by Calculated Risk on 8/04/2017 07:27:00 PM

From the Association of American Railroads (AAR) Rail Time Indicators. Graphs and excerpts reprinted with permission.

Total U.S. rail carloads were 0.6% lower in July 2017 than in July 2016. That’s not much, but it’s the first decline since October 2016. The end of easy comps for coal and grain gets much of the blame. For coal, carloads rose 4.0% in July, down from double-digit gains the previous six months. ... The biggest bright spots for rail traffic in July were carloads of crushed stone, gravel, and sand (up 15.0%, their sixth straight double-digit increase — thank frac sand) and intermodal (up 5.6%, keeping it on pace to set a new annual record this year). Carloads of petroleum products kept falling in July, as did carloads of motor vehicles and parts (consistent with declines in sales and production of cars and light trucks). Year-todate total carloads were up 5.4% through July; year-to-date intermodal was up 3.1%.

Click on graph for larger image.

This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Dark blue is 2017.

Rail carloads have been weak over the last decade due to the decline in coal shipments.

Last month we said that U.S. rail carloads were doing relatively well. Well, that was last month. Thanks in large part to much tougher comparisons, July’s carloads don’t look nearly as good. In July 2017, U.S. carload originations were 1,019,239, down 0.6% (6,079 carloads) from July 2016. It’s the first yearover-year monthly decrease for total carloads since October 2016, a span of eight months (see the chart below right). Average total weekly carloads in July 2017 of 254,810 were the lowest for July since sometime prior to 1988, when our records begin.

The second graph is for intermodal traffic (using intermodal or shipping containers):

Unlike some rail carload categories, intermodal remains on track. U.S. intermodal originations were up 5.6% (55,997 containers and trailers) in July 2017 over July 2016. Weekly average originations of 264,589 in July 2017 were the second highest for July on record, behind July 2015.

by Calculated Risk on 8/04/2017 03:01:00 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 six 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 six months of Mr. Trump's term, the economy has added 1,027,000 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 six months of Mr. Trump's term, the economy has gained 47,000 public sector jobs.

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

After six months of Mr. Trump's presidency, the economy has added 1,074,000 jobs, about 176,000 behind the projection.

by Calculated Risk on 8/04/2017 11:59:00 AM

Earlier 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 $43.6 billion in June, down $2.7 billion from $46.4 billion in May, revised. June exports were $194.4 billion, $2.4 billion more than May exports. June imports were $238.0 billion, $0.4 billion less than May imports.

Click on graph for larger image.

Imports decreased and exports increased in June.

Exports are 18% above the pre-recession peak and up 6% compared to June 2016; imports are 3% above the pre-recession peak, and up 5% compared to June 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 $44.68 in June, down from $45.03 in May, and up from $39.38 in June 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 $32.6 billion in June, from $29.7 billion in June 2016.

by Calculated Risk on 8/04/2017 10:00:00 AM

The headline jobs number was above expectations, and there were slight combined upward revisions to the previous two months.  And the unemployment decreased slightly.  

Earlier: July Employment Report: 209,000 Jobs, 4.3% Unemployment Rate

In July, the year-over-year change was 2.16 million jobs. This is decent year-over-year job growth.

Note that July has been the second strongest month for job growth over the three previous years, exceeded only by June, and just ahead of November.  This is the 4th consecutive solid job gain in July:  202 thousand in July 2014, 254 in July 2015, 291 thousand in July 2016, and now 209 thousand in July 2017. 

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 July.

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), at 5.3 million, was essentially unchanged in July. 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 slightly in July. The number working part time for economic reasons suggests a little slack still in the labor market.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 8.6% in July.

Unemployed over 26 Weeks

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

According to the BLS, there are 1.79 million workers who have been unemployed for more than 26 weeks and still want a job. This was up from 1.66 million in June.

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 another solid report.

by Calculated Risk on 8/04/2017 08:42:00 AM

From the BLS:

Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, professional and business services, and health care.
...
The change in total nonfarm payroll employment for May was revised down from +152,000 to +145,000, and the change for June was revised up from +222,000 to +231,000. With these revisions, employment gains in May and June combined were 2,000 more than previously reported.
...
In July, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.36. Over the year, average hourly earnings have risen by 65 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 209 thousand in July (private payrolls increased 205 thousand).

Payrolls for May and June were revised up by a combined 2 thousand.

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

In July the year-over-year change was 2.16 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 increased in July to 62.9%. 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 increased to 60.2% (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 July to 4.3%. 

This was above expectations of 180,000 jobs, and the previous two months were revised up slightly.  A solid report.

I'll have much more later ...

by Calculated Risk on 8/03/2017 07:46:00 PM

Earlier:

My July Employment Preview

and Goldman: July Payrolls Preview

Friday:
• At 8:30 AM ET, Employment Report for July. The consensus is for an increase of 180,000 non-farm payroll jobs added in July, down from the 222,000 non-farm payroll jobs added in June. The consensus is for the unemployment rate to decline to 4.3%.

• Also at 8:30 AM, Trade Balance report for June from the Census Bureau. The consensus is for the U.S. trade deficit to be at $44.5 billion in June from $46.5 billion in May.

by Calculated Risk on 8/03/2017 03:35:00 PM

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

We estimate nonfarm payrolls increased by 190k in July ... Our forecast reflects generally favorable labor market fundamentals and a potential boost from evolving seasonality, as July job growth has been strong in recent years in both the establishment and household surveys.

We believe job growth will be sufficient to bring the unemployment rate back down to 4.3%, and we expect the combination of diminished labor market slack and favorable calendar effects to produce a 0.3% monthly rise in average hourly earnings (or +2.4% year-over-year).

by Calculated Risk on 8/03/2017 01:00:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for July. The consensus, according to Bloomberg, is for an increase of 178,000 non-farm payroll jobs in July (with a range of estimates between 144,000 to 220,000), and for the unemployment rate to decline to 4.3%.

The BLS reported 222,000 jobs added in June.

Here is a summary of recent data:

• The ADP employment report showed an increase of 178,000 private sector payroll jobs in July. This was close to consensus expectations of 175,000 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 close to expectations.

• The ISM manufacturing employment index decreased in July to 55.2%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll increased about 10,000 in July. The ADP report indicated manufacturing jobs decreased 4,000 in July.

The ISM non-manufacturing employment index decreased in July to 53.6%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll jobs increased about 175,000 in July.

Combined, the ISM indexes suggests employment gains of about 185,000.  This suggests employment growth close to expectations.

• Initial weekly unemployment claims averaged 242,000 in July, mostly unchanged from 243,000 in June. For the BLS reference week (includes the 12th of the month), initial claims were at 234,000, down from 242,000 during the reference week in June.

The decrease during the reference week suggests slightly fewer layoffs during the reference week in July than in June. This suggests a somewhat stronger employment report in July than in June.

• The final July University of Michigan consumer sentiment index decreased to 93.4 from the June reading of 95.1. 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.  Overall these indicators suggest job growth close to the consensus.

by Calculated Risk on 8/03/2017 10:04:00 AM

The July ISM Non-manufacturing index was at 53.9%, down from 57.4% in June. The employment index decreased in July to 53.6%, from 55.8%. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: July 2017 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in July for the 91st consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Non-Manufacturing Business Survey Committee: "The NMI® registered 53.9 percent, which is 3.5 percentage points lower than the June reading of 57.4 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 55.9 percent, 4.9 percentage points lower than the June reading of 60.8 percent, reflecting growth for the 96th consecutive month, at a slower rate in July. The New Orders Index registered 55.1 percent, 5.4 percentage points lower than the reading of 60.5 percent in June. The Employment Index decreased 2.2 percentage points in July to 53.6 percent from the June reading of 55.8 percent. The Prices Index increased 3.6 percentage points from the June reading of 52.1 percent to 55.7 percent, indicating prices increased in July for the second consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector did not sustain the previous rate of growth and cooled-off in July. The majority of respondents’ comments were mostly positive about business conditions and the state of the economy."
emphasis added

Click on graph for larger image.

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This suggests slower expansion in July than in June.

by Calculated Risk on 8/03/2017 08:33:00 AM

The DOL reported:

In the week ending July 29, the advance figure for seasonally adjusted initial claims was 240,000, a decrease of 5,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 244,000 to 245,000. The 4-week moving average was 241,750, a decrease of 2,500 from the previous week's revised average. The previous week's average was revised up by 250 from 244,000 to 244,250.
emphasis added

The previous week was revised up.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 241,750.

This was lower than the consensus forecast.

The low level of claims suggests relatively few layoffs.