December’s jobs report; November’s trade deficit, factory inventories, wholesale trade, and JOLTS

Major economic reports released last week were the Employment Situation Summary for December and the Job Openings and Labor Turnover Survey (JOLTS) for November, both from the Bureau of Labor Statistics (BLS), the November report on our International Trade from agencies within the Commerce Dept, and the Full Report on Manufacturers’ Shipments, Inventories and Orders for November and the November report on Wholesale Trade, Sales and Inventories, both from the Census Bureau….also last week, the Fed released the Consumer Credit Report for November, which showed that overall consumer credit, a measure of non-real estate debt, decreased by a seasonally adjusted $7.5 billion, or at a 1.8% annual rate, as non-revolving credit grew at a 2.0% rate to $3,743.1 billion in November, while revolving credit outstanding shrunk at a 12.0% rate to $1,359.3 billion….

Privately issued reports released last week included the ADP Employment Report for December, and the December Services Report On Business, the second of the widely followed purchasing manager’s surveys from the Institute for Supply Management(ISM), which saw the Services index rise to 54.1% in December, up from 52.1% in November, with the above 50% reading meaning that a larger plurality of service industry purchasing managers reported improving conditions in various facets of their business in December, up from a smarter plurality in November…

Employers Added 256,000 Jobs in December, Unemployment Rate Fell 0.1%, Employment Rate Rose 0.2%

The Employment Situation Summary for December from the Bureau of Labor Statistics indicated a payroll jobs increase that was well above expectations, a decrease in the unemployment rate from 4.2% to 4.1%, and an increase in the employment rate from 59.8% to 60.0% …estimates extrapolated from the seasonally adjusted establishment survey data projected that employers added 256,000 jobs in December, after the previously estimated payroll job increase for November was revised down by 15,000, from 227,000 to 212,000, while the payroll jobs increase for October was revised up by 7,000, from 36,000 to 43,000….slightly offsetting December’s increase, those revisions means that this report shows a net of 249,000 more payroll jobs than last month’s report did, well above the 160,000 job increase that was expected….the unadjusted data, meanwhile, shows that there were actually 81,000 fewer payroll jobs extent in December than in November, as the usual seasonal layoffs in areas such as construction and other outdoor services were normalized by the seasonal adjustments to show the job increases indicated, more than offsetting the downward seasonal adjustment to jobs in sectors such as retail..

Seasonally adjusted job increases in December were concentrated in the service providing sector and in government, as a 16,000 job decrease in durable goods manufacturing turned the job change in the weak goods producing sector negative….since the BLS summary of the job gains by sector is clear and more detailed than our usual synopsis, we’ll again just quote from that summary here:

• Total nonfarm payroll employment rose by 256,000 in December. Employment trended up in health care, government, and social assistance. Retail trade added jobs in December, following a job loss in November. Payroll employment rose by 2.2 million in 2024 (an average monthly gain of 186,000), less than the increase of 3.0 million in 2023 (an average monthly gain of 251,000). (See table B-1.)
• Health care added 46,000 jobs in December, with gains in home health care services (+15,000), nursing and residential care facilities (+14,000), and hospitals (+12,000). Health care added an average of 57,000 jobs per month in 2024, the same as the average monthly gain in 2023.
• Retail trade added 43,000 jobs in December, following a loss of 29,000 jobs in November. In December, employment increased in clothing, clothing accessories, shoe, and jewelry retailers (+23,000); general merchandise retailers (+13,000); and health and personal care retailers (+7,000). Building material and garden equipment and supplies dealers lost jobs (-11,000). Overall, employment in retail trade changed little in 2024, following an average monthly increase of 10,000 in 2023.
• Government employment continued to trend up in December (+33,000). Government added an average of 37,000 jobs per month in 2024, below the average monthly gain of 59,000 in 2023. Over the month, employment continued to trend up in state government (+10,000).
• Employment in social assistance increased by 23,000 in December, mostly in individual and family services (+17,000). Social assistance added an average of 18,000 jobs per month in 2024, below the average increase of 23,000 per month in 2023.
• Employment in leisure and hospitality changed little in December (+43,000). Leisure and hospitality added an average of 24,000 jobs per month in 2024, about half the average monthly gain of 47,000 in 2023.
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation and warehousing; information; financial activities; professional and business services; and other services.

The establishment survey also showed that average hourly pay for all employees rose by 10 cents an hour to $35.69 an hour in December, after it had increased by a revised 11 cents an hour in November; at the same time, the average hourly earnings of production and nonsupervisory employees increased by 6 cents to $30.62 an hour….employers also reported that the average workweek for all private payroll employees was at 34.3 hours for the fifth consecutive month in December, while hours for production and non-supervisory personnel remained at 33.7 hours…at the same time, the manufacturing workweek was unchanged at 40.0 hours, while average overtime fell a tenth of an hour to 2.8 hours…

Meanwhile, the December household survey indicated that the seasonally adjusted extrapolation of those who reported being employed rose by an estimated 478,000 to 161,661,000, while the estimated number of those who reported being unemployed and looking for work fell by 235,000 to 6,886,000, and as a result the total labor force increased by a rounded net of 243,000 to 168,547,000… since the working age population had grown by 175,000 over the same period, that meant the number of employment aged individuals who were not in the labor force fell by 68,000 to 101,091,000….even as the number of those in the labor force rose, so did the civilian noninstitutional population, and hence the labor force participation rate remained unchanged at 62.5% in December….on the other hand, the relatively large increase in the number employed as a percentage of the increase in the population was enough to raise the employment to population ratio, which we could think of as an employment rate, by 0.2% to 60.0%, reversing the drop in November…at the same time, the decrease in the number considered unemployed was enough to lower the unemployment rate, from 4.2% in November to 4.1% in December… meanwhile, the number of those who reported they were forced to accept just part time work fell by 111,000, from 4,469,000 in November to 4,358,000 in December, which was enough to lower the alternative measure of unemployment, U-6, which includes those “employed part time for economic reasons”, by 0.2% to 7.5% of the labor force in December, the lowest since June…

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..

Job Openings Rose in November; Hiring and Job Quitting Fell, and Layoffs Were Flat

The Job Openings and Labor Turnover Survey (JOLTS) report for November from the Bureau of Labor Statistics estimated that seasonally adjusted job openings increased by 259,000, from 7,839,000 in October to 8,098,000 in November, after October’s job openings were revised 95,000 higher, from 7,744,000 to 7,839,000… November’s jobs openings were still 9.3% lower than the 8,931,000 job openings reported for November a year ago, while the job openings ratio expressed as a percentage of the employed rose from 4.7% in October to 4.8% in November, while it was down from 5.4% in November a year ago….the largest percentage increase in November’s job openings appears to be the 105,000 job opening increase to 410,000 openings in the finance and insurance sector, while the information sector saw job openings decrease by 89,000 to 121,000 (see table 1 for more job openings details)…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 their jobs, and ‘other separations’, which includes retirements and deaths….in November, seasonally adjusted new hires totaled 5,269,000, down by 125,000 from the revised 5,394,000 who were hired or rehired in October, as the hiring rate as a percentage of all employed fell from 3.4% in October to 3.3% in November, and it was also down from 3.5% in November a year ago (details on hiring by region and by sector since July are in table 2)….meanwhile, total separations fell by 180,000, from 5,306,000 in October to 5,126,000 in November, as the separations rate as a percentage of the employed fell from 3.3% in October to 3.2% in November, while it was also down from 3.4% in November a year ago (see table 3)…subtracting the 5,126,000 total separations from the total hires of 5,269,000 would imply an increase of just 143,000 jobs in November, somewhat less than the revised payroll job increase of 212,000 for November that was reported by the December establishment survey later in the same week, but still within the expected +/-110,000 margin of error in these incomplete survey extrapolations….

Breaking down the seasonally adjusted job separations, the BLS finds that 3,065,000 of us voluntarily quit our jobs in November, down by 218,000 from the revised 3,283,000 who quit their jobs in October, while the quits rate, widely watched as an indicator of worker confidence, fell from 2.1% to 1.9% of total employment, and it was also down from 2.2% a year earlier (see job quitting details in table 4)….in addition to those who quit, another 1,765,000 were either laid off, fired or otherwise discharged in November, up by 17,000 from the 1,748,000 who were discharged in October, as the discharges rate remained at 1.1% of total employment, which was up from the 1.0% discharges rate in November a year ago….meanwhile, other separations, which includes retirements and deaths, were at 296,000 in November, up from 275,000 in October, for an ‘other separations’ rate of 0.2%, which was the same rate as in October and as in November 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 easily using the links to tables at the bottom of the press release…

US Trade Deficit Rose 6.2% in November on Higher Imports of Capital Goods and Industrial Supplies

Our trade deficit rose 6.2% in November, after falling 12.1% in October, as both the value of our exports and the value of our imports increased, but the value of our imports increased by quite a bit more….the Commerce Dept report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit rose by $4.6 billion to $78.2 billion in November, from an October deficit of $73.6 billion, which was revised from the $73.8 billion deficit reported for October a month ago….the value of our exports rose by $7.1 billion to a rounded $273.4 billion​ in November​, on a $6.2 billion increase to $177.6 billion in our exports of goods and a $0.9 billion increase to $95.8 billion in our exports of services, while the value of our imports rose by $11.6 billion to $​351.6 billion on a $11.6 billion increase to $280.9 billion in our imports of goods and a increase of less than $0.1 billion to $70.6 billion in our imports of services…export prices were on average unchanged in November, which means the increase in the value of this month’s exports was a real one, and that real exports likely rose about 2.7%, while import prices were 0.1% higher, meaning that the jump in the value of our imports was also mostly real, ​ie, not due to higher prices, and that our real imports probably rose by about 3.3%….

The $6.2 billion increase in the value of our exports of goods in November was led by greater exports of industrial supplies and materials, automotive goods, capital goods, and of consumer goods… referencing the Full Release and Tables for November (pdf), in Exhibit 7, we find that the value of our exports of industrial supplies and materials rose by $4,312 million to $61,638 million on a $876 million increase in the value of our exports of petroleum products other than fuel oil, a $737 million increase in the value of our exports of crude oil, a $577 million increase in the value of our exports of plastic materials, and a $340 million increase in the value of our exports of chemicals not listed separately, and that the value of our exports of automotive vehicles, parts, and engines rose by $1​,886 million to $13,919 million on a $826 million increase in our exports of passenger cars, a $603 million increase in our exports of trucks, buses, and special purpose vehicles, and a $406 million increase in our exports of automotive parts and accessories other than engines, chassis, and tires…in addition, the value of our exports of capital goods rose by $1,841 million to $53,789 million, led by a $1​,306 million increase in our exports of civilian aircraft engines, and a $336 million increase in our exports of industrial machinery not otherwise itemized, which were in turn offset by a $536 million decrease in our exports of civilian aircraft, while the value of our November exports of consumer goods rose by $531 million to $21,623 million on a $802 million increase in our exports of pharmaceutical preparations and a $317 million increase in our exports of gem diamonds…at the same time, our exports of foods, feeds and beverages rose by $1,012 million to $14,547 million on increase in the value of our exports of nuts, meats, poultry, soybeans, and other foods, while the value of our exports of other goods not categorized by end use fell by $4,998 million to $9,823 million, mostly reversing an increase in October to adjust for a backlog caused by a delay in the compilation of ​bilateral statistics on U.S. exports of goods to Canada…

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods, and shows that greater imports of industrial supplies and materials, of capital goods, of foods, feeds and beverages and of automotive goods accounted for the lion’s share of the $11.6 billion increase in our imports of goods….the value of our imports of industrial supplies and materials rose by $3,730 million to $56,413 million on a $1,041 million increase in the value of our imports of nonmonetary gold, a $962 million increase in the value of our imports of crude oil, a $595 million increase in the value of our imports of nuclear fuel materials. and a $394 million increase in the value of our imports of finished metal shapes, while the value of our imports of capital goods rose by $3,525 million to $82,227 million as a $1,165 million increase in our imports of semiconductors, a $1,127 million increase in our imports of civilian aircraft, a $587 million increase in our imports of generators and accessories, a $450 million increase in our imports of electric apparatuses, and a $447 million increase in our imports of computers were partly offset by a $505 million decrease in our imports of telecommunications equipment, a $433 million decrease in our imports of computer accessories, and a $422 million decrease in our imports of industrial machinery not otherwise itemized…in addition, the value of our imports of foods, feeds, and beverages increased by $1,352 million to $19,492 million, led by higher imports of alcoholic beverages, food oils and oilseeds, and green coffee, the value of our imports of automotive vehicles, parts and engines rose by $1,210 million to $39,267 million on a $1,087 million increase in our imports of passenger cars, the value of our imports of consumer goods rose by $821 million to $69,805 million on a $721 million increase in our imports of pharmaceutical preparations, and the value of our imports of other goods not categorized by end use rose by $953 million to $11,640 million..

The News Release for this month’s report also summarizes Exhibit 19 in the Full Release and tables, which gives us surplus and deficit details on our goods trade with selected countries:

The November figures show surpluses, in billions of dollars, with Netherlands ($5.4), South and Central America ($3.6), Australia ($2.0), Hong Kong ($2.0), Belgium ($0.5), Saudi Arabia ($0.3), United Kingdom ($0.3), and Brazil ($0.2). Deficits were recorded, in billions of dollars, with China ($25.4), European Union ($20.5), Mexico ($15.4), Vietnam ($11.3), Ireland ($9.3), Germany ($6.9), Taiwan ($5.5), Japan ($5.3), South Korea ($5.1), Canada ($4.9), India ($3.9), Switzerland ($3.9), Italy ($2.9), Malaysia ($2.8), France ($2.3), Israel ($0.7), and Singapore ($0.6).

• The deficit with France increased $2.2 billion to $2.3 billion in November. Exports decreased $0.3 billion to $3.7 billion and imports increased $1.9 billion to $6.0 billion.
• The surplus with the United Kingdom decreased $1.8 billion to $0.3 billion in November. Exports decreased $1.0 billion to $6.3 billion and imports increased $0.7 billion to $6.1 billion.
• The deficit with Japan decreased $1.2 billion to $5.3 billion in November. Exports increased $0.2 billion to $6.6 billion and imports decreased $1.1 billion to $11.9 billion.

To estimate the impact of October’s and November’s trade in goods on the 4th quarter GDP growth figures that will be released at the end of the month, 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 2017 dollars, the same inflation adjustment now used by the BEA to compute trade figures for GDP, except that the figures​ given here are not annualized….from that table, we can figure that the 3rd quarter’s real exports of goods averaged 147,582.7 million monthly in 2017 dollars, while our similarly inflation adjusted October and November exports were at 142,369 million and 147,272 million respectively, in that same 2017 dollar quantity index representation… computing the annual change between the average monthly real exports of the data available for those two quarters, we find that the 4th quarter’s real exports of goods are running at a 7.28% annual rate below those of the 3rd quarter, or at a pace that would subtract about 0.49 percentage points from 4th quarter GDP if it were to continue at the same pace through December….in a similar manner, we find that the 3rd quarter​'s real imports of goods averaged 242,783.3 million monthly in chained 2017 dollars, while inflation adjusted October and November imports were at 231,131 million and 225,469 million in 2017 dollars respectively… those chained dollar representations of real goods imports would indicate that so far in the 4th quarter, our real imports have been falling at annual rate of 6.12% from those of the 3rd quarter…since imports are subtracted from GDP because they represent the portion of the consumption and investment components of GDP that occurred during the quarter that was not produced domestically, their decrease at a 6.12% rate would conversely add about 0.65 percentage points to 4th quarter GDP….hence, if our October and November trade deficit in goods is maintained at these levels through December, our​ slighhtly better balance of trade in goods would add a net of roughly 0.16 percentage points to the growth of 4th quarter GDP…..

Note that we have not computed the impact of the usually less volatile change in services here, because the BEA does not provide inflation adjusted data on those, and because we don’t have a straightforward way to adjust the various services for all their price changes…however, we do know that our exports in services grew by roughly $1.8 billion over October and November, and that our imports in services also grew $1.8 billion over those two months, which would suggest a negligible impact on GDP from the services side of the trade ledger…

Value of Factory Shipments Rose 0.1% in November, Factory Inventories Rose 0.3%

The Full Report on Manufacturers’ Shipments, Inventories, & Orders (pdf) for November from the Census Bureau reported that the seasonally adjusted value of new orders for manufactured goods decreased $2.1 billion or 0.4 percent to $586.1 billion in November, following an increase of 0.5% to $588.2 billion in October, which was revised from the 0.2% increase $586.7 billion that was reported for October a month ago….however, since the Census Bureau does not even collect any 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 accurate as revised updates to the November advance report on durable goods we reported on two weeks ago…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 November, down three of the last four months, decreased $2.1 billion or 0.4 percent to $586.1 billion, the U.S. Census Bureau reported today. This followed a 0.5 percent October increase. Shipments, up following three consecutive monthly decreases, increased $0.7 billion or 0.1 percent to $586.3 billion. This followed a 0.2 percent October decrease. Unfilled orders, up fifty-one of the last fifty-two months, increased $4.6 billion or 0.3 percent to $1,404.8 billion. This followed a 0.5 percent October increase. The unfilled orders-to-shipments ratio was 7.07, up from 7.04 in October. Inventories, up following two consecutive monthly decreases, increased $2.5 billion or 0.3 percent to $859.3 billion. This followed a 0.1 percent October decrease. The inventories-to-shipments ratio was 1.47, up from 1.46 in October.
• New Orders for manufactured durable goods in November, down three of the last four months, decreased $3.3 billion or 1.2 percent to $284.7 billion, down from the previously published 1.1 percent decrease. This followed a 0.7 percent October increase. Transportation equipment, also down three of the last four months, led the decrease, $2.9 billion or 3.0 percent to $95.4 billion. New orders for manufactured nondurable goods increased $1.2 billion or 0.4 percent to $301.4 billion.
• Shipments of manufactured durable goods in November, down four consecutive months, decreased $0.5 billion or 0.2 percent to $284.9 billion, down from the previously published 0.1 percent decrease. This followed a 0.5 percent October decrease. Transportation equipment, also down four consecutive months, drove the decrease, $1.0 billion or 1.1 percent to $90.7 billion. Shipments of manufactured nondurable goods, up two consecutive months, increased $1.2 billion or 0.4 percent to $301.4 billion. This followed a 0.2 percent October increase. Chemical products, up nine of the last ten months, led the increase, $0.7 billion or 0.9 percent to $82.5 billion.
• Unfilled Orders for manufactured durable goods in November, up fifty-one of the last fifty-two months, increased $4.6 billion or 0.3 percent to $1,404.8 billion, unchanged from the previously published increase. This followed a 0.5 percent October increase. Transportation equipment, up forty-six of the last forty-seven months, drove the increase, $4.7 billion or 0.5 percent to $908.0 billion.
• Inventories of manufactured durable goods in November, up following three consecutive monthly decreases, increased $1.9 billion or 0.4 percent to $529.7 billion, unchanged from the previously published increase. This followed a virtually unchanged October decrease. Transportation equipment, also up following three consecutive monthly decreases, led the increase, $1.5 billion or 0.9 percent to $172.1 billion. Inventories of manufactured nondurable goods, up following two consecutive monthly decreases, increased $0.6 billion or 0.2 percent to $329.6 billion. This followed a 0.1 percent October decrease. Petroleum and coal products, also up following two consecutive monthly decreases, drove the increase, $0.8 billion or 1.7 percent to $47.3 billion..

To gauge the impact of November factory inventories on 4th 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 November’s finished goods inventories was 0.1% higher at $293,813 million; the value of work in process inventories was 0.7% higher at $251,713 million, and materials and supplies inventories were 0.2% higher at $313,790 million…the producer price index for November indicated that prices for finished goods were 0.7% higher, that prices for intermediate processed goods were virtually unchanged, and that prices for unprocessed goods were on average 0.6% higher….assuming similar valuations for like types of inventories, those price changes would suggest that November’s real finished goods inventories were around 0.6% lower, that real inventories of intermediate processed goods were 0.7% greater, and that real inventories of materials and supplies were around 0.4% smaller.…those November inventory changes follow an October factory report that indicated real finished goods inventories were about 0.2% higher, but that real inventories of intermediate processed goods were about 0.8% lower, and that real raw material inventory inventories were about 4.2% lower.…since real NIPA factory inventories were slightly higher in the 3rd quarter, accounting for 2% of the moderate aggregate inventory increase, that the October and November reports indicate a small decrease in real factory inventories means that decrease, plus the small third quarter increase, would be subtracted from the growth rate of 4th quarter GDP​, unless there was a large enough increase in December to offset them both…

Wholesale Sales Rose 0.6% in November, Wholesale Inventories Fell 0.2%

The November report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at “$678.0 billion, up 0.6 percent (±0.4 percent) from the revised October level and were up 2.0 percent (±0.9 percent) from the revised November 2023 level“…October’s sales were revised down to $673.9 billion from the $675.1 billion reported last month, and as a result “The September 2024 to October 2024 percent change was revised from the preliminary estimate of down 0.1 percent (±0.5 percent)* to down 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 left in a warehouse represent goods that were produced but not sold, and this November report estimated that wholesale inventories were valued at a seasonally adjusted “$901.6 billion at the end of November, down 0.2 percent (±0.4 percent)* from the revised October level. Total inventories were up 0.8 percent (±0.5 percent) from the revised November 2023 level.” ..the value of inventories at the end of October was revised to $903.3 billion from the $905.0 billion indicated by last month’s report, which is now virtually unchanged from September…

To estimate the impact of November’s wholesale inventories on 4th quarter GDP, we must first adjust them for changes in price with appropriate components of the producer price index…although relevant details are not broken out in this report, we’ve previously estimated that about 2/3rd​s of wholesale inventories are finished goods, with notable exceptions such as inventories of crude oil and farm products….the producer price index for November indicated that prices for finished goods were 0.7% higher, that prices for intermediate processed goods were virtually unchanged, and that prices for unprocessed goods were on average 0.6% higher.…those price increases mean that the value of wholesale inventories fell despite higher prices, which would thus suggest that real inventories were down about 0.8%…that follows an October report which appeared to show that real inventories were down slightly…..since real wholesale inventories in the 3rd quarter were up by $6.3 billion in 2017 dollars, accounting for about a tenth of the quarter’s increase, any 4th quarter real wholesale inventory decrease would reverse that 3rd quarter increase and also subtract the 4th quarter decrease from the growth rate of 4th 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…)