These stories are starting to sound like a broken record as we get barraged with disappointing economic data on a near daily basis. Let’s hit the bullet points so you can keep a tab of the disappointments without feeling overwhelmed:
- The Challenger Job’s report showed a huge surge in layoffs this month to 66,414 from 41,432 in June. This is the highest reading in 16 months. John Challenger had some brief comments on the report:
“July marks the third consecutive increase we have seen in monthly job-cut announcements, which certainly seems to provide additional evidence that the recovery has stalled. What may be most worrisome about the July surge is that the heaviest layoffs occurred in industries that, until now, have enjoyed relatively low job-cut levels, including pharmaceuticals, computer and retail.”
- The ADP private payroll employment came in at 114K for the month of July. This was better than expected, however, if you’ll recall last month’s 157K was well shy of the private sector 18K that showed up in Friday’s report. The ADP report has been known to be a bit more volatile than the government data so I don’t know that there’s much to learn here.
- Factory orders fell -0.8% as durable goods orders declined.
- ISM Services came in slightly below consensus and appears to confirm the slow-down worries that are now gripping the markets. Econoday details the report:
“A second month of slowing in new orders and deepening contraction in backlog orders undercut strength in the ISM non-manufacturing composite index for July that edged only slightly lower to a 52.7 level that indicates moderate monthly expansion compared to June. New orders, which were in the 60s as recently as March, fell nearly two points to 51.7 and are now testing the monthly breakeven level of 50. Backlog orders are already well below 50, down 4-1/2 points in the month to 44.0. Weak orders do not point to overall strength in the months ahead.What did give the composite index a boost in July was business activity, a component that’s akin to a production index on the manufacturing side and which rose more than 2-1/2 points to 56.1. Other readings include a slowing in the expansion of the sample’s labor force, at 52.5 vs 54.1 in June.
Today’s report hints at continued slow growth for the overall economy given, however, that new orders can hold above 50 in the months ahead. Stocks are edging lower following release of today’s report.”
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