USA: Jobs being created, but consumer expectations dampened

In January, the number of employed persons in the United States rose far faster than expected, as is revealed in the latest labour-market report. The total came to 304,000 persons, and of that figure no less than 72,000 of the jobs were in manufacturing. In the service sector, almost all segments benefited, whereby the leisure-time, hospitality and healthcare sectors really stood out. This momentum is unlikely to persist in the coming months, or so the slightly cooler economic climate would suggest.

Firstly the temporary shutdown of some federal agencies and secondly the updated estimate for the total population both left their mark on the jobless statistics, which are calculated separately on the basis of phone surveys. An unemployment rate of 4.0% is reported for January. Since the prior monthly data have not been recalculated, the ratio is not directly comparable with the previous month. Irrespective of these statistical adjustments, it is running at an historical low.

Given robustly dynamic hiring, wage increases were comparatively low, however. Compared to December, the average hourly wage rose by only 0.1%, meaning the wage increase when extrapolated for the year comes to 3.2% down from 3.3%.

This and the uncertainty that has arisen owing to the hardened political fronts between the Democrats and the Republicans, and between them and the President, too, were presumably the factors that have led to consumer sentiment dimming. For the second consecutive month, in January US consumer expectations were visibly dented. This emerged from the survey conducted by the Conference Board organisation. Consumers’ assessment of the current situation is more or less unchanged and at a high level. However, overall the consumer climate is now at the lowest point in almost one and a half years.

In line with this picture is the fact that the increase in consumer spending is no longer nearly as zestful as it was last year. Since private consumer spending is the single most important driver of the US economy, growth in the latter is likely to be only about 2% in 2019, as against just short of 3% in the previous year. In the final analysis, the dynamism in consumer spending will slow but is not about to be stifled. That said, many US private households are now presumably wondering how long they will manage to survive without wage payments and for this reason also be more restrained in their attitude to spending. This is especially true for employees of the federal government. After all, if the politicians cannot agree on a compromise, there is the threat of the next “shutdown” in just under two weeks’ time.

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