Did economy mirror blockbuster June jobs report?
Americans are still basking in the glow of Friday’s blockbuster jobs report, but economic news this week should reveal whether the robust June performance was reflected in indicators such as retail sales, industrial production and inflation.
On Tuesday, the government looks back a bit further in the rearview mirror to employee movements in the labor market in May. The findings of the Job Openings and Labor Turnover Survey (JOLTS) may not be pretty. The Labor Department on Friday revised down May’s job growth tally to a scant 11,000, the weakest showing since September 2010. And its JOLTS report for April showed that the number of hires fell sharply for a second straight month despite job openings that matched the highest on record since 2000. That’s partly because employers are struggling to find qualified workers now that the unemployment rate has fallen below 5%. Yet May’s job total was so paltry it’s a good bet that the JOLTS survey will indicate that both openings and hires tumbled that month. The good news: The June results should be much better.
Friday brings a flurry of key data. A core measure of retail sales that excludes volatile categories such as autos and gasoline jumped in both April and May as consumers splurged amid still-low gasoline prices, solid job growth and reduced household debt. Lewis Alexander, chief U.S. economist of Nomura, believes the positive trend continued in June, citing steady gains in retail employment and a strong pickup in a measure of service-sector activity. He estimates the Commerce Department will announce that the core sales reading increased a healthy 0.4% in June.
Although gas is still cheap, pump prices have been rising this year, and that’s expected to continue to gradually nudge up the consumer price index. Core consumer prices, which exclude volatile food and energy items, also have edged up. Economists estimate the Labor Department will report that core inflation in June rose to 2.3% on an annual basis from 2.2% the previous month. The Federal Reserve is seeking a pickup in core prices before raising interest rates again.
Industrial production has been sluggish for well over a year because the weak global economy and strong dollar have hobbled exports, and low oil prices have hammered crude production and related orders for steel pipes. This year, the dollar has weakened and oil prices generally have risen, but so far those developments have had just a small stabilizing effect on factory output. Economists estimate the Fed will record a modest 0.2% rise in industrial production in June, offsetting about half the previous month’s decline.