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WHAT'S ON TAP
HOT OFF THE PRESS
Unemployment hits two-year low
The unemployment rate fell to 6.4% in July, better than expectations for a flat reading and the lowest level in two years…
… thanks to a 75K gain in employment, which was split evenly between part-time and full-time work.
The sector skew was also positive - with public sector losses more than offset by gains in trade, finance, and construction among other categories…
… but there’s still work to do on the demographic mix, with young job seekers sitting below pre-COVID trends while employment in the 55-64 age group tracks above average.
Ivey PMI shows inflation and inventory build
The Ivey PMI came in at 55.1, indicating purchasing activity continues to expand…
… and with the price index remaining elevated for the fifth month straight, most of that expansion is likely inflation-driven…
… though building an inventory buffer to protect against longer supplier delivery times could also be a factor.
The employment index edged lower for the third straight month, but with it sitting above 50…
… it’s no surprise that manufacturing employment increased in July.
ON OUR RADAR
GAINERS & LOSERS
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Russel Metals (RUS) added another 15% on the back of a Q2 that blew estimates out of the water, driven by higher prices and record shipment volumes tied to the ramp up of its Kloeckner acquisition…
… which should increase contribution from the US as it scales…
… and drive 100-200 bps of gross margin expansion over current levels, which sit at three-year highs ($529 per ton). That momentum looks set to continue, with July running ahead of Q2…
… thanks to strong end market activity (data centers, power, infra, etc.), with current lead times of 90-120 days tracking ~3x above normal levels. Management expects the demand backdrop is structural…
… implying cycle durability that investors are pricing in, with the stock near its peak forward EBITDA multiple and up 85% YTD.
Altus Group (AIF) jumped 15% on its Q2 beat, which came with a guidance bump and a 2027 rule of 40 target…
… thanks to recent non-core divestitures and the coming retirement of its legacy platforms, which will remove some excess overhead. Once there, it wouldn’t be surprising to see AIF shares get a re-rate…
… but the company won’t be shy on the buyback if not, with ~$450M deployed YTD and a 20% reduction in share count.
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