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US hiring slowed to 155K jobs, trucking gains on seasonally adjusted data

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WASHINGTON  — U.S. employers added 155,000 jobs in November, a slowdown from recent months but enough to suggest that the economy is expanding at a solid pace despite sharp gyrations in the stock market.

The Labor Department said Friday that the unemployment rate remained 3.7 percent, nearly a five-decade low, for the third straight month. Average hourly pay rose 3.1 percent from a year ago, matching the previous month’s figure, which was the best since 2009.

CAPTION FOR PHOTO

Laurence Marzo, left, and Ty Ford, right, move a conveyor belt into place to help unload a truck carrying merchandise at a Walmart Supercenter in Houston.  (Associated Press: DAVID J. PHILLIP)

The economy is expanding at a healthy pace, but rising trade tensions between the U.S. and China, ongoing interest rate increases by the Federal Reserve and weakening global growth have roiled financial markets. Analysts expect growth to slow but remain solid in 2019 as the impact of last year’s tax cuts fade.

On a seasonally adjusted basis, for hire trucking gained 4,500 jobs; on a not seasonally adjusted basis, the industry lost 1,200 jobs.

The jobs figure was less than many economists forecast, but few saw the report as a sign of a broader slowdown.

“The economy continues to churn out new jobs and reflects the strong underlying business conditions that point to steady, albeit slower job growth and economic activity in 2019,” said Joe Brusuelas, chief economist at consulting firm RSM. “This report strongly implies that a recession is not looming just over the horizon.”

The report is unlikely to dissuade the Federal Reserve from raising short-term interest rates at its meeting later this month, as expected, Brusuelas said. But it suggests the Fed may not hike rates next year as rapidly as many investors have feared.

The ongoing job gains are pushing down unemployment rates to historically low levels for a variety of groups. The unemployment rate for men aged 20 and above fell last month to 3.3 percent, the lowest in 18 years. And the rate for Americans with just high school diplomas dropped to 3.5 percent, the lowest since December 2000. The African-American jobless rate declined to 5.9 percent, matching May’s figure as the lowest on record.

November’s job gains are down from October’s robust 237,000, which was revised lower from last month’s estimate. Hiring has averaged 195,000 a month for the past six months, modestly below an average of 212,000 in the previous six.

Hiring in November was led by health care firms, which added 40,100 jobs, and professional services such as accounting and engineering, which gained 32,000. Manufacturing companies hired 27,000 new workers, the most in seven months and a sign that trade tensions have yet to weaken factory hiring.

Construction firms cut back, however, adding just 5,000 jobs, the fewest in five months. Hiring also slowed in restaurants, bars and hotels.

Most recent data have pointed to solid economic growth. Americans increased their spending in October by the most in seven months, and their incomes grew by the most in nine months, according to a government report last week. Consumer confidence remains near 18-year highs, surveys show. And both manufacturing and services companies expanded at a healthy pace in November, according to a pair of business surveys.

The housing market, though, has stumbled this year as the Fed’s rate hikes have contributed to sharply higher mortgage rates. Sales of existing homes have fallen 5.4 percent from a year earlier, the biggest annual decline in more than four years.

Investors, however, are mostly focused on where the economy is headed. They are worried that the U.S.-China trade war could still intensify, despite an agreement over the weekend between Presidents Donald Trump and Xi Jinping that included postponing a planned U.S. tariff hike for 90 days. Higher tariffs would compound the risks for a global economy that is already grappling with dismal growth figures from Europe and Japan.

The interest rate paid by longer-term bonds has also fallen sharply in the past month, panicking investors, while short-term rates have declined by much less. That typically signals a weaker economy ahead.

And the Federal Reserve has raised short-term interest rates three times this year and is likely to do so a fourth time later this month, thereby raising borrowing costs for consumers and businesses. The Fed has signaled that it could increase rates again next year.

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ACT Research For-Hire Trucking Index: Weak finish to 2nd quarter

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The June Pricing Index at 43.8 (seasonally adjusted) recovered a good bit of last month’s sharp decline, up from 38.8 in May on a seasonally adjusted basis, the lowest in survey history. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — The latest release of ACT’s For-Hire Trucking Index (June data) showed nearly across-the-board declines, with capacity again the lone exception.

The Volume Index dropped further into negative territory, falling to 43.2 (seasonally adjusted) in June from 46.7 in May.

The June Pricing Index at 43.8 (seasonally adjusted) recovered a good bit of last month’s sharp decline, up from 38.8 in May on a seasonally adjusted basis, the lowest in survey history.

“Volumes and utilization have been down seven of eight months, and the supply-demand balance has been loosening for eight straight months,” said Tim Denoyer, ACT Research’s vice president and senior analyst. “In line with several second quarter earnings warnings from truckload carriers this week, this is further confirmation of a weak freight environment. May’s Pricing Index looked a little anomalously bad, so it was good to see that pick back up, though still not a great level in June.”

Denoyer said volumes reached a new cycle low in June, likely due in part to rapid growth of private fleets, the slowdown in the industrial sector and some inventory drawdown.

“This coincides with most other freight metrics,” he said. “The supply-demand balance reading loosened to 41.4, from 42.1 in May. The past eight consecutive readings have shown a deterioration in the supply-demand balance, with June the largest yet.”

ACT is a publisher of new and used commercial vehicle (CV) industry data, market analysis and forecasting services for the North American market, as well as the U.S. tractor-trailer market and the China CV market. ACT’s CV services are used by all major North American truck and trailer manufacturers and their suppliers, major trucking and logistics firms, as well as the banking and investment community in North America, Europe, and China.

 

 

 

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Oil price rises on Mideast tensions, stock markets cautious

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After six weeks of declines that totaled 13 cents, the price of a gallon of diesel went up 1.3 cents a gallon for the week ending July 8 but dropped four tenths of a penny last week. (©2019 FOTOSEARCH)

BANGKOK — The price of oil rose on Friday after the U.S. said it had destroyed an Iranian drone near the Persian Gulf, where a lot of the world’s oil is shipped through. Stock markets were largely stable as investors monitor earnings and the ongoing trade talks between China and the U.S.

Energy prices were ratcheted higher after President Donald Trump said a U.S. warship had downed an Iranian drone that had been threatening. While Iran denied the incident, it’s the latest incident to increase tensions and uncertainty in the region, where oil tankers have been attacked or threatened.

About 20% of all oil traded worldwide passes through the Persian Gulf, so investors are aware of the potential for disruptions to ship traffic.

The U.S. benchmark for crude oil advanced 71 cents, or 1.3%, to $56.01 per barrel in electronic trading on the New York Mercantile Exchange. Brent, the international oil standard, picked up 98 cents, or 1.6%, to $62.91 per barrel.

Obviously, the price of on-highway diesel is an outgrowth of the price of oil.

Diesel has gone down seven of the last eight weeks.

After six weeks of declines that totaled 13 cents, the price went up 1.3 cents a gallon for the week ending July 8 but dropped four tenths of a penny last week.

Stock markets were mixed, with Britain’s FTSE 100 shedding 0.1% to 7,484 and the CAC 40 in Paris falling by the same rate to 5,543. In Germany, the DAX rose less than 0.1% to 12,236. Wall Street looked set for small gains, with the future for the Dow Jones Industrial Average up 0.2% and the future for the S&P 500 adding 0.1%.

Reports that Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer spoke with their Chinese counterparts as planned, with more talks to come, helped ease some concerns over the deepening trade war between Washington and Beijing.

The standoff over China’s longstanding trade surpluses and its policies aimed at building up advanced high-tech industries has added to concerns over slowing demand and weaker Chinese growth.

Expectations that the U.S. Federal Reserve will move quickly to cut interest rates have also helped buoy sentiment recently.

Comments by the president of the Federal Reserve Bank of New York, John Williams, suggesting central banks need to “take swift action” when conditions turn adverse, have whetting investors’ appetites for buying, analysts said.

“Investors are highly sensitive to dovish comments from Fed presidents these days, as they are trying to figure out whether the Fed would lower its interest rates by 50 basis points by the end of this month,” Ipek Ozkardeskaya of London Capital Group said in a report.

“Given that a 50-basis-point cut would trigger a further rally in global equities, any remark of dovish nature translates immediately into higher asset prices,” she said.

In Asian trading, Japan’s Nikkei 225 index jumped 2% to 21,466.99 while Hong Kong’s Hang Seng climbed 1.1% to 28,765.40. The Shanghai Composite index rose 0.8% to 2,924.20, while in South Korea, the Kospi added 1.4% to 2,094.36. India’s Sensex slipped 1.3% to 38,390.88. Shares rose in Taiwan and Southeast Asia.

Investors are looking ahead to corporate earnings.

So far, in the U.S. the results have been mixed, though only about 13% of S&P 500 companies have reported, according to FactSet. Analysts expect profits to fall 2.4% overall by the time all reports are tallied.

In currencies, the dollar rose to 107.60 Japanese yen from 107.30 yen on Thursday. The euro weakened to $1.1239 from $1.1279.

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ACT Research: Industry currently astride Class 8 demand inflection

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This chart shows the Class 8 North American build out backlog and the backlog to build ratio. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. – According to ACT Research’s (ACT) latest State of the Industry: Classes 5-8 Report, June’s Class 8 orders broke the string of falling order volumes with the opening of 2020 order books, garnering a 19% rebound.

While better orders slowed the rapid backlog decline, the situation is temporary, as coming months represent the seasonally weakest order period of the year, suggesting rapid backlog declines should continue in the near-term, according to Kenny Vieth, ACT Research president and senior analyst.

“The industry is currently astride the Class 8 demand inflection,” Vieth said. “On one side of the ledger, weak freight volumes and rates will increasingly pressure carrier profits, thereby moderating demand for new equipment. On the other, significant new capacity additions and steadily increasing inventory volumes suggest current build rates are unsustainable.”

Vieth said medium duty metrics remained in-line with expectations again in June, with most metrics close to their prevailing trends, if displaying some fraying at the edges.”

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

 

 

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