Economic Indicators

January 2019 Jobs Report: Is There Strength in Numbers?

The number of jobs created in January as revealed in the February 1 Bureau of Labor Statistics’ Employment Situation report could only be characterized as strong. The national economy added 304,000 jobs, approaching double the expectation of about 170,000. Strength in hiring was widespread. Construction, manufacturing, and leisure and hospitality stood out as job gaining sectors, but most other sectors also saw increases. Only wholesale trade, financial activities, and information technology were essentially flat. The report comes on the heels of a similarly strong report for December, although it did include a downward revision of December’s numbers of 90,000, leaving that month’s job creation number at 220,000, still well beyond what had been expected. The headline unemployment rate, U3, ticked up 0.1 percentage point to 4 percent. The broader labor underutilization measure, U6, which counts individuals not formally included in the narrow definition of “unemployed” but available for full-time work, jumped from 7.6 to 8.1 percent. The two sets of numbers – job creation and unemployment rates – are generated in different surveys; the partial government shutdown, for technical reasons, was expected to have an impact on the “household survey,” which produces the unemployment rates.  This seems to be the case. Expectations were that headline unemployment would be unchanged, but might tick up a bit due to the shutdown, which, indeed, is what happened. January’s job creation report, even given the revision to December’s numbers, indicates, at least as measured by the labor markets, that the U.S. economy remains strong and on firm footing. About the Author Tom Cunningham holds a Ph.D. in economics from Columbia University and was senior economist with the Federal Reserve Bank of Atlanta from 1985 to 2015. Mr. Cunningham serves as a consultant to MST in the creation and ongoing development [...]

2019-02-13T18:28:35+00:00February 1st, 2019|Blog, Economic Forecasting, Economic Indicators|

December Jobs: An Unexpectedly Big Jump

The December Employment Situation report numbers from the Bureau of Labor Statistics showed a hefty 312,000 jobs added, well above the 180,000 expected. Revisions to the previous two months added another 58,000 jobs. The consensus on new December jobs was notably diffuse this month, some very serious analysts projecting numbers relatively far above and below that average result. No one, however, was suggesting any figure nearly this large. Health care, food services, construction, manufacturing, retail trade, and business services were all strong, with other sectors essentially unchanged.  Average hourly earnings came in a bit above expectation as well, at 3.2% year-over-year. New jobs for 2018 totaled highest since 2015. This dispersion of beliefs no doubt reflects uncertainties about the economy. The fundamentals in the economy look okay (and considering this report, maybe better than okay), albeit a bit off from last year’s unsustainable pace. But the volatility in equity markets suggests risks are rising. Recent political activity has not helped stabilize expectations. The headline unemployment rate rose, .02 percent to 3.9 percent, versus the expectations that it would remain unchanged. The move reflected a small increase in the number of unemployed, most of which is coming from increased voluntary separations. The labor force participation rate was essentially unchanged.  The broadest measure of labor underutilization, U6, remains at 7.6 percent. The headline unemployment rate is still quite low. The real message in today’s report is the extremely strong job creation and decent earnings growth. It’s difficult to assess this as anything other than a very strong report. Unfortunately, this report doesn't clarify the outlook. By itself, with job growth this strong, there is a strong argument for the Fed to continue tightening. Financial markets' view of the future is more mixed, but that's the issue: the base of the economy – employment – [...]

2019-01-04T15:53:44+00:00January 4th, 2019|Blog, Economic Indicators|

Mixed Economic Signals Suggest Cautionary Reasonable and Supportable Forecasts

Volatile is not a big enough word to describe what’s going on in the global financial markets. Markets both reflect and anticipate their economies. Tariff wars, interest rates, global political instability – all have been cited as reasons to be nervous about the world economy and ours. But none are probably as meaningful to banks and their lending practices as the fourth leg of that stool, a slowing economy. But the real economy data doesn’t look that slow. Some larger foreign economies are slowing. The U.S. is deliberately trying to reduce trade with them through tariffs, which is responsible for some slowing of our economy as well as theirs. China, the second largest economy in the world – first if you use a purchasing-power-parity based exchange rate – is trending downward, from 6.8 percent growth in GDP in 2017 to 6.5 percent this year to 5.8% projected for 2022. That’s not the same pace as the near 7 percent and more of the previous ten years, but neither is it slow in the long-run sense. In the U.S., the fundamentals remain strong. There is no underlying economic condition pointing to an inevitable recession. Financial markets are disquieted by the political instability all around the world. But political instability does not necessarily create immediate economic dislocation. In the case of Brexit, for example, it’s been two years and now all the negative consequences that were predicted for a couple of years down the road look like they’re going to happen in March. The likelihood of avoiding a bad outcome, in terms of slowing British and European Union economies, looks less possible as deadlines approach and the political process does not seem to be coming up with plausible schemes to resolve the anticipated economic [...]

2018-12-28T10:10:00+00:00December 28th, 2018|Blog, Economic Indicators|

November Jobs Report: No Cause for Celebration or Concern

November’s national Employment Situation report from the Bureau of Labor Statistics was marginally weaker than expected. The number of new jobs reported for the month came in at 155,000, lower than the expected 190,000. Otherwise the report was in line with expectations, the headline U3 employment rate coming in at 3.7 percent for the third month in a row. Health care, manufacturing, retail, transportation and business services all added employment with the other sectors essentially flat. No sector was a notable job loser. While the U3 held steady, the broadest measure of labor underutilization, U6, ticked up only slightly to 7.6 percent. On the other hand, average hourly earnings were marginally higher, a 3.1% increase year-over-year. Perhaps most notably, the number of long-term unemployed fell substantially, 120,000 to 1.3 million who have been jobless for 27 weeks or longer. Interestingly, the knee-jerk equities markets pretty much ignored the report as they opened on December 7. With the nation essentially at full employment, the report appears to have offered little cause for either celebration or concern. A marginally weaker than expected new jobs report will add a little fuel to the argument that the economy is slowing somewhat. But it is also clear that the labor market is still in very good shape. The report could give those in the Federal Open Market Committee hesitant to vote for raising rates some support for pausing the rate hike process. It is not weak enough to rule out a hike, but it does add some uncertainty to predicting the Committee's actions.  The report is not weak enough that it would rule out a hike, but it does add some uncertainty to predicting their action. About the Author Tom Cunningham holds a Ph.D. in economics from Columbia University and [...]

2018-12-07T14:09:20+00:00December 7th, 2018|Blog, Economic Indicators|

Job Growth on a Roll; U.S. at Full Employment

Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics The Bureau of Labor Statistics’ jobs report for October was extremely strong. The November 2 release reported the U.S. added 250,000 jobs in the month, 31-plus percent more than the 190,000 expected. The other highlight number, hourly earnings, also grew substantially at 3.1 percent better than the average hourly wages reported in October 2017 – although the number is somewhat suspect given last year’s unusual decline in wages due to Hurricane Harvey. […]

2018-11-02T14:47:21+00:00November 2nd, 2018|Blog, Economic Forecasting, Economic Indicators|

Florence Distorts Job Numbers; Labor Market Remains Strong

Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics The headline numbers from the Bureau of Labor Statistics’ (BLS) September jobs report suggest a mixed employment situation. New jobs came in at just 134,000, well below the expected 180,000, while that headline unemployment rate, U3, fell 0.2 percentage points to 3.7 percent, slightly lower than the 3.8 percent expected. […]

2018-10-23T17:31:16+00:00October 9th, 2018|CECL, Economic Forecasting, Economic Indicators|

August Report Positive on Jobs and Earnings

Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics The September 7 national Employment Situation Report from the Bureau of Labor Statistics showed a net gain of 201,000 jobs for the month of August, 10,000 more than expected. It’s a strong number, if somewhat compromised by the lower than expected 157,000 jobs reported for July as well as a downward revision of 50,000 jobs to the combined May and June reports. […]

2018-10-31T09:09:08+00:00September 7th, 2018|Economic Indicators|

July Jobs: Below Expectations

Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics July jobs came in below expectations. The monthly Bureau of Labor Statistics reports released today showed 157,000 jobs were created in July versus a projected 190,000. However, upward revisions to previous months’ figures were notable, adding 59,000 jobs. Hiring was in business and professional services, manufacturing, and health care. Other sectors were essentially unchanged.   […]

2018-10-31T09:24:54+00:00August 3rd, 2018|Economic Forecasting, Economic Indicators|

June Jobs: Good Numbers, Subject to Misinterpretation

Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics  This month’s national Employment Situation report from the Bureau of Labor Statistics (BLS) features a substantial increase in jobs, but the release is getting mixed reviews. The U.S. added 213,000 jobs, well above expectations of around 190,000 – and another 37,000 in revisions to the April and May counts. Still, the headline unemployment rate ticked up from 3.8 to 4 percent.  […]

2018-10-31T09:32:50+00:00July 7th, 2018|Economic Indicators|

Joy Over Job Numbers Tempered by Trade War Concerns

Guest blog by Dr. Tom Cunningham, Economist and MST Advisory Services, Senior Advisor- Economics Dateline: June 1, 2018 … This morning’s U.S. Employment Situation report revealed an uptick from previous months in the number of new jobs created. The figure of 223,000 new jobs was well above the 190,000 tally expected. […]

2018-10-23T23:46:43+00:00June 1st, 2018|Economic Indicators|