Economy in Brief: June 2018

U.S. Petroleum Prices Remain Firm
by Tom Moeller  June 5, 2018

Retail gasoline prices eased to $2.94 per gallon last week (+21.8% y/y) from $2.96 per gallon during the prior week. They remained near the highest price level since November 2014. Haver Analytics constructs factors adjusting for the seasonal variation in gasoline pump prices. The seasonally-adjusted price fell slightly to $2.76 per gallon.

West Texas Intermediate crude oil prices declined to an average of $66.97 (+38.1% y/y) per barrel last week versus $70.97 per barrel in the week prior. Prices declined yesterday to $64.75 per barrel. Brent crude oil prices eased to an average of $76.62 per barrel last week and were $75.34 yesterday.

Natural gas prices improved to an average of $2.86/mmbtu last week (-3.2% y/y) from $2.83/mmbtu and were $2.92 yesterday.

In the four-weeks ending May 25, gasoline demand increased 0.8% y/y, while total petroleum product demand rose 1.3% y/y. Gasoline inventories declined 1.1% y/y, while inventories of all petroleum products dropped 8.4% y/y. Crude oil input to refineries declined 3.0% y/y in the last four weeks.

This data is reported by the U.S. Department of Energy. The price data can be found in Haver's WEEKLY and DAILY databases. Greater detail on prices, as well as the demand, production and inventory data, along with regional breakdowns, are in OILWKLY.

Weekly Energy Prices	06/03/18	05/28/18	05/21/18	Y/Y %	2017	2016	2015
Retail Gasoline ($ per Gallon Regular, Monday Price)	2.94	2.96	2.92	21.8	2.47	2.31	2.03
Light Sweet Crude Oil, WTI ($ per bbl, Previous Week's Average)	66.97	70.97	71.31	38.1	50.87	43.22	48.90
Natural Gas ($/mmbtu, LA, Previous Week's Average)	2.86	2.83	2.78	-3.2	2.96	2.49	2.62

 

The Bureau of Labor Statistics reported that the total job openings rate increased to 4.2% in March from an unrevised 3.9% in February. (The job openings rate is the job openings level as a percent of total employment plus the job openings level.) The hiring rate held steady at 3.7%, down slightly from its cycle peak of 3.8%.

The private sector job openings rate increased m/m to an expansion high of 4.5%. The rate rose to 5.1% in leisure & hospitality, professional & business services and education & health services. The job openings rate in trade, transportation and utilities improved to 4.1% and in construction rose to 3.4%. In the manufacturing sector, the job openings rate eased to 3.0%. The job openings rate in the government sector surged to 2.7%, its highest point since April 2016.

The level of job openings surged 7.8% (16.8% y/y) after falling in February. Private sector openings rebounded  8.0% (16.5% y/y) to 5.928 million. Openings in construction surged 38.5% y/y and increased 26.4% y/y in trade, transportation & utilities. Professional & business services job openings gained 20.6% y/y while leisure & hospitality openings rose 17.0% y/y. Openings in education & health services increased 13.8% y/y, but to the downside were factory sector openings where they eased 0.7% y/y. Openings in government surged 20.3% y/y.

The private sector hiring rate held steady at 4.1%, where it's been for four of the last five months. The rate in professional and business services (5.6%), manufacturing (2.9%) and trade, transportation & utilities (3.8%) remained firm. The hiring rate in leisure & hospitality fell to 6.3%, and in education & health services, it dropped to 2.8%. The government sector hiring rate held steady at 1.5%, about where it's been since late 2016.

Total hiring increased 2.4% y/y. Hiring in the private sector increased 2.7% y/y led by a 13.5% y/y gain in professional & business services jobs. Factory sector hiring rose 12.7% y/y but construction sector employment declined 11.7% y/y. Leisure & hospitality hiring improved 0.7% y/y while the number of education & health services workers eased 1.8% y/y. Hiring in the public sector declined 2.4% y/y.

The overall job separations rate rose m/m to 3.6%, about where it's been since 2015. It held at a low 3.9% in the private sector and was steady at 1.5% in government. The level of overall separations rose 2.3% y/y.

The level of layoffs declined 6.3% y/y and left the layoff rate at the record low of 1.1%. In the private sector, the layoff rate held at 1.2% and dipped to 0.4% in the public sector.

The Job Openings & Labor Turnover Survey (JOLTS) survey dates to December 2000 and the figures are available in Haver's USECON database.

JOLTS (Job Openings & Labor Turnover Survey, SA)	Apr	Mar	Feb	Apr'17	Mar '16	Mar'15
Job Openings, Total
Rate (%)		4.2	3.9	3.7	4.0	3.5
Total (000s)		6,550	6,078	5,607	5,944	5,183
Hires, Total
Rate (%)		3.7	3.7	3.6	3.7	3.6
Total (000s)		5,425	5,507	5,297	5,297	5,078
Layoffs & Discharges, Total
Rate (%)		1.1	1.1	1.1	1.2	1.4
Total (000s)		1,564	1,620	1,669	1,745	1,906

 

U.S. ISM Nonmanufacturing Index Declines
by Tom Moeller  June 5, 2018

The pace of business activity in the service sector continues to moderate. The Composite Index of Nonmanufacturing Sector Activity from the Institute for Supply Management (ISM) fell to 56.8 during April from an unrevised 58.8 in March. The Action Economics Forecast Survey expected a slip to 58.2 last month. Despite the decline from a January high of 59.9, the index remained up sharply versus the August 2016 low of 51.6. The ISM data are diffusion indexes where readings above 50 indicate expansion.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM index and the ISM factory sector measure released Tuesday. This composite fell to 56.9 from 58.9 in March and roughly equaled the level twelve months earlier. During the last ten years, there has been a 71% correlation between this index and the q/q change in real GDP.

Movement amongst the component series remained mixed last month. The business activity reading declined moderately to 59.1, but remained improved versus the 2016 low. The new orders index rose modestly to 60.0 and also remained up versus 2016. The vendor delivery index fell sharply and indicated the quickest rate of order fulfillment since November.

The employment measure declined sharply to the lowest level in twelve months. During the last ten years, there has been an 87% correlation between the ISM nonmanufacturing sector jobs index and the m/m change in private service plus construction sector payrolls. An increased 24% (NSA) of industries reported a rising jobs level and a stable 13% indicated a decline.

The prices paid index rose negligibly to 61.8 and remained up sharply versus its February 2016 low. A strengthened 33% (NSA) of firms reported paying higher prices while a stable four percent of firms reported paying less.

Amongst the other detail indexes, which are not seasonally adjusted, the export order series surged m/m to the highest level in twelve months. It remained up sharply versus 2016. The import index backed away from March's twelve-month high. The order backlog index declined sharply to the lowest level in three months.

The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.

ISM Nonmanufacturing Survey (SA)	May	Apr	Mar	May'17	2017	2016	2015
Composite Diffusion Index		56.8	58.8	57.3	56.9	54.9	57.1
Business Activity		59.1	60.6	61.9	60.1	58.0	60.8
New Orders		60.0	59.5	62.1	59.3	57.5	59.2
Employment		53.6	56.6	52.2	55.2	52.6	56.0
Supplier Deliveries (NSA)		54.5	58.5	53.0	53.2	51.5	52.5
Prices Index		61.8	61.5	58.0	57.7	52.6	50.6