Employment

Total U.S. nonfarm employment grew in May for the 56th consecutive month as a solid 280,000 jobs were created, accelerating from the 221,000 jobs that were created the previous month. Notably, May’s tally marked the 14th time in the last 15 months that job gains surpassed the 200,000 level. Furthermore, job totals were revised upward for the previous two months by a combined 32,000. In May, the private sector expanded for a record 63rd consecutive month, adding 262,000 jobs, while the government sector gained 18,000. The unemployment rate edged up in May from a seven-year low, ticking up 0.1 percentage points to 5.5 percent, but was 0.8 percentage points below its rate of a year ago. With 397,000 workers entering the labor force in May, the labor force participation rate rose from 62.8 percent to 62.9 percent, but remained just 0.2 percentage points above March’s 37-plus-year low. Driven by a sharp pullback in oil-related job cuts, the number of planned job cuts announced by U.S. companies plummeted 33.4 percent from a 35-month high to 41,034, and were down 22.5 percent from a year ago. Oil prices have been responsible for about 29 percent of the 242,830 planned layoffs year to date as producers and suppliers have been forced to cut production. The Labor Department reported that the average work week rose in May from 33.6 hours to 33.7 hours, 0.1 hour below February’s seven-and-a-half-plus year high, but was flat year-over-year.

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Employment Indicators

Expanding the indicators below will showcase multi-year historical trends.

Indicator
Latest
Trend
Date
Expand all
Unemployment Rate
5.3%
7/2

The unemployment rate for all civilian workers represents the number of unemployed as a percent of the civilian labor force. To qualify as unemployed, a worker must be actively searching as well as physically able to work, but unable to find employment in the previous 4 week period.

Underemployment Rate
10.5%
7/2

The U-6 unemployment rate is an alternative measure of labor underutilization to the widely referenced U-3, or official unemployment rate. The U-6 rate includes the total unemployed as counted in U-3, plus all persons marginally attached to the labor force (those who would like to and are able to work but have not looked for work in the past year), plus total employed part time for economic reasons, as a percent of the civilian labor force.

Non-Farm Payrolls
223K
7/2

Nonfarm payroll employment is a monthly estimate of the number of paid employees working full-time or part-time in U.S. business and government agencies.  Trends in this figure are considered an indicator of strength and direction of the U.S. economy: increases indicate a growing economy and decreases point to a slowing or contracting economy.

Challenger, Gray, & Christmas - Layoffs Survey
45K
7/2

A monthly report published by outplacement firm Challenger, Gray, & Christmas on the number of announced large company layoffs. This report can help gauge the strength of the job market, which can be useful in gauging the strength of the overall economy.

Weekly Labor Hours
33.6
7/2

Average weekly hours of production and nonsupervisory workers on private nonfarm payrolls is tracked monthly by the Bureau of Labor Statistics. A rise in weekly labor hours reflects an increase in labor utilization of those employed.

Business Activity

GDP contracted at an annual rate of 0.7 percent in Q1, marking the second consecutive year that GDP has dropped in Q1. Analysts believe the Q1 slowdown largely reflects temporary factors, such as harsh weather and a labor dispute at West Coast ports that hampered exports and delayed deliveries to factories and retailers. Other economic headwinds could linger, however, including a strong dollar that's making U.S. goods more expensive for foreign buyers and a pullback in energy company investment amid a plunge in oil prices. Additionally, the Industrial Production Index and durable goods orders have cooled in recent months. The industrial production index, while up in 51 of the last 70 months and slightly above its level of a year ago, has fallen in four of the last five months. Durable goods orders have fallen year-over-year in five of the last six months. The service sector continued its ascent, however, expanding in May for the 64th consecutive month. Furthermore, the Small Business Optimism Index edged up in May to 98.4, which was near last December’s eight-year high; however, the Index hovers slightly below readings that have normally been associated with expansion and below its pre-recession average of 99.5 from 1973 through 2007.

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Business Activity Indicators

Expanding the indicators below will showcase multi-year historical trends.

Indicator
Latest
Trend
Date
Expand all
Gross Domestic Product
-0.2%
6/24

GDP is the broadest measure of economic activity. Reported quarterly, GDP growth is the percent change in annualized total economic output. The major elements measured by GDP include consumption, investment, net exports, government spending and inventories. One popular definition of a recession is two consecutive quarters of negative percentage change in GDP, although this is not a hard and fast rule.

Industrial Production
105.1
6/15

The Industrial Production (IP) Index, which is tracked by the Federal Reserve Board, measures the real output of the manufacturing, mining, and electric and gas utilities industries. The reference or base period for the index is 2007 at a level of 100. These aforementioned sectors are highly sensitive to interest rates and consumer demand; and thus, industrial production can be an important indicator for forecasting future Gross Domestic Product (GDP) and economic performance.

Durable Goods Order
-3.1%
7/2

Durable Goods Orders primarily measures business spending on products expected to last more than three years such as machinery and computer equipment. The year over year change in order levels is a gauge of future growth for the manufacturing industry and a predictor of GDP growth. A subset of the data, nondefense capital goods orders, is considered a good indicator of business investment spending.

ISM Non-Manufacturing Index
56.0
7/6

This is a composite indicator of three factors (employment trends, prices and new orders) in industries outside of manufacturing such as agriculture, construction, transportation, and retail trade. An index value above 50 signals a favorable increase in these factors and a value below 50 signals an unfavorable decrease.

Small Business Optimism Index
98.3
6/9

This is a monthly index based on a survey of small business owners regarding 10 factors including their future plans for hiring, capital investment, and inventory building, as well as their expectations for future sales, profits, economic trends and credit market conditions. It is a broad indicator of current business conditions in the small business sector.

Consumer

Consumer spending, representing roughly 70 percent of U.S. economic activity, was flat in April but was up 2.8 percent from a year ago and has advanced in 65 of the last 72 months. The weakness in April reflected big declines in spending on both durable goods such as autos and nondurable goods such as clothing and food. Retail sales, which account for 30 percent of consumer spending, surged 1.2 percent in May, after edging up 0.2 percent the previous month. Sales increased sharply in many categories, rising 2.0 percent for auto dealers, 2.1 percent for building material supply stores, and 1.5 percent at clothing retailers. Moreover, retail sales were up 2.7 percent from a year ago and have sustained year-over-year increases for 67 consecutive months. The Thomson Reuters Same Store Sales (SSS) Index rebounded from its first year-over-year decline in 68 months, increasing a modest 0.8 percent year-over-year in May, after falling 0.6 percent the previous month. However, the SSS Index failed to grow by at least 3.0 percent year-over-year, a level that can indicate health among U.S. consumers, for the fifth straight month. The Conference Board Consumer Confidence Index edged up 1.1 points in May; moreover, with the Index registering at 95.4 it has surpassed the healthy 90.0 level for the 10th time in the last 11 months and was up over 13 points from a year ago.

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Consumer Indicators

Expanding the indicators below will showcase multi-year historical trends.

Indicator
Latest
Trend
Date
Expand all
Consumer Spending
0.9%
6/25

A measure of monthly goods and services purchased by household consumers. The dollar figure represents an annualized, seasonally adjusted level of consumption. The percent change from month to month indicates growth (if positive) or contraction (if negative) in household consumption – a major component of GDP.

Retail Sales
2.7%
6/11

An estimate of monthly sales for retail and food service firms, based on a random sample of 5,000 companies. The monthly figure is adjusted for seasonality and holiday/trading day differences, and we record the percentage change from the current month compared with the same month a year ago as indicator of trends in discretionary consumer spending.

Thomson Same Store Sales Index
0.8%
6/4

The monthly SSS index provides a snapshot of U.S. consumer spending relative to expectations ahead of the monthly comps reporting cycle. The index tracks 29 retailers across a variety of specialties, including discounters, department, apparel, teen/kids, and drug stores. Costco® currently has the strongest weighting in the index after Wal-Mart® ceased reporting monthly same store sales results in April 2009.

Personal Income
0.5%
6/25

A measure of income received from wages and salaries, dividends and interest, rental income, and other business sources. The percent change from month to month indicates growth (if positive) or contraction (if negative). Personal income, a key pillar of consumer spending, tends to display a rising trend during periods of economic expansion, and show a stagnant or slightly declining trend during recessionary times.

Consumer Confidence Index
101.4
6/30

This index is based on a survey of households regarding current and future business and employment conditions, as well as expectations for future income. It indicates consumers’ level of optimism and can affect their likelihood to make purchases – a major component of GDP. A declining trend in this index may indicate a slowdown in consumer spending and a slowdown in economic growth.

Housing

In April, home sales were mixed as existing home sales fell from an 18-month high, while new home sales jumped to within 4.8 percent of February’s seven-year high. However, both existing and new homes sales were well above their levels of a year ago, up over 6 percent and 26 percent, respectively. Home sales have benefited from steady job creation, rising rental rates, and historically low mortgage rates, although issues related to limited inventory and higher home prices have created some headwinds. Tight inventory over the last year, which has kept the months supply of existing homes for sale near January 2013’s seven-year low, has created bidding wars for properties in many markets and accelerated the pace of property sales. 30-year fixed rate mortgage rates increased in May for just the fourth time in the last 13 months and hover just 49 basis points above December 2012’s record low of 3.35 percent. Although home prices have advanced in 26 of the last 36 months and were up 5 percent from a year ago, they remained nearly 15 percent below their April 2006 peak.

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Housing Indicators

Expanding the indicators below will showcase multi-year historical trends.

Indicator
Latest
Trend
Date
Expand all
Existing Home Sales
5.35 mil
6/22

This is an annualized, seasonally adjusted figure based on the number of existing home and condominium sale transactions that closed during the month. Month to month changes are considered a good measure of demand in the residential real-estate sector.

Existing Home Inventory
5.1 mo.
6/22

This is an annualized, seasonally adjusted figure based on the number of existing home and condominium sale transactions that closed during the month. Month to month percentage changes are considered a good indicator of activity trends in the housing market. The months supply figure represents the number of months required to sell all current existing home inventory at the current pace of sales activity. The lower this figure, the greater the need for new housing starts and construction activity.

S&P / Case-Shiller Home Price Index
177.01
6/30

The S&P / Case-Shiller Index is a monthly index that tracks home price trends in 20 major markets across the country. Prices shown are not seasonally adjusted.

New Home Sales
546K
6/23

This is an annualized, seasonally adjusted figure based on the number of new single family home transaction commitments (e.g. sales for which an agreement was signed) during the month. The level of monthly sales is considered a good indicator of activity trends in housing. Together with existing home sales, trends in housing activity can act as a leading indicator for consumer purchases of household items such as appliances and furniture.

Building Permits
1,250K
6/24

The Building Permits Survey (BPS) produces estimates of the number of permits issued for new housing units each month. The level of permits issued, which is shown at a seasonally adjusted annualized rate, is considered a good leading indicator of future trends in housing.

 

30-Year Fixed Rate Mortgage
3.98%
6/30

The 30-year fixed rate loan is the most common loan in the lending markets, and the 30-year interest rate is a good measure for the availability of credit to eligible borrowers in the home lending market. Changes in the mortgage rate impact both the level of new and existing home sales with a few months of lag time.

Financial

Major U.S. stock market indices rallied in May for the second consecutive month and hit record highs during the second half of the month. Stocks rose as data indicated the economy was settling into a moderate pace of growth after a first-quarter slump. Equities also got a boost from a surprise gain in profits and a record $214 billion of announced acquisitions. The Dow Jones Industrial Index, up 7.7 percent from a year ago, rose 1.0 percent in May. The S&P 500 Index, up 9.6 percent from a year ago, also rose 1.0 percent in May. 10-year treasury yields increased for just the 7th time in the last 17 months as the selloff in German bonds amid rising inflation expectations and the prospect of a tighter Fed policy put upward pressure on yields in April. Still, yields remain historically low, likely reflecting the Federal Reserve’s near zero-interest rate policy, investors’ ongoing concerns about the prospects for a strong U.S. economic recovery, modest inflation, slowing global growth, and negative yields in Europe. Demand for credit strengthened for small businesses in Q1 for the 14th time in the last 17 quarters, while it strengthened for medium to large businesses in Q1 for the 15th time in the last 17 quarters. Credit standards for small businesses eased in Q1 for the 18th time in the last 19 quarters, while they eased for medium to large businesses in Q1 for the 20th time in the last 21 quarters. An easing of credit standards or rise in demand for credit by businesses may signal faster economic growth.

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Financial Indicators

Expanding the indicators below will showcase multi-year historical trends.

Indicator
Latest
Trend
Date
Expand all
S&P 500
-2.1%
6/30

An index containing 500 American stocks (primarily large cap) across a range of industries, representing approximately 75 percent of the total value of the U.S. stock market. The S&P 500 is the most widely watched index of large-cap U.S. stocks and is considered to be a bellwether for the U.S. economy.

Dow Jones Industrial Average
-2.2%
6/30

A blue-chip index containing 30 of some of the largest and most widely held stocks in America, representing approximately 25% of the total value of the U.S. stock market. The Dow Jones Industrial Average is one of the most popular indexes used to track the health of the U.S. equities market.

13-Week Treasury Bills
0.01%
6/30

T-Bills are short term U.S. government issued securities that mature in one year or less from their issue date. They are considered to be a nearly credit risk-free investment given their negligible default risk.

10-Year Treasury Notes
2.34%
6/30

Treasury notes are sold at regularly scheduled public auctions. The competitive bids at these auctions determine the interest rate paid on each Treasury note issue. Usually, bond market investors are forward-looking and this means interest rates on Treasury securities will move in the direction of Fed policy with a lead. As a result, one is more likely to see rising interest rates on Treasury yields during an expansion (and falling yields during economic slowdowns) in advance of policy changes by the Federal Reserve. Generally, stock prices and bond yields (interest rates) move inverse of each other.

Federal Reserve Rates
0.25%
6/19

The Federal Open Market Committee consists of the seven Governors of the Federal Reserve Board and five Federal Reserve Bank presidents. The FOMC meets eight times a year in order to determine the near-term direction of monetary policy. These meetings occur roughly every six weeks and and can be one of the most influential events for the markets. The interest rate set by the Fed, the federal funds rate, serves as a benchmark for all other rates.

Tightening/(Easing) of Credit
-5.7%
5/4

The Senior Loan Officer Opinion Survey on Bank Lending Practices addresses changes in the supply of C&I (Commercial and Industrial) loans to businesses. The results reported are based on responses from 60 domestic banks and 24 U.S. branches and agencies of foreign banks. Positive percentages represent a net tightening of credit, while negative percentages represent a net easing. An increase in the net percentage of banks tightening credit standard reflects a decrease in the supply of credit available to businesses to finance business operations (payrolls and inventories) and expansion (plant/equipment and mergers/acquisitions); and thus, may signal slower economic growth.

Demand for Credit
5.7%
5/4

The Senior Loan Officer Opinion Survey on Bank Lending Practices addresses changes in the demand for C&I (Commercial and Industrial) loans to businesses. The results reported are based on responses from 60 domestic banks and 24 U.S. branches and agencies of foreign banks. Positive percentages represent a net strengthening of demand, while negative percentages represent a net weakening. A rise in demand for credit reflects an increase in financing needs for business operations (payrolls and inventories) and expansion (plant/equipment and mergers/acquisitions); and thus, may signal faster economic growth.

Inflation

The Consumer Price Index (CPI) on a monthly basis rose modestly for the third month in a row, ticking up 0.1 percent in April. The Index for shelter rose, as did the indexes for medical care, household furnishings and operations, used cars and trucks, and new vehicles. However, the annual rate declined by 0.1 percentage point to -0.2 percent, matching a five-year low and well below the Fed’s 2.0 percent target rate that is considered to be moderate. The annual decline was driven by the energy index, which fell 19.4 percent over the last 12 months, with all the major components declining except electricity. The Core CPI (removing volatile prices of food and energy) rose 0.3 in April after increasing by 0.2 percent the previous month, while the annual rate was unchanged at 1.8 percent, which was 0.2 percentage points above last December’s 43-month low. Energy prices rallied in May for the second straight month after plunging in eight of the previous nine months to five-year lows. Depressed energy prices, a negative annual CPI, tame core inflation, and below average utilization rates for physical capital should continue to temper inflationary concerns, enabling the Fed to keep interest rates at historically low levels for some time to stimulate economic growth. Declining in 11 of the last 14 months, the Baltic Dry Index (a barometer of ocean freight shipping costs) retreated in May and declined nearly 37 percent from a year ago.

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Inflation Indicators

Expanding the indicators below will showcase multi-year historical trends.

Indicator
Latest
Trend
Date
Expand all
Consumer Price Index
0.0%
6/18

The Consumer Price Index is a measure of the average price level of a fixed basket of goods and services purchased by consumers. The CPI is divided into two measures, with the ‘core’ rate excluding volatile food and energy costs. The year/year change in core CPI is seen by most economists as the best measure of the underlying inflation rate. The Federal Open Market Committee (FOMC) implements monetary policy to help maintain an inflation rate of 2.0 percent per year. Historically, inflation has averaged about 3.0 percent per year.

Producer Price Index
-1.1%
6/12

The Producer Price Index measures a basket of finished goods purchased by businesses to sell to consumers. The PPI is used as an early indicator of inflation, since it gives some insight into the costs incurred by businesses to produce their goods and services. The most important indicator is the underlying core PPI number, which excludes volatile food and energy prices.

Capacity Utilization
78.1%
6/15

The Federal Reserve Board constructs estimates of capacity and capacity utilization for industries in manufacturing, mining, and electric and gas utilities. For a given industry, the capacity utilization rate is equal to an output index (seasonally adjusted) divided by a capacity index. Effectively, it is the employment rate for physical capital. When the economy is healthy, total capacity utilization should be near 80.0 percent. The long-term average rate from 1972 through 2014 is 80.1 percent. If it gets up close to 85 percent it is a serious sign that the economy is overheating and that inflation will soon be a very serious issue. Therefore, capacity utilization beyond a certain threshold may signal inflation is on the rise.

Energy Prices
0.8%
6/30

The Energy Information Administration publishes a weekly survey of gasoline prices of all grades and formulations gathered from a sampling of service stations across the country. The association also publishes weekly WTI crude oil spot prices per barrel.

Currency - Euro & Pound (GBP)
1.0%
6/30

The chart below shows the exchange rate of the U.S. Dollar with the Euro and British Pound. The vertical axis shows the number of U.S. dollars equal to one Euro and Pound. When the graph is falling, the dollar is strengthening, since it takes fewer dollars to purchase one euro. When the graph is rising, the dollar is weakening. The strength of the dollar is an important economic indicator as a strong dollar generally means bad news for American companies as their products will be more expensive in relation to foreign competitors, but good news for consumers as a stronger dollar results in lower prices for imported goods and services.

Baltic Dry Index (BDI)
35.8%
6/30

The Baltic Dry Index is a daily average of prices in the spot market to ship raw materials in bulk. It represents the cost paid by an end user to have a shipping company transport raw materials across seas on the Baltic Exchange, the global marketplace for brokering shipping contracts. The Baltic Exchange is similar to the New York Mercantile Exchange in that it is a medium for buyers and sellers of contracts and forward agreements (futures) for delivery of dry bulk cargo. This index can be used as an indicator of the direction of overall global economic activity because it measures the changing demand for shipping capacity (which is generally limited and increases very slowly over time); consequently, small changes in demand can lead to much larger changes in shipping rates. The BDI can also be a good indicator of the future direction of inflation.

Disclaimer: The information being provided in the Economy at a Glance is an informational service of Insperity and is drawn from various governmental agencies and third parties who have expressly disclaimed its accuracy and completeness. The information is provided "as is" and Insperity makes no representation or warranty regarding it or its accuracy or completeness. The information herein should not be relied upon for any investment, hiring, or other operational decision.