Blockbuster January retail sales presage gains in jobs
Blockbuster January retail sales presage gains in jobs
(Dan here…late posting)
[NOTE: I’ll report separately on industrial production later this morning. Real retail sales is my bellwether for the health of the consumer. And after 3 months of declines, we got a huge upturn in January. Before adjusting for inflation, retail sales jumped 5.3% – not annually, 5.3% in one month! After adjusting for inflation, sales were up 5.0%, to a new all-time high:
This is simply very good news and adds to the evidence. Once the pandemic is under control, the economy is going to accelerate.
I use retail sales as a very good short leading indicator for employment. Because the series is somewhat noisy, I use the YoY% change (which was up 6.0% in real terms) to anticipate what is likely to happen with the jobs numbers several months down the road.
And once again, the news is good, both for overall jobs (red) and for the more granular number of aggregate hours of employment (gold):
The YoY growth in sales in the past 5 months has been equivalent to that during most of 2010. While neither jobs nor hours growth matched the growth rate quickly thereafter, the comparisons consistently got better and better.
Because temporary help jobs lead overall employment, the graph compares sales (blue), jobs (red), and temporary help jobs (green) YoY:
Because of this month’s good news is retail sales, I expect to see further gains in temporary help in next month’s jobs report (perhaps turning positive YoY), which is already presaged by the weekly Temporary Staffing Index having turned positive in the past several weeks.
For the past 2 months I have written that;
“I continue to expect employment to continue to rise – with a lag, and quite possibly a pause during this winter as the pandemic continues to rage – to match the level of sales.”
Last month I added that;
“We certainly got the ‘pause’ in December’s employment report, and if we get more initial jobless claims reports like yesterday’s, a further downturn. I still expect employment to rise to meet sales once the winter surge in cases and shutdowns of outdoor activities including dining both abate.”
That is still my opinion, reinforced by this morning’s retail sales report.
let’s not forget that these reports are seasonally adjusted, and that retail sales weren’t really 5.3% greater in January than in December…unadjusted retail sales (extrapolated from surveys of a small sampling of retailers) indicate sales actually fell 17.3%, from $616,649 million in December to $509,802 million in January…the seasonally adjustments to change that to a 5.3% increase are based on historical trends, which might not have much validity in the midst of pandemic related lockdowns and other shifting of spending trends….ie, since the pandemic has hit services worse, there’s been some shifting of services spending to retail spending, while services jobs are lost…so while the jobs report also reflects seasonal adjustments and might show a related jobs increase, i wouldn’t be hanging my hat on the report of such a metric as particularly indicative of “the health of the consumer”…
hi rjs.
How is the weather treating you?
https://www.nytimes.com/2021/02/21/business/economy/pandemic-economic-boom.html?smid=tw-share
On the Post-Pandemic Horizon, Could That Be … a Boom?
Signs of economic life are picking up, and mounds of cash are waiting to be spent as the virus loosens its grip. …
Run, re weather, it seems like i’ve been shoveling snow every day for years…
it’s also an interesting question re retail sales, since seasonal adjustments are based on the normal trend…January here in Ohio wasn’t as bad as it’s been, but where it would matter most would be in the major population centers, and i don’t have a good sense of that..