THOUGHTS ON THURSDAY’S DATA

Bad news across the board today on the news front.  The nonfarm payrolls figure came in much worse than expected at -467K vs estimates of -350K.  The unemployment rate jumped to 9.5% which was slightly lower than expected.  Wage inflation continues to be a non-factor as hourly earnings were unchanged.  The latest number of unemployed workers hit 14.7MM, a record high.  Jobless claims were also out this morning and posted a 615K climb.  This was about in-line with the 619K analysts expected.  Continuing claims came down slightly, but still remain elevated.  The pace of improvement in the jobs markets is incredibly disconcerning especially considering the green shoots we keep hearing about.

Factory orders were also out this morning and posted a 1.2% gain for May.  Econoday reports:

May was a good month for manufacturing as orders jumped 1.2 percent to an adjusted $347.9 billion in the month. New orders for durable goods rose 1.8 percent while orders for non-durable goods, boosted only modestly by higher oil-related prices, rose 0.7 percent. May was a strong month for aircraft and defense excluding which orders were still very solid: machinery, a sizable group at $22.2 billion, was up 7.1 percent in the month while the larger computers & electronics group, always fighting against price depreciation, posted a rare gain.

Outside of new orders, however, the news isn’t so good. Destocking slowed slightly but inventories still fell 0.6 percent in May. Yesterday’s ISM manufacturing report showed deepening rates of destocking in June. Optimists say inventories will have to be restocked given the strength in new orders and wider outlook for economic recovery. But pessimists can warn that businesses are drawing down stocks in case demand does not improve.