More Hiring During Q2, But Less Optimism: What We Learned During the Week of March 7-11

Employers say they intend to expand payrolls during Q2, but small business owners are not as confident. Here are the 5 things we learned from U.S. economic data released during the week ending March 11.

#1Employers plan to continue hiring this spring. 22% of the more than 11,000 companies participating in the Manpower Employment Outlook Survey reports they intend to expand payrolls between April and June while 4% expect to shed workers. The difference of +18 slips to +16 after seasonal adjustments. The seasonally adjusted reading was off a point from Q1 but matches that from a year earlier. The index was positive for all 13 tracked industries with the most positive readings seen for leisure & hospitality (+31), wholesale/retail trade (+22), transportation/utilities (+19) and professional/business services (+18). The measure also was positive for all 4 Census regions: Midwest (+17), South (+17), West (+16) and Northeast (+15). While the press release notes that the U.S. market is “strong compared to the global situation,” it warns that increased labor market volatility “may be here to stay.”

#2Small business owners sentiment deteriorated during February. The Small Business Optimism Index from the National Federation of Independent Business lost a full point to a seasonally adjusted reading of 92.9 (1986 = 100), its lowest reading in 2 years. 6 of 10 index components declined during the month; including indices for earnings trends, sales expectations and whether it is a good time to expand. 4 indices were unchanged during February, leaving no index components improving from their January readings. The press release describes the survey results as “ho hum,” noting that there is no strength exhibited by small businesses.

#3Import prices contracted for the 8th consecutive month in February. The Bureau of Labor Statistics reports import prices decreased 0.3% during the month, the smallest 1-month percentage decline since last October, with the non-seasonally adjusted measure down 6.1% from its February 2015 reading. Prices for fuel imports fell 3.9%, its smallest drop since last June. Prices for imported petroleum and natural gas prices decreased 4.0% and 6.3%, respectively. Prices for imported fuel have fallen a whopping 37.3% over the past 12-months with imported petroleum prices 38.5% below readings from a year earlier. (Obviously, this data does not reflect the recent rebound in the prices for crude oil and petroleum.) Prices for nonfuel imports slipped 0.1% during February and were 2.7% below year levels. Prices for imported consumer goods increased while those for food/beverages, automobiles and nonfuel industrial supplies/materials each declined.

#4Wholesalers expanded inventories 1st time since last fall during January. The Census Bureau estimates merchant wholesale inventories totaled $584.2 billion on a seasonally adjusted basis at the end of January, up 0.3% for the month and 2.0% above January 2015 levels. Inventories of durable goods contracted 0.3% during January and were 0.4% under year ago levels as stocks of electrical/electronic goods declined 3.6%. Nondurable goods inventories expanded 1.1% from December and were 5.9% above January 2015 levels, thanks to larger inventories of paper/paper products and drugs/druggists’ sundries. The inventory-to-sales ratio was at 1.35, up 2-basis points from December and 7-basis points from last January.

#5Consumers took on more debt but kept their credit cards in their wallets in January.  According to the Federal Reserve, outstanding consumer credit balances (net of mortgages and other real estate-backed debt) totaled $3.544 trillion at the end of January, up $10.5 billion for the month and 6.5% above year ago levels. Nonrevolving consumer credit balances—including student college loan debt and car loans—expanded by $11.5 billion during January to $2.608 billion, up 6.9% from January 2015 levels (its lowest 12-month comparable since July 2012). Revolving credit balances—e.g., credit cards—totaled $935.3 billion, which was down $1.1 billion for the month but remained 5.3% above its January 2015 reading. This was the highest year-to-year comparable for revolving credit balances since the early days of the last recession in July 2008.

Other data released over the past week that you might find of interest:                       
Jobless Claims (week ending March 5, 2016, First-Time Claims, seasonally adjusted): 259,000 (-18,000 vs. previous week; -34000 vs. same week a year earlier). 4-week moving average: 267,500 (-11.8% vs. same week a year earlier).
Treasury Budget (February 2016: Budget Surplus/Deficit): -$192.6 billion (vs. +$55.2 billion in January 2016 and -$192.4 billion in February 2015). 1st 5 months of FY2016: -$353.0 billion (8.7% smaller than the deficit of the 1st 5 months of FY2015).

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

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