US Job Openings Continue to Expand

Daily Analysis - 10/02/2016

United States Job Openings Expand Further

The American labor market continues to show its resilience as JOLTs job openings climb, nearing the highest value obtained since July of 2015. This closely followed indicator of economic conditions measuring job vacancies reported rising opportunities in the private sector while remaining largely unchanged for government positions.

German Industrial Production Plummets

German industrial production figures stunned market participants after declining to levels last seen in August of 2014. The German Federal Statistics Office announced a -1.20% contraction during the month of December, falling deeper than November’s revised -0.10% while also missing expectations of a 0.40% expansion. This marks the 4^th contraction in the last 6 months and underlines the tenuous nature of global trade. Consumer products declined by -1.40%, capital goods fell by -2.60% and energy production tumbled -3.00%. The decline in German factory orders over the same time period comes during the ongoing weakness in one of nation’s largest trading partners, China. While domestic demand is expected to rise even further and offset some external woes after documenting record low unemployment that will boost consumer spending in spite of low fuel prices.

US JOLTs Job Openings Climb

The latest Bureau of Labor Statistics release showed further gains in Job Openings and Labor Turnover summary, increasing to 5.607 million for the month of December. The value easily exceeded expectations of 5.400 million and previous month’s revised 5.346 million by a sizable margin. The JOLTs report usually reflects the results of the non-farm payrolls during the same measurement period. In December, when official payrolls initially surged to 292,000 before being revised downwards to 262,000, the results were mirrored by rising job openings, corroborating the strong labor market. Jobs rose in construction by 69,000 while for manufacturing in non-durable and durable goods rose by 60,000 and 26,000 respectively. The JOLTs report is closely followed by Federal Reserve policy officials as a gauge for the health in the labor market. Nevertheless, the US dollar continued to exhibit weakness, falling further against the Swiss Franc before rising modestly overnight.

UK Trade Gap Narrows

Trade data released by the United Kingdom revealed the lowest trade deficit since September. The Office for National Statistics (ONS) report showed the deficit shrinking to -£9.92 billion in December, beating estimates of a deeper -£10.40 billion deficit and marking a steady improvement over the prior month’s revised -£11.50 billion. Cheap oil prices and unspecified goods have pushed import costs lower, seeing total imports for December tumble by -3.60% while exports also declined over the period by -0.80%. The full year trade data marked a higher deficit in comparison to 2014 after ONS reported the growing deficit falling to -£34.70 billion from -£34.40 billion. Concerns continue to arise from China’s slowdown while a tentative Federal Reserve and a strengthening Pound are still weighing on the economy, preventing Bank of England policymakers from adjusting monetary policy over the medium-term.

Swiss Unemployment at 6-Year High

The Swiss State Secretariat for Economic Affairs reported January’s non-seasonal adjusted unemployment rate rose to a 6-year high of 3.80%. The value increased for a 4^thconsecutive month, climbing above both expectations and December’s report of 3.70%. The rise was mainly attributed to the rate of unemployed foreigners which jumped from 7.30% to 7.60% during the month whereas the level of joblessness among Swiss citizens climbed slightly to 2.60% from 2.50%. Another concerning factor is ascending youth unemployment which saw the rate jump to 2.70% in January. The Swiss National Bank maintains that the Franc continued to be substantially overvalued despite the fact that the Central Bank has introduced negative interest rates for large deposits in a bid to dampen interest in the currency and discourage haven flows. The overvalued currency has hurt exporters, forcing companies to cut costs mainly by cutting headcounts.