by Calculated Risk on 5/05/2019 08:59:00 PM

Weekend:
• Schedule for Week of May 5, 2019

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures: S&P 500 are down 46 and DOW futures are down 469 (fair value).

Oil prices were down over the last week with WTI futures at $60.41 per barrel and Brent at $69.23 per barrel.  A year ago, WTI was at $71, and Brent was at $75 - so oil prices are down 10% to 15% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.89 per gallon. A year ago prices were at $2.80 per gallon, so gasoline prices are up 9 cents per gallon year-over-year.

by Calculated Risk on 5/05/2019 12:18:00 PM

By request, 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, Fed Chair, 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 (dark blue) took office during the financial crisis and great recession. There was also a significant recession in the early '80s right after Mr. Reagan (dark red) took office.

There was a recession towards the end of President G.H.W. Bush (light 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 (27 months).

The employment recovery during Mr. G.W. Bush's (red) first term was sluggish, and private employment was down 821,000 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 382,000 private sector jobs lost during Mr. Bush's two terms. 

Private sector employment increased by 20,979,000 under President Clinton (light blue), by 14,714,000 under President Reagan (dark red), 9,039,000 under President Carter (dashed green), 1,511,000 under President G.H.W. Bush (light purple), and 11,890,000 under President Obama (dark blue).

During the first 27 months of Mr. Trump's term, the economy has added 5,163,000 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 269,000 jobs).

During the first 27 months of Mr. Trump's term, the economy has added 237,000 public sector jobs.

The third graph shows the progress towards the Trump goal of adding 10 million jobs over his 4 year term.

After 27 months of Mr. Trump's presidency, the economy has added 5,400,000 jobs, about 225,000 behind the projection.

by Calculated Risk on 5/04/2019 08:11:00 AM

The key report this week is the April CPI.

----- Monday, May 6th -----
No major economic releases scheduled.

----- Tuesday, May 7th -----
10:00 AM ET: Job Openings and Labor Turnover Survey for March 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 decreased in February to 7.087 million from 7.625 million in January.

The number of job openings (yellow) were up 9% year-over-year, and Quits were up 10% year-over-year.

10:00 AM: Corelogic House Price index for February.

3:00 PM: Consumer Credit from the Federal Reserve.

----- Wednesday, May 8th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, May 9th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 215 thousand initial claims, down from 230 thousand last week.

8:30 AM: Trade Balance report for March from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. 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.

The consensus is the trade deficit to be $50.1 billion.  The U.S. trade deficit was at $49.4 Billion in February.

8:30 AM: The Producer Price Index for April from the BLS. The consensus is for a 0.2% increase in PPI, and a 0.2% increase in core PPI.

----- Friday, May 10th -----
8:30 AM: The Consumer Price Index for April from the BLS. The consensus is for 0.4% increase in CPI, and a 0.2% increase in core CPI.

by Calculated Risk on 5/03/2019 04:27:00 PM

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

Volumes for U.S. railroads in April 2019 were far from ideal, but they were much better than in March. Total carloads in April were down 0.9% (9,130 carloads), compared with a decline of 8.9% (93,616 carloads) in March. … The improvement in April was due partly to a return to near-normal operations in the Midwest as numerous rail lines that had been flooded were returned to service — coal and grain were especially impacted. ... Intermodal volume fell 3.9%, or 42,832 containers and trailers, in April 2019 from April 2018. That’s the third-straight monthly decline for intermodal, something that hasn’t happened since the fall of 2016.
emphasis added

Click on graph for larger image.

This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Red is 2019.

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

Rail traffic in April 2019 won’t win any prizes, but it could’ve been worse.

Total U.S. rail carloads were 1.04 million in April 2019, down 0.9%, or 9,130 carloads, from April 2018. That’s the third straight year-over-year monthly decline for total carloads, but it’s much better than the 8.9% decline in March and the 2.7% decline in February

For the first four months of 2019, total U.S. carloads were down 2.5%, or 109,930 carloads, from the first four months of 2018.

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

For the first four months of 2019, intermodal volume was down 1.4%, or 62,724 units, from the same period in 2019 … This year had a few moving pieces that aren’t always there — e.g., imports being rushed ashore late last year to beat scheduled tariff increases at the start of this year; intermodal lane rationalizations in some areas; the aforementioned flooding; and an economy that’s been even harder than usual to read.

by Calculated Risk on 5/03/2019 03:14:00 PM

The headline jobs number at 263 thousand for April was above consensus expectations of 180 thousand, and the previous two months were revised up 16 thousand, combined. The unemployment rate declined to 3.6%. Overall this was a strong report.

Earlier: April Employment Report: 263,000 Jobs Added, 3.6% Unemployment Rate

In April, the year-over-year employment change was 2.620 million jobs. That is solid year-over-year growth.

Average Hourly Earnings

Wage growth was close to expectations. From the BLS:

"In April, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.77. Over the year, average hourly earnings have increased by 3.2 percent."

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 3.2% YoY in April.

Wage growth has generally been trending up.

Prime (25 to 54 Years Old) Participation

Since the overall participation rate has declined due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.

The 25 to 54 participation rate was declined in April at 82.2% from 82.5% in March, and the 25 to 54 employment population ratio was decreased to 79.7%.

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 4.7 million in April. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or because they were unable to find full-time jobs."

The number of persons working part time for economic reasons increased in April to 4.654 million from 4.499 million in March.   The number of persons working part time for economic reason has been generally trending down.

These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 7.3% in April.

Unemployed over 26 Weeks

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

According to the BLS, there are 1.230 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.305 million in March.

Summary:

The headline jobs number was above expectations, and the previous two months were revised up slightly.  The headline unemployment rate declined to 3.6%.

This was a strong jobs report.   The economy added 820 thousand jobs through April 2019, down from 879 thousand jobs during the same period in 2018.   So it appears job growth has slowed somewhat, but is still solid.

The decline in the participation rate lowered the unemployment rate.  Note that sometime soon the overall participation rate will start another steady decline due to demographic factors.   The overall participation rate has been moving sideways for several years, as the expansion has offset the demographics factors.  

by Calculated Risk on 5/03/2019 10:08:00 AM

The March ISM Non-manufacturing index was at 55.5%, down from 56.1% in March. The employment index decreased to 53.7%, from 55.2%. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: April 2019 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector grew in April for the 111th 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 55.5 percent, which is 0.6 percentage point lower than the March reading of 56.1 percent. This represents continued growth in the non-manufacturing sector, at a slightly slower rate. The Non-Manufacturing Business Activity Index increased to 59.5 percent, 2.1 percentage points higher than the March reading of 57.4 percent, reflecting growth for the 117th consecutive month, at a faster rate in April. The New Orders Index registered 58.1 percent; 0.9 percentage point lower than the reading of 59 percent in March. The Employment Index decreased 2.2 percentage points in April to 53.7 percent from the March reading of 55.9 percent. The Prices Index decreased 3 percentage points from the March reading of 58.7 percent to 55.7 percent, indicating that prices increased in April for the 23rd consecutive month. According to the NMI®, 15 non-manufacturing industries reported growth. The non-manufacturing sector has experienced an uptick in business activity, but in general, there has been a leveling off. Respondents are still mostly optimistic about overall business conditions, but concerns remain about employment resources.”
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 April than in March.

by Calculated Risk on 5/03/2019 08:41:00 AM

From the BLS:

Total nonfarm payroll employment increased by 263,000 in April, and the unemployment rate declined to 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in professional and business services, construction, health care, and social assistance.
...
The change in total nonfarm payroll employment for February was revised up from +33,000 to +56,000, and the change for March was revised down from +196,000 to +189,000. With these revisions, employment gains in February and March combined were 16,000 more than previously reported.
...
In April, average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $27.77. Over the year, average hourly earnings have increased by 3.2 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 263 thousand in April (private payrolls increased 236 thousand).

Payrolls for February and March were revised up 16 thousand combined.

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

In April, the year-over-year change was 2.620 million jobs.

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

The Labor Force Participation Rate declined in April to 62.8%. 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 and long term trends.

The Employment-Population ratio was unchanged at 60.6% (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 declined in April to 3.6%.

This was above the consensus expectations of 180,000 jobs added, and February and March were revised up by 16,000 combined.  A strong report.

I'll have much more later ...

by Calculated Risk on 5/02/2019 07:47:00 PM

My April Employment Preview

Goldman: April Payrolls Preview

Friday:
• At 8:30 AM: Employment Report for April.   The consensus is for 180,000 jobs added, and for the unemployment rate to be unchanged at 3.8%.

• At 10:00 AM: the ISM non-Manufacturing Index for April.   The consensus is for a reading of 57.2, up from 56.1.

by Calculated Risk on 5/02/2019 05:42:00 PM

From HotelNewsNow.com: STR: U.S. hotel results for week ending 27 April

The U.S. hotel industry reported negative year-over-year results in the three key performance metrics during the week of 21-27 April 2019, according to data from STR.

In comparison with the week of 22-28 April 2018, the industry recorded the following:

• Occupancy: -1.4% to 68.9%
• Average daily rate (ADR): -1.4% to US$128.66
• Revenue per available room (RevPAR): -2.9% to US$88.59

STR analysts attribute steep performance declines in many major markets to group business decreases on Easter Sunday and the Monday that followed. The corresponding days from 2018 were non-holiday dates.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2019, dash light blue is 2018, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

A decent start for 2019, close - to-date - compared to the previous 4 years.

Seasonally, the occupancy rate will mostly move sideways during the Spring, and then increase during the Summer travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 5/02/2019 02:50:00 PM

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

We estimate nonfarm payrolls increased 195k in April (vs. consensus of 190k), as lower jobless claims and resilient employment surveys suggest that the pace of job growth remains solid.. …

We expect an unchanged unemployment rate in tomorrow’s report (3.8%; consensus also expects 3.8%). … We estimate a 0.2% rise in average hourly earnings (mom sa) that leaves the year-over-year rate unchanged at 3.2%
emphasis added