According to American Chemistry Council (ACC) Weekly Chemistry & Economic Trends report on October 7, 2022, the number of new jobless claims was up by 29,000 to 219,000 during the week ending 1 October. Continued claims increased by 15,000 to 1.36 million for the week ending September 24 and the insured unemployment rate was 1.0%, up 0.1 percentage point from the previous week's revised rate.
While it was the smallest monthly gain since April 2021, the 263,000 gain in September nonfarm payrolls came in slightly better-than-expected. There were broad gains across sectors, except for retail trade, transportation, and government that saw lower employment. The decline in transportation and warehousing employment was the first monthly decline since April 2020 and was led by steep declines in truck transportation and warehousing, potentially a sign of weakening demand. Manufacturing employment continued to expand, up by 22,000. Average hourly wages were up 5.0% Y/Y, the slowest gain since last December. The unemployment rate fell from 3.7% in August to 3.5% in September, in part because of a decline in labor force participation. As a share of the working age population, 62.3% are employed or looking for work, slightly lower than last month, but still higher than earlier in the year. The participation rate fell sharply during the pandemic and has only partially recovered.
As the labor market started cooling, job openings declined sharply in August, down 10.0% to 10.1 million. The number of job openings per unemployed person fell from 2.0 in July to 1.7 in August, the lowest since the beginning of the year and a sign that Fed actions to slow the economy may be starting to have an impact.
U.S. exports of goods and services dropped 0.3% in August to $67.4 billion. Imports were also down (by 1.1% to $326.3 billion). As a result, the U.S. trade deficit narrowed 4.3% to $67.4 billion. The goods deficit narrowed in August to $87.6 billion as the decline in imported goods outpaced the decline in exports. Exports of natural gas increased as did exports of pharmaceuticals preparations. Exports of crude oil and cars fell. Imports of crude oil, fuel oil, semiconductors, civilian aircraft, computer accessories all fell. Imports of cars increased.
Light vehicle sales edged higher from a 13.1 million seasonally adjusted annual pace to 13.5 million in September. There were increases in sales of both cars and light trucks. Vehicle sales were 9% above year-ago levels.
Construction spending fell 0.7% in August from July’s upwardly revised figure. Residential construction spending fell 1.0%, driven entirely by a sharp decline in the single-family home segment. Spending on multi-family home construction remained resilient. Non-residential spending fell by a modest 0.4% in August and was broad-based. Public spending on construction fell 1%, but with many infrastructure projects awaiting start and many local and state governments well-funded, the sector should remain resilient going forward.
Following a decline in July, sales at the wholesale level edged higher by 0.1% in August. Within segments, sales were mixed with the largest gains in furniture apparel, hardware and computer equipment offsetting losses in petroleum products, metals and miscellaneous durable goods. Wholesale inventories continued to build and were up by 1.3% in August. Compared to a year ago, sales were up 16.1% Y/Y while inventories were up by 25.0% Y/Y. The inventories-to-sales ratio moved higher from 1.29 in July to 1.31 in August. This was up from 1.21 a year ago and a sign that inventories are accumulating at this node of the supply chain.
According to the Institute for Supply Management (ISM), the Services PMI® for September 2022 registered 56.7%, 0.2 percentage points down from August but above expectations. Most (15 out of 18) U.S. non-manufacturing industries reported growth, but softness in business activity and new orders resulted in slower growth despite improved employment and supplier deliveries. The composite index showed growth for the last 28 months since the COVID recession. Based on comments from Business Survey Committee respondents, there have been improvements regarding supply chain efficiency, operating capacity, and materials availability; however, performance remains less than ideal. Employment continued to improve despite the restricted labor market.
ISM’s Manufacturing PMI® dropped 1.9 points to 50.9 in September, the 28th month in a row for U.S. industrial sector expansion. September’s reading was the lowest since the industry began to pull out of the pandemic in June 2020. Only nine of 18 industries reported growth. The ISM reports demand is easing as indicated by new orders and new export orders contracting, backlog of orders has moved toward contraction and customers say their inventory levels are roughly stable but, nearing levels of “about right”. Employment levels contracted with companies indicating they’re using hiring freezes and allowing attrition for the time-being (rather than headcount decreasing due to mass layoffs, etc.). Supplier deliveries are slowing at a slower rate.
Factory orders were flat in August, following a 1.0% decline in July. While orders for consumer goods were flat, orders for capital goods declined in August, led by lower orders for civilian aircraft. Orders for core business goods rose 1.4% while there were smaller gains in motor vehicles, and construction materials. Unfilled orders (a measure of the manufacturing pipeline) rose 0.5%, a smaller gain than in recent months. Manufacturing shipments rose 0.5% following a decline in July. Inventories of manufactured goods edged slightly lower, by 0.1%, following flat growth in July. The inventories-to-shipments ratio for manufacturing ticked down to 1.46 in August from 1.47 in July and was lower than 1.51 a year ago.
The JP Morgan Global Manufacturing PMI has been steadily losing steam and slipped into contractionary territory in September when the index fell by 0.5 to 49.8. That is the lowest reading since manufacturing expanded out of the pandemic-induced drop early 2020. Output, new orders and new export orders all declined and at a faster rate. Employment grew but the index is close to the 50-mark. Both input and output prices grew. Output expanded in just 10 of 30 economies. Together, the signs from this release point to a weakening industrial sector.
Global semiconductor sales fell 3.4% in August with declines across all major regions, except Europe which posted a small gain. The largest declines were in China and other Asia/Pacific (except Japan). Compared to a year ago, semiconductor sales were nearly stable, with just a 0.1% Y/Y gain. Semiconductor sales in China were off 10.0% Y/Y.
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