Employers have many unfilled jobs while inflation remains subdued. Here are the five things we learned from U.S. economic data released during the week ending August 11.
Even with a record level of job openings, the pace of hiring sputtered in June as employers are unable to fill Thomas roles. There were a seasonally adjusted 6.163 million job openings on the final day of June, up 461,000 from May, 11.3 percent from a year earlier, and the most reported in the 17-year history of the Bureau of Labor Statistics data series. This included 5.588 million private sector job openings, which represented a 12.0 percent increase from June 2016. Industries reporting the largest percentage gains in job openings over the past year include construction (+31.6 percent), wholesale trade (+28.5 percent), financial activities (+22.6 percent), professional/business services (+16.0 percent), and accommodation/food services (+11.9 percent). Yet, employers were struggling to fill those positions. Hiring declined by 103,000 during the month to 5.356 million. This was up 3.5 percent from the number of people hired during June 2016. Private sector employers hired 5.026 million people during the month, up 4.3 percent from a year earlier. The industries with the largest year-to-year percentage increases in hiring included manufacturing (+25.2 percent), construction (+15.0 percent), and professional/business services (+14.6 percent). 5.224 million people left their job during June, off by 21,000 for the month, but 5.7 percent the year ago count. 3.314 million people voluntarily quit their jobs (+5.2 percent versus June 2016) while the 1.701 million people laid off was up 5.7 percent from the same month a year earlier.
Consumer prices eke out a small gain during July. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) increased 0.1 percent during the month, after having been unchanged during June. Energy CPI declined for the fifth time in six months, albeit with a small 0.1 percent drop. Gasoline prices were unchanged during July while electricity prices grew 0.4 percent. Food prices gained 0.2 percent during July, the fifth time over the past six months with a monthly increase of at least 0.2 percent. Net of energy and food, core CPI gained 0.1 percent for a fourth consecutive month. Growing were prices for medical care commodities (+1.0 percent), medical care services (+0.3 percent), apparel (+0.3 percent), and transportation services (+0.2 percent). Meanwhile, prices for both new and used cars/trucks dropped 0.5 percent. Both headline and core CPI have grown 1.7 percent over the past year, each under the Federal Reserve’s two-percent target rate for inflation.
Wholesale prices declined during July. The final demand Producer Price Index (PPI) slipped 0.1 percent during the month, following a 0.1 percent increase in June. The core measure, which nets out energy, food, and trade services, held steady during the month. PPI for final demand goods edged down 0.1 percent. The measure for wholesale energy goods decreased 0.3 percent (wholesale gasoline prices fell 1.3 percent) while that for food was unchanged during July. Meanwhile, final demand PPI for services dropped 0.2 percent, pulled down by declines for transportation/warehousing (-0.8 percent) and trade (i.e., retailer and wholesaler margins, -0.5 percent). Over the past year, both the headline and core measure of final demand PPI has grown just under the Federal Reserve’s target with a 1.9 percent increase.
Productivity growth was soft during Q2, which was an improvement over Q1’s stagnation. The Bureau of Labor Statistics finds nonbusiness labor productivity edged up 0.9 percent on a seasonally adjusted annualized basis during April, May, and June, a gain from the productivity being unchanged during the first quarter. Output grew 3.4 percent during the quarter while hours worked gained 2.5 percent. Unit labor costs edged up 0.6 percent during the quarter. Over the past year, nonfarm productivity grew by a tepid 1.2 percent. The manufacturing sector presented a bright picture with a 2.5 percent productivity gain, led by a sharp 3.8 percent surge in durable goods manufacturing productivity. Productivity of nondurable manufacturing slipped 0.1 percent during Q2.
Small Business Owner Sentiment Rebounded During July. The Small Business Optimism Index from the National Federation of Independent Business improved for the first time in six months with a 1.6 point increase to a seasonally adjusted 105.2 (1986 = 100). This was the measure’s best reading since February and up 10.6 points from a year earlier. Seven of the index’s ten components improved from their June readings, led by measures for current job openings (up five points), expected real sales (up five points), plans to increase employment (up four points), and expected future economic conditions (up four points). Only two of the index components declined during the month: plans to make capital outlays (down two points) and expected credit conditions (off a point). The press release noted that “Main Street was buoyed by stronger customer demand despite the dysfunction in Washington, D.C.”
Other U.S. economic data released over the past week:
– Jobless Claims (week ending August 5, 2017, First-Time Claims, seasonally adjusted): 244,000 (+3,000 vs. previous week; -19,000 vs. the same week a year earlier). 4-week moving average: 241,000 (-8.2% vs. the same week a year earlier).
– Consumer Credit (June 2017, Outstanding Consumer Credit Balances (net of mortgages and other real-estate backed debt, seasonally adjusted): $3.856 trillion (+$12.4 billion vs. May 2017, +5.7% vs. June 2016).
– Federal Government Treasury Budget (June 2017, Surplus/Deficit): -$42.9 billion (vs. June 2016: -$90.2 billion, July 2017 -$112.8 billion). 1st ten months of FY2017: -$566.0 billion (vs. 1st ten months of FY2016: -$512.0 billion).
– Wholesale Inventories (June 2017, Inventories of Merchant Wholesalers, seasonally adjusted): $599.4 billion (+0.7% vs. May 2017, +2.8% vs. June 2016).
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What We Learned About the U.S. Economy Last Week 