The stock market has meandered all session long, perhaps glued to the Helsinki press conference that ended with more questions than when it began.  Financials are up on Bank of America (BAC) results and consumer discretionary is higher on the retail sales report.

Retail Sales

Retail sales out for June underscores the fact the America consumer continues to act on renewed confidence.  While the headline increase of +0.5% was in line with estimates, the number was better than expected after taking into account increased revisions to May’s report, +1.3% from +0.8%.

Autos continue to be stronger than anticipated, while health and personal care surged month to month and from a year earlier.  Clothing was down sharply as prices for apparel, as measured by the CPI report, has come down rapidly.  The internet bounced back, and restaurants remain strong.  Grocery was lower suggesting people are rewarding themselves with more dining outside the home.

Empire State Manufacturing

Manufacturing is still expanding in New York State and is expected to continue to do so over the next twelve months.  The Empire State Manufacturing index expanded at about the same pace in July as in June.  The headline general business conditions were lower by two points to 22.6, but it remains at a level suggesting strong growth.  Labor market indicators showed steady growth with a slight increase in the workweek.  The index for the number of employees fell 2 points to 17.2 after climbing to its highest level of the year in the prior month.   

 NABE Business Conditions Survey

All panelists from the firms and industries who are members of NABE expect continued economic growth over the next 12 months.  Most expect real GDP growth to exceed 2% on an inflation adjusted basis. The panelists also expect labor markets to remain tight and the difficulty in finding skilled labor to drive pay raises and increased training.  Additional investments in automation was an alternative that was also mentioned.

These reports point to potential wage inflation in the next non-farm payroll report in August.