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US weekly earnings slow

By Colin Twiggs
September 7, 2016 9:30 p.m. EDT/11:30 a.m. AEST

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I pointed out several weeks ago that US GDP growth was slowing but was not too concerned because jobs numbers continue to improve. Now I am starting to see further signs that the economy is slowing.

The Institute for Supply Management updated their Non-Manufacturing Index on September 6th:

In August, the NMI® registered 51.4 percent, a decrease of 4.1 percentage points when compared to July's reading of 55.5 percent, indicating continued growth in the non-manufacturing sector for the 79th consecutive month. A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting......

But there is weakness in Manufacturing, as the ISM reported last week :

Manufacturing contracted in August as the PMI® registered 49.4 percent, a decrease of 3.2 percentage points from the July reading of 52.6 percent, indicating contraction in manufacturing for the first time since February 2016 when the PMI registered 49.5. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.....

A 10-year graph of Manufacturing PMI shows that whipsaws around the 50 level are fairly common and not cause for alarm. A decline below the December 2015 low of 48.0, however, would be cause for concern.

Manufacturing PMI

Source: quandl.com

Of greater concern is the declining growth of estimated weekly employee earnings which closely follows GDP. Weekly employee earnings — estimated by multiplying Total Non-farm Payrolls by Average Weekly Hours (Total Private) and Average Hourly Earnings — have held around the 4.0 percent level since early 2014 but are now tracking the decline of GDP. Further falls in Nominal GDP, below 2.43% p.a. from the second quarter, now appear likely.

Estimated Weekly Employee Earnings

Source: FRED/ US Bureau of Labor Statistics



Firmness, both in sufferance and exertion, is a character which I would wish to possess. I have always despised the whining yelp of complaint and the cowardly, feeble resolve.

~ Robert Burns

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