Thursday, July 2, 2020
June payroll numbers from the U.S. Bureau of Labor Statistics (BLS) came out this morning, in what is known as the Employment Situation or non-farm payroll report, with better-than-expected headline numbers: 4.8 million new jobs were reportedly created last month, with the Unemployment Rate dropping to 11.1%. These compare favorably with expectations of 2.9-3.7 million and 12.5%, respectively.
Further, revisions to the last two months rose 90K in aggregate: April’s worst-ever jobs report number dropped an additional 100K to -20.8 million, while May grew an additional 190K to +2.699 million. In total, the number of unemployed Americans is still very high at 17.8 million, 14.7 million higher than were reported in February of this year; in other words, employment is still down 9.6% from those historic levels.
Average Hourly Earnings dropped 35 cents overall to $29.37 per hour, signifying the return of lower-wage employees to the workforce en masse — dishwashers, janitors, et. al. The Average Workweek slipped marginally to 34.5 hours per week. Temporary Layoffs came down 4.8 million from an astronomical 15+ million a month ago.
The biggest gainers by industry came from those with plenty of pent-up demand: Retail +740K, Education/Healthcare +568K, Manufacturing +356K, Professional/Business Services +306K and Construction +158K. But “pent-up demand” is the key phrase here — no one should expect retailers to hire 3/4 of a million new employees per month for anything like an extended period of time.
Nevertheless, strength in consumer demand — along with a healthy dollop of Fed and congressional relief — has borne out a quick relative recovery in the overall jobs market. Pre-market indexes will not look this gift horse in the mouth: the Dow is currently up 420 points, the Nasdaq (building on all-time highs) is +106 and the S&P 500 +40.
Initial Jobless Claims also came out this morning, down for the 13th straight week though higher than expectations at 1.427 million. This follows a slightly upwardly revised 1.482 million the previous week. These reads are more than 3.6x lower than they were at the apex of the economic crisis due to the pandemic shutdown in April, and are thus going in the right direction.
Continuing Claims dipped slightly to 19.29 million from the expected 19.5 million. While this is nice to see, the reality of more than 19 million Americans collecting long-term employment is still a big problem in search of a remedy.
The U.S. Trade Deficit for May dropped a bit, to -$54.6 billion from the -$53 billion analysts were looking for, and down from a lower-revised -$49.8 billion the previous month. While also not a figure worth applauding, we’re still well off the lows we saw around -$60 billion in December 2018.
Finally, Tesla TSLA continues on its roll: the morning after taking the helm as the highest-valued automaker in the world with a market cap of $208 billion, we now see the EV leader beat delivery estimates for Q2: 90,650 vehicles were shipped in the quarter, well ahead of guidance of 72K. Shares are now up an incredible 446% from a year ago, and have gained another 9.5% in today’s pre-market on this news. Ahead of this new data, Tesla had been carrying a Zacks Rank #2 (Buy) with a Value-Growth-Momentum grade of D.
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