Jobs, Strikes, Oil, & More
Week in review: Oct 2-6
This week brought us another large strike and new data on the labor market, oil prices/production, and the services and manufacturing sectors.
Construction spending increased 0.5% in August and is up 7.4% over the past year. Residential spending saw a healthy 0.6% increase for the month, with new single family spending up 1.7% and new multifamily spending up 0.6%. While residential spending is down 3% over the past year, it’s still up more than 42% since the start of the pandemic.
Nonresidential spending is up 18% over the past year, and that has everything to do with manufacturing-related construction and public construction.
ISM Manufacturing PMI
According to this survey of business managers, activity in the manufacturing sector shrank for the 11th straight month in September, but the economy expanded for the first time in ten months.
Of course, we know that the economy didn’t shrink for the past nine months—that’s just what the ISM Manufacturing PMI suggests. It’s possible that the people surveyed for PMI readings are a little too glum about the economy (much like the people surveyed for consumer sentiment readings), but we also know the manufacturing side of the economy has been weak over the past year or so.
Big picture, this was the rosiest reading of the ISM Manufacturing PMI in a while, and it looks like soft data (based on sentiment and surveys) is catching up to hard data.
Gas prices fell again during the week ending October 2nd and are just $0.02 more expensive than during the same week last year.
Diesel prices were essentially unchanged last week (up <$0.01/gallon) and are about $0.30/gallon cheaper than one year ago.
TSA Checkpoint Travel Numbers
The number people who passed through TSA security last week was still about 4% higher than the same week in 2019. No sign of a slowdown in air travel yet.
Job Openings & Labor Turnover Survey (JOLTS)
The number of open, unfilled positions increased in August, according to this release, but that shouldn’t change your understanding of the labor market. Because JOLTS data is really volatile from month to month, it helps to look at the 3-month moving average, and if we do that, job openings fell for the seventh straight month.
If the rise in job openings was real (and not a statistical aberration), it was due to a 509,000 increase in openings in the professional and business services sector. Maybe big businesses no longer think a recession is coming and are looking to staff up (that’s just speculation).
More important than the job openings: the quit rate (share of workers quitting their job each month) is now back at the pre-pandemic level of 2.3%. This is partly because the labor market has cooled a little and partly because so many people switched jobs over the past few years.
The layoff/discharge rate still hasn’t normalized, though, which means employers are still reluctant to get rid of workers.
Kaiser Permanente Union Strike
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