June Economic Update
May was another good month for stocks. The S&P 500 gained more than 1%, putting its YTD advance above 7.7%. While the housing market showed some spring weakness, hiring bounced back and most other important economic indicators did not falter.
Wall Street seemed little troubled by politics, terrorist incidents, data disappointments, or earnings misses. In addition, global stock benchmarks largely advanced - some rather impressively. Both investors and consumers seemed firmly confident in the U.S. and global economies. (1)
U.S. Employment Report
The Department of Labor’s latest employment report showed a rebound in job creation. While March saw just 79,000 net new jobs, that number increased to 211,000 in April. These additions left the main (U-3) jobless rate at 4.4%, a 10-year low. (2)
Word arrived mid-month that the Fed was more cautious about a June hike than some investors assumed. May ended with the Bureau of Economic Analysis revising the Q1 GDP number north by half a percent to 1.2%, but that was still far from impressive.
Minutes from the May 2-3 Federal Open Market Committee meeting noted that FOMC members “generally judged that it would be prudent to await additional evidence” of the economy picking up before making another policy move. Still, the Fed futures market had the chance of a June rate increase at 83% in late May. (3,4)
Home sales had to cool off at some point in 2017. According to reports from the National Association of Realtors and Census Bureau, the housing market reached that point in April. The NAR released their report showing a 2.3% slip for resales, while the Bureau noted new home sales sliding by 11.4%. The latest 20-city composite S&P/Case-Shiller home price index showed home prices rising 1.0% for March, keeping the yearly gain of the index at 5.9%. The broader national Case-Shiller index was up 5.8% annually through March, its best showing in 33 months. (3,5)