Job Openings Hit a New Record: August 7 – 11.

Employers have many unfilled jobs while inflation remains subdued. Here are the five things we learned from U.S. economic data released during the week ending August 11.

#1Even with a record level of job openings, the pace of hiring sputtered in June as employers are unable to fill Thomas roles. There were a seasonally adjusted 6.163 million job openings on the final day of June, up 461,000 from May, 11.3 percent from a year earlier, and the most reported in the 17-year history of the Bureau of Labor Statistics data series. This included 5.588 million private sector job openings, which represented a 12.0 percent increase from June 2016. Industries reporting the largest percentage gains in job openings over the past year include construction (+31.6 percent), wholesale trade (+28.5 percent), financial activities (+22.6 percent), professional/business services (+16.0 percent), and accommodation/food services (+11.9 percent). Yet, employers were struggling to fill those positions. Hiring declined by 103,000 during the month to 5.356 million. This was up 3.5 percent from the number of people hired during June 2016. Private sector employers hired 5.026 million people during the month, up 4.3 percent from a year earlier. The industries with the largest year-to-year percentage increases in hiring included manufacturing (+25.2 percent), construction (+15.0 percent), and professional/business services (+14.6 percent). 5.224 million people left their job during June, off by 21,000 for the month, but 5.7 percent the year ago count. 3.314 million people voluntarily quit their jobs (+5.2 percent versus June 2016) while the 1.701 million people laid off was up 5.7 percent from the same month a year earlier.Nonfarm Job Openings 2007-2017 081117

#2Consumer prices eke out a small gain during July. The Bureau of Labor Statistics reports that the Consumer Price Index (CPI) increased 0.1 percent during the month, after having been unchanged during June. Energy CPI declined for the fifth time in six months, albeit with a small 0.1 percent drop. Gasoline prices were unchanged during July while electricity prices grew 0.4 percent. Food prices gained 0.2 percent during July, the fifth time over the past six months with a monthly increase of at least 0.2 percent. Net of energy and food, core CPI gained 0.1 percent for a fourth consecutive month. Growing were prices for medical care commodities (+1.0 percent), medical care services (+0.3 percent), apparel (+0.3 percent), and transportation services (+0.2 percent). Meanwhile, prices for both new and used cars/trucks dropped 0.5 percent. Both headline and core CPI have grown 1.7 percent over the past year, each under the Federal Reserve’s two-percent target rate for inflation.

#3Wholesale prices declined during July. The final demand Producer Price Index (PPI) slipped 0.1 percent during the month, following a 0.1 percent increase in June. The core measure, which nets out energy, food, and trade services, held steady during the month. PPI for final demand goods edged down 0.1 percent. The measure for wholesale energy goods decreased 0.3 percent (wholesale gasoline prices fell 1.3 percent) while that for food was unchanged during July. Meanwhile, final demand PPI for services dropped 0.2 percent, pulled down by declines for transportation/warehousing (-0.8 percent) and trade (i.e., retailer and wholesaler margins, -0.5 percent). Over the past year, both the headline and core measure of final demand PPI has grown just under the Federal Reserve’s target with a 1.9 percent increase.

#4Productivity growth was soft during Q2, which was an improvement over Q1’s stagnation. The Bureau of Labor Statistics finds nonbusiness labor productivity edged up 0.9 percent on a seasonally adjusted annualized basis during April, May, and June, a gain from the productivity being unchanged during the first quarter. Output grew 3.4 percent during the quarter while hours worked gained 2.5 percent. Unit labor costs edged up 0.6 percent during the quarter. Over the past year, nonfarm productivity grew by a tepid 1.2 percent. The manufacturing sector presented a bright picture with a 2.5 percent productivity gain, led by a sharp 3.8 percent surge in durable goods manufacturing productivity. Productivity of nondurable manufacturing slipped 0.1 percent during Q2.

#5Small Business Owner Sentiment Rebounded During July. The Small Business Optimism Index from the National Federation of Independent Business improved for the first time in six months with a 1.6 point increase to a seasonally adjusted 105.2 (1986 = 100). This was the measure’s best reading since February and up 10.6 points from a year earlier. Seven of the index’s ten components improved from their June readings, led by measures for current job openings (up five points), expected real sales (up five points), plans to increase employment (up four points), and expected future economic conditions (up four points). Only two of the index components declined during the month: plans to make capital outlays (down two points) and expected credit conditions (off a point). The press release noted that “Main Street was buoyed by stronger customer demand despite the dysfunction in Washington, D.C.”

Other U.S. economic data released over the past week:
Jobless Claims (week ending August 5, 2017, First-Time Claims, seasonally adjusted): 244,000 (+3,000 vs. previous week; -19,000 vs. the same week a year earlier). 4-week moving average: 241,000 (-8.2% vs. the same week a year earlier).
Consumer Credit (June 2017, Outstanding Consumer Credit Balances (net of mortgages and other real-estate backed debt, seasonally adjusted): $3.856 trillion (+$12.4 billion vs. May 2017, +5.7% vs. June 2016).
Federal Government Treasury Budget (June 2017, Surplus/Deficit): -$42.9 billion (vs. June 2016: -$90.2 billion, July 2017 -$112.8 billion). 1st ten months of FY2017: -$566.0 billion (vs. 1st ten months of FY2016: -$512.0 billion).
Wholesale Inventories (June 2017, Inventories of Merchant Wholesalers, seasonally adjusted): $599.4 billion (+0.7% vs. May 2017, +2.8% vs. June 2016).

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.

job openings and hiring 2011-2017-060917

#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.

Does Robust Job Creation Set Up a Fed Funds Rate Hike This Week? What We Learned During the Week of March 6 – 10

Hiring remained solid in February, but the trade deficit widened to a nearly 5-year high in January. And now we wait for the Fed to act. Here are the 5 things we learned from U.S. economic data released during the week ending March 10.

#1Job creation continued to chug along in February. Per the Bureau of Labor Statistics, nonfarm payrolls expanded by a seasonally adjusted 235,000 during the month, nearly matching the 238,000 added jobs in January and last December’s 155,000 payroll gain. Private sector employers added 227,000 workers during the month, split by 132,000 in the service sector (vs. 167,000 in January) and 95,000 jobs in the goods-producing side of the economy (vs. 54,000 in January). Industries that added the most workers during February were construction (+58,000), health care/social assistance (+32,500), manufacturing (+28,000), and leisure/hospitality (+26,000). The retail sector shed 26,000 workers during the month. The average number of hours worked during the week held steady at 34.4 hours while average weekly earnings grew by $2.07 to $897.50 (+2.5% vs. February 2016).Job-Creation-2010-2017-031017

Based on a separate household survey, the unemployment rate slipped by 1/10th of a percentage point to a seasonally adjusted 4.7% (vs. 4.9% in February 2016). 340,000 people entered the labor market during the month, while the labor force participation rate inched up by 1/10th of a percentage point to 63.0% (its best reading since last March, but still not far off from its recently achieved multi-decade low). The typical length of unemployment dropped to another post-recession low, shedding 2/10ths of a week to 10.0 weeks (February 2016: 11.3 weeks). The seasonally count of part-time workers who were seeking a full-time opportunity dropped by 136,000 to 5.704 million (February 2016: 6.019 million). The broadest measure of labor underutilization matched the post-recession low hit last December at 9.4% (February 2016: 9.8%). In all, the stability of the labor market would seem to give the Federal Reserve the final piece to the puzzle in deciding to bump up its short-term interest rate target at next week’s Federal Open Market Committee meeting.

#2January’s trade deficit was the largest in nearly five years. The Census Bureau and the Bureau of Economic Analysis estimate that exports totaled $192.1 billion during the month (+$1.1 billion vs. December 2016) while imports jumped $5.3 billion to $240.6 billion. The resulting deficit of -$48.5 billion was $4.2 billion larger than that of the prior month, up 9.7% than that of January 2016, and the largest single-month trade deficit since March 2012. The goods deficit expanded by $4.0 billion during the month to -$69.7 billion while the services surplus shrank by $0.3 billion to +$21.2 billion. Exports of supplies/materials (crude oil and petroleum products) and automotive vehicles grew during the month while capital goods exports slowed. Growing import goods categories included consumer goods (including cellular phones), industrial supplies/materials (including crude oil), and automotive vehicles. The U.S. had its largest goods deficits with China (-$30.2 billion), the European Union (-$13.4 billion), Germany (-$5.7 billion), Mexico (-$5.5 billion), and Japan (-$5.5 billion) during the month.

#3Factory orders increased during January. New orders for manufactured goods grew 1.2% during the month to a seasonally adjusted $470.2 billion, according to the Census Bureau. This was up 3.8% from a year earlier. Orders for durable goods rose 6.2%, thanks to big gains in orders for civilian aircraft (+69.8%), defense aircraft (+62.2%), and automobiles (+0.8%). Net of transportation goods, new orders for core manufactured goods increased 0.3% during January to $393.7 billion (+6.0% vs. January 2016). Orders for nondefense, non-aircraft capital goods orders (a proxy for business investment) slipped 0.1% during the month and was only 0.5% above its year ago reading. Shipments increased for the 10th time in 11 months with a 0.2% gain to $478.3 billion. Unfilled orders contracted for the 7th time in 8 months with a 4.0% decline to $1.114 trillion. Inventories expanded for the 6th time in 7 months (+0.2% to $627.9 billion). 

#4Productivity barely grew during 2016. The Bureau of Labor Statistics estimates nonfarm business labor productivity grew at a seasonally adjusted annualized rate of 1.3% during Q4, matching the BLS’s previous Q4 productivity estimate that it reported a month earlier but below the 3.3% gain reported for Q3. Manufacturing sector productivity grew 2.0% during Q4, with increases of 1.5% and 2.7% for durable and nondurable manufacturing, respectively. For all of 2016, labor productivity grew by only 0.2%, making last year the worst year for productivity gains since 2011. This is a particularly dubious achievement in that productivity growth has been weak throughout the current economic recovery.

#5Prices for both imports and exports increased during February. The Bureau of Labor Statistics reports that import prices grew 0.2% during the month, following gains of 0.6% and 0.4% during January and last December. The increase occurred despite a 0.7% decline in the price of imported fuels (prices for imported petroleum and natural gas fell 0.7% and 1.3%, respectively. Nonfuel import prices grew at their fastest rate since last May with a 0.3% gain, pulled up by rising prices for nonfuel industrial supplies/materials, consumer goods, and foods/feeds/beverages. Import prices have risen 4.6% over the past year while the 12-month comparable for nonfuel imports was up a much more modest 0.5%. Meanwhile, export prices grew 0.3% during the month and have risen 3.1% since February 2016. Rising during the month were prices for agricultural exports (+1.4%, including a 24.3% surge in vegetable export prices), nonagricultural industrial supplies, and capital goods.

Other U.S. economic data released over the past week:
Jobless Claims (week ending March 4, 2017, First-Time Claims, seasonally adjusted): 243,000 (+20,000 vs. previous week; -10,000 vs. the same week a year earlier). 4-week moving average: 236,500 (-9.0% vs. the same week a year earlier).
Consumer Credit (January 2017, Outstanding Non-Real Estate Backed Consumer Loan Balances, Seasonally Adjusted): $3.774 trillion (+$8.8 billion vs. December 2016, +6.3% vs. January 2016)
Monthly Treasury Statement(February 2017, Federal Government Budget Surplus/Deficit): -$192.0 billion (vs. January 2017: +$51.3 billion, February 2016: -$192.6 billion).
Wholesale Trade (January 2017, Wholesale Inventories, seasonally adjusted): $600.0 billion (-0.2% vs. December 2016, +2.2% vs. January 2016).

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