There were a few important reports on the U.S. economy released this morning. First, data from Challenger, Gray & Christmas showed that there were 29,831 corporate layoffs announced in America last month. That is a 7.8 percent decrease from September and 3.0 percent lower than this same period last year. 2017-to-date, 351,309 job cuts have been announced, the lowest 10-month total since 1997. Similarly, a report from the Bureau of Labor Statistics (BLS) showed that first-time claims for unemployment benefits in America fell this month to a roughly 44-year low after a hurricane-related spike in September. John A. Challenger, chief executive officer of Challenger, Gray & Christmas, added that “companies are currently holding on to their workforce,” but stressed that “another downturn could be on the horizon for early to mid-2018 and with it, the large-scale layoff announcements that typically follow. Adding to this is the possibility that global factors, including Brexit, could usher in a recession.”
Elsewhere, a report from the Bureau of Labor Statistics (BLS) showed that nonfarm business sector labor productivity rose by 3.0 percent during the third quarter of 2017, as output (+3.8 percent) increased faster than hours worked (+0.8 percent). That is much better than the 2.5 percent gain economists had anticipated and the best quarter for growth since 2014. The latest improvement has been driven in part by firming economic activity (GDP), and overall productivity during the first three quarters of 2017 looks a lot better than it did in 2016. However, productivity growth in America remains below the average seen during past business cycles, which is discouraging because Federal Reserve Chair Janet Yellen described productivity growth as the “most important factor determining continued advances in living standards.” Muted business investment has been a major drag on productivity growth in recent years, as companies have relied more heavily on boosting staff sizes to meet increased customer demand rather than investing in technology and education to increase efficiency. On the bright side, the latest GDP reports suggest that business investment is improving.
Sources: Econoday, Bloomberg, ZH, Challenger, Gray & Christmas, U.S. DoL, FRBSLPost author: Charles Couch