Last month, we cast our normally jaundiced eyes on an exciting bit of data in the US jobs report: the rapid pace of job growth in the retail sector. Since there is a strong relationship between the (non-seasonally adjusted) number of workers hired by retailers and real consumer spending at retailers, we were encouraged by the fact that October was the best month since the late 1990s for the sector. Here was the chart we made then:
Last week’s US jobs report contains a nugget of data indicating a high level of confidence on the part of American retailers: ignoring seasonal adjustments, more retail jobs were added in October than in any previous October ever.
This chart from CreditSights puts it in perspective: Read more
This post by the FT’s US economics editor Robin Harding is cross-published from FT Money Supply.
The Fed has made that question very difficult to answer – not least because opinions differ within the institution. “Substantial improvement in the outlook” has turned out to be a dismal bit of communication: every word needs a definition. For example, does it refer to a level of the unemployment rate or the speed of change? What if the unemployment rate was expected to fall to 7 per cent but then get stuck? Is that a substantial improvement? Read more
The ebullience of recent sessions was subsiding as traders took stock ahead of further developments on the eurozone fiscal crisis and the start of the US third-quarter earnings season, the FT reported. The FTSE All-World equity index was up 0.4 per cent, supported by a 2 per cent jump in Tokyo, which was playing catch-up after Monday’s holiday, during which time global risk assets enjoyed one of their strongest days for some while. The FTSE Eurofirst was down fractionally and S&P 500 futures pointed to Wall Street dipping just 0.1 per cent at the open. The US benchmark jumped 3.4 per cent on Monday, taking its gains since last Tuesday’s intraday low to 11.2 per cent. The rally came partly as a result of dwindling concerns over the health of the world’s biggest economy, after better-than-expected US jobs numbers on Friday finished topped off several examples of forecast-beating macroeconomic data. But the main impetus behind the surge is, arguably, raised hopes that the European authorities will manage to create a grand plan for the bloc that by recapitalising the region’s banks, may allow for a managed Greek default and thus contain sovereign debt contagion and restore confidence in the euro project.
The fears were valid, it seems.
Nonfarm payrolls stayed exactly flat in August — a month in which the drumbeat of negative economic signals was amplified to piercing levels. Read more
Global stock markets continued to rally on hopes that the US Federal Reserve may still unveil a third dose of quantitative easing, after minutes released from the last Fed board meeting indicated that several policymakers backed further monetary easing to support economic growth, the FT reports. However, gains and volumes also continued to be light, as traders marked time ahead of a speech next week by US president Barack Obama, billed as a major policy address, and the US jobs report on Friday. While expectations may not have changed, traders are for the moment unwilling to bet on any worsening in economic or sentiment conditions. The S&P 500 was up 0.4 per cent at midday, paring gains of more than 1 per cent earlier, though the Dow Jones Industrial Average has inched into positive territory on the year by adding 0.4 per cent on Wednesday. “Investor cyclical fears may have gone too far, too fast,” said Lena Komileva, global head of G-10 strategy at Brown Brothers Harriman. “But it is unclear if this corrective drift…can be extrapolated into the final months of the year and early 2012, and this uncertainty about the macro-economic outlook may serve as a self-reinforcing drag on business, consumer and investor activity into the year end.”
Ben Bernanke, US Federal Reserve chairman, on Wednesday issued a more optimistic assessment of the state of the US jobs market, suggesting the central bank believes at least some of the drop in unemployment in recent months reflects economic growth, reports the FT. “Notable declines in the unemployment rate in December and January, together with improvement in indicators of job openings and firms’ hiring plans, do provide some grounds for optimism on the employment front,” Bernanke told the House of Representatives’ budget committee in his first appearance before it since Republicans took control in November. MoneySupply meanwhile looks at prospects for a rate rise and bets $100 the Fed will not raise short-term rates by its November 2011 meeting.
There are indicators and then there are indicators, as seen in the debate surrounding the US jobs optimism highlighted in this week’s private-sector payroll figures from the ADP National Employment Report.
As Economix points out: Read more
Robust US economic data on Wednesday lifted the dollar and US stocks, raising hopes over the strength of the US recovery, reports the FT. The ADP survey of US private sector employment showed private payrolls rose 297,000 in December, far ahead of expectations for a 100,000 rise, suggesting that Friday’s US employment report could be similarly strong. Analysts said the figures could signal the kind of broader economic improvement that would enable the Federal Reserve to end its quantitative easing programme. The dollar rose 1.5% to Y83.27 against the yen and 1.9% against the Swiss franc to SFr0.966. The NYT’s Economix column says while the ADP report lacks the “track record to make it deserving of too much trust”, the trend this time may be correct.