- The ISM Manufacturing Index registered 54.2 in July, while the Services Index hit a 17-month high of 58.1
- U.S. auto sales rose 11.3% to $14.5 million in July from the prior month
- Nonfarm payrolls grew by 1.8 million in July, while the unemployment rate fell to 10.2%
Top Three Market Headlines
U.S. Economy Recovery Remains on Track: The U.S. economy continued to claw its way back in July from the COVID-19-induced contraction endured in the spring, according to two widely-followed surveys released last week. The Institute for Supply Management (ISM) reported that its Manufacturing Index, based on surveys of manufacturing company executives, registered 54.2 for July, marking the second straight month of expansion (a reading above 50 indicates growth of activity, while a reading below 50 reflects contraction). Improving conditions also extended to the service sector for the second straight month, as the ISM’s Services Index registered 58.1 in July, its highest reading in 17 months.
U.S. Auto Sales Rebound: In a sign of recovering consumer sentiment, U.S. auto sales rose by 11.3% in July from the prior month to 14.5 million (SAAR) units. While still below pre-COVID-19 levels, auto sales continue to rebound from their April lows, having recorded gains in each of the last three months. Passenger vehicles led the gains in July, increasing 17.8%, followed by light trucks, which grew 9.8%. Light trucks accounted for almost 76% of total sales, three percentage points higher compared to one year ago. The uptick in auto sales, combined with coronavirus-induced production constraints, have driven inventories down to an eight-year low.
U.S. Job Market Improvement Continues: The Labor Department reported last Friday that U.S. nonfarm payrolls grew by 1.8 million in July. This was the third straight month of employment gains, reflecting the continued resumption of economic activity that had been curtailed by business shutdowns in the wake of COVID-19. However, there are still about 13 million fewer jobs than existed in February, the month before the U.S. economy largely shut down. Key areas exhibiting job gains in July included hospitality, government, retail, business services, and health care. Meanwhile, the unemployment rate fell for the third straight month in July to 10.2%, down from 14.7% in April, but remained far above the historically low rate of 3.5% in February before the pandemic hit.