Sunday, March 10, 2019

February’s jobs report; December’s trade deficit, construction spending, and new home sales; January’s home construction, et al

This week's big report was the Friday release of Employment Situation Summary for February from the Bureau of Labor Statistics, but it was preceded by several reports which had been delayed because of or in the aftermath of the government shutdown...those included the Commerce Dept report on our International Trade for December, the December report on Construction Spending, the December report on new home sales, and the January report on New Residential Construction, all from the Census Bureau....in addition to those, the Fed released the Consumer Credit Report for January, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $14.5 billion, or at a 5.1% annual rate, as non-revolving credit expanded at a 5.6% annual rate to $2,976.9 billion and revolving credit outstanding expanded at a 2.9% rate to $1,058.0 billion..

The week’s privately issued reports included the ADP Employment Report for February; the light vehicle sales report for February from Wards Automotive, which estimated that vehicles sold at a 16.53 annual rate in February, down from the 16.60 million annual sales rate in January, and down from the 16.96 million annual sales rate in February a year ago; and the Mortgage Monitor for January (pdf) Black Knight Financial Services….the latter indicated that 3.75% of US mortgages were delinquent in January, down from 3.88% in December and down from 4.31% in January a year ago, and that 0.51% of all mortgages were in the foreclosure process at the end of the month, down from 0.52% of mortgages in December and down from the 0.66% of mortgages that were in foreclosure in January a year ago...in addition, the Institute for Supply Management (ISM) released the February Non-Manufacturing Report On Business, which saw the NMI (non-manufacturing index) rise to 59.7%, up from 56.7% in January, indicating a larger plurality of service industry purchasing managers reported expansion in various facets of their business in February...

Employers Add 20,000 Jobs in February, Unemployment Rate Falls 0.2% to 3.8%

The Employment Situation Summary for February reported the smallest payroll job increase in 17 months, largely due to unseasonable weather during the reference weeks of both January and February, while the unemployment rate fell 0.2%, reflecting the return of temporarily unemployed government employees…estimates extrapolated from the seasonally adjusted establishment survey projected that employers added 20,000 jobs in February, after the previously estimated payroll job increase for January was revised up from 304,000 to 311,000 and the payroll jobs increase for December was revised from 222,000 up to 227,000…hence, job gains have now averaged 186,000 per month over the past 3 months, somewhat less than the 2018 average of 223,000 jobs per month, but still more than the growth rate of the working age population...the unadjusted data shows that there were actually 827,000 more payroll jobs extant in February than in January, as large seasonal job increases in sectors such as professional & business services, leisure and hospitality and public and private education were smoothed over by the seasonal adjustments…

Seasonally adjusted job increases in February were concentrated in the non-seasonal service sector, as seasonal jobs took a hit when compared to their adjusted increases in January...the broad professional and business services sector added 42,000 jobs, with increases of 5,800 jobs in both architectural and engineering services and in temporary help services...employment in health care and social assistance rose by 22,500, led by the addition of 4,900 jobs in outpatient care centers and 4,200 jobs in hospitals...in addition, wholesale trade saw an increase of 10,900 jobs, with 7,700 of those in wholesale durable goods...the major seasonally adjusted job decrease was seen in construction, which shed 31,000 employees, 13,200 of which had been employed in heavy and civil engineering construction..meanwhile, employment in other major sectors, including resource extraction, manufacturing, retail, transportation and warehousing, information, financial activities, leisure and hospitality, and government, all saw job gains or losses of less than 10,000 over the month....

The establishment survey also showed that average hourly pay for all employees rose by 11 cents an hour to $27.66 an hour in February, after it had increased by 2 cents an hour in January, revised from the 3 cent increase reported last month; at the same time, the average hourly earnings of production and non-supervisory employees increased by 8 cents an hour to $23.18 an hour...employers also reported that the average workweek for all private payroll employees decreased by a tenth of an hour to 34.4 hours in February, while hours for production and non-supervisory personnel decreased by 0.2 hour to 33.6 hours...in addition, the manufacturing workweek also decreased by 0.1 hour to 40.7 hours, while average factory overtime was unchanged at 3.5 hours...

Reflecting a reverse of the effects of the government shutdown, the February household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 255,000 to 156,949,000, while the similarly estimated number of those unemployed fell by 300,000 to 6,706,000; which together meant there was a 45,000 decrease in the total labor force...since the working age population had grown by 153,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by 198,000 to 95,208,000...meanwhile, with the decrease of those in the labor force statistically insignificant compared to the civilian noninstitutional population, the labor force participation rate remained unchanged at 62.3%...similarly, the increase in number employed as a percentage of the increase in the population was also not great enough to change the employment to population ratio, which we could think of as an employment rate, as it remained at 60.7%...however, the decrease in the number unemployed was large enough reduce the unemployment rate from 4.0% in January to 3.8% in February....also reflecting the reversal of the government shutdown, the number who reported they were involuntarily working part time fell by 837,000 to 4,310,000 in February, which cut the alternative measure of unemployment, U-6, which includes those "employed part time for economic reasons", from 8.1% in January to 7.3% in February, the lowest since January 2001....

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 access  the data while avoiding the need to scroll up and down the page..  

December Trade Deficit Up 18.8% on a Record Deficit in Trade in Goods

Our trade deficit jumped 18.8% to a 10 year high in December as the value of our exports decreased while the value of our imports increased....the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit rose by $9.5 billion to $59.8 billion in December from a revised November deficit of $50.3 billion....the value of our December exports fell by a rounded $3.9 billion to $205.1 billion on a $3.9 billion decrease to $135.6 billion in our exports of goods and a decrease of less than $0.1 billion to $69.5 billion in our exports of services, while the value of our imports rose by a rounded $5.5 billion to $264.9 billion on a $5.1 billion increase to $217.2 billion in our imports of goods, and a $0.5 billion increase to $47.7 billion in our imports of services...the November trade deficit was revised from the originally reported $49.3 billion to $50.3 billion, while the seasonally adjusted goods data for every prior month of 2018 were revised as well, meaning that previously published quarter over quarter figures for GDP should be revised as well...export prices were on average 0.6% lower in December, so the real change in our December exports would be greater than the nominal value of them by that percentage, while import prices averaged 1.0% lower, meaning real imports were greater than the nominal dollar values reported here by that percentage...

The $3.9 billion decrease in our December exports of goods was largely due to lower exports of industrial supplies and materials and of capital goods... referencing the Full Release and Tables for November (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials fell by $2,117 million to $43,793 million on a $889 million decrease in our exports of petroleum products other than fuel oil, a $476 million decrease in our exports of crude oil, and a $393 million decrease in our exports of fuel oil, and that our exports of capital goods fell by $1,672 million to $46,703 million on a $997 million decrease in our exports of civilian aircraft, a $250 million decrease in our exports of computer accessories, a $239 million decrease in our exports of telecom equipment, a $209 million decrease in our exports of excavating equipment, and a $208 million decrease in our exports of electric apparatuses...in addition, our exports of foods, feeds and beverages fell by $152 million to $9,600 million on a $205 million decrease in our exports of corn, and our exports of automotive vehicles, parts, and engines fell by $13 million to $12,314 million as higher exports of parts offset lower exports of assembled autos....slightly offsetting the decreases in those export categories, our exports of consumer goods rose by $114 million to $17,094 million on a $650 million increase in our exports of pharmaceutical preparations, and our exports of other goods not categorized by end use rose by $96 million to $5,659 million..

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows our imports of all major end use categories increased in December, led by greater imports of capital goods and consumer goods...our imports of capital goods rose by $2,742 million to $60,006 million on a $720 million increase in our imports of computer accessories, a $661 million increase in our imports of computers, a $422 million increase in our imports of civilian aircraft, a $271 million increase in our imports of semiconductors and a $229 million increase in our imports of generators, while our imports of consumer goods rose by $2,375 million to $55,517 million on a $693 million increase in our imports of household appliances, a $579 million increase in our imports of cellphones, a $434 million increase in our imports of furniture, a $306 million increase in our imports of cotton goods, a $296 million increase in our imports of televisions and video equipment and a $252 million increase in our imports of apparel and textiles other than those of cotton or wool, which were partially offset by a $378 million decrease in our imports of pharmaceutical preparations....in addition, our imports of foods, feeds, and beverages rose by $433 million to $12,583 million on increases in imports of several food items, our imports of industrial supplies and materials rose by $27 million to $46,124 million as a $1940 million decrease in our imports of crude oil was offset by a $619 million increase in our imports of petroleum products other than fuel oil, a $267 million increase in our imports of chemical fertilizers, and smaller import increases in our imports of several other industrial materials, and our imports of automotive vehicles, parts and engines rose by $25 million to $32,133 million as greater imports of tires, parts and accessories offset a $393 million decrease in our imports of trucks, buses, and special purpose vehicles...only slightly offsetting increases in those import categories, our imports of other goods not categorized by end use fell by $374 million to $9,187 million....

The full release also gives us details on our balance of trade with selected regions and countries: The December figures show surpluses, in billions of dollars, with South and Central America ($3.5), Hong Kong ($2.2), Brazil ($0.8), United Kingdom ($0.6), and Singapore ($0.4). Deficits were recorded, in billions of dollars, with China ($38.7), European Union ($15.8), Mexico ($8.8), Germany ($5.7), Japan ($5.5), Italy ($3.0), South Korea ($1.7), Taiwan ($1.6), France ($1.5), India ($1.4), OPEC ($1.3), Saudi Arabia ($1.2), and Canada ($0.7).

  • • The deficit with China increased $3.2 billion to $38.7 billion in December. Exports increased $0.4 billion to $7.7 billion and imports increased $3.6 billion to $46.4 billion.
  • • The deficit with Mexico increased $2.1 billion to $8.8 billion in December. Exports decreased $1.3 billion to $21.1 billion and imports increased $0.8 billion to $29.9 billion.
  • • The deficit with India decreased $0.4 billion to $1.4 billion in December. Exports increased $0.6 billion to $3.3 billion and imports increased $0.3 billion to $4.7 billion.

In the initial estimate of 4th quarter GDP published last week, our December 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 seasonally adjusted December goods trade deficit was at $79,492 million on a Census basis, on goods exports of $135,718 million and goods imports of $215,211 million...this report revises that and shows that our actual Census basis goods trade deficit in December was at $80,387 million, on adjusted goods imports of $215,550 million and adjusted goods exports of $135,163 million...at the same time, the November goods trade deficit was revised up from 70,478 million indicated in that advance report by nearly $1 billion to $71,415 million, and the October goods trade deficit was revised up from $77,116 million to $77,718 million…those revisions from the previously published figures would suggest that the 4th quarter trade deficit in goods was roughly $2.434 billion more than was accounted for in last week's GDP report, or roughly $9.8 billion greater on an annualized basis, which would subtract about 0.19 percentage points from 4th quarter GDP when the 2nd estimate is released at the end of this month....

Note that trade in goods for July, August, September and October, which all go into figuring the change in 4th quarter GDP, were also revised with this report as well, and since our GDP growth is a measure of the change from one quarter to the next, one should also adjust for changes in those months as well to get an accurate 4th quarter read...however, the BEA will not revise 3rd quarter GDP figures until the annual revision this summer, so the 4th quarter GDP report that will be published at the end of March will not reflect the revised 3rd quarter trade figures included herein...moreover, since this month’s revisions are due to changes in the seasonal adjustments, the net trade deficit for the entirety of 2018 will not be affected...

Construction Spending Fell 0.6% in December after Prior Months Were Revised Higher

The Census Bureau's report on construction spending for December (pdf) estimated that the month's seasonally adjusted construction spending would work out to $1,292.7 billion annually if extrapolated over an entire year, which was 0.6 percent (±1.0 percent)* below the revised November estimate of a $1,300.6 billion rate annually, but still 1.6 percent (±1.2 percent) above the estimated annualized level of construction spending in December of last year...the annualized November construction spending estimate was revised fractionally higher, from $1,299.9 billion to $1,300.6 billion, and the annual rate of construction spending for October was also revised a bit higher, from $1,289.7 billion to $1,290.55 billion...for all of 2018, construction spending totaled $1,297.66 billion, 4.1 percent (±1.0 percent) above the $1,246.0 billion spent in 2017...

A further breakdown of the different subsets of construction spending are provided by a Census summary, which precedes the detailed spreadsheets:

  • Private Construction: Spending on private construction was at a seasonally adjusted annual rate of $991.2 billion, 0.6 percent (±0.7 percent)* below the revised November estimate of $997.1 billion. Residential construction was at a seasonally adjusted annual rate of $536.7 billion in December, 1.4 percent (±1.3 percent) below the revised November estimate of $544.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $454.5 billion in December, 0.4 percent (±0.7 percent)* above the revised November estimate of $452.9 billion. The value of private construction in 2018 was $995.6 billion, 3.4 percent (±1.2 percent) above the $962.8 billion spent in 2017. Residential construction in 2018 was $542.3 billion, 3.3 percent (±2.1 percent) above the 2017 figure of $524.9 billion and nonresidential construction was $453.4 billion, 3.5 percent (±1.2 percent) above the $437.8 billion in 2017.
  • Public Construction In December, the estimated seasonally adjusted annual rate of public construction spending was $301.5 billion, 0.6 percent (±1.6 percent)* below the revised November estimate of $303.5 billion. Educational construction was at a seasonally adjusted annual rate of $77.5 billion, nearly the same as (±1.5 percent)* the revised November estimate of $77.5 billion. Highway construction was at a seasonally adjusted annual rate of $89.1 billion, 0.9 percent (±4.3 percent)* below the revised November estimate of $89.9 billion.  The value of public construction in 2018 was $302.0 billion, 6.6 percent (±1.8 percent) above the $283.2 billion spent in 2017. Educational construction in 2018 was $73.6 billion, 3.8 percent (±3.5 percent) above the 2017 figure of $71.0 billion and highway construction was $92.6 billion, 4.2 percent (±3.9 percent) above the $88.9 billion in 2017.

Construction spending for December was lower than was reported by the BEA in their advance estimate of 4th quarter GDP last week, while October and November construction spending were revised $0.85 and $0.7 billion higher respectively...The BEA's key source data and assumptions accompanying last week's 4th quarter GDP report indicates that they had estimated that December's residential construction would decrease by an annualized $5.1 billion from previously published figures, that nonresidential construction would decrease by an annualized $1.2 billion from last month's report, and that December's public construction would increase by an annualized $1.5 billion from last month's report....totaling those changes, the BEA reported December construction spending $4.8 lower than previously reported November levels, which have now been revised $0.7 billion higher...since this report indicated that total construction spending for December was $7.9 billion lower than the revised November figure, that means the net of the annualized construction figures used for December in the GDP report was $2.4 billion too high...averaging the differences between the annual rates in this report and those used in the GDP report for the three months of the 4th quarter would mean that this report suggests that construction spending in the 4th quarter GDP report was overestimated by $0.3 billion (at an annual rate), implying a downward revision to GDP components at a rate that might result in a subtraction of 0.01 percentage point from 4th quarter GDP when the 2nd estimate is released at the end of March...

    December New Home Sales Reported Higher After Sales in Prior Months Revised Lower

    The Census report on New Residential Sales for December (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 621,000 homes annually during the month, which was 3.7 percent (±16.4 percent)* above the revised November annual rate of 599,000 new single family home sales, but was 2.4 percent (±21.3 percent)* below the estimated annual rate that new homes were selling at in December of last year....the asterisks indicate that based on their small sampling, Census could not be certain whether December new home sales rose or fell from those of November or even from those of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series....with this report; sales new single family homes in November were revised from the annual rate of 657,000 reported last month to an annual rate of 599,000, while home sales in October, initially reported at an annual rate of 544,000 and revised to 562,000 last month, were revised back to a 549,000 a year rate with this report, and while September's annualized home sale rate, initially reported at an annual rate of 553,000 and revised from the initially revised 597,000 a year rate to a 613,000 a year rate last month, were revised to a 609,000 rate with this release...

    The annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 44,000 new single family homes sold in December, up from the estimated 43,000 new homes that sold in both November and in October.....the raw numbers from Census field agents further estimated that the median sales price of new houses sold in December was $318,600, up from the median sale price of $303,500 in November but down from the median sales price of $343,300 in December a year ago, while the average December new home sales price was $377,000, up from the $357,600 average sales price in November, but down from the average sales price of $402,900 in December a year ago....a seasonally adjusted estimate of 344,000 new single family houses remained for sale at the end of December, which represents a 6.6 month supply at the December sales rate, down from the revised 6.7 months of new home supply in November...for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales increased to 621,000 Annual Rate in December and A few Comments on December New Home Sales...

    January Housing Starts Reported Higher after Prior Months Revised Lower

    The January report on New Residential Construction (pdf) from the Census Bureau estimated that their widely watched count of new housing units started in January was at a seasonally adjusted annual rate of 1,230,000, which was 18.6 percent (±26.6 percent)* above the revised December estimated annual rate of 1,037,000, but was 7.8 percent (±12.7 percent)* below last January's rate of 1,334,000 housing starts annually...however, the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell during the month or even over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, January housing starts could have been down by 8.0% or up by as much as 45.2% from those of December, with revisions of a greater magnitude in either direction possible...in this report, the annual rate for December housing starts was revised from the 1,078,000 reported last week to 1,037,000, while November starts, which were first reported at a 1,256,000 annual rate, were revised from last week's initial revised figure of 1,214,000 to 1,206,000 annually....

    The annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 82,600 housing units were started in January, up from the revised 68,400 units that were started in December, but down from the 91,200 units that were started in November...of those housing units started in January, an estimated 61,000 were single family homes and 20,400 were units in structures with more than 5 units, up from the revised 47,400 single family starts in December and up from the 19,700 units started in structures with more than 5 units in December...

    The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data...in January, Census estimated new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,345,000, which was 1.4 percent (±0.8 percent) above the revised December rate of 1,326,000 permits, but was 1.5 percent (±1.0 percent) below the 1,366,000 a year rate of building permit issuance in January a year earlier...the annual rate for housing permits issued in December was unrevised from the 1,326,000 reported last week....again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for roughly 96,900 housing units were issued in January, up from the revised estimate of 95,400 new permits issued in December....of those, 57,400 were permits for single family homes and 36,000 were permits for units in structures of more than 5 units, up from the 53,400 single family permits in December, but down from the 39,400 permits for units in structures of more than 5 units....for graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts Increased to 1.230 Million Annual Rate in January and Comments on January Housing Starts...

     

    (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 picked from the aforementioned GGO posts, contact me…)      

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