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

Last week’s major releases included both major monthly jobs reports: the Employment Situation Summary for February and the Job Openings and Labor Turnover Survey (JOLTS) report for January, both from the Bureau of Labor Statistics, and three reports that will provide source data for 1st quarter GDP: the Commerce Dept’s 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, both 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, grew by a seasonally adjusted $19.5 billion, or at a 4.7% annual rate, as non-revolving credit expanded at a 3.6% annual rate to $3,711.7 billion, while revolving credit outstanding grew at an 7.6% rate to $1,327.5 billion…

The week’s privately issued reports included the ADP Employment Report for February and the Mortgage Monitor for January from ICE Black Knight Financial Services, which indicated that 3.38% of all mortgages were delinquent in January, down from 3.57% in December, but unchanged from the 3.38% of mortgages that were delinquent in January of 2023, and that 0.41% of all mortgages were in the foreclosure process, up from the 0.40% that were in foreclosure in December, but down from the 0.45% of mortgages that were in foreclosure a year earlier, and the February 2024 Services Report On Business from the Institute for Supply Management (ISM), who reported their Services Index fell to 52.6%, down from 53.4% in January, still indicating a small plurality of service industry purchasing managers reported expansion in various facets of their business in February…

Employers Added 275,000 Jobs in February, Unemployment Rate Rose to 3.9%

The Employment Situation Summary for February indicated that employers added somewhat more payroll jobs than were expected after sharp downward revisions to jobs added in prior months, while the unemployment rate rose 0.2% due to actual job losses, largely among women, minorities, and teenagers…estimates extrapolated from the seasonally adjusted establishment survey projected that employers added 275,000 jobs in February, after the previously estimated payroll job increase for January was revised down by 124,000, from 353,000 to 229,000, while the payroll jobs increase for December was revised down by 43,000, from a increase of 333,000 jobs to an increase of 290,000 jobs…hence, those revisions mean that this report represents a total of just 108,000 more seasonally adjusted payroll jobs than the report of a month ago…..the unadjusted data shows that there were actually 1,141,000 more payroll jobs extant in February than in January, but the typical seasonal job increases in sectors such as professional & business services, leisure and hospitality and public and private education were leveled off in the report by the seasonal adjustments…

Seasonally adjusted job increases in February were spread through the private goods producing and service sectors and in government, while 4,000 jobs were lost in the manufacturing sector due to the seasonal adjustment….since the BLS summary of the job changes by sector is clear and as detailed as our usual synopsis from the tables, we’ll again just quote from that summary here:

• Total nonfarm payroll employment rose by 275,000 in February, above the average monthly gain of 230,000 over the prior 12 months. In February, job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing. (See table B-1.)
• Health care added 67,000 jobs in February, above the average monthly gain of 58,000 over the prior 12 months. In February, job growth continued in ambulatory health care services (+28,000), hospitals (+28,000), and nursing and residential care facilities (+11,000). 
• Government employment rose by 52,000 in February, about the same as the prior 12-month average gain (+53,000). Over the month, employment continued to trend up in local government, excluding education (+26,000) and federal government (+9,000).
• Employment in food services and drinking places increased by 42,000 in February, after changing little over the prior 3 months.
• Social assistance added 24,000 jobs in February, about the same as the prior 12-month average gain of 23,000. Over the month, job growth continued in individual and family services (+19,000).
• Employment in transportation and warehousing rose by 20,000 in February. Couriers and messengers added 17,000 jobs, after losing 70,000 jobs over the prior 3 months. In February, job growth also occurred in air transportation (+4,000), while warehousing and storage lost 7,000 jobs. Employment in the transportation and warehousing industry is down by 144,000 since reaching a peak in July 2022.   
• In February, employment continued to trend up in construction (+23,000), in line with the average monthly gain of 18,000 over the prior 12 months. Over the month, heavy and civil engineering construction added 13,000 jobs.
• Retail trade employment changed little in February (+19,000) and has shown little net change over the year. Over the month, job gains in general merchandise retailers (+17,000); health and personal care retailers (+6,000); and automotive parts, accessories, and tire retailers (+5,000) were partially offset by job losses in building material and garden equipment and supplies dealers (-6,000) and electronics and appliance retailers (-2,000).   
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; manufacturing; wholesale trade; information; financial activities; professional and business services; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 5 cents an hour to $34.57 an hour in February, after it had increased by a downwardly revised 18 cents an hour in January; at the same time, the average hourly earnings of production and nonsupervisory employees increased by 7 cents an hour to $29.71 an hour…employers also reported that the average workweek for all private payroll employees increased by one-tenth of an hour to 34.3 hours in February, while hours for production and non-supervisory personnel increased by 0.3 hour to 33.8 hours, after the non-supervisory workweek had decreased by 0.3 hours in January…in addition, the manufacturing workweek increased by 0.1 hour to 39.9 hours, while average factory overtime was up 0.2 hours to 3.0 hours…

Meanwhile, the February household survey indicated that the seasonally adjusted extrapolation of those who reported being employed fell by an estimated 184,000 to 160,968,000, while the similarly estimated number of those considered unemployed rose by 334,000 to 6,458,000, which together meant there was a rounded 150,000 increase in the total labor force…since the working age population had grown by 171,000 over the same period, that meant the number of employment aged individuals who were not in the labor force rose by a rounded 20,000 to 100,285,000….with the increase of those in the labor force in line with the increase of the civilian noninstitutional population, the labor force participation rate was unchanged at 62.5%….meanwhile, the decrease in number employed as a percentage of the increase in the population was large enough to lower the employment to population ratio, which we could think of as an employment rate, from 60.2% in February to 60.1% in February …likewise, the increase in the number unemployed was large enough increase the unemployment rate from 3.7% in January to 3.9% in February, the highest since January 2022….meanwhile, the number who reported they were involuntarily working part time fell by 46,000 to 4,376,000 in February, which partly offset the increase in the unemployed and left the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, at 7.3% in February, up just 0.1% from 7.2% in January…

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 alongside the press release to access the data while avoiding the need to scroll up and down the page..

Hiring, Layoffs, and Job Quitting Fell in January, Job Opening were Little Changed

The Job Openings and Labor Turnover Survey (JOLTS) report for January from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 26,000, from 8,889,000 in December to 8,863,000 in January, after December’s job openings were revised 137,000 lower, from 9,026,000 to 8,889,000, with that revision incorporating an annual revision of 2023’s job openings and labor turnover data, tables for which are included in the release…January’s jobs openings were also 15.0% lower than the revised 10,425,000 job openings reported for January a year ago, as the job opening ratio expressed as a percentage of the employed was unchanged from the 5.3% now indicated for December, but was down from the 6.3% rate of January a year ago….a 170,000 decrease to 540,000 in job openings in retail was the largest decrease, while job openings in nondurable goods manufacturing increased by 82,000 to 261,000 (details on job openings by industry and region can be viewed in Table 1)…like most BLS releases,the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked at the end of the release…

The JOLTS release also reports on labor turnover, which consists of hires and job separations, which in turn is further divided into layoffs and discharges, those who quit, and ‘other separations’, which includes retirements and deaths….in January, seasonally adjusted new hires totaled 5,687,000, down by 100,000 from the revised 5,787,000 who were hired or rehired in December, as the hiring rate as a percentage of all employed fell from 3.7% in December to 3.6% in January, and it was also down from the 4.1% hiring rate in January a year earlier (details of hiring by sector since September are in table 2)….meanwhile, total separations fell by 78,000, from 5,419,000 in December to 5,341,000 in January, as the separations rate as a percentage of the employed was unchanged at 3.4%, but was still down from the separations rate of 3.9% in January a year ago (see table 3)…subtracting the 5,341,000 total separations from the total hires of 5,687,000 would imply an increase of 346,000 jobs in January, more than the revised payroll job increase of 229,000 for January reported in the February establishment survey, and just outside the expected +/-115,000 margin of error for these reports….

Breaking down the seasonally adjusted job separations, the BLS finds that 3,385,000 of us voluntarily quit our jobs in January, down by 54,000 from the revised 3.439,000 who quit their jobs in December, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.2% to 2.1% of total employment, and it also down from the 2.5% quits rate of a year earlier (see details in table 4)….in addition to those who quit, another 1,572,000 were either laid off, fired or otherwise discharged in January, down by 35,000 from the 1,607,000 who were discharged in December, as the discharges rate remained at 1.0% of all those who were employed during the month, which was also down from the discharges rate of 1.2% a year earlier….meanwhile, ‘other separations’, which includes retirements and deaths, were at 384,000 in January, up by 11,000 from 373,000 in December, for an ‘other separations rate’ of 0.2%, the same as in December and as in January of last year….both seasonally adjusted and unadjusted details by industry and by region on hires and job separations, and on job quits and discharges can be accessed using the links to tables at the bottom of the press release…

US Trade Deficit Rose 5.1% in January on Higher Imports of Capital Goods

Our trade deficit rose 5.1% in January, as both the value of our exports and the value of our imports increased, but our imports increased by quite a bit more…the Commerce Dept report on our international trade in goods and services for January indicated that our seasonally adjusted goods and services trade deficit rose by a rounded $3.3 billion to a rounded $67.4 billion in January, from a December deficit that was revised up from $62.2 billion to $64.2 billion, while trade deficit figures for all the months of 2023 were revised as well, the net of which was to leave the annual trade deficit at $779.8 billion in 2023, down from the $951.2 billion deficit in 2022 (annual details are here)….

The value of our exports rose by a rounded $0.3 billion to $257.2 billion in January, on a $0.2 billion increase to $171.8 billion in our exports of goods, and an increase of $0.2 billion to $85.4 billion in our exports of services, while our imports rose by $3.6 billion to $324.6 billion on a $3.1 billion increase to $263.4 billion in our imports of goods and a $0.5 billion increase to $61.3 billion in our imports of services…prices of our exports averaged 0.8% higher in January, which means the increase in the nominal value of our exports for the month was price related, and that our real exports likely fell on the order of 0.7%, while import prices also averaged 0.8% higher, meaning that most of increase in imports was also price related, and that real imports probably only rose about 0.3%..

The increase in our January exports of goods resulted from greater exports of automotive products, consumer goods, and capital goods, which were mostly offset by lower exports of industrial supplies and materials…referencing the Full Release and Tables for January (pdf), in Exhibit 7 we find that our exports of automotive vehicles, parts and engines rose by $1,401 million to $15,125 million on a $725 million increase in our exports of passenger cars and a $494 million increase in our exports of automotive parts other than engines, chassis, and tires, and that our exports of consumer goods increased by $620 million to $21,599 million, led by a $382 million increase in our exports of jewelry…in addition, our exports of capital goods rose by $557 million to $51,502 million led by a $382 million increase in our exports of civilian aircraft engines, and despite a $947 million decrease in our exports of civilian aircraft….mostly offsetting our increased exports in those end use categories, our exports of industrial supplies and materials fell by $1660 million to $61,261 million as a $1,371 million decrease in our exports of crude oil and a $573 million decrease in our exports of fuel oil was partly offset by a $1,029 million increase in our exports of nonmonetary gold, and our exports of foods, feeds and beverages fell by $236 million to $13,663 million despite a $570 million increase in our exports of soybeans, while our exports of other goods not categorized by end use fell by $450 million to $7,189 million….

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our January goods imports and shows that the January increase in our imports was due to increased imports of capital goods and automotive products, which were partly offset by lower imports of industrial supplies and materials and of consumer goods….our imports of capital goods rose by $3,096 million to $74,998 million on a $768 million increase in our imports of computer accessories, a $607 million increase in our imports of computers, a $572 million increase in our imports of semiconductors, and a $328 million increase in our imports of industrial machinery not listed separately, and our imports of automotive vehicles, parts and engines rose by $1,963 million to $40,880 million on a $1,095 million increase in our imports of passenger cars and a $1,000 million increase in our imports of trucks, buses, and special purpose vehicles…at the same time, our imports of foods, feeds, and beverages rose by $94 million to $16,984 million, and our imports of other goods not categorized by end use rose by $101 million to $10,311 million….partly offsetting the increased imports in those end use categories, our imports of industrial supplies and materials fell by $1,318 million $54,948 million as a $1,901 decrease in our imports of crude oil and a $335 million decrease in our imports of nonmonetary gold were partly offset by a $667 million increase in our imports of organic chemicals and a $550 million increase in our imports of copper, and our imports of consumer goods decreased by $1108 million to $62,152 million as a $1,060 decrease in our imports of cell phones and a $317 million decrease in our imports of gem diamonds were partly offset by a $342 million increase in our imports of imports of toys, games, and sporting goods and a $308 million increase in our imports of artwork and other collectibles…

The Press Release for this month’s report summarizes Exhibit 19 in the full pdf, which gives us surplus and deficit details on our goods trade with selected countries…

  

The January figures show surpluses, in billions of dollars, with South and Central America ($4.2), Netherlands ($4.1), Hong Kong ($2.2), Australia ($1.6), United Kingdom ($1.4), Belgium ($1.1), Singapore ($0.4), Brazil ($0.2), and Saudi Arabia ($0.2). Deficits were recorded, in billions of dollars, with China ($22.9), European Union ($18.1), Mexico ($12.7), Vietnam ($8.5), Japan ($7.3), Germany ($6.3), Ireland ($6.0), Canada ($5.7), South Korea ($5.5), Taiwan ($4.8), Italy ($3.8), India ($3.7), Malaysia ($2.1), Switzerland ($1.5), France ($1.4), and Israel ($0.4).

    
• The deficit with Japan increased $2.1 billion to $7.3 billion in January. Exports increased $0.1 billion to $6.2 billion and imports increased $2.2 billion to $13.5 billion.
• The deficit with Taiwan increased $1.4 billion to $4.8 billion in January. Exports decreased $0.2 billion to $3.3 billion and imports increased $1.2 billion to $8.1 billion.
• The deficit with Vietnam decreased $1.5 billion to $8.5 billion in January. Exports increased less than $0.1 billion to $0.9 billion and imports decreased $1.5 billion to $9.4 billion.
  

To estimate the impact of January’s trade on eventual 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 for inflation in chained 2017 dollars, the same inflation adjustment that’s used by the BEA to compute trade figures for GDP, with the only difference being that the amounts given here are not annualized…from that table, we can figure that the 4th quarter’s real exports of goods averaged 143,572.7 million monthly in chained 2017 dollars, while inflation adjusted January goods exports were at 145,030 million in that same 2017 dollar quantity index representation… figuring the annualized change between those two figures, we find that January’s real exports of goods are thus rising at a 4.12% annual rate from those of the 4th quarter, or at a pace that would add about 0.30 percentage points to 1st quarter GDP growth if continued at the same pace through February and March…in a similar manner, we find that our 4th quarter real imports of goods averaged 227,978.3 million monthly in chained 2017 dollars, while inflation adjusted goods imports in January were at 231,026 million in 2017 dollars….that would indicate that so far in the 1st quarter, we have seen our real imports of goods increase at a 5.46% annual rate from those of the 4th quarter…since an increase in imports would subtract from GDP because it would represent the portion of consumption or investment that occurred during the quarter that was not produced domestically, an increase at a 5.46% rate would subtract roughly 0.59 percentage points from 1st quarter GDP….hence, if our January trade in goods deficit is maintained at the same level throughout the rest of the 1st quarter, the deterioration in our balance of trade in goods would subtract about 0.29 percentage points from the growth rate of our 1st quarter GDP….

Note that while we have not computed the impact of the change in international trade in services here, we’d note that our exports of services rose by less than $0.2 billion in January, while our imports of services rose by $0.5 billion, so the impact of the month’s services trade on GDP appears to be negative…however, both our exports and imports of services were about $1 billion higher in January than the 4th quarter averages, and since we have no appropriate price indexes we could apply, we can’t say for sure…

Factory Shipments Fell 1.0% in January, Factory Inventories were 0.1% Lower

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for January from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods decreased by a rounded $21.5 billion or 3.6 percent to $569.7 billion in January, following a decrease of $1.9 billion or 0.3% to $591.2 billion in December, which was revised from an increase of $1.2 billion or 0.2 percent to $594.3 billion that was reported for December a month ago….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 for their revised updates to the January advance report on durable goods, which was released last week….on those durable goods revisions, the Census Bureau’s own summary, which precedes their detailed spreadsheet of the metrics included in this report, is quite clear and complete, so we’ll just quote directly from that summary here:

  
• Summary: New orders for manufactured goods in January, down three of the last four months, decreased $21.5 billion or 3.6 percent to $569.7 billion, the U.S. Census Bureau reported today. This followed a 0.3 percent December decrease. Shipments, down four of the last five months, decreased $5.7 billion or 1.0 percent to $572.3 billion. This followed a 0.5 percent December decrease. Unfilled orders, up thirteen of the last fourteen months, increased $2.1 billion or 0.2 percent to $1,395.1 billion. This followed a 1.3 percent December increase. The unfilled orders-to-shipments ratio was 7.18, up from 7.10 in December. Inventories, down two consecutive months, decreased $0.8 billion or 0.1 percent to $855.8 billion. This followed a virtually unchanged December decrease. The inventories-to-shipments ratio was 1.50, up from 1.48 in December.
  
• New Orders for manufactured durable goods in January, down three of the last four months, decreased $18.1 billion or 6.2 percent to $276.3 billion, down from the previously published 6.1 percent decrease. This followed a 0.3 percent December decrease. Transportation equipment, also down three of the last four months, led the decrease, $17.4 billion or 16.2 percent to $89.8 billion. New orders for manufactured nondurable goods decreased $3.3 billion or 1.1 percent to $293.4 billion.
  
• Shipments of manufactured durable goods in January, down four of the last five months, decreased $2.4 billion or 0.9 percent to $278.9 billion, unchanged from the previously published decrease. This followed a 0.6 percent December decrease. Transportation equipment, also down four of the last five months, drove the decrease, $2.9 billion or 3.2 percent to $86.3 billion. Shipments of manufactured nondurable goods, down four consecutive months, decreased $3.3 billion or 1.1 percent to $293.4 billion. This followed a 0.3 percent December decrease. Petroleum and coal products, also down four consecutive months, led the decrease, $2.5 billion or 3.8 percent to $63.1 billion.
  
• Unfilled orders for manufactured durable goods in January, up thirteen of the last fourteen months, increased $2.1 billion or 0.2 percent to $1,395.1 billion, unchanged from the previously published increase. This followed a 1.3 percent December increase. Transportation equipment, also up thirteen of the last fourteen months, drove the increase, $3.4 billion or 0.4 percent to $899.7 billion.
  
• Inventories of manufactured durable goods in January, up six consecutive months, increased $1.1 billion or 0.2 percent to $527.4 billion, unchanged from the previously published increase. This followed a 0.2 percent December increase. Transportation equipment, also up six consecutive months, drove the increase, $1.2 billion or 0.7 percent to $169.0 billion. Inventories of manufactured nondurable goods, down four consecutive months, decreased $1.9 billion or 0.6 percent to $328.4 billion. This followed a 0.4 percent December decrease. Petroleum and coal products, also down four consecutive months, led the decrease, $1.2 billion or 2.5 percent to $47.2 billion. By stage of fabrication, January materials and supplies increased 0.2 percent in durable goods and decreased 0.8 percent in nondurable goods. Work in process increased 0.3 percent in durable goods and 0.7 percent in nondurable goods. Finished goods were virtually unchanged in durable goods and decreased 0.9 percent in nondurable goods.

To gauge the effect of January’s nominal factory 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 decreased 0.4% to $245,697 million; the value of work in process inventories was 0.4% higher at $228,023 million, and materials and supplies inventories were valued at $313,002 million, 0.2% less than December…meanwhile, the producer price index for January indicated that prices for finished goods decreased 0.2%, that prices for intermediate processed goods were also 0.2% lower, but that prices for unprocessed goods were on average 0.1% higher….assuming similar valuations for like inventories, that would suggest that January’s real finished goods inventories were about 0.6% smaller December’s, that real inventories of intermediate processed goods were about 0.2% greater, and that real raw material inventory inventories were around 0.3% smaller…given that, it appears that total real factory inventories were down on the order of 0.2%…since there was a modest increase in real factory inventories in the 4th quarter, any 1st quarter decrease in real factory inventories would first subtract that 4th quarter increase and then also the first quarter decrease from the growth rate of first quarter GDP…

January Wholesale Sales Down 1.5%, Wholesale Inventories Down 0.3%

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 $657.2 billion, down 1.7 percent (±0.4 percent) from the revised December level and were down 1.5 percent (±0.9 percent) from the revised January 2023 level.”… the December preliminary estimate was revised down to $668.3 billion from the $670.9 billion sales reported last month, which meant “The November 2023 to December 2023 percent change was revised from the preliminary estimate of up 0.7 percent (±0.5 percent) to up 0.3 percent (±0.5 percent)*.*”….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 produced or finally sold….

On the other hand, the monthly change in private inventories is a major factor in GDP, as additional goods in a warehouse represent goods that were produced even if they weren’t sold, and this January report estimated that wholesale inventories were valued at $895.1 billion at month end, a decrease of 0.3 percent (±0.2 percent) from the revised December level and 2.5 percent (±1.1 percent) lower than January a year ago…the December preliminary inventory estimate was concurrently revised upward from $897.2 billion to $897.4 billion, still up 0.4% from November…

In national accounts data, January’s wholesale inventories will be adjusted with components of the producer price index for January to determine their real change…with notable exceptions such as farm products, chemicals and petroleum & its products, we’ve estimated that wholesale inventories appear to be roughly 70% finished goods…with the January producer price index for finished goods down by 0.2%, the producer price indexes for intermediate goods also 0.2% lower, but with prices for unprocessed goods on average 0.1% higher, it appears that January’s real wholesale inventories will be down by around a tenth of a percent…since real wholesale inventories were up modestly the 4th quarter, January’s wholesale inventories real decrease will reverse that 4th quarter increase and also subtract January’s small decrease from 1st quarter GDP….

  

(the above is the synopsis that accompanied my regular sunday morning news 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 of which are picked from the aforementioned GGO posts, contact me…)