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The Institute for Supply Management’s (ISM) Manufacturing Index for June dropped by -0.4 to 51.7, the lowest reading since October 2016, indicating expansion was continuing but at a slower rate. New orders dropped -2.7 to a flat 50.0, while inventories (49.1), customer inventories (44.6), prices (47.9), and order backlogs (47.4) were all below 50.0, indicating a contraction in those areas. However, production rose +2.8 to 54.1 and employment rose +0.8 to 54.5, with thirteen of the 18 industry categories reporting growth and production decreases reported only for Apparel, Transportation Equipment, Primary Metals, Fabricated Metals, and Plastic & Rubber products. Selected quotes from respondents noted concerns over tariffs, weather, and finding qualified employees, but also noted continuing strong global demand.
In May imports rose by $8.5 billion to $266.2 billion, overtaking a gain of +$4.2 billion for exports to $210.6 billion and resulting in a widening of the trade deficit  to $55.5 billion (+8.4%). The largest export increases were for soybeans (+$0.7 billion), automotive vehicles (+$0.6 billion), and civilian aircraft (+$0.5 billion), and the largest import increases were for automotive vehicles (+$2.3 billion), crude oil (+$1.3 billion), and consumer goods (+$1.4 billion). Year-to-date compared to 2018, the deficit is +$15.7 billion higher, with exports up +$5.1 billion (+0.5%) and imports up +$20.8 billion (+1.6%). The largest trade deficit was with China at $30.1 billion, followed by the European Union ($16.9 billion) and Mexico ($9.1 billion), while surpluses were recorded with South/Central America ($4.1 billion), Hong Kong ($2.6 billion), and Singapore ($0.6 billion).
There were 224,000 jobs created in June, but a +0.1% uptick in the labor force participation rate to 62.9% increased the pool of available workers and raised the unemployment rate  by +0.1% to 3.7%. The highest number of jobs were created in professional/business services (51,000), followed by health care (35,000), transportation/warehousing (24,000), construction (21,000) and manufacturing (17,000), with manufacturing seeing its first significant employment increase in 4 months. Average hourly earnings rose by 6-cents in June after a 9-cent gain in May to $27.90/hour, with wages gaining +3.1% on a yearly basis. The U-6 unemployment rate, which also accounts for discouraged and underemployed workers, rose by +0.1% to 7.2%, down from 7.8% in June 2018.
Upcoming Economic Reports:
Thursday July 11 – Consumer Price Index
Friday July 12 – Producer Price Index