Economic Data Deluge

Following the biggest selling day in a long time — -3% among major U.S. indexes — we see a plethora of new economic data hitting the tape during the early market hours this Thursday, among them Jobless Claims (as nearly every Thursday), Retail Sales, Productivity and Unit Labor Costs, and more. We even get a new earnings report from the biggest of the big-box retailers.

Initial Jobless Claims ticked up by 8000 last week from an upwardly revised 211K two weeks ago to 220K reported this morning. These figures are still solidly within our long-term ranges and only slightly above the 217,167 average we’ve seen over the past 12 weeks.

Continuing Claims of 1.75K were above the previous print of 1.69K, as well as the highest we’ve seen since the seek of June 30, but are still near historically low levels, indicating no strain on the current U.S. labor market, at least on a week-by-week basis.

Retail Sales for July more than doubled expectations to +0.7%, and above the +0.4% we saw in the month-ago data. Stripping out auto sales, this figure plummets to +0.1% (though still in positive territory), while taking out auto & gas sales (“control”) brings the level back up to +0.9%. Another strong indication that the U.S. consumer is pulling its weight for the domestic economy.

This control number — stripping out volatility in the near-term retail market — is considered important because it leads directly to Gross Domestic Product (GDP) gains. So if this health in the retail space can continue going forward (less than completely likely when one considers Amazon’s [AMZN] Prime Day sales happened in July), we may see a stronger-than-expected headline on Q3 GDP early this fall.

Q2 Productivity also outperformed expectations this morning, posting 2.3% growth for the second three-month span of 2019, up from the expected 1.7%, though down from the upwardly revised 3.5% from Q1. Unit Labor Costs for Q2 were a tad light of estimates to 2.4%, though the previous quarter’s revision went way up from -1.6% originally reported to +5.5% this morning. More strength on the U.S. economy.

Mixed results on the monthly — and notably volatile — Empire State and Philly Fed surveys for August also show up in our news feed this morning: the New York state read of 4.8 was a half-point higher than the unrevised 4.3 we saw a month ago. Philly doubled its estimates to 16.8, down only slightly from the strong 21.8 from July. Again — health in the domestic economy everywhere one looks.

Walmart WMT even outperformed expectations, a day after Macy’s M quarter flopped and analysts openly questioned the viability of big-box retail. Walmart proved today certain companies can still bring the magic: $1.27 per share topped the Zacks consensus by 5 cents, while revenues of $130.38 billion narrowly surpassed estimates.

Even better: Walmart guided higher for full-year (fiscal) 2020, as higher-than-expected comps — reaching 2.8% year over year, led by strength in groceries — look to add to earnings totals. This comes after the company had already warned that trade issues with China will lead to higher prices.

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