JOLTS, International Trade, Service Sector Activity: What We Learned During the Week of July 6-10

Employers are creating more job openings, the service sector remains robust and the trade deficit is expanding.  Here’s the U.S. economic data you missed during the week ending July 10.071015graphic

  1. The number of job openings edged up during May while hiring activity slightly slowed. The Bureau of Labor Statistics reports there were a seasonally adjusted 5.363 million job openings on the final day of May, up only 29,000 from April but also 16.4% above year ago levels. Strong year-to-year gains in the creation of job openings was widespread, including in retail (+25.9%), professional/business services (+24.5%), health care/social assistance (+19.3%), manufacturing (+18.8%) and government (+18.8%). A seasonally adjusted 5.000 million people were hired during May, which was down 34,000 from April but up 4.1% from the May 2014 pace. The biggest year-to-year percentage gains in hiring were in the government (+14.9%), education/health care (+10.4%) and accommodation/food services (+7.0%). Increased worker confidence in labor conditions led to an 8.2% year-to-year gain in the count of people voluntary quitting their job while the count of layoffs was off slightly (-0.4% versus year ago levels).
  2. Continued weakness in exports resulted in a wider trade deficit during May. The U.S. Census Bureau and the U.S. Bureau of Economic Analysis say that the goods and trade deficit expanded by $1.2 billion during the month to a seasonally adjusted -$41.9 billion. This was slightly smaller than the May 2014 trade deficit of -$42.1 billion. Exports dropped by $1.5 billion during May to $188.6 billion (-4.4% versus May 2014), where a strong U.S. dollar hurt exports of capital goods (including civilian aircraft). Imports slowed $0.4 billion to $189.2 billion (-3.7% versus May 2014). The U.S. saw its goods deficit grow by $1.2 billion to -$61.5 billion while the services surplus was essentially unchanged at +$19.6 billion. The trade story looks even worse after controlling for price changes. The “real” trade deficit, using 2009 chained dollars, grew by $1.4 billion to -$58.4 billion. The same measure was at -$51.3 billion a year earlier. The U.S. had its largest goods deficits with China, the European Union, Germany, Japan and Mexico.
  3. The service sector grew during June at roughly the same pace that it had enjoyed in May. The headline index from the Institute for Supply Management’s Non-Manufacturing Report on Business eked out a 3/10ths of a percentage point gain to a reading of 56.0. This was the 65th straight month in which the measure was above a reading of 50.0, consistent with an expanding service sector. Three of four index components improved from their May readings: business activity (+2.0 points to 61.5), supplier deliveries (+1.5 points to 51.5) and new orders (up 4/10ths of a point to 58.3). The employment index shed 2.6 points to 52.7. The press release noted that a “majority of respondents’ comments are positive about business conditions and the economy.”
  4. There were more first-time jobless claims made in early July than there had been in any week since February. But there is little reason to be concerned. First, the cause of the gain appears related to the timing of temporary auto factory shutdowns for model year changeovers. Second, this data series tends to be very volatile week-to-week, so it is important to note that one week’s data does not indicate a trend. Whatever the case, the Department of Labor estimates there were a seasonally adjusted 297,000 first time claims made for unemployment insurance benefits made during the week ending July 4. This was up by 15,000 claims from the week before but off by 10,000 claims from the same week a year earlier. The resulting 4-week moving average grew by 4,500 claims to 279,500. The moving average was at 311,500.
  5. Consumers added to their consumer debt holdings at their slowest pace in 4 months during May as households kept their credit cards in their wallets. The Federal Reserve estimates outstanding credit balances (not including mortgages and other real estate backed loans) grew by $16.1 billion to a seasonally adjusted $3.401 trillion, up 6.5% from a year earlier. Outstanding balances of non-revolving credit (e.g., student loans, car loans) expanded by $14.5 billion to $2.500 trillion (+7.8%, its smallest year-to-year gain since February 2014). Meanwhile, revolving credit balances (e.g., credit cards) increased $1.6 billion to $901.0 billion (+3.2% versus May 2014 balances).

Other reports released over the past week that you might find of interest:
– CoreLogic Home Price Index May 2015:  +1.7% (+1.4% net of distressed sales)
– Wholesale Inventories May 2015:   +0.8% versus April 2015, +5.0% versus May 2014
– The Federal Reserve released the minutes to its June Federal Open Market Committee meeting.

The opinions expressed here are not necessarily those of Kevin’s current and previous employers. No endorsements are implied.

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