February jobs report; January’s trade deficit, factory inventories, and wholesale sales

in addition to the Employment Situation Summary for February from the Bureau of Labor Statistics, this week’s releases included three reports that will input into 1st quarter GDP: the Census report on our International Trade for January, the Full Report on Manufacturers’ Shipments, Inventories and Orders for January, and the January report on Wholesale Trade, Sales and Inventories, also from the Census Bureau….in addition, the Fed released the Consumer Credit Report for January, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $8.8 billion, or at a 2.4% annual rate, as non-revolving credit expanded at a 5.5% annual rate to $2,778.4 billion and revolving credit outstanding contracted at a 4.6% rate to $995.1 billion…

the week’s privately issued reports included the ADP Employment Report for February and the Mortgage Monitor for January (pdf) Black Knight Financial Services…the latter reported that there were 480,598 home mortgages, or 0.94% of all mortgages outstanding, remaining in the foreclosure process at the end of January, down from the 0.95% of all active loans that were in foreclosure at the end of December, and down from 1.30% of all mortgages that were in foreclosure in January of last year, while new foreclosure starts rose to 70,357 in January, up from 59,739 in December and the highest since March of last year …..

Employers Add 235,000 Jobs in February, Unemployment Rate Down to 4.7%

the Employment Situation Summary for February indicated modest employment increases over the month, while the household survey saw upticks in the employment rate and the labor force participation rate, and lower unemployment…estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 235,000 jobs in February, after the previously estimated payroll job increase for January was revised up from 227,000 to 238,000 and the payroll jobs increase for December was revised from 157,000 down to 155,000…that means that this report represents a total of 244,000 more seasonally adjusted payroll jobs than were reported last month, better than the 6 month average of 194,000 jobs per month, and above the past year’s average of 196,000 jobs per month…the unadjusted data shows that there were actually 1,010,000 more payroll jobs extant in February than in January, as large seasonal job increases in sectors such as administrative and waste services, leisure and hospitality and state and local government were smoothed over by the seasonal adjustments…

seasonally adjusted job increases in February were spread through through both the goods producing and the service sectors, with only the retail sector dropping 26,000 jobs on a seasonally adjusted basis, as general merchandise stores cut 19,300 employees…the construction sector saw a seasonally adjusted increase of 58,000 jobs, with specialty trade contractors adding 36,400 workers, largely because of record warm temperatures through a large swath of the eastern US….the broad professional and business services sector added 37,000 jobs, as management and technical consulting services employed 6,300 more than in December and 5,500 jobs were added in computer systems design….employment in health care rose by 32,500, with the addition of 6,900 jobs in doctor’s offices and 6,300 in hospitals.. in addition, employment in private educational services rose by 29,300 and manufacturing employment rose by 28,000, with 8,800 of those in food manufacturing…another 26,000 seasonally adjusted jobs were added in accommodation and food services, with the addition of 16,700 jobs in bars and restaurants…other major sectors, including resource extraction, wholesale trade, transportation and warehousing. financial, and government all saw job gains of less than 10,000, while the utility sector shed a net of 1,000 employees..

the establishment survey also showed that average hourly pay for all employees rose by 6 cents an hour to $26.09 an hour in February, after it had increased by a revised 5 cents an hour in January; at the same time, the average hourly earnings of production and non-supervisory employees increased by 4 cents to $21.86 an hour…employers also reported that the average workweek for all private payroll employees was unchanged at 34.4 hours in February, while hours for production and non-supervisory personnel was unchanged at 33.6 hours for the seventh consecutive month…in addition, the manufacturing workweek was also unchanged at 40.8 hours, while average factory overtime remained at 3.3 hours…

meanwhile, the February household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 447,000 to 152,528,000, while the similarly estimated number of those unemployed fell by 107,000 to 7,528,000; which thus meant a net 340,000 increase in the total labor force…since the working age population had grown by 164,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by 176,000 to 94,190,000…with the increase of  those in the labor force greater than the increase in the civilian noninstitutional population, the labor force participation rate ticked up from 62.9% in January to 63.0% in February….at the same time, the increase in number employed as a percentage of the increase in the population was great enough to lift the employment to population ratio, which we could think of as an employment rate, 0.1% to 60.0%…at the same time, the decrease in the number unemployed was also large enough to decrease the unemployment rate from 4.8% to 4.7%….meanwhile, the number who reported they were involuntarily working part time fell by 136,000 to 5,704,000 in February, which was enough to lower the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, from 9.4% in January to 9.2% in February, matching its lowest since April 2008….

like most reports from the Bureau of Labor Statistics, the employment situation press release itself is easy to read and understand, so you can get more details on these two reports 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..   

January Trade Deficit Rises 9.6% on Higher Imports of Oil, Cars and Consumer Goods

our trade deficit rose by 9.6% January, as the value of both our exports and our imports increased, but our imports increased by much more….the Census report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit rose by $4.2 billion to $48.5 billion in January, the highest in 5 years, from a December deficit which was revised but statistically unchanged at $44.3 billion…the value of our January exports rose by $1.1 billion to $192.1 billion on a $1.1 billion increase to $128.0 billion in our exports of goods and a decrease of less than $0.1 billion to $61.1 billion in our exports of services, while our imports rose $5.3 billion to $240.6 billion on a $5.1 billion increase to $197.6 billion in our imports of goods and a $0.2 billion increase to $42.9 billion in our imports of services…export prices averaged 0.2% higher in January, so the real growth in exports was less than the nominal dollar value by that percentage, while import prices were 0.6% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage….. 

the increase in our January exports of goods was mostly a result of higher exports of industrial supplies and of automotive products, offset by a decrease in our exports of capital goods…referencing the Full Release and Tables for January (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $2,082 million to $37,961 million on a $697 million increase in our exports of crude oil and a $548 million increase in our exports of petroleum products other than crude or fuel oil, and that our exports of automotive vehicles, parts, and engines rose by $1329 million to $13,616 million on a $874 million increase in our exports of new and used passenger cars and a $306 million increase in our exports of trucks, buses, and special purpose vehicles…in addition, our exports of foods, feeds and beverages rose by $594 million to $11,204 million on a $407 million increase in our exports of soybeans.. offsetting those increases, our exports of capital goods fell by $1,889 million to $43,482 million on a $611 million decrease in our exports of civilian aircraft, a $575 million decrease in our exports of engines for civilian aircraft, and a $306 million decrease in our exports of telecommunication equipment, our exports of consumer goods fell by $11 million to $16,476 million, and our exports of other goods not categorized by end use fell by $1,738 million to $4,202 million..

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows that higher imports of consumer goods, industrial supplies and materials, and automotive vehicles, parts, and engines were responsible for the increase in January imports…our imports of consumer goods rose by $2,406 million to $52,061 million on a $1019 million increase in our imports of cellphones, a $281 million  increase in our imports of nonwool or cotton clothing and textiles, a $236 million increase in our imports of TVs and video equipment, a $208 million increase in our imports of toys, games and sporting goods, and a $205 million increase in our imports of gem diamonds…our imports of industrial supplies and materials rose by $1,001 million to $42,015 million as our imports of crude oil rose by $1,672 million, our imports of fuel oil rose by $436 million and our imports of other petroleum products rose by $493 million, while our imports of coal fell by $306 million and our imports of fertilizers fell by $370 million….our imports of automotive vehicles, parts and engines rose by $899 million to $31,763 million on a $688 million increase in our imports of new and used passenger cars and a $383 million increase in our imports of trucks, buses, and special purpose vehicles…in addition, our imports of capital goods rose by $688 million to $51,091 million on a $374 million increase in our imports of semiconductors…meanwhile, our imports of foods, feeds, and beverages fell by $57 million to $11,250 million, and our imports of other goods not categorized by end use fell by $76 million to $7,601 million…

to gauge the impact of January trade on 1st quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2009 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, albeit they are not annualized here….from that table, we can figure that 4th quarter real exports of goods averaged 121.037.7 million monthly in chained 2009 dollars, while inflation adjusted January goods exports were at 124,015 million in that same 2009 dollar quantity index representation… annualizing the change between the two figures, we find that January’s real exports of goods are running at a 10.2% annual rate above those of the 4th quarter, or at a pace that would add about 0.83 percentage points to 1st quarter GDP if continued through February and March…in a similar manner, we find that our 4th quarter real imports of goods averaged 183.210.3 million monthly in chained 2009 dollars, while inflation adjusted goods imports in January were at 189,361 million…that would indicate that so far in the 1st quarter, we have seen our real imports increase at a 14.1% annual rate from those of the 4th 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, their increase at a 14.1% rate would subtract 1.61 percentage points from 1st quarter GDP….hence, if the January trade deficit is maintained at the same level throughout the 1st quarter, our deteriorating balance of trade in goods would subtract about 0.78 percentage points from the growth of 1st quarter GDP….note that we have not computed the impact of the less volatile change in services here because the Census does not provide inflation adjusted data on those, and we don’t have easy access to the details on their price changes…  

Factory Shipments Up 0.2%, Inventories Up 0.2%

the Full Report on Manufacturers’ Shipments, Inventories, & Orders for January (pdf) from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods increased by $5.5 billion or 1.2 percent to $470.2 billion, the sixth increase in seven months, following an increase of 1.3% in December, which was unrevised from last month’s reported figure….however, since the Census Bureau does not even collect data on new orders for non durable goods for this widely watched “factory orders report”, both the “new orders” and “unfilled orders” sections of this report are really only useful as a revised update to the January advance report on durable goods we reported on a week ago…this report now shows that new orders for manufactured durable goods rose by $4.5 billion or 2.0% to $230.7 billion in January, revised from the 1.8% increase to $230.4 billion figure that was published a week ago….

this report also indicated that the seasonally adjusted value of January factory shipments rose by $1.1 billion or 0.2 percent to $478.3 billion, following a 2.5% increase in December….shipments of durable goods were statistically unchanged from December at $238.8 billion, revised from the 0.1% decrease reported by the durables report last week…meanwhile, the value of shipments (and hence of “new orders”) of non-durable goods were up by $1.0 billion or 0.4 percent to $239.5 billion, after December shipments were revised 0.3% higher to show a 3.4% increase, as January’s increase was again driven by a  2.4% increase in the value of shipments of petroleum and coal products…

meanwhile, the aggregate value of January factory inventories rose for the 7th time in 8 months, increasing by $1.0 billion or 0.2 percent to $627.9 billion, after a December increase of 0.3%…January inventories of durable goods increased in value by $0.3 billion or 0.1 percent to $384.1 billion, revised up from last week’s published “virtually unchanged increase”, following a 0.1% decrease in December durable inventories…..the value of non-durable goods’ inventories rose by $0.8 billion or 0.3 percent to $243.8 billion, following a revised 0.9% increase in December non-durable inventories…to gauge the effect of these January inventories on 1st quarter GDP, they must first be adjusted for changes in price with appropriate components of the producer price index…by stage of fabrication, the value of finished goods inventories was up 0.1% to $224.96 billion in January; the value of work in process inventories was up 0.2% to $194.5 billion, and materials and supplies inventories were valued 0.2% higher at $208.46 billion…the January producer price index reported prices for finished goods increased 0.2%, prices for intermediate processed goods inventories were 1.1% higher, and prices for unprocessed goods were 3.8% higher..that would suggest that real finished goods inventories were 0.1% lower, real inventories of intermediate processed goods were 0.9% lower, and raw material inventory inventories were 3.6% lower..

January Wholesale Sales Down 0.1%, Wholesale Inventories Down 0.2%

the January report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $463.6 billion, down 0.1 percent (+/-0.5%)* from the revised December level, but 8.4 percent (±0.9 percent) higher than wholesale sales of January 2016… the December preliminary estimate of wholesale sales was revised down $0.8 billion or 0.2 percent to $464.1, which meant December’s sales were 2.4% above the November level… January wholesale sales of durable goods rose 0.1% percent (+/-1.1%) from December and were up 7.4% percent (+/-1.8%) from a year earlier, with a 3.2% increase in wholesale sales of motor vehicles and motor vehicle parts and supplies leading the increase …wholesale sales of nondurable goods were down 0.3 percent (+/-0.9%)* from December but were up were 9.3 percent (+/-1.6%) from last January, with wholesale sales petroleum and petroleum products down 1.3% the largest drag…as an intermediate activity, wholesale sales are not included in GDP except insofar as they are a trade service, since the traded goods themselves do not represent an increase in the output of the goods sold….

on the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods on the shelf represent goods that were produced but not sold, and this January report estimated that wholesale inventories were valued at $600.0 billion at month end, a decrease of 0.2 percent (+/-0.2%)* from the revised December level but still 2.2 percent (±0.9 percent) higher than January a year ago, with the December preliminary inventory estimate revised downward by $0.2 billion or 0.1%….inventories of durable goods were valued 0.2 percent (+/-0.2%)* lower than December but were valued 1.1 percent higher than January a year earlier, with wholesale inventories of motor vehicle and motor vehicle parts and supplies 3.1% lower while inventories of computers, computer peripheral equipment and software were up 3.5%…meanwhile, the value of wholesale inventories of nondurable goods was down 0.1 percent (+/-0.2%) from December but was up 4.0 percent (+/-0.9%) from last January, as a 2.1% decrease in the value of wholesale inventories of petroleum and petroleum products offset a 2.3% increase in the value of wholesale farm products…with the January producer price index for finished goods up by 1.0% and producer prices for intermediate goods up by 1.1%, most additions to January inventories look to be a negative for 1st quarter GDP growth… 

 

(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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