Analysts at Nomura offered a review of the key US data and updated their GDP tracking update.
“Initial jobless claims:
For the week ending 10 June, initial jobless claims fell 8k to 237k. However the 4-week moving average remained relatively unchanged at 243k (242k one week prior). For the week ending 3 June, continuing unemployment insurance claims increased 6k to 1935k with the 4-week moving average increasing slightly to 1927k from 1918k. Overall, initial claims remain at historically low levels as firms continue to show an unwillingness to let go of their employees and the labor market tightens further.
Industrial production was unchanged in May, below expectations (Nomura: 0.5%, Consensus: 0.2%), following an upwardly revised 1.1% increase in April (previously reported as a 1.0% increase). Much of the softness was attributable to a 0.2% m-o-m decline in core factory output, following an upwardly revised 0.9% increase in April. The weakness in core factory output appears fairly broad-based. In particular, computers and electronics output fell 0.5%, and machinery production increased only by 0.1%. Yet, we caution against reading too much into a monthly blip, the 12-month change rate remains positive and suggests an improvement from the prior year. As expected, motor vehicle and parts production fell 2.0%. The decline in production is likely a reflection of automakers adjusting their production level to work off high inventory levels amid slowing sales. In addition, the mining sector output increased steadily by 1.6%. The healthy improvement appears consistent with improved count of active gas and oil rigs.
GDP tracking update:
In the industrial production report, vehicle assemblies and utilities output, both of which are inputs into GDP estimation, were in line with our expectations. Thus, we left our Q2 GDP tracking estimate unchanged at 2.8% q-o-q saar.”