Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Payrolls grew by 272k, almost 100k above the estimate of 180k. The private sector contributed 229k of this vs the forecast of 165k. Revisions to the two prior months were down a combined 15k. Average hourly earnings rose .4% m/o/m, one tenth more than consensus and the y/o/y pace is up 4.1%. For perspective, this averaged 2.5% per annum in the 20 years leading up to Covid. Hours worked were as expected at 34.3 which is where it was in February 2020. Combine this with the hourly earnings figure and weekly earnings grew by .4% m/o/m and 3.8% y/o/y. The 25-54 yr old age group saw its participation rate rise to 83.6% from 83.5% and that is the highest in 22 years. 

2)The May ISM services index rose to 53.8 from 49.4 and that was better than the estimate of 51. The internals were quite mixed though. The breadth was a touch better as 13 industries of 18 asked saw growth vs 12 in April while 5 saw a contraction vs 6 in the month before. The bottom line from ISM reflects the mixed picture, and was goosed by the supplier delivery component. “Survey respondents indicated that overall business is increasing, with growth rates continuing to vary by company and industry. Employment challenges remain, primarily attributed to difficulties in backfilling positions and controlling labor expenses. The majority of respondents indicate that inflation and the current interest rates are an impediment to improving business conditions.”

3)In the May Challenger Jobs Report, they said announced job cuts fell 1.5% m/o/m and lower by 20% y/o/y. Year to date thru May, firing’s are down 7.6% and tech continues to lead the way in cuts.

4)The May Logistics Managers Index rose 2.7 pts m/o/m to 55.6. They said "this increase was largely a function of positive movements in the transportation market and warehousing utilization. This expansion faced headwinds in the 2nd half of the month however, particularly from inventory levels, which moved from expansion to contraction." Also of note was pricing as they are rising again "and are mildly above capacity." Their transportation price index jumped 13.7 pts at 57.8 from a contracting 44.1 in April. That's the highest since June 2022.

5)Auto sales in May totaled 15.9mm at a seasonally adjusted annualized rate (SAAR). That is vs 15.74mm in April, just above the 15.8mm estimate and vs 15.05mm in May 2023. Wards yesterday said "Further confirming as a theme for 2024, growth in May largely was centered in the most affordable CUV (crossover utility vehicle) and car segments. Other sectors during the first five months of 2024 have either recorded sporadic gains or fell into steady decline, including some, such as fullsize pickups, that are coming off lengthy periods of strong results. So far in 2024, market strength is with more affordable small and midsize CUVs and small sedans."

6)The Atlanta Fed’s GDPNow is back above 3% for Q2 from 1.8% earlier in the week.

7)From HP Enterprises: "Enterprise customer interest in AI is rapidly growing and our sellers are seeing a higher level of engagement." Similar to Dell however, "This year's mix shift from networking to AI systems should weigh on our gross margins…As we capitalize on the AI growth opportunity, we also see indications of the market recovery in traditional and cloud infrastructure markets. Orders for traditional service grew sequentially and y/o/y, driven by enterprise public sector and SMB customers in North America and Europe."