Job openings provide little comfort

The economy is starting to rebound but the labor market is not yet responding. The Job Openings and Labor Turnover (also known as JOLT) showed that the number of job openings in the U.S. was little changed at a series low level of 2.4 million at the end of July, the Bureau of Labor Statistics reported.

It's probably going to be sometime near the end of the year or next before the economy starts consistently generating new jobs, and much depends on the strength of the recovery.

Global PMI moves above 50

With all the bad news we continue to see in the labor market (yes, the trend is favorable but 200,000+ declines in payrolls for 12-consecutive months highlights the severity of the recession), I wanted to take a moment to point out another batch of decent news.

Yesterday, the JPMorgan Global All-Industry Index jumped from 48.2 in July to 52.1 in August, the first time it has been above 50 - the line that marks contraction and expansion - since May 2008 and the highest level since December 2007, when the U.S. economy first entered the recession.

"The manufacturing sector continued to lead the rebound in global economic activity. Manufacturing production levels rose for the third month running and to the greatest extent since April 2006. Meanwhile, service sector activity rose slightly for the first time in fifteen months," the survey revealed.

The U.S. consumer remains unconvinced and companies continue to shed employees. But after watching the global economy go into a free-fall late last year, it is heartening to see the economy begin to rebound.

Job losses mount, unemployment rate at 26-year high

Companies shed another 216 payrolls in August and the unemployment rate jumped from 9.4% to 9.7%, the highest level since the 1982 recession.

The economy is moving forward but uncertainty and a focus on the bottom line continues to force job cuts.

More is available on what is starting out as a “jobless recovery” at Examiner.

Natural gas bubbles over

There’s plenty of natural gas in storage as the country nears the end of summer.  Coupled with weak industrial activity, prices are holding at multi-year lows.

Earlier today, the Energy Information Administration reported that supplies increased 65 billion cubic feet to 3,323 bcf in the last week, which is 489 bcf higher than last year at this time and 501 bcf above the 5-year average.

Unless a major hurricane in the Gulf of Mexico disrupts production or we have an early and frigid start to winter, home owners who rely on natural gas to heat their homes should get a pleasant surprise when they open their heating bills this winter.

And that will provide consumers with extra cash to either spend, save, or pay down debt.

Weekly jobless claims stuck at high altitude

We’ve been seeing a number of signs that the economy is on the mend.  Housing is in an upward trend and manufacturing has begun to improve. 

However, consumers remain reluctant to spend and the broader-based service sector has lagged and remains below 50. See chart below.

Hence, we haven’t seen the improvement in weekly jobless claims that would signal a more robust recovery.

Details available at Examiner.com.

Baltic Dry Index flashing yellow

A recent article in the Financial Times indicated that  the world’s largest commodity trading houses have turned upbeat on economic growth, signaling firmer raw materials prices in the second half of the year.

After peaking at 615 in July 2008, the CRB’s Continuous Commodity Index fell 48% to a three-year low in December before beginning a rally that has been driven by demand from China and speculation that the world economy is set to recover.

Strength in commodity prices is a strong sign that demand around the world is picking up, though some of the increases may be traced back to speculators who are also betting on a global recovery.

Much of the economic data in the U.S. are flashing green, and China’s GDP took off in 2Q, but not all forward-looking indicators are signaling a global recovery is at hand.

That brings us to the Baltic Dry Index. The Baltic Dry Index tracks shipping rates for various dry bulk cargoes, which includes many raw materials.

Not surprisingly, shipping rates are based on supply and demand.

After peaking at nearly 12,000 in May 2008, prices literally collapsed, and the Baltic Dry Index settled around 670 six months later, or a whopping 95% drop in prices!

Clearly, the magnitude of the drop underscored the severity of the global recession in manufacturing that followed the demise of Lehman Brothers and the seizing up of credit markets.

Prices rebounded nicely as China resumed the importation of raw materials, but after peaking in early June, the Baltic Dry Index is 40% off its peak.

The decline suggests a note of uncertainty is in the air because the index is difficult to manipulate.  Moreover, weakness in shipping rates for raw materials may be signaling sluggish demand, which may be a sign that the rally in commodity prices could stall. 

Whatever the end result, the drop in the Baltic Dry Index bears watching.

Pending home sales in upward trend

Pending  home sales increased by 3.2% to 97.6 in July, the sixth-consecutive monthly gain and the longest winning streak since the index  began back in 2001.

Pending home sales are contracts for existing homes that have been signed but not yet closed, and it is designed to forecast existing sales about two months out.