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Weekly Economic Data Review
Overall it was a very solid week for the economy and the market, which rose 1.4% to hit another all time high.
Industrial production (which benefits from the weakening dollar) was up 0.4% in the past month, higher than expected and much better than last month’s 0.1% gain.
Meanwhile the JOLTs jobs report shows a “disappoingting” number of job openings (5.66 million), but more importantly the private sector quit rate has climbed to 2.5%, the highest level since 2005.
The reason that the headline job opening number is less important than the quit rate, is because the number of available jobs is a highly volatile estimate. But the quit rate, meaning what % of privately employed workers quit their job last month, is a sign of increasing worker confidence.
After all, if you were worried about the job market, or your ability to find a better, higher paying job, would you quit your current one?
Meanwhile inflation is weakening, now down to just 1.4% based on the core PCE (the Fed’s favorite inflation metric). That’s the big reason why the market rallied last week, because Janet Yellen, the head of Fed, testified before Congress that if inflation continues to come in below expectations (2%) that the Fed may slow the rate of interest rate hikes.
That would mean rates would remain low for longer, which the market loves.
More importantly though corporate earnings continue to look very impressive.
For example, according to FacSet Research (FDS) so far corporate earnings (6% of companies reporting by July 14th), have strongly beaten expectations.