Although the headline nonfarm payroll number missed estimates, the revisions more than made up for the miss. July payroll increased by 157,000, missing estimates by 33,000.  Revisions of June (+35,000) and May (+24,000) totaled 59,000. Average hourly earnings increased 0.3% and are up 2.7% over the last twelve months.  Employment increased in professional and business services, health care and social services and manufacturing.  

Jobs Highlights

• Professional and business services increased by 51,000 jobs
• Healthcare and social assistance increased by 34,000 jobs
• Manufacturing added 37,000 jobs; over the past 12 months, manufacturing has added an average of 27,250 jobs for a total of 327,000

ISM Non-Manufacturing

The ISM’s Services index for July was 55.7% in July, which corresponds to a 2.5% increase in real GDP, was down from 59.1% in June. The decline could be a sign of a more tepid third quarter real GDP growth. A reading above 50% indicates expansion. July was the 102^nd consecutive month of growth.

• New Orders Index 56.5% from 63.9%.
• Employment Index 56.1% from 53.6%
• Prices Index 63.4% from 60.7%.
• New Export Orders Index 58.0% from 60.5%

U.S. International Trade in Goods and Services

The goods and services deficit for June was $46.3 billion, up $3.2 billion from May.  Exports came in $1.5 billion less, while imports were higher by $1.6 billion.  Exports were led by soybeans shipments ahead of tariffs.  Imports rose from an increase in crude oil and pharmaceutical drugs.  Year-to-date, the deficit is up $19.6 billion, 7.2%, compared to the same period last year.  A rising U.S. dollar makes exports more expensive, while allowing Americans to purchase imports cheaper.  Economists are predicting the trade gap will surpass last year’s $552 billion and rise to the highest level since 2008.  The wild card is China and tariffs.             

Market Action

Consumer staples are rocking, led by Kraft Heinz (KHC), which posted a strong number but not so strong to explain today’s action.  Clearly, the consolidation story has taken hold, which is also powering one of my favorite company’s higher, Smuckers (SJM) traded higher by 8%.