The number of new jobs in the US economy in January came in way below forecast, but markets focused on wage growth rather than that.
151,000 extra jobs were reported the the Non-farm payrolls report, well under the 191,000 expected and the 262,000 gained in December.
But their unemployment rate fell to 4.9%. That is an eight year low.
Their participation rate was unchanged at 62.7%.
And American wage growth rose +2.5% over the year to January and far above their headline inflation rate.
Markets have taken this data to indicate the US labour market recovery remains firm.
And that implies the Fed will feel it can maintain its rate hike plans, especially after the emergence of the long-awaited rise in wages.
Equities fell on Wall Street, and are down -2% on the S&P500 and more than -3% on the NASDAQ.
Of more importance for New Zealand, the US dollar rose as sharply as stocks have fallen, although to be fair, fx markets anticipated the data release and started falling late yesterday.
One under-reported feature of today's data are the prior-period revisions. Although it turns out the strong +292,000 new jobs in December was revised down to +262,000, over the whole year these revisions were higher than initial reports, adding +100,000 more jobs created than initially reported.
In other data released today in the US, consumer credit jumped at an annual rate of 7.2% in December.
22 Comments
'But their unemployment rate fell to 4.9%. That is an eight year low.'
It is worth noting that the method of counting the unemployed in the US has been changed over the decades, and that official figures bear little resemblance to the actual numbers because people not actively seeking work because they have given up are not counted as unemployed. Nor are people whose unemployment benefit has expired counted as unemployed.
According to John Williams
http://www.shadowstats.com/alternate_data/unemployment-charts
the real US unemployment rate is 22.9% (similar to southern Europe), a much more believable figure than the official 4.9%, and consistent with closure of manufacturing plants, layoffs in the energy sector and closure of retail outlets etc. .
A lot that is wrong or just half-truths in your assertions there AFNTT. For example, the status of unemployment benefits is irrelevant in the CPS. It all about whether you are looking for work. If you give up, you are not in the labour force. And that is the same way it is treated around the world (incl. NZ).
The US CPS is an enormous monthly survey. More than 100,000 people are personally interviewed. (NZ can't afford to do its one monthly, so we can only get quarterly jobless data.)
You can find some details here.
David, something just does not add up when we read glowing reports of the US economy from government sources and the very opposite from US-based non-government sources:.
'1. The number of job cuts in the United States skyrocketed 218 percent during the month of January according to Challenger, Gray & Christmas.
2. The Baltic Dry Index just hit yet another brand new all-time record low. As I write this article, it is sitting at 303.
3. U.S. factory orders have now dropped for 14 months in a row.
4. In the U.S., the Restaurant Performance Index just fell to the lowest level that we have seen since 2008.
5. In January, orders for class 8 trucks (the big trucks that you see shipping stuff around the country on our highways) declined a whopping 48 percent from a year ago.
6. Rail traffic is also slowing down substantially. In Colorado, there are hundreds of train engines that are just sitting on the tracks with nothing to do.'
http://theeconomiccollapseblog.com/archives/22-signs-that-the-global-ec…
1. This is the movement in a tiny (for the US) number, and is following an all-time low. "+218%" means nothing. From the Challenger report ..."In all, US-based employers reported 75,114 planned job cuts to kick off 2016. That is a 218 percent increase from a 15-year low of 23,622 in December." These might look like big numbers from a NZ perspective, but they are margin of error data for the US. I would average the two months before jumping to apocolypse conclusions.
2. Baltic Dry data is irrelevant these days. Better to look at airfreight data.
3. True. This is official US Census data. But that is seasonally adjusted data. Actual data doesn't show such a long decline. But still, December data involves a massive US$460 bln in new orders. Dec-14 data was US$486 bln. Hardly a collapse. A few aircraft orders can make the difference ...
4. Can't comment. Never heard of that obscure series.
5. True. Might end up as something significant. Might just be a one-off. Too early to tell.
6. True. But that is to do with the oil patch slowdown. There was a massive increase in engines added in the past few years to handle the railing of the sudden rise in fracked crude. That is slowing fast. Also, pipelines have geared up to handle more volume. It's tough on those who speculated on more rail engines though. But not an economic indicator.
"too early?"
http://www.telegraph.co.uk/finance/economics/12141369/Dollar-tumbles-as…
"The US is very likely heading into a recession, and the data may start to show this soon,"
watch the Fed and the USD then I guess.
5. "American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index increased 1% in December, ending the year on a strong note.
Following a decrease of 0.9% during November, the index equalled 135.6. That's up from 134.3 in the previous month and just 0.1% below the all-time high of 135.8 reached in January 2015."
We're clearly doomed.
So this can be explained by, rather than purchase a truck with a long term saving v renting, truckers are renting as they have no confidence they will have the work for long enough to pay the new truck off. and/or on top of that it maybe that truckers cannot get finance off the banks so are forced to rent.
Really then cherry picking a single data point and making big assumptions with out considering other data to back it up is dodgy, to say the least. Par for the course really.
meanwhile an interesting chart is this,
http://www.oftwominds.com/blogfeb16/chart-of-doom2-16.html
Now if you follow Steve Keen when private debt contracts we get a recession. In this case 2 growing v 2 contracting and one stagnant.
You seem to know about as much about trucking indexes and you do about the bdi... It is not a truck ownership index! Try reading before "explaining".
"The ATA Truck Tonnage Index is a measure of the total amount of tonnage hired for transport from American freight trucking services. It is often used as a barometer of commerce and trade in general across the United States, as the higher the number the more people and corporations are using truck and freight services to ship goods across the country." It is a stretch to call it a single data point!
http://m.truckinginfo.com/news/260599/truck-tonnage-index-ends-2015-on-…
#2 For the uninitiated: "There’s various people out there having kittens over the manner in which the Baltic Dry Index has plunged. I think particularly ofZero Hedge. Yet the concern is almost entirely misplaced. Because the Baltic Dry is not a measure of the volume of world trade, the amount of it, but of the price of doing it for certain goods. And it simply is not true that prices depend solely upon demand. We cannot say that a price has fallen thus demand must also have done so. Price is the thing which changes in order to balance supply anddemand: we must therefore consider both when attempting to explain what a price change means to us."
http://www.forbes.com/sites/timworstall/2016/01/20/to-explain-the-balti…
There are several materials/ores that are essential to building more "things". Concrete, steel, copper, aluminum and oil.
When we look at the state of,
The OZ iron ore industry and the collapse of the iron ore price.
http://www.indexmundi.com/commodities/?commodity=iron-ore&months=240
When we look at copper we see its collapse in 2008 and now again,
http://www.infomine.com/investment/metal-prices/copper/all/
Interestingly its graph also suggests peak copper might be close.
Aliminium,
http://www.indexmundi.com/commodities/?commodity=aluminum&months=300
Oil is well discussed already.
So the BDI is used as a forward indicator by some to indicate a coming recession.
Now even if the BDI did not matter any more the key items above following the same trend point at a slow down and probable global recession.
Then there are the finance houses like citi also saying the same thing.
So I guess the saying is "are you feeling lucky punk?"
If so then you want to be buying while its all cheap surely?
In regard to the bdi the over riding factor is ship supply not commodity prices. "The world fleet doubled in size between 2010 and 2013. At the same time, China doubled its shipyard capacity and took huge orders for new ships as it sought to control the commodities trade."
Dont believe John Williams / shadow stats, ever. All he does is he takes official figures and just adds a number he likes to get to the number he likes, it is a farce.
I can accept that the real number is worse than 4.9%, but 22.9% like South EU seems way questionable.
--edit-- the U6 is probably fairer. 10% un-employment somewhat matches the lackluster US economy, 22% is Great Depression territory.
And American wage growth rose +2.5% over the year to January and far above their headline inflation rate.
But that isn’t really the main objection to “surging” wages so much as there isn’t any actual evidence that wages are doing anything like that. Even including January’s variation, wages and earnings have been stuck in the same rut that has defied monetary imagination and intrusion this whole “recovery.” Nominal weekly average earnings for production and non-supervisory employees gained 2.5% year-over-year in January 2016 compared to 2.9% in January 2015; or 2.5% in January 2011 and 3.6% in January 2008. Read more
'Baltic Dry data is irrelevant these days. Better to look at airfreight data'
The only reason airlines are flying at all is because oil prices are extraordinarily low, currently less than one third of the 2010-to-2014 'normal' price and an order of magnitude below the true value when energy density and convenience are considered.
If oil prices were to return to more normal levels ($100 to $120 a barrel) we would witness a dramatic fall in airline activity, and see a fall in most other economic activity.
On the other hand, persistently low oil prices are crippling most western oil companies and rupturing the budgets of numerous oil-producing nations. Didn't Shell recently announce an 87% fall in profits and 10,000 more redundancies?
http://www.theguardian.com/business/2016/feb/04/shell-profits-plunge-87
Meanwhile BP recorded the biggest annual loss in its history of $6.5 billion.: And another 7,000 job losses.
http://www.theguardian.com/business/2016/feb/02/bp-annual-loss-biggest-…
Contrary to the assertions of many economists, who seem to think that interest rates and financial stimulus are the drivers of economic activity, in reality global economic activity is entirely dependent on the price and availability of oil. No oil or prices too high and everything comes to a halt; insufficient demand and prices too low and the basics of the financial system -shares, dividends, taxes- collapse.
That leaves only money-printing by central banks to hold things together in the short term, which is what we are currently witnessing.
There is no way out of the energy trap, nor any way out of the environmental catastrophe that is a consequence of the energy trap.
https://scripps.ucsd.edu/programs/keelingcurve/wp-content/plugins/sio-b…
We can be sure this will all end very badly but cannot be sure of the exact route to catastrophe or the exact timing at this stage.
By the way, this graph
https://in.finance.yahoo.com/q/bc?s=%5EDJI&t=2y&l=on&z=l&q=l&c=
showing an erratic decline of 2000 points since May 2015, is not consistent with a narrative of resilience, recovery and increased wealth in the US..
Quite the opposite, in fact.
We would seem to be in the midst of the largest "going out of business" sales spree ever.
Just that no one is calling it what it is. Dairying, iron ore, coal, gas, oil , electronics, automotive, educational... all industries on life support. But hold on, the finance industries that extend said life support are themselves staggering under the weight of un-meetable obligations.
Just look at the automobile sales in the US; estimates are that nearly 30% of buyers can fog a mirror, and thats about it. All financed by US govt guarantees.
Similarly, the tertiary education bubble just goes and grows ; all financed by US govt guarantees.
The numbers put forth by the said Govt Bureaus are those from a patient on life support; numbers designed to keep those interested parties happy. The actual patient is long past reviving.
Its been a long , long, long time since the US paid its way in the world. Its the exhorbitant privilege of having the worlds Reserve Currency that keeps the US functioning, hence the massive military and diplomatic efforts to keep it that way.
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