JOLTS July Update: US Hiring Improved But Slower

The Job Openings & Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics for July continued to indicate improved hiring, but at a slower rate than in June. The hires rate fell to 3.2% from an upwardly revised 3.4% in June. These figures are versus the monthly low of 3.0% last Spring and 3.1% during all of last year.

The hires rate in manufacturing slipped to 2.4% from 2.6% in June but remained above the 2.2% averaged last year.

The survey dates only to December 2000 but has since followed closely the movement in nonfarm payrolls.

The job openings rate rose to 2.4%, the highest level since October 2002.

Chairman Greenspan's testimony on the economic outlook is available here.

The Congressional Budget Office Updated its US budget outlook. The current deficit estimates of $422 for FY04 and $348B for FY05 are below the $477B and $363B estimated six months ago due to improved economic & technical assumptions.

The ten year deficit outlook, however, deteriorated due to raised spending estimates (mostly military & Medicare) which more than offset raised estimates of revenues.

"The Budget and Economic Outlook: An Update" from the Congressional Budget Office is available here.

For the first ten months of FY04 the deficit of $395.8 was 22.2% larger than last year. Budget deficits raised the growth in outstanding liabilities of the Federal government through 1Q04 to 12.7% versus 8.0% growth in nonfederal liabilities.

Growth in net receipts for the first ten months of FY04 improved to 4.0% versus a 3.9% decline during the first ten months of FY03. Individual tax receipts were down 0.3% versus a 6.9% decline in the first ten months of FY03. Corporate tax receipts for the fiscal year-to-date were up 45.0% ($145.3B) versus last fiscal YTD.

Growth in Federal net expenditures was about stable at 7.2% versus the first ten months of last fiscal year. Defense expenditures grew 14.8% versus 15.9% last year. Growth in Medicare outlays was 8.6% versus 8.3%. Interest expense grew 3.7% versus a 10.0% decline during last year's first ten months.

Challenger, Gray & Christmas reported that announced job cuts rose another 6.6% in August on top of an 8.1% rise the prior month. The increase to 74,150 was to the highest level since February.

The three month moving average of job cut announcements rose modestly to 69,355 (-7.4% y/y).

During the last ten years there has been an 86% (inverse) correlation between the three month moving average of announced job cuts and the three month change payroll employment.

Job cut announcements differ from layoffs. Many are achieved through attrition, early retirement or just never occur.

A new series from Challenger indicated that announced hiring plans in August surged to a multiple of intentions for July. The series dates back only to May.

Chain store sales slipped ticked slightly higher last week but the level of sales was little changed from four weeks ago according to the International Council of Shopping Centers (ICSC)-UBS.

Sales began September 0.2% below the August average which was unchanged from July.

During the last ten years there has been a 60% correlation between y/y change in chain store sales and the change in non-auto retail sales less gasoline.

The ICSC-UBS retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

The effective interest rate on a conventional 30-year mortgage ticked up last week to 6.06% from 6.02% the prior week, but those rates were little changed from the 6.04% averaged in August. In May, 30-year financing averaged 6.53%. The effective rate on a 15-year mortgage was 5.49%.

The index of mortgage applications compiled by the Mortgage Bankers Association jumped 7.7% from the prior week as purchase applications surged 7.4% and began the month 6.1% above August which fell 2.8% from July.

During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

Applications to refinance mortgages surged 8.0%following two weeks of decline. Refi's began September 7.5%% ahead of August.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.

Yesterday, we described an improving trend in German industrial production through July, an encouraging sign for Europe as a whole. At the same time, not all countries are fully on board yet. Data reported yesterday for the UK show two months of hesitation and a report this morning from the Netherlands indicates that Dutch industry is still struggling to get on a sustained uptrend.

UK output fell 0.3% in July following a similar decline in June. Trends are mixed among UK sectors, as production of capital goods and of consumer durable goods increased, while that of intermediate products and energy has had a listless performance and consumer nondurables continue to slide. Obviously, the improving pattern in investment and consumer durables, the most cyclical products, is quite favorable in the midst of an otherwise clouded picture. Indeed, capital goods output is the highest since the summer of 2001.

In the Netherlands, manufacturing output has been uneven. It appeared to reach a bottom at the middle of last year and tilted up slightly in subsequent months. However, the declines in May and again in July erase most of those gains and leave factories just above their year-ago operating pace. Details will be published tomorrow. In the meantime, through June, food and textile production in the Netherlands were sources of weakness, as they have been in the UK. This suggests that consumer demand in those countries could still be sluggish and/or that import competition is pressuring domestic industry.