One More Look at September Labor Market Trends: November 6 – 10

The latest Job Openings and Labor Turnover report finds hiring slowed during September. Here are the five things we learned from U.S. economic data released during the week ending November 10.

#1The pace of hiring slowed a bit in September even with the number of job openings remaining at record highs. The Bureau of Labor Statistics indicates that employers had a seasonally adjusted 6.093 million job openings at the end of September, up a mere 3,000 from August but 7.5 percent ahead of the year-ago count. Industries with substantially large year-to-year percentage gains in job openings included wholesale trade (+31.4 percent), manufacturing (+30.4 percent), transportation (+21.8 percent), and health care/social assistance (+9.8 percent). On the other hand, both the federal government (-20.6 percent) and retailers (-2.7 percent) reported having fewer open positions than they did back in September 2016. Employers hired a seasonally adjusted 5.273 million workers during September, down 147,000 from August but still up 1.8 percent from the September 2016 count. Hiring rose over the past year in manufacturing (+20.2 percent), construction (+18.9 percent), financial activities (+9.6 percent), and health care/social assistance (+6.8 percent). Hiring fell versus a year earlier in retail (-9.2 percent) and the government (-4.6 percent). 5.240 million people left their jobs during September, off 33,000 from August but still 6.0 percent ahead of the year-ago pace. The number of people who had quit their job increased by 89,000 during the month to 3.182 million (+3.4 percent versus September 2016) while layoffs slowed by 78,000 to 1.703 million (+12.3 percent versus September 2016).job openings and hiring-2003-2017 111017

#2Wholesalers added to their inventories add a slower rate during September as sales jumped. The Census Bureau reports that merchant wholesaler inventories grew 0.3 percent during the month to a seasonally adjusted $609.5 billion. While this was down from August’s 0.8 percent gain, it leaves wholesale inventories up 4.6 percent from September 2016 levels. Stockpiles of durables expanded 0.3 percent during September while those of nondurables increased 0.4 percent. Wholesaler sales surged 1.3 percent during September—following a 1.9 percent gain in August—to a seasonally adjusted $480.5 billion (+8.5 percent). Durable goods sales jumped 0.7 percent during the month while those of nondurables rose 1.8 percent (including a 12.6 percent surge in petroleum sales).

#3Layoff activity remained muted during the first days of November. The Department of Labor estimates there were a seasonally adjusted 239,000 first-time claims made for unemployment insurance benefits during the week ending November 4. This was up 10,000 from the prior week but down 11,000 from the same week a year ago. The four-week moving average of first-time claims slipped by 1,250 to 231,250. The four-week moving average was 9.7 percent below that of the same week a year ago. During the week ending October 21, 1.639 million people were receiving some form of unemployment insurance benefits, 8.1 percent below the count receiving the same during the same week a year earlier.

#4Consumers added to their debt load in September. Per the Federal Reserve, consumers had a seasonally adjusted $3.788 trillion in outstanding consumer debt (not including mortgages and other real estate backed debt) at the end of September, this was up $20.8 billion from August and 5.6 percent from a year earlier. Nonrevolving debt balances (e.g., auto and college loans) jumped by $14.4 billion to $2.782 trillion (+5.6 percent versus September 2016). Revolving debt balances (e.g., credit cards) crossed over the trillion dollar mark for the first time at $1.006 trillion. This represented a $6.4 billion bump up from August and was 5.6 percent ahead of year-ago levels.

#5Bankers report easing leading standards to their commercial customers during Q3. A “modest net percentage” of banks responding to the Federal Reserve’s October 2017 Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that they had eased lending standards for the commercial and industrial (C&I) loans in recent months. These “eased” standards took the form of expanded credit lines, lower costs for credit lines, narrowed spreads of loan rates over the banks’ cost of funds, eased loan covenants, and lower interest spreads. Increased competition among lenders was the most significant driver for the relaxed lending standards to commercial borrowers. Banks were more likely to have maintained their current lending standards for their residential real estate loan offerings while tightening standards and terms on credit cards and car loans. Demand for residential real estate loans, credit cards, and auto loans all have weakened during the past quarter.

Other U.S. economic data released over the past week:
University of Michigan Index of Consumer Sentiment (November 2017-preliminary, Index (1966Q1=100, seasonally adjusted):  97.8 (vs. October 2017: 100.7; November 2016: 93.8).

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

Employers’ Inability to Find Qualified Candidates Slows Hiring: June 5 – 9.

A lack of qualified candidates weighed on hiring during April. Here are the 5 things we learned from U.S. economic data released during the week ending June 9.

#1Even with a record number of job openings, hiring slowed in April. The Bureau of Labor Statistics estimates there were a seasonally adjusted 6.044 million job openings at the end of the month, up 259,000 for the month, 7.1 percent from a year earlier, and the highest count ever recorded in the 16+ year history of the data series. The private sector had 5.464 million jobs available, up 240,000 from March and 6.7 percent from April 2016. Among the industries reporting significant year-to-year percentage gains in job openings were professional/business services (+15.0 percent), accommodations/food services (+13.3 percent), financial activities (+11.0 percent), leisure/hospitality (+10.6 percent), and construction (+10.3 percent). Employers continued to experience significant difficulty in filling these jobs. Employers hired 5.051 million people during April, down 253,000 from March and up a measly 0.3 percent from a year earlier. Private sector companies brought 4.718 million people onto their payrolls during the month, up 0.7 percent from a year earlier. Also slowing during the month were the number of job separations with 4.973 million people leaving their jobs during the month, a 225,000 decline from March. This included voluntary quits sinking by 109,000 to 3.027 million (+4.3 percent vs. April 2016). Layoffs decreased by 71,000 to 1.590 million, 4.7 percent below the year ago levels.

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#2New factory orders contracted during April for the first time in 2017. Census Bureau data indicate that new orders for manufactured goods declined 0.2 percent during the month to a seasonally adjusted $469.0 billion. This was up 3.8 percent from a year earlier. April’s decline following month-to-month increases of 0.8 percent and 1.0 percent in February and March, respectively. Transportation goods orders fell 1.4 percent as a 9.1 percent drop civilian aircraft orders outweighed a 0.6 percent gain in orders of automobiles. Net of transportation goods, new orders edged up 0.1 percent during April to $390.6 billion (+6.0 percent vs. April 2016). Orders for computers/electronic products jumped 1.6 percent during the month while falling were orders of electrical equipment/appliances (-2.0 percent), fabricated metals (-1.0 percent), primary metals (-0.7 percent), machinery (-0.7 percent), and furniture (-0.2 percent). Orders of civilian nonaircraft capital goods (a proxy for business investment) inched up 0.1 percent during the month and was 3.0 percent above year earlier levels.

#3The service sector hummed along at a slightly slower growth rate in May. The headline index from the Institute for Supply Management’s Report on Business for the nonmanufacturing sector of the economy decreased by 6/10ths of a point to 56.9. The NMI has been above a reading of 50.0—indicative of an expanding service sector—for 89 consecutive months. Three of the four index components declined during the month: new orders (down 5.5 points to 57.7), business activity (down 1.7 points to 60.7), and supplier deliveries (down 1.5 points to 51.5). On the flipside, the employment index surged 6.4 points to 57.8. Seventeen of the 18 tracked nonmanufacturing sectors expanded during the month, led by real estate, construction, and accommodation/food services. The press release noted that survey respondents were “continu[ing] to indicate optimism about business conditions and the overall economy.”

#4Productivity gains were nonexistent during Q1, but that is an improvement from a previous estimate. The Bureau of Labor Statistics raised its previously published estimate of labor productivity from saying it had shrunk 0.6 percent on a seasonally adjusted annualized rate (SAAR) to now reporting it had held steady during the quarter. This was the result of output and the number of hours worked both having grown at an annualized rate of 1.7 percent during the quarter. Over the past year, labor productivity increased an anemic 1.2 percent with output expanding 2.5 percent and hours worked growing 1.3 percent. Also increasing was productivity in the manufacturing sector, with the previously reported 0.4 percent bump raised to a 0.5 percent increase during Q1. Productivity gained 2.7 percent for nondurable goods manufacturing but contracted 0.7 percent for durable goods manufacturing.

#5Consumer debt levels grew at a slower pace during April. Per the Federal Reserve, outstanding consumer debt balances (net of mortgages and other real estate-backed debt) totaled $3.821 trillion at the end of April, up $8.2 billion for the month and 5.8% from a year earlier. This was the smallest single-month gain in credit balances since December 2015. Nonrevolving credit balances grew by $6.7 billion to $2.810 trillion. While this also was their smallest single-month increase since late 2015, nonrevolving credit balances (e.g., college loans, car loans) have expanded 5.7 percent over the past year. Revolving credit balances (e.g., credit cards) grew at its slowest pace in three months (+$1.5 billion) to $1.010 trillion (+5.7 percent vs. April 2016).

Other U.S. economic data released over the past week:
Jobless Claims (week ending June 3, 2017, First-Time Claims, seasonally adjusted): 245,000, -10,000 vs. previous week; -20,000 vs. the same week a year earlier). 4-week moving average: 242,000 (-10.2 percent vs. the same week a year earlier).
Wholesale Trade (April 2017, Wholesale Inventories, seasonally adjusted): $591.0 billion (-0.5% vs. March 2017, +1.6% vs. April 2016).

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

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.