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A behind-the-scenes look at job conditions

The monthly job report from the Bureau of Labor Statistics is just one of many barometers economists use to judge the health of the labor market. Other reports receive less attention than the monthly job report, but are equally valuable. The weekly report of initial unemployment claims provides a more timely measure of the stability in jobs; the current level of claims is 267,000. Weekly claims have been below 300,000 for 57 consecutive weeks, the longest stretch since 1973. Employers appear more willing and able to retain qualified and experienced workers.

The Job Openings and Labor Turnover Survey (JOLTS) report is quickly becoming a valuable source for examining the condition of the job market. This report provides detailed information on conditions surrounding job changes and openings. For instance, level of "hires" increased 3.8 percent in February, the strongest level in almost 10 years. The "quits" rate, which reflects the willingness of people to leave a job voluntarily, rose by 3.5 percent. People are more willing to leave a job when they feel job conditions are ripe for getting a better job. Job openings declined 2.8 percent in February. The number of available jobs has continued to grow since 2010. The current job opening rate is 3.7 percent, close to the high rates seen back in 2001. The strong rate signals that the pace of hiring should continue at least through this year.

Other Key Indicators this Week:

Trade Deficit – The trade deficit widened to minus $47.1 billion in February. This represents an increase of 2.6 percent, the largest deficit in six months. Exports increased for the first time in five months, but not enough to counteract the 1.3 percent increase in imports. Weak foreign economies continue to diminish demand for U.S. goods. Shipments of industrial supplies, including petroleum, chemicals and steel, fell to the lowest level in six years. Consumer goods and autos led the increase in exports. On the other side, the U.S. imported the largest amount of food, feed and beverages on record. Crude oil brought in by the U.S. was at its lowest level since 2002.

Factory Orders – The manufacturing sector remains distressed. Factory orders fell 1.7 percent in February and were revised lower for January. Weak demand here and abroad, coupled with a stronger dollar, continues to hamper improvements in the manufacturing industry. Core shipments, a proxy for business investment, are down 8.5 percent since the beginning of the year – below the minus 5.1 percent level in the fourth quarter. Most economists will agree that the lack of business spending is hurting economic growth, creating a larger drag on GDP in the first quarter than in the fourth quarter of 2015.

Consumer Credit – Household borrowing increased 1.2 percent in February. The increase of $17.2 billion was led by a gain of $14.3 billion in non-revolving debt, the smallest gain in three months. Non-revolving debt includes student loans and auto loans. Credit card debt reversed course in February, soaring by $2.9 billion, following a decrease of $243 million the month before. Consumers apparently were good about paying down balances after the holidays, so they could start spending again.

Strategically for Credit Unions:

Auto and mortgage loan rates remained basically unchanged last month. In fact, mortgage rates are seven basis points lower than a year ago. Yields on Treasury securities continue to decline due to global economic weakness, low inflation and a Federal Reserve wanting to proceed cautiously. I suspect this will be the story for the remainder of 2016.

Sarina Freedland – Senior Investment Officer

Although this information has been obtained from sources we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. All herein listed securities are subject to availability and change in price. Past performance is not indicative of future results. Changes in any assumption may have a material effect on projected results.

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