March unemployment, February’s trade, factory orders and consumer credit, US & eurozone March PMIs

the March report on employment from the BLS was one of the weakest we’ve seen in a long time…according to the seasonally adjusted establishment survey, just 88,000 payroll jobs were added during March, the slowest job growth since last June, and the second lowest number of jobs created in any month since January 2011…even worse, the government job cuts that will result from the sequester will not kick in till April so that wasn’t yet a major factor…while not even enough to cover the typical 125K monthly increase in working age population, some consolation could be taken from the revisions to the two previous months; 32,000 more jobs were added to the 236,000 first reported in February to put that month’s total at 268,000, while January’s total was revised from 119,000 to 148,000…more than half of the March payroll gains were in professional and business services, where 51,000 jobs were added, 20,300 of which were temps, and 11,000 of which were in accounting & bookkeeping…the big loser was retail, where 24,000 jobs vanished; March saw 15,000 less working in clothing stores, 10,000 fewer jobs at building and garden supply stores, and 6,000 less working at electronics and appliance stores..meanwhile, health care work saw a gain of 23,000 jobs, 15,000 of which were ambulatory care workers while 8,000 were added by hospitals, and construction saw a 18,000 job gain, possibly aided by post-Sandy reconstruction…food services, another sector that has been strong throughout the recovery, added 13,000 jobs, while the postal service shed 12,000…other major sectors, including manufacturing, mining, wholesale trade, transportation and warehousing, information, financial activities, state government, and local government saw little change in employment….BLS also reported that the average workweek for all non-farm employees increased by 0.1 hour to 34.6 hours, while the manufacturing workweek decreased by 0.1 hour to 40.8 hours.and the average workweek for production and nonsupervisory employees was unchanged at 33.8 hours….average hourly earnings for all non-farm employees was up a penny at $23.82, while average hourly earnings of production and nonsupervisory employees fell a penny to $20.03…we have previously noted the margin of error on this survey as 100,000, but that has been changed in the BLS technical notes to +/- 90,000; with that in mind, doug short has started tracking the revisions made to non-farm payrolls in subsequent months and presents it as a chart which we’ve included to the above you can see, most of the revisions recently have been positive, but over the longer term the record is unclear…doug notes that since 2000, there have been 91 upward revisions, shown in blue, averaging + 48,000, and 63 downward revisions (red) averaging a monthly change of – 44,000 jobs

the results from the smaller survey of 60,000 households were an unmitigated disaster, even though the headline unemployment rate fell from 7.7% in February to 7.6% in March….according to the BLS household survey, there were 206,000 less of us employed but also 290,000 fewer counted as unemployed in March than in February, which resulted in a 496,000 decline in the civilian labor force, even though the non-institutional population older than 16 rose by 167,000…what that means is that those “not in the labor force” and hence not counted when computing the unemployment rate jumped 663,000 to almost 90 million in March, driving the labor force participation rate, shown in red on our FRED graph, down from 63.5% in February to  63.3%, a level not seen since 1979, before significant numbers of women were included…the other metric we follow, the employment population ratio shown in blue, which you can think of as the “employment rate”, also fell in March, to 58.5% from February’s 58.6%, meaning 5.0% less of us are employed than at the 2007 peak, while we’re still stuck in the same 58.2% to 58.7% range it’s been in since 2009…there were few major changes in the headline unemployment rates for most age, sex and racial groupings, except in that the overall jobless rate for Blacks fell from 13.8% to 13.3%, and although the jobless rate for teens fell from 25.1% to 24.2%, there was no breakout as to how many went back to school or quit looking for for work and werent counted…similarly, the number of those reported as unemployed longer than 27 weeks fell from 4,797,000 to 4,611,000, but there was no telling how many of those 186,000 were discouraged & just no longer counted…and even those “marginally attached to the labor force”, a category which should catch some of the uncounted, was essentially unchanged from a year ago, dropping from 2,352,000 to 2,326,000; these are those who’ve looked for a job in the past twelve months but werent counted in this survey because they hadnt looked for work in the 4 week period ending March 12th…of those, 803,000 were considered “discouraged workers” because they reported they hadnt looked for work because they believe no jobs are available for them… 

FRED Graph

also released on Friday, the report on International Trade and Services for February from the Commerce Dept (pdf) was barely mentioned in a blogosphere focused on employment data…it provided a bit of good news, as seasonally adjusted exports rose from $184.4 billion in January to $186.0 billion in February while seasonally adjusted imports of $228.9 billion were barely changed from January’s $228.8 billion resulting in a $1.5 billion decrease in the trade deficit, from a revised $44.5 billion in January to $43 billion in Februarythe January to February increase in exports of goods was driven by $1.8 billion additional exports of industrial supplies and materials, as fuel oil, organic chemicals and other petroleum products each saw exports grow on the order of $0.5 billion; in addition, exports of autos parts, and engines increased $0.2 billion, while exports of capital goods decreased $0.8 billion, exports of consumer goods fell $0.3 billion, and exports of foods, feeds, and beverages fell $0.1 billion…the change in imports reflected a $2.6 billion decrease in imports of industrial supplies and materials, as we saw a decrease in imports of crude oil from $25,064 million in January to $23,605 million in February, even though the average price of oil rose from $94.08 to  $95.96; that was partially offset by a $1.1 billion Increase in imports of autos, parts, and engines, and  increases of $0.7 billion in imports of consumer goods, $0.3 billion of capital goods; and $0.2 billion of foods, feeds, and beveragesthe decline in the February dollar value of imports of oil completely reversed the increase that boosted oil imports in January from December, despite falling prices then, so there must have been a change around year end that was not captured in the seasonal adjustments…as has been the case for years, our largest bilateral trade deficit was $23.4 billion with China; other major trade deficits were recorded with the EU at $8.8, Japan at $5.9  billion, Germany at $4.5  billion, Mexico at $4.3 billion, and OPEC at $3.6 billion; meanwhile, small trade surpluses were recorded with Hong Kong at $3.3 billion, Australia at $1.3 billion, Singapore $0.9 billion, and Brazil at $1.7 billion…we will again include Bill McBride’s chart which shows the overall trade deficit in blue, the petroleum deficit in black, and the trade deficit without oil in red; note that all numbers charted are negative, with the top of the chart at zero…

 U.S. Trade Deficit

another release on Friday which received little coverage was the February report on Consumer Credit from the Fed; you may recall that this report has usually shown that most of the increase in lending in the economy has originated with the Federal Government in the form of students loans; in February, seasonally adjusted consumer credit outstanding increased $18.14 billion to $2,799.1 billion from $2,780.9 billion in January, or at a seasonally adjusted annual rate of 7.8%; the revolving credit portion of that total, which is the credit card component, increased at an annual rate of 0.8%, from $847.5 billion to $848.0 billion, while non revolving credit, which is longer term loans for such as cars and tuition but not including real estate, rose at an annual rate of 10.9%, from January’s $1,933.5 billion to $1.951.1 billion…as we’ve been watching this report for the increasing level of student debt, we want to determine what portion of that consumer credit increase is originating with the Federal government; to do that, we scroll to the 3rd table in the release, under the heading “Consumer Credit Outstanding”, and check the subheading “Major types of credit, by holder” which gives us actual data which is not seasonally adjusted; there we see the actual increase in February non revolving credit is just $2.5 billion, from $1,952.5 billion to $1,955.0 billion, a far cry from the seasonally adjusted amount….looking further to see what portion of that was from the federal government, we see federal loans outstanding increased from $552.7 billion to $556.9 billion. or $4.2 billion dollars, $1.7 billion greater than the total…that means the increase in student loans outstanding was at a rate 168% greater than the rate that overall non-revolving credit expanded…in fact, since the unadjusted revolving credit numbers actually show a decrease of $15.6 billion, from $826.4 billion to $810.8 billion, that means that the only portion of consumer credit that showed an actual, unadjusted increase in February was the Federal portion of student loans…FRED only graphs the seasonally adjusted data, so our adjacent graph shows total consumer credit outstanding in blue, the total non-revolving credit outstanding in red, revolving, or credit card debt outstanding, in orange, and student loans owed to the Federal government in green; it’s pretty clear that all the growth in non-revolving credit (red) and total credit (blue) since 2009 has been driven by that green line’s increase…

FRED Graph

another release from earlier this week was the Full February Report on Manufacturers’ Shipments, Inventories and Orders (pdf) from the Dept of Commerce, which is typically covered as “new factory orders”; this release revises and includes the Advance Report on Durable Goods (pdf), which comes out a week earlier & is based on less complete data, but which nonetheless seems to get all the attention…seasonally adjusted new orders for manufactured goods, or “factory orders”, rose 3.0% in February, increasing $14.5 billion to $492.0 billion, to the highest level since this series was started; excluding new orders for transportation equipment, new factory orders were only up 0.3%new orders for durable goods in February were up $12.3 billion, or 5.6%, to $232.2 billion; that increase in new orders for durable goods was slightly revised from the 5.7% increase reported last week; orders for transportation equipment drove the increase, as they were up $13.3 billion or 21.8% to $74.5 billion; most of that in turn was driven by a surge in civilian aircraft orders, which were up 95.1% for the month, as Boeing reported orders for 179 aircraft, up from just 2 in January…excluding aircraft, orders for core capital goods, which include machinery and equipment orders, fell 3.2%, to $65,405 million from January’s $67,593 million…orders for construction equipment and supplies also slipped from $42,772 million to $42,536 million, while orders for computers and electronic products rose slightly…orders for consumer goods rose 2.0%, to $215,616 from January’s $211,338; orders for consumer durables were up 4.3%, from $37,073 to $38,667 while orders for consumer nondurables were up 1.5% from $174,265 to $176,949….our FRED graph for this report goes back to the beginning of this series in 1992; it shows total factory orders in green, orders for durable goods in red, and new orders for non-defense capital goods excluding aircraft, or so called core capital goods, in blue…
FRED Graph
this week also brought us the March results of both purchasing manager’s indexes (PMIs) from the Institute of Supply Management (ISM); the March 2013 Manufacturing ISM Survey continued to indicate expansion in March, albeit at a slower pace than February, as the PMI came in at 51.3% in March, down from 54.2% in February; recall that readings above 50 indicate expansion… the fall in the PMI was driven by a fall in the new orders index, which dropped 6.4 points from 57.8 to 51.4; that is below the 52.3% inflection point in that index that would be consistent with an expansion in the Census new factory orders, which we just looked at…the production index also saw a significant decline, from 57.6% to 52.2%, while the employment index rose 1.65, from 52.6% to 54.2%, indicating more managers were considering adding workersthe prices index also tumbled, from 61.5 to 54.5, as the list of commodities up in price was far fewer than in February, and the inventories index fell into contraction at 49.5% from last month’s expansionary reading of 51.5%…the backlog of orders slipped 4.0 points but remained positive at 51.0, while the export index rose 2.5 points to a more expansionary 56.0% and the import index remained unchanged at 54.0…of the 18 manufacturing industries classified by ISM, 14 indicated growth in March, led by wood products & furniture, plastic & rubber products, and electrical equipment and appliances
        FRED Graph the ISM Non-manufacturing index also slipped in March to the lowest level since last August but remain positive with a reading for the NMI at 54.4%, down from 56.0% in February; their business activity index came in at 56.5%, which was 0.4 points lower than the 56.9% reported in February, while the new orders index slipped 3.6 from 58.2 to 54.6 and the employment index fell 3.9 from 57.2 to 53.3…the service industries price index also tumbled from 61.7 to 55.9, indicating a slowing increase in prices in March…inventories were also growing slower in March, as the index slipped 2.5 from 54.0 to 51.5, while the backlog of orders index remained unchanged at 54.5…supplier’s deliveries rose from 51.5 to 53.0, as did the import index, which jumped from 52.5 to 57.5…the new export orders index, however, fell 4.0 points, from 60.5 to 56.5…15 non-manufacturing industries reported growth in March, led by construction, management and support services, transportation and warehousing, and food & lodgingour FRED graph above shows the track of the PMI for manufacturing in red, and the NMI (non-manufacturing index) in blue since its inception in January 2008; the grew bar marks the official recession…

purchasing manager indexes were also released for most countries around the globe, as is typical for the beginning of each month…they’re worth pointing out this week because economic activity worldwide appears to be slowing again, especially in Europe; the final Markit March manufacturing PMI for the euro area showed an accelerating slowdown, dropping from 47.9 to a three-month low of 46.8; with all major eurozone countries in contraction…the German PMI was at 49.0, the French PMI was at 44.0, the Italian PMI was at 44.5, a 7 month low, while Spain’s PMI fell to a 5 month low at 44.2; even Ireland and the Netherlands, countries which had been holding up, saw their PMIs tumble; the Dutch to a 10 month low at 48.0 and the Irish to a 14 month low at 48.5…for others, the WSJ provides an interactive table of world wide factory activity by country from Markit and JP Morgan…along with those leading indicators, official Eurostat data for February showed that unemployment across the Eurozone hit a record high 12%..and we would be remiss if we didn’t note that Canada saw a decline of 54,500 payroll jobs, the worst job loss for them in more than four years; for a country their size, that would be the equivalent of the US losing a half million…

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)

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