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Economic Watch: Employment, Factory Orders Continue Growing

A sizeable gain in trucking employment helped the total number of job additions move higher in January, according to a new Labor Department report.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
February 2, 2018
Economic Watch: Employment, Factory Orders Continue Growing

 

3 min to read


A sizeable gain in trucking employment helped the total number of job additions move higher in January, according to a new Labor Department report.

The trucking industry added 2,200 jobs in the first month of 2018 as the overall economy added a total of 200,000 non-farm jobs, the 88th straight month of job growth and the longest streak on record.

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While trucking employment expanded, the wider transportation and warehousing sector added even more jobs for the month, slightly more than 11,000. More than 5,000 of these jobs were in the warehousing and storage sector with nearly as many coming from the couriers and messengers category.

Despite this continued strength in overall employment, the nation’s unemployment rate remained at 4.1%, the lowest its been since 2000, while wage growth during was the strongest since in nearly nine years.

Average hourly earnings rose 0.3% in January following December’s 0.4% gain. This boosted the year-on-year increase in average hourly earnings to 2.9% the largest rise since June 2009 and up from 2.7% in December.

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According to Wells Fargo Securities, the job gains are consistent with 2.5% to 3% economic growth in the first half of 2018. Economic growth in the final quarter of 2017 was at an annual rate of 2.6% following performances of slightly better than 3% in the second and third quarters of last year.

“Quarterly annualized gross domestic product growth rates of 3% are not out of the question, however, sustained growth of 3% should largely be written off if the labor force participation rate does not improve,” said John E. Silvia, chief economist at Wells Fargo Securities.

He said structural issues continue to hold back growth in this metric.

“While the labor force participation rate for men is higher than for women, growth in the prime age participation rate during this expansion has been led by women,” Silva said. “The overall labor force participation rate peaked in the early 2000s and trended sharply downward until 2016, where it has been relatively stable at just under 63.”

Despite this, Silva said he expected the Federal Reserve to raise interest rates when it meets in March and expected another rate hike in the second quarter of 2018.

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Factory Orders and Shipments Continue Moving Higher, Business Investment Lowers But Still Stong

Meantime, a separate Commerce Department report showed continued gains when it comes to factory orders and shipments, but an indicator of business investment has slowed from the pace seen in 2017.

New orders for manufactured goods in December, up six of the last seven months, increased an 1.7%, following an upwardly revised 1.7% November increase. Shipments, up twelve of the last thirteen months, increased 0.6%, following a November gain of 1.4%.

There were also gains in orders and shipments for big ticket durable goods, rising 2.8% and 0.5% in December, respectively.

The one area of concern is for new orders for non-defense capital goods excluding aircraft, regarded as a measure of business spending plans. It declined 0.6% in December instead of falling 0.3% as reported last month. Orders for these so-called core capital goods edged up 0.1 percent in November.

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Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.4% in December rather than increasing 0.6% in an earlier report. Core capital goods shipments rose 0.3% in November.

According to analysts at Econoday, even with this latest numbers about core capital goods the report “is consistent with a factory sector that…is probably accelerating into the new year.”

Wells Fargo Securities pointed out even with the decline in new orders for core capital goods, the sector grew in December at an annualized rate of 11.2%.

Also, a separate report, released a few days earlier, showed factory activity in January remained strong despite it slowing just a little bit from December.

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