease in the number of companies issuing positive EPS guidance (-7) for the quarter relative to its five-year average.
