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Thank you President Trump!

U.S. factory activity ticked up in May after slowing for two
straight months and private employers stepped up hiring,
suggesting the economy is regaining speed after struggling at
the start of the year.

The signs of renewed vigor in the economy and labor market
tightness could encourage the Federal Reserve to raise interest
rates later this month.

"The economy is moving forward at an acceptable pace and the Fed
is likely to hike rates in June, but there is a cloud over the
path of rates later on this year," said Chris Rupkey, chief
economist at MUFG in New York.

The Institute for Supply Management (ISM) said its index of
national factory activity ticked up to a reading of 54.9 last
month from 54.8 in April. The index hit a 2-1/2-year high of
57.7 in February amid optimism over President Donald Trump's pro-
business policy proposals.

It had declined for two consecutive months as concerns mounted
in the business community that political scandals could derail
the Trump administration's economic agenda, including its push
to cut corporate and individual taxes.

A reading above 50 in the ISM index indicates an expansion in
manufacturing, which accounts for about 12 percent of the U.S.
economy. The manufacturing recovery remains underpinned by the
energy sector as steady increases in crude oil prices boost
drilling activity, fueling demand for machinery.

The ISM survey's new orders sub-index increased to 59.5 last
month from 57.5 in April. A measure of factory employment jumped
to a reading of 53.5 from 52.0 in April. Manufacturers of food
and fabricated metals products reported difficulties finding
qualified workers.

Manufacturers continued to steadily increase inventories and
still viewed their customers' stocks as too low, according to
the survey. While raw materials prices rose for a 15th straight
month, the pace of increase slowed sharply in May.

U.S. stocks were trading higher on Thursday, while U.S. Treasury
debt prices fell. The dollar .DXY rose against a basket of
currencies.

The ADP National Employment Report showed private payrolls
increased by 253,000 jobs last month, beating economists'
expectations for a gain of 185,000 jobs. Private payrolls rose
by 174,000 jobs in April.

The ADP report is jointly developed with Moody's Analytics and
was released ahead of the Labor Department's more comprehensive
nonfarm payrolls report on Friday, which includes both public
and private-sector employment.

The ADP report, however, is not a good predictor of the private
payrolls component of the employment report. According to a
Reuters survey of economists, payrolls likely increased by
185,000 jobs in May after a gain of 211,000 in April. The
unemployment rate is forecast to be unchanged at a 10-year low
of 4.4 percent.

ECONOMY FIRMING

Still, the ADP report added to data this week showing an
acceleration in consumer spending in April.

The economy grew at a 1.2 percent annualized rate in the first
quarter. The Atlanta Fed is forecasting gross domestic product
increasing at a 3.8 percent pace in the second quarter.

Minutes of the Fed's May 2-3 policy meeting, which were
published last week, showed that while policymakers agreed they
should hold off hiking rates until there was evidence the growth
slowdown was transitory, "most participants" believed "it would
soon be appropriate" to raise borrowing costs.

The U.S. central bank hiked rates by 25 basis points in March.
It is expected to do so again at its June 13-14 policy meeting.

In a third report on Thursday, the Labor Department said initial
claims for state unemployment benefits jumped 13,000 to a
seasonally adjusted 248,000 for the week ended May 27.

It was the 117th straight week that claims were below 300,000, a
threshold associated with a healthy labor market. That is the
longest such stretch since 1970, when the labor market was
smaller.

A Labor Department official said claims for California and seven
other states were estimated because of the Memorial Day holiday
on Monday, which could have distorted the data.

The four-week moving average of claims, considered a better
measure of labor market trends as it irons out week-to-week
volatility, rose only 2,500 to 238,000 last week.

"While the claims report put a damper on what has been a pretty
upbeat run for most of the recent labor market data, we still
have a fairly favorable view of labor market conditions," said
Daniel Silver, an economist at JPMorgan in New York.

The Fed said on Wednesday in its Beige Book report of anecdotal
information on business activity collected from contacts
nationwide that labor markets continued to tighten from early
April through late May.

It also said "most" districts had cited worker shortages across
a broadening range of occupations and regions.

A fourth report by global outplacement consultancy Challenger,
Gray & Christmas showed layoffs announced by U.S.-based
employers surged 41 percent to 51,692 in May. Nearly 40 percent
of the job cuts were announced by Ford Motor Co (F.N), according
to the report.

https://www.reuters.com/article/us-usa-economy-unemployment-
idUSKBN18S53H

Great! That is at least 20,000 union leeches who will not be
sabotaging vehicles and driving up costs.
 

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