The employment gains in the latest U.S. jobs report from the
Bureau of Labor Statistics (BLS) may have been tepid but the potential of the
U.S. economy is continuing to heat up. This is most evident in the foreign
trade statistics. November’s goods and services deficit fell to its lowest
level since the recession of 2008-2009.
Given the robust 4.1% “real” (i.e., inflation-adjusted)
gross domestic product (GDP) growth rate in 2013’s Q3, a worsening trade
deficit might have been expected, based on historical patterns. Such thinking
is out-of-date. Now, vast increases in U.S. oil and gas reserves, thanks to
wide-spread “fracking”, have reduced dependence on outside sources of energy.
Combine the turnaround in energy supplies with solid
improvements in auto sales and new home starts and the present outlook is a
“throwback” forecast with the U.S. supplanting China and assuming its
traditional role as world growth leader. Against this backdrop, there are the
following other recent economic nuggets to note:
(1) In December 2013, the U.S. gain in total employment
(+74,000 jobs) was the lowest in three years, dating back to January 2011
(+69,000). A private sector estimate
from ADP Research Institute came to a cheerier conclusion, +238,000. One major
point of difference concerned construction jobs, -16,000 embedded in the former
compared with +48,000 in the latter.
(2) A healthy year-over-year percentage change for U.S.
total employment is +2.5% or more. In the latest report from the BLS, December
2013’s number versus December 2012 was +1.6%. Private-sector services
employment, which comprises 70% of the total, was a decent +2.1%.
(3) The total number of U.S. construction jobs was +2.1%
year over year, while employment in manufacturing was +0.6%. Among major
services sub-categories, professional and business services (+3.5%) was the
leader, followed by leisure and hospitality (+2.8%) and retail (+2.5%). The
number of jobs in information services and government was flat, -0.1% in both
cases.
(4) Delving deeper into sub-sectors, there were some other
performances worth noting: jobs in motor vehicles and parts manufacturing,
+5.1% year over year; amusements, gambling and recreation, +3.6%; computer
systems design services, +3.3%; and architectural and engineering services
(i.e., a leading indicator for on-site construction activity levels), +2.9%.
(5) The latest motor vehicle sales information from Autodata
Corp. fell back to 15.4 million units seasonally adjusted and annualized (SAAR)
in December, after a bullish 16.4 million units in November. At the Detroit
Auto Show, Ford has announced the next generation of its best-selling F-150
pick-up truck will adopt an all-aluminum body in order to lower weight and
improve fuel efficiency. What’s good news for one industry (i.e., aluminum)
isn’t so hot for another (steel).
(6) For full-year 2013, General Motors led the Big Three
U.S. automakers in unit sales, but Ford recorded the greatest percentage
increase (+10.8%). Chrysler (+9.0%) took second, but GM (+7.3%) had nothing to
be embarrassed about. Toyota (+7.4%) was the biggest other assembler.
(7) U.S. improved self-sufficiency in energy, combined with
relatively low prices, has spurred on the repatriation of industries that use
gas as both a fuel and a feedstock (e.g., the manufacture of petrochemicals).
Also working to reduce the overall trade deficit has been a remarkably high
surplus in services trade. This category of economic activity includes tourism.
(8) U.S. “current dollar” (i.e., not adjusted for inflation)
retail sales in December were +0.2% month to month and +4.1% year over year.
With all-items inflation running so low (+1.2%), this points to a significant
increase in “real” consumer spending, a key component (70%) of GDP.
(9) Leaders in year-over-year sub-sector retail sales were:
motor vehicle and parts dealers, +5.9%; clothing and clothing accessory stores,
+5.2%; health and personal care stores, +4.7%; and furniture and home
furnishing stores, +4.5%. For non-store retailers (i.e., catalogue sales and
the Internet), the year-over-year percentage gain (+9.9%) fell just short of
double digits.
(10) Returning to labor market statistics north and south of
the border, the U.S. unemployment rate (6.7%) in December dropped below
Canada’s figure (7.2%) for the first time in five years. The greatest disparity
between the two series occurred in November 2010, when the jobless rate in
America at 9.8% was 2.2 percentage points higher than the Canadian figure of
7.6%.
(11) Canada shed 46,000 jobs in December. Year-over-year
total employment was an anemic +0.6%. The service sector wasn’t much better at
+0.7%, while construction eased back to +1.9%, after having been as high as
+9.1% in August of last year, and manufacturing declined 2.3%. Saskatchewan
(3.8%) closed the year with the lowest unemployment rate among the provinces,
with Alberta next (4.4%). The four western provinces all recorded jobless rates
lower than anywhere east of the Ontario-Manitoba border. Alberta led in
year-over-year job growth, +3.3%.
(12) Canada’s merchandise trade balance was negative for the
20th consecutive month in November. The better prospects for the U.S. economy
relative to Canada’s at this time are causing the value of the “loonie” to
fall. So far, it has found a floor at around 92 cents American.
(13) Shockingly bad weather has been hanging around much of
the U.S. and Canada since before Christmas, with power outages a common
occurrence. Members of the scientific community, stung by assertions from the
general public that the temperature is becoming cooler rather than warmer, have
been stressing the difference between “weather” (short term) and “climate”
(long term). As someone who walks his dog after 11 p.m. each evening, all this
author knows is that the icy and slippery conditions of the past three weeks in
my hometown (Toronto) seem to have only one serious intent – to cull the herd of
older unsteady pedestrians such as myself.
Source: Reed
Construction Data
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