|Job Openings and Labor Turnover Survey
The Bureau of Labor Statistics reported that manufacturers hired 280,000 workers in September, a sharp uptick after the soft 236,000 hires observed in August. The September figure was the fastest pace in hiring since November 2010.
At the same time, the number of manufacturing separations—including layoffs, firings and retirements—also increased, rising from 237,000 to 268,000. Therefore, there were 12,000 net new hires (or hires minus separations) in September, an improvement from the net loss of 1,000 manufacturing employees in August. In addition, net hiring has averaged 15,600 per month over the past five months (May to September), which is progress from the 5,000 average over the five months prior to that (December to April).
The number of manufacturing job openings declined from 296,000 in August to 285,000 in September. While job postings have risen since January’s 259,000 figure, the short-run trend reflects a decrease since peaking at 302,000 in June, which was a two-year high.
Meanwhile, there were similar trends in the larger economy. There were 5,026,000 hires in September, the most since December 2007 (the first month of the Great Recession). Hiring increased in the following sectors: construction, education and health services, leisure and hospitality, manufacturing and professional and business services. Job openings in the nonfarm sector fell from 4,853,000 to 4,735,000, even as the longer-term movement remains positive.
NFIB Small Business Survey
The National Federation of Independent Business reported that its Small Business Optimism Index rose from 95.3 in September to 96.1 in October, rebounding back to levels seen in August. Small business leaders have become more confident during the year, with the index moving higher after bottoming out at 91.4 in February. Since the first quarter, the index has averaged 95.7. At the same time, small business owners remain somewhat anxious, with the index remaining below the key threshold of 100, the level that would indicate strong growth for the sector. The index has now been below 100 since October 2006.
However, there were some positives in this month’s report. The net percentage of respondents saying they expect sales to increase over the next three months increased from 5 percent to 9 percent. While this was below the pace seen earlier in the year (e.g., 15 percent in May), it was a step in the right direction. Similarly, the net percentage planning to hire in the next three months rose from 9 percent to 10 percent, and those planning a capital expenditure in the next three to six months jumped from 22 percent to 26 percent.
Yet, there were also signs that small businesses are not yet out of the woods. Earnings data continued to be weak, and the net percentage saying the next three months were a “good time to expand” dropped from 13 percent to 11 percent. The economy was cited as the main reason for those saying it was not a good time to expand, followed by the political climate. Along those lines, government regulations (22 percent) and taxes (21 percent) topped the list of “single most important problems.”
Real GDP by Industry (Second Quarter)
The Bureau of Economic Analysis reported that manufacturers added 0.81 percentage points to real GDP growth in the second quarter. As reported earlier, real GDP rebounded strongly in the second quarter after weakness in the first quarter, expanding by 4.6 percent. Durable and nondurable goods sectors contributed 0.51 percent and 0.30 percent, respectively, to second quarter real GDP growth. Indeed, real value-added increased by 8.0 percent for durable goods firms, with 5.4 percent growth for nondurable goods manufacturers.
Other sectors with significant contributions to growth in the second quarter included:
- Professional and business services (adding 0.90 percent);
- Finance, insurance, real estate, rental and leasing (0.55 percent);
- Retail trade (0.42 percent);
- Wholesale trade (0.38 percent);
- Mining (0.30 percent); and
- Utilities (0.27 percent).
Manufacturing value-added increased 1.9 percent in the second quarter, up from $2.045 trillion in the first quarter to $2.085 trillion. On a year-over-year basis, manufacturing value-added rose 4.4 percent. This suggests that the sector has experienced decent growth in output over the past 12 months, even with softness earlier in the year. Manufacturing accounted for 12.0 percent of GDP in the second quarter.
According to the Census Bureau, retail sales rose 0.3 percent in October, offsetting the 0.3 percent decline in September. This was slightly better than the consensus estimate of 0.2 percent growth for the month. Gasoline station sales fell 1.5 percent and have declined in four of the past five months. Of course, gasoline prices were largely behind this decrease, with the average price of regular gasoline dropping from $3.64 in late June to less than $2.91 last week. Excluding gasoline, spending would have risen 0.6 percent, suggesting better sales figures in the broader market.
On a year-over-year basis, retail sales have risen 4.1 percent. This would indicate decent consumer spending growth over the past 12 months. With that said, the year-over-year pace declined from 5.0 percent in August and 4.4 percent in September. This might indicate some continued caution, or it might simply be a result of stronger gains in the monthly data last year.
There were significant increases in retail spending for non-store retailers (up 1.9 percent), food services and drinking places (up 0.9 percent), health and personal care stores (up 0.7 percent), miscellaneous store retailers (up 0.6 percent), clothing and accessory stores (up 0.5 percent) and auto dealers (up 0.5 percent). Lower gasoline prices might have helped buoy spending in other categories.
Outside of gasoline stations, other areas of weakness included electronics and appliance stores (down 1.6 percent) and department stores (down 0.3 percent), with the decline in electronics being a reaction to strong gains the prior month (up 4.7 percent) on the introduction of the new iPhone.
University of Michigan Consumer Sentiment
The University of Michigan and Thomson Reuters reported that consumer confidence rose to its highest level since July 2007. Preliminary Consumer Sentiment Index data increased from 86.9 in October to 89.4 in November. This reflects continued improvement in Americans’ perceptions about the U.S. economy, with the headline figure rising from 75.1 in November 2013 (in the aftermath of the budget shutdown). Moreover, it mirrors similar data from the Conference Board, which also has reached a pre-recessionary high of late.
The largest increase in the November figure came from people’s opinions about current conditions, with the index for that component up from 98.3 to 103.0. That figure was also at its highest point since July 2007. It is likely that lower gasoline prices and rising equity values have lifted consumers’ spirits, with fewer geopolitical events in the news also perhaps beneficial. In addition, the forward-looking measure increased from 79.6 to 80.6, also reflecting progress.
At the same time, it is important to keep in mind that the index remains below 100, and the public continues to worry about labor market and income growth. Nonetheless, these data points suggest movement in the right direction. Final data for the month arrives on November 26; the Conference Board’s report will be released the day before on November 25.
The Census Bureau reported that wholesale sales rose 0.2 percent in September, edging higher after falling 0.8 percent in August. Over the past 12 months, wholesalers have seen orders rise 5.2 percent, which suggests decent growth in demand year-over-year than the current softness might seem to indicate. August’s data were mixed, with durable goods sales up 0.5 percent while nondurable goods orders declined by 0.1 percent.
Monthly sales were higher for hardware (up 4.8 percent), apparel (up 4.0 percent), furniture (up 1.8 percent), lumber (up 1.8 percent) and automotive (up 1.4 percent), among other categories. In contrast, wholesale sales were lower for farm products (down 5.9 percent), paper (down 2.6 percent), chemicals (down 2.2 percent) and petroleum (down 1.7 percent). The petroleum figure was likely the result of reduced prices.
Meanwhile, wholesale inventories increased 0.3 percent in September, somewhat slower than August’s 0.6 percent growth rate. The year-over-year pace was a robust 7.4 percent. Increases in wholesale inventories for computer equipment (up 3.4 percent), chemicals (up 2.4 percent), groceries (up 1.8 percent) and metals (up 1.8 percent) helped to offset declines for petroleum (down 5.3 percent), farm products (down 3.0 percent) and drugs (down 2.4 percent).