The Bureau of Labor Statistics said that nonfarm job openings increased from 5,785,000 in March to 6,044,000 in April, a new all-time high. This continued an upward trend that began after job postings fell to 5,491,000 in August. In this release, construction, educational services, government, financial activities, leisure and hospitality and wholesale trade all saw increased openings for the month. Yet, net hiring in the overall economy slowed, down from 106,000 in March to 78,000 in April. Read More
The Census Bureau said that new factory orders edged down 0.2 percent in April, pulling back slightly from March’s fastest pace since November 2014. Much of that decline stemmed largely from a decrease in nondefense aircraft orders, down 9.1 percent, which can often be quite volatile from month-to-month. Excluding transportation, manufactured goods orders were up 0.2 percent. Durable goods orders fell by 0.8 percent, or off by 0.5 percent with transportation equipment excluded. In contrast, nondurable goods orders were up by 0.4 percent. Nonetheless, new factory orders – which have struggled mightily over the past couple years – have largely trended in the right direction more recently, up 3.8 percent since April 2016. Excluding transportation, the gains were slightly larger, up 6.0 percent year-over-year. Read More
The Bureau of Labor Statistics reported that manufacturing labor productivity rose by 0.5 percent in the first quarter of 2017, slightly better than the 0.4 percent gain seen in an earlier estimate. It was the second straight quarterly increase in productivity in the sector, with fourth quarter activity rebounding from declines in each of the two prior quarters. In this release, manufacturing output rose by 2.6 percent, its fastest quarterly rate since the second quarter of 2014. Unit labor costs were up 2.4 percent. There were large sectoral differences in the data, with labor productivity for durable goods firms down 0.7 percent in the first quarter but up 2.7 percent for nondurable goods manufacturers. As a result, unit labor costs were up 2.4 percent and 2.1 percent for durable and nondurable goods businesses in the quarter, respectively.
Overall, these data continue a trend of lethargic manufacturing productivity growth since the Great Recession, which rose just 0.2 percent in 2016. For instance, manufacturing output per worker was essentially stagnant from 2013 to 2016, down 0.05 percent per year on average, well below the 5.2 percent pace experienced from 2002 to 2008. Over the longer term, manufacturers have benefited from being leaner, but the recent sluggishness in productivity and output growth has meant that unit labor costs have risen 11.4 percent since the end of 2011. Read More
The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit rose from $45.28 billion in March to $47.62 billion in April, a three-month high. The trade deficit has trended higher so far in 2017, averaging $46.65 billion per month year-to-date relative to $42.07 billion for 2016 as a whole. In April, the increased trade deficit was the result of reduced goods exports (down from $127.48 billion to $126.94 billion) and a pickup in goods imports (up from $193.54 billion to $195.32 billion). Interestingly, the petroleum trade deficit fell from $8.43 billion to $5.43 billion, its lowest level since September. Therefore, the uptick in April’s trade deficit primarily came from the non-petroleum deficit, which grew from $56.50 billion to $61.71 billion, a level not seen since March 2015. Meanwhile, the service sector surplus edged slightly lower, down from $20.78 billion to $20.77 billion. Read More
According to the latest data from the Bureau of Labor Statistics, job growth in May was disappointing. The U.S. economy added just 138,000 net new workers in May, below the consensus estimate of 185,000 and even further from the 253,000 estimate provided by ADP yesterday. In addition, there were downward revisions to the March and April data, subtracting a total of 66,000 from those months in job gains. There were fewer Americans employed overall, down from 153.2 million in April to 152.9, a three-month low. As a result, the participation rate dropped from 62.9 percent to 62.7 percent, its lowest level since June 2016. With that in mind, we saw the unemployment rate fall once again, down from 4.4 percent to 4.3 percent, a 10-year low. Likewise, the so-called “real” unemployment rate declined from 8.6 percent to 8.4 percent, a level not seen since November 2007.
Meanwhile, manufacturers were hoping to have a sixth straight month of job gains, much as we saw in the ADP data. Instead, manufacturing employment was off by 1,000 workers in May. On the positive side, revisions to March and April data added another 3,000 employees to what was previously estimated. Overall, manufacturing employment has averaged 12,167 per month since December, which stands in sharp contrast to the loss of 16,000 workers on net seen in 2016 as a whole. As such, even with the slight decline in May employment for the sector, the general trend for manufacturing employment over the past six months has been favorable. We have seen higher expectations for job growth of late in light of a stronger outlook for demand and production. Read More
The Census Bureau said that private manufacturing construction spending pulled back once again in April, down 1.9 percent. The value of construction put in place in the sector declined from $69.19 billion in March to $67.84 billion in April, its slowest pace since October 2014. (December 2016’s $67.87 billion was not far off from that threshold.) To further illustrate the recent deceleration in activity, construction spending in the sector has averaged just $68.40 billion over the past five months (December to April), down from $75.51 billion in the prior five months (July to November). While manufacturing construction has trended mostly higher over the past few years, activity has moved lower since achieving the all-time high of $82.15 billion in September 2015. Nonetheless, we would expect a turnaround in construction activity in the coming months, especially in light of the improved outlook of late. Read More
The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers’ Index reported that growth in activity remained essentially the same in May. The composite index edged marginally higher, up from 54.8 in April to 54.9 in May. On the reassuring front, it was the ninth consecutive monthly expansion in manufacturing activity in the United States, with the sector showing signs of progress after two years of notable challenges. The sample comments tend to echo those improvements, citing better economic conditions, a favorable outlook and increased difficulties in finding labor. At the same time, the headline index has drifted lower since February (57.7), and respondents continue to note some lingering headwinds and increased pricing pressures. The ISM report mostly mirrors other sentiment surveys, which have observed some pullbacks from multiyear highs post-election, even as they remain mostly encouraging. Read More
ADP reported that manufacturing employment rose by 8,000 in May, increasing for the sixth straight month. From December through May, the sector added 114,000 net new workers. This was yet another sign that we have turned a corner in the labor market, with employers accelerating their hiring in light of stronger activity and sentiment. In contrast, hiring in 2016 was flat for the year as a whole. We are hopeful the trend of stronger job growth is one that continues in the coming months.
Meanwhile, total private employment increased by 253,000 in May, well above the consensus estimate of around 185,000 and a nice jump from the 174,000 gain in April. Year to date, nonfarm private payrolls have risen by 239,696 per month on average, which is significantly higher than the 180,892 workers added each month in 2016 as a whole. Read More
The Dallas Federal Reserve Bank reported that manufacturing activity accelerated in May for the eighth straight month, picking up somewhat from April’s pace. The composite index of general business activity edged up from 16.8 in April to 17.2 in May. The headline number has averaged 19.2 over the past six reports, which would indicate significant progress from contracting conditions as recently as September. The recent gains in business confidence can be attributed largely to better energy commodity prices, improvements in the global economy and a post-election boost in optimism. Nonetheless, the sample comments also suggest challenges with identifying qualified workers and with increased pricing pressures. Read More
The Bureau of Economic Analysis said that personal spending rebounded modestly in April after declining slightly in March. Personal consumption expenditures (PCEs) increased 0.2 percent in April, essentially offsetting the decline of 0.2 percent in March. We have seen spending pull back from more robust growth at the end of 2016, but this report suggests Americans have begun to open their pocketbooks once more, albeit still cautiously. Stronger sales of motor vehicles and parts, which rose for the first time since December, buoyed the rebound in spending. The year-over-year data indicate decent growth overall in consumer demand, with personal spending up 4.3 percent since April 2016. That was down from 5.0 percent in the prior release but up from 3.8 percent one year ago.
For its part, the saving rate was unchanged at 5.3 percent. It mirrors the trends described above, with the saving rate rising from 4.5 percent in December due to a more hesitant consumer. Still, the saving rate has fallen from 5.9 percent one year ago, a sign that Americans have picked up their purchases in general over the past 12 months. Read More