August 1, 2014

July ISM Manufacturing Increases to 57.1%, Up From June’s 55.3% (Update: June Construction Spending Dove)

Filed under: Economy,Taxes & Government — Tom @ 10:25 am

From the Institute for Supply Management:

Economic activity in the manufacturing sector expanded in July for the 14th consecutive month, and the overall economy grew for the 62nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The July PMI® registered 57.1 percent, an increase of 1.8 percentage points from June’s reading of 55.3 percent, indicating expansion in manufacturing for the 14th consecutive month. The New Orders Index registered 63.4 percent, an increase of 4.5 percentage points from the 58.9 percent reading in June, indicating growth in new orders for the 14th consecutive month. The Production Index registered 61.2 percent, 1.2 percentage points above the June reading of 60 percent. Employment grew for the 13th consecutive month, registering 58.2 percent, an increase of 5.4 percentage points over the June reading of 52.8 percent. Inventories of raw materials registered 48.5 percent, a decrease of 4.5 percentage points from the June reading of 53 percent, contracting after five months of consecutive growth. Comments from the panel are generally positive, while some indicate concern over global geopolitical situations.

Of the 18 manufacturing industries, 17 are reporting growth in July …

New Orders and Production would indicate stronger GDP in the quarters to come. But backlog stayed in contraction, thought just barely (49.5%).

Overall, it’s a very strong report. The mystery is why this strong sentiment survey (as well as the Non-Manuafacturing report, which will come out next Tuesday) isn’t correlating much with actually reported, hard-number production, spending and sales results.

Latest example: In the first indication that Wednesday’s GDP report may have overstated second-quarter growth, construction spending fell by 1.8% in June – its biggest drop since Jan 2011 (HT Zero Hedge) —

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during June 2014 was estimated at a seasonally adjusted annual rate of $950.2 billion, 1.8 percent (±1.8%)* below the revised May estimate of $967.8 billion. The June figure is 5.5 percent (±2.3%) above the June 2013 estimate of $900.3 billion.

During the first 6 months of this year, construction spending amounted to $445.1 billion, 7.8 percent (±1.6%) above the $413.0 billion for the same period in 2013.

The July Employment Situation Summary (080114); 209K Jobs Added, Unemployment Rate Rises to 6.2%

Filed under: Economy,Taxes & Government — Tom @ 8:25 am

Predictions:

  • Associated Press — 225,000 seasonally adjusted jobs added; 6.1 percent unemployment rate. “… it would mark the sixth straight month of gains above 200,000, the longest such stretch since 1997.”
  • Bloomberg — 230,000 jobs added, no rate prediction.
  • Reuters — 233,000 jobs added, 6.1 percent unemployment rate.

Not Seasonally Adjusted Benchmarks:

Readers here know that yours truly likes to look at actual (i.e., not seasonally adjusted) data to see what’s really happening in the labor market, so let’s do that side-by-side with the adjusted data:

NSAandSAjobAdds2001toJune14

July is a month during which many jobs are actually lost overall.

If the job market is on track to be stellar, we shouldn’t see more than 1.05 million jobs lost overall. That number is lower than any other July listed because I believe that the factors influencing the high number of July let-go’s are not as strong as they have been in the past.

If the private sector is on track to be stellar, we need to see 200,000 such jobs actually added before seasonal adjustment, i.e., it needs to be a lot better than the previous four years, which gave us mostly mediocre seasonally adjusted results.

We’ll see what transpired here at 8:30 a.m.

HERE IT IS (full HTML): At firtst blush … Well, things aren’t absolutely perfect in the land of economic legacy, are they? —

Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 6.2 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, manufacturing, retail trade, and construction.

Both the unemployment rate (6.2 percent) and the number of unemployed persons (9.7 million) changed little in July. Over the past 12 months, the unemployment rate and the number of unemployed persons have declined by 1.1 percentage points and 1.7 million, respectively.

Among the major worker groups, the unemployment rate for adult women increased to 5.7 percent and the rate for blacks edged up to 11.4 percent in July, following declines for both groups in the prior month. The rates for adult men (5.7 percent), teenagers (20.2 percent), whites (5.3 percent), and Hispanics (7.8 percent) showed little or no change in July. The jobless rate for Asians was 4.5 percent (not seasonally adjusted), little changed from a year earlier.

… The civilian labor force participation rate, at 62.9 percent, changed little in July. The participation rate has been essentially unchanged since April. The employment-population ratio, at 59.0 percent, was unchanged over the month but has edged up by 0.3 percentage point over the past 12 months.

… Establishment Survey Data

Total nonfarm payroll employment increased by 209,000 in July, the same as its average monthly gain over the prior 12 months. In July, employment grew in professional and business services, manufacturing, retail trade, and construction.

Professional and business services added 47,000 jobs in July and has added 648,000 jobs over the past 12 months. In July, employment continued to trend up across much of the industry, including a gain of 9,000 jobs in architectural and engineering services. Employment in temporary help services changed little over the month.

Manufacturing added 28,000 jobs in July. Job gains occurred in motor vehicles and parts (+15,000) and in furniture and related products (+3,000). Over the prior 12 months, manufacturing had added an average of 12,000 jobs per month, primarily in durable goods industries.

… The change in total nonfarm payroll employment for May was revised from +224,000 to +229,000, and the change for June was revised from +288,000 to +298,000. With these revisions, employment gains in May and June were 15,000 higher than previously reported.

These releases read like propaganda a bit more with each passing month.

Just one example: “Employment in temporary help services changed little over the month.” It increased by a seasonally adjusted 8,500, or 4% of the total jobs pickup, for a sector which has about 2% of all of employment. In other words, the statement’s just not true, but BLS doesn’t want to admit that the economy is generating a disproportionate number of temp jobs.

Not Seasonally Adjusted Benchmark Follow-up: The economy actually lost 1.11 million jobs overall, while the private sector picked up 127,000 jobs. Those figures fell 60K and 23K, respectively, short of the benchmarks above. Fairly close, but no cigar, which explains why the overall number of jobs added trailed predictions by about 25,000.

Other notes (referencing seasonally adjusted figures unless otherwise indicated):

  • The seasonally adjusted labor force increased by 329,000 in July to 156.023 million. That’s still 204K below where it was in March.
  • The number of employed in the Household Survey increased by only 131K. Meanwhile, the number of full-timers and part-timers increased by 285K and 52K, respectively, a total of 337K. Don’t ask me to explain that, except to ask, “Aren’t seasonally adjusted numbers fun?”
  • The black unemployment rate shot up to 11.4%, while the white unemployment rate stayed at 5.3%. The rate for 20-and-over black women zoomed from 9.0% to 10.1%.
  • The number of those unemployed for 27 or more weeks increased a bit from 3.081 million to 3.155 million after declining significantly during the three previous months.
  • “Food services and drinking places” keep on cranking a disproporationate number of relatively low-paying jobs (18,600 in July, 292K in the past year).

___________________________________________

UPDATE: Zero Hedge notes that in a separate government report, wage growth came in below estimates.

UPDATE 2: Pethokoukis (“July jobs report: The Obama recovery hits its stride. And that’s the problem”; bolds are mine) —

… the Obama recovery seems to have hit its sweet spot. And that’s the problem. This may be as good as it gets given that the expansion is five-years old and GDP growth seems stuck in low gear. The US employment rate of 59.0% is still well below its prerecession level of 62.9%, a gap of nearly 10 million jobs. There are still 3.2 million long-term unemployed vs. 1.3 million in December 2007. And as Capital Economics points out, “Despite the strength of employment gains and the decline in the unemployment rate, there is still no sign of an acceleration in average hourly earnings, which were unchanged in July.”

Overall, it was a bad report for the job metrics “dashboard” of Federal Reserve Chair Janet Yellen. As economist Robert Brusca points out, ” … we see that the unemployment rate has risen, the U-6 rate is up. The long-term unemployed share of total unemployment is up. Part-time workers are up, part-time workers looking for full-time work is a higher ratio. Marginally attached workers are greater in number. There are more discouraged workers.”

Then again, what can you really expect from an economy that has expanded by just 2.4% over the past four quarters, and a mere 2.2% over the five years of the expansion?

There is little happening in the economy right now that suggests this expansion will ever be a whole lot more than what it currently is.

To anyone with a memory or a knowledge of history, “what it currently is” is unacceptable.

Friday Off-Topic (Moderated) Open Thread (080114)

Filed under: Lucid Links — Tom @ 6:06 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

Positivity: Court allows 9/11 cross to remain standing at Ground Zero

Filed under: Positivity — Tom @ 6:00 am

To be clear, this is not completely positive, because of the backhanded logic employed. But at least it stays, which is far more important than the semantic gymnastics involved, at least for now.

From Washington:

Jul 29, 2014 / 11:38 am

Rejecting arguments from an atheist group, a federal appeals court ruled Monday that the iconic cross found at the site of the 2001 World Trade Center attacks may remain at the 9/11 Museum.

“The history of 9/11 would not be complete without including the impact the Ground Zero Cross had in inspiring rescue workers and Americans generally,” said Eric Baxter, counsel for the Becket Fund for Religious Liberty, in a July 28 statement.

“Displaying the cross in a display about ‘Finding Meaning at Ground Zero’ is perfectly appropriate,” he continued.

The Becket Fund for Religious Liberty had filed a brief supporting the museum’s ability to display the cross, which was discovered amid piles of rubble by recovery workers in the aftermath of the Sep. 11, 2001 attacks on the World Trade Center in New York City.

Nearly 20 feet tall, the cross was formed by two intersecting metal beams from the fallen skyscrapers. It became a place of gathering and prayer for recovery workers at the site, with many people posting prayers and petitions to the structure.

Since 2011, the cross has been part of the World Trade Center Museum. In July 2011, however, American Atheists filed suit against the display, charging that the presence of the cross was offensive and marginalized them as atheists.

The suit added that the presentation of the cross led to injury “in consequence of having a religious tradition not their own imposed upon them through the power of the state.”

In 2013, a district court upheld the display of the cross, saying that it had a secular purpose and did not “create excessive entanglement between the state and religion.”

American Atheists appealed that ruling, arguing that the display still “alienates non-Christians seeking to commemorate the dead, wounded and other affected persons,” and that “the overwhelmingly dominant display of the cross over any other religious symbolism is a violation of the Establishment Clause.”

But in their July 28 ruling, federal judges on the Second Circuit Court of Appeals decided that “displaying The Cross at Ground Zero to tell the story of how some people used faith to cope with the tragedy is genuine, and an objective observer would understand the purpose of the display to be secular.”

They continued, noting that the cross is included in an exhibit entitled “Finding Meaning at Ground Zero,” which includes artifacts from a variety of faith perspectives as well as non-religious pieces. Therefore, the judges said, “an objective observer would not view the display as endorsing religion generally, or Christianity specifically.” …

Go here for the rest of the story.