The Day at a Glance | August 4 2023

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*Job creation in the U.S. once again surprised to the downside in July, although the unemployment rate unexpectedly decreased.

*Gross Fixed Investment accelerated during May, while private consumption continued to expand on an annual basis.

*Retail sales in the Eurozone recorded a monthly -0.3% contraction following a 0.6% increase the previous month. However, on an annual basis, there was a smaller decline (-1.4%) compared to what was logged in May (-2.4% y/y). 

*The Non-Manufacturing ISM Index (ISM Services) declined by 1.2 points in July from the four-month high of 53.9 recorded in June, setting at 52.7. The moderation in the employment component and “cautious optimism” regarding business conditions and the overall economy were highlighted by those surveyed.

*Former U.S. President Donald Trump pleaded not guilty to the four criminal charges related to the 2020 presidential election.

Economic environment

The U.S. employment report surprised to the downside, with fewer job additions than expected. During July, the U.S. economy created 187,000 new jobs, lower than the 200,000 expected by the analysts’ consensus, and also below the originally reported 209,000 positions in June, which were later revised down to 185,000. Additionally, the payroll change for May was also revised down to 281,000 positions, bringing the total number of jobs created between January and July to 1.8 million. Furthermore, these figures point to a more noticeable downward trend in U.S. job creation. However, this was offset by the unemployment rate, which surprisingly decreased to 3.5% from the previous 3.6%, and was expected to continue in July, while the participation rate remained unchanged at 62.6% for a fifth consecutive month. Moreover, hourly wage revisions continued to increase at a rate of 0.4% m/m, surpassing the estimated 0.3% m/m, pushing the annual reading to 4.4%, the same as the previous month and higher than the 4.4% consensus forecast. With this, labor market figures were mixed; however, revisions in the previous non-farm payroll data and the moderation in July indicate weaker job creation momentum than previously expected.

Gross fixed investment and private consumption maintained a positive trend during May. On an annual basis, gross fixed investment advanced by 15.1% in May, up from April’s 6.9%. On a monthly basis, a streak of 2 consecutive declines was broken with a 4.5% m/m increase (compared to the previous -0.25%). This is due to a monthly 7.6% increase in construction and a 1.2% rise in the machinery and equipment sector. More specifically, the recovery in gross fixed investment came from the construction sector, where residential and non-residential construction grew 6.8% and 9.7%, respectively. On the private consumption side, the figure increased by 3% y/y, and logged a slowdown compared to last month’s 3.52%. On a monthly basis, consumption decreased by -0.3%. The consumption of domestic goods and services fell by 0.9%, while the consumption of imported goods rose by 2.7%, although it was not enough to offset the decline.