Retail sales edge up

Retail sales rose 0.6% from the previous month in June, according to the Department of Commerce retail report issued July 16. Compared with one year ago – in the early months of the pandemic – sales were up 18.0%. Total sales for the three-month period of April through June were up 31.5% from the same period a year ago.

Auto sales were down 2.0% for the month of June – but up 19.5% from a year earlier. Building material sales were down 1.6% for the month, but up 6.8% from a year earlier; and department store sales were up 5.9% for the month and up 24.4% from a year earlier, as shoppers returned to brick-and-mortar stores. Restaurants and bars continued to benefit from the recovery, with the food services and drinking places category up 2.3% for the month and 40.2% from a year earlier. Non-store retailers (primarily online) edged up 1.2% for the month and 12.0% from a year earlier.

Unemployment rate drops 0.5%

The U.S. economy added nearly a million new jobs in July, sending the unemployment rate down 0.5%, from 5.9% to 5.4%, according to the Employment Situation Report issued August 6 by the Department of Labor (DOL). A total of 943,000 new jobs were added for the month, exceeding the 870,000 new jobs analysts expected. It was the largest job gain since last August.

The biggest gains came in the leisure and hospitality industry, with 380,000 new jobs, local government education, with 221,000, and professional and business services, with 60,000 new jobs. Average hourly earnings increased by 11 cents to $30.54.

After a steady drop in unemployment claims, the number of claims filed moved up slightly in July, according to the DOL. The 4-week moving average was 394,500 through July 24, an increase of 8,000 from the previous week's revised average, but still remains well below the volume of unemployment claims filed during the early months of the pandemic.

Health Care, Real Estate and Utilities lead July returns

The Health Care sector of the S&P 500 was up 4.90% in July to lead all sectors, followed by Real Estate, up 4.64%, and Utilities, up 4.33%. Only two sectors posted losses for the month. Energy was down 8.27% and Financials were down 0.44%.

The chart below shows the results of the 11 sectors for the past month and year-to-date:

Treasury yields continue to drop

Bond yields continued to drop in July after a rapid run-up early in the year, as concerns over inflation subsided. The yield on 10-year U.S. Treasuries dropped from 1.45% at the end of June to 1.23% at the July close.

Oil prices level off

After rising more than 50% through the first six months of 2021, as global travel picked up, the rise in oil prices leveled off in July. The price of West Texas Intermediate, a grade of crude oil used as a benchmark in oil pricing, inched up 0.65% in July, from $73.47 at the end of June to $73.95 at the July close. Through the first six months of 2021, the price of oil surged 51.42%.

Gasoline prices moved up 2.51% in July, with the national average price per gallon rising from $3.15 at the end of June to $3.23 at the end of July.

International equities edge up

Although nations around the world continue to deal with the adverse effects of the pandemic, international equities continued to edge up in July. The MSCI EAFE Index rose 0.70% for the month, from 2,304.92 at the end of June to 2,321.09 at the July close. Through the first seven months of 2021, the index was up 8.08%. (The MSCI EAFE tracks developed-economy stocks in Europe, Asia and Australia.)