May 2, 2018

In Case You Missed It: GM Has Stopped Reporting Monthly Vehicle Sales

Filed under: Economy — Tom @ 9:31 am

I didn’t catch this until a few days ago, but it was confirmed yesterday when everyone else in the auto industry released their sales figures:

No. 1 U.S. automaker General Motors Co (N:GM) announced last month that it would no longer report monthly sales and instead will just post sales on a quarterly basis. Industry estimates showed GM posting sales anywhere from flat to down 8 percent for April.

Companies don’t take steps like this unless they lack confidence in their performance, and want to reveal as little as they can about it.

April 2018 ISM Manufacturing: 57.3 Percent, Down from 59.3 Percent in March

Filed under: Economy,Taxes & Government — Tom @ 9:23 am

From the Institute for Supply Management on Tuesday (bolds and most paragraph breaks are mine):

Economic activity in the manufacturing sector expanded in April, and the overall economy grew for the 108th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The April PMI® registered 57.3 percent, a decrease of 2 percentage points from the March reading of 59.3 percent.

The New Orders Index registered 61.2 percent, a decrease of 0.7 percentage point from the March reading of 61.9 percent. The Production Index registered 57.2 percent, a 3.8 percentage point decrease compared to the March reading of 61 percent.

The Employment Index registered 54.2 percent, a decrease of 3.1 percentage points from the March reading of 57.3 percent. The Supplier Deliveries Index registered 61.1 percent, a 0.5 percentage point increase from the March reading of 60.6 percent. The Inventories Index registered 52.9 percent, a decrease of 2.6 percentage points from the March reading of 55.5 percent.

The Prices Index registered 79.3 percent in April, a 1.2 percentage point increase from the March reading of 78.1 percent, indicating higher raw materials prices for the 26th consecutive month.

Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index at 60 or above for the 12th straight month, and the Customers’ Inventories Index remaining at low levels. The Backlog of Orders Index continued expanding, with its highest reading since May 2004, when it registered 63 percent.

Consumption, described as production and employment, continues to expand, but has been restrained by labor and skill shortages. Inputs, expressed as supplier deliveries, inventories and imports, declined overall, due primarily to inventory reductions likely led by supplier performance restrictions. Lead time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Export orders remained strong.

The Prices Index is at its highest level since April 2011, when it registered 82.6 percent. In April, price increases occurred across 17 of 18 industry sectors. Demand remains robust, but the nation’s employment resources and supply chains continue to struggle.

Of the 18 manufacturing industries, 17 reported growth in April, in the following order: Wood Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Furniture & Related Products; Paper Products; Machinery; Primary Metals; Nonmetallic Mineral Products; Chemical Products; Computer & Electronic Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Printing & Related Support Activities; Miscellaneous Manufacturing; and Apparel, Leather & Allied Products. No industry reported a decrease in PMI® in April compared to March.

The pullback from March shouldn’t be seen as problematic, especially given the continued strength in New Orders and the 14-year record high in Backlog of Orders. The latter figure, as I’ve noted several times in commenting on recent reports, indicates that factories can plan their production over a longer term, and is a very under-appreciated metric. It indicates that we’ve moved back into a relatively predictable economy compared to the turmoil continually seen during the post-recession economy in the Obama era. (Why? The constant threats of regulatory over-reach and intimidation have been minimized, a factor even more important from a planning standpoint than the reduction in the raw volume of government regulations.) Higher known order backlogs should cause factories to achieve economies and efficiencies they couldn’t achieve since before the last recession.

The Prices Paid figure is raising alarms with some. But it only matches a 2011 figure, when inflation wasn’t a problem at all, so I fail to see why that figure has the significance some people are attaching to it.

April 2018 ADP Employment Report: 204,000 Private-Sector Jobs Added (See Conference Call Notes)

Filed under: Economy,Taxes & Government — Tom @ 7:15 am


This report, as it did last year, has been posting larger numbers than the government’s Bureau of Labor Statistics. At this point one should presume that it typically overstate actual results by an average 20K or more (but actual differences will vary widely, as explained later).

The report will be here at 8:15, and I will attend the 8:30 conference call.


Private-sector employment increased by 204,000 from March to April, on a seasonally adjusted basis.

From the press release:

“The labor market continues to maintain a steady pace of strong job growth with little sign of a slowdown,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “However, as the labor pool tightens it will become increasingly difficult for employers to find skilled talent. Job gains in the high- skilled professional and business services industry accounted for more than half of all jobs added this month. The construction industry, which also relies on skilled labor, continued its six month trend of steady job gains as well.”

Mark Zandi, chief economist of Moody’s Analytics, said, “Despite rising trade tensions, more volatile financial markets, and poor weather, businesses are adding a robust more than 200,000 jobs per month. At this pace, unemployment will soon be in the threes, which is rarified and risky territory, as the economy threatens to overheat.”

Previous months: The four previous months averaged 240,000. That’s only slightly lower than the 245,000 average seen for the same four months in the March report.


MARK ZANDI: Any number ot or above 200K is strong. Strong across sizes and industries and pay scales.

Employers are aggressively adding to payroll.

Technical point: BLS data more affected by weather because of higher bar for being considered employed. Have to get paid during BLS survey week; for ADP you just have to be on the payroll, even if unable to come in because of weather.

No sense of any slowing in job creation. Hiring is strong.

Question about what is sustainable. CBO says it something less than 100K/mo., really more like 80K-90K. In last six months, a bit of a pickup in participation. So we are at a point where people on the margins are coming back into the labor force. That has lifted sustainable rate of job growth temporarily.

We will see unemployment begin to decline in a more definitive way into the 3 percent range. Only seen 3 times; early 1950s, 1960s, and late-1990s. Overheating occurred in each of those instances, and that is a concern now.

Expansion is tied for second-longest in history, very good chance that it will be the longest.

Concern about overheating is being reflected in financial markets. Fed on path to normalizing interest rates by the end of the decade. LT interest rates are up.

Relationship between ST and LT rates — spread is small, and should grow. if 50 points or less, supposedly signals a recession three years down the road.

Next recession is starting to come into view.


ME (minimum wage employment impacts): Zandi thinks that market rates might rise to that level and may not hit employment very hard. Relatively small employment effects.

States which have increased minimum wages are in hot labor markets.

Vicki Needham, The Hill: (Tariffs and recession possibilities, and what are the headwinds?) Rising-rate environment puts pressure on financial markets and housing values. We’re already observing it in reactions of investors. Also risk is in trade. At end of day, it may not have macro consequences. BUT there’s always a possibility that negotiations could deteriorate and get hostile, with the cycle not stopping, adding to inflation, etc.

FINAL NOTES: This should foretell a slightly stronger BLS figure on Friday. But as noted earlier, ADP seems to be consistently overstating job growth, so on that basis, even considering the weather catch-up factor Zandi noted, I wouldn’t expect the BLS figure Friday to come in much higher than ADP’s. Other factors are at play, which I will look at either before or after Friday’s report, depending on time availability.

Zandi’s contention (note that he said it way my contention, which is not true; I gave him a choice in my question) that minimum-wage laws might not have much employment effect would appear to have a potentially glaring exception in the New York City restaurant industry.

Wednesday Off-Topic (Moderated) Open Thread (050218)

Filed under: Lucid Links — Tom @ 6:00 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: How graduates can thrive, according to one Catholic entrepreneur

Filed under: Business Moves,Education,Positivity — Tom @ 5:55 am

From Atlanta:

Apr 29, 2018 / 04:14 pm (CNA/EWTN News).- While colleges students may frequently find themselves offered worn-out adages on how to find success, a book by entrepreneur and philanthropist Frank J. Hanna goes beyond the clichés to help graduates focus on the things that really matter in life.

Hanna, the CEO of Hanna Capital, is the author of “A Graduate’s Guide to Life: Three Things They Don’t Teach You in College That Could Make All the Difference.”

In addition to his success as a merchant banker, Hanna is known for his philanthropy, particularly his commitment to Catholic education and evangelization. He is an EWTN board member. CNA is part of the EWTN family.

Amazon describes the book, released last year, by saying, “The college years are often referred to as the best years of your life. Author Frank J. Hanna believes your best years are still ahead of you, but only if you have a strategy for living that goes beyond what you learned in school.”

“According to Hanna, wealth and success are not what you think. Drawing on a lifetime of business experience, he proposes a radically different approach. He shows that wealth is not merely money, competition has a higher purpose than simply getting ahead, and a life of happiness is simpler to attain than we imagine.”

CNA interviewed Hanna about his book, his inspiration in writing it, and the advice he would offer college students today. The text of the interview is below: