Yahoo Finance Consumers, Small Businesses Optimistic While JOLTS Signals Labor Market Slowdown
U.S. economic data came in mixed on Tuesday with reports offering an optimistic view about the economy outweighing a new concern over the strength of the labor market. FOMC speakers were also on tap with one member offering his assessment on the U.S. jobless rate and inflation, while the other talked about banking regulations.
NFIB Small Business Index
Tuesday’s report from the National Federation of Independent Business (NFIB) showed small-business owners are optimistic the economy will keep moving forward albeit at a slower-to-moderate pace.
The NFIB Small Business Optimism Index inched up one-tenth of a point to 101.8. It also showed that the uncertainty index, one of its components, fell six points to 79, a level NFIB said is normal compared to recent years.
“Small business owners continue to create jobs, expand their operations, and are enjoying strong sales,” said NFIB President and CEO Juanita Duggan. “Since Congress resolved the shutdown, uncertainty has declined as small business owners add jobs, increase sales, and invest in their businesses and employees.”
“Owners are growing their businesses and expect that they can sell more if they can produce more with additional employees,” said NFIB Chief Economist Bill Dunkelberg. “Investment spending has been solid for the past two years and owners are choosing to invest in their workforce as well by creating new jobs and raising wages.”
IBD/TIPP Economic Optimism
The IBD/TIPP Economic Optimism Index, a leading national poll on consumer confidence, dropped 2.7 percent in April to a reading of 54.2, down from 55.7 last month. Nevertheless, the reading remains in positive territory for a record 31 consecutive months.
“While there was some movement in April’s indexes, it was not the kind of wild swings we’ve experienced in recent months,” said Terry Jones, IBD’s Commentary Editor. “Consumers are starting to raise an eyebrow about the six-month economic outlook, as that component touched negative territory, but overall Americans continue to feel good about their personal financial lives, and their views across all metrics are relatively stable.”
JOLTS Survey May Be Signaling Labor Market Slowdown
According to the U.S. Department of Labor, demand for workers deteriorated sharply in February, possibly adding to evidence of a slowdown in hiring, the results of a closely-followed labor market survey showed.
The JOLTS (Job Openings and Labor Turnover Survey) showed the number of job openings retreated by 538,000 to reach 7.1m versus a consensus estimate of 7.566, with the job openings rate declining to 4.5% – an 11-month low- although at 5.7m the number of hires did not see a big change from the month before.
The biggest decrease in openings was in the private sector, where they fell by 523,000.
Fed Members Speak Ahead of Minutes
On Tuesday, Fed Vice Chairman for Supervision and Federal Open Market Committee member spoke late in the day at the “Meet the Policymakers” forum hosted by George Mason University in Virginia. At the forum, he reiterated that the US Federal Reserve is data driven and is very disciplined. He also added that White House comments do not factor into Fed decisions.
Federal Reserve Vice Chairman Richard Clarida said on Tuesday the U.S. unemployment rate may have room to fall further without leading to excessive inflation. This statement likely solidified the central bank’s reasoning behind taking a pause in interest rate hikes.
The low unemployment rate “has been interpreted by many…as suggesting that the labor market is currently operating beyond full employment,” Clarida said. But the actual level of “full employment” is difficult to determine, and “the range of plausible estimates likely extends at least as low as the current level of the unemployment rate.”
Clarida’s remarks suggest the Fed will look closely at measures of labor market slack beyond the unemployment rate as they determine their next move on interest rates. Clarida also said that a better understanding of the nature of full employment would take an equal priority alongside assessing how to better achieve its 2 percent inflation goal.
For example, the number of workers returning to the labor force, whether previously discouraged from seeking work, retired, or just taking a break, surprised Fed officials and suggests a larger potential pool of workers for employers to draw on, Clarida said.
This article was originally posted on FX Empire
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