There were two important reports on the U.S. economy released this morning. First, total industrial production in America rose in September by 0.3 percent, according to new data from the Federal Reserve Board of Governors. That was better than expected, the fourth monthly increase in a row, and annual growth lifted to the highest reading since 2010. Under the hood, construction fell sharply in September, but this was likely a temporary disruption related to hurricane Florence. Further, large gains were seen in spending on business equipment and mining, and manufacturing activity also firmed. As for capacity utilization, this leading indicator of inflation and potential output climbed in September to the highest level since April.
Elsewhere, the latest job openings and labor turnover survey (JOLTS) from the Bureau of Labor Statistics showed that there were 7.136 million job openings in America in August (lagged release). That was much better than expected and a new all-time high. Total hires also climbed to a record level in August, but vacancies continued to rise at a much faster pace, highlighting the challenges many businesses face competing for talent. Moreover, the number of unemployed Americans per job opening held below 1.0 in September, signaling more unfilled positions than out-of-work individuals, and the ratio of quits to layoffs and discharges remained elevated. Altogether, this report provided more evidence of a tight labor market that is enabling U.S. workers to give up their current job security for better employment opportunities. Although supportive of wage growth, this environment can also lead to higher consumer inflation as businesses try to pass on the rising cost of labor.
Sources: Econoday, FRBG, U.S. DoL, FRBSL
Post author: Charles Couch