The unemployment rate improved for the third straight month as some workers returned to their jobs. Gains were notable in restaurants and retailers, especially in New York. The headline rate fell to 10.2%, which was slightly better than expected (10.6%). Underlying the report there is a large cohort of people who lost their jobs early in the crisis that remain unemployed and with the expiration of PPP layoff restrictions, the momentum may be slowing on further improvements.
Initial jobless claims also improved last week, finally halting the 2 consecutive weeks of increases we saw in the middle of July. The weekly figure dropped to 1.186 M. down from 1.435 M the week prior.
July manufacturing data remained in expansionary territory on both the ISM and Markit surveys. Markit’s survey was notably weaker and remained just inside of expansionary territory at 50.9 (figures above 50 indicate expansion), while ISM’s was stronger at 54.2.
Trade wars may be ratcheting back up with the Trump administration reinstating tariffs on Canadian aluminum as well as executive orders related to China’s TikTok and WeChat. The orders prohibit companies from transacting with their parents and may have wide ramifications, depending on how “transact” is defined in the next 45 days before it goes into effect. Tencent, WeChat’s parent company, has ownership stakes in Activision, Tesla, Snap as well as streaming deals for the NBA, NFL, and MLB. Further, such companies as Starbucks and Walmart accept payments on Tencent’s platforms. To our north, the Canadian tariffs were imposed just a month after the USMCA went into effect and were previously met with promises of dollar-for-dollar retaliation.