Succinct Summation of the Week's Events

Succinct Summation of the Week's Events:

Positives,

1)Initial claims remained low at 208k, 3k below expectations and unchanged with the week before. Continuing claims totaled 1.774mm, 16k under the estimate and also unchanged with the week before. 

2)Q1 productivity was about as expected when including the revisions to Q4. Productivity gains were 2.9% y/o/y vs 2.7% in Q4 and 2.3% in Q3. On the unit labor cost side, they rose 1.8% y/o/y vs 2.4% in Q4 and 1.9% in the quarter before. 

3)Vehicle sales in April totaled 15.74mm on seasonally adjusted annualized rate (SAAR), a touch above the estimate of 15.70mm. That compares though with 15.91mm in April 2023 and 16.4mm in April 2019. 

4)The Apartment List National Rent Report for April showed a .5% m/o/m increase in new lease growth but seasonally rises in the spring as this is the 3rd month of gains. Versus April 2023, new rents are still down .8%. Due to more supply, mostly in the sunbelt, the national vacancy rate is at 6.7%. Rents were up in 83 of 100 cities in April m/o/m, though 43 are up y/o/y. 

5)From Live Nation: "So just to make sure we hit hard on the consumer demand, we are seeing no weakness. The things that we look at that give us an indication of how the shows are selling, how the fans are spending when they go to the site, all continue to be very strong...We're consistently seeing the sell-through of the shows are at or above where they were last year and that the overall grosses for the artists are consistently higher. So no issues at all on fan demand relative to last summer."

6)From Booking Holdings: "We continue to see resiliency in global leisure travel demand, including healthy growth for travel on the books that's scheduled to take place during our peak summer travel season."

7)From Marriott: "Once again, we saw RevPAR growth across all three of our customer segments, group, leisure transient and business transient. Group, which comprised 24% of global room nights in the 1st quarter was again the strongest customer segment."

8)From Shake Shack: "And we're showing solid signs of strength so far this year and each month we have improved sales. April got even better as we grew Same-Shack sales by 4.9% with approximately flat traffic and we carried the momentum into fiscal May."

9)From Doordash: Users still benefiting more than corporate profits, "In general, we're not seeing the signs of strain on the consumer, but I think it perhaps has something to do with the segment that we operate in, which is digital and delivery. I do understand that there are some headwinds that certain merchants face when it comes to in-store traffic. But when it comes to all things digital, we're actually not seeing, I think, those same signs of strains. Even, for example, in the US restaurants business the growth is pretty consistent over the last six quarters."

10)From Brinker: After the weather weak January, "We were pleased to see our business immediately bounce back and perform well in February and March and with Chili's beating the industry sales by more than 7% and traffic by nearly 4% for the entire quarter...We do know that we're growing in all income demographics right now. So, when you look at across all income profiles, they're all spending more at Chili's, so we feel really good about that."

11)From Domino's Pizza: "And our growth in the US came through positive order counts across all income cohorts in both our carryout and delivery segments. We saw the largest growth in our lower income cohorts that are undoubtedly benefiting from the renowned value that we're offering."

12)From Amazon: With AWS, "companies have largely completed the lion's share of their cost optimization, and turned their attention to newer initiatives."

13)From Dupont: "Our results for the period exceeded our expectations, driven by better than expected volumes in all segments. Broadly, the first quarter confirmed that we are past the bottom in electronics and on the road to recovery."

14)While it won't work just by itself, the Japanese step in again and try to stem the weakness in the yen. The Governor of the Bank of Korea did so verbally to lift the won. 

15)Hong Kong's economy in Q1 grew much more than forecasted with GDP up 2.7% y/o/y, well better than the estimate of .8%. Home sales and tourism helped. 

16)Asian manufacturing is trying to find a bottom. PMI's: Taiwan's rose to 50.2 from 49.3, Japan 49.6 vs 48.2, Australia 49.6 vs 47.3, Vietnam was at 50.3 vs 49.9, South Korea at 49.4 vs 49.8, Thailand at 48.6 vs 49.1, Malaysia 49 vs 48.4, Indonesia 52.9 vs 54.2, the Philippines at 52.2 vs 50.9 and India at 58.8 vs 59.1. 

17)The China Caixin manufacturing April PMI printed 51.4 from 51.1 in the month before. Caixin said "Underpinning the latest acceleration in manufacturing sector growth was better demand conditions...Additionally, new orders from abroad expanded at the fastest pace for nearly 3 1/2 years. Global market demand improved at the start of the 2nd quarter, according to panelists."

18)GDP growth in the Eurozone in Q1 did rise .3% q/o/q, 2 tenths above the estimate but Q4 was revised down by one tenth to a very slight contraction of .1%. Growth y/o/y was .4%. 

Negatives,

1)Payrolls in April grew by 175k, below the estimate of 240k and the two prior months were revised down by a total of 22k. A lot of the miss was in the government sector as the private sector added 167k of those 175k jobs vs the forecast of 193k. The household sector added just 25k jobs and combine this with the 87k person rise in the labor force, saw the unemployment rate tick up by one tenth to 3.9%, matching the highest since January 2022. The U6 all in rate also rose by one tenth m/o/m to 7.4%. Mix was a factor here as the 25-54 yr old category added 163k jobs but was more than offset by a drop of 319k for those 55 and older. Those younger than 25 saw jobs rise. There was a downtick in hours worked to 34.3 from 34.4. Not including Covid, it is just .1 hr from matching the lowest since 2011. The labor force participation rate held at 62.7%, still below its February 2020 level but did rise one tenth to 83.5% for the key 25-54 age group which is above the 83% print in February 2020. Job leavers as a % of the unemployed fell to 12% from 12.7% and vs 11% in February and well off the peak of 16% a few years ago. Average hourly earnings rose .2% m/o/m vs the estimate of .3% and versus last year, hourly wages were up by 3.9%. Average weekly earnings were up by 3.9% too. Lastly of note, there was another rise in those working part time because of 'slack work' (highest since October 2021) and also because they 'can't find full time' work (highest since November 2020). This squares with the reduction we've seen in job openings. 

2)Job Openings in March shrunk by 325k jobs m/o/m to 8.488mm. That's the least since February 2021. The hiring rate fell to 3.5% from 3.7% and that matches the lowest since 2014 not including Covid. Also, the quit rate fell one tenth to 2.1%, the lowest since January 2018 not including Covid. 

3)The ISM services PMI fell 2 pts m/o/m to under 50 for the first time since December 2022 at 49.4. New orders were down 2.2 pts to 52.2. Backlogs fell 5.5 pts in March and rebounded by 6.3 pts in April to 51.1. Inventories bounced back above 50, up by 8.1 pts m/o/m to 53.7. Highlighting the slowing pace of hirings, employment fell to just 45.9, down 2.6 pts and that is the lowest since December 2023 with just 5 of 18 industries seeing an increase in hiring. The weakness in services came with a 5.8 pt rise in prices paid to 59.2, a 3 month high with 14 of 18 sectors paying higher prices. Supplier deliveries remained below 50 (normal supply chains) Overall industry breadth stayed the same with 12 of 18 industries seeing growth. The bottom line from ISM, "Survey respondents indicated that overall business is generally slowing, with rates varying by company and industry. Employment challenges continue to be primarily due to difficulties in backfilling positions and/or controlling labor expenses. The majority of respondents indicate that inflation and geopolitical issues remain concerns.”

4)The ISM manufacturing index slipped back below 50 in April at 49.2 vs 50.3 in March and vs the estimate of exactly 50. Of note, prices paid jumped 5.1 pts to 60.9 and that is the highest since June 2022. With respect to breadth, it was similar to March with 9 industries seeing growth and 7 experiencing a contraction (vs 6 in March).