NAM: Tuesday Economic Report
Despite a dramatically altered labor market, manufacturers consistently suggest that they have trouble attracting and retaining sufficient workers. More than 77% of small and medium-sized firms expect to continue struggling to identify talent in 2021 and beyond, according to a new survey from The Manufacturing Institute and BKD, a national CPA and advisory firm.
The December survey reported 475,000 manufacturing job openings, pulling back for the second straight month but continuing to be solid overall. In the larger economy, nonfarm business job openings increased to 6,646,000 in December, a five-month high. The December figure translates into 1.62 unemployed workers for every one nonfarm business job opening in the United States.
The National Federation of Independent Business reported that the Small Business Optimism Index dropped from 95.9 in December to 95.0 in January, its lowest level since May 2020, with small business owners expressing anxiety about the economy and the political landscape.
Consumer sentiment declined to a six-month low, according to preliminary data from the University of Michigan and Thomson Reuters. The weakened economic assessment was most profound for households with incomes of less than $75,000.
Initial unemployment claims totaled 793,000 for the week ending Feb. 6, a five-week low. Insurance claims remained highly elevated, illustrating continuing pain in labor markets.
Meanwhile, 20,435,018 Americans received some form of unemployment insurance benefit (including state and federal programs) for the week ending Jan. 23. That figure was higher than the previous week, largely from increased pandemic assistance, reflecting new legislation passed at year's end.
Consumer prices rose 0.3% in January. However, excluding food and energy, costs remained flat for the second straight month. On a year-over-year basis, core consumer inflation rose 1.4% since January 2020, reflecting some stabilization in pricing pressures in recent months.
Manufacturing production increased in December for the eighth consecutive month, albeit with output remaining 2.6% below pre-pandemic levels. This week, the Federal Reserve will release an update for January, likely stretching the growth in output in the sector to nine months.
Other highlights this week will be January releases for housing starts and retail sales. Consumer spending has been disappointing in recent months, and that trend will likely continue in the latest update. However, new residential construction should remain a bright spot.