NFIB’s Small Business Optimism Index was basically unchanged from August to September. Reading 96.1, the Index gained 0.2 points and remains well below the 42 year average of 98.
“Small business optimism continues to be stagnant, which is consistent with the expected economic growth of about 2.5 percent. The percent of owners citing the difficulty of finding qualified workers as their Most Important Business Problem increased and is now third on the list behind taxes and regulations. This is the highest reading since 2007 and suggests that employers will continue to face wage pressure in order to attract and keep good employees.”
Global Stocks Fall on China Data Global stocks were lower after the release of fresh evidence that China’s economy is slowing.
China’s exports dropped 3.7% from a year earlier in September. The figures fueled fears that China’s third-quarter growth data, due next week, would fall below Beijing’s target, helping to stall the global stock rally that kicked off last week. (…)
According to the General Administration of Customs, Chinese exports fell 3.7% in September from a year earlier in U.S. dollar terms following a 5.5% drop in August. Imports in September fell 20.4% from a year earlier, compared with a 13.8% decrease in August, the customs agency said Tuesday. (…)
Economists said exports last month would probably have been stronger if it weren’t for an explosion at the northern port of Tianjin in August and the temporary closing of factories ahead of a September military parade in Beijing aimed at reducing air pollution. (…)
While Chinese imports have dropped sharply in recent months in dollar terms—tied in part to the yuan’s peg to the dollar and the declining cost of commodities such as crude oil and iron ore—the decline is much less sharp if measured in volume terms, economists say. (…)
In addition, China’s crude imports rose in September to 27.95 million metric tons, compared with 26.59 million tons in August. So far in 2015, crude imports are up 8.8% to about 249 million tons.
The WSJ article failed to add that
- exports fell 1.1% in September in yuan terms compared with a 6.1% drop in August. The forecast was for a 7.4% slide.
- shipments to the U.S. rose 6.7% in September in U.S. dollar terms. Exports to the U.S. as a percentage of overall shipments jumped to their highest level since August 2010.
- crude imports rose from a three-month low.
- Iron ore imports increased to the highest level this year to near a record.
- China’s exports to every major market except Taiwan rose from August.
- monthly trends show a steady rise to most major export markets in the U.S. and Europe since last spring.
Also, vehicle sales edged up to 2.02M in September which ISI seasonally adjusts to +8.7% MoM for passenger cars.
After years of spending long hours behind the wheel without seeing their paychecks grow, U.S. truck drivers now have employers fighting for their services.
Many freight haulers have in the past year pushed through their biggest raises in decades. Truck-stop job boards and satellite radio airwaves are saturated with want ads, some offering sign-on bonuses topping $5,000 and free bus tickets to drivers willing to switch employers. Companies are equipping their fleets with satellite televisions and other amenities to make life on the road more comfortable. (…)
Drivers are in demand in the shifting $700 billion trucking industry. Business is booming because the economy is expanding and the strong dollar is increasing demand for imported goods that must be transported from ports to cities and towns nationwide, though growth has cooled recently. At the same time, interest in the profession is waning.
Average pay for long-haul truckers jumped 17% since the end of 2013 to a record $57,000 this year, according to the National Transportation Institute, a research group. U.S. wages rose by less than 4% over the same period.
Higher trucker pay is being passed along to retailers, grocers and other shippers. (…)
The long-haul trucking industry, which employs about 800,000 people today, needs an additional 48,000 drivers, according to the American Trucking Associations, a trade group. (…)
Home builders this year have booked their strongest sales since the recession. A shortage of construction workers, however, is making it tough for them to deliver all those new homes on time. (…)
Wages, particularly in residential construction, are still too low to attract enough qualified workers to the physical and sometimes dangerous work of building houses. Tightened immigration policies, meanwhile, are deterring foreign labor from returning to the U.S. And efforts to train and recruit young trade workers atrophied in past years as many school districts focused less on certain vocational training.
The labor shortage has led to costly delays. Seventy-four builders surveyed in September by industry tracker John Burns Real Estate Consulting Inc. have reported slowdowns as long as two months as they wait for carpenters, drywall workers, foundation pourers and other specialists. (…)
Overall, the residential industry has regained less than a third of the roughly 1.5 million jobs lost from 2006 to 2011. An analysis by the Associated General Contractors of America found that the number of jobless workers with construction experience dropped last month to the lowest September level since 2000, a development the trade group attributes to a dearth of available workers. (…)
The national average pay for residential-construction workers was $26.32 an hour in August, compared with $25.10 for all private-sector jobs, according to Labor Department. That isn’t enough of a premium to entice people to leave other jobs.
“To get people back onto the construction site, we’re going to have to pay a lot more,” said Christopher Huebner, owner of HSCB Homes LLC, a framing contractor in Houston. “If I can’t get them a step-up in pay that’s great enough to make a difference for them, then there’s no reason for them to make the jump.”
Juan Antonio Rivera worked as a carpenter and painter in Texas for 12 years, leaving in 2013 to rejoin his family and trade cattle in the Mexican city of Tempoal. He was part of a 30% decrease in Mexican-born construction workers in the U.S., to 1.32 million in 2014 from 1.89 million in 2007, according to John Burns Real Estate Consulting. Mr. Rivera said he now earns twice to nearly three times as much each week as the $700 to $800 he made on job sites in the U.S.
“I’m doing excellent—much better than in the U.S.,” said Mr. Rivera, 44 years old. He added that he might return to the U.S. to visit, but “to work, no.”
Small companies in the U.S. see wage growth accelerating in coming months after 23 percent said in September that they recently boosted worker compensation.
A net 16 percent of managers last month said they plan to increase pay, up 3 percentage points from August and the second-largest share since 2007, according to the seasonally adjusted results of 656 responses in a survey by the National Federation of Independent Business. The proportion of business owners who said they had recently raised pay was unchanged from August.
Central Bankers Urge Fed to Get On With Rate Increase Officials who gathered in Lima, Peru, for the IMF’s annual meeting delivered a message to their American counterparts: Please stop dithering and raise rates.
Fed official urges rates hold amid risks Brainard says dangers to the US are ‘tilted to downside’
Lael Brainard, a member of the Federal Reserve’s board of governors, said the central bank should be “watching and waiting” rather than pushing forward with an increase in short-term interest rates, adding that financial market movements have already delivered a tightening equivalent to two rate hikes.
The comments came in a dovish speech that suggested Ms Brainard is a considerable way from supporting an interest-rate increase, highlighting the divisions that exist on the Federal Open Market Committee.
Ms Brainard said that the risks to inflation and to growth are “tilted to the downside” and that the Fed should not run the risk of lifting rates when it has limited scope to inject fresh stimulus if a U-turn were necessary. (…)
Over the weekend, Stanley Fischer, vice-chairman of the Fed’s board of governors, told a conference in Peru that he shared the view held by most Fed rate-setters that it would be appropriate to lift interest rates in 2015 as the central bank responds to diminishing spare capacity in the labour market. (…)
El Niño Boosts Commodities The El Niño weather phenomenon is starting to push up prices for key agricultural commodities as its impact spreads through key crop-growing regions in Asia and beyond.
Government forecasters in the U.S. and Australia have in recent weeks warned that El Niño could be the severest in nearly two decades. Late last week, the Japan Meteorological Agency said sea surface temperatures in the Pacific are “remarkably above normal” and warned that temperatures could even reach their highest level since 1950.
In turn, farmers are warning of potential damage to their output. Sugar farmers in Brazil say heavy rain could reduce the sugar content of their cane, while farmers in Australia, Asia and parts of Africa say dry conditions could hit production of crops such as palm oil, wheat, cocoa and coffee.
A number of agricultural prices have rallied off their lows on fears of weather-related supply shortages. Sugar prices have risen 31% over the past three weeks; dairy is up 36%, palm oil has gained 13.1% and wheat is up 6.1% over the same period. (…)
Oil glut to persist through 2016, says IEA Weaker economic output forecast after price stimulus wears off
(…) The International Energy Agency said in its closely watched monthly report a “marked slowdown” in oil demand growth looms as the stimulus from lower prices fades and economic activity weakens in countries dependent on commodity revenues. (…)
A collapse in oil prices has supported strong oil demand growth this year. But the IEA anticipates oil demand growth will fall to 1.2m barrels a day in 2016 — to 95.7m b/d — down from initial estimates of 1.4m b/d. It is a sharp contrast to the stronger than expected 1.8m b/d in 2015, taking total demand to 94.5m b/d. (…)
World oil supply held steady near 96.6m b/d in September as a drop in output from the US, and other producers outside of Opec, was offset by increased supply from the cartel itself.
“High-cost supply — primarily non-Opec — is being forced out,” the IEA said. “Supply in the US — which had been the motor of growth — is already sinking swiftly.”
Non-Opec supply slipped 180,000 b/d to 58.3m b/d in September as spending cuts of more than 20 per cent by the world’s biggest energy companies have an impact on new projects and existing output. Production is expected to average at this level for 2015, before dropping to 57.8m b/d next year as lower oil prices continue to bite.
“The sharpest slowdown is in the US,” the IEA said. “Further reductions in drilling activity since the start of September are expected to accelerate declines in US light tight oil production.”
US year-over-year gains have eased to just 300,000 b/d from 1.6m b/d in early 2015.
Non-Opec supplies nevertheless exceeded expectations, with Brazil and Russia recording record output levels during August and September.
Opec crude supply — led by record Iraqi output which offset declines from Saudi Arabia — rose 90,000 kb/d in September to 31.7m b/d. Year to date the group has pumped 31.2m b/d, 1m b/d higher than the same period a year ago.
Long race to Ottawa: Canada’s election
After a marathon campaign, Canadian politicians can see next Monday’s finishing line. The early leaders, the left-leaning New Democrats, have flagged. Voters turned away when their leader, Thomas Mulcair, took a principled stand against banning the niqab at citizenship ceremonies and uncharacteristically promised to continue fiscal austerity. The centrist Liberals, under Justin Trudeau, have drawn level with Stephen Harper’s ruling Conservatives, partly because Mr Trudeau showed more grit than expected in the five leadership debates. The Conservatives, in office for nearly a decade, remain in the running despite a recent recession and widespread desire for change. Mr Harper’s promise of safety in an uncertain world resonates; so does his antipathy to the niqab. But he still looks short of the votes needed for a fourth term. A Pacific trade deal, agreed on last week, hasn’t helped: Canadians fear for their carmaking and dairy industries. It’ll be close. (The Economist)