Payroll employment rises by 138,000 in May; unemployment rate changes little (4.3%)
The change in total nonfarm payroll employment for March was revised down from +79,000 to +50,000,
and the change for April was revised down from +211,000 to +174,000. With these revisions,
employment gains in March and April combined were 66,000 less than previously reported. Over the past 3 months, job gains
have averaged 121,000 per month.
In May, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to
$26.22. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent.
U.S. Light Vehicle Sales Ease
Light vehicle sales continue to soften. Total sales of light vehicles fell 1.3% during May to 16.66 million units (SAAR) from 16.88 million in April, according to the Autodata Corporation. Sales fell 3.0% y/y. During the first five months of 2017, sales declined 1.7% y/y versus the first five months of 2016.
Light truck sales remained unchanged (2.9% y/y) versus April at 10.46 million. Imported light truck sales increased 2.4% (7.6% y/y) to a record 1.93 million units. Sales of domestically-made light trucks eased 0.6% (+1.8% y/y) to 8.53 million units. Trucks’ share of the U.S. vehicle market equaled the record 62.8%, up from 59.2% twelve months earlier.
Passenger car sales declined 3.4% (-11.4% y/y) to 6.20 million units. Domestically-made passenger car sales fell 3.7% (-11.3% y/y) to 4.52 million units, the lowest level since December 2011. Sales of imported passenger cars declined 2.7% (-11.7% y/y) to 1.68 million units.
Imports share of the U.S. vehicle market improved m/m to 21.7%. Imports share of the passenger car market rose slightly to 27.1%. Imports share of the light truck market inched higher to 18.4%, up from 12.7% during all of 2014.
Sure looks like a cyclical peak:
Manufacturing PMI slips to eight-month low in May
U.S. manufacturing companies indicated an upturn in business conditions during May, but the latest survey revealed a further loss of momentum from the peak seen at the beginning of 2017. The softer overall improvement in manufacturing conditions reflected a moderation in new business growth to its weakest for eight months, alongside relatively subdued increases in output and employment. May data also pointed to more cautious inventory policies, with stocks of purchases falling at the fastest pace since August 2016.
The rate of expansion picked up slightly from April’s seven month low, but remained relatively modest overall. Survey respondents noted that subdued new business growth and more cautious inventory policies had acted as a brake on production requirements. Reflecting this, stocks of finished goods were accumulated at a slower pace than seen at the start of 2017. Meanwhile, preproduction inventories dropped for the second month running, which contrasted with robust rates of stock building earlier this year.
New order levels increased again in May, although the rate of expansion was the least marked recorded since September 2016. This was mainly linked to subdued client demand. Some manufacturers also cited weak export sales, as highlighted by a slower upturn in new work from abroad than that seen in April.
The latest survey pointed to a decline in backlogs of work for the first time since May 2016. Manufacturing firms noted that sustained staff hiring had helped to alleviate capacity pressures. Payroll numbers increased at a modest pace in May, although the latest rise was much softer than the 18-month peak seen in December 2016.
Receding cost pressures and intense competition for new work led to a slower pace of factory gate price inflation in May.
The ISM:
The May PMI® registered 54.9 percent, an increase of 0.1 percentage point from the April reading of 54.8 percent. The New Orders Index registered 59.5 percent, an increase of 2 percentage points from the April reading of 57.5 percent. The Production Index registered 57.1 percent, a 1.5 percentage points decrease compared to the April reading of 58.6 percent. The Employment Index registered 53.5 percent, an increase of 1.5 percentage points from the April reading of 52 percent. The Inventories Index registered 51.5 percent, an increase of 0.5 percentage point from the April reading of 51 percent. The Prices Index registered 60.5 percent in May, a decrease of 8 percentage points from the April reading of 68.5 percent, indicating higher raw materials prices for the 15th consecutive month, but at a noticeably slower rate of increase in May compared with April. Comments from the panel generally reflect stable to growing business conditions, with new orders, employment and inventories of raw materials all growing in May compared to April. The slowing of pricing pressure, especially in basic commodities, should have a positive impact on margins and buying policies as this moderation moves up the value chain.
Of the 18 manufacturing industries, 15 reported growth in May.
If I have to pick one U.S. PMI survey, I’d go Markit which has been less erratic and more accurate for a while now.
Growth of global manufacturing slips to six-month low in May
The rate of expansion in the global manufacturing sector eased to a six-month low in May. This was signalled by the J.P.Morgan Global Manufacturing PMI™ posting 52.6, down slightly from 52.7 in April, but still above the long-run series average of 51.4.
Developed nations again tended to outperform emerging markets in May. Growth across emerging nations slowed to a pace only marginally above the stagnation mark. The Developed Markets PMI continued to signal solid and steady expansion. (…)
Price pressures continued to ease in May. This was highlighted by the rates of increase in both input costs and output charges easing to eight-month lows. Both price measures also tended to signal sharper increases for developed nations (on average) than in emerging markets.
U.S. Construction Spending Gives Back Some Prior Gains
The value of construction put-in-place dipped 1.4% in April, following sharp weather-related gains totaling 3.9% in the first three months of the year. Despite the latest drop, construction spending was up 6.7% from a year earlier. The March figure was initially reported down 0.2%, but was revised up with the April report to a gain of 1.1%.
Private sector construction activity declined 0.7% in April, but nevertheless increased by 10.4% from a year earlier.
Residential spending declined 0.7% as well (+16.0% y/y), after six months of solid gains. The April decline was centered in the volatile improvements sector, which fell 2.9% (+32.3% y/y). Single-family building improved 0.8% (+7.7% y/y), while multifamily declined 0.2% (+10.3% y/y).
Nonresidential building activity fell 0.6% (+4.3% y/y), which was the third decline in a row. Office construction was the one major sector showing a gain in April, rising 1.8% (+14.8% y/y). Commercial construction eased 0.3% (+13.5% y/y), manufacturing sector construction dropped 1.9% (-8.4% y/y), health care building declined 1.1% (-0.1% y/y), and power plant construction fell 1.4% (+1.5% y/y).
One Sign That Long-Missing Wage Acceleration Could Be Emerging The labor force is shifting toward better-paying jobs, even as overall payroll growth eases.
Since the U.S. started consistently adding jobs in 2010, employment in three low-wage categories–leisure and hospitality, retail and temporary help—had grown at a faster rate than overall private-sector payrolls.
Until this year.
Growth in other private-sector industries has outpaced gains in the three largest low-wage categories since February. It’s the first time such a shift has occurred during the expansion. And it could be a precursor to better wage growth as stronger job gains in fields that pay above-average wages lift the broader pay measure. (…)
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Canada: Wages and salaries growing at healthy clip
Just looking at the Labour Force Survey, one could get the impression that wages are barely growing in Canada. Indeed, according to the LFS, wages (the product of Average hourly wage rate and Total hours worked) grew a meagre 1% in the first quarter of 2017 compared to the same quarter last year. That probably explains why some observers, including the Bank of Canada, continue to refer to wage growth as “subdued”. But latest national accounts data, which arguably is
more reliable than the LFS, tells a much different story, putting annual wage growth at more than 3% in Q1. (NBF)
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Did you miss PROFIT MARGINS: THE SQUEEZE IS UNDERWAY ?
Frustration deepens for value investors Nasdaq 100 notches seventh monthly gain, its longest streak since 2009
(…) The top 10 stocks, mostly in the tech industry, account for almost half the S&P 500’s gain of 7.7 per cent this year. In contrast, the S&P 500 value index has only eked out a 2 per cent gain so far in 2017, trailing behind the racier “growth index” of faster-expanding companies. Indeed, US growth stocks are now thumping their value counterparts by the most since 2000.
- The S&P 500 has diverged from the percentage of members trading above the 200-day moving average. This tells us that the rally is no longer very broad.
Source: BMI Research (via The Daily Shot)
Fully loaded: 
(chart from Topdowncharts.com)