Here is the executive summary of the U.S. macroeconomic indicators and trending topics for June 2023.
US Macroeconomic Indicators
Federal Reserve looks poised to raise interest rates again after a brief pause.
While the Fed’s rate-setting body did not hike interest rates in June, some officials wanted to raise rates by one-quarter of their percentage points, according to minutes of the last meeting. Although they unanimously paused the rate hike at the June 13-14 meeting, they signaled that rates would probably be raised twice this year, beginning as soon as July 2023.
U.S. Labor Market Shows Resilience With Strong May Hiring
The U.S. Bureau of Labor Statistics reported that total nonfarm payroll employment increased by 209,000 in June, and the unemployment rate changed slightly to 3.6 percent. Employment grew in government, health care, social assistance, and construction.
Nonfarm employment has grown by 278,000 per month over the first 6 months of 2023, lower than the average of 399,000 per month in 2022. Both the unemployment rate, at 3.6 percent, and the number of unemployed persons, at 6.0 million, changed little in June. The unemployment rate has ranged from 3.4 percent to 3.7 percent since March 2022.
Services PMI at 53.9%; June 2023 Services ISM Report On Business
Economic activity in the services sector expanded in June for the sixth consecutive month as the Services PMI® registered 53.9 percent, according to the latest Services ISM® Report On Business®. The sector has grown in 36 of the last 37 months, with the lone contraction in December of last year.
The 15 services industries reporting growth in June listed in order are — Accommodation & Food Services; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Public Administration; Educational Services; Management of Companies & Support Services; Transportation & Warehousing; Wholesale Trade; Other Services; Utilities; Professional, Scientific & Technical Services; Construction; Finance & Insurance; Retail Trade; and Health Care & Social Assistance. The three industries reporting a decrease in June are – Agriculture, Forestry, Fishing & Hunting, Mining, and Information.
A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent means it is generally contracting.
Manufacturing PMI® at 46% – June 2023 Manufacturing ISM® Report
The Purchasing Managers’ Index is based on five major indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment.
According to June 2023 Manufacturing ISM® Report On Business® report, Manufacturing PMI® registered 46 percent, 0.9 percentage points lower than the 46.9 percent recorded in May. Regarding the overall economy, this figure indicates a seventh month of contraction after 30 months of expansion.
“Of the six biggest manufacturing industries, only one — Transportation Equipment — registered growth in June.
The Inflation Rate Rose Just 0.2% in June, as Consumers get a Break from Price Increases
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in June on a seasonally adjusted basis after increasing 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all-items index increased 3.0 percent before seasonal adjustment.
The index for shelter was the largest contributor to the monthly all-items increase, accounting for over 70 percent of the increase. The food index increased 0.1 percent in June after increasing 0.2 percent the previous month.
US Mortgage Rates Continue to Rise
The National Association of Realtors report shows that mortgage rates fell in June but remained above 6.5%. According to Freddie Mac, the average rate on a 30-year fixed mortgage was 6.69% from 6.71%.
The two main factors driving today’s mortgage market have become more favorable:
- Inflation dropped to 4%
- After raising rates for over a year, the Federal Reserve paused its interest rate hikes.
- The layoffs continue as companies across the globe continue to lay off thousands of employees. An analysis of the Intellizence Layoff Dataset indicates companies continued to announce layoffs in June 2023.
- Over 484 companies announced terminations in May. Major layoff announcements were – UBS Group (35000), Citi Group (5000), Autoliv (8000), and SA Post Office (7000).
U.S. Retail Sales up 1.5% YoY in June 2023
According to National Retail Federation, US retail sales continued to rise in June 2023, despite slower employment growth; retail sales were up 0.2 percent MoM and 1.5 percent YoY. June sales were up in six out of nine retail categories on a yearly basis, led by online sales, health and personal care stores, and electronics and appliances stores, and up in four categories on a monthly basis.
June sales were up in six out of nine retail categories on a yearly basis, led by online sales and other groups, and up in four categories on a monthly basis. Key trends for June reinforce consumer resilience in the face of inflation and highlight seasonal spending across sectors and channels. Of note:
- Online and other non-store sales were up 1.9%.
- Electronics and appliance stores were up 1.1%.
- Clothing and clothing accessory stores were up 0.6%.
- Furniture and home furnishings stores were up 1.4%.
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