Consumer sentiment at two-year high

Consumer sentiment, as measured by the Reuters/University of Michigan survey, increased to its highest level since January 2008, suggesting that improving economic conditions are helping to bolster attitudes towards the economic recovery.

Sentiment increased from 73.6 in April to 75.5 in mid-June, topping most economic forecasts.

Nonetheless, consumer sentiment has yet for move noticeably higher amid lackluster job prospects and still-high layoffs.  Modest gains in confidence have helped retailers and the overall economy.

Improved hiring and increased job security would go a long way in fueling further increases in consumer confidence and putting the recovery on solid ground.

Retail sales winning streak comes to an end

An unexpected drop in retail sales in may ended a seven month winning streak, but an upward revision to April and may eased some of the sting.

Despite the drop, the upward trend remains intact. More at Examiner.

Weekly jobless claims stuck in narrow range

Weekly initial jobless claims fell just 3,000 in the latest week to 456,000, but the prior week was revised upward by 6,000.  The 4-week moving average increased 2,500 to 463,000.

The chart below speaks volumes.  There has been virtually no improvement since the beginning of the year, as uncertainty in the corporate world persists.

Census hiring sparks payroll gain

Private sector reflects weakness

On the surface, the economic recovery appears to be creating new jobs, but much of May’s increase of 431,000 came from a 411,000 rise in temporary hiring for the 2010 Census.

Private sector job creation was more robust in April but jobless claims remain elevated, suggesting a reluctance to hire among private employers.

A deeper look at the report is available at Examiner.

Weekly jobless claims in holding pattern

Weekly initial jobless claims fell 10,000 in the latest week to 453,000, registering the second-straight weekly drop.  But the 4-week moving average managed a small rise of 1,750 to 459,000. And as the chart below reflects, progress has all but stalled.

On Friday, the government will issue the highly-anticipated labor report for May.  Employers are forecast to have created 540,000 new jobs last month, with the bulk having come from temporary census workers. 

Hence, private payrolls will be the mostly closely watched release in the data.  Another solid gain in excess of 200,000, like we saw last month, would be welcome.

But the economists surveyed by Bloomberg are providing a range of 225,000 to 635,000, highlighting the uncertainty among forecasters.

ISM services index keeps rolling ahead

The ISM Non-Manufacturing Index is a survey that measures economic activity in the broad-based service sector.  For the third-straight month, the index held steady at 55.4, signaling that growth in the service sector is neither robust nor tepid.   A reading of 50 marks the line between growth and contraction.

There’s really not a whole lot to say about today’s report except that Europe’s debt crisis is yet to have any impact on the U.S., nor would we expect any negative effect this quickly.

What the ISM survey is telling us is that the recovery that started in manufacturing has spread to the service sector, which is growing modestly.

ISM reveals strong manufacturing recovery

The latest survey released by the Institute for Supply Management shows that manufacturing continues to recovery at a strong pace.

The ISM Manufacturing Index fell 0.7 points to 59.7.  A reading above 50 indicates that goods producers are expanding.  New orders held at a very robust 65.7, pointing to further gains, while manufacturers continue to say that customer inventories are too low, which also implies that production will stay strong.

Those looking for jobs also received good news, as the employment index increased 1.3 points to a strong 59.8.

Manufacturing underwent wrenching cuts in production in late 2008 and early 2009.  The difficult but needed cuts helped to get inventories back in line with sales. 

Now that demand is picking up, formerly bloated stockpiles have been replaced by barren warehouses, and manufacturers are reacting by boosting production and helping to power overall growth in the economy.