Money Talk Podcast, Friday July 8, 2016
Landaas & Company newsletter July edition now available.
Advisors on This Week’s ShowJason Scuglik and Joel Dresang)
Week in Review (July 4-8, 2016)
Significant economic indicators & reports
U.S. markets and government offices closed for Independence Day.
In a reminder of slowing economies globally, U.S. factory orders fell in May, the first decline in three months. The Commerce Department reported the less-volatile orders excluding transportation equipment rising for the third month in a row. But orders for non-military capital goods, excluding aircraft – a proxy for
business investments – was down 3.7% from the same time last year.
The U.S. trade deficit widened more than analysts expected in May. The trade gap grew by 10% to $41.1 billion, according to the Bureau of Economic Analysis. Exports, which have been hampered by global stagnation and the strong dollar, declined 0.2% from April. Imports rose 1.5%, suggesting the relative strength of the U.S. economy as Americans spent more on overseas goods and services.
Resilience in the U.S. economy also shone through a better-than-expected June report from the ISM Non-manufacturing Index. Purchasing managers from the largest segment of the U.S. economy said their companies were expanding for the 77th months in a row. The index rose for the third month in a row, reaching its highest level in seven months. Most of the index components were growing at a faster pace, and hiring and new export orders increased after contracting in May.
The four-week moving average for initial unemployment claims fell for the fifth time in six weeks, approaching the 42-year low reached in April. According to the Department of Labor, average claims remain 26% below the 49-year average, suggesting employers continue to be reluctant to let workers go. Eventually, such conditions tend to lead to job and wage improvements, which encourage consumer spending, accounting for more than two-thirds of U.S. economic activity.
Employers added many more jobs than expected in June after a couple of months of slower hiring, the Bureau of Labor Statistics reported. The 287,000 gain in jobs surpassed the three-month average of 147,000 and the 12-month trend of 199,000 per month. The figures included an anomaly of 35,000 striking Verizon workers who returned to the job in June. Average hourly wages rose for the third month in a row, though less than analysts forecast. The unemployment rate rose to 4.9% from 4.7% in May as workers who previously settled for part-time jobs or were discouraged by their prospects entered the job market.
Where the Markets Closed for the Week
- Nasdaq – 4,957, up 94 points or 1.9%
- Standard & Poor’s 500 – 2,130, up 27 points or 1.3%
- 10-year U.S. Treasury Note – 1.36%, down 0.09 point
- Dow Jones Industrial – 18,147, up 198 points or 1.1%