Retail Is Still Waiting for a Jump Start: What We Learned During the Week of November 9-13

Retail continues to wobble while the number of job openings remains strong. Here are the 5 things we learned from U.S. economic data released during the week ending November 13.

#1Retail sales grew modestly in October. The Census Bureau estimates retail sales increased 0.1% to a seasonally adjusted $437.4 billion during the month, up a mere 1.7% from the same month a year earlier. This was the smallest 12-month comparable for the headline retail sales metric since April. Net of sales at auto
dealers/parts stores (-0.5%) and gas stations (-0.9%, due to lower gasoline prices), core retail sales gained 0.3% during October and were up a still soft 3.5%. Sales grew during the month at retailers focused on building materials (+0.9%), furniture (+0.4%) and sporting goods/hobbies (+0.4), with gains also occurring at nonstore retailers (+1.4%) and 111315
restaurants/bars (+0.5%). Sales softened at general merchandisers (-0.4%), electronics/appliance retailers (-0.4%) and grocery stores (-0.1%).

#2While the number of job openings remained near post-recession highs, hiring was flat during September. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.526 million available nonfarm job at the end of September, up 149,000 for the month and 18.1% from a year earlier. The count of private sector job openings at the end of the month was at 5.020 million jobs (+19.7% vs. September 2014), with the largest positive 12-month comparables seen with professional/business services (+35.3%), health care/social assistance (+24.4%), construction (+18.4%) and manufacturing (+9.6%). But the large number of job openings is not translating into greater hiring activity. Hiring slipped by 32,000 jobs during September to a seasonally adjusted 5.049 million jobs (-0.2% vs. September 2014). The largest positive 12-month comparables were in accommodation/hospitality (+9.0%), construction (+7.2%) and retail (+6.7%) while hiring was slower than at the year ago pace at professional/business services (-8.3%) and health care/social assistance (-2.4%). Separations were off 0.2% from the year ago pace, with voluntary quits down 0.5% and layoffs up 2.2% from their September 2014 levels.

#3Wholesale prices fell once again in October. With a 0.4% drop, this was the 4th consecutive month in which the Bureau of Labor Statistics’ Producer Price Index (PPI) for final demand failed to increase. The resulting year-to-year change of -1.7% continued the trend we have been seeing during all of 2015 with negative 12-month comparables each month. PPI for final demand energy was flat during the month (PPI for gasoline grew 3.8%) while that for final demand food declined 0.8% (including egg prices falling 26.9%). Net of energy and food, PPI for core final demand goods declined 0.3% during October and was unchanged from a year earlier. Lower margins at retailers, particularly at gas stations, push PPI for final demand services down 0.3% during the month (+0.1% vs. October 2014 levels).

#4The U.S. government ran a $136.5 billion deficit during October. The Bureau of the Fiscal Services reports that receipts totaled $211.0 billion during the 1st month of FY2016, down 0.8% from the same month a year earlier. Up from a year earlier were individual tax receipts and social insurance & retirement receipts, while corporate tax collections were below year ago levels. Outlays totaled $347.6 billion, up 3.9% from October 2014, with Social Security and debt interest payments among the big gainers. The resulting deficit of -$136.5 billion was up 12.2% in comparison to the 1st month of the previous fiscal year.

#5Small business owner sentiment failed to improve after 3 monthly gains. The Small Business Optimism Index from National Federation of Independent Business stayed at a reading of 96.1 (1985 = 100). 5 of 10 index components improved during the month, led by expected retail sales, (+3), whether it is a good time to make capital outlays (+1), expected credit conditions (+1), current inventories (+1) and whether it was a good time to expand (+1). 3 index components deteriorated, including plans to grow inventories (-3), earning trends (-3) and plans to increase employment (-1). The press release noted that the Small Business Optimism Index remained below its historic average of 98.0 (as it has since before the last recession) and that employment indicators were for the 1st time in recent months not signifying gains in the labor market.

Other data released over the past week that you might find of interest:                       
Jobless Claims (week ending November 7, 2015, seasonally adjusted): 276,000 (unchanged vs. previous week; -13,000 vs. same week a year earlier).  4-week moving average: 267,750 (-6.5% vs. same week a year earlier).
University of Michigan Index of Consumer Sentiment (November 2015 (preliminary), 1966 Q1 = 100, seasonally adjusted): 93.1 (+3.1 vs. October 2015, +4.3 vs. November 2014).
Import Prices (October 2015): -0.5% vs. September 2015, -10.5% vs. October 2014.
Manufacturers’ and Trade Inventories (September 2015, seasonally adjusted): $1.818 trillion (+0.3% vs. August 2015, +2.5% vs. September 2014).

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

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