March Hiring Falls 0.6% From February

Redbook Same Store Sales Growth Improves

March Hiring - before we talk about hiring in March, let's review Redbook's same store sales. Real consumption growth was only 1.2% in Q1. GDP growth was boosted by trade and inventories. That type of weak consumer spending growth is near recessionary levels. 

That’s why the Redbook weekly readings and the retail sales report, which comes out next week, are important. Specifically, Redbook showed yearly same store sales growth increased from 5.5% to 5.9%. Last week I mentioned how retail sales could have been impacted by the Easter holiday season. The fact that yearly sales growth was 5.9% in the week of May 4thtells us sales were strong even after the Easter bump ended. The consumer is in solid shape.

April's retail sales report comes out next Wednesday, but estimates aren’t out yet. March’s report was solid as headline monthly growth was 1.6% and the control group’s monthly growth was 1%. I wouldn’t be surprised if there is monthly weakness because of the tough comps. The report will undoubtedly be influenced by the Easter holiday season. That could add some controversy to the report if it misses estimates to the upside or the downside.

March Hiring - Mixed JOLTS Report

The Job Openings and Labor Turnover survey was mixed. It showed the same trends we are used to, namely extreme growth in openings with low hiring growth. There were 7.488 million job openings in March which destroyed estimates for 7.215 million and beat the high end of the consensus range for 7.24 million. 

February reading was revised higher from 7.087 million to 7.142 million. Remember the February monthly BLS report showed weak job creation.

Job opening’s yearly growth was 8.6%, but hiring growth was only 0.6%. Hiring actually fell 0.6% from February. To me, if firms aren’t hiring more workers, it doesn’t matter how high openings are. If you are looking for a job and there are numerous openings, but no one will hire you, it’s not a positive. The lack of workers with skills needed to fill these jobs could slow economic growth.

Employers might be giving out offers that aren’t fair to workers. If you are a computer programmer with 5 years experience and your previous salary was $85,000, you won’t look at job offers with a salary of $75,000. The recent decline in weekly wage growth might show us that firms aren’t willing to pay up to get talent. Any type of worker can be acquired at the right price. Firms need to be profitable, so they can’t hire people at any price. However, S&P 500 margins are fairly high, so there’s some meat on the bone to pay workers more.

March Hiring - There were 5.66 million hirings in March 

Which means the difference between openings and hires was 1.828 million which is a new record high. There were 6.211 million unemployed people actively looking for work which means there were 1.277 million more openings than people looking for a job. As you can see from the chart below, the ratio of the unemployed to the number of job openings was 0.83 which is near a record low.

Job opening growth was the strongest for the construction industry as it was 54%. This industry is facing a worker shortage. Real estate, rental, and leasing job opening growth was 39%. Third, was information which had yearly opening growth of 30%. The number of quits fell from 3.447 million to 3.409 million. It was 3.483 in January. 

Workers quit their job when they are confident in the labor market’s ability to get them a better job with a higher wage. Job switchers almost always have higher wage growth than those who stay at the same job. That all being said, the quit rate stayed at 2.3% which is the cycle high. Its record peak was 2.5% in January 2001. This report would be more valuable if went back further than December 2000.

Credit Card Debt Falls

March Hiring - Even though the savings rate crashed in March from 7.3% to 6.5%, credit card debt actually fell which signals the consumer isn’t leveraging up. Consumer credit increased $10.3 billion which was down from the $15.5 billion increase in the previous month. This increase in March missed estimates for $16.5 billion and the low end of the estimate range which was $14.0 billion. It missed estimates because credit card debt fell $2.2 billion after increasing $3.1 billion.

As you can see from the chart below, the net percentage of banks tightening lending standards for credit card loans increased from 6.4% to 15.2%. 

That’s the highest percentage since Q4 2009. Non-revolving credit growth was $12.5 billion which was $100 million more than February. This debt is mostly auto and student loans. On a quarterly basis, consumer credit was up 4.3% which fell from 5.5%. This was dragged down by credit card growth which fell from 5% to 1.4%. Non-revolving credit growth increased from 5.3% to 5.6%.

MBA Purchase Applications Growth Improves

March Hiring - MBA composite index in the week of May 3rd had weekly growth of 2.7% which was on top of a 4.3% decline. The purchase index increased 4% which was on top of a 4% decline. 

Yearly growth rate increased from 1% to 5%. Refinance index’s weekly growth rate improved from -5% to 1%. 30 year fixed mortgage rate was 4.14% in that week. In this week it fell 4 basis points to 4.1%. The lowest rate in the past year was 4.06% in March.

As you can see from the chart below, the mortgage credit availability index increased 2.1% to 186 in April. Increases indicate lending standards are loosening. The indicator is getting close to last year’s peak.

March Hiring - Conclusion

The Redbook report showed the consumer improved in early May which is important now that the Easter holiday is no longer muddying the water. 

JOLTS report showed hiring fell from last month which isn’t great. Credit card debt and lending standards for credit cards tightened. Lending standards for mortgage loosened. They are near last year’s peak.  

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