Private Payrolls, Consumer Confidence Signal Strong January

Popular Economics Weekly

ADP is calling for substantial strength in Friday’s employment report, showing yesterday 246,000 for private payrolls, not including government jobs. This is far beyond expectations and would compare with December private payroll growth in the government’s report of 144,000 (ADP’s count for December is revised slightly lower to 151,000).

Yesterday’s data follow positive employment indications in Tuesday’s consumer confidence report and may very well pull expectations higher for Friday’s employment report, says Econoday.

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Graph: Econoday

And the Conference Board’s consumer confidence survey showed further consumer strength. Consumer confidence held strong and steady in January, at 111.8 for only a slight decrease from December’s 15-year high of 113.3 (revised), said the Conference Board. Details are positive including a noticeable decline in those saying jobs are hard to get right now, at 21.5 percent vs December’s 22.7 percent, combined with a solid rise in those who say jobs are plentiful, at 27.4 vs 26.0 percent.

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Then we also have the ISM manufacturing index back to post-recession highs. The ISM manufacturing report out Wednesday, in line with a run of regional reports, is signaling the strongest conditions in the factory sector since the oil-price collapse of 2014. The composite index for January is 56.0 for a sizable 1.5 point gain and the highest reading since November 2014.

New orders at 60.4 vs 60.3 in December is also a high since November 2014 and is the first back-to-back 60 showing since December 2013. Employment is also strong, up a sharp 3.3 points to 56.1 for the highest reading since August 2014. Inventories are steady as are delivery times which have been slowing in line with rising activity. Input costs are showing increasing pressure, in line with rising costs in other anecdotal reports.

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Graph ISM

So what have we for economic prospects in the Trump era? A lot will depend on the markets confidence that the Trump team can follow through on its promises. But limiting immigration when the economy is basically fully employed is not a recipe for further growth, because where will the workers come from to build all those infrastructure projects, for instance?

Probably from overseas. Or maybe from some of the unemployed blue-collar workers that don’t have the skills in today’s high tech economy. Though housing construction is rising, public construction spending fell a sharp 1.7 percent in the month. Educational spending fell 2.2 percent with highways & streets down 0.6 percent. Private nonresidential categories are mixed with total spending for this component unchanged in the month.

Also, where will the additional monies come from to finance those Trump projects?

Harlan Green © 2017

Follow Harlan Green on Twitter: https://twitter.com/HarlanGreen

About populareconomicsblog

Harlan Green is editor/publisher of PopularEconomics.com, and content provider of 3 weekly columns to various blogs--Popular Economics Weekly and The Huffington Post
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