Payroll employment increases by 313,000 in February; unemployment rate unchanged at 4.1%
- Total nonfarm payroll employment increased by 313,000 in February, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today.
- The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported.
- In February, construction employment increased by 61,000, with gains in specialty trade contractors (+38,000) and construction of buildings (+16,000). Construction has added 185,000 jobs over the past 4 months. Retail trade employment increased by 50,000 over the month.
- The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.5 hours in February.
- In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.40 in February. (+2.5%)
- The civilian labor force rose by 806,000 in February. The labor force participation rate increased by 0.3 percentage point over the month to 63.0 percent but changed little over the year.
- In February, total employment, as measured by the household survey, rose by 785,000.
U.S. Household Debt Rose Last Quarter at Fastest Rate Since 2007
The pace of household debt accumulation during the quarter reflects the Fed’s previously reported outsize 7.8 percent annualized rise in consumer credit, along with a 3 percent gain in mortgage borrowing. Such activity helped fuel a 3.8 percent rise in consumer spending in the period, the fastest in more than a year. (…)
(…) U.S. households also saw their net worth rise to nearly seven times their disposable personal income in 2017, swelling past earlier prerecession peaks. (…) Previous busts—in the early and late 2000s—were preceded by periods of rising asset values and low saving, and the current wealth-to-income level surpasses that seen in the run-up to earlier recessions. (…)
The problem is that the people with the debt in the first headline are not the same as the people with the high net worth in the second…So #2 is no offset to #1. (Chart below via ValueWalk)
The share of wealth held by the top 1% rose to 39% in 2016, up from 30% in 1989, according to the Fed’s survey of consumer finances, which is conducted every three years.
Household debts rose at an annual rate of 5.2% in the fourth quarter, with liabilities increasing by $208.6 billion. Borrowing has continued to climb even as the Fed has been gradually raising short-term interest rates, making mortgages, home-equity lines and other loans more expensive. (…)
Fresh Evidence of Flaring Wage Growth Appeared in Fed’s Beige Book
In many of the Fed’s 12 regional districts, wage growth picked up to a moderate pace, the Fed reported in its latest roundup of anecdotal information about regional economic conditions known as the beige book. The report was based on information collected through Feb. 26. (…) Meanwhile, the report also suggested ramped up price growth was occurring, with most districts noting moderate inflation after some previously described price growth as “modest.” (…)
Trump sets steel and aluminum tariffs; Mexico, Canada exempted
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Trump offers steel tariff exemptions to ‘real friends’ Canada and Mexico given temporary carve-out while Nafta talks continue
(…) “You would have trouble thinking of a more aggressive way to offend our friends and allies,” said one former US official. (…) “If you put tariffs against your allies, you wonder who your enemies are,” Mr Draghi said. (…)
Who’s a “real friend”? A country who will give in on trade talks?
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U.S. allies line up for exemptions from Trump’s tariffs
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Mexico says U.S. tariffs will not pressure NAFTA talks
NBF: “Expect Brussels to come out swinging over the next few days with some form of retaliation. Investors better hope this will not snowball into an all-out trade war.”
(…) “A trade war is never the right solution,” [Chinese Foreign Minister] Wang said. “In a globalized world, it is particularly unhelpful, as it will harm both the initiator and the target countries. In the event of a trade war, China will make a justified and necessary response.” (…)
U.S. Business Leaders Upbeat About Economy, But Worried About Inflation
(…) Close to 80% of executives said they were upbeat about the prospects for the U.S. economy, up from 74% who said so in the fourth quarter of 2017. Chief executives, chief financial officers and other certified public accountants are also more optimistic about the outlook for their own company, with 71% sharing that sentiment this quarter, up from 70% in the fourth quarter of 2017.
Executives — on average — expect revenue to grow by 5% in the coming 12 months, while profit is forecast to accelerate by 4.4%, the AICPA said in a statement. The share of executives that plan to expand their business ticked up to 72% in February, when the survey was conducted, from 71% in the fourth quarter.
(…) nearly half — 49% — of the respondents said they are concerned about inflation over the next six months, up significantly from 27% in the last quarter of 2017. Rising labor costs, raw material costs and higher interest rates are among the top concerns for executives, according to the survey.
Business leaders expect salary and benefit costs to rise 2.7% during the next 12 months, while headcount is forecast to increase by 2.1%. Close to 30% of respondents said they have too few employees and plan to hire. Over 10% — 14% — said they don’t have enough staff but hesitate to recruit more employees.
Global hiring at decade-high, price pressures build
Worldwide employment growth continued to run at its highest rate for a decade, buoyed by firms boosting capacity, which has been increasingly stretched as a result of faster growth of new orders. February saw inflows of new business rise to the greatest extent since June 2014, registering one of the biggest increases in demand seen over the past seven years.
Average prices charged for goods and services meanwhile rose worldwide at a rate only exceeded once (February 2011) since the global financial crisis. Higher prices generally reflected improved pricing power amid stronger demand, though also reflected the need for firms to pass higher costs on to customers. Historical comparisons of selling prices and costs nonetheless suggest that the current upturn in demand is boosting profit margins. (…)
[Eurozone] inflationary pressures also remained elevated, adding to sense that policymakers will start to sound more hawkish, but trends are more varied. Germany is seeing an especially strong increase in prices while France and Italy are notable in seeing companies struggle to pass higher costs on to customers. (…)
U.S. capacity is clearly being strained by the upturn in demand, as indicated by the largest build-up of uncompleted orders since early-2015 and reports of increasingly stretched supply chains. The concern is that price pressures are building as demand outstrips supply. Average prices charged for goods and services showed the largest monthly rise since September 2014, which is likely to feed through to higher consumer price inflation. (…)
Canadian housing starts exceeded expectations and continue to trend higher.
FANG+
Bespoke built a new index:
(…) While FANG was simply a combination of Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOGL), FANG+ takes those four names and adds in other favorites of the action-seeking trading community like Apple (AAPL), Alibaba (BABA), Baidu (BIDU), NVIDIA (NVDA), Tesla (TSLA), and Twitter (TWTR). Talk about a hyper-growth investor’s dream! Taking a look at the performance of FANG+ since its inception late last year, the index has been on quite a tear with a gain of over 34% since late October. (…)
… while the S&P 500 Index rose 7%. Downside to the 50d m.a. is 9%. To the 200d m.a.: 22%!