Boockvar’s Weekly Summation
From Peter Boockvar:
Positives,
1) Payrolls in May rose by 172k, well more than the estimate of up 88k and the two prior months were revised up by a total of 93k. A major factor at play was the 55k person increase in local government hiring. Also helping was the 70k hiring increase in leisure/hospitality, thanks in part to World Cup hiring vs the average monthly increase of 14k over the prior 12 months. Healthcare, again, the other major contributor, added 35k jobs, about in line with the average of 38k over the prior year. Elsewhere, the hiring was more mixed. The household survey said 149k jobs were new but which follows three months in a row of declines totaling 475k. The labor force grew by 83k and which combined, kept the unemployment rate unchanged at 4.3%. The all in U6 rate at 8.1% was down one tenth m/o/m. The participation rate held at 61.8%, the lowest since September 2021 but continued to be weighed down by retiring boomers. The participation rate for the 25-54 yr old group rose one tenth to 83.9%, just one tenth below from matching the highest since 2001. Hours worked remained at 34.3 while average hourly earnings grew by .3% m/o/m as expected and by 3.4% y/o/y. Combining the two saw weekly earnings higher by .3% m/o/m and 3.7% y/o/y.
2) The number of job openings in April jumped to 7.618mm, an increase of 752k from March and to the most since May 2024. Just about all of the increase in job openings came from just the ‘professional/business services’ line item which spiked by 668k.
3) The May ISM services index rose to 54.5 from 53.6 and that was above the estimate of a slight gain to 53.8. New orders rose to 57.3 from 53.5 after falling by 7 pts last month. Backlogs were above 50 for the 4th straight month at 51.3. Likely reflecting the pull forward of ordering I keep hearing about, the inventory component jumped by almost 10 pts to 62.5 matching the highest on record dating back to 1997 with this survey with May 2010 the only other time. Not confirming the jobs report, Employment remained a drag coming in at 47.9, little changed m/o/m but below 50 for the 3rd straight month. The ISM said “Respondents commented frequently that their companies had instituted hiring freezes or were not backfilling vacated positions, however, most industries reported that they were holding flat in employment month over month.” Prices paid remained high, rising by another .6 pts to 71.3 which is the most since August 2022. ISM said, “For the third month in a row, no commodities in the report listed as down in price, with multi month runs of being up in price for aluminum, copper, diesel, gasoline, software licensing and transportation.” With regards to sector breadth, 17 of 18 industries saw growth in May while just one experienced a contraction, that being in ‘real estate, rental & leasing.’ That compares with 14 industries seeing growth and 3 a downturn.
4) The May ISM manufacturing index rose to 54 from 52.7 and was 1 pt above the estimate. Strength in new orders helped again, rising by 2.7 pts m/o/m to 56.8 and backlogs were above 50 for the 5th month in a row at 52.2. Inventories got to 49.9, around the flat line but that is the highest since April 2025. Customer inventories remain well below 50 at 42.7 but that is the highest in 5 months. Employment was in contraction again at 48.6 but up 2.2 pts m/o/m. Industry breadth further improved with 16 of 18 industries seeing growth vs 13 in the two prior months. In December it was at just 2. One saw a contraction, ‘wood products’, vs 3 in April.
5) With the average 30 yr mortgage rate staying above 6.50%, at 6.57%, though down from 6.65% in the week before, purchase applications fell for the 4th week in the past 5, down another 2.9%. Refi’s were down by 2.3% w/o/w after dropping by 18% in the week before.
6) From Petco: To a question on their consumer, “I would remind you and everyone on the call for that matter that Petco serves customers across all income demographics. We have a really nice offering from both value all the way to premium brands. As we look back on the quarter, I would say there was nothing material amongst income demographics that performed differently. It was consistent across all. So in total, we didn’t see really any different change in behavior.”
7) From Macy’s: “In the first quarter, we delivered enterprise wide growth, better than expected performance across all key metrics and our best comparable sales in four years with all nameplates and channels positive.” They saw “widespread increases in new and retained customers as well as across all income cohorts.”
8) From Five Below: “The comp growth was disproportionately driven by transactions up 19% with ticket up 4%, reflecting strong traffic, customer engagement, and continued success in our value proposition across price points.”
9) From Dollar General: “We grew market share in both dollars and units in highly consumable product sales once again during the quarter, in addition to growing market share in non-consumable product sales.” Comps grew by 2% “primarily driven by customer traffic growth of 1.4%, and supported by average basket growth of .5 point. Notably, this marks the fourth consecutive quarter of growth in customer traffic as our combination of value and convenience continues to resonate with customers.” And in the search for value by everyone, “we are seeing customer penetration growth across low, middle and high-income segments, as customers across all income cohorts seek value at increasing rates. Notably, across these cohorts, the largest increase in customer count came from the highest income segment, which earns more than $100,000 annually, contributing to a significant increase in trade-in customer households during the quarter.”
10) From Signet Jewelers: “We delivered comp sales growth across every category and most brands this quarter…we continue to see strength in higher end consumer with some of our best performance at higher price points…By category, growth was low single digit for bridal and fashion with stronger growth in watches and services.”
11) From Victoria’s Secret: “We achieved our 4th consecutive quarter of positive comps with total comp sales increasing 13% and driving total sales growth of 15%. We also saw strength across channels and geographies. We were particularly encouraged by double digit gains in new customer acquisition and continued file growth across all age and income cohorts. In fact, we saw the strongest growth from customers and households earning under $50,000 annually and over $200,000, underscoring the broad resonance of our brands across the consumer landscape.”
12) From Ulta Beauty: “growth in the beauty category remains healthy, even as consumers are increasingly value focused…And while we are continuing to monitor how the macro landscape could evolve, we remain execution focused and are confident we will deliver our fiscal 2026 expectations.”
13) The Bank of Japan got another reason to hike rates after base pay in April rose 3.4% y/o/y for a 3rd straight month, staying at the highest since 1992.
14) China’s private sector weighted May services index rose to 54.4 from 52.6 and 2 pts above the estimate. RatingDog said “The faster increase in activity was accompanied by a further acceleration in the rate of growth in new business moving through the second quarter. The rate of expansion in demand for services accelerated for the fourth time in five months and was broadly in line with the long run survey averages. Increased client demand, business innovation and expansion, new client acquisitions, improved market conditions and the development of new projects were all mentioned as sources of new work.”
15) Manufacturing PMIs from overseas: Taiwan 56.1 vs 55.3 (certainly helped by TSMC) , South Korea 54.8 vs 53.6 (certainly helped by Samsung and SK Hynix) , Vietnam 52.8 vs 50.5, Japan 54.5 vs 55.1, Australia 50.7 vs 51.3, India 55 vs 54.7, Philippines 50.8 vs 48.3, the China state focused manufacturing was 50 vs 50.3 in April. The non-manufacturing PMI (including construction) was 50.1 vs 49.4. The PMI for Singapore’s service and manufacturing sector was 56.7 vs 57.9.
16) Eurozone manufacturing PMI in May was 51.6, above 50 for a 4th straight month. In the UK, it was 53.9 vs 53.7.
17) The Swiss National Bank will likely keep rates for now at zero after May CPI rose .6% y/o/y as expected with a core rate of up just .3%, also as estimated. The rise in fuel prices hasn’t had much of an impact, yet.
Negatives,
1) Initial jobless claims rose by 13k w/o/w to 225k and that was 10k more than expected. That helped to lift the 4 week average to 215k from 208k and also due to the print of 199k 5 weeks ago that dropped out. While still low, it’s the most since late February. Continuing claims totaled 1.777mm, little changed with the 1.785mm seen in the week before.
2) The NFIB yesterday released its small business May Plans to Hire in the coming 3 months figure and it fell to 9, down 4 pts m/o/m to the lowest level since May 2020 and matching the weakest since August 2014 before that. Also, job openings that could not be filled dropped 5 pts to also the lowest since May 2020 at 29%. The chief economist at the NFIB said, “Concerns about rising labor costs increased significantly to the highest reading in the survey’s history. Small business owners are facing mounting pressure to retain workers, and many firms are navigating costly new state mandates. While current conditions restrict Main Street’s already thin profit margins, compensation measures remain steady for now.”
3) In the April JOLTS data, the hiring rate though fell back to 3.2% after rising to 3.5% in March vs 3.1% in February. Outside of Covid, 3.1% was the lowest since 2011 for perspective. The quit rate fell to 1.9% which matches the smallest print since 2014, also not including Covid.
4) From the Fed’s Beige Book, “Economic activity increased at a slight to moderate pace for ten of the twelve Federal Reserve Districts, while one District reported a slight decline and one reported no change. On the biggest component of US GDP, “Consumer spending remained mixed across Districts and increasingly bifurcated across income groups amid affordability pressures. Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as “squeezing more life out of every dollar before deciding to spend it,” and low-income consumers showed greater financial strain. Overall, there were reports of increased credit card usage, fewer retail visits, and stronger demand for necessities. Auto dealers reported softer new vehicle demand tied to affordability and fuel costs, alongside substitution toward used and hybrid vehicles.”
5) Notwithstanding the strong payroll report, the Beige Book said: “Employment showed little to no change across eleven Districts, while one District experienced modest growth.” And, “Most Districts described a low-hire, low-fire environment, with workers increasingly reluctant to change jobs because of economic uncertainty. Hiring remained selective and primarily focused on critical roles or attrition replacement. Professional services occupations had mixed demand conditions, partly reflecting shifts in technological and operational changes.” Where there has been some growth, “Manufacturing hiring was the strongest sector in several Districts, supported by defense-related activity and rising data center demand.”
6) And on prices from the Beige Book: “Prices increased at a moderate to strong pace overall, with most Districts reporting higher inflation than the previous report. Districts noted that energy-related costs tied to the conflict in the Middle East were the primary driver of inflationary pressures, with spillovers into shipping, packaging, groceries, and fertilizer. Non-labor input costs continued to rise faster than selling prices, contributing to broader concerns about margin compression.”
7) Container shipping prices jumped again according to the World Container Index. The Shanghai to NY route saw prices sharply higher by 20% w/o/w to $5,505, the highest in a year. The Shanghai to LA trip was 31% pricier w/o/w to $4,565, also the highest since June 2025. The price of a container from Shanghai to Rotterdam is the most since January 2025, up 25% w/o/w.
8) From the Logistics Managers Index: “Transportation Prices are up 1 pt to 96, which is the fastest rate of expansion ever recorded for any metric in the nearly ten year history of the index. Transportation Capacity continues to contract quickly at 31.7, and Transportation Utilization expansion remains elevated at 69.5. The transportation market has been tight, with prices growing at an unprecedented rate since the closure of the Strait of Hormuz. The spike in fuel has led to increases for all three of our price and cost metrics, with aggregate logistics costs reading in at 250.9, which is the highest reading since March of 2022.”
9) From S&P Global on US manufacturing: “At first glance, the manufacturing sector seems to be firing on all cylinders but lift the hood and the picture is not so clear…since the outbreak of war in the Middle East we have seen production and demand buoyed by stock building as companies worry over rising prices and supply difficulties. This stockpiling was again widely evident in May and makes it hard to take an accurate reading on the underlying health of the manufacturing economy, as growth will cool once this stock build has run its course.”
10) From Lululemon: “We saw encouraging signs in Q1 that reinforced we are moving in the right direction, but as we closed Q1 and entered Q2, we faced a few headwinds and a moderating sales trend. Based on our early analysis, there are two key factors impacting our trend. First, we experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance. And second, not all of our product launches have met our expectations.”
11) From Coca Cola: “we have spoken for a couple of years now, under the general headline of the consumer is resilient, that seems to pop up every quarter, that some of them are not as resilient as you think. And so segmenting populations, whether it’s in the US or whether it’s in China, is a very important capability to build, so that you have the opportunity to evolve your portfolio, to stay relevant with those segments that are under the most pressure…for people earning less than $50,000, $60,000 a year, when you take a step back and look at the cumulative impact of cost pressures on their typical basket of goods and services, the math is pretty obvious, it doesn’t work. They just don’t have the purchasing power to be able to, and so something’s got to go.”
12) From Ollie’s Bargain Outlet: “Touching on the consumer for a moment, customers are shopping closer to need more than ever before, but also remain resilient. In the first quarter, the environment shifted very quickly with surging gas prices impacting shopping patterns with a focus on trip consolidation. This primarily impacted the lower income consumer, particularly those driving longer distances to the store. We saw further strengthening of trade down, but typically in these moments of economic stress, lower income consumers trade out more quickly than upper income trade-in.”
13) From Five Below: And why the stock is likely down, “We’re very pleased with our Q1 performance and remain highly convicted in our ability to continue to generate durable, sustainable growth. At the same time, we remain cautious with respect to the macro environment, consumer sentiment, and buying behaviors. As such, we have left our half two comparable sales assumptions unchanged from our previous guidance.”
14) From Thor Industries: “At the end of our fiscal second quarter, we correctly identified the risk of geopolitical events having an adverse impact on the RV selling season. The consequences of this risk coming to fruition during our fiscal third quarter have exceeded the expectations of our industry due to the unforeseen duration of these macroeconomic influences and their impact on consumer sentiment and material costs. In particular, our North American Towable segment has confronted both suppressed volumes due to strained consumer sentiment and rising material costs brought on by tariff and inflationary pressures.”
15) From Shack Shack: “We are seeing some challenges in short to mid term on the cost side. Obviously, I think everyone is aware of the beef prices that we’re battling. They’ve continued to escalate. And we are also seeing fuel surcharge prices on some of our distribution and some of the other input costs in the middle of the P&L…there’s going to be some headwinds in the macro and we acknowledge that. And that’s part of what you see in the update and guidance today reflecting our views on the current cost structure and what our views are just given the competitive landscape and all the things that we know today.”
16) From Dollar General: “While there are a variety of puts and takes on customer budgets during Q1, our core customer continues to be financially constrained, as any benefit from tax benefits was largely offset by higher fuel prices and reductions in SNAP benefit payments. Importantly, while there has been a significant reduction in overall SNAP dollars distributed in 2026, we grew share of wallet with SNAP customers during Q1, further demonstrating the strength and relevance of our value proposition…Notably, during the quarter many of our core customers reported cutting back on other household expenses, including food purchases, due to rising gas prices. This pressure has been more pronounced on customers in rural communities as they work to minimize trip distance and make trade-offs in their search for everyday affordability and value.”
17) From Broadcom as sometimes great is not great enough: Their semiconductor business saw a sales gain of 79% y/o/y and of course, “Driving this growth was AI semiconductor revenue at a record $10.8 billion, up 143% y/o/y and above our outlook…Demand for XPUs and networking is simply insatiable.”
18) From HP Enterprises: “Demand was even stronger than revenue growth. Orders more than doubled, significantly outpacing revenue, resulting in a record company backlog. Customer investments in agentic AI and AI inferencing accelerated. We also saw broad based demand strength across the portfolio, driven by ongoing investment in compute infrastructure modernization, unstructured storage data growth, and private cloud adoption for AI.”
19) The revised service PMI’s for Germany, France, Italy and the UK all remained below 50 while Spain just got there at 50.1. The UK was close at 49.3. Not surprisingly, “Cost pressures in the service sector continued to increase, as they now have done in every month since the start of the war in the Middle East. Output charge inflation saw only a fractional uplift from April, however.”
20) The May Eurozone CPI was higher by 3.2% y/o/y and 2.5% at the core. The headline was as forecasted but the core rate was one tenth above and both compare with 3% and 2.2% in April. Of note, services inflation accelerated to a 3.5% y/o/y increase, matching the quickest since April 2025 while non-energy industrial goods prices rose .9% y/o/y, still benign but that is the fastest rate of change since Q1 2024.
21) South Korea reported May CPI that rose 3.1% headline y/o/y, two tenths more than expected and a core rate gain of 2.5% which was 3 tenths above the estimate.
Position: None
