Today: Slower jobs growth, contained labor costs, rising U.S. market share, E.U. and Japan stimulating.
U.S. Job Growth Slows U.S. job growth slowed to its lowest level of the year in August, as employers added 142,000 jobs, a stumble for labor markets that had delivered a string of steady gains over the prior six months despite uneven economic growth. The unemployment rate ticked lower to 6.1%
July’s gain was revised up slightly to an increase of 212,000 from an earlier estimate of 209,000, but June’s gain was revised down to 267,000 from an earlier estimate of 298,000. Payroll gains have averaged 207,000 over the past three months.
So far this year, employers have averaged 215,000 jobs every month, the best pace of job growth since hiring averaged 265,000 jobs a month in 1999.
In August, the average workweek for all employees on private nonfarm payrolls was 34.5 hours for the sixth consecutive month. The manufacturing workweek edged up by 0.1 hour to 41.0 hours, and overtime was unchanged at 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was 33.7 hours for the sixth consecutive month. Average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents in August to $24.53. Over the year, average hourly earnings have risen by 2.1 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents to $20.68. (BLS)
U.S. Productivity Rose 2.3% in 2Q The productivity of U.S. workers improved by less than previously estimated in the second quarter, a new indication the economy’s spring rebound could lose momentum in the months ahead.
Nonfarm labor productivity, or output per hour worked, rose at a 2.3% annual rate from April through June, the Labor Department said Thursday. From the same period last year, second-quarter productivity rose 1.1%, in line with the meager growth of around 1% recorded in 2012 and 2013.
Labor-cost data from Thursday’s report showed that unit labor costs, a measure of how much companies are paying for their workers’ output, fell 0.1% in the second quarter. Labor’s initial estimate had pegged a 0.6% increase.
Over the same period a year ago, unit labor costs were up 1.7%. Labor-cost growth, which is watched as a sign of inflationary pressures in the economy, remains far below levels of over 3% prior to the recession.
U.S. Trade Gap Narrowed in July The U.S. trade gap narrowed in July, reflecting stronger demand for U.S. goods overseas that could boost the factory sector in the second half of the year.
The trade deficit shrank 0.6% to $40.5 billion in July from June as both exports and imports rose, the Commerce Department said Thursday. Exports climbed 0.9% while imports increased 0.7%.
Forecasting firm Macroeconomic Advisers raised its expectation of third-quarter growth to a 3.1% annual rate from 2.7%.
Asian nations aren’t getting the bounce that a U.S. manufacturing recovery used to bring, reflecting a weakening link between demand in the world’s largest economy and regional exporters, said Deutsche Bank AG.
The CHART OF THE DAY tracks the widening gap between U.S. manufacturing performance and export growth in the largest economies of north and Southeast Asia. A purchasing managers’ index for the U.S. by the Institute for Supply Management has risen in all but two months in 2014, climbing in August to the highest in more than three years. By contrast, year-on-year growth in Japan’s overseas sales weakened to 3.9 percent in July from 15.3 percent in December, while South Korean shipments declined in August, according to data compiled from each government.
Although China saw a 14.5 percent jump in July shipments, growth probably decelerated to 9 percent in August, according to a Bloomberg survey. Among Southeast Asia’s biggest economies, exports from Indonesia and Thailand fell in five out of seven months. The chart shows the most-recently available period and also the month at the end of each quarter starting with December 2004.
Draghi Sees Almost $1 Trillion Stimulus as QE Fight Waits Mario Draghi signaled at least 700 billion euros ($906 billion) of fresh aid for his moribund economy and left a fight with Germany over sovereign-bond purchases for another day.
ECB Cuts Rates, Plans Stimulus The European Central Bank unexpectedly lowered all its interest rates and announced two new programs under which it will buy asset-backed securities and covered bonds issued by eurozone banks.
After the rate cut was announced, the euro fell 1.6% against the dollar to $1.29, a 14-month low.
In adjusted terms, factory output was up by 1.9% on the month, beating expectations of a 0.5% increase in a Dow Jones Newswires survey of analysts conducted last week. It was the sharpest rate of increase since March 2012.
Among major categories, the data showed that output in manufacturing rose by 2.6%, matching an output record reached in January 2008, the ministry said. Meanwhile, construction output increased by 1.7%, and energy output declined by 3.7%.
The data followed a surprisingly positive print for German factory orders Thursday. These increased by 4.6% in monthly terms in July.
China’s Weak Demand for Asia’s Exports Sows Confusion China’s weak demand for electronics parts and other goods made in Asian countries has economists scratching their heads.
South Korea is China’s main source of intermediary goods for computers and other electronics. But Korea’s exports to China declined between May and July. Exports from Taiwan to China also have been subdued.
Aso Signals Japan Prepared to Boost Stimulus for Growth The Abe administration gave its clearest signal yet of concern about damage to the economy from this year’s sales-tax increase, with the finance minister saying that a back-up plan for stimulus will be prepared.
David Tepper: it’s the beginning of the end of the bond market bubble
David Tepper, founder of Appaloosa Management, told Bloomberg Television anchor Stephanie Ruhle in a phone interview today the rally in the bond market is ending after the European Central Bank unexpectedly cut interest rates to spur economic growth and stave off the threat of deflation.
Tepper said, “What the ECB did today was very important. They want growth, an increase in the money supply and inflation. Basically what it all means for the markets is higher equity prices and a beginning of the end of the world bond market bubble…We are done.”
He went on to say, “Draghi wants inflation in the Euro zone. He will not stop.”
Story and video: http://bloom.bg/1vSKKGG