U.S. Adds 255,000 Jobs in July; Unemployment Rate Steady at 4.9% U.S. employers hired at a steady pace in July, a sign of underlying strength for the labor market despite a host of mixed economic signals.
Revisions showed U.S. employers added 18,000 more jobs in May and June than previously estimated. (…)
So far in 2016 employment gains have averaged 186,000 per month, down from 229,000 per month in 2015. (…)
Average hourly earnings for private-sector workers rose by 8 cents, or 0.3%, from June to July to $25.69. From a year earlier, average hourly earnings were up 2.6%, outpacing inflation. The consumer price index increased 1.1% in June from a year earlier.
The average workweek last month rose 0.1 hour to 34.5 hours.
Another month of hiring was enough to draw more people into the workforce. The labor force participation rate rose to 62.8% in July from 62.7% in June. (…)
Employment growth continues to decelerate on a YoY basis with July up 1.7% down from +2.0% in March. This may explain this:
The Liscio Report says that state level withholding taxes are down 0.5% YoY from +2.7% in June.
BofAML has this chart of 12-month rolling federal tax receipts…
…which, even though it is slowing, hides the drop in the recent numbers: personal taxes flat in Q2 YoY; corporate taxes –9.1% YoY in Q1.
There has been no tax cuts since Congress has been in recess since 2012 
. This means that personal pretax revenue growth is flattening, confirming my Wednesday chart showing that spending growth is now outpacing declining revenue growth. Not very healthy for an economy essentially relying on consumer spending to stay positive.
INVENTORIES WATCH:
The peak shipping season on the Pacific appears to be starting with a whimper, at least as far as ocean carriers are concerned. Reports from shipping industry observers show container ship operators have pulled significant capacity from the market, suggesting they’re uneasy waiting for an upturn in demand and are more focused on propping up pricing. Drewry Shipping Consultants Ltd. says in a report that carriers have dramatically increased their idled capacity since early July, according to Global Trade, and writes that “muted demand must have played a part in the usual decision.” Two shipping alliances suspended some trans-Pacific services in recent weeks, according to Drewry and shipping analysts at Alphaliner. Rates may play a big part in the suspensions, but the moves also show shipping customers aren’t providing carriers much confidence in future cargo bookings. (WSJ)
U.S. Factory Orders Decline Further in June, but Shipments Rise
New orders to manufacturers declined 1.5% (-5.6 y/y) during June following a little-revised 1.2% May fall. A 1.7% decline had been expected in the Action Economics Forecast Survey. Durable goods orders fell 3.9%, the same as in the advance report, paced by a sharp drop in transportation sector bookings. Nondefense aircraft & parts orders fell 58.8% (-60.7% y/y). Factory sector orders outside of the transportation sector altogether improved 0.4% (-4.2% y/y) after a 0.2% gain.
Total shipments rose 0.7% (-3.2% y/y) after a 0.1% rise. Nondurable goods shipments, which equal orders, improved 1.0% (-4.6% y/y), led by a steady 3.9% increase (-23.7% y/y) in petroleum refinery shipments. Basic chemical shipments improved 0.5% (0.6% y/y) and textile mill shipments rose 0.2% (4.7 y/y). Apparel shipments declined 1.7% (+8.5% y/y). In the durable goods sector, shipments improved 0.4% (-1.9% y/y), led higher by a 1.4% gain (0.8% y/y) in transportation shipments. Machinery shipments eased, however, by 0.2% (-8.3% y/y).
Some Small Businesses Curb Expansion, Citing New Labor Law Small-business owners say they are shouldering higher costs and scaling back expansion plans because of a revised rule that gives employees more leverage in settling workplace grievances.
(…) The new policy, intended to hold businesses accountable for labor-law violations against people whose working conditions they control but don’t claim as employees, was put in place last year through a ruling by the National Labor Relations Board, which referees workplace disputes and oversees union-organizing elections. The rule, expected to affect fast-food, construction and other industries reliant on contract workers and employees of franchisees, also aims to ensure workers can unionize and collectively bargain with businesses that help control their fates. (…)
The change could pull franchisers—ranging from big brand companies such asMcDonald’s Corp. and Golden Corral Corp. to smaller operations—into labor disputes involving workers at their networks of independent owner-operators, or franchisees. The brand companies face the risk of having to pay back wages to workers fired for protesting low pay or trying to join a union; the companies also could be swept into collective-bargaining talks alongside store owners they say have total control over the workers at the stores.
Franchisees, meanwhile, say they could lose their independence to hire, fire and manage workers as they please. They are also concerned about becoming too independent: Some say their franchisers have scaled back worker training tools and other guidance, fearing regulators would view such involvement as joint-employer-like control.
Businesses say they are in a regulatory limbo because the new standard is vague about what constitutes control. (…)
Employers say the NLRB is confusing control with contractual relationships that help businesses and workers thrive. (…)
US economy: Decline of the start-up nation
(…) Despite headline-grabbing tales of tech unicornsin Silicon Valley, the portion of the US workforce employed in young companies has been shrinking, as has the pace at which new employer-owned businesses are created. In another sign of depressed dynamism, Americans change jobs and move between geographies less frequently.
Figures released yesterday by the Kauffman Foundation, which tracks entrepreneurship in the US, showed that the share of companies that are start-ups employing at least one person was at the second-lowest level on record in 2013, and 20 per cent below its pre-recession levels. There has been improvement since, with a bounce in openings in the fourth quarter of 2015 to their highest level in 10 years.
But the improvement has not been enough to dispel the musty air surrounding large parts of American business. Companies are growing older, competition is less fierce and market power is consolidating in the hands of a few large companies in many industries.
In three-quarters of US sectors, the 50 biggest companies boosted their revenue share between 1997 and 2007, according to research by Jason Furman, chairman of President Barack Obama’s Council of Economic Advisers, and Peter Orszag, an economist and banker. Industries from retail and finance to transportation became increasingly concentrated. (…)
While there has been a long-term decline nationwide in the share of businesses that are start-ups, analysis from the OECD finds similar trends in its other member countries, suggesting the US is by no means uniquely challenged. (…)
German Manufacturing Data Point to Sluggish Economy
[June] Orders fell by 0.4% in adjusted terms versus expectations in a Wall Street Journal survey of 0.5% growth. Foreign orders declined by 1.2% while domestic orders rose by 0.7%. The data showed that orders from the rest of the eurozone sharply fell by 8.5% on the month, while those from non-eurozone states rose by 3.8%.
The ministry said that in the second quarter new orders were down 0.5% versus the first three months of the year. (…)
Markit’s German PMI for July remained good:
Despite falling from June’s 28-month high of 54.5 to 53.8, the index remained above its long-run series average (51.9). Part of the fall in the headline PMI was attributed to a slower rise in new order intakes. Nevertheless, the latest increase in new work was the second strongest in 28 months. New export orders also
continued to rise during the month, with nearly one quarter of the survey panel reporting an expansion. As was the case with total new business, the rate of
increase slowed slightly.Manufacturers reported an acceleration in output growth at the start of the third quarter, which they generally linked to rising demand and the processing of backlogs. The pace of expansion was the fastest since April 2014.
Meanwhile, in the U.K.:
According to the Recruitment & Employment Confederation, the UK labor markets have been impacted by the elevated uncertainty in the corporate sector.(The Daily Shot)
SENTIMENT WATCH
Goldman, Gundlach, and Gross Are Worried About U.S. Markets. Time to Get Out?
Goldman Warns ‘Supply Storm’ to Engulf Global Copper Market
Gap Between Emerging Markets, S&P 500 Nears Record High: Chart
- Also: Japanese equities are the cheapest in 30 years when compared to US equities. (The Daily Shot)
