Recently, a number of conflicting
economic indicators have surfaced for the U.S. Most disappointing is
of course the Employment Situation report released on Friday, a day
when exchanges for equities were closed. Today, however, such markets
fell by 1.00% to 1.14%. Similarly disappointing are national rail
traffic volumes released last Thursday, and continue in a down trend.
Looking at the conflicting positive
data, the Institute for Supply Management released its monthly,
broadly based, PMI numbers for U.S. manufacturing last week. It
showed continued growth. Supporting the manufacturing PMI are U.S.
Census Bureau Factory Orders, also showing growth.
Employment Did Take A Crunch
Employment data is the most concerning
at the moment. March jobs grew at an abysmal 120,000 versus
February's gain of 240,000. Huge difference, even considering
analysts were estimating 201,000 jobs. Disturbing loss on estimates,
and month over month results.
Breaking down the Bureau of Labor
Statistics' study, frankly expected suspects again reveal themselves.
Construction jobs compressed by 10,600, comporting with existing home
sales, existing home inventories that are now being managed by banks, and
apparent weakness in demand for new retail space on the commercial side.
What also might be to come are considerable
downward signals for commercial real estate. According to the
employment report, between general merchandise stores and department
stores, March employment declined by seasonally adjusted 53,300 jobs, the most notable
decline in employment on the report.
For real organic loss of jobs is
telecommunications. While the sector lost only 3,600 jobs in March
2012, since March of 2011, it has shred 45,200 jobs.
Retail's Crunch Not A Real Surprise
Retail sales last reported on March
13 for February numbers. The next release is slated for April 16. For
the last report, general merchandise saw sales declining in February
by only -.1%, but still had a yearly increase of 2.9%. Department
stores did better with a February advance of 1.5%, with a yearly gain
of a weak .2%.
Reported previously on this space are
potential explanations for retail's en masse loss of jobs. For so
long, many retailers, whether grocery, general merchandise, or
department stores, have been increasing price to sustain sales
against reduced traffic. At the same time, they have not been
controlling SG&A expenses. Sustainability of profit is challenged
with such propositions. Major examples are SuperValue and J.C. Penny.
With associated layoffs and restructuring.
Gas prices and the inevitable
inelasticity of demand are revealed in two ways today. Firstly, gas
station stores lead the retail sales report with a yearly increase of
10.3% and a February increase of 3.3%. Then we have the simple fact
of gas price, and how it has helped gas selling retailers such as
Costco (look at Sunoco's switch in business plans).
Growth In U.S. Economy Are Cars And Bank Lending, But Is It Sustainable
Still, due to the nature of
gasoline/convenience store retail, customer service jobs don't
increase congruent to increased sales as with general merchandise and
department stores. Ergo, we see a net loss of retail jobs on the
Employment Situation report of down 34,000 for February.
Despite such losses, again I have to
mention a pattern of suspects. Where retail has faltered over time
in its traditional concept, we have leads that do in fact ramify
through this economy.
Cars and transportation equipment
created a combined 24,600 jobs for March. Monthly gains lead to
yearly job creation of 130,200. Job creation like this drives the
index and overall tells of competition for consumer money.
Consumer Credit advances show that in
the U.S. banks are lending money. But on shorter term loans backed by
vehicle collateral. But what did I hear about car prices reaching a
recent high?
Is this market getting ahead of itself
and lending on over priced collateral. Wouldn't be the first time.
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