Economic Week in Review

According to Briefing.com, the key takeaway from the report is that “…employment conditions remain in that sweet spot of being encouraging on the hiring front and encouraging on the inflation front in that average hourly earnings growth isn't accelerating sharply enough to provoke imminent rate-hike concerns.”

Unemployment
The annual average unemployment rate for 2019 came in at 3.7%, down from the 3.9% for 2018. The last time back-to-back years of under 4% unemployment occurred was 1968 and 1969 (3.6% and 3.5%, respectively.)

For the 19^th time in the past 21 months (since May 2018), the national unemployment rate has been below 4%.  The last time rates were consecutively less than 4% this long was more than fifty years ago, from October 1967 to January 1970.

New nonfarm jobs added in 2019 was 1.827 million, the tenth consecutive year of positive employment growth.  Currently, on a seasonally adjusted basis, 152.2 million people are working in the United States:

However, as pointed out by Chad Moutray at NAM, “…manufacturing employment fell by 12,000 workers in January, dropping for the third time in the past four months. Indeed, over that four-month time frame, hiring in the sector was essentially stagnant. That suggests that, while there have been some signs of stabilization in other indicators, manufacturing job growth has lagged that progress. We still expect to see improvements moving forward, especially considering greater trade certainty and some economic progress globally.”

Staying with U.S. manufacturing, the Institute for Supply Management reported last week that “the January {manufacturing} PMI registered 50.9 percent, an increase of 3.1 percentage points from the seasonally adjusted December reading of 47.8 percent… The PMI returned to expansion territory for the first time since July 2019. Demand expanded, with (1) the New Orders Index growing at a moderate rate supported by new export order expansion, (2) the Customers’ Inventories Index remaining at ‘too low’ status and (3) the Backlog of Orders Index contracting for the ninth month, but at a slower rate.”

Here’s what some of the ISM survey respondents had to say:

• “Business has picked up considerably. Many of our suppliers are working at or above full capacity. Tariffs are still a concern and are believed to be a factor in short supply and higher prices of electronic parts. Our profit margin has been somewhat negatively affected by high tariffs, particularly on electronic parts from China.” (Computer & Electronic Products)
• “Small signs of increased global demand in the chemical segment.” (Chemical Products)
• “Continued signs of slowdown in manufacturing.” (Transportation Equipment)
• “Demand for prepared frozen food continues to be strong, but margins compressing as inputs rise with price elasticity preventing accompanying increases.” (Food, Beverage & Tobacco Products)
• “Our customer slowdown has not reached the bottom.” (Petroleum & Coal Products)
• “Our business is starting 2020 stronger than we finished 2019, as we saw a dramatic downturn in orders over the last four months of 2019. Orders are up to start the year, but slightly behind where they were one year ago.” (Fabricated Metal Products)
• “Business is good — above last year, though a little below plan.” (Furniture & Related Products)
• “The annual holiday slowdown was slightly more significant compared to the previous three years, heightening concerns over the 2020 first-quarter forecast.” (Electrical Equipment, Appliances & Components)
• “The lack of faith in the economy seems to be why we cannot sell capital projects.” (Machinery)
• “Tariffs on injection molds will impact selection of mold builder for future jobs. We are more likely to choose domestic rather than offshore.” (Plastics & Rubber Products)