Employers continued struggling to fill open positions. Here are the five things we learned from U.S. economic data released during the week ending January 7.
Payroll gains were again underwhelming in December. Nonfarm payrolls grew by a seasonally adjusted 199,000 during the month. While the Bureau of Labor Statistics measure grew by a record 6.448 million during 2020, it remained 3.572 million under its February 2020 pre-pandemic peak. The data also reflect upward revisions to October’s and November’s payroll counts by a total of 141,000. The largest payroll gains in December were in leisure/hospitality (+53,000), professional/business services (+43,000), manufacturing (+26,000), and construction (+22,000). Retail employment slipped by 2,100. Average weekly earnings of $1,086.46 were up 4.7 percent from a year earlier.
The separate households survey puts the unemployment rate at a pandemic-low of 3.9 percent (down 3/10ths of a point from November and 2.8 percentage points from a year earlier). 168,000 people entered the labor force in December, keeping the labor force participation rate at 61.9 percent (December 2020: 61.5 percent, February 2020: 63.4 percent). Also holding steady in December was the 25 to 54 labor force participation rate at 81.9 percent (December 2020: 81.0 percent, February 2020: 83.0 percent). Falling to pandemic lows were the median length of unemployment (down a half week to 12.9 weeks), part-time workers seeking a full-time job (down 337,000 to 3.929 million), and the broadest measure of labor underutilization (the U-6 series, down 4/10ths of a percentage point to 7.3 percent).
The issue is not a lack of available jobs. There were a seasonally adjusted 10.562 million open jobs at the end of November. While down 536,000 from October count, job openings were just under the record high for the Bureau of Labor Statistics measure achieved in July. Industries with at least a million open positions were professional/business services, health care/social assistance, accommodation/food services, and retail. In November, employers hired 6.697 million people with million-plus adds in professional/business services, accommodation/food services, and trade/transportation/utilities. 6.273 million people separated from their jobs in November (a record-high if you do not include the first two months of the pandemic). A record 4.527 million people quit their jobs during the month, while layoffs were at near a pandemic-low of 1.369 million
Factory orders—and unfilled orders—increased in November. The Census Bureau reports that new orders for manufactured goods rose 1.6 percent during the month to a seasonally adjusted $531.8 billion. Durable and nondurable goods orders jumped 2.6 percent and 0.7 percent, respectively. Aircraft pushed up transportation goods orders 6.5 percent—new orders net of transportation goods advanced 0.8 percent. Core (civilian, nonaircaft) capital goods orders were flat during the month. Shipments increased 0.7 percent, with matching gains for durable and nondurable goods. Manufacturers had $1.260 trillion in unfilled orders, up 0.7 percent for the month. The unfilled orders-to-shipments ratio inched up by a basis point to 6.78. Inventories grew 0.7 percent to $777.0 billion.
Purchasing managers report continued (but slower) growth in December. The Institute for Supply Managers’ Manufacturing PMI lost 2.4 points during the month to a reading of 58.7. Even with the decline, the Manufacturing PMI remained above the critical growth/contraction threshold of 50.0 for 19 straight months. Of significant components, only one (manufacturing) advanced in December. Declining were measures for new orders, production, and inventories. Fifteen of 18 tracked manufacturing industries expanded in December, led by apparel, furniture, and textiles. The press release noted “signs of improvement” in terms of supplier deliveries and other recent challenges.
The ISM’s Services PMI plummeted by 7.1 points to a reading of 62.0. This measure also has been above a 50.0 reading for 19 straight months (and has been greater than 60.0 ever since March). Falling were index components for business activity, new orders, employment, and inventories. Sixteen of 18 service sector industries reported growing in December, led by accommodation/food services, wholesale trade, and construction. Per the press release, purchasing managers indicated that “they continue to struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials.”
Trade deficit widened to a near-record in November. The Census Bureau and the Bureau of Economic Analysis report that imports surged 4.6 percent to a seasonally adjusted $304.4 billion, while exports eked out a slight 0.2 percent gain to $224.2 billion. The resulting trade deficit of -$80.2 billion was up 19.4 percent from October, just short of September’s all-time record. The trade deficit for the first 11 months of 2021 (-$785.5 billion) was up 28.6 percent from the comparable 2020 months. The goods deficit surged $15.1 billion to -$99.0 billion, while the services surplus grew $2.1 billion to +$18.8 billion. The former reflected a $12.3 billion increase in imported goods (including finished metal shapes, crude oil, consumer goods, and automobiles/parts) and a $2.9 billion drop in exports (including capital goods, nonmonetary gold, and crude oil). The U.S. had its largest goods deficits with China, the European Union, and Mexico.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending January 1, 2022, First-Time Claims, seasonally adjusted): 207,000, +7,000 vs. the previous week, -674,000 vs. the same week a year earlier). 4-week moving average: 204,500 (-74.6% vs. the same week a year earlier).
- Vehicle Sales (December 2021, Light Trucks and Automobiles, seasonally adjusted): 12.435 million (-3.6% vs. November 2021; -25.9% vs. December 2021).
- Construction Spending (November 2021, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.626 trillion (+0.4% vs. October 2021; +7.9% vs. November 2020).
- Consumer Credit (November 2021, Outstanding Non-Real Estate Back Consumer Credit Balances, seasonally adjusted): $4.415 trillion (+$40.0 billion vs. October 2021; +5.8% vs. November 202).
- FOMC Minutes (December 2021)
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What We Learned About the U.S. Economy Last Week 