A decent start to the holiday retail season and continued solid labor market news are among last week’s highlights. Here are the 5 things we learned from U.S. economic data released during the week ending December 11.
Retail sales had a good start to the holiday season. The Census Bureau estimates retail sales were at a seasonally adjusted $448.1 billion. While this was up only 0.2% for the month, the pace of growth was held down by a relatively small slowdown in auto sales (-0.4%) and a price-driven drop in sales at gas stations (-0.8%). The savings from the latter appear to have been put into other retail segments. Net of sales at both auto dealers and gas stations, core retail sales were up 0.5% for the month and 3.6% above the year ago pace. Sales gains were widespread across most retail segments, with stores focused on furniture and building materials being the major exceptions, each with 0.3% declines. Sales gained during the month at sporting goods/hobbies stories (+0.8%), apparel retailers (+0.8%), general merchandisers (+0.7%, although sales at non-luxury department stores were flat versus October), restaurants/bars (+0.7%) and electronics/appliance retailers (+0.7%). Sales at nonstore retailers (e.g., internet retailers, catalogs) gained 0.6% during the month and were 7.3% above their year ago pace.
The number of job openings remained well above year ago levels in October, but hiring activity was essentially flat. The Bureau of Labor Statistics says there were a seasonally adjusted 5.383 million job openings at the end of October. While this was a decline of 151,000 from September, it was 11.0% above year ago levels. There were 4.887 million private job opening at the end of October, off 154,000 from September but 10.1% above the October 2014 count. Industry sectors that enjoyed largest year-to-year gains in job openings were health care/social assistance (+27.0%), retail (+26.4%), government (+21.3%) and trade/transportation/utilities (+18.0%). Even with the sizable number of available jobs, employers are having difficult fill those openings. Hiring grew by 57,000 during the month to a seasonally adjusted 5.137 million. This was only 0.6% above the October 2014 pace, with private sector hiring actually 0.2% below its year ago pace at 4.790 million. The largest 12-month comparables for hiring were seen with the government (+14.5%), accommodation/food services (+8.1%) and health care/social assistance (+4.8%). Separations were essentially unchanged for the month at a seasonally adjusted 4.863 million (-0.9% vs. October 2014). Versus a year earlier, layoffs were down 4.3% while voluntary quits increased 1.2%—both signs of a solidifying labor market.
Wholesale prices grew at their fastest pace since the summer, but most of it was centered around larger margins at retailers & wholesalers. The Bureau of Labor Statistics’ final demand Producer Price Index (PPI) jumped 0.3% on a seasonally adjusted basis during November following 3 consecutive monthly declines (-1.3% vs. November 2014 levels). Falling for a 5th straight month was PPI for final demand goods (-0.1%), with a 0.6% drop for PPI for final demand energy goods (gasoline: -1.3%) and a 0.3% gain the prices for final demand food (fresh fruit/vegetables: +11.6%, eggs: +10.8%). PPI for final demand core goods (net of energy and food) slipped 0.1% for the month and was unchanged when compared to that of November 2014. Meanwhile, PPI for final demand services jumped 0.5% after 2 straight monthly declines. The metric for trade services, which measures increased margins of retailers and wholesalers, surged 1.2%. BLS attributes 40% of that gain to increased margins at retailers focused on apparel, jewelry, footwear and accessories.
The labor market outlook for Q1 2016 is positive. Twenty percent of the 11,000+ U.S. employers questioned for the Manpower Employment Outlook Survey indicate they will expand payrolls in during the first 3 months of 2016 while 6 percent anticipate a contraction in company employment. After seasonal adjustments, the difference of +14 gives us a Net Employment Outlook of +17. This was down a point from the Q4 2015 reading and up a point from the same quarter a year earlier. All 13-tracked industry segments had positive Net Employment Outlook readings, with the largest values seen for leisure/hospitality, transportation/utilities, wholesale/retail trade and professional/business services. The laggards include mining (think lower oil prices slowing drilling activity) and the government. As noted its press release, Manpower anticipates job growth in 2016 but indicated that “employers will increasingly feel the impact of rising wages and the on-going skills mismatch.”
The growth in credit card debt slowed sharply in October, checking the overall gain in consumer credit. The Federal Reserve estimates outstanding balances of non-real estate backed debt increased by $16.0 billion to $3.512 trillion (+7.0% vs. October 2014). This was the 2nd smallest gain in consumer credit balances since April. Revolving credit balances (i.e., credit cards) totaled $923.6 billion, up a mere $0.2 billion for the month (+4.4% vs. October 2014). Near record-level auto sales and continued growth in student loans led to additional $15.8 billion in outstanding nonrevolving credit balances, rising to $2.573 trillion (+7.9% vs November 2014).
Other data released over the past week that you might find of interest:
Jobless Claims (week ending December, 2015, seasonally adjusted): 282,000 (+13,000 vs. previous week; -7,000 vs. same week a year earlier). 4-week moving average: 270,750 (-8.2% vs. same week a year earlier).
Import Prices (November 2015): -0.4% vs. October 2015, -9.4% vs. November 2014.
University of Michigan Index of Consumer Sentiment (December 2015—Preliminary, Index 100=1966 Q1, Seasonally Adjusted) 91.8 (+0.5 vs. November 2015, -1.8 vs December 2014).
Treasury Budget (November 2015, Surplus/Deficit): -$64.6 billion (vs. -$136.5 billion in October 2015, -$56.8 billion in November 2014).
NFIB Small Business Optimism (November 2015, Index 100=1986): 94.8 (-1.3 vs October 2015, -3.3 vs. November 2014).
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