Record Levels of Job Openings, Hiring Not So Hot: What We Learned During the Week of September 7-11

Record levels of job openings and employers indicating they will hire more workers in Q4. Here are the 5 things we learned from U.S. economic data released during the week ending September 11.

#1The number of job openings blossomed while hiring slowed in July. The Bureau of Labor Statistics (BLS) estimates there were a seasonally adjusted 5.723 million job openings at the end of July. This was up 8.1% from June, 21.7% above year ago levels and (by far) the highest count of job openings in the 25-year history of the data series. The number of private sector job openings was 23.7% above July 2014 levels, with the industries having the largest year-to-year percentage gains in job openings being professional/business services (+46.1%), retail (+26.5%), accommodation/leisure (+22.8%) and education/health services (+20.3%). But employers are not necessarily finding people to fill these jobs. Hiring decelerated 3.8% during the month to a seasonally adjusted 4.982 million jobs (off 0.3% from a year earlier). Also declining during the month were the count graphic091115of separations, falling 3.9% for the month to 4.716 million (essentially unchanged from a year earlier). The good news is the count of layoffs was 11.2% below year ago levels, while the measure of voluntary quits was 6.0% above the year ago pace (a sign of worker confidence).

#2And hiring is anticipated to strengthen during Q4. 21% of U.S. employers surveyed by the ManpowerGroup expect to expand payrolls during the final 3 months of 2015 while 6% anticipate shedding workers. The resulting difference of +15 turns into +18 after seasonal adjustments. This was the highest reading for the seasonally adjusted Net Employment Outlook since the 4th quarter of 2007. The index grew in the Northeast (+16) and the Midwest (+17), but softened in the South (+17) and West (+17). The index also was positive in all 13-tracked industries, with the highest readings seen in leisure/hospitality, wholesale/retail trade, professional/business services and transportation/utilities. The press release characterized the labor market as having “broad-based, stable growth.” The company that warned employers were having “difficulty finding skilled candidates,” noting that this was partially the result of the low labor market participation rate.

#3Wholesale prices were flat in August, even as oil prices dropped. The Producer Price Index (PPI) for final demand was unchanged during the month after increasing for 3 consecutive months. Per the BLS, PPI for final demand goods declined 0.6% while that for services grew 0.4%. On the goods side, energy PPI had its biggest single-month decline since January (-3.3%) as wholesale gasoline prices fell 7.7%. PPI for final demand food grew 0.3%, boosted by a 32.3% surge in the price for eggs “for fresh use.” Net of energy and food, core final demand wholesale prices declined 0.2%. On the services side, trade prices zoomed up 0.9% (boosted by higher margins at apparel retailers). Over the past year, final demand PPI has fallen 0.8% while the index for core goods was up a still paltry 0.7%.

#4Small business owner optimism held steady in August. The Small Business Optimism Index from the National Federation of Independent Business added a half point to 95.9 (1986 = 100). With few exceptions, the index has consistently remained in the low-to-mid 90s range since the spring of 2013. Five of 10 index components improved during the month, led by 4-point gains in indices for current job openings and earning trends. Three index components fell by 2 points: expected economic conditions, expected credit conditions and whether it was a good time to expand.

#5Consumers took on debt at their slowest pace in 3 months during July. According to the Federal Reserve, consumers had $3.453 trillion in outstanding credit (not including real estate-backed loans—e.g. mortgages) at the end of July, an increase of $19.1 billion for the month and a 6.8% gain over the past year. Revolving credit balances (i.e., credit cards) increased $4.3 billion during the month to $914.6 billion (+3.9% vs. July 2014, its biggest 12-month comparable in 7 years). Meanwhile, outstanding nonrevolving credit balances (e.g., car/truck loans, college loans) expanded by $14.8 billion to $2.539 trillion (+7.9%, its smallest 12-month comparable since February 2014).

Other data released over the past week that you might find of interest:
– Jobless Claims (week ending September 5, 2015): 275,000 (-6,000 vs. week earlier); 4-week moving average: 275,750 (+500 vs. week earlier).
– University of Michigan Index of Consumer Sentiment (September 2015—preliminary): 85.7 (vs. August 2015: 91.9; September 2014: 84.6)
– Wholesale Inventories (July 2015):  -0.1% vs. June; +4.9% vs. July 2014.
– Treasury Budget Surplus/Deficit (August 2015): -$64.4 billion (FY15 year-to-date: -$529.96 billion, -10.0% vs. FY14 year-to-date)
– Import Prices (August 2015): -1.8% vs. July 2015; -11.4% vs. August 2014.

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

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