Employment Report
Total nonfarm payrolls increased 117,000 in July, after increasing by an upwardly revised 46,000 in June (originally reported as 18,000). May’s data was revised as well, to 53,000, from 25,000 (total revisions pushed total payrolls up by 56,000 over the previous two months.) Total private jobs increased by 154,000 in July. The unemployment rate fell to 9.1%, down from 9.2% in June. Average weekly hours worked was unchanged at 34.3 hours and average hourly earnings for all employees posted a gain of $0.10. The labor market remains stuck in a slow patch as weak economic growth in the first half of the year 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 Manufacturing Index
In July, the Institute for Supply Management’s manufacturing index fell 4.4 points to 50.9, down from a reading of 55.3 in June. While the index remains above the threshold of 50 for an expanding economy, all of the components, excluding exports and imports, declined this month.  Despite the drop, business confidence in the manufacturing sector has remained positive despite considerable headwinds. As the economy slowly moves out of its slow patch, we expect business confidence to gradually improve.

Personal Income
In June, personal income rose a paltry 0.1% after rising 0.2% in May. Real disposable personal income rose 0.3% in June following no change in May. Real personal consumption expenditure growth was flat after a small 0.1% decline in May. The price index for personal consumption expenditures declined 0.2% after rising 0.2% in May, suggesting some of the recent run-up in inflation is cooling off. As consumers refrained from spending the saving rate rose 0.4 percentage points to 5.4% in June. The minor income gains and lack of consumption portend only a modest increase in consumption in the second half of this year.

Consumer Credit
In June total consumer credit grew 7.7% at an annual rate, or $15.5 billion, to a total of $2.446 trillion. Revolving credit rose 7.9% in June following a 5.0% increase in May. Non-revolving credit increased at a 7.6% annual rate after increasing at a 1.3% pace in the previous month. Consumer demand for credit picked up again, even though personal consumption expenditures were depressed in June.