The Jim Bakker Show

U.S. job growth cools as labor market nears full employment; wages rise

Job seekers line up to apply during "Amazon Jobs Day," a job fair being held at 10 fulfillment centers across the United States aimed at filling more than 50,000 jobs, at the Amazon.com Fulfillment Center in Fall River, Massachusetts, U.S., August 2, 2017.

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March.

Nonfarm payrolls increased by 148,000 jobs last month after surging by 252,000 in November, the Labor Department said on Friday. Retail payrolls decreased by 20,300 in December, the largest drop since March, despite reports of a strong holiday shopping season.

The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. The economy needs to create 75,000 to 100,000 jobs per month to keep up with growth in the working-age population.

“We do not think that today’s employment report will keep the Federal Reserve from tightening again at the March policy meeting, given other strong recent economic data,” said David Berson, chief economist at Nationwide in Columbus, Ohio.

Job growth surged in October and November after being held back in September by back-to-back hurricanes, which destroyed infrastructure and homes and temporarily dislocated some workers in Texas and Florida.

Taking some sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after a 0.1 percent gain in the prior month. That lifted the annual increase in wages to 2.5 percent from 2.4 percent in November.

Prices of U.S. Treasuries were mostly flat while the U.S. dollar <.DXY> was slightly stronger against a basket of currencies. U.S. stock indexes opened at fresh record highs.

Employment gains in December were below the monthly average of 204,000 over the past three months. Job growth is slowing as the labor market nears full employment, but could get a temporary boost from a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.

The lift from the fiscal stimulus, which includes a sharp reduction in the corporate income tax rate to 21 percent from 35 percent, is likely to be modest as the stimulus is occurring with the economy operating almost at capacity. There are also concerns the economy could overheat.

“With the tax cuts we get solid GDP growth in the near-term and then a fiscal hangover, which will likely put the economy at a greater risk of recession,” said Ryan Sweet, senior economist at Moody’s Analytics in West Chester, Pennsylvania.

NEAR FULL EMPLOYMENT

Data ranging from housing to manufacturing and consumer spending have suggested solid economic growth in the fourth quarter, despite a widening of the trade deficit in both October and November, which could subtract from gross domestic product.

In a separate report on Friday, the Commerce Department said the trade gap widened 3.2 percent in November to $50.5 billion, the highest level since January 2012.

The deficit was boosted by record high imports, which offset the highest exports in three years. The economy grew at a 3.2 percent annualized rate in the third quarter.

For all of 2017, the economy created 2.1 million jobs, below the 2.2 million added in 2016. Economists expect job growth to slow further this year as the labor market hits full employment, which will likely boost wage growth as employers compete for workers.

Economists are optimistic that annual wage growth will top 3.0 percent by the end of this year. The December employment report incorporated annual revisions to the seasonally adjusted household survey data going back five years.

There was no change in the unemployment rate, which declined by seven-tenths of a percentage point last year.

Economists believe the jobless rate could drop to 3.5 percent by the end of this year. That could potentially unleash a faster pace of wage growth and translate into a much stronger increase in inflation than currently anticipated.

That, according to economists, would force the Fed to push through four interest rate increases this year instead of the three it has penciled in. The U.S. central bank raised borrowing costs three times in 2017.

“If the unemployment rate declines and wages rise faster, which is likely, the Fed is going to start worrying about wage inflation,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Employment gains were largely broad-based in December. Construction payrolls increased by 30,000 jobs, the most since February, reflecting recent strong increases in homebuilding. Manufacturing employment increased by 25,000 jobs.

Manufacturing is being supported by a strengthening global economy and a weakening dollar. Employment in the utilities sector fell for a second straight month.

General merchandise stores payrolls tumbled by 27,300 in December, with employment at clothing stores dropping by 3,800 jobs.

For all of 2017, retail employment dropped by 67,000 jobs after rising by 203,000 in 2016. Further job losses are likely this year as major retailers, facing stiff competition from online sellers like Amazon.com Inc <AMZN.O>, close stores.

Sears Holdings Corp said on Thursday it was shuttering 103 unprofitable Kmart and Sears stores. Macys Inc also announced 11 store closures, which could leave 5,000 workers unemployed.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. factory activity jumps, construction spending unchanged

A man walks his dog past a mural depicting factory workers in the historic Pullman neighborhood in Chicago

By Lindsay Dunsmuir

WASHINGTON (Reuters) – U.S. factory activity jumped in June suggesting economic growth in the second quarter gained some steam, while construction spending held steady in May.

The Institute for Supply Management (ISM) said on Monday its index of national factory activity rose to a reading of 57.8 last month from 54.9 in May.

A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for roughly 12 percent of the overall U.S. economy.

The ISM survey’s new orders sub-index rose to 63.5 in June from 59.5 the prior month. A measure of factory employment increased to a reading of 57.2 from 53.5 in May.

According to ISM, comments from those surveyed generally reflected expanding conditions, “with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace.” Fifteen of the 18 manufacturing industries reported growth in June.

The dollar rose to a session high against a basket of currencies after the data, while the yield on the 2-year U.S. Treasury note rose to a more than eight-year high. U.S. stocks extended gains.

CONSTRUCTION SPENDING MIXED

Meanwhile, U.S. construction spending unexpectedly remained flat in May but federal government outlays on construction projects were the highest in more than four years.

The Commerce Department said on Monday that construction spending in May remained unchanged at $1.23 trillion. Spending in April was revised to show it declining 0.7 percent after a previously reported 1.4 percent fall.

Economists polled by Reuters had forecast construction spending rising 0.3 percent in May. Construction spending increased 4.5 percent from a year ago.

Federal government construction spending jumped 6.4 percent in May to its highest monthly level since January 2013.

The May construction spending release included revisions to data back to January 2015, the Commerce Department said.

In May, private construction spending fell 0.6 percent, the biggest decline since October 2015, after declining 0.2 percent in April. Investment in private residential construction also declined 0.6 percent, the biggest fall since July 2014, after rising 0.5 percent the prior month.

Spending on private nonresidential structures fell 0.7 percent in May, the fifth straight monthly decline.

Investment in public construction projects rose 2.1 percent in May after dropping 2.7 percent in April.

Outlays on state and local government construction projects increased 1.7 percent in May after falling 2.7 percent in April.

(Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)

U.S. wholesale inventories post biggest drop in more than a year

Shelves are stacked with wholesale merchandise at a Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013. REUTERS/Rick Wilking

WASHINGTON, June 9 (Reuters) – – U.S. wholesale inventories fell more steeply in April than the government had previously estimated, posting their biggest drop in more than a year as sales also fell sharply.

The Commerce Department said on Friday that wholesale inventories fell 0.5 percent in April after increasing 0.1 percent in March. The department reported last month that wholesale inventories slipped 0.3 percent in April.

Automotive inventories fell 1.4 percent while petroleum inventories dropped 5.0 percent, their biggest fall since December 2015. Paper inventories fell 1.8 percent in the category’s biggest drop since January 2013.

Wholesale stocks of electrical goods also slipped 0.1 percent while machinery inventories were flat.

Sales at wholesalers fell 0.4 percent in April after falling 0.2 percent in March. Sales of electrical goods rose 0.7 percent while those of machinery fell 0.8 percent. Auto sales were up 1.3 percent.

At April’s sales pace it would take wholesalers 1.28 months to clear shelves, unchanged from March.

(Reporting by David Lawder; Editing by Paul Simao)

U.S. core capital goods orders, shipments increase in March

FILE PHOTO - Honda Motor Co's Acura NSX luxury sports car is seen in assemble line at the company's Performance Manufacturing Center in Marysville, Ohio, U.S., November 11, 2016. REUTERS/Maki Shiraki/File Photo

WASHINGTON (Reuters) – New orders for key U.S.-made capital goods rose less than expected in March, but a second straight monthly increase in shipments suggested business investment accelerated in the first quarter amid a recovering energy sector.

The Commerce Department said on Thursday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.2 percent last month after an upwardly revised 0.1 percent gain in February.

Shipments of these so-called core capital goods rose 0.4 percent after jumping 1.1 percent in February. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

Economists polled by Reuters had forecast core capital goods orders rising 0.5 percent last month after a previously reported 0.1 percent dip. March’s modest increase suggests some loss of momentum in the manufacturing sector after recent strong growth.

Manufacturing, which accounts for about 12 percent of the U.S. economy, is being underpinned by the energy sector revival.

Energy services firm Baker Hughes said last Friday that U.S. oil rigs totaled 688 in the week ending April 21, the most in two years. U.S. drillers have added oil rigs for 14 straight weeks and shale production in May was set for its biggest monthly increase in more than two years.

Business spending on equipment is expected to have accelerated from the fourth-quarter’s annualized 1.9 percent growth pace and will likely be one of the few bright spots when the government publishes its advance first-quarter GDP estimate on Friday.

Manufacturing could get a lift from President Donald Trump’s proposed tax plan, announced on Wednesday, that includes cutting the corporate income tax rate to 15 percent from 35 percent.

Last month, orders for machinery slipped 0.2 percent, but shipments increased 0.7 percent. Orders for primary metals rose in March as did shipments of these products. Electrical equipment, appliances and components orders and shipments also increased last month.

There were, however, declines in orders for fabricated metal products and computers and electronic products.

Last month overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, increased 0.7 percent after surging 2.3 percent in February. Civilian aircraft orders increased 7.0 percent.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Consumer spending slows; inflation pushing higher

A customer shops at a Walmart Supercenter in Rogers, Arkansas June 6, 2013. REUTERS/Rick Wilking

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer spending barely rose in February amid delays in the payment of income tax refunds, but the biggest annual increase in inflation in nearly five years supported expectations of further interest rate hikes this year.

The Commerce Department said on Friday consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1 percent. That was the smallest gain since August and followed an unrevised 0.2 percent rise in January.

Economists had expected a 0.2 percent increase.

The government delayed the issuing of tax refunds this year as part of efforts to combat fraud. Spending last month was held back by a 0.1 percent dip in purchases of big-ticket items like automobiles. While unseasonably warm weather reduced households’ heating bills, it restricted spending last month.

Weak consumer spending suggested that economic growth slowed further in the first quarter. Gross domestic product increased at a 2.1 percent annualized rate in the fourth quarter, stepping down from the July-September quarter’s brisk 3.5 percent pace.

Despite signs of moderate growth, the Federal Reserve is expected to raise interest rates at least twice more this year. The U.S. central bank raised its benchmark overnight interest rates by a quarter of a percentage point this month.

Prices for U.S. Treasuries fell on the data, while the dollar was little changed against a basket of currencies. U.S. stock index futures were slightly lower.

With consumer confidence at 16-year highs and labor market tightness pushing up wage growth, the moderation in spending is likely to be temporary. Even with economic growth slowing at the start of the year, inflation is rising.

The personal consumption expenditures (PCE) price index gained 0.1 percent last month after jumping 0.4 percent in January. That lifted the year-on-year rate of increase in the PCE price index to 2.1 percent, the biggest gain since April 2012. The PCE price index rose 1.9 percent in January.

Excluding food and energy, the so-called core PCE price index increased 0.2 percent last month after rising 0.3 percent in January. In the 12 months through February, the core PCE price index increased 1.8 percent after a similar gain in January.

The core PCE is the Federal Reserve’s preferred inflation measure and is running below its 2 percent target. Inflation is now in the upper end of the range that Fed officials in March felt would be reached this year.

Rising price pressures are also eating into consumer spending. When adjusted for inflation, consumer spending fell 0.1 percent in February after declining 0.2 percent in January.

That suggests a sharp deceleration in the pace of consumer spending after a robust 3.5 percent growth rate in the fourth quarter.

Personal income rose 0.4 percent last month after advancing 0.5 percent in January. Wages increased 0.5 percent, the biggest gain in five months.

Income at the disposal of households after accounting for inflation increased 0.2 percent after dipping 0.1 percent in January. Savings rose to a five-month high of $808.0 billion from $770.9 billion in January.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Factory activity hits two-year high as orders surge

An employee is seen passing the nose of a Boeing 737 MAX during a media tour of the Boeing 737 MAX at the Boeing plant in Renton, Washington

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. factory activity accelerated to a two-year high in December amid a surge in new orders and employment, suggesting some of the oil-related drag on manufacturing was fading.

Other data on Tuesday showed construction spending hitting a 10-1/2-year high in November, which could provide a lift to fourth-quarter economic growth. The reports suggested president-elect Donald Trump was inheriting a strong economy, marked by a labor market that is near full employment, from the Obama administration.

The Institute for Supply Management (ISM) said its index of national factory activity rose 1.5 percentage points to a reading of 54.7 last month, the highest since December 2014. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

A gauge of new orders jumped 7.2 percentage points, to the highest level since November 2014. A measure of factory employment rose 0.8 percentage point, to the highest level since June 2015.

A collapse in oil prices in 2015, together with a surge in the dollar, have hobbled manufacturing. Much of the impact has been through weak business spending on equipment, which has contracted for four consecutive quarters.

But with oil prices rising and touching 18-month highs on Tuesday, manufacturing is starting to perk up. Gas and oil well drilling has risen over the last several months.

In a separate report, the Commerce Department said construction spending increased 0.9 percent to $1.18 trillion in November, the highest level since April 2006. It was boosted by gains in both private and public sector investment

Construction spending in October was revised up to show a 0.6 percent rise instead of the previously reported 0.5 percent increase. Construction spending was up 4.1 percent from a year ago in November.

Workers construct a new house in Leyden Rock in Arvada, Colorado, U.S. on August 30, 2016. REUTERS/Rick Wilking/File Photo

November’s solid increase and October’s upward revision to construction spending could prompt economists to raise their gross domestic product estimates for the fourth quarter.

The Atlanta Federal Reserve is currently forecasting GDP increasing at a 2.5 percent annualized rate in the fourth quarter. The economy grew at a 3.4 percent rate in the third quarter.

The dollar rose to a fresh 14-year high against a basket of currencies after the data, while prices for U.S. government debt fell. U.S. stocks were trading higher.

Spending on private construction projects jumped 1.0 percent in November to its highest level since July 2006 as single-family home building, as well as home renovations, increased.

Investment in private nonresidential structures — which include factories, hospitals and roads — rose 0.9 percent after tumbling 1.5 percent the prior month.

Public construction spending gained 0.8 percent in November to the highest level since March. It was the fourth straight month of increases. Outlays on state and local government construction projects rose 0.6 percent, also gaining for a fourth consecutive month.

Federal government construction spending surged 3.1 percent after rising 0.2 percent in October.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

Drop in U.S. consumer spending clouds Fed rate hike outlook

By Jason Lange

WASHINGTON (Reuters) – U.S. consumer spending fell in August for the first time in seven months while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates.

The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.1 percent last month after accounting for inflation.

Analysts polled by Reuters had expected a 0.1 percent gain.

“Consumers took a breather in August,” said Chris Christopher of IHS Global Insight.

Fed Chair Janet Yellen said last week she expected the U.S. central bank would raise rates once later this year to keep the economy from eventually overheating.

Prices for fed funds futures suggest investors see almost no chance of a hike at the Fed’s next policy meeting in early November and roughly even odds of an increase at its mid-December meeting, according to CME Group.

The dollar <.DXY> was little changed against a basket of currencies while U.S. stock prices were trading higher.

Consumer spending, which has been robust in recent months, partially offset the drag from weak business investment and falling inventories in the second quarter when the economy expanded at a lackluster 1.4 percent annual rate.

Economists said overall economic growth could still accelerate in the current quarter even with August’s slight decline in consumer spending.

The Atlanta Fed said growth appeared on track to accelerate to a 2.4 percent annual rate in the third quarter, according to its closely watched GDPNow forecasting model. It had forecast growth of 2.8 percent for the period earlier this week.

A tightening labor market appears to be pushing up wages and could fuel higher levels of spending in the future. Personal income rose 0.2 percent in August, in line with expectations.

Consumer prices also rose about as much expected in August, with the price index excluding food and energy increasing 0.2 percent from the prior month. That left inflation excluding food and energy at 1.7 percent in the 12 months through August, up a tenth of a percentage point from the prior month and closer to the Fed’s 2 percent inflation target.

(Reporting by Jason Lange; Editing by Paul Simao)

Half of U.S. Counties Have Not Recovered From Recession

A new report from the Commerce Department shows that half of the nation’s counties have still not recovered from the economic depression despite the overall nationwide economy indicating a recovery.

The Wall Street Journal reports that despite the good nationwide number the economic recovery is uneven at best.

One of the report’s authors said that the report shows why many Americans feel like the economy is not improving. Emilia Istrate said that Americans feel the economy locally and that if there’s no recovery in their area they don’t believe overall conditions are improving.

The report examined GDP, total number of jobs, unemployment rates and home prices.

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