KEY DATA: Trade Deficit: $38.8 ($0.2 billion wider); Job Openings: down 180,000; Claims: 350,000 (down 12,000)
IN A NUTSHELL: "The global expansion has to pick up steam if our exports are to rise."
WHAT IT MEANS: The trade deficit widened a touch in August but the details were not that bad. Exports were off modestly, but much of the decline was in things such as monetary gold and petroleum. That does not indicate any major problem with U.S. competitiveness. Indeed, we did sell more capital and consumer goods as well as vehicles. That seems to point to an export sector that is doing okay. The only concern is that food exports were off. However, food export prices are falling and that may explain the drop. As for imports, they were off as every segment except capital goods demand was down. Whether that was a temporary pause or a trend is not yet clear.
As for the labor market, jobless claims eased last week but the data remain roiled by continued computer problems in California. I guess John Arbuckle was right, "you get what you pay for" and going with a low price provider seems to have cost both California and the ACA/Obama Administration dearly. The government shut down also distorted the numbers as some workers applied for unemployment insurance. Job openings fell in July but that was probably due to a rise in hiring and a slowdown in terminations. Firms are adding workers but also doing their best to retain workers. The threat is that when the job market gets tight, turnover will soar so companies are becoming afraid. Not enough for them to raise wages, but afraid nonetheless. They have every good reason to be so.
MARKETS AND FED POLICY IMPLICATIONS: These data are not particularly current but they do point to continued economic lethargy. Fed members, including Janet Yellen, watch the JOLTS data closely and they would love to see opening rise along with hiring. That would indicate a firming in the labor force, which has yet to happen. What is happening with the unemployment numbers is anyone's guess, as the data remained messed up. We may not know what the real level is for a few more weeks. If it is near the current number, that would not be good news. It would be better if they fall back closer to the 300,000 level we had been seeing. As for the markets, these numbers will not likely be much more than the tree falling in the forest. Earnings are more important right now.