As 2017 Ends, Jobless Claims Remain Low and Sentiment Eases: December 25 – 29

Employers issued relatively few pink slips during the final days of the year. Here are the five things we learned from U.S. economic data released during the week ending December 29.

#1First-time jobless claims remained near a 40+ year low as 2017 wrapped up. The Department of Labor reports that there were a seasonally adjusted 245,000 initial claims made for unemployment insurance benefits during the week ending December 23. This was unchanged from the week before and 13,000 below the number of first-time claims from the same week a year earlier. More remarkable, the jobless count has been below 300,000 claims every week since March 21,2015, with the measure remaining for much of 2017 near levels not consistently seen since 1973(!). The four-week average of first-time claims inched up by 1,750 to 237,750 claims. This was 7.2 percent below the moving average from a year ago. During the week ending December 9, 2.004 million people were receiving some form of unemployment insurance benefits, 6.4 percent below that a year earlier.First-Time Jobless Claims-2007-2017-122917

#2Another second measure of consumer sentiment eased during December. The Conference Board’s Consumer Confidence Index lost 6.5 points during the month to a seasonally adjusted 122.1 (1985=100). This was up from the 113.3 reading from December 2016. The decline occurred despite survey respondents growing slightly more confident about current business conditions—the present conditions index added 1.7 points during the month to 156.6. The expected conditions index, however, plummeted by 11.9 points to 99.1. 35.7 percent of survey respondents report that jobs are “plentiful” while 15.2 percent report them being “hard to get,” with the latter being a 16-year low. The press release noted that “consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018.” During the previous week, we learned that the University of Michigan’s Index of Consumer Sentiment had lost 2.6 points to a seasonally adjusted reading of 95.9 (1966Q1=100).

#3Home purchase contract signings inched up during November. The Pending Home Sales Index (PHSI) from the National Association of Realtors added 2/10ths of a point during the month to a seasonally adjusted reading of 109.5. This was the PHSI’s highest point since June. The index jumped 4.1 percent in the Northeast and edged up 0.4 percent in the Midwest while pulling back modestly in both the West (-1.8 percent) and South (-0.4 percent). The PHSI has grown 0.8 percent over the past year, with positive 12-month comparables in the South (+2.0 percent), Northeast (+1.1 percent), and Midwest (+0.8 percent). Meanwhile, contract signings to purchase a previously owned home in the West were 2.3 percent below that of a year earlier. While the press release notes that the “housing market is closing the year on a stronger note,” it warned that potential buyers were being “stifled by tight supply and higher prices.”

#4Home prices continued to rise in October. The 20-city Case-Shiller Home Price Index grew 0.2 percent without seasonal adjusted and jumped 0.7 percent after adjustments for seasonal variation. The measure of home prices has risen 6.4 percent over the past year, putting the index just 1.3 percent below its pre-recession peak back in 2006. The index gained on a seasonally adjusted basis in all 20-tracked markets with increases greater than 1.0 percent in Las Vegas (+1.4 percent) and San Francisco (+1.2 percent). The press release states that rising home prices have been the result of “low interest rates, low unemployment and continuing economic growth” but also notes that higher prices are making renting “more attractive than buying.” 

#5Agricultural prices jumped in November. The Department of Agriculture reports that the prices received by farmers swelled 4.2 percent during the month, its first monthly gain since May. The measure has increased 9.1 percent since November 2016. The prices received for livestock production surged 8.1 percent (and was up 18.0 percent from the same month a year earlier), as poultry & egg prices jumped 15.0 percent and that of metal animals grew 7.2 percent. Dairy product prices increased 1.0 percent. Meanwhile, prices received for crop production slumped 1.0 percent during November but was still 1.1 percent above the prices received a year earlier. Prices fell for vegetables/melons (-6.1 percent) and grain/oilseed (-3.5 percent) but gained 1.4 percent for fruit/tree nuts.

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

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.

Trade Data Holds Steady in July: September 4 – 8

The trade picture barely changed during July, but the service sector perked up in August. Here are the five things we learned from U.S. economic data released during the week ending September 8.

#1The trade deficit held steady during July. The Census Bureau and Bureau of Economic Analysis tell us that exports slowed $0.6 billion to a seasonally adjusted $194.4 billion (+4.9 percent versus July 2016) and that import activity slipped by $0.4 billion to $238.4 billion (+5.1 percent versus 2016). The resulting trade deficit of $43.7 billion was up a mere $0.1 billion from June but was up 5.8 percent from a year earlier. The goods deficit was essentially unchanged at -$65.3 billion while the services surplus shrank by $0.2 billion to +$21.6 billion. While civilian aircraft exports grew by $1.1 billion, exports slowed for consumer goods and automotive vehicles. Capital goods imports increased $1.3 billion (largely of computers and associated accessories) while imports of crude oil and passenger cars both declined. The United States had its largest goods trade deficits in July with China, the European Union, Japan, and Mexico.trade deficit 2013-2017-090817

#2A slowdown in transportation goods pulled down factory orders during July. Per the Census Bureau, new orders for manufactured goods fell 3.3 percent during the month to a seasonally adjusted $466.4 billion. Transportation goods orders plummeted 19.2 percent, thanks to a 70.8 percent drop in orders for manufactured goods and a 0.9 percent decline in orders for automobiles. Net of transportation goods, core factory orders gained 0.5 percent during July to a seasonally adjusted $392.2 billion. Growing during the month were new orders for electrical equipment/appliances (+2.6 percent), computers/electronics (+2.1 percent), furniture (+1.9 percent), fabricated metal products (+0.5 percent), nondurable goods (+0.4 percent), and primary metals (+0.2 percent). Shipments grew 0.3 percent during July, with shipments of non-transportation goods increasing 0.4 percent. Unfilled orders contracted 0.3 percent while inventories expanded 0.2 percent.

#3Business activity in the service sector picked up during August. The headline index from the Institute for Supply Management’s Non-Manufacturing Report on Business grew by 1.4 points during to a seasonally adjusted reading of 55.3, regaining some of the measure’s losses from July. The NMI has been above a reading of 50.0—indicative of an expanding service sector—for 92 straight months. Three of the NMI’s four components improved during the month: business activity, new orders, and employment. The component for supplier deliveries declined during the month. Fifteen of 18 tracked service sector industries reported growth during the month, led by retail, information, and management of companies/support services. The press released noted that a “majority of respondents are optimistic about business conditions going forward.”

#4Q2 productivity growth was a bit better than previously believed. The Bureau of Labor Statistics upwardly revised its estimate of nonfarm business sector productivity growth from the 0.9 percent gain reported a month ago to a 1.5 percent increase, with output growing 4.0 percent and the number of hours worked rising 2.5 percent. Productivity gains have varied greatly quarter-to-quarter and, as a result, output per hour worked has increased by only 1.3 percent over the past year. Manufacturing sector productivity rose 2.9 percent during the quarter (up from the 2.5 percent previously reported), led by a 3.8 percent bump in output per hour for durable goods (this was unchanged from the initial estimate released a month ago). Nondurable goods production increased 0.5 percent during Q2, an improvement from the original estimate of a 0.1 percent contraction.

#5Hurricane Harvey led to a surge in jobless claims during the final days of August. The Department of Labor estimates that there were a seasonally adjusted 298,000 first time claims made for unemployment insurance benefits during the week ending September 2. This was up 62,000 from the previous week and 41,000 claims from the same week a year earlier. The state of Texas—site of Harvey’s prolonged landfall—suffered from 63,742 first time claims, up a sharp 51,637 claims from the previous week. The state with the second largest biggest week-to-week increase in first-time claims was Michigan, which saw its first-time claims count grow by a mere 3,283. The boost in unemployment resulting from Harvey is expected to be fleeting, but of course, Hurricane Irma will have similar (if also likely temporary) negative impact on the labor market over the coming weeks. Even with the surge in first-time claims, the four-week moving average of first-time claims of 250,250 was still down 3.6 percent from the moving average of the same week a year earlier.

Other U.S. economic data released over the past week:
Consumer Credit (July 2017, Outstanding Consumer Credit Balances-net of real-estate backed loans, seasonally adjusted): $3.754 trillion (+$18.5 billion vs. June 2017, +5.9% vs. July 2016).
Wholesale Inventories (July 2017, Inventories of Merchant Wholesalers, seasonally adjusted): $602.4 billion (+0.6% vs. June 2017, +3.3% vs. July 2016).
Beige Book

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