Several other new indicators confirm the message from the Q2 GDP report: the U.S. economy continues to grow, but at a discouragingly slow rate.
Perhaps the most disturbing release last week was the ISM manufacturing survey, whose July index of 49.8 indicated that reports of contractions outnumbered expansions in manufacturing for the second month in a row. But fortunately, there were some other indicators also released last week suggesting things weren’t universally that weak.
Autos continue to sell reasonably well, by recent standards anyway. Sales of cars manufactured in North America were up almost 19% from last year and close to July 2007 levels.
Domestic light truck sales were up less than 3% year-over-year, but still down 15% from July 2007. I view the stronger sales of the smaller cars as something that’s healthy over the longer run for the U.S. economy, raising hope that the domestic manufacturers can continue to compete in an era of much higher oil prices than we saw five years ago.
And then we have Friday’s employment report, which showed a seasonally adjusted increase in July over June of 163,000 in the number of Americans on nonfarm payrolls. On the other hand, the separate BLS household survey showed a 195,000 monthly drop in the number of working Americans. There’s a lot of noise and other confounding factors in either of these estimates. It’s perhaps more meaningful to look at the growth in the seasonally adjusted numbers over the last six months, which averaged 131,000 per month according to the establishment survey and 97,000 according to the household. That’s enough to provide jobs for new entrants into the labor force, but not enough to make any progress with the unemployment rate, which ended July at the same 8.3% rate at which we started the year.