KPI – July 2024: Recent Vehicle Recalls
KPI – July 2024: State of Business – Automotive industry
KPI – July 2024: State of Manufacturing
KPI – July 2024: Consumer Trends
State of the Economy
In June, the Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1% on a seasonally-adjusted basis, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all-items index increased 3% before seasonal adjustment.
Important Takeaways, Courtesy of the U.S. Bureau of Labor Statistics:
- The index for gasoline fell 3.8% in June, with energy down 2% month-over-month, but the indexes for food, food-at-home and food-away-from-home increased 0.2%, 0.1% and 0.4%, respectively.
- Indexes on the climb include shelter, motor vehicle insurance, household furnishings and operations, medical care and personal care, while indexes on the decline include airline fares, used cars and trucks and communication.
- The all-items index rose 3.0% year-over-year, with the all-items less food and energy index up 3.3%. The energy index was up 1% year-over-year and food increased another 2.2%.
For perspective, recent data shows food prices are on the climb 25.8% since November 2020. The cost of meat, poultry, fish and eggs, for example, collectively increased 23.5% since the last election. Eggs are up 54%, while dairy products like milk, cheese and butter rose upwards of 36%. Similarly, cereals and bakery products such as bread, rolls, crackers and cookies jumped 28% during the last four years.
“So, while the latest 2.2% annual food inflation rate for March 2024 seems more manageable, it doesn’t negate the cumulative 25.8% increase in grocery prices since that November 2020 election. And it remains to be seen if that downward trend in food inflation will continue in the coming months,” according to Laura Beck, author of Here’s How Much Grocery Prices Have Increased Since the Last Election.
“With the significant rise in food costs over the past few years, American households have been forced to spend a bigger share of their income on basic grocery items. Tighter budgets due to higher prices have financial impacts that ripple through the entire economy. As the data so clearly shows, a routine trip to the grocery store is a much more expensive these days than it was just a few years ago,” she continues.
Employment
Total nonfarm payroll employment increased by 206,000 in June – in line with the Dow Jones forecast of 200,000. However, the unemployment rate and number of unemployed persons inched up to 4.1% and 6.8 million people, respectively – the former of which is the highest in nearly three years. In addition, the labor force participation and long-term unemployed (those jobless for 27 weeks or more) rates increased to 62.6% and 22.2%, respectively, according to the U.S. Bureau of Labor Statistics. Average hourly earnings increased 0.3% month-over-month and 3.9% year-over-year, both in line with estimates, but not enough to offset many rising costs crushing American households.
Regular monthly job revisions are a troubling trend as well, according to industry professionals. Throughout 2023, negative revisions within the monthly jobs report subtracted more than 440,000 jobs from the initial total. The concerning practice continues in 2024, as the Bureau revised its data by 57,000 in April, lowering its previous estimate of 165,000 jobs added to 108,000. Likewise, May payroll estimates were revised down 54,000 jobs – decreasing total job gains from 272,000 to 218,000. That is a combined 111,000 fewer jobs in April and May than first reported, which brings the three-month average of job gains to roughly 177,000 – well below the 269,000 recorded during the first three months of the year.
“With the June data in hand, the economy is close to triggering the ‘Sahm Rule’ created by economist Claudia Sahm, which has a strong track record of signaling in real-time when the economy is in recession. The rule examines the difference between the current three-month average of the unemployment rate and the lowest three-month average over the past year. That difference now stands at 0.4 percentage point, and the traditional Sahm Rule trigger is 0.5 percentage point,” according to joint reporting by Courtenay Brown and Neil Irwin at Axios.
For better context: Approximately 153,000 of the 206,000 jobs added in June were government (70,000), health care (49,000) and social assistance (34,000). Leading economists and market analysts like Paul Ashworth, chief North America economist at Capital Economics, note the government as a source of many jobs, downward revisions and a rise in unemployment is not only unsustainable, but also “concerning.”
Source: U.S. Bureau of Labor Statistics data
By Demographic
This month, unemployment rates among the major worker groups: adult women – 3.7%; adult men – 3.8%; teenagers – 12.1%; Asians – 4.1%; Whites – 3.5%; Hispanics – 4.9%; and Blacks – 6.3%.
Last month, unemployment rates among the major worker groups: adult women – 3.4%, adult men 3.8%, teenagers – 12.3%, Asians 3.1%, Whites – 3.5%, Hispanics 5% and Blacks – 6.1%.
*Data is bold reflects notable unemployment increases.
Caption: In June 2024, the national unemployment rate was at 4.1%. Seasonal adjustment is a statistical method of removing the seasonal component of a time series that is used when analyzing non-seasonal trends.
By Industry
The Employment Trends Index™ (ETI) has been on a downward trajectory since its peak in March 2022, with some industry professionals preparing for an employment decrease in the second half of 2024.
“The index remains above its pre-pandemic level and payrolls growth remains healthy, albeit at a reduced pace compared to the outsized gains experienced during the pandemic recovery,” says Will Baltrus, associate economist at The Conference Board. “While June’s ETI suggests an aggregate reduction in employment ahead, we anticipate the labor market will only cool modestly. Indeed, as long as companies are willing to retain workers, net nonfarm payrolls are likely to remain positive.”
Baltrus notes the labor market remains resilient despite slowing real GDP growth. For example, he says many employers continue to hoard workers regardless of rising labor costs.
“This reflects the difficulty companies are facing in finding workers: At 37%, the share of firms that report jobs are ‘not able to be filled right now’ – a component of the ETI – remains well above the average of 23% observed between July 2009 and January 2020, the period following the financial crisis and immediately preceding the pandemic. This share is expected to remain elevated as Baby Boomers retire,” he explains. “Companies are also hesitant to downsize payrolls amid a slowing economy because the weakness may be transitory, and rehiring workers after an economic soft patch may be more expensive given persistent labor shortages.”
Caption: The Conference Board Employment Trends Index™ (ETI) decreased to 110.27 in June, compared to a
downwardly revised 111.04 in May. The Employment Trends Index is a leading composite index for payroll employment. When the Index increases, employment is likely to grow as well, and vice versa. Turning points in the Index indicate that a change in the trend of job gains or losses is about to occur in the coming months.
Important Takeaways, Courtesy of the U.S. Bureau of Labor Statistics:
- Government employment rose by 70,000 in June, higher than the average monthly gain of 49,000 over the prior 12 months. Employment increased in local government, excluding education (+34,000) and in state government (+26,000).
- Health care added 49,000 jobs, with employment rising in ambulatory health care services (+22,000) and hospitals (+22,000).
- Employment in social assistance increased by 34,000, primarily in individual and family services (+26,000).
- Construction added 27,000 jobs, above the average monthly gain of 20,000 over the prior 12 months.
