Publications

U.S. Economic Indicators

Initial jobless claims were unchanged from last week at 218,000. The four-week moving average fell 2,500 to 215,000. DOL Report

Nonfarm business sector labor productivity increased 3.4% in Q1 and rose 2.4% compared to last year. Hours worked increased 0.5% and unit labor costs fell 1.6%. BLS Report

The U.S. trade deficit declined from $51.9 billion in March (revised) to $50.8 billion in April. The goods deficit fell by $1.0 billion while the services surplus increased by $0.1 billion. Census Bureau Report

U.S. News

According to the Wall Street Journal, international negotiators are making progress on rewriting rules for how countries tax multinational corporations in the era of digitization. Participants are optimistic that the OECD-managed talks will reach consensus on policies to minimize disputes between countries and discourage nations from enacting separate taxes on international corporations. WSJ

U.S. Economic Indicators

The ADP Employment Report shows that private-sector employment increased by 27,000 jobs in May, significantly below expectations of 175,000. The services sector added 71,000 jobs, while the goods-producing sector lost 43,000 jobs. ADP Report

The ISM Non-Manufacturing Index rose 1.4 points to 56.9 in May. The New Orders Index rose 0.5 point to 58.6, while the Employment Index rose 4.4 points to 58.1. ISM Report

U.S. News

According to the Financial Times, the U.S. Commerce Department has warned that any halt to China’s rare earth exports would cause “significant shocks” to U.S. supply chains. The Commerce Department recommended streamlining the permitting process for domestic mining to reduce U.S. dependence on foreign suppliers of critical minerals. FT

Greg Ip of the Wall Street Journal reports that a major trade war between the U.S. and China is comparable to the 1973 Arab oil embargo, but would have milder consequences given currently low inflation. He noted that although many companies are starting to shift supply chains away from China to minimize potential disruptions, the process will take years to complete and will harm U.S. productivity. WSJ

U.S. Economic Indicators

New factory orders for manufactured goods decreased 0.8% in April following a 1.3% increase in March and are up 1.6% compared to a year ago. New orders excluding transportation rose 0.3% while new orders for nondefense capital goods excluding aircraft fell 1.0%. Census Bureau Report

U.S. News

The Wall Street Journal reports that Federal Reserve Chairman Jerome Powell announced that the central bank is closely monitoring escalating trade tensions and may cut rates if the economic outlook deteriorates. Additionally, with inflation holding below the Fed’s 2% target for the past several months, officials are concerned that persistently low inflation will pull down consumers’ expectations of future inflation and have a negative effect on actual future prices. WSJ

According to the Wall Street Journal, President Trump has announced that he expects U.S. tariffs on Mexican goods to go into effect next week as scheduled despite ongoing negotiations to resolve the immigration dispute. The proposed tariffs would affect all Mexican exports to the U.S., starting at 5% on June 10 and rising each month to 25% by October. WSJ

U.S. Economic Indicators

The ISM Manufacturing Index decreased 0.7 percentage point to 52.1 in May. The Employment Index rose 1.3 percentage points to 53.7, while the New Orders Index rose 1.0 percentage point to 52.7. ISM Report

Construction spending was essentially unchanged in April at an annualized rate of $1.30 trillion. Public construction rose 4.8% while private construction decreased 1.7%. Census Bureau Report

U.S. News

According to the Wall Street Journal, both China and Mexico have signaled that they are still willing to negotiate with the U.S. over escalating trade issues. Over the weekend, China released a policy paper indicating both China’s willingness to engage in a trade war and openness to returning to negotiations, while Mexico rushed a delegation to the U.S. to resolve immigration issues before the U.S. imposes punitive tariffs on Mexican goods. WSJ

U.S. Economic Indicators

Real disposable personal income increased 0.1% in April after falling 0.2% in March, while real personal consumption expenditure (PCE) was unchanged. The PCE price index increased 0.3% (up 1.5% Y/Y) and the core price index increased 0.2% (up 1.6% Y/Y) in April. BEA Report

The University of Michigan Consumer Sentiment Index rose 2.8 points to 100.0 in the final May reading and is up 2.0 points from last year. The Index of Consumer Expectations increased 6.1 points to 93.5, while the Current Economic Conditions Index fell 2.3 points to 110.0. University of Michigan

U.S. News

According to the Wall Street Journal, the U.S. has announced it will impose increasing tariffs, starting at 5%, on all Mexican exports to the U.S. beginning June 10 in an effort to pressure Mexico to deter the flow Central American migrants to the southern border. Business groups have expressed concerns that the tariffs will lead to retaliation against U.S. farm products and manufactured goods. WSJ

The Financial Times reports that an official measure of Chinese factory activity slowed to a ten-year low in May, suggesting that trade tensions and banking troubles will continue to drag down China’s economic growth. Experts expect Chinese policymakers to ease credit access for banks to promote lending to smaller companies, though the government’s recent bank takeover—the first in 18 years—is expected to tighten credit access in the short run. FT