MTS Insights

Economic Report Monitor #42 June 16th, 2020 Some mixed economic reporting today continued to encourage volatile trading as indexes jump after a few days of losses. Making the headlines was a retail sales jump of 17.7% in May that beat expectations strongly. Industries that were most affected by the lockdown saw huge rebounds as reopening processes ramp up. Furniture store sales jumped 89.7%, clothing & clothing accessories store sales skyrocketed 188.0%, and sporting goods, hobby, musical instrument, & book store sales grew 88.2%. Food services & drinking place sales were up just 29.1% though as these non-essential businesses lagged. Businesses that didn't see a dip in demand remained cool in this report. Food & beverage store sales were up just 2.0%, health & personal care stores mostly flat at 0.4%, and general merchandise stores saw a bump of 6.0%. These numbers are mostly surprising because for most of May the lockdown was in effect with just the back end o...

Economic Report Monitor #41 June 11th, 2020 The market sells off on another large initial jobless claims number . Initial unemployment claims increased 1.542 million last week even though states have already begun the reopening process. The large difference in the jobs report number and the claims numbers speaks to the unpreparedness of the system to handle the mass forced layoffs. Continued unemployment claims fell again but only slightly. A drop of -339,000 takes the total to 20.9 million, just barely off its peak in early May. In a more optimistic tone, May 23rd data showed a -1.2 million drop in individuals claiming Pandemic Unemployment Assistance to 9.7 million. All eyes on continuing claims data (pictured above) to see if the labor market recovery will gain speed. Following CPI data yesterday, the Producer Price Index (PPI) report came out for May. The broad index increased by 0.4% disguising some other volatile segments. Food goods saw a 6.0% increase, a trend reflecting the f...

Economic Report Monitor #40 June 10th, 2020 It's the last day of the June FOMC meeting as the monetary leaders continue to fight against COVID-19's economic effects. Their opening statement  admits that the disease has brought "tremendous human and economic hardship" despite the improvements from the initial calamitous impacts. The FOMC reaffirmed their commitment to keeping rates low until "the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals." Based on the economic projections, this commitment means rates stay near 0% all the way through 2022 as the Fed projects a -6.5% GDP contraction and 9.3% unemployment in 2020. Both doves and hawks spoke in unison on this decision with only two FOMC members seeing a Fed Funds rate above the 0.0-0.25% range in 2022. In support of that dovish statement of the Fed, the May CPI report came out with deflationary data. For the month, overall CPI fell -0.1% with...

Economic Report Monitor #39 June 9th, 2020 Another employment report comes out today, and while it's less popular and less current than the ones from last week, it's equally as telling. The Job Openings and Labor Turnover Survey (JOLTS) showed a decrease in separations as the labor market starts its rebound. Total separations fell -4.8 million in April after rising to over 14.5 million in March. Most of the drop there was a decrease in layoffs and discharges, about -3.8 million, especially in the accommodation and food services industry and retail. With the report lagging a month behind the jobs reports, it's optimistic to see improvement come a bit earlier than expected. However, job openings continued to decline falling below 2017 levels to 5.0 million despite the decrease in separations. It's likely that job gains in this rebound will be old positions being rehired and furloughed workers coming back from quarantine. Demand will probably not be able to sustain additio...

Economic Report Monitor #38 June 5th, 2020 A huge jobs report closed out the week with a fantastic surprise as the Bureau of Labor Statistics reported employment rising by 2.5 million jobs in May beating expectations by a lot. The improvement was a result of reopening by some states as leisure and hospitality jobs saw a sharp rise. The unemployment rate fell 13.3%, down -1.4%, in a huge reversal of sentiment. Temporary layoffs saw a huge drop of 2.7 million as people were up to work after 16.2 million workers were temporarily unemployed in April. The labor force participation rate increased 0.6% to 60.8%, another trend that was reversed. The number of people employed part-time for economic reasons was still at it elevated level from March and February, 10.6 million, suggesting there is still a lot of weakness in the labor market due to restricted cash flow. Businesses want to keep people employed, but utilization is not high enough to support a lot of full-time workers. Taken as it is...

Economic Report Monitor #37 June 4th, 2020 From The Real Economy Blog Thursday brought with it another batch of employment data, and this indicator has been watched intently for the past two months. The Unemployment Insurance Weekly Claims  for the last week of May produced another elevated number, 1.88 million, but lower in context of the COVID-19 outbreak. Falling below 2 million for the first time since March, the high unemployment claim number is likely more representative of the backlog of the unemployment system than anything else since several states have already started opening up. However, despite that fact, continued unemployment claims did jump slightly, increasing the insured unemployment rate 0.5% to 14.8%. This number will be closely monitored in June to gauge the progress of the recovery during reopening procedures. Another report  on unemployment was released by Challenger Gray & Christmas documenting the job cuts in May. While down 40.8% from April, the to...

Economic Report Monitor #36 June 3rd, 2020 After a quiet Tuesday, the middle of the week brings more COVID-19 economic data. The gamut of reports includes the non-manufacturing PMIs from IHS Markit and the Institute of Supply Management (ISM). Crucial data also was released for factories and energy with new orders and the weekly crude oil supply data. Finally, the Automatic Data Processing employment report brings a preview of the official Bureau of Labor jobs report on Friday. On Monday, the manufacturing PMIs revealed a troubled industry that was just starting to see some relief but with respondents suggesting a rebound is likely to be sluggish. The non-manufacturing and service PMIs today mirrored that sentiment today. The IHS Markit Services index jumped to 37.5 in May after dropping to the record low of 26.7 in April. Firms continued to see muted demand with the shutdown lasting through the month. Foreign demand was especially slow as new business from abroad decreased at a ...