The big news of the week was the employment report, showing a "disappointing" +36,000 increase in jobs in January. Meanwhile, the separate household survey showed that the unemployment rate dropped 0.4% to 9.0%. Yesterday there was a lot of head scratching. Today there are two good summaries making sense of it all from Prof. James Hamilton and Dean Baker.
The employment report contrasted with extremely strong, multi decade highs in the ISM and Chicago manufacturing reports, and a very strong non-manufacturing report as well. Meanwhile personal income and spending both rose. Slightly more autos were sold in January than December. Residential and nonresidential construction both declined in January, but it seems increasingly likely that nonresidential construction has already bottomed.
I plan on getting down deep into the weeds with several posts dissecting the employment information next week (one of which will explain the quotes around the word "disappointing" above).
Meanwhile, Here is this week's high frequency data:
The BLS reported initial jobless claims of 415,000, and the 4 week moving average rose slightly to 430,500. The trend to under 400,00 claims is for now halted.
The Mortgage Bankers' Association reported an increase of 9.5% in seasonally adjusted mortgage applications last week, which still has this series below recent highs, and essentially in a flat range since last June. Refinancing increased 11.7%, but is still near its lowest point in a year, due to higher mortgage rates.
Gas at the pump decreased 1 cent to $3.10 a gallon, while Oil ended the week at about $89 a barrel. Gasoline usage was lower than last year, by 54,000 barrels a day. This is the first negative YoY reading in a while, and suggests that gas prices may be beginning to "bite" (or it could just be particularly lousy weather).
The American Staffing Association Index increased 1% to 90 for the week ending January 23. This was 14% higher than a year ago, and only about 9% below the peak January levels from 2008. This is once again the closest so far the index has come to pre-recession levels.
Railfax showed seasonal improvement as would be expected. Total rail shipments were 6.6% higher in the week ending January 29 than during the same week last year. Shipments of waste and scrap metal and auto shipments remain at last year's levels. In general rail traffic is still improving YoY, but the rate of that improvement has been decreasing for months. If the YoY comparisons remain week for a couple more weeks, then the slowdown cannot be dismissed.
The ICSC reported that same store sales for the month of January increased 4.2% YoY. Shoppertrak reported that sales rose 4.3% YoY for the week ending January 29, even though they declined 6.1% from the week before.
Weekly BAA commercial bond rates fell slightly to 6.08%. This has been in a range within 0.20% for over two months. This compares with a 0.02% decline in the yields of 10 year treasuries, which have also been in a tight range for over a month.
M1 was up 0.5% w/w, up 0.6% M/M and up a strong 9.4% YoY, so Real M1 is up 8.0%. M2 was down 0.4% w/w, up 0.1% M/M and up 4.2% YoY, so Real M2 is up 2.8%. Both of these are in ranges where economic expansion has always taken place.
A reminder that on a trial basis I am using Matt Trivisonno's +1.07% adjustment to withholding data this year vs. last year, due to the recent payroll tax political deal. So adjusting, the Daily Treasury Statement showed adjusted receipts for the month of January of $154.3 B vs. $140.4 B a year ago, for a gain of almost +10% YoY (although this January had one more reporting day).
Drive carefully if you are in an area of snow and ice, and have a nice weekend!
4 comments:
Agreed. Drinks are on me! Well... If you want to drag yourself to the frozen snowscape that is Chicago :)
I never understand why tax receipts aren't the dominant stat in determining the health of the employment situation. If we add quarterly estimated tax payments plus taxes collected by employers, we should learn a LOT about what's going on. Once you subtract out wage inflation (there isn't much), you should know whether people are being hired (year over year).
What's wrong with this?
@Saxman
If I'm not mistaken, tax receipts for small businesses don't always need to be made when a payroll is made. IIRC, my bookkeeper sister told me that they can be held back either until a dollar threshold is reached, or a time period has passed. It's not an automatic drop into IRS accounts, and businesses have a bit of flexibility to meet tax liability requirements.
I'm certain Bonddad could correct me on this, but please note the link to the Daily Treasury Statement showing receipts.
Hi Bonddad, my understanding is that the idea that jobless claims below 400,000 signals strong employment growth was developed from previous recessions. Could this magic number be higher now with population growth? In other words, could jobless claims slightly above 400,000 actually be good enough? Thanks.
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