New Business Applications Decline
Total new business applications fell in June but it still remained the best June on record, according to new data from the Commerce Department. That’s still a potential good sign for property owners looking to fill space.
In June, the Commerce Department reported 448,533 new business applications across the United States, down 9.8% from May. June was higher than June last year, which had 378,223 new applications on the way to an all-time peak the following month, with 551,667.
Declines in June this year came in most industry categories, notably in retail trade, the largest category for new business applications.
The trend followed with high-propensity applications, those with the best chance of turning into a business with a payroll. Those applications were down 8.8% from May with 152,272, which is still better than the 130,089 applications a year ago.
New applications surged during the pandemic, perhaps driven by home-based businesses with many people working from home. But now employees are returning to the office at least some of the time.
Louisiana, one of the strongest states for new applications, had the biggest drop in the United States in June, falling by 27.2%. Ohio was next with a 26.5% decline.
Jobless Claims Hit New Low
New jobless claims hit a pandemic low last week while the number of those continuing on unemployment dropped to the lowest level since late March 2020.
The Labor Department reported 360,000 new unemployment claims last week, 26,000 lower than the previous week’s number that was revised upward by 16,000. Last week’s number is the lowest since the week of March 14, 2020, when 256,000 claims were reported, the first week when the pandemic was made official.
Continuing claims, which represent those still using unemployment benefits, fell 126,000 to 3.24 million for the week that ended July 3 from the previous week's figure that had been revised upward by 26,000. That’s the lowest level since March 21, 2020, when the number was at nearly 3.1 million.
The report could portend better job recovery numbers later this month. Businesses across the board have complained they have struggled to fill positions because of the enhanced federal benefits, prompting many states to halt them earlier than the scheduled Sept. 6 expiration date.
Though still high relative to pre-pandemic figures, analysts expect labor difficulties to ease once benefits expire and schools open, which would mitigate childcare concerns.
Mixed Signals in Factory Activity
New York factories set a record pace for business activity in June while factories in the Philadelphia area show slower activity. U.S factory output is feeling the impact of the computer chip shortage, sending mixed signals on manufacturing’s recovery.
The New York Federal Reserve Bank reported Thursday that its monthly index climbed 26 points to 43, which is the highest level in the 15 years the survey has existed. Based on surveys of manufacturers, the New York Fed found that employment grew strongly, and the average work week increased.
New orders are up as are shipments. Selling prices increased at a record pace as the cost of making goods increased sharply.
Meanwhile, the Philadelphia Federal Reserve Bank reported the same day that its index fell from 30.7 to 21.9, showing slow activity in new orders and shipments while employment grows.
The Federal Reserve Board reported on Thursday as well that industrial production rose 0.4% in June, following a 0.7% increase in May. But factory output declined 0.1%, largely as a result of a 6.6% decrease in production of motor vehicles and parts because of the ongoing semiconductor shortage.