Making Sense out of the Economic News: Not As Bad As The Dow Took It.

We have just had a great deal of economic news come out.

The Employment Report: The unemployment rate is up slightly to 9.5 percent (compared to 9.4 percent in May.) This was as expected. The payroll survey showed a bigger than expect drop: 467,000 jobs in June. The latter became the headline news. Wall Street opened a hundred and fifty points lower and continued to fall. London and European stock markets accelerated their early morning declines in response to the news. A closer look at the data shows a curious divergence in the trends measured by the household and establishment surveys. Over the last three months, the establishment survey shows employment falling by an average of 436 thousand jobs a month, while the household survey shows a monthly fall in employment almost half that (230 thousand.) This is significant because in the last recession household employment growth turned positive well over a year before payroll jobs turned up. Corrected for base biases, it may be a better cyclical indicator.

Aerospace appears to have lost another five thousand jobs in June for a two month total of 12-13,000. BLS does not break these data out, so I have to estimate them from the published data.

Consumer confidence was down. German and Australian retail sales were up and beat expectations. U.S. durable goods orders were up in May.

Non defense aircraft and parts orders were up as well. Although orders were half May, 2008, they reached the highest level since October. Order backlogs for the industry fell from 39.2 months to 33.4 months.

Car sales are up and appear to have bottomed out in February. They are way from May, 2008.