Job openings climbed to 5.13 million in February, up from 4.97 million in January and from 4.88 million in December. But the number of Americans actually hired to fill jobs declined—falling to 4.9 million in February, down from five million in January and 5.2 million in December, according to the Labor Department’s Job Openings and Labor Turnover Survey, known as Jolts.
(…) The number of voluntary quits declined in February to 2.7 million from 2.8 million in January.
The report was not all dour news, however. The number of involuntary layoffs dropped to 1.6 million from 1.7 million in January and December. The rate of layoffs matched the lowest level seen since the year 2000.
And the increase in openings implies that employers have a desire for more workers, though they took a step back in their hiring in February. There were 1.7 workers for every job opening in February, compared with more than six for each available job during the worst of the crisis. The number of underemployed workers per job opening fell to 3.7 in February. Underemployment–which includes those who want a job but have become discouraged from searching, those marginally attached to the labor force, and also part-time workers who want full-time work–has remained elevated throughout the recovery.
Here’s the LT chart from CalculatedRisk:
In our recap of the monthly Employment Situation Report, sent to Bespoke Premium subscribers last Friday, we noted that while average hourly earnings ticked up, the bulk of the gain came from managerial employees. The chart below illustrates this effect.
The combination of the high AHE reading (driven by non-production and supervisory workers) and the JOLTS report suggests that labor market demand is focused in the specialized section of the labor market; this narrative also makes sense in the context of high openings rates. We think that eventually the rubber will meet the road: production and non-supervisory employees with less specialized skill sets (for instance, lower education levels) will eventually start jumping ship, increasing the quit rate and filling openings. Alternatively, wages will go up.
The math here is pretty inescapable; the only question is when. It’s worth pointing out that last Friday’s low NFP number (126,000 versus 245,000 expected) can be partially explained by employers not being able to find workers that suit their needs, hindering jobs created. Of course, that optimistic outlook doesn’t explain the whole disappointment, but the February JOLTS data very much supports that explanation as part of the larger picture.
A meaningful rise in the ECI when inflation stagnates would hurt margins…
Americans Pull Back on Credit-Card Debt in February Americans pared down their credit-card balances in February, the latest sign consumers are spending cautiously to start the year.
Total debt balances increased by a seasonally adjusted $15.52 billion to $3.34 trillion in February, the Federal Reserve said Tuesday. That reflected a 5.59% gain at an annual rate.
The latest figures showed household debt grew by $10.8 billion in January, a smaller advance than the initially estimated $11.56 billion gain.
Revolving credit, reflecting credit-card debt, fell at a 4.97% annualized rate in February. That marked the third decline for the measure in the past four months.
Nonrevolving credit, representing mostly auto loans and student debt, grew at a 9.44% annualized rate in February. That was the largest monthly increase in two years. (Chart from Haver Analytics)
The seasonally adjusted Purchase Index increased 7 percent from one week earlier, reaching its highest level since July 2013. … The unadjusted Purchase Index … was 12 percent higher than the same week one year ago
(…) The PMIs are indicating somewhat sluggish GDP growth of 0.3% in the first quarter. However, the important message from the survey is that the pace of expansion looks set to gather pace in coming months.
Inflows of new business are rising at the strongest rate since the spring of 2011, and companies are responding to the upturn in demand by taking on staff to an extent not seen for three-and-a-half years.
Encouragingly, with France returning to growth, all of the four largest euro nations are now back in expansion, thereby indicating a broad-based upturn which should therefore be more self-sustaining.
The upturn continues to be led by Spain, where GDP looks set to have risen by 0.7-0.8% in the first quarter according to the PMI data, with the pace of expansion having picked up further in March.
Growth also accelerated in Germany and Italy, hitting eight-month highs in March in both cases. The surveys point to GDP growth of 0.4% in the first quarter in Germany but a more modest 0.1% in Italy.
France was the only one of the big-four eurozone countries to see growth weaken in March, though the PMIs suggest the economy is set to have grown by 0.2% in the first quarter.
The European Union’s statistics agency Wednesday said retail sales fell 0.2% from January, but were nevertheless 3.0% higher than in the same month of 2014 after strong rises since September.
Poor reporting from the WSJ. The reality is that excluding food and gas, real core sales rose 0.1% even after having jumped 10.6% annualized since October.
Italy Expects to Exit Recession This Year Italy said its economy will exit its longest postwar recession this year, with growth seen accelerating in the next two years.
Greece Risks Slipping Back Into Recession Greece’s latest promise to repay its creditors on time has reduced fears about an imminent default but while the government lives from hand to mouth, the Greek economy is slipping back toward recession, businesses and analysts say.
Spectre of Grexit back as cash runs out Going will be hard for Athens, no matter which way it turns
The U.S. Energy Information Administration said U.S. crude-oil output, which hit a 42-year high in March, would peak in April and May before falling from June to September.
The forecast comes a day after analysts at Goldman Sachs predicted production would peak this month. (…)
On Tuesday, Saudi Arabia’s oil minister, Ali al-Naimi, revealed that the kingdom’s oil production in March was 10.3-million barrels a day – a record high. (…)
Two weeks ago, Mr. al-Naimi announced that Saudi crude production in March would be about 10-million barrels a day, which is about 400,000 barrels a day more than over the November figure. Now he has revealed that March production landed at 10.3-million barrels a day, an increase of almost 700,000 barrels a day over February. (…)
Mr. al-Naimi said that Saudi Arabia will continue to produce about 10-million barrels a day. (…)
Why is Saudi Arabia opening the spigot? There is no doubt that country’s own domestic demand is rising, thanks to heavy investment in new refineries, requiring more production. But it also appears that Saudi Arabia is making renewed push for market share for fear that a gusher of Iranian oil will soon hit the export markets as the Iranian embargo is ratcheted back. (…)
In March, both Iraq and Libya managed to boost production in spite of the violence and chaos in those countries. As a result, OPEC production in March was about 31.5-million barrels a day, an increase of 1.2-million barrels over February and 2-million barrels over March, 2014. The March figure is well above the second-quarter estimate put out by the International Energy Agency. (…)
Libyan oil production has edged up to 600,000 b/d, Mustafa Sanalla, the chairman of state-owned NOC, told Platts Tuesday, up from the most recently reported level of 565,000 b/d. The country’s oil production is now closing in on almost 50% of its total capacity of around 1.5 million b/d, with the rise coming despite the fact that its oil sector remains in disarray with the two rival governments looking to secure control over the industry.
Over the weekend, the crisis escalated as the officially recognized government based in Tobruk in the east of Libya issued a directive aimed at diverting oil revenues from the country’s central bank to its own accounts. (…)
Despite the bitter rivalry between the two governments and the emergence of Islamic State fighters targeting oil infrastructure, Libyan production continues to rise and shipping sources have even suggested that confidence was returning with an increasing number of shipowners prepared to send vessels to the country.
There is also some optimism that two of the country’s main export terminals — Es Sider and Ras Lanuf — could reopen in the coming days, which would enable fields that feed the ports to resume production.
Exports of Canadian crude oil continued to climb in January despite the plunge in oil prices, rising 100,000 b/d to a new record high of 3.125 million b/d, National Energy Board data Monday showed. Total crude exports topped 3 million b/d for the first time in December. Light crude exports accounted for the entirety of January’s rise, climbing 115,750 b/d to their own record of 1.05 million b/d, the first time 1 million b/d mark has been breached since reaching 1.03 million b/d in November 2013.
In contrast, heavy crude volumes declined by 6,850 b/d to 2.075 million b/d, though exports remained near their all-time high of 2.095 million b/d set in September.
Of companies in the S&P 500 index, 22 that reported lower profits still posted flat or positive earnings per share because they sopped up some of their outstanding stock, according to a Wall Street Journal review of their most recent fiscal years provided by S&P Capital IQ.
That’s down from 29 companies the year before, in part because last year’s 11% increase in stock prices made buybacks progressively more expensive.
International Business Machines Corp. was one of the biggest names to juice its EPS. The company’s net income from continuing operations fell almost 7%, but EPS grew nearly 2% because it reduced its share count by 8% last year. It was the second year in a row that buybacks helped IBM deliver per-share earnings growth despite sagging profits.
Companies buy back stock for many reasons, such as to offset dilution from stock-based executive pay, or when management feels Wall Street is significantly undervaluing the business. Increasingly, companies are using repurchases to appease activist investors who demand they return excess cash.
20% Last year, 308 companies in the index ended the year with fewer shares compared with 282 the year before.
They spent $553 billion on buybacks in 2014, the most in a calendar year since the $589 billion record set in 2007.
Nothing really new here. In each quarter of 2014, 20% of S&P 500 companies reduced their share count by at least 4% (21.3% in Q4’14). In total, 68% of S&P 500 companies reduced their share count YoY and 31% increased it.
There is no general conspiracy. The S&P 500 Index share count has been pretty stable since 2006. From the most recent peak in 2011, the share count has diminished only 2.8%.