Sunday, May 7, 2017

April’s jobs report; March incomes and outlays, trade deficit, construction spending, and factory inventories

the major economic releases from the past week that we'll review today include the Employment Situation Summary for April from the Bureau of Labor Statistics, and four March reports that include metrics which were either estimated or included in last week's advance estimate of 1st quarter GDP:  the March report on Personal Income and Spending from the Bureau of Economic Analysis, the Commerce Dept report on our international trade in goods and services for March, and the March report on Construction Spending (pdf), and the Full Report on Manufacturers' Shipments, Inventories and Orders for March, both from the Census Bureau...in addition, the Consumer Credit Report for March was released by the Fed this week, and it showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $16.4 billion, or at a 5.2% annual rate, as non-revolving credit expanded at a 6.2% annual rate to $2,805.8 billion and revolving credit outstanding grew at a 2.4% rate to $999.8  billion...

privately issued reports released this week included the ADP Employment Report for April, the light vehicle sales report for April from Wards Automotive, which estimated that vehicles sold at a 16.81 annual rate in April, up from the 16.53 million rate in March, but down 3% from the 17.23 million annual rate in April a year ago, and the Mortgage Monitor for March (pdf) Black Knight Financial Services, which indicated that mortgage delinquencies fell 14.08% in March to their lowest rate in 11 years, while foreclosure starts rose 4.15% to 60,030, still 17.2% lower than a year ago....in addition, the week saw both of the widely followed purchasing manager's surveys from the Institute for Supply Management (ISM): the April Manufacturing Report On Business indicated that the manufacturing PMI (Purchasing Managers Index) fell to 54.8% in April, from 57.2% in March, which suggests a slower expansion in manufacturing firms nationally, and the April Non-Manufacturing Report On Business; which saw the NMI (non-manufacturing index) rise to 57.5% in April from 55.2% in March, indicating a larger plurality of service industry purchasing managers reported expansion in various facets of their business in April...both of those ISM reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally... 

Employers Add 211,000 Jobs in April, Unemployment Rate Drops to 4.4%

the Employment Situation Summary for April indicated a modest increase in payroll job growth, while the employment rate rose even as the participation rate dropped…seasonally adjusted estimates extrapolated from the establishment survey data projected that employers added 211,000 jobs in April, after the previously estimated payroll job increase for March was revised down from 98,000 to 79,000, while the payroll jobs increase for February was revised up from 219,000 to 232,000…that means that this report represents a total of 205,000 more seasonally adjusted payroll jobs than were reported last month, a bit above the past year's average of 186,000 jobs per month...the unadjusted data shows that there were actually 1,026,000 more payroll jobs extant in April than in March, as seasonal job increases in sectors such as construction, services to buildings and dwellings, and leisure and hospitality were normalized by the seasonal adjustments…

seasonally adjusted job increases in April were spread through throughout both the goods producing and the service sectors, with only the information sector losing 7,000 jobs on a seasonally adjusted basis, as telecommunications companies cut 5,300 employees....the leisure and hospitality sector added 55,000 jobs, with the addition of 26,200 spots in bars and restaurants....the broad professional and business services sector added 39,000 jobs, as 9,900 more than normal for this time of year were employed in services to buildings....employment in health care and social assistance rose by 36,800, with the addition of 17,100 jobs in individual and family services...meanwhile, 19,000 more were employed by financial services, with the addition of 14,000 jobs by insurance carriers...in addition, the other major sectors, including construction, manufacturing, mining, retail, wholesale trade, transportation and warehousing, utilities, education, and government, all also saw small increases in payroll employment over the month…

the establishment survey also showed that average hourly pay for all employees rose by 7 cents an hour to $26.19 an hour in April, after it had increased by a revised 2 cents an hour in March; at the same time, the average hourly earnings of production and non-supervisory employees increased by 6 cents to $21.96 an hour...employers also reported that the average workweek for all private payroll employees increased by 0.1 hour to 34.4 hours in April, after the March workweek was revised 0.1 hour lower, while hours for production and non-supervisory personnel rose to 33.7 hours after 8 months at 33.6 hours...in addition, the manufacturing workweek was up 0.1 hours at 40.7 hours, while average factory overtime decreased by 0.1 hours to 3.2 hours...

meanwhile, the April household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 156,000 to 153,156,000, while the similarly estimated number of those unemployed fell by 146,000 to 7,056,000; which should have meant a net 10,000 increase in the total labor force, but the BLS logged it as a 12,000 increase...since the working age population had grown by 174,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 162,000 to 94,375,000....with the increase of those in the labor force a bit smaller than the increase in the civilian noninstitutional population, it was enough to lower the labor force participation rate 0.1% to 62.9%....at the same time, the increase in number employed as a percentage of the increase in the population was great enough to lift the employment to population ratio, which we could think of as an employment rate, 0.1% to 60.2%...in addition, the decrease in the number unemployed was also large enough to lower the unemployment rate from 4.5% to 4.4%....meanwhile, the number who reported they were involuntarily working part time fell by 81,000 to 5,272,000 in April, which was also enough to lower the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", from 8.9% in March to 8.6% in April, the lowest since November 2007....

like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports from there...note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page.. 

March Personal Income Rose 0.2%, Personal Spending Little Changed, PCE Price index Down 0.2%

this week's Monday release of the March Income and Outlays report from the Bureau of Economic Analysis was actually concurrent with the release of the advance report on 1st quarter GDP on the prior Friday, and much of the data in this report has already been included in that report...and like that report, all the dollar values reported here are at an annual rate and seasonally adjusted, ie, they tell us what income, spending and saving would be for a year if March's adjusted income and spending were extrapolated over an entire year...however, the percentage changes are computed monthly, from one annualized figure to the next, and in this case of this month's report they give us the percentage change in each annualized metric from February to March....thus, when the opening line of the press release for this report tell us "Personal income increased $40.0 billion (0.2 percent) in March...", it means that the annualized figure for all types of personal income in March, $16,472.8 billion, was $40.0 billion, or more than 0.2% greater than the annualized personal income figure for February; the actual increase in personal income in March over February is not given....similarly, disposable personal income, which is income after taxes, also rose by more than 0.2%, from an annual rate of $14,393.5 billion in February to an annual rate of $14,428.5 billion in March...

meanwhile, seasonally adjusted personal consumption expenditures (PCE) for March, which were included in the change in real PCE in 1st quarter GDP that we reviewed last week, rose at a $5.7 billion annual rate to a level of $13,099.5 billion in consumer spending annually, less than a 0.1% increase from February, which itself was revised down from the originally reported annual rate of $13,106.0 billion to $13,093.7 billion...the current dollar increase in March spending included a $34.0 billion annualized increase in spending for services, offset by a $19.6 billion decrease in annualized spending for durable goods, and a $8.7 billion decrease in annualized spending for non durable goods...total personal outlays for March, which includes interest payments, and personal transfer payments in addition to PCE, rose by an annualized $4.9 billion to $13,579.3 billion, which left personal savings, which is disposable personal income less total outlays, at a $849.1 billion annual rate in March, up from the revised $819.0 billion in annualized personal savings in February...as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, rose to 5.9%, from 5.7% in February, which itself was originally reported at 5.6%..

while our personal consumption expenditures accounted for 68.8% of our first quarter GDP, before they were included in the measurement of the change in our output they were first adjusted for inflation, to give us the real change in consumption, and hence the real change in goods and services that were produced for that consumption.....that's done with the price index for personal consumption expenditures, which is also included in this report, which is a chained price index based on 2009 prices = 100....from Table 9 in the pdf for this report, we find that that index fell from 112.264 in February to 112.005 in March, giving us a negative month over month inflation rate of -0.2307%, which the BEA reports as a decrease of -0.2%….at the same time, Table 11 gives us a year over year PCE price index increase of 1.8%, and a core price increase, excluding food and energy, of 1.6% for the past year, both still below the Fed's inflation target....applying the March inflation adjustment to the change in March PCE shows that real PCE was up 0.2756%, which BEA reports as a 0.3% increase in their press release and in the tables...note that when those PCE price indexes are applied to a given month's annualized current dollar PCE, it yields that month's annualized real PCE in chained 2009 dollars, which aren't really dollar amounts at all, but merely the means that the BEA uses to compare one month's or one quarter's real goods and services produced to another....those results are shown in tables 7 and 8 of the PDF, where the quarterly figures given are identical to those shown in table 3 in the GDP report, and which were used to compute the contribution of real personal consumption of goods and services to GDP...

March Trade Deficit Little Changed as Lower Imports Offset Lower Exports

our trade deficit was slightly lower in March, after our February deficit was revised slightly higher...the Census report on our international trade in goods and services for March indicated that our seasonally adjusted goods and services trade deficit fell by $0.05 billion to $43.71 billion in March, from a February deficit that was revised from the originally reported $43.56 billion to $43.76 billion...the value of our March exports fell by $1.7 billion to $191.0 billion on a $2.1 billion decrease to $126.3 billion in our exports of goods and an increase of $0.4 billion to $64.7 billion in our exports of services, while our imports also fell $1.7 billion to $234.7 billion on a $1.7 billion decrease to $191.8 billion in our imports of goods and a less than $0.1 billion decrease to $42.9 billion in our imports of services...export prices averaged 0.2% higher in March, so the real growth in exports was less than the nominal dollar value by that percentage, while import prices were 0.2% lower, meaning real imports were greater than the nominal dollar values reported here by that percentage...

the decrease in our March exports of goods came about as a result of lower valued exports of industrial supplies and materials and of automotive goods, offset by an increase in our exports of capital goods...referencing the Full Release and Tables for March (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials fell by $1,779 million to $36,586 million on a $617 million decrease in our exports of fuel oil, a $595 million decrease in our exports of other petroleum products, a $253 million decrease in our exports of crude oil, and a $224 million decrease in our exports of natural gas....in addition, our exports of automotive vehicles, parts, and engines fell by $851 million to $12,959 million on $814 million lower exports of passenger cars, and our exports of consumer goods fell by $588 million to $16,553 million on a $695 million decrease in our exports of pharmaceuticals and a $418 decrease in our exports of gem diamonds....partially offsetting those decreases, our exports of capital goods rose by $696 million to $43,561 million on a $377 million increase in our exports of engines for civilian aircraft and a $364 million increase in our exports of telecommunications equipment, our exports of foods, feeds and beverages rose by $290 million to $10,809 million, and our exports of other goods not categorized by end use rose by $421 million to $5,356 million...

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that lower imports of all categories of goods other than passenger cars were responsible for the decrease in March imports...our imports of capital goods fell by $920 million to $50,311 million on a $326 million decrease in our imports of civilian aircraft and a $240 million decrease in our imports of computers....our imports of industrial supplies and materials fell by $709 million to $42,786 million, as our imports of crude oil fell by $590 million and our imports of other petroleum products fell by $436 million...in addition, our imports of consumer goods fell by $517 million to $48,478 million on a $307 million decrease in our imports of toys, games and sporting goods, our imports of foods, feeds, and beverages fell by $510 million to $11,001 million, and our imports of other goods not categorized by end use fell by $200 million to $7,194 million....partially offsetting those decreases, our imports of automotive vehicles, parts and engines rose by $1145 million to $30,283 million on a $1,108 million increase in our imports of new and used passenger cars...

in the advance report on 1st quarter GDP last week, our March trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP  release...that report estimated that our March goods trade deficit was at $64.8 billion on a Census adjusted basis, up 1.4% from February, on goods exports of $125.5 billion and goods imports of $190.3 billion...this report revises that and shows that our actual goods trade deficit in March on a Census basis was at $64.2 billion, on adjusted goods imports of $191.8 billion and adjusted goods exports of $125.8 billion...at the same time, the February goods trade deficit was revised higher from the advance figures by a bit more than $1.2 billion…those revisions from the previously published data mean that the 1st quarter trade deficit in goods was $0.6 billion more than was included in last week's GDP report, or roughly $2.5 billion on an annualized basis, which would subtract about 0.06 percentage points from 1st quarter GDP when the 2nd estimate is published at the end of May....

Construction Spending Fell 0.2% in March after Prior Months Were Revised Much Higher

the Census Bureau's report on construction spending for March (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,218.3 billion annually if extrapolated over an entire year, which was 0.2 percent (±2.1%)* below the revised annualized February estimate of  $1,220.7 billion, but 3.6 percent (±1.5 percent) above the estimated annualized level of construction spending in March of last year...the annualized February construction spending estimate was revised 2.3% higher, from $1,192.8 billion to $1,220.7 billion, while the annual rate of construction spending for January was revised 1.3% higher, from $1,183.84 billion to $1,198.78 billion...

private construction spending was at a seasonally adjusted annual rate of $940.2 billion in March, little changed (± 3.3 percent)* from the revised February estimate of $940.1 billion, which had been previously reported at $917.36 billion...residential spending was at a  $503.4 billion rate, up 1.2 percent (±1.3 percent)* from the revised annual rate of $497.4 billion in February, while private non-residential construction spending of $436.8 billion was 1.3 percent (± 3.3 percent)* below the revised February estimate of $442.6 billion....meanwhile, public construction spending was estimated to be at an annual rate of $278.1 billion in March, 0.9 percent (±2.0 percent)* below the revised February estimate of $280.7 billion, with construction spending for education down 2.0 percent (±2.6 percent)*  to an annual rate of $70.2 billion...

with the upward revisions, construction spending for all three months of the 1st quarter was higher than was reported by the BEA in their advance estimate of GDP last week....as we saw above, annualized construction spending for January was revised $14.94 billion higher, and annualized construction spending for February was revised $27.9 billion higher...in reporting 1st quarter GDP, the BEA's technical note (pdf) indicated that they had estimated March residential construction would be $0.9 billion more than that of the previously reported February figure, with single family construction valued at $258.2 billion and multifamily construction valued at $62.3 billion, and that March nonresidential construction would be valued at $433.2 billion, $0.5 billion more than that of the reported February figure...with this report, March residential construction spending at a $503.4 billion rate was up by $6.0 billion from the revised February figure, with new single family construction valued at $258,479 million annually and new multifamily construction at $66,080 million, while March nonresidential construction spending was at $436,785 billion, down $5.9 billion from the revised February figure...hence, total private construction spending in March was roughly $7.67 billion more, at an annual rate, than the figures used by the BEA to compute 4th quarter GDP...therefore, over the 3 months, the annualized figure for 1st quarter construction spending would have thus averaged $16.84 billion more than the figure used by the BEA when computing 1st quarter GDP, which would mean that this report implies a 0.41 percentage point upward revision to 1st quarter GDP, assuming there aren’t major revisions to prices...

March Factory Shipments Down 0.1%, Inventories Flat

the Full Report on Manufacturers' Shipments, Inventories, & Orders for March (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $0.8 billion or 0.2 percent to $478.2 billion, the eighth increase in nine months, following an increase of 1.2% in February, which was revised from the 1.0% increase reported last month....however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched "factory orders report", both the "new orders" and "unfilled orders" sections of this report are really only useful as a revised update to the March advance report on durable goods we reported on last week...this report now shows that new orders for manufactured durable goods rose by $2.1 billion or 0.9 percent to $239.4 billion in March, revised from the 0.7% increase to 238.7 billion figure that was published last week....

this report also indicated that the seasonally adjusted value of March factory shipments fell for the 1st time in 8 months, decreasing by $0.5 billion or 0.1 percent to $478.8 billion, following a 0.2% increase in February....shipments of durable goods were up $0.6 billion or 0.3 percent from February at $240.1 billion, revised from the 0.2% increase reported by the durables report last week...meanwhile, the value of shipments (and hence of "new orders") of non-durable goods were down by $1.3 billion or 0.5 percent to $238,746 million, after the value of February's shipments was revised from $240.5 billion to $240,050 million..

meanwhile, the aggregate value of March factory inventories fell for the first time in six months, decreasing by a statistically insignificant $0.1 billion to $629.7 billion, after a February increase of 0.2%...March inventories of durable goods increased $0.7 billion or 0.2 percent to $386.0 billion, revised up from the previously published 0.1 percent increase, following a 0.2 percent February increase.....the value of non-durable goods' inventories fell by $0.8 billion or 0.3 percent to $243.73 billion, following little change in February non-durable inventories...however, the BEA's technical note for 1st quarter GDP indicates that they had estimated that the value of non-durable goods inventories would increase at a seasonally adjusted annual rate of $18.1 billion in March, so after annualizing the actual decrease, that would indicate that they overestimated the 1st quarter GDP inventory component by about $28.1 billion on an annualized basis, which would seem to imply that 1st quarter GDP will have to be adjusted downwards by 0.67 percentage points to account for what this report shows..

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

No comments:

Post a Comment