THE WEEKLY BRIEFING - JUNE 7TH, 2021



IN THIS WEEK’S BRIEF:

  • Employers Gain Steam in May and Add 559,000 Jobs

  • Manufacturing and Services Sectors Both Pick Up Gains Despite Supply Chain Issues

EMPLOYERS GAIN STEAM IN MAY AND ADD 559,000 JOBS

U.S. employers added 559,000 jobs in May, below consensus expectations but still double from the previous month. While vaccination rates increased and businesses continue to reopen, half of U.S. states will not offer expanded federal unemployment benefits of $300 per week, and we believe it will take some time to see how labor markets respond. Multiple factors, however, are playing a role in the choppy job recovery as supply chains work through bottlenecks and labor shortages, and as individuals examine health and exposure risks, childcare needs, and returning to work.


The services industry, which took the biggest hit from pandemic lockdowns, continued to lead job creation in May. Leisure and hospitality added 292,000 jobs, accounting for 60% of private payroll gains as scores of people returned to bars and restaurants. Education, health care and social assistance also showed growth. Public and private education added 144,000 jobs as many schools reopened. Health care and social assistance contributed 46,000 jobs to the total as non-pandemic health care needs increased.


The May unemployment rate fell 30 basis points (bps) to 5.8%, the first time it dropped below 6% since the pandemic started. The Job Cut Report from Challenger, Gray and Christmas also showed ongoing improvement. Job cut announcements in May increased to roughly 24,600 from 22,900 in April, a modest increase, but was down about 93.8% YOY, hitting the lowest level observed in two decades.


While jobs are being added back at an encouraging clip, another recent report highlights the challenges of the current imbalance between labor supply and labor demand. The National Federation of Independent Business said in its May report that a record-high number of 48% of small business owners reported unfilled job openings in May, up from 44% in April.


Monthly Change in U.S. Private Payrolls since January 2020


MANUFACTURING AND SERVICES SECTORS BOTH PICK UP GAINS DESPITE SUPPLY

Both the ISM manufacturing and ISM services indices posted solid gains last month in a sign that the recovery is expanding in a range of economic sectors despite supply chain bottlenecks that have limited the availability of some key inputs.


The manufacturing index rose from 60.7 to 61.2 during May, holding above 60 for the fourth consecutive month. The index improved on the back of rising new orders as 16 out of 18 manufacturing subsectors reported growth in this area. The production and employment components slowed but remained above the 50 point mark in expansionary territory.


Meanwhile, the services index climbed more than a point to 64.0, the highest level on record for a series that dates back to 1997 and marking the 12th consecutive month above the neutral threshold of 50. All 18 service subsectors reported growth in business activity as well as gains in new orders, suggesting broad-based positive momentum.


The gains in activity took place against a backdrop of supply chain disruptions that led both manufacturers and services providers to report longer supplier delivery times above already elevated levels, but rising stockpiles may mitigate some of these issues moving forward. The Census Bureau reports wholesale inventories increased 0.8% during May, and nonauto retail inventories expanded 0.5%. Retail inventories for vehicles and car parts continue to suffer, however, dropping 7.0% in May due to continued semiconductor shortages.


Retail Inventories to Sales Ratio

DISCLOSURES AND DISCLAIMERS

This is a general analysis of the real estate and other markets prepared by Bridge Investment Group LLC (“Bridge”) and is not related to any specific products or services of Bridge or any affiliate. Sources for statistics and other factual data included herein are maintained by Bridge Research. Such data has not been verified by Bridge and we can give no assurance that it is accurate or complete. Statements contained herein that are nonfactual constitute opinions of Bridge, which are subject to change. Financial projections contained herein are estimates only and are based on assumptions, including assumptions regarding future rent growth, the availability and cost of financing, changes in market capitalization rates, and various micro- and macro-economic trends. No assurance can be given that either the projections or the assumptions will prove to be accurate. Investment in real estate involves substantial risk of loss.

This analysis contains various forward-looking statements that are not historical in nature. You are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this presentation. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements and we cannot guarantee future results or the successful implementation of the strategies discussed in this presentation. We are under no duty to update any of the forward-looking statements after the date of this presentation to conform these statements to actual results. Certain information contained herein has been obtained from published sources, agencies of the U.S. government and from third-parties, including without limitation, market forecasts, market research, publicly available information and industry publications. Although such information is believed to be reliable for the purposes used herein, Bridge does not assume any responsibility for the accuracy or completeness of such information. Similarly, forecasts or market research, while believed to be reliable, have not been independently verified and Bridge does not make any representation as to the accuracy or completeness of such information. All information is provided on an “as is” basis only. By using this information, the reader agrees that Bridge shall not have any liability for the accuracy of the information contained herein, for delays or omissions therein, or for any results based on your use of the information which are not consistent with your objectives. Without limiting the foregoing disclaimers, the information provided herein is not guaranteed to be accurate or complete, nor does Bridge take responsibility for it. The information contained herein has not been audited and Bridge does not guarantee its suitability for any purpose. All information is subject to change and/or withdrawal at any time without notice. Certain information included herein may refer to published indices. Indices that purport to present performance of certain markets or the performance of certain asset classes or asset managers may actually present performance that materially differs from the overall performance of such markets, asset classes or asset managers.

Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy. Any research in this document has been procured and may have been acted on by Bridge for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of Bridge or any of its affiliates and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any Bridge funds and has not been prepared in connection with any such offer.

Copyright 2021, Bridge Investment Group LLC. “Bridge Investment Group” and certain logos contained herein are trademarks owned by Bridge.

SIGN UP AND RECEIVE EMAIL UPDATES OF ALL NEW BLOG POSTS

THANKS FOR SUBSCRIBING!