Job Openings Rise to Another Record: May 7 – 11

Employers continue having trouble filling open positions. Here are the five things we learned from U.S. economic data released during the week ending May 11.

#1Job openings hit an (at least) 17-year high during March while growth in hiring lagged. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 6.550 million available jobs at the end of March, up 472,000 for the month, 16.8 percent above the year-ago count, and the most since the launch of the data series back in December 2000. Private sector employers had 5.928 million job openings, up 16.5 percent from a year earlier. Some of the largest year-to-year percentage increases in job openings were in construction (+38.5 percent), trade/transportation/utilities (+26.4 percent), retail (+24.0 percent), state/local government (+23.9 percent), professional/business services (+20.6 percent), financial activities (+17.2 percent), and leisure/hospitality (+17.0 percent). Employers had difficulty finding people to fill these positions as the 5.425 million hired workers during the month was down 86,000 from February and up a more modest 2.4 percent from a year earlier. Industries with strong year-to-year percentage gains in hiring included arts/entertainment/recreation (+26.0 percent), professional/business services (+13.5 percent), manufacturing (+12.7 percent), transportation/warehousing (+7.0 percent), and wholesale trade (+6.9 percent). 5.291 million people left their jobs during March, up 118,000 from February and 2.3 percent from a year earlier. This included 3.344 million people who quit their jobs (+6.4 percent from a year earlier) and 1.278 million people who were subject to a layoff (down 7.1 percent from March 2017).Job Openings and Hiring 2008-2018 051118

#2Consumer prices grew at a moderate rate in April. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) increased 0.2 percent on a seasonally adjusted basis during the month, up from a 0.1 percent decline in March and leaving the measure 2.5 percent ahead of its year-ago mark. Energy prices rebounded 1.4 percent during April following a 2.8 percent pullback in March (gasoline prices increased 3.0 percent). Food prices grew at their fastest rate in 13 months with a 0.3 percent advance (fruits/vegetables, eggs, beer, and dairy products leading the way). Net of energy and food, core CPI saw its smallest gain since last November with a 0.1 percent increase. Helping keep the core measure in check were declining prices for used cars/trucks (-1.6 percent), new vehicles (-0.5 percent), transportation services (-0.4 percent), and medical care commodities (-0.2 percent). Rising were prices for shelter (+0.3 percent), apparel (+0.3 percent) and medical care services (+0.2 percent).

#3Lower food prices lead to the smallest increase in wholesale prices of the year. The final demand measure of the Producer Price Index (PPI) grew a seasonally adjusted 0.1 percent during April following a 0.3 percent increase in March, per the Bureau of Labor Statistics. The core measure of wholesale prices—final demand PPI net of energy, food, and trade services—increased 0.1 percent following three monthly 0.4 percent gains. Final demand prices were unchanged during April as energy prices edge up 0.1 percent and food prices fell 1.1 percent (including a 17.8 percent drop in vegetable prices). Core final demand goods prices (net of energy and food) grew 0.3 percent for the third time in four months. Final demand PPI for services gained 0.2 percent, reflecting a 0.2 percent gain in trade services PPI and a 0.6 percent jump in transportation/warehousing prices. Over the past year, final demand PPI has grown 2.6 percent while the core measure (net of energy, food, and trade services) has increased 2.5 percent.

#4Small business owner confidence held firm in April. The Small Business Optimism Index eked out a 1/10th of a point gain to a seasonally adjusted reading of 104.8 (1986=100). This was the 17th consecutive month in which the National Federation of Independent Business’s measure was above a reading of 100. Four of ten index components gained during the month: earnings trends (up three points), plans to make capital outlays (up three points), current inventories (up two points), and expected real sales. Three measures declined from their March readings: plans to increase employment (down four points), expected economic conditions (down two points), and whether it is a good time to expand (off a single point). The press release claims that “[n]ever in the history of this survey have we seen profit trends so high.”

#5Consumers took on debt at a slower pace in March. The Federal Reserve reports that outstanding consumer credit balances (net of mortgages and other real estate backed debt) grew by $11.7 billion during the month to a seasonally adjusted $3.875 trillion. This was smaller than the $13.6 billion advance during February and left outstanding debt balances up 5.0 percent over the past year. Revolving credit balances (e.g., credit cards) contracted by $2.6 billion to $1.027 trillion (+4.8 percent versus March 2017). Nonrevolving credit balances (including college and auto loans) increased by $14.2 billion to $2.848 trillion. This represented a 5.1 increase from the same month a year earlier.

Other U.S. economic data released over the past week:
Jobless Claims (week ending May 5, 2018, First-Time Claims, seasonally adjusted): 211,000 (Unchanged vs. previous week; -26,000 vs. the same week a year earlier). 4-week moving average: 216,000 (-11.7% vs. the same week a year earlier).
Import Prices (April 2018, All Imports, not seasonally adjusted): +0.3% vs. March 2018, +3.3% vs. April 2017. Nonfuel Imports: +0.2% vs. March 2018, +1.8% vs. April 2017.
Export Prices (April 2018, All Exports, not seasonally adjusted): +0.6% vs. March 2018, +3.8% vs. April 2017. Nonagricultural Exports: +0.7% vs. March 2018, +4.0% vs. April 2017.
U. of Michigan Consumer Sentiment (May 2018-preliminary, Index of Consumer Sentiment, seasonally adjusted): 98.8 (vs. April 2018: 98.8, vs. May 2017: 97.1).
Wholesale Inventories (March 2018, Inventories of Merchant Inventories, seasonally adjusted): $627.4 billion (+0.3% vs. February 2018, +5.5% vs. March 2017).
Monthly Treasury Statement (April 2018, Federal Government Budget Surplus/Deficit): +$214.3  Billion (vs. April 2017: +$176.3 billion).  The deficit over 1st 7 months of FY2018: -$385.4 billion (vs. 1st 7 months of FY2017: -$344.4 billion).
Senior Loan Officer Opinion Survey (April 2018).

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

The Unemployment Rate Drops Below 4%: April 30 – May 4

Employers continued to add workers while the unemployment rate fell to its lowest point since 2000. Here are the five things we learned from U.S. economic data released during the week ending May 4.  

#1The unemployment rate dropped to a 17.5 year low, but job creation lags a bit. The Bureau of Labor Statistics has nonfarm payrolls growing by a good, but not great 164,000 during April (seasonally adjusted), following increases of 135,000 and 324,000 in March and February. Private sector employers added 168,000 workers during the month, split by 49,000 jobs in the goods-producing side of the economy and 119,000 in the service sector. Industries adding the most workers to their payrolls during April were professionals/business services (+54,000), health care/social assistance (+29,300), manufacturing (+24,000), leisure/hospitality (+18,000), and construction (+17,000). The average workweek remained at 34.5 hours while average hourly earnings added four cents to $26.84. As a result, average weekly earnings grew by $1.38 to $925.98 (+2.8 percent versus April 2018).

Based on a separate household survey, the unemployment slipped by 2/10ths of a percentage point to 3.9 percent, its lowest point since December 2000. Taking some of the steam from this news was that 239,000 people left the labor force during the month, resulting in the labor force participation rate slipping by 1/10th of a percentage point to 62.8 percent. Falling by the same amount was the labor force participation rate for adults aged 25-54 (to 82.0 percent). The median length of unemployment jumped by 7/10ths of a week to 9.8 weeks (April 2017: 10.3 weeks). The BLS’s broadest measure of labor underutilization (the U-6 series) hit another post-recession low with a 2/10ths of a percentage point decline to 7.8 percent.Unemployment Rate 1998-2018 050418

#2The Fed stays put in May, likely to act in June. The policy statement released following this past week’s meeting of the Federal Open Market Committee (FOMC) continued to characterize economic growth as “moderate” and job gains as “strong.” Further, while household spending had “moderated,” business investment continued to grow “strongly.” Finally, core inflation measures continued to approach the Fed’s two-percent target. The FOMC voting members voted unanimously to keep the fed funds target rate between 1.5 and 1.75 percent, a rate the committee considers to be “accommodative.” The statement notes that conditions likely will “warrant further gradual increases” in its short-term interest rate target. The general consensus has the next rate hike at its June 12-13 meeting.

#3Personal spending rebounds in March. The Bureau of Economic Analysis reports that real personal consumption expenditures (PCE) rose 0.4 percent on a seasonally adjusted basis during the month following declines in both January and February. Real spending on durable goods jumped 1.1 percent while expenditures for nondurables and services each gained 0.3 percent. As prices were flat during the month, nominal PCE also grew 0.4 percent during the month. The increased spending was prompted a 0.3 percent gain in both nominal personal income and disposable income. After adjusting for inflation, real disposable income grew by 0.2 percent. Funding the difference was the 2/10ths of a percentage point drop in the savings rate to +3.1 percent. Over the past year, real PCE has increased 2.4 percent while disposable income has gained 1.7 percent.

#4Aircraft exports prompt a sharp narrowing of the trade deficit in March. Per the Census Bureau and Bureau of Economic Analysis, exports increased by $4.2 billion during the month to $208.5 billion (+8.8 percent versus March 2017) while imports slowed by $4.6 billion to $257.5 billion (+8.9 percent versus March 2017). As a result, the trade deficit contracted by 15.2 percent during the month to -$49.0 billion, which was still 9.5 percent larger than that of a year earlier. The goods deficit shrank by $7.5 billion to -$69.5 billion while the services surplus expanded by $1.3 billion to +$20.5 billion. The former was boosted by increased exports of civilian aircraft (+1.9 billion), foods/feeds (+$1.0 billion), and industrial supplies/materials (+$0.9 billion) and decreased imports of capital goods (-$3.6 billion), consumer goods (-$0.9 billion), and crude oil (-$0.5 billion). The U.S. had its biggest goods deficits with China (-$35.4 billion), the European Union (-$12.4 billion), and Mexico (-$7.0 billion).

#5Factory orders grew for the seventh time in eight months during March. The Census Bureau estimates new orders for manufactured goods increased 1.6 percent during the month to a seasonally adjusted $507.7 billion (+8.1 percent versus March 2017). Transportation goods—and, in particular, civilian aircraft—were a major reason for the increase. Net of transportation goods, factory orders increased 0.3 percent during the month and was 6.6 percent ahead of its year-ago pace. Durable goods orders jumped 2.5 percent during March while those for nondurables gained 0.5 percent. Shipments increased for the 15th time in 16 months with 0.4 percent growth to $502.8 billion. Non-transportation goods shipments gained 0.2 percent. The value of manufacturers’ unfilled orders gained 0.8 percent to $1.154 trillion (its sixth increase in seven months) while inventories expanded 0.3 percent to $677.3 billion (its 16th increase over the past 17 months). 

Other U.S. economic data released over the past week:
Jobless Claims (week ending April 28, 2018, First-Time Claims, seasonally adjusted): 211,000 (+2,000 vs. previous week; -31,000 vs. the same week a year earlier). 4-week moving average: 221,500 (-9.3% vs. the same week a year earlier).
Productivity (Q1 2018-preliminary, Nonfarm Labor Productivity, seasonally adjusted): +0.7% vs. Q3 2017, +1.3% vs. Q1 2017).
ISM Report on Business-Manufacturing (April 2018, PMI (Index (>50=expanding manufacturing sector)), seasonally adjusted): 57.3 (-2.0 points vs. March 2018).
ISM Report on Business-Nonmanufacturing (April 2018, NMI (Index (>50=expanding service sector)), seasonally adjusted): 56.8 (-2.0 points vs. March 2018).
Construction Spending (March 2018, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.285 trillion (-1.7% vs. February 2018, +3.6% vs. March 2017).
Vehicle Sales (April 2018, Light Vehicle Retail Sales, seasonally adjusted annualized rate): 17.17 million units (-1.8% vs. March 2018, +0.8% vs. April 2017).
Pending Home Sales (March 2018, Index (2001=100), seasonally adjusted): 107.6 (+0.4% vs. February 2018, -3.0% vs. March 2017).

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

Job Openings Fall, Remain Near Record High: April 9 – 13

There were fewer available jobs in February, although employers continued struggling to fill openings. Here are the five things we learned from U.S. economic data released during the week ending April 13.  

#1The number of job openings shrinks from its all-time high while hiring slightly edged down. The Bureau of Labor Statistics estimates that there were a seasonally adjusted 6.052 million job openings on the final day of February, down 176,000 from January’s 6.228 million openings (itself a data series record) but still 7.7 percent ahead of its February 2017 count. Private sector employers were searching to fill 5.476 million jobs at the end of February, 7.0 percent more than they had been seeking a year earlier. Industries with large percentage year-to-year increases in job openings included transportation (+46.0 percent), state/local governments (+24.0 percent), retail (+21.9 percent), manufacturing (+21.0 percent), construction (+16.0 percent), and finance/insurance (+12.8 percent). Employers hired 5.507 million people during February, down 33,000 from January but still up 4.6 percent from a year earlier. Private sector employers expanded payrolls by 5.161 million workers, a 5.0 percent improvement from a year earlier. Industries with large year-to-year percentage gains in payrolls included manufacturing (+27.9 percent), finance/insurance (+19.2 percent), professional/business services (+12.4 percent), and health care/social assistance (+6.4 percent). Fewer workers left their jobs during February, declining 127,000 from the prior month to 5.192 million (+3.2 percent versus February 2017). This included 3.210 million people who quit their jobs (+6.4 percent versus February 2017) and 1.647 million who were laid off (-0.6 percent versus February 2017).job openings and hiring 041318

#2Core consumer prices remained on target even as gasoline prices fell in March. The Bureau of Labor Statistics’ Consumer Price Index (CPI) slipped 0.1 percent on a seasonally adjusted basis during the month but was still 2.4 percent ahead of year-ago levels. Energy prices slumped 2.9 percent as gasoline prices dropped 4.7 percent. Food prices eked out a 0.1 percent gain. Netting out both energy and food, core CPI increased 0.2 percent during March and has risen 2.1 percent over the past year. Rising were prices for medical care services (+0.5 percent), shelter (+0.4 percent), transportation services (+0.2 percent), and medical care commodities (+0.1 percent). Prices fell during the month for apparel (-0.6 percent) and used cars/trucks (-0.3 percent).

#3Wholesale prices had a sizable gain for the second time in three months. The final demand Producer Price Index (PPI) grew by a seasonally adjusted 0.3 percent during March following a 0.2 percent bump in February and a 0.4 percent increase in January. Final demand PPI net energy, food, and trade services (a measure of core wholesale prices) rose 0.4 percent for a third consecutive month. Food PPI jumped 2.2 percent while energy PPI slumped 2.1 percent. Net of energy and food, core wholesale goods prices increased 0.3 percent. PPI for final demand services gained 0.3 percent, with rising wholesale prices for in transportation/warehousing (+0.6 percent) and trade services (+0.3 percent). Over the past year, final demand PPI has jumped 3.0 percent while wholesale prices net of energy, food, and trade services have risen 2.9 percent.

#4Small business owner optimism chilled slightly in the March winds. The Small Business Optimism Index from the National Federation of Independent Business lost 2.9 points during the month to a seasonally adjusted 104.7 (1986=100). Even with the decline, this was the 16th straight month in which the measure was above a reading of 100.0. Eight of ten components to the index lost ground from their February readings, including significant drops for future expectations for the economy, expected real sales, and whether it was a good time to expand. Only two index components—plans to increase employment and current job openings—improved in March. The press release noted that March index reading was “among the 20 best in survey history.”

#5Wholesale inventories swelled in February. Merchant wholesalers expanded their inventories 1.0 percent during the month to a seasonally adjusted $625.6 billion, per the Census Bureau. Wholesale inventories have grown 5.5 percent over the past year. Inventories of durable goods jumped 1.7 percent during February to a seasonally adjusted $240.5 billion (+8.6 percent versus February 2017), including gains for furniture (+4.5 percent), metals (+4.4 percent), machinery (+3.9 percent), and automobiles (+1.4 percent). Nondurable goods inventories expanded by a more modest 0.4 percent to $255.4 billion (+5.2 percent versus February 2017), including sizable gains for apparel (+5.0 percent), farm products (+3.3 percent), alcohol (+2.4 percent), and chemicals (+2.0 percent). The wholesale inventory-to-sales (I/S) ratio held firm during the month at 1.26. This I/S ratio for durable goods shrank by one basis point to 1.58 while that for nondurables inched up by a basis point to 0.96.

Other U.S. economic data released over the past week:
Jobless Claims (week ending April 7, 2018, First-Time Claims, seasonally adjusted): 233,000 (-9,000 vs. previous week; -3,000 vs. the same week a year earlier). 4-week moving average: 230,000 (-7.0% vs. the same week a year earlier).
Import Prices (March 2018, All Imports, not seasonally adjusted): Unchanged vs. February 2018, +3.6% vs. March 2017. Nonfuel imports: +0.2% vs. February 2018, +2.1% vs. March 2017.
Export Prices (March 2018, All Exports, not seasonally adjusted): +0.3% vs. February 2018, +3.4% vs. March 2017. Nonagricultural exports: -0.1% vs. February 2018, +3.4% vs. March 2017.
Monthly Federal Treasury Statement (March 2018, Budget Surplus/Deficit): -$208.7 billion. First 6 months of FY2018: -$599.7 billion (vs. First 6 months of FY2017: -$526.9 billion).
University of Michigan Consumer Sentiment (April 2018-preliminary, Index of Consumer Sentiment, seasonally adjusted): 97.8 (vs. March 2018: 101.4, vs. April 2017: 97.0).
FOMC Minutes

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