by Calculated Risk on 6/03/2017 08:11:00 AM

This will be a light week for economic data.

On Thursday, the ECB meets and former FBI director James Comey is schedule to testify before the Senate intelligence committee.

----- Monday, June 5th -----
10:00 AM: the ISM non-Manufacturing Index for May. The consensus is for index to decrease to 57.0 from 57.5 in April.

10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

----- Tuesday, June 6th -----
10:00 AM: Job Openings and Labor Turnover Survey for April from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings increased in March to 5.743 million from 5.682 million in February.

The number of job openings (yellow) were down 2% year-over-year, and Quits were up 6% year-over-year.

----- Wednesday, June 7th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $17.0 billion increase in credit.

----- Thursday, June 8th -----
8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 241 thousand initial claims, down from 248 thousand the previous week.

10:00 AM: The Q1 Quarterly Services Report from the Census Bureau.

12:00 PM: Q1 Flow of Funds Accounts of the United States from the Federal Reserve.

----- Friday, June 9th -----
No major economic releases scheduled.

by Calculated Risk on 6/02/2017 05:32:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on June 2, 2017:

• A middling week for rig additions

• Total US oil rigs were up 11 to 733

• US horizontal oil rigs added 7 to 633

• Rig additions may still have been affected by logistics considerations associated with the Memorial Day weekend

Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.

by Calculated Risk on 6/02/2017 02:11:00 PM

Here is another update of tracking employment during Presidential terms.  We frequently use Presidential terms as time markers - we could use Speaker of the House, or any other marker.

NOTE: Several readers have asked if I could add a lag to these graphs (obviously a new President has zero impact on employment for the month they are elected). But that would open a debate on the proper length of the lag, so I'll just stick to the beginning of each term.

Important: There are many differences between these periods. Overall employment was smaller in the '80s, however the participation rate was increasing in the '80s (younger population and women joining the labor force), and the participation rate is generally declining now.  But these graphs give an overview of employment changes.

The first graph shows the change in private sector payroll jobs from when each president took office until the end of their term(s). Presidents Carter and George H.W. Bush only served one term.

Mr. G.W. Bush (red) took office following the bursting of the stock market bubble, and left during the bursting of the housing bubble. Mr. Obama (blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (yellow) took office.

There was a recession towards the end of President G.H.W. Bush (purple) term, and Mr Clinton (light blue) served for eight years without a recession.

Click on graph for larger image.

The first graph is for private employment only.

Mr. Trump is in Orange (just four months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 811,000 jobs at the end of his first term.   At the end of Mr. Bush's second term, private employment was collapsing, and there were net 396,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased slightly under President G.H.W. Bush (purple), with 1,510,000 private sector jobs added.

Private sector employment increased by 20,966,000 under President Clinton (light blue), by 14,717,000 under President Reagan (yellow), and 9,041,000 under President Carter (dashed green).

There were only 1,937,000 more private sector jobs at the end of Mr. Obama's first term.  At the end of his second term, there were 11,756,000 more private sector jobs than when Mr. Obama initially took office.

During the first four months of Mr. Trump's term, the economy has added 601,000 private sector jobs.

 A big difference between the presidencies has been public sector employment.  Note the bumps in public sector employment due to the decennial Census in 1980, 1990, 2000, and 2010. 

The public sector grew during Mr. Carter's term (up 1,304,000), during Mr. Reagan's terms (up 1,414,000), during Mr. G.H.W. Bush's term (up 1,127,000), during Mr. Clinton's terms (up 1,934,000), and during Mr. G.W. Bush's terms (up 1,744,000 jobs).

However the public sector declined significantly while Mr. Obama was in office (down 268,000 jobs).

During the first four months of Mr. Trump's term, the economy has lost 7,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over the next 4 years.

After four months of Mr. Trump's presidency, the economy has added 594,000 jobs, about 240,000 behind the projection.

by Calculated Risk on 6/02/2017 11:59:00 AM

From the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $47.6 billion in April, up $2.3 billion from $45.3 billion in March, revised. April exports were $191.0 billion, $0.5 billion less than March exports. April imports were $238.6 billion, $1.9 billion more than March imports.

Click on graph for larger image.

Imports increased and exports decreased in April.

Exports are 15% above the pre-recession peak and up 5% compared to April 2016; imports are 3% above the pre-recession peak, and up 8% compared to April 2016.

In general, trade has been picking up.

The second graph shows the U.S. trade deficit, with and without petroleum.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil imports averaged $45.40 in April, down from $46.26 in March, and up from $29.53 in April 2016.  The petroleum deficit had been declining for years - and is the major reason the overall deficit has mostly moved sideways since early 2012. 

The trade deficit with China increased to $27.6 billion in April, from $24.3 billion in April 2016.

by Calculated Risk on 6/02/2017 10:00:00 AM

The headline jobs number was below expectations, and there were combined downward revisions to the previous two months.   Is this is slowdown in hiring a short term issue, part of the normal business cycle, or due to a Trump Slump? My view is this slowdown in hiring is mostly part of the normal business cycle (my expectation was job growth would slow further this year).

There was still some good news - especially with the unemployment rate falling to 4.3% (lowest since 2001), and U-6 falling to 8.4% (lowest since 2007).  But overall this was a disappointing report.

Earlier: May Employment Report: 138,000 Jobs, 4.3% Unemployment Rate

In May, the year-over-year change was 2.26 million jobs. Still decent job growth.

Average Hourly Earnings

Click on graph for larger image.

This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation.

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.5% YoY in May.

Wage growth has generally been trending up.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in May. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of persons working part time for economic reasons decreased in May. The number working part time for economic reasons suggests a little slack still in the labor market. This is the lowest level since March 2008.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.4% in May. This is the lowest level for U-6 since November 2007.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.66 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 1.63 million in April.

This is generally trending down, but still a little elevated.

Although U-6, the number of persons employed part time for economic reasons, and the number of long term unemployed are still a little elevated, it appears the economy is nearing full employment. Overall this was a disappointing report.

by Calculated Risk on 6/02/2017 08:43:00 AM

From the BLS:

Total nonfarm payroll employment increased by 138,000 in May, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and mining.
...
The change in total nonfarm payroll employment for March was revised down from +79,000 to +50,000, and the change for April was revised down from +211,000 to +174,000. With these revisions, employment gains in March and April combined were 66,000 less than previously reported.
...
In May, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.22. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent.
emphasis added

Click on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).

Total payrolls increased by 138 thousand in May (private payrolls increased 147 thousand).

Payrolls for March and April were revised down by a combined 66 thousand.

This graph shows the year-over-year change in total non-farm employment since 1968.

In May, the year-over-year change was 2.23 million jobs.  This is a decent year-over-year gain.


The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate was decreased in May to 62.7%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio decreased to 60.0% (black line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate decreased in May to 4.3%.  This is the lowest unemployment rate since 2001.

This was below expectations of 185,000 jobs, and the previous two months were revised down.  A disappointing report.

I'll have much more later ...

by Calculated Risk on 6/01/2017 08:42:00 PM

Earlier:

My May Employment Preview

and Goldman: May Employment Preview

Friday:
• At 8:30 AM ET, Employment Report for May. The consensus is for an increase of 185,000 non-farm payroll jobs added in May, down from the 211,000 non-farm payroll jobs added in April. The consensus is for the unemployment rate to be unchanged at 4.4%.

• Also at 8:30 AM, Trade Balance report for April from the Census Bureau. The consensus is for the U.S. trade deficit to be at $46.1 billion in April from $43.7 billion in March.

by Calculated Risk on 6/01/2017 06:02:00 PM

A few excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate nonfarm payrolls increased by 170k in May ... somewhat below consensus of +180k. Our forecast reflects some softening in service sector employment surveys, a return to normal weather, and a modestly slower pace of hiring in May, reflecting labor supply constraints in an economy near full employment.

We estimate the unemployment rate remained stable at 4.4%, based on our expectation that household employment will hold on to its sharp year-to-date gains. Finally, we expect average hourly earnings to increase 0.2% month over month and 2.5% year-over-year in tomorrow’s report, reflecting the interaction of firming wage growth with unfavorable calendar effects.

CR Note: My employment preview is here.

by Calculated Risk on 6/01/2017 04:00:00 PM

Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 16.60 million SAAR in May.

That is down 3% from May 2016, and up 1% from last month.


Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for May (red, light vehicle sales of 16.60 million SAAR mostly from WardsAuto).

This was below the consensus forecast of 16.9 million for May.

After two consecutive years of record sales, it looks like sales will be down in 2017.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

by Calculated Risk on 6/01/2017 12:59:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for May. The consensus, according to Bloomberg, is for an increase of 185,000 non-farm payroll jobs in May (with a range of estimates between 140,000 to 231,000), and for the unemployment rate to be unchanged at 4.4%.

The BLS reported 211,000 jobs added in April.

Here is a summary of recent data:

• The ADP employment report showed an increase of 253,000 private sector payroll jobs in May. This was well above expectations of 170,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth above expectations.

• The ISM manufacturing employment index increased in May to 53.5%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll was unchanged in May. The ADP report indicated 8,000 manufacturing jobs added in May.

The ISM non-manufacturing employment index for May hasn't been released yet.

• Initial weekly unemployment claims averaged 238,000 in May, down from 243,000 in April. For the BLS reference week (includes the 12th of the month), initial claims were at 233,000, down from 243,000 during the reference week in April.

The decrease during the reference week suggests fewer layoffs during the reference week in May than in April. This suggests a somewhat stronger employment report in May than in April.

• The final May University of Michigan consumer sentiment index increased slightly to 97.1 from the April reading of 97.0. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Conclusion: None of the indicators alone is very good at predicting the initial BLS employment report.  The ADP report and weekly unemployment claims suggest stronger job growth in May.