Job Openings Hold Steady, Trade Deficit Narrows: What We Learned During the Week of February 6 – 10

Data released last week finds the labor market held firm, but not necessarily improved, during the final days of 2016.  Here are the 5 things we learned from U.S. economic data released during the week ending February 10.

#1Both the count of job openings and the pace hiring held steady in December. Per the Bureau of Labor Statistics, there were 5.501 million job openings on a seasonally adjusted basis at the end of December, virtually unchanged from November but up 4.2% from a year earlier. Private sector job openings totaled 5.017 million, 4.8% above the December 2015 count. Industries reporting large percentage gains in job openings included wholesale trade (+34.3%), retail (+22.9%), construction (+19.4%), and health care/social assistance (+12.0%). Employers hired 5.252 million workers during December, up 40,000 from November but off 2.8% from a year earlier. The private sector was responsible for 4.931 million of the people hired during the month (-2.2% vs. December 2015). Industries with large positive percentage gains in hiring included construction (+20.5%), wholesale trade (+3.9%), manufacturing (+3.3%), and health care/social assistance (+2.2%). 4.969 million people left their job during December, down 50,000 from November and off 3.1% from a year earlier. 2.507 million people voluntarily left their job in December (-3.7% vs. December 2015) while layoffs totaled 1.822 million during the month (-1.2% vs. December 2015).job-openings-hiring-021017

#2The trade deficit narrowed slightly in December. The goods and services deficit shrank by $1.5 billion during the month to -$44.3 billion per the Bureau of Economic Analysis/Census Bureau. Even with the contraction, this was the 3rd consecutive month in which the deficit was larger than -$40 billion. Exports grew by $5.0 billion to $190.7 billion (+4.2% vs. December 2015 and its highest point since August 2015) while import activity increased by $3.6 billion to $235.0 billion (+4.6% vs. December 2015 and its highest reading since December 2014). In comparison to November, exports grew for capital goods (including for civilian aircraft) and industrial supplies/materials (including natural gas and fuel oil). Imports increased during the month for passenger cars, industrial supplies/materials (including natural gas and fertilizers/pesticides/insecticides), and capital goods. The U.S. had its largest goods deficits with China (-$30.2 billion, European Union (-$12.9 billion), Japan (-$6.8 billion), Germany (-$5.2 billion), and Mexico (-$4.6 billion).

#3Rising energy prices pulled up import prices during January. The Bureau of Labor Statistics reports that import prices grew 0.5% during the month following a 0.1% decline during the prior month. Prices for fuel imports jumped 5.8%, with gains of 12.2% and 5.2% for imported natural gas and petroleum, respectively. Net of fuel, import prices decreased 0.2% during January, the 5th straight month in which core import prices failed to increase. Pulling down nonfuel import prices were declining prices for foods/feeds/beverages and every major category of finished goods. Import prices have grown 3.7% over the past year while the prices for nonfuel imports matched those of January 2016. Meanwhile, export prices edged up 0.1% during January and were 2.3% above their year ago levels. While prices for agricultural exports slipped 0.1% during the month, prices grew for both exported nonagricultural supplies/materials and vehicles.

#4The pace of growth in consumer credit balances slowed during December. Outstanding consumer credit loan balances (not including mortgages and other real estate-backed loans) grew by $14.2 billion during the month to $3.763 trillion. This followed a $25.2 billion gain in the Federal Reserve measure in November and was 6.2% above its December 2015 mark. Non-revolving credit balances (e.g., college loans, car loans), grew by $11.8 billion to $2.727 trillion (+6.5% vs. December 2015). Revolving credit balances increased at a slower rate, rising $2.4 billion to $995.5 billion. Even with the slower pace of growth during December, outstanding revolving credit balances were up 6.2% from a year earlier.

#5Banks maintained lending standards on most commercial and consumer loans during the final months of 2016. The Federal Reserve’s January 2017 Senior Loan Office Survey on Bank Lending Practices finds 92.8% of banks had kept their lending standards “basically unchanged” for their large and middle-market commercial & industrial (C&I) customers. More specifically, 16.7% had increased the maximum size of credit lines, 23.8% had narrowed the spread between their loan rates and their cost of funds, 16.7% had eased loan covenants, and 12.5% lessened their use of interest rate loans. 64.3% of banks reported that the demand for C&L loans from large and medium-sized customers was “about the same,” with 16.7% saying the demand was stronger and 19.1% saying it had weakened. On the residential side, 94.3% of banks indicated that their credit standards for GSE-backed residential mortgages (e.g. Fannie Mac, Freddie Mac) had “remained essentially unchanged, with similar percentages of banks reporting the same for other mortgage types. 51.4% of banks reported that the demand for GSE-eligible residential mortgages was “about the same,” with 20.0% indicating an increase in demand and 28.6% reporting “moderately” weakened demand.

Other U.S. economic data released over the past week:
Jobless Claims (week ending February 4, 2017, First-Time Claims, seasonally adjusted): 234,000 (-12,000 vs. previous week; -25,000 vs. the same week a year earlier). 4-week moving average: 244,250 (-12.1% vs. the same week a year earlier).
Wholesale Inventories (December 2016, Merchant Wholesale Inventories, seasonally adjusted): $601.1 billion (+1.0% vs. November 2016, +2.6% vs. December 2015).
Treasury Budget (January 2017, Surplus/Deficit): +$51.3 billion (vs. January 2016: +$55.2 billion). For the 1st 4 months of FY17: -$156.9 billion (vs. 1st 4 months of FY16: -$160.4 billion).
University of Michigan Index of Consumer Sentiment (February 2017-preliminary, Index (1966Q1 = 100, seasonally adjusted): 85.7 (vs. January 2017: 85.3, vs. February 2016:

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

A Mixed Holiday Gift Bag for Retailers: What We Learned During the Week of January 9 – 13

December was only merry for some retail sectors, but small business owners did grow more confident. Here are the 5 things we learned from U.S. economic data released during the week ending January 13.

#12016 ended well for some but not all retailers. The Census Bureau estimates retail and food services sales increased 0.6% during December to a seasonally adjusted $469.1 billion. This was 4.1% above the year ago sales pace and was thanks partially to a 2.4% surge in sales at auto dealers and part stores. When you remove activity at auto dealers and parts stores, sales edged up only 0.2% (+3.4% vs. December 2015). Retail sales grew during the month at gas stations (+2.0%, thanks to higher prices at the pump), furniture stores (+0.5%), building material/garden stores (+0.5%), health & personal care stores (+0.3%), and sporting goods/hobby retailers (+0.2%). Sales slumped 0.6% at department stores while electronics/appliance retailers suffered a 0.5% sales decline. Restaurants and bars also saw sales dropping 0.8% during December. One bright spot was at nonstore retailers (e.g., internet sellers), where sales jumped 1.3% during the month and were 13.2% above the December 2015 pace. To get a sense of the health of the 2016 holiday season: retail sales between October and December were 4.1% above that for the same 3 months in 2015. Retail sectors with the largest year-to-year holiday sales comparisons were nonstore retailers (+12.8%), health/personal care (+6.6%), auto dealers/parts stores (+5.2%), and building materials/garden (+4.3%). Less merry during the holiday season were department stores (-7.6%), electronics/appliance stores (-3.7%), and sporting goods/hobby retailers (-2.1%).retail-sales-december-2016-011317

#2Both the count of job openings and the pace of hiring increased slightly in November. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.522 million job openings at the end of November, up 71,000 for the month and 6.2% above the November 2015 reading. Industries with the largest year-to-year percentage gains in job openings included construction (+82.2%), manufacturing (+36.1%), retail trade (+23.9%), mining (+13.3%), and government (+12.5%). Employers hired 5.219 million people during November, a 59,000 increase in hiring for the month but 0.6% below its year ago reading. Industries with the largest year-to-year percentage gains in hiring included transportation/warehousing (+14.5%), government (+6.3%), and leisure/hospitality (+4.9%). Separations increased by 62,000 during the month to 5.028 million (+1.4% vs. November 2015). Voluntary quits were 8.4% above their November 2015 level, suggesting workers were confident about their job prospects. Over the same 12-month period, the count of layoffs had declined 3.8%.

#3Wholesale prices continued to heat up in December. Per the Bureau of Labor Statistics, the final demand Producer Price Index (PPI) grew 0.3% on a seasonally adjusted basis during the month following a 0.4% gain in November. The measure has increased 1.6% over the past 12 months. The index same measure net of energy, food, and trade services grew at a more modest 0.1% (+1.7% vs. December 2015). Final demand PPI jumped 0.7% (its largest increase since last June) sparked by a 2.6% gain in energy PPI and a 0.7% bounce in food PPI. In the case of the former, wholesale gasoline prices surged 7.8%. Net of both energy and food, final demand PPI for core goods gained 0.3% during December. Meanwhile, PPI for demand services inched up 0.1%

#4Small business owner confidence surged in December. Matching gains in consumer sentiment and perhaps reflecting the political preferences of the survey’s sponsor, the Small Business Optimism Index jumped 7.4 points during the month to a seasonally adjusted reading of 105.8 (1986 = 100). The last time the National Federation Independent Business measure had been this high was back in 2004. 7 of 10 index components improved from the November readings, led by large gains for indices tracking expected economic conditions (up 38 points to +5), expected real sales (up 20 points to +31), whether “it is a good time to expand” (up 12 points to +23), and whether it is “a good time to make capital outlays” (up 5 points to +29). Only 2 of the index components declined during the month: current job openings (off 2 points to +29) and expected credit conditions (off a point to -6). The press release says that the findings indicate that “[s]mall business is ready for a breakout” as nearly half of the gain in the index due to expectations for “better business conditions” because of the election.

#5Consumer credit balances expanded by $24.6 billion during November. The Federal Reserve reports that outstanding consumer credit balances (net of mortgages and other real estate-backed loans totaled $3.750 trillion, up 6.3 from a year earlier. The expansion of revolving credit (e.g., credit cards) balances sped up during the month—they increased $11.0 billion during November following a $2.4 billion gain in October. The $992.4 billion total was 6.4% above its November 2015 reading. Nonrevolving credit balances grew by $13.5 billion during the month to $2.758 trillion (+6.2% vs. November 2015).

Other U.S. economic data released over the past week:
Jobless Claims (week ending January 7, 2017, First-Time Claims, seasonally adjusted): 247,000 (+10,000 vs. previous week; -33,000 vs. the same week a year earlier). 4-week moving average: 256,500 (-7.7% vs. the same week a year earlier).
University of Michigan Index of Consumer Sentiment (January 2017-preliminary, Index (1966Q1 = 100, seasonally adjusted): 98.1 (-0.1 vs. December 2016, +6.1 vs. January 2016).
Business Inventories (November 2016, Manufacturing & Trade Inventories, seasonally adjusted): $1.828 trillion (+0.7% vs. October 2016, +1.5% vs November 2015).
Import Prices (December 2016, seasonally adjusted): +0.4% vs. November 2016, +1.8% vs. December 2015. Nonfuel imports: -0.2% vs. November 2016, -0.1% vs. December 2016.
Export Prices (December 2016, seasonally adjusted): +0.3% vs. November 2016, +1.1% vs. December 2015.

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

Quiet Economic Data in a Week of Political Change: What We Learned During the Week of November 7 – 11

During a week of much political news, economic data pointed to stability. Here are the 5 things we learned from U.S. economic data released during the week ending November 11.

#1The number of job openings grew slightly while hiring slowed in September. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 5.486 million job openings at the end of September. This was up 33,000 from August and 2.4% from a year earlier. The year-to-year growth rate in private sector job openings was slightly slower—the 4.987 million private sector job openings at the end of September represented a 2.2% gain from September 2015. Industries with the largest year-to-year gains in job gains were construction (+112.5%), manufacturing (+7.1%), transportation/warehousing (+6.5%), and retail (+2.1%). 5.081 million people were hired during September, off 187,000 from the prior month and down 0.9% from September 2015’s hiring pace. The largest positive 12-month comparables in hiring were in the government (+12.3%), transportation/warehousing (+4.4%), retail (+3.6%), wholesale trade (+3.0%), and professional/business services (+1.8%). Also falling were separations, dropping by 138,000 to 4.914 million. This was 0.8% below the year ago pace of separations. 3.270 million people voluntarily departed their jobs during September, down 581,000 from August but still 11.6% ahead of the September 2015 rate. Layoffs remained soft–at 1.610 million, layoffs declined 281,000 from August 2016 and was 21.7% below the year ago pace.job-openings-hires-separations-111116

#2Wholesalers’ inventories largely held steady in September. Merchant wholesale inventories inched up 1/10th of a percent to a seasonally adjusted $590.2 billion. This was 0.1% below year ago levels for the Census Bureau measure. Inventories of durable goods contracted 0.4% during the month to $354.9 billion (-1.9% vs. September 2015), with inventory declines greater than 1.0% for metals, computer equipment, machinery, and automobiles. Nondurable goods inventories expanded 0.9% during the month to $235.3 billion (+2.7% vs. September 2015), reflecting sizable gains for petroleum (+3.8%), drugs (+3.3%), and paper (+0.8%). The inventory-to-sales (I/S) was at 1.33 in September, matching the ratios from both August 2016 and September 2015. The I/S ratio for durable goods slipped by a basis point to 1.66 while that for nondurable goods added a basis point to 1.02.

#3Small business owner sentiment edged up to its highest point in a year during October. The Small Business Optimism Index from the National Federation of Independent Business added 8/10ths of a point to a seasonally adjusted reading of 94.9. This was the measure’s best reading since October 2015 when it was at 96.0. The gain occurred even though only 5 of the index’s 10 components improved during the month, led by a big 9-point increase in the measure tracking respondents’ plans to increase inventories.  Also improving from their September readings were index components for current job openings (up 4 points), current inventories (up 3 points), whether it is a good time to expand (up 2 points), and expected credit conditions (up a point). Falling sharply was the expected economic conditions index (down 7 points), with declines also seen for indices tracking expected real sales (down 3 points) and earning trends (down a point). The press release, published on election day, said that business owners “need predictability…that the political climate creates the opposite.”

#4Consumer credit balances grew at a slower pace in September. The Federal Reserve places the value of outstanding non-real estate backed consumer loans at a seasonally adjusted $3.707 trillion, a gain of $19.3 billion from August and 6.0% from a year earlier. Non-revolving consumer credit balances—e.g., car loans, college loans—increased by $15.1 billion to $2.728 trillion (+6.0% vs. September 2015). Outstanding revolving consumer credit balances (including credit cards) expanded by $4.2 billion during September to $978.815 billion. (By comparison, revolving credit balanced increased $5.6 billion during August.) Revolving credit balances have grown 5.9% over the past year.

#5Banks report maintaining current lending standards to their commercial customers. According to survey data collected by the Federal Reserve and published in its latest edition of the Senior Loan Officer Opinion Survey on Bank Lending Practices, domestic banks kept their lending standards to both large/medium sized companies and to small firms “unchanged.” Some banks reported increasing the size of credit lines, shrinking the size of spreads between the cost of borrowed funds and their lending rates, and less frequent use of interest rate floors. At the same time, a small percentage of banks reported weaker demand for commercial loans from large/medium sized companies, but a “modest fraction” of banks reported greater interest in lines of credit from their commercial customers.

Other data released over the past week that you might find of interest:
Jobless Claims (week ending November 5, 2016, First-Time Claims, seasonally adjusted): 254,000 (-11,000 vs. previous week; -22,000 vs. the same week a year earlier). 4-week moving average: 259,750 (-4.2% vs. the same week a year earlier).
University of Michigan Index of Consumer Sentiment (November 2016-preliminary, Index (1966Q1=100, seasonally adjusted): 91.6 (vs. October 2016: 87.2, vs. November 2015: 91.3)
Federal Government Budget (October 2016, Surplus/Deficit): -$44.2 billion (vs. October 2015: -$136.6 billion).

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