Employers added just 80,000 jobs, falling short of expectations for the June employment report and triggering declines in the equity markets. The unemployment rate was unchanged from May (8.2%). Additionally, the U.S. manufacturing sector contracted in June for the first time since July 2009.

First, let’s recap news from the past week:

• The June employment report fell short of expectations. U.S. employers added only 80,000 jobs to their payrolls in June, and net revisions for the previous two months were slightly lower. While the U.S. unemployment rate held steady at 8.2%, the underemployment rate inched higher to 14.9%.
• Also on the disappointing front, the Institute of Supply Management, or ISM, manufacturing index fell to 49.7 in June from 53.5 in May. Readings below 50 indicate contraction. As such, the U.S. manufacturing sector contracted in June for the first time since July 2009. In a related report, the ISM service index also fell more than anticipated in June to 52.1, from the previous month’s reading of 53.7.
• In other U.S. news, vehicle sales improved from an annualized rate of 13.7 million units in May to 14.1 million in June.
• Looking overseas, the European Central Bank reduced its main interest rate to an all-time low of 0.75%.
• Overall, the major equity markets declined last week, with the Standard & Poor’s 500 off 0.55% and the Dow Jones Industrial Average lower by 0.84%. One of the biggest movers for the week was the U.S. dollar, up 2.14%.

Sources of chart data: Yahoo Finance, Freddie Mac, MarketWatch, Thomson Reuters, and The Wall Street Journal

Now let’s look at the economic events for the next two weeks:

• In general, this week is expected to be fairly light in terms of economic news. Here are a few items to watch.
• On Wednesday morning, the U.S. trade balance report for the month of May is announced. For the second straight month, the U.S. trade gap is forecast to narrow, from $50.1 billion in April to approximately $48.5 billion in May.
• Thursday morning brings weekly unemployment claims. Last week’s claims were 374,000, and the projection for this week is slightly lower at 370,000.
• On Friday morning, we will get our first glimpse at June inflation numbers with the release of the Producer Price Index, or PPI. For the month of May, headline PPI plummeted 1.0%, and the consensus for June shows a continued drop in prices of 0.4%.
• We wrap up the week with the U.S. consumer sentiment report. This is the bi-weekly report from the University of Michigan. We ended June with an index reading of 73.2, and the estimate for the first half of July is a small improvement to 73.5.

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