Tags: jobs | growth | confidence | Washington

Small-Business Hiring Falls for 6th Straight Month in Worrisome Trend

Small-Business Hiring Falls for 6th Straight Month in Worrisome Trend
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Tuesday, 29 August 2017 12:48 PM Current | Bio | Archive

INDICATOR: August Consumer Confidence, Small Business Hiring and June Housing Prices

KEY DATA: Confidence: +2.9 points; Current Conditions: +5.8 points/ Jobs Index: -0.02%/ National Home Prices (Over-Year): +5.8%

IN A NUTSHELL: “Despite the chaos in Washington, consumers remain upbeat and that holds out hope that spending will be solid this quarter.”

WHAT IT MEANS: Washington is a mess and nothing is getting done on anything, while Houston is in the midst of a massive disaster that will require months if not years to overcome (given my experience with super storm Sandy), but consumers remain upbeat. The Conference Board’s Consumer Confidence Index rose in August as respondents’ perception of current conditions picked up sharply. The current conditions index is near its all-time high. Business conditions and the labor market are both seen as having gotten better. However, looking outward, impressions were more mixed as to the availability of jobs and the likelihood that economic activity will accelerate. The cut off point for the survey was August 16th, so any impact of Charlottesville and Houston may not have been fully factored into the numbers.

Friday we get the August jobs numbers and today Paychex released its index of small business employment. The measure declined for the sixth consecutive month, though the decline in August will be modest. That raises questions about how many new jobs will be reported on Friday, as it is hard for the solid payroll gains we have seen to be sustained if the small business sector isn’t adding workers.

The housing data, including sales and construction, have been bouncing around, but one number has been on a fairly steady upward trend: Prices. That pattern was reinforced as the S&P CoreLogic Case-Shiller U.S. National Home Price Index rose solidly in June and over the year. Sixteen of twenty major metro areas reported prices increases over the month. Only Atlanta, Chicago, Cleveland and New York were down, on a seasonally adjusted basis. The national index is now 4.3% above the prior, housing bubble peak.

MARKETS AND FED POLICY IMPLICATIONS: All thoughts are with Houston, but as is the case with investors and economists, the catastrophe is being looked at in terms of the impact on the markets and growth. As is usually the case with natural disasters, the short-term impact is likely to be negative. But the rebuilding will create massive amounts of new activity. It is also likely that Congress will pass a major recovery bill. (It is doubtful the Texas Congressional delegation will require the increases in spending be met by spending cuts elsewhere, as many did with Sandy. Those of us who were flooded out and had to live through that debate have not forgotten those no votes.) So the fourth quarter should see a lot of activity that would not have happened without the storm. Thus, we could see a slight reduction in third quarter growth but a faster fourth quarter and a little better first half of 2018. Investors will parse that as to who will be the winners and losers, especially since there will likely be a lot of home and infrastructure-rebuilding occurring paid for by a lot of insurance claims and government assistance.

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.

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Paychex released its index of small business employment. The measure declined for the sixth consecutive month, though the decline in August will be modest. That raises questions about how many new jobs will be reported on Friday.
jobs, growth, confidence, Washington
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2017-48-29
Tuesday, 29 August 2017 12:48 PM
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