Employment remains a star in an otherwise lackluster economic expansion. U.S. employer payrolls swelled by a strong 209,000 in July, and the unemployment rate fell a tick to 4.3 percent, remaining at a 16-year low. Even with the sluggish GDP growth of recent quarters, it is clear that the U.S. economy is growing above its long-term, non-inflationary potential, creating a strong demand for labor even after eight years of economic recovery and expansion.
In spite of the modest drop in the Institute for Supply Management’s (ISM) widely-followed Purchasing Managers’ (PMI) Index, U.S. manufacturing growth remains on a path of considerable improvement. After reaching 57.8% in June, more than 3 percentage points above the current 12-month average, the PMI index slipped by 1.5 percentage points in July to a still strong 56.3%. Key survey indices such as new orders, production, and the backlog of orders remain in solid growth territory although they all fell modestly last month.
I anticipated that the historical U.S. GDP revisions, which accompany the initial release of the second quarter GDP report and currently extend back to the first quarter of 2014, would make for some interesting analysis. What’s remarkable, however, is just how small the revisions are on the whole. The revised data in no way change the qualitative narrative of growth for a frustrating period in which U.S. manufacturing was all but stagnant. Score one for the reliability and stability of the U.S. economic data system.
The FOMC punted on another move and released a statement that smacks of trepidation on the sustainable strength of the U.S. economy. They acknowledge that job gains have been solid and that consumer spending and business fixed investment have continued to expand. The troubling point remains inflation, and they are quite concerned.
With whistleblower suits on the rise, increased CEO firings over ethical lapses, and National Whistleblower Appreciation Day falling on July 30, it’s an important time for companies to think about their corporate governance structures, whistleblower systems, and whistleblower investigation processes. Instead of looking at whistleblowing as harmful, companies should consider whistleblowing a safety valve and a sign of an engaged, ethical culture.
As has often been the case in recent years, the monthly U.S. employment report provides a glimmer of light in a gray picture. A net gain of 222,000 payroll jobs in June markedly exceeded the expectations of analysts who projected that slow economic growth would have some impact on employment gains.
I’m not sure I would call it fireworks, but the June manufacturing report from the Institute for Supply Management (ISM) certainly contains some buoyant signs for the U.S. factory sector. The overall Purchasing Mangers’ Index rose by nearly three percentage points to 57.8%, its highest level of what has been an impressive post-August 2016 run.
The buzz about the “Internet of Things” has been brewing for years. Companies like SpaceX, Tesla, Apple, Uber, and Google have been pouring investments into universal satellite internet, autonomous cars, artificial intelligence, and wearables.
As expected, the Federal Open Market Committee, the Fed’s monetary policy body, announced an increase of 25 basis points in the target for its consequential federal funds rate. Today’s action is only the fourth time since the economy bottomed in June 2009 that that Fed has acted to remove its extraordinary monetary accommodation.
In May, the U.S. unemployment rate fell to a remarkably low 4.3%, the lowest level since May of 2001. In the past, few would have doubted that this was either at or close to full employment, the level below which wage and inflation pressures begin to create growth-killing instabilities.