September jobs report, August incomes and outlays, trade, factory orders, construction spending, July Case-Shiller, et al

it’s been a very busy news week, with several important economic releases…in addition to the employment reports for September released on Friday, we also saw the International Trade Report for August (pdf) released on the same day, and the Personal Income and Outlays report for August on Monday, which gives us nearly 69% of GDP for the month…there were also several diffusion indexes for September derived from surveys of industry management released this week, including:

Employers Add 248,000 Payroll Jobs in September

the establishment survey conducted for September by the Bureau of Labor Statistics indicated that nonfarm payroll employment increased by a seasonally adjusted 248,000 jobs to 139,435,000 jobs, somewhat more than was expected, while August’s payroll jobs count addition was revised up from 142,000 to 180,000, as was July’s, up from 212,000 to 243,000, resulting in a reported net addition of 317,000 seasonally adjusted jobs with this release, and the highest year to date job creation count in 15 years…the unadjusted establishment data indicates that there were actually 701,000 non-farm payroll jobs in September, as 1,053,300 jobs were regained in local government education before the seasonal adjustment, partially reversing the job losses recorded in July when school district employees were released for the summer…the FRED bar graph below incorporates the seasonal adjustments and the revisions to the July & August reports and shows the reported payroll job change monthly since the beginning of 2008, with job gains above the zero line and job losses below it…   

September 2014 payroll jobs

seasonally adjusted payroll jobs increased in all major sectors in September, led by an increase of 81,000 additional jobs in the broad professional and business services category, with 33,600 of those in employment services and another 11,500 in management and technical consulting services….an additional 28,000 slots were added in retail, with 19,500 added by food and beverage stores, as a grocery labor dispute in New England ended….employment also increased with the addition of 33,000 more jobs in leisure and hospitality, with 20,400 of those working in bars and restaurants… another 22,700 jobs were added in health care and social assistance, with the addition of 14,200 in ambulatory health care services and 6,200 jobs in hospitals…there were also 16,000 more jobs in construction, 8,800 of which were working for specialty trade contractors and 6,200 of which were working in residential construction…in addition, the information and financial sectors added 12,000 jobs each, with the addition of 5,400 in the motion picture and sound recording industries for the former and 6,300 more insurance employees for the latter…there were also 12,000 more government jobs in September, as an addition of 21,500 jobs in education at the state level was partially offset by the loss of 14,400 jobs other than education at the local level…job additions by other sectors included 9,000 in resource extraction, 4,000 in manufacturing, 1,900 in transportation and warehousing, and 1,800 in wholesale trade…

the average workweek for all payroll employees was rose to 34.6 hours after 5 months at 34.5 hours, with generally longer workweeks in the services and shorter workweeks in resource extraction and construction, and with the manufacturing workweek unchanged at 40.9 hours and factory overtime increasing by 0.1 hour to 3.5 hours….the average workweek for production and nonsupervisory employees, on the other hand, fell by 0.1 hour to 33.7 hours, as the average nonsupervisory service sector employee saw their workweek fall 0.1 hour to 32.4 hours…the average hourly pay for all workers fell by a penny an hour to $24.53 an hour, with their year over year increase at 47 cents, or less than 2%, while the average pay for nonsupervisory workers was unchanged at $20.67, while their year over average hourly pay rose 46 cents, a 2.3% average increase in hourly pay over the past year…

Labor Force Participation Rate at 36 Year Low with Those Not in Labor Force at Record High

in contrast to the decent establishment survey results, the household survey indicated new records – none of which were good….the employment data extrapolated from the September survey of 60,000 households showed that the seasonally adjusted count of the employed rose by 232,000 to 146,600,000, a number not directly comparable to the establishment data since it also includes farm workers and the self-employed… meanwhile, the count of the unemployed fell by 329,000 to 9,262,000, which thus means the number of us who were counted in the labor force fell by 97,000, leaving the unemployment rate, or those counted as unemployed as a percentage of the total, at 5.9%, down 6.1% in August…with an increase of 217,000 in the working age population and 97,000 less in the labor force, the count of those not in the labor force (and hence not counted when the percentages are calculated) rose by 315,000 to a record high 92,584,000…therefore, the large drop in the unemployed, and hence in the unemployment rate, can almost entirely be accounted for by those who dropped out of the labor force and thus weren’t counted….as a result, the labor force participation rate fell back from 62.8% to 62.7%, a 36 year low last matched in February 1978, before large numbers of women entered the labor force…and although the count of the employed rose by 232,000,  the increase was statistically small enough to leave the employed to population ratio unchanged at 59.0% for the 4th month in a row….our FRED graph below shows the employment to population ratio, which we could think of as the employment rate, in blue, and the labor force participation rate in red, back to the turn of the century…

September 2014 household survey metrics2

of the seasonally adjusted total of 146,600,000 of us counted as being employed in September, 119,287,000 reported they were working full time, 671,000 more than in August, while 27,359,000 reported they were working part time, or less than 34 hours in the reference week, a decrease of 384,000 part time workers over the August part time count…of those, the count of those working part time who would rather work full time fell by 174,000 to 7,103,000; as a result of that, combined with the total leaving the workforce altogether, the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, fell by 0.2% to 11.8%…meanwhile, the number of us unemployed for more than 27 weeks who were still looking for work fell by just 9,000 in September to 2,954,000, while the median duration of unemployment rose from 13.2 weeks to 13.3 weeks…among the 92,584,000 of us not officially in the labor force and hence not counted as unemployed, 6,007,000 reported that they still wanted a job, down from 6,382,000 in August, but up from 5,775,000 a year earlier; of those, 2,226,000 were categorized as “marginally attached to the labor force” because they had looked for work sometime during the last year, but not during the 30 day period covered by the September survey…698,000 of those were further characterized as “discouraged workers”, because they reported that they haven’t looked for work because they believe there are no jobs available to them… 

Personal Income Rises 0.3% in August; Spending Rises 0.5%, Prices Fall

other than the employment report, the report on Personal Income and Outlays for August from the Bureau of Economic Analysis was probably the most important this week, as this is the report that gives us the monthly data on our personal consumption expenditures (PCE), which is nearly 69% of GDP, as well as the important monthly personal income data, total personal savings and the national savings rate, in addition to the price index for PCE, the inflation gauge the Fed targets and which is used in this report to adjust both personal income and consumption expenditures for inflation to arrive at ‘real’ change figures….like the GDP reports, all the dollar amounts referenced by this report are seasonally adjusted and at an annual rate; so the actual monthly dollar changes, which are not reported, are thus on the order of one twelfth of the reported amounts… however, the percentage changes are expressed as a month over month change and are used within the report as if they refer to the annualized amounts, so the two are frequently conflated in the media… 

total personal income increased in August at a seasonally adjusted and annualized $47.3 billion rate, to what would be a gross national personal income of $14,860.8 billion annually, which was 0.3% higher than in July, when personal income increased by 0.2% over June…disposable personal income (DPI), which is total income after taxes, increased at an annualized rate of $35.2 billion to $13,111.4 billion annualized, which was also a 0.3% increase over July, while July’s DPI was also up 0.2% over June…increases in private wages and salaries accounted for $30.4 billion of the August personal income gains, with service industry payrolls increasing by $24.6 billion, goods producing industry payrolls rising $6.0 billion, and government payrolls up by $1.4 billion….increases in supplements to wages and salaries, such as employer contributions to pension plans, accounted for another $4.7 billion of August’s annualized increase, while employee contributions for government social insurance, which is subtracted from the personal income figure, increased at a $4.3 billion rate…meanwhile, proprietors’ income decreased at a $8.5 billion rate in August, mostly due to a $9.7 billion decrease in farm owners incomes, as incomes of individual proprietors of other types of business were up $1.4 billion….other sources of the August personal  income changes included rental income of individuals, which increased at a $6.3 billion clip in August, personal interest and dividend income, which fell at a $0.2 billion rate, and personal transfer payments from government programs, which increased at a $17.2 billion rate.. 

meanwhile, seasonally adjusted personal consumption expenditures (PCE), rose at a $57.5 billion annual clip to $11,980.6 billion in August, which was 0.5% higher than July’s annualized figure, when the increase in PCE over June was not statistically significant….personal outlays for services increased at a $41.0 billion rate to an annualized $7,968.9 billion, personal spending for durable goods rose at a $23.3 billion rate to $1,331.0 billion annually, while personal consumption of non-durable goods fell at a $6.7 billion annual rate to an annualized $2,680.8 billion…..total personal outlays, which includes interest payments and personal transfer payments in addition to PCE, rose by an annualized $60.4 billion in August to $12,406.1 billion, in contrast to the increase of just $3.5 billion in July outlays….the increase in outlays left personal savings, which is disposable personal income less total outlays, at $705.3 billion for the month, down from the savings of $730.5 billion in July…as a result, the personal saving rate, which is personal savings as a percentage of disposable personal income, fell from 5.6% in July to 5.4% in August…  

while personal consumption expenditures account for over 68% of our GDP, before their change is included in the quarterly computation of the change in real GDP they will be adjusted for inflation first, to give us the real change in consumption, and hence real goods and services produced for that consumption…that’s done with the price index for personal consumption expenditures, which is included in this report, which is a chained price index based on 2009 prices = 100….that index fell to 109.079 in August from 109.130 in July, meaning that month over month inflation actually fell by .05%, and hence the personal consumption figure for August will have to be adjusted up by that fraction; however, in the one significant digit rendering of this report, real (inflation adjusted) personal consumption is still listed as increasing by 0.5% for August, as in like manner the change in real disposable income, or the purchasing power of disposable income, also increased by 0.3% for August, same as before the adjustment…

our FRED graph below, which can also be viewed as an interactive, shows monthly real disposable personal income in blue and real personal consumption expenditures in red since January 2000, with the scale in chained 2009 dollars for both on the left; also shown on this same graph in green is the monthly personal savings rate over the same period, with the scale of savings as a percentage of disposable income on the right…the spike in income and savings at the end of 2012 was a result of bonuses and income manipulation before the year end fiscal cliff; the earlier spikes were as a result of the tax rebates enacted as a fiscal stimulus under George Bush….although it may appear from the graph that real disposable income has been accelerating over the past 13 years, real DPI as shown below is not adjusted for increases in the population; on a per capita basis, real DPI is up just 21.1% over the span of this graph…     

August 2014 income and outlays 

August Trade Deficit Slows Slightly to $40.1 Billion

the August report on our International Trade in Goods and Services from the Commerce Department indicated that our seasonally adjusted trade deficit in goods and services was at $40.1 billion for the month, down from the revised trade deficit of $40.3 billion in July, as our exports rose more than $0.4 billion to $198.5 billion on a $0.1 billion increase to $138.8 billion in our goods exports and a $0.4 billion increase to $59.6 billion in our services exports, while our imports rose $0.2 billion to $238.6 billion on a $0.1 billion increase to $198.7 billion in our imports of goods, while our imports of services rose $0.1 billion to $39.9 billion….the July trade deficit was revised down from the previously reported $40.5 billion, and combined with August’s deficit, that gives us an $80.4 billion trade deficit for the 2 months of the 3rd quarter, in contrast with the $130.3 billion trade deficit of the 2nd quarter, suggesting the change in trade will positively impact 3rd quarter GDP…since last August, our overall trade deficit has increased by $0.6 billion, on an $7.9 billion increase in exports and a $8.4 billion increase in imports…

end use categories of exports that saw seasonally adjusted increases in August included capital goods, exports of which were up $1,010 million to $47,134 million, on increases of $566 million in exports of telecommunications equipment, $260 million in exports of computer accessories, $167 million more exports of industrial engines and $133 million more exports of other industrial equipment, which were partially offset by a $133 million decline in exports of engines for civilian aircraft; consumer goods, exports of which were up $765 million to $17,274 million, on a $422 million increase in exports of jewelry and a $168 million increase in exports of pharmaceuticals; and Industrial supplies and materials, exports of which rose $746 million to $44,241 million on $335 million more exports of nonmonetary gold, $264 million more in fuel oil exports, $224 million more exports of finished metal shapes, $172 million more exports of steelmaking materials and $133 million more exports of other precious metals, which were partially offset by a $222 million decrease in exports of nonferrous metals other than copper and aluminum….in addition, our exports of goods not categorized by end use rose by $389 million to $5,656 million… meanwhile, our exports of automotive vehicles, parts, and engines fell by $1721 million in August to $13,591 million, and our exports of foods, feeds & beverages fell by $580 million to $10,482 million, on $291 million less exports of soybeans and $167 million less exports of corn…

the July to August increase in imports of goods included a $1759 million increase to $50,852 in our imports of capital goods, as we imported $1,134 million more of civilian aircraft, $255 million more in semiconductors and $201 million more computer accessories; we also imported $45,797 million worth of consumer goods, $704 million more than July, as we imported $340 million more in cotton apparel and cotton household goods and $236 million more in apparel and textiles other than wool or cotton….meanwhile, our imports of automotive vehicles, engines and parts fell by $1,362 million to $27,559 million, our imports of foods feeds and beverages fell by $280 million to $10,554 million on $125 million lower fruit and fruit juice imports, and our imports of industrial supplies and materials fell by $245 million to $55,522 million on $744 million lower imports of crude oil and $299 million lower imports of fuel oil which were partially offset by $327 million more in imports of organic chemicals and $262 million more imports of fertilizer…in addition, our imports of goods not categorized by end use fell by $475 million to $6,320 million..

included below is Bill McBride’s graph of our trade deficit from his coverage of this report, which shows the relationship of our net petroleum trade deficit to our deficit overall….reading from the top $0 line down, the black graph line tracks our deficit in petroleum trade as a negative in billions of dollars since 1998; over the same span, the red graph shows our trade deficit for everything else except oil, also as a negative from the $0 line; combined together, those two sum to our total trade deficit, which Bill has graphed in blue…it’s pretty clear that even though our oil deficit in black has generally been falling (ie, going up towards zero on this chart) over the past couple of years, our trade deficit in everything else in red has continued to grow, and hence there’s been little improvement in our monthly deficit… 
August 2014 McBride trade deficit

August Construction Spending Falls 0.8%; Unfilled Factory Orders at Record High While New Orders Fall 10.1%

the week also saw the Census report on Construction Spending for August (pdf). which estimated that our seasonally adjusted construction spending for the month would work out to an annual rate of $961.0 billion of spending overall, 0.8 percent (±1.8%)* below the revised July estimate of spending at a $968.8 billion annual rate and 5.0 percent (±2.3%) above last August’s adjusted and annualized level of construction spending….private construction spending was at a seasonally adjusted annual rate of $685.0 billion, 10.8 percent (±1.0%)* lower than the revised July estimate, with residential spending falling 0.1 percent (±1.3%)* and non-residential construction falling 1.4 percent (±1.0%), while public construction spending was estimated at $275.9 billion, 30.9 percent (±2.8%)* below the revised July estimate….in addition, Census also released the Full Report on Manufacturers’ Shipments, Inventories, & Orders for August(pdf), which showed new orders for manufactured goods fell by a record $56.1 billion or 10.1% to $502.0 billion, more than reversing the $53.0 increase in new orders in July, as new orders for commercial aircraft returned to normal…this report also showed factory shipments fell by $5.0 billion or 1.0% to $503.1 billion, factory inventories rose by $0.8 billion or 0.1% to $653.9 billion, and unfilled factory orders rose by $7.0 billion or 0.6% to $1,164,463 billion, which was the highest level value of unfilled orders on record….   
Annual Gains in Case-Shiller Home Price Indexes Lower in July

this week also saw the release of the Case-Shiller Home Price Indices for July which showed unseasonably smaller increases in home prices in all of their indices…for July, the 10-City and 20-City Composites, which compare repeat sale home prices of the three month period of May to July vis a vis the 3 month period from April to June, increased 0.6% while the National Index was up 0.5% over last month..on an unadjusted basis, all cities except San Francisco, where prices slipped 0.4%, saw home prices increase, although 17 saw smaller increases in July as compared to last month..the largest increases were seen by New York, where prices were up 1.1%, by Detroit, where prices rose 0.9%, and by Dallas and Miami, where prices rose 0.8%…on a year over year basis, the 10-City and 20-City Composites both rose 6.7%, in contrast to the year over year gains of 8.1% seen by both indexes last month, while the National Index was up 5.6% compared to the annual increase of 6.2% seen nationally last month….the largest year over year home price increases were seen in Las Vegas at 12.8%, Miami at 11.0% and San Francisco at 10.3%, while Cleveland, where prices just rose 0.9%,was the only city showing an annual home price increase of less than 3.0%…

included below are the pair of interactive FRED graphs we have created to show the historical track of home price indexes for each of the cities in the 20 city index, which are all based on 2000 home prices equal to 100.0… in our first FRED graph, we show the tracks of home price indexes for Atlanta in bright blue, Boston in bright red, Charlotte in dark green, Chicago in orange, Cleveland in purple, Dallas in grey, Detroit in mauve, Denver in mustard, Las Vegas in dull blue, and Los Angeles in beet red… for the larger interactive view of this graph at FRED, click here; there you can move your cursor across the graph and view the monthly price history of the changes in the price indices for all 10 cities shown below, just as we have included the home price index values for each of them for the June report in our screenshot… 

July 2014 Case Shiller A-L

our second FRED graph of the Case-Shiller city indices shows the the historical price track of the metro home price indexes for Miami in bright blue, Minneapolis in bright red, New York in dark green, Phoenix in orange, Portland in violet, San Diego in grey, San Francisco in mauve, Seattle in mustard, Tampa in dull blue and Washington DC in beet red; in addition, this second chart includes the track of the Case-Shiller Composite 20 shown as a heavier black line…the S&P Case-Shiller index is not seasonally adjusted, but you will notice that the seasonal home price swings have become more pronounced since the housing bust…again, you can click here for the larger 1000 pixel interactive version of this graph at the St Louis Fed web site, where all the lines can be easily traced and  the index values for each  viewed over time with their interactive tool… 

July 2014 Case Shiller M-Z

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

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