Employment Report
Total nonfarm payrolls increased just 18,000 in June, after increasing by a downwardly revised 25,000 in May (originally reported as 54,000). April’s data was revised down as well, to 217,000, from 232,000 (total revisions pushed total payrolls lower by 44,000 over the previous two months.) Total private jobs increased by 57,000 in June. The unemployment rate rose from 9.1% in May to 9.2% in June, the third consecutive increase. Average weekly hours worked declined 0.1 to 34.3 hours and average hourly earnings for all employees posted a slight loss of $0.01 in June. The labor market remains stuck in a slow patch as weak economic growth in the first quarter has translated into weak labor market growth. As the economy gradually picks up in the following quarters, the employment situation should improve as well.

ISM Nonmanufacturing Index
In June, the Institute for Supply Management’s nonmanufacturing index fell 1.3 points to 53.3, down from a reading of 54.6 in May.  While the index remains above the threshold of 50 for an expanding economy, several important components, such as new orders and business activity/production, declined over the month.  This report contrasts with the ISM manufacturing index, which rose 1.8 points in June. Despite the drop this month, business confidence in the service sector has remained positive despite considerable headwinds. As the economy slowly moves out of its slow patch, we expect business confidence to gradually improve.

Consumer Credit
In May total consumer credit grew 2.5% at an annual rate, or $5.1 billion, to a total of $2.432 trillion. March’s gain was revised down to $5.7 billion (previously $6.3 billion). Revolving credit rose 5.1% in May after months of declines. Non-revolving credit increased at a 1.3% annual rate after increasing at a 4.8% pace in the previous month. Consumer demand for credit picked up a bit in May, even though personal consumption expenditures were depressed in May.