Below expectations
The US added 559k new jobs in May, short of expectations for 671k new jobs. The leisure and hospitality once again led job gains in May with 292k new jobs, followed by the education and health and government sectors. There was, unsurprisingly, a decrease in construction jobs last month as we’ve seen the rising construction costs put a slight damper on the construction market. Overall, the unemployment rate fell to 5.8%, the lowest so far in the pandemic, but that number doesn’t account for those who left the workforce as a result of the pandemic and are likely to return.
Moral of the story: Employers are eager to hire people, so this report is an indicator that the labor shortages are real. Add to that the supply chain issues becoming more widespread now (I’m feeling the pain trying to even get quotes from wedding vendors!), and you’ve got some governors on a more robust economic recovery.
Services for days
The latest ISM manufacturing and services indices were flashing neon signs about the labor shortages that employers are seeing across the services and manufacturing sectors. Manufacturers have been flooded with new orders for their goods. The demand pushed the ISM manufacturing index half a point higher to 61.2 in May though production and hiring have both slowed with backlogs rising to the highest level on record. On the services side of the economy, we’re seeing consumers rush back to do all the things they haven’t been able to in the last 18 months, pushing demand aggressively across the services industry and driving the ISM services index to a record high of 64.
Moral of the story: Both indices are indicative of supply side restrictions and elevated demand, which (Econ 101) increases prices, which means more inflation. Though the supply side disruptions are largely expected to be temporary in nature, it’s likely they will persist throughout the summer until the unemployment benefits run out.
Planet of the apes
ICYMI, AMC was making headlines again this week as retail investors (apparently the retail investors in AMC call themselves “apes”) pushed the meme stock to all-time highs at $72.62 before shares fell again, closing out the week around $52. AMC, unsurprisingly, took advantage of the interest to issue 25m more shares to raise about $800m in cash. The retail speculation in this stock has allowed AMC to raise a total of $1.6b in cash since the beginning of the year.
Moral of the story: Timing is the key to capturing so much of the movements in these things, and unfortunately unless you have some algorithm working in nanoseconds to make trades for you, it’s really difficult to actually do it super well. Regardless, I’m not entirely clear what AMC is going to be able to accomplish with the cash it’s raising for a business that’s literally in secular decline, but hopefully the company can do right by all these retail shareholders.