Saturday, 8 April 2006

Strong US job growth, slowing inflation, continued expansion in OECD

The March US jobs report was strong. From Reuters:

U.S. employers added an unexpectedly strong 211,000 jobs in March and the jobless rate slipped to a 4-1/2-year low, according to a government report on Friday that underlined a relatively vigorous labor market.

The pace of hiring last month exceeded the 190,000-job gain forecast by analysts, who also had expected the unemployment rate, which fell to 4.7 percent, to be unchanged at February's 4.8 percent.

If the above numbers suggest higher interest rates, other numbers reported yesterday do not.

The job report showed average hourly earnings rose 0.2 percent to $16.49 in March rather than the 0.3 percent expected by economists. Over the 12 months through March, wages rose 3.4 percent, slowing from 3.5 percent gain in the 12 months through February.

The Labor Department modestly revised down new hiring in February to 225,000 jobs instead of 243,000 reported last month while January new jobs totaled 154,000 instead of 170,000 -- a cumulative reduction of 34,000 in the number of jobs created over the two months.

Indeed, future inflation could slow.

A later report from the Economic Cycle Research Institute showed inflation pressures eased in March because industrial commodity prices were lower as were loan applications. Its Future Inflation Gauge, designed to anticipate cyclical swings in the rate of inflation, fell to 121.3 in March from 122.6 in February.

And wholesale inventories are building up.

A third report on Friday, from the Commerce Department, showed inventories of unsold goods at wholesalers rose in February by a stronger-than-forecast 0.8 percent because of rising stocks of unsold new cars and drugs.

And another Reuters report shows that consumer credit rose by less than expected in February.

U.S. consumer credit rose by a slightly less-than-expected $3.26 billion in February, a Federal Reserve report showed on Friday... Consumer credit outstanding rose to $2.164 trillion in February, rising at an annual rate of 1.8 percent from a slightly revised $2.161 trillion in January.

There was more good news yesterday in the form of the OECD composite leading indicator.

Moderate expansion lies ahead in the OECD area according to the latest composite leading indicators (CLIs). February data show improved performance in the CLI's six month rate of change in most of the major seven economies with the most positive signals observed in the United States, Germany and Canada.

The CLI for the OECD area rose by 0.5 point in February to 109.3 from a revised 108.8 in January. Its six-month rate of change rose for the tenth consecutive month...

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