Tag: Trade deficit

Job creation mellowed a bit in November while the trade deficit widened again in October. Here are the five things we learned from U.S. economic data released during the week ending December 7.

Job creation slowed in November, but wage growth held firm. The Bureau of Labor Statistics estimates nonfarm employers added a seasonally adjusted 155,000 workers during the month, down from the 237,000 added in October and below the 211,000 average of the past 12 months. The private sector added 161,000 workers during the month while government employment contracted by 6,000. Industries expanding their payrolls the most include health care/social assistance (+40,100), professional/business services (+32,000), manufacturing (+27,000), transportation/warehousing (+25,400), retail (+18,200), and leisure/hospitality (+15,000). Average hourly wages have grown 3.1 percent over the past year to $27.35 with average weekly earnings increased a more modest 2.8 percent because the average workweek slipped by 1/10^th of an hour to 34.4 hours.

Based on a separate survey of households, the unemployment rate held steady at its post-recession low of 3.7 percent. 133,000 people entered the labor force during the month, but the labor force participation rate remained at 62.9 percent. The labor force participation rate for adults aged 25 to 54 edged down by 1/10^th of a percentage point to 82.4 percent. While just off its post-recession high, this measure remained its peak during the previous business cycle (October 2000: 83.4 percent). The median length of unemployment dropped by a half week to a post-recession low of 8.9 weeks while the count of part-time workers seeking a full-time job (“involuntary part-time workers”) grew by 181,000 to 4.802 million.  The broadest measure of labor underutilization by the BLS (the U-6 series) inched up 2/10^ths of a percentage point to 7.6 percent.

The U.S. trade deficit widened once again in October. The Census Bureau and Bureau of Economic Analysis report that exports slowed $0.3 billion during the month to a seasonally adjusted $211.0 billion (+6.3 percent versus a year earlier) while imports grew by $0.6 billion to $266.5 billion (+8.5 percent versus a year earlier). As a result, the U.S. goods and services deficit expanded by $0.9 billion to -$54.6 billion. The deficit was 18.1 percent larger than that of the year earlier and was its largest reading since October 2008. The goods deficit expanded by $0.9 billion to -$78.1 billion while the surplus on services shrank a modest $0.1 billion to +$22.6 billion. The former was hurt by a decline in exports of soybeans and civilian aircraft/engines and increased imports of pharmaceutical preparations and automotive vehicles/engines. The U.S. had its biggest trade deficits in goods with China (-$38.2 billion), the European Union (-$15.1 billion), and Mexico (-$6.4 billion).

October factory orders were soft. The Census Bureau indicates new orders for manufactured goods dropped by $10.5 billion during the month to a seasonally adjusted $502.7 billion. New orders for transportation goods fell 12.0 percent, pulled down by massive declines in orders for defense (-59.3 percent) and civilian (-22.2 percent) aircraft (both of which tend to be volatile month-to-month). Net of transportation goods, new orders increased 0.3 percent. Durable goods orders slumped 4.3 percent while nondurable orders gained 0.3 percent. Unchanged were orders for civilian capital goods net of aircraft (a proxy of business investment). Shipments slipped 0.1 percent to $508.4 billion, its first drop after 15 consecutive monthly increases, with unfilled orders also contracting by 0.1 percent to $1.184 trillion. Inventories expanded for the 24^th straight month with a $0.9 billion gain to $681.7 billion.

Purchasing managers say business activity accelerated in November. The headline index from the Institute for Supply Management’s Manufacturing Report on Business, the PMI, added 1.6 points during the month to a seasonally adjusted 59.3. This was the PMI’s 27^th consecutive month above a reading of 50.0, indicative of an expanding manufacturing sector. Four of five PMI components improved from their October readings: new orders (up 4.7 points), inventories (up 2.2 points), employment (1.6 points) and production (up 7/10^ths of a point). The measure tracking supplier deliveries lost 1.3 points. Thirteen of 18 tracked manufacturing industries reported growth during the month, led by computers/electronics, plastics/rubber product, and paper products. Survey respondents’ comments stated that “[d]emand remains strong” but noted many detrimental impacts of tariffs (both current and pending).

The NMI, the headline index from ISM’s Non-Manufacturing Report on Business, has been above a reading of 50.0 for 106 straight months. In November, the NMI edged up by 4/10^ths of a point to 60.7. Only two of the NMI’s four components improved during the month:  business activity/production (up 2.7 points) and new orders (up a full point). Slipping were components tracking employment (off 1.3 points) and supplier deliveries (down a full point). Seventeen of 18 tracked nonmanufacturing industries expanded during the month, led by education services, professional/scientific/technical services, and health care/social assistance. The press release stated that survey respondents “remain positive about current business conditions and the direction of the economy.”

Construction spending sputtered again in October. The Census Bureau estimates the value of construction put in place edged down 0.1 percent during the month to a seasonally adjusted annualized rate (SAAR) of $1.309 trillion, its third monthly decline. Construction spending has grown 4.9 percent over the past 12 months. Private sector spending decreased 0.4 percent to $998.7 billion (SAAR), up 3.9 percent from October 2017. Residential private sector spending dropped 0.5 percent while the nonresidential private sector measure shrank more slowly (-0.3 percent). Public sector construction gained 0.8 percent to an annualized $304.2 billion, up 8.8 percent from a year earlier.

Other U.S. economic data released over the past week:
– Jobless Claims (week ending December 1, 2018, First-Time Claims, seasonally adjusted): 231,000 (-3,000 vs. previous week; -4,000 vs. the same week a year earlier). 4-week moving average: 228,000 (-5.3% vs. the same week a year earlier).
– University of Michigan Surveys of Consumers (December 2018-preliminary, Index of Consumer Sentiment, seasonally adjusted): 97.5 (vs. November 2018: 97.5; vs. December 2017: 95.9).
– Productivity (2018 Q3-revision, Nonfarm Labor Productivity, seasonally adjusted annual rate): +2.3% vs. 2018 Q2, +1.3% vs. 2017 Q3.
– Beige Book

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

The unemployment rate dropped to a multi-decade low while the trade deficit widened to a six-month high. Here are the five things we learned from U.S. economic data released during the week ending October 5.  

The unemployment rate fell to a 49-year low during September. The Bureau of Labor Statistics reports that nonfarm payrolls grew by a seasonally adjusted 134,000 during the month, below the 165,000 and 270,000 jobs created during July and August. Some of the slowdown in job creation can be linked to the effects of Hurricane Florence, which weighed on the retail (-20,000 jobs) and leisure/hospitality (-17,000) sectors. Private sector employers added 121,000 jobs during September, less than half of the 254,000 private sector jobs added in August. Industries adding the most workers during September were professional/business services (+54,000), health care/social assistance (+29,800), transportation/warehousing (+23,800), and construction (+18,000). The average number of hours worked remained at 34.5 hours (September 2017: 34.3 hours) while average weekly earnings increased by $2.76 to $939.78 (+3.4 percent versus September 2017).

Based on a separate survey of households, the unemployment rate dropped to its lowest reading since December 1969 at 3.7 percent. This was down 2/10^ths of a percentage point from August and a half percentage point from the same month a year earlier. 150,000 people entered the labor force during the month, but the labor force participation rate remained at 62.7 percent (September 2017: 63.0). The labor force participation rate for adults aged 25 to 54 shed 2/10^ths of a percentage point to 81.8 percent, matching its year-ago reading. The median length of unemployment was 9.2 weeks, off 9/10^ths of a week from September 2017 while the number of part-time workers seeking a full-time position has fallen 9.8 percent over the past year to 4.642 million people. Finally, the broadest measure of labor underutilization (the U-6 series) came in at 7.5 percent, just above its post-recession low (September 2017: 8.3 percent).

The trade deficit grew to a six-month high in August. Export activity slowed $1.7 billion during the month to a seasonally adjusted $209.4 billion (+7.1 percent versus August 2017) while imports grew by $1.5 billion to $262.7 billion (+9.6 percent versus August 2017), per the Census Bureau and the Bureau of Economic Analysis. The resulting trade deficit of -$52.2 billion represented a $3.2 billion increase for the month, a 20.5 percent jump from the same month a year earlier, and the largest trade deficit since February. The goods deficit blossomed by $3.6 billion to -$76.7 billion (+17.2 percent versus 2017) while the service surplus widened by $0.4 billion to +$23.5 billion (+10.2 percent versus August 2017). The former was hurt by declining exports of crude oil/petroleum products and soybeans and increased imports of automotive vehicles and cell phones. The U.S. had its largest goods deficits with China (-$34.4 billion), the European Union (-$14.9 billion), and Mexico (-$8.7 billion).

Aircraft orders fueled factory orders in August, but core capital orders struggled. The Census Bureau reports that new orders for manufactured goods jumped 2.3 percent during the month after falling 0.5 percent in July. The seasonally adjusted $510.5 billion estimate for new orders represented a robust 10.0 percent increase over the past year. As noted with the previous week’s durable goods report, much of the rise was the product of the 69.0 percent surge in civilian aircraft orders and the 17.0 percent bounce in orders for defense aircraft. Net of transportation goods, factory orders managed a mere 0.1 percent increase. Durable goods orders rose 4.4 percent to $259.6 billion while orders for nondurables gained 0.2 percent to $250.9 billion. Civilian capital goods orders net of aircraft—a proxy of business investment—slumped 0.9 percent. Shipments grew 0.5 percent during the month to $504.0 billion (+7.8 percent versus August 2017), with the gain shrinking to a 0.2 percent increase after removing transportation goods. Shipments of core capital goods contracted 0.2 percent during August.

Purchasing managers report business activity largely held firm in September. The PMI, the headline index from the Institute for Supply Management’s Manufacturing Report on Business, slid by 1.5 points to a reading of 59.8. Even with the decline, this was the 25^th consecutive month in which the measure was above a reading of 50.0, indicative of an expanding manufacturing sector. Only two of the five PMI components improved during the month:  production (+0.6) and employment (+0.3). Dropping were PMI components linked to supplier deliveries (-3.4), new orders (-3.3), and inventories (-2.1). Fifteen of 18 manufacturing industries expanded during September, led by textile mills, “miscellaneous” manufacturing, and plastics/rubber products. The press release noted that survey respondents remained “overwhelmingly concerned about tariff-related activity.”

The NMI, the headline index from the Nonmanufacturing Report on Business, jumped by 3.1 points to a reading of 61.6. This was the measure’s 104^th straight month with a reading above 50.0. All four NMI components jumped during the month: employment (+5.7), business activity/production (+4.5), new orders (+1.2), and supplier deliveries (+1.0). Seventeen of 18 tracked nonmanufacturing industries grew during September, led by mining, real estate, and wholesale trade. The press release noted the survey respondents were “positive” about current market conditions but were concerned about “capacity, logistics and the uncertainty with global trade.”

Construction spending inched up in August. The Census Bureau estimates the value of construction put in place grew 0.1 percent during the month to a seasonally adjusted annualized rate of $1.319 trillion. This was 6.5 percent ahead of August 2017’s annualized rate. Private sector construction spending slowed 0.5 percent to $1.007 billion (+4.4 percent versus August 2017). Dropping during the month were expenditures on both private sector residential (-0.7 percent) and nonresidential (-0.2 percent) spending. Public sector spending rose 2.0 percent during August to an annualized $316.7 billion. Public sector construction spending has surged 14.0 percent over the past 12 months.

Other U.S. economic data released over the past week:
– Jobless Claims (week ending September 29, 2018, First-Time Claims, seasonally adjusted): 207,000 (-8,000 vs. previous week; -47,000 vs. the same week a year earlier). 4-week moving average: 207,000 (-24.9% vs. the same week a year earlier).
– Consumer Credit (August 2018, Outstanding Non-Real Estate Backed Consumer Credit, seasonally adjusted): $3.935 trillion (+$20.1 billion vs. July 2018, +4.7% vs. August 2017).

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