{"id":1656,"date":"2020-02-05T10:35:20","date_gmt":"2020-02-05T15:35:20","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1656"},"modified":"2020-02-05T10:35:20","modified_gmt":"2020-02-05T15:35:20","slug":"january-private-sector-jobs-nonmanufacturing-activity-and-december-trade-deficit","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1656","title":{"rendered":"January Private Sector Jobs, NonManufacturing Activity and December Trade Deficit"},"content":{"rendered":"\n

KEY DATA:<\/strong>  ADP: +291,000; ISM (NonMan.): +0.6 point;\nActivity: +3.9 points; Employment: -1.7 points\/ Deficit: $48.9 billion (11.9%\nwider)<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cWhen winter doesn\u2019t strike, the data can\nbecome weird.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  It\u2019s Employment Friday week and that makes it\nADP Wednesday, the day when we get a rough estimate of private sector job\ngains.  ADP, an employment services\ncompany, thinks businesses went crazy hiring people in January.<\/em><\/strong>  The estimate was for robust job gains, well\nabove consensus.  But the\ndetails should be viewed carefully as there was a very mild month for winter\nweather.  For example, two sectors that\nare sensitive to climate quirks, construction and leisure and hospitality,\nadded a total of 113,000 new workers.<\/em><\/strong> \nThat is way above anything that would be considered reasonable. <\/em><\/strong> Indeed, Mark Zandi, chief economist of Moody\u2019s\nAnalytics, noted that: \u201cMild winter\nweather provided a significant boost to the January employment gain. \u2026\nAbstracting from the vagaries of the data underlying job growth is close to\n125,000 per month\u2026<\/em>\u201d That doesn\u2019t mean that Friday\u2019s job number\nwill not be good: Just don\u2019t assume it would be a good idea to bet the farm on\na blockbuster number.<\/em><\/strong><\/p>\n\n\n\n

The nonmanufacturing sector accelerated in January,\nwhich really should not have been a surprise. \nThis segment of the economy is very sensitive to weather conditions<\/em><\/strong> and they were pretty good\nlast month.  The Institute for Supply\nManagement\u2019s index rose a touch as activity improved solidly.<\/em><\/strong>  Still, the details were mixed. <\/em><\/strong> Hiring moderated, orders increased a bit\nfaster and backlogs thinned more rapidly.<\/em><\/strong>  The big change was in imports, which\nsurged.  Got me why that happened.  <\/p>\n\n\n\n

Remember how the trade deficit shrank dramatically\nin November and hopes were that things were turning around?  Well, never mind.  The shortfall rebounded sharply in December,\nled by a sharp increase in imports.<\/em><\/strong>  We bought a\nlot more energy products, consumer goods and technology.  Export growth was decent, but hardly as\nstrong as the demand for foreign products.<\/em><\/strong>  But the only really solid segment was energy,\nso we are really not seeing any great demand for our products.  As for the China situation, the monthly\ndeficit continues to narrow and the total for 2019 was $74 billion, or 17.6%\nless than in 2018.  That\u2019s a big change.<\/em><\/strong>\n Overall, the deficit narrowed modestly,\nless than 2% as a solid decline in the goods shortfall was partially offset by\na drop in the services surplus.  Still, that\nwas the first decline in six years.<\/em><\/strong> \nSince that entire drop came from the huge change in the China deficit,\ndon\u2019t expect further declines in the years to come.   <\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  The\neconomy is fine and the labor market is strong, but we need to get past this\nwarm winter.  If the better than expected\neconomic numbers have been weather driven, we will pay for it when normal\nweather returns.<\/em><\/strong>  That\u2019s what\nseasonal factors are designed to do: If you get unseasonal conditions for some\nmonths, the more typical months get killed. \nSo wait a few months to determine the strength of the economy.<\/em><\/strong>  As for Friday, the consensus is for roughly\n165,000, though I am a little lower.  The\nADP report argues for a number above 200,000. \nWatch the details.  If this is a\nstrong report but the major gains were in the weather-sensitive sectors,\ndismiss it.  As for the markets, happy\ndays are here again, the world is great and earnings are going to\nskyrocket.  And if you believe that,\nlet\u2019s discuss my investment opportunity in a Broadway musical.  First quarter growth is still likely to be\nbelow 2%, which hardly supports the rally we are seeing in the markets.  <\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA:  ADP: +291,000; ISM (NonMan.): +0.6 point; Activity: +3.9 points; Employment: -1.7 points\/ Deficit: $48.9 billion (11.9% wider) IN A NUTSHELL:  \u201cWhen winter doesn\u2019t strike, the data can become weird.\u201d WHAT IT MEANS:  It\u2019s Employment Friday week and that makes it ADP Wednesday, the day when we get a rough estimate of private sector … Continue reading January Private Sector Jobs, NonManufacturing Activity and December Trade Deficit<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1656","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1656"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1656\/revisions"}],"predecessor-version":[{"id":1657,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1656\/revisions\/1657"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}