August jobs; July’s international trade, factory orders, & construction spending, et al

in addition to the Employment Situation Summary for August from the Bureau of Labor Statistics, this week also saw the release of three reports from the Census Bureau that together will make up a decent part of the July contribution to 3rd quarter GDP: the report on our International Trade for July, the Full Report on Manufacturers’ Shipments, Inventories and Orders for July and the July report on Construction Spending…the week also saw the private report on light vehicle sales for August from Wards Automotive, which estimated that vehicles sold at a 17.72 million annual rate in August, up 1.3% from the 17.5 million annual sales rate in July, and the highest monthly rate of auto sales since July 2005….in addition, the week also saw the release of several widely watched diffusion indexes, generated from business growth surveys that weigh the positive responses of executives against the negative ones…those included the Texas area manufacturing survey from the Dallas Fed, which reported their general business activity index dropped more than 11 points, from -4.6 to -15.8, while their company outlook index also turned negative, coming in at -10.3., indicating a deepening recession in their oil patch economy, the August Chicago Business Barometer from the ISM Chicago (pdf) which slipped slightly from 54.7 in July to 54.4 in August, indicating an ongoing rebound from the weak readings of spring and early summer which saw contraction in 4 out of 5 months prior to July, and the two reports from national the Institute for Supply Management (ISM), the August Manufacturing Report On Business, which saw the manufacturing PMI (Purchasing Managers Index) fall from 52.7 in July to a two year low at 51.1 in August, indicating just a slim majority of manufacturing purchasing managers saw expansion in various facets of their business, and the August Non-Manufacturing Report On Business, which saw the NMI (non-manufacturing index) slip from a record 60.3% in July to 59.0% in August, still indicating a large plurality of service industry purchasing managers reported expansion in various facets of their business…both of those reports are easy to read and include anecdotal comments from purchasing managers from the 34 business types who participate in those surveys nationally…

Employers Add 173,000 Jobs in August – Labor Force Participation Stays at a 38 Year Low

the Employment Situation Summary for August indicated the weakest job creation since March, with a record number of us not in the labor force, while the unemployment rate fell to a post recession low of 5.1%….the establishment survey data indicated that employers added a seasonally adjusted 173,000 jobs in August, while the payroll job increases for June and July were both revised to 245,000, from the previously reported 231,000 jobs added in June and 215,000 jobs in July….August job increases were entirely in the private service sector and in government, as 24,000 fewer of us were employed by goods producers than in July, with the loss of 17,000 jobs in manufacturing and another 10,000 in resource extraction…the health care and social assistance sector added 56,400 jobs, with 21,100 of those in ambulatory services and another 15,900 jobs in hospitals…the leisure and hospitality sector added 33,000 jobs, with 26,100 of those in restaurants and bars, as did the professional and business services category, where 15,800 more were employed in administrative and waste services, while the various branches of government also added 33,000 jobs, with 22,900 of those in local school districts…in addition, employers reported the average workweek rose by 0.1 hour to 34.6 hours and the average hourly earnings for all non-farm employees rose by 8 cents to $25.09… 

the June household survey estimated that the seasonally adjusted count of those employed rose by 196,000 to 149,036,000, while the number of unemployed fell by 237,000 to 8,029,000, which was enough to reduce the unemployment rate by 0.2%, from 5.3% to 5.1%…however, with the reduction of the unemployed greater than the increase in the employed and the civilian working age population increased by 220,000 new entrants, the count of those not in the labor force rose by 261,000 to a new record at 94,031,000, and the labor force participation rate fell from 62.623% in July to 62.552% in August, a new 38 year low, albeit officially statistically unchanged at 62.6%…with the increase in the employed, the employment to population ratio, which we could think of as an employment rate, rose from 59.3% to 59.4%…while the number who reported they were working part time fell by 131,000 to 19,760,000, those who reported being stuck in just part time work involuntarily rose by 158,000 to 6,483,000, and hence the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, only fell by 0.1% to 10.3%…

the BLS employment situation press release itself is not difficult to read or understand, so you can get more details on this report from there…note that almost every paragraph in that release points to one or more of the tables that are linked to on the bottom of the release, and those tables are also on a separate html page here that you can open it along side the press release to avoid the need to scroll up and down the page…thus, when you encounter a line such as “The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours. (See tables B-2 and B-7.)”  you can quickly open Table B-2 and Table B-7 where you will find average weekly hours and hours of overtime for both all employees and for non-supervisory employees by industry sector, and where you’d see that average includes workweeks as long as 44.4 hours for those in “mining and logging” down to an average of 25.0 hours for those working in leisure and hospitality sectors…

July Trade Deficit Falls by 7.3%, on Pace to Add 0.58 Percentage Points to 3rd quarter GDP

our July trade deficit fell by 7.3% from June as the value of our exports rose and the value of our imports fell…the Census report on our international trade in goods and services for July indicated that our seasonally adjusted goods and services trade deficit fell by $3.3 billion to $41.9 billion in June from an June deficit which was revised from $43.8 billion to $45.2 billion….the value of our July exports rose $0.8 billion to $188.5 billion as our exports of goods rose by $0.6 billion to $128.2 billion and our exports of services increased $0.2 billion to $60.3 billion, while our imports fell $2.5 billion to $230.4 billion on a $2.7 billion decrease to $189.6 billion  in our imports of goods which was partially offset by a $0.2 billion increase to $40.8 billion in our imports of services…export prices averaged 0.2% lower in July, so the real growth in exports was higher by that fraction, while import prices were 0.9% lower, thus incrementally increasing real growth in imports by that percentage from the nominal dollar amounts reported here…

referencing Exhibit 7 in the Full Release and Tables for July, we find that a $596 million increase to $13,275 million in our exports of vehicles, parts, and engines was largely responsible for our increased exports; in addition, our exports of industrial supplies and materials rose $303 million to $37,376 on a $348 million increase in our exports of non-monetary gold, our exports of capital goods rose $179 million to $44,298 million on increases in most line items including $462 million more industrial machines that more than offset a $738 million decrease in our exports of civilian aircraft, our exports of foods feeds and beverages rose $178 million to $10,691 million on a $263 million increase in our exports of soybeans, and our exports of goods not categorized by end use rose by $151 million to $5,632 million; those export increases were partially offset by a $426 million decrease to $16,327 million in our exports of consumer goods…

meanwhile, Exhibit 8 in the Full Release and Tables shows us that a $2,609 million decrease to $47,806 million in our imports of consumer goods was largely responsible for our reduced July imports, as we imported $1,469 million less pharmaceuticals and $1,251 million less cellphones and similar household goods than in June…in addition, our $10,525 million in imports of foods, feed and beverages were $593 million less than in June, as we imported $278 million less fish and shellfish and $147 million less meat products…partially offsetting those decreases, our imports of industrial supplies and materials rose by $370 million to $42,285 million on a $456 million increase in our imports of crude oil, our imports of vehicles, parts, and engines rose by $326 million to $30,003 million, our imports of capital goods rose $233 million to $49,291 million on a $576 million increase in our imports of computers, which was partially offset by a $229 million decrease in our imports of civilian aircraft, and our imports of goods not categorized by end use rose by $158 million to $6,931 million…for more details, the two itemized lists that we referenced show the value of more than 200 export and import line items, both monthly and year to date, in table form in exhibit 7 and exhibit 8 of the full pdf for this release

to gauge the impact of July trade on 3rd quarter growth, we must first adjust the value of July imports and exports for inflation and compare July to the similarly adjusted 2nd quarter figures… exhibit 10 in the pdf for this report gives us monthly goods trade figures by end use category and in total in chained 2009 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, albeit they are not annualized….from that table, we find that 2nd quarter real exports averaged 120,343 million monthly in 2009 dollars, while inflation adjusted July exports were at 120,725 million using the same 2009  dollar quantity index…annualizing the change between the two figures, we find that 3rd quarter real exports are running at a 1.28% rate over those of the 2nd quarter, or at a pace that would add 0.16 percentage points to 3rd quarter GDP…in a similar manner, we find that our 2nd quarter real imports averaged 178,201 million monthly in chained 2009 dollars, while inflation adjusted July imports were at 176,933 million…that would indicate that so far in the 3rd quarter, our real imports are falling at a 2.8% annual rate from those of the 2nd quarter…since imports subtract from GDP because they represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, that 2.8% rate of decline would add another 0.42 percentage points to 3rd quarter GDP….hence, if July trade figures are maintained throughout the 3rd quarter, our improving balance of trade would add 0.58 percentage points to the growth of 3rd quarter GDP…

July Construction Spending Increased by 0.7% from June Spending that was Revised 1.1% Higher

in the July report on construction spending (pdf), the Census Bureau estimated that our seasonally adjusted construction spending would work out to a post recession high of $1,083.4 billion annually if extrapolated over an entire year, which was 0.7 percent (±1.5%)* above the revised June estimate of spending at a  $1,075.9 billion annual rate, and 13.7 percent (±2.0%) above the estimated adjusted and annualized level of construction spending of July of last year…the June construction spending estimate was revised from $1,064.6 billion annually to $1,075.9 billion and the May estimate was revised from $1,063.5 billion to $1,068.4  billion annually, so with the caveat that these are estimates, construction spending was actually at a rate 1.8% higher than last reported once those revisions are taken into account…like last month, those construction revisions should also imply another decent upward revision to 2nd quarter GDP…meanwhile, the rate of July construction spending was 1.9% higher that the rate of the 2nd quarter, which would be adjusted with the 0.5% increase in the price index for final demand for construction to indicate a quarter over quarter growth rate of 1.4%, or construction spending that was growing at a 5.8% annual rate in the 3rd quarter

private construction spending was at a seasonally adjusted annual rate of $787.8 billion, 1.3 percent (±1.0%) above the revised June estimate of $777.4 billion annually, with residential spending rising to a seasonally adjusted annual rate of $380.8 billion in July, 1.1 percent (±1.3%) above the revised June estimate of $376.6 billion, while private non-residential construction spending was at an annual rate of $407.0 billion in July, 1.5 percent (±1.0%) above the revised June estimate of $400.8 billion…private spending for manufacturing facilities was at a $93,402 million rate annually, 4.7% higher than June and 73.1% higher than last July, while outlays for construction of lodging fell 1.1% to $21,763 million in July but were still 41.2% higher than a year ago….meanwhile, public construction spending was estimated at a rate of $298.2 billion annually, 1.6 percent (±2.6%)* above the revised revised May estimate of $293.5 billion in spending, with public recreation spending down 11.9% to $10,792 million, highway and street spending down 0.2% to $90,315 million, and education construction spending down 3.0% to $66,374 million..

Value of July Factory Orders Up 0.4%, Shipments Down 0.2%, Inventories Down 0.1%

the Full Report on Manufacturers’ Shipments, Inventories, & Orders for June (pdf), also from the Census Bureau, reported that the value of new orders for durable goods rose in June by a seasonally adjusted $2.0 billion or 0.4% to $482.0 billion, largely because of the jump in automobile orders that we saw with with the advance report on durable goods last week, which were revised higher to show a 2.2% increase this week’s report…the 4.0% increase in automotive equipment orders combined with a 19.5% increase in orders for ships and boats led to a 5.0% increase in orders for transportation equipment, without which new factory orders actually fell by 0.6%, as the value of new orders for non-durable goods was 1.3% lower in July than in June…while new factory orders increased in both June and July, those increases followed decreases of 1.1% in May and 0.7% in April, and with the output of refineries, commodity food producers, and chemical plants all priced much lower than a year ago, the value of year to date new orders still remains 7.3% less than a year ago…

this report also showed that the value of factory shipments fell by $0.8 billion or 0.2 percent to $483.6 billion, which followed an increase by 0.6% in June and a decrease of 0.2% in May…shipments of durable goods rose 1.0% almost entirely on a 2.9% increase in shipments of transportation equipment, led by a 9.5% increase in shipments of light trucks and utility vehicles…meanwhile, the value of shipments of non-durable goods fell by 1.3%, entirely on a 8.7% decrease in shipments from refineries, which saw somewhat lower product prices in July…meanwhile, the aggregate value of July factory inventories, which had been up each month in the 2nd quarter, decreased by $0.6 billion or 0.1 percent to $651.2 billion…inventories of manufactured durable goods fell by $0.3 billion or 0.1 percent to $401.8 billion as lower priced inventories of primary metals fell by $0.2 billion, while inventories of non-durable goods also fell by $0.3 billion or 0.1% to $249.4 billion on a $1.5 billion or 3.9% drop to $37.0 billion in inventories of coal and refined products…..

finally, the value of unfilled orders rose by $2.8 billion or 0.2 percent to $1,198.0 billion, following a statistically insignificant increase in June…a 0.4% increase to $614,835 million in the order book for commercial aircraft led to a 0.4% increase in unfilled orders for transportation equipment, which now account for more than 2/3rds of all unfilled factory orders….without that increase in unfilled orders for transportation equipment, the overall factory order book was down $508 million to $394,950 million, or a bit more than 0.1%…with both shipments and inventories higher, the widely watched unfilled orders-to-shipments ratio was at 1.35 in July, unchanged from June, although as we’ve pointed out in the past, that ratio has lost much of its relevance in the current period of collapsing commodity prices…

(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, most from the aforementioned GGO posts, contact me…)

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