Have we reached peak retail services employment? The following graph shows the total number of retail employees going back to the late 1980s:Consider the following points:

  1. The size of the peak in each cycle has been increasing. It was 15.4 million in 2001, 15.6 million in 2008, and 15.9 million in 2020. But the peaks in the last two cycles are very close to one another.
  2. During the last 20 years, brick and mortar stores have faced increasing competition from online providers, which is a trend that will continue.
  3. There have been 25 major retail bankruptcy announcements during the last 3-4 months, which will likely continue.
  4. About 2.4 million retail jobs were lost due to the lockdowns; about 1.5 million have been reinstated.

It’s doubtful we’ll return to the 15.9 million level soon, if ever.

So long as we’re looking at data, consider this chart of capacity utilization:It has hit progressively lower peaks since the 1980s and dropped sharply as a result of the lockdowns. With utilization it’s unlikely we’ll see a torrent of new equipment orders, which means we’ll see weaker growth in capital goods orders for the intermediate time frame. This is a key leading economic indicator. In other words, this does not bode well for the near and intermediate term.

The Fed releases industrial production tomorrow.

The labor data is moving in the right direction but it’s still incredibly ugly (emphasis added):

In the week ending August 8, the advance figure for seasonally adjusted initial claims was 963,000, a decrease of 228,000 from the previous week’s revised level. The previous week’s level was revised up by 5,000 from 1,186,000 to 1,191,000. The 4-week moving average was 1,252,750, a decrease of 86,250 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 1,337,750 to 1,339,000.

The advance seasonally adjusted insured unemployment rate was 10.6 percent for the week ending August 1, a decrease of 0.4 percentage point from the previous week’s unrevised rate.

Here are the charts from the release:

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The top chart’s peaks were the highest ever on record — and not by a fraction, but by a massive amount. The initial unemployment rate is still one of the highest we’ve see as well.

Let’s take a look at today’s performance tables:This was a nothing day for the equity averages: they were either up or down marginally. The big news continues to the sell-off in the treasury market, which was down again.There are only two notable entries on the sector performance tables: the drop in energy (which continues to be volatile) and real estate (which is moving lower as rates climb). The other movement was, at best, modest.

Let’s take a look at three charts:The SPY’s chart is really good: all the EMAs are moving higher; the shorter EMAs are above the longer EMAs; and, prices are pulling everything higher. However, we’re also right at critical levels; prices are right around highs. Today, they wound up getting stuck at these levels on lower volume. This isn’t fatal but it could certainly be better.

Add to that:On the 30-day chart, prices have broken trend on declining momentum. Also, note the higher volume at the end of today’s trading (see the lower right hand corner).On the 5-day chart, prices have broken trend and formed a rounding top.

So, on three charts, prices are at critical levels.

Let’s add three news variables to the equation:

1.) Retail sales come out tomorrow at 7:30 CST.

2.) The status of stimulus talks is questionable.

3.) Tomorrow is the last day of the trading week.

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And, just to add one more point:A key technical indicator could be telling us something.

Stay tuned.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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