- The U.S. added 943,000 jobs in July, bringing the unemployment rate down to 5.4%
- The ISM Services Index hit a record high of 64.1 in June
- The Q2 2021 earnings growth rate for S&P 500 companies currently stands at 89%
Top Three Market Headlines
July Jobs Report Beats Expectations: The Labor Department announced last Friday that U.S. employers added 943,000 jobs in July, beating economists' expectations of an increase of 845,000. All industries except for retail registered job growth in the month, with gains led by companies in the leisure and hospitality, local government education, and professional and business services industries. As of July, employment was up by 16.7 million since April 2020, but remained down by 5.7 million, or 3.7%, from pre-pandemic levels in February 2020. July's job gains drove the unemployment rate down to 5.4% from 5.9% in the prior month. Meanwhile, average hourly earnings also ticked up in July, supporting the idea that the labor market remains extremely tight.
U.S. Economic Expansion Continues in July: Business activity in the U.S. continued expanding in July, according to surveys of business executives released last week by the Institute for Supply Management (ISM). The ISM Manufacturing Index registered 59.5, down slightly from the June reading of 60.6 but still well above the 50 mark that distinguishes expansion from contraction. The services sector registered particularly strong growth in July as the ISM Services Index hit 64.1, an increase of four points compared to June and the highest reading recorded since the inception of the index in 2008.
Corporate Earnings Skyrocket in Q2: Corporate earnings rebounded at a steep pace in Q2 2021 compared to shutdown-impaired results in the prior year. With almost 90% of S&P 500 companies having reported Q2 earnings through last week, the year-over-year blended EPS growth rate (combining actual results with analyst estimates for the few companies yet to report) stands at 89%, well ahead of the estimate of 63.0% as of June 30. This would be the highest growth rate reported since Q4 2009. Analysts presently project full-year earnings growth for S&P 500 companies of 41.6%.