Month of May 2019

• Employment: Total employment vaulted by 263,000 in April after adding 189,000 (revised) new jobs in
March. The average monthly job gain in 2019 was 213,000 per month (223,000 in 2018). Notable
employment increases for April occurred in professional and business services (76,000), construction
(33,000), and health care (27,000). The unemployment rate fell 0.2 percentage point to 3.6% in April, the
lowest rate since December 1969. The number of unemployed persons decreased by 387,000 to 5.8
million. The labor participation rate dropped 0.2 percentage point for the second consecutive month to
62.8% in April, while the employment-population ratio was unchanged at 60.6%. The average workweek
decreased by 0.1 hour to 34.4 hours for April. Average hourly earnings increased by $0.06 to $27.77.
Over the last 12 months ended in April, average hourly earnings have risen 3.2%.

• FOMC/interest rates: As expected, the Federal Open Market Committee did not change interest rates
following its latest meeting during the first week of May. On the plus side, the Committee noted that economic activity was running at a solid rate, as was the labor market. However, household spending declined as did inflation, which was running below the FOMC's 2.0% target rate.

• GDP/budget: The second estimate of the first-quarter gross domestic product showed the economy
grew at an annualized rate of 3.1% (3.2% for the initial estimate). The GDP expanded at a rate of 2.2%
for the fourth quarter of 2018. Driving the growth rate increase was an upturn in state and local
government spending, accelerations in private inventory investment and in exports, and a smaller
decrease in residential investment. These movements were partly offset by decelerations in consumer
spending and nonresidential fixed investment (business spending on equipment, structures, software,
etc.), and a downturn in federal government spending. Imports declined. The federal budget enjoyed a
surplus of $160.3 billion in April ($214.3 billion in April 2018), largely due to individual income tax
payments. Through the first seven months of the fiscal year, the government deficit sits at $530.9 billion.
Over the same period for fiscal year 2018, the deficit was $385.4 billion.

• Inflation/consumer spending: Inflationary pressures remain weak as consumer prices are up 1.5%
over the last 12 months ended in April. Consumer prices excluding food and energy are up 1.6% over
the same 12-month period. For the month, consumer prices rose 0.3% over March, when prices
increased 0.2%. In April, consumer spending rose 0.3% (1.1% in March). Personal income climbed
0.5% in April after increasing 0.1% in March. Disposable (after-tax) income rose 0.4% in April after
advancing 0.1% in March.

• The Consumer Price Index increased 0.3% in April after rising 0.4% in March. Over the 12 months
ended in April, the CPI rose 2.0%. The gasoline index continued to increase, rising 5.7% and accounting
for over two-thirds of the monthly increase. Core prices, which exclude food and energy, climbed 0.1%
for the third consecutive month in April. Core prices were up 2.1% over the previous 12 months ended in
April.

• According to the Producer Price Index, the prices companies received for goods and services rose 0.2%
in April after climbing 0.6% in March. The index increased 2.2% for the 12 months ended in April. The
index less foods, energy, and trade services moved up 0.4% in April, the largest increase since rising
0.5% in January 2018.

• Housing: While new home sales have continued to expand, the market has been slower for existing
home sales, which fell 4.0% in April after dropping 4.9% in March. Year-over-year, existing home sales
remain down 4.4%. The April median price for existing homes was $267,300, up from $259,400 the prior
month. Existing home prices were up 3.6% from April 2018. Total housing inventory for existing homes
for sale in April increased to 1.83 million (4.2-month supply), up from 1.67 million existing homes
available for sale in March. Sales of new single-family houses in April were 6.9% lower than March, but
7% higher than their April 2018 estimate. Falling prices and a few more houses on the market have
helped drive sales activity. The median sales price of new houses sold in April was $342,200. The
average sales price was $393,700. Inventory was at a supply of 5.9 months in April.

• Manufacturing: The manufacturing sector continued to sputter in April, as industrial production edged
down 0.5% after falling 0.1% in March. Output is now reported to have declined 1.9% at an annual rate
in the first quarter. Manufacturing production also decreased 0.5% in April after being unchanged in
March. Total industrial production was 0.9% higher in April than it was a year earlier. After showing signs
of life during the first quarter, durable goods orders fell 2.1% in April after rising 1.7% (revised) in March.
Transportation equipment drove the decrease, dropping 5.9% for the month.

• Imports and exports: Import prices advanced 0.2% in April after increasing 0.6% in March. Higher fuel
prices (+2.5%) drove the April increase. Excluding fuel, prices paid for imports edged down 0.1% in
April. Prices received for exports also rose 0.2% in April following a 0.6% jump the prior month.
Agricultural exports decreased 1.5% in April, while nonagricultural export prices rose 0.4%. Prices for
imports from China declined 0.2% in April, and have fallen 1.1% over the past 12 months—the largest
over-the-year drop since the index fell 1.1% in May 2017. The latest information on international trade in
goods and services, out May 9, is for March and shows that the goods and services deficit increased to
$50.0 billion, up from the $49.3 billion deficit in February. March exports were $212.0 billion, $2.1 billion
more than February exports. March imports were $262.0 billion, $2.8 billion more than February imports.
Year-to-date, the goods and services deficit decreased $5.8 billion, or 3.7%, from the same period in
2018. The advance report on international trade in goods (excluding services) revealed the trade deficit
to be $72.1 billion in April, up $0.2 billion from March. Goods exports in April were $5.9 billion less than
the prior month, while imports of goods were $6.5 billion less than March.

• International markets: European Union elections held last week saw the highest turnout in 27 years
and resulted in big wins for the Brexit Party and Liberal Democrats, and a devastating turn for
Conservatives. Following Prime Minister Theresa May's resignation announcement earlier in the week,
the prospects of a negotiated Brexit deal are slim at best. As it stands, Great Britain will leave the
European Union on October 31—deal or no deal—unless there's another extension to negotiate a deal or Great Britain decides to forgo Brexit altogether. The trade dispute involving the United States and China
continues to affect other nations, as Japan expects its industrial production to weaken, impacted by the
trade tensions between the two world economic giants.

• Consumer confidence: The Conference Board Consumer Confidence Index® jumped from 129.2 in
April to 134.1 in May, as consumers saw improvements in current business and labor market conditions.

The trade negotiations between the United States and China continue to play a major role in the domestic
economy overall, and the stock market specifically. Industrial production fell in April, while sales of existing
homes continued to flounder. Both sectors look to rebound heading into the summer months.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation);
U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City
Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance:
Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S.
Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK);
www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based
on reports from multiple commonly available international news sources (i.e. wire services) and are
independently verified when necessary with secondary sources such as government agencies, corporate
press releases, or trade organizations. All information is based on sources deemed reliable, but no
warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion
expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be
relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk,
including the potential loss of principal, and there can be no guarantee that any investing strategy will be
successful.
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