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The Commerce Department reported factory orders increased by 1.5% in June, following an upwardly revised 2.3% in May. The increase in factory goods orders was broad, with gains in machinery, computers and electronic products, in addition to electrical equipment, appliances and components. While bookings at Boeing helped orders for transportation equipment increase 2.0%, motor vehicle orders were hobbled by a semiconductor shortage dipping 0.3%. Shipments of manufactured goods increased by 1.6% in June after rising by 0.9% in May. Unfilled orders at factories increased 1.0% in June. The unfilled orders-to-shipments ratio dipped to 6.94 from 6.96 in May. Inventories increased 1.0%, following a 1.1% uptick in May. The inventories-to-shipments ratio dropped slightly to 1.48 from 1.49 in May. New orders for non-durable goods jumped 2.1% in June, following a 1.4 % advance in May. Orders for durable goods also climbed by an upwardly revised 0.9% in June after rising by 3.2% in the previous month.
IHS Markit’s US services final purchasing managers’ index dipped to 59.9 in July, the lowest value since February 2021, and down from the previous month’s 64.9. A reading above 50 indicates a majority of services firms reported an increase in activity. Greater output was linked to a sustained increase in new orders. New business continued to rise in July, and at one of the fastest rates since data collection began in October 2009. Some companies indicated that staffing shortages hindered their growth. The cost of inputs used in services firms’ production processes remains high, as service providers passed on increased costs to their clients. Input inflation is being driven by higher fuel prices, increased payroll costs, and supply chain constraints. The overall rate of increase in selling prices for goods and services did moderate from May’s peak.
The U.S. Bureau of Labor Statistics reported the unemployment rate dipped sharply in July to 5.5% as compared to June’s 5.9% – 943,000 jobs were added. This is the biggest gain in nearly a year, as the number of unemployed fell by 782K to 8.7M. Notable job gains occurred in leisure and hospitality (+380K), with bars and restaurants leading the way (+253K), followed by hotels (+74K), and then arts, entertainment, and recreation (+53K). Public and private education was robust (+260K). Roughly two-thirds of the overall increase in July payrolls was due to job gains in leisure and hospitality and in local education. Construction employment was up (+11K), as was manufacturing (+27K). The only industry to lose jobs was retail (-5.5K). The labor force participation rate was little changed at 61.7%, still down from 63.3% in February 2020. The number of persons not in the labor force who currently want a job remained unchanged at 6.5M, the figure is up 1.5M over February 2020.
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