While the U.S. job market remains strong, some question marks are starting to appear. To begin, initial jobless claims, which some consider an early warning signal for a softening labor picture, remain in good shape. For the week ending June 20, claims fell 8,000 for a total of 221,000, which is regarded as a low figure.

While payroll processing company ADP doesn’t have the prestige of the U.S. government, it can offer its own measure of the job market by as its clients hire new employees and report people who leave their companies. Along those lines, in June, the private sector added an anemic 102,000 jobs, according to ADP. This is less than the average monthly increase this year. And, ADP also reported that small businesses – those with 49 or fewer employees – saw employment decline by 23,000 jobs.

The Bureau of Labor Statistics – considered the gold standard for employment data – reported the June unemployment rate was 3.7 percent, up .1 percent from May. Most forecasters expected unemployment to stay at 3.6 percent. The number of new employees was put at 224,000, which is certainly a respectable increase, but a question mark popped up in that 33,000 new jobs were for government employers. This is an exceptionally large number, one that is rarely seen.

Finally, another possible anomaly appeared in the employee count for foodservice and drinking places, which was reported as a minus 300. One expects foodservice hiring to fluctuate but it is highly usual for the industry to have a net loss of employees.

All these unusual statistics may simply be glitches, but they might signal a darker labor picture in the future.

Economic News This Week

• June sales of cars and light trucks declined and are down for the first six months of the year. Most manufacturers have experienced declines and even some hot selling SUVs and crossovers are down as well. Surprisingly, a number of subcompact and tiny cars are enjoying higher sales. In all probability industry sales won’t reach 17 million vehicles for the year for the first time since 2014. Automotive News put it this way: “U.S. auto sales are not tumbling down a cliff, but they’re no longer in flat, steady territory either.”
• New orders for manufactured goods decreased 0.7 percent in May from April according the Census Bureau’s full report for the month. Shipments rose 0.1 percent and unfilled orders decreased 0.5 percent. New orders for unfilled durable goods (items that usually last 3 years or longer) declined 1.3 percent in May driven by 4.6 percent drop in transportation equipment.
• The Institute for Supply Management’s Production Manufacturing Index showed slower growth in June. The index hit 51.7 in June, a decline of .4 percent from May. (Any reading greater than 50 means increasing activity.) The June survey means that manufacturing activity continues to grow but at a slower rate. June, though, was the third month in a row the index declined. The New Orders Index fell to 50.0 in June from 52.7 in May, which means New orders were flat in June. But the Production Index rose to 54.1 in June from 51.3 in May. The Employment Index edged up to 54.5 in June from 53.7 to 54.5 in May. Also edging up, but staying negative, was the Order Backlog index which grew to 47.4 in June from 47.2 in May. Of the 18 manufacturing industries in the survey, 12 reported growth.
• The Institute for Supply Management’s Non-Manufacturing Index fell in June while remaining well within expansion territory. The index dropped to 55.1, a decline of 5.8 percent from May. The same was essentially true for the Business Activity/ Production Index, which declined to 58.2 in June from 61.2 in May; the New Orders Index, which dipped to 55.8 from 58.6 and the Employment Index, which fell to 55.0 from 58.1. On the other hand, The Order Backlog Index increased to 56.0 in June from 52.5 in May. The report also noted that of the 16 non-manufacturing industries that experienced growth in June, the accommodations and foodservice sector was the fifth fastest growing.
• May private construction spending declined 0.7 percent from April. Residential construction spending dropped 0.6 percent in May when compared to April.

Foodservice News This Week

• The Performance Food Group acquired Reinhart Foodservice Distributors from its parent company Reyes Holdings. Reinhart has annual sales of more than $6 billion. The acquisition of Reinhart makes PFG the second largest foodservice distributor, per the Food Institute. The two companies’ combined sales volume should be about $30 billion annually thus leapfrogging U.S. Foodservice’s $27.7 billion in annual sales. The Performance Food Group will still be far behind Sysco, which reports $60 billion in annual revenue.
• Restaurants Unlimited files for bankruptcy.Citing progressive wage policies as a key factor, the multiconcept operator owned by Sun Trust Holdings, filed for bankruptcy on July 7.  Wage increases in Seattle, San Francisco and Portland boosted the company’s wage expenses by a total of $10.6 million through its fiscal year end 2019, per a company spokesperson. Other factors contributing to the company’s financial woes include two disappointing restaurant openings and consumers shunning casual dining are to blame for the bankruptcy filing.
• Corporate Stirrings: Hooters of America, LLC has been acquired by Nord Bay Capital and TriArtisan Capital Advisers. Hooters has more than 430 restaurants in 38 states and 27 countries. Wingstop will relocate its corporate headquarters to Addison, Texas. London-based YO will merge with sushi kiosk operator SnowFox. Snowfox is based in Houston and has about 700 sushi kiosks across the U.S., most of which are located in large supermarkets.
• Growth Chains: Celebrity Chef Gordon Ramsey has received a $100 million investment from the private investment firm of Lion Capital to open 100 restaurants in the U.S. in the next 2 years. This will cover three concepts: Gordon Ramsey Steak, Gordon Ramsey Pub & Grill and Gordon Ramsey Fish & Chips. Pilot Flying J will open six travel centers in West Texas.
• Comparable Store Sales Report: Cracker Barrel up 1.3 percent.

For details and same-store sales of other chains, please click here for the latest Green Sheet.