Summer spending to show signs of a heating up economy
Monster Senior Vice President Joanie Courtney weighs in on what to expect in the May Bureau of Labor Statistics jobs report.
Things continued in the right direction for the U.S. economy at the start of Q2. The economy added 288,000 jobs and the unemployment rate fell by 0.4 percent to 6.3 in April, according to the Bureau of Labor Statistics (BLS). The April job numbers were better than expected and certainly helped consumer confidence and could lead to an increase in consumer spending this summer. All eyes will be on Friday’s job report to see if the trend will continue.
The good news in the April monthly report was that gains were widespread across a variety of industries: business services, retail trade and food service among them. It will be a good sign if we see an increase in manufacturing, construction and professional and business service sectors.
Automatic Data Processing, a payroll company which releases a monthly report on the state of private sector, showed in yesterday's report the economy added 179,000 jobs in May, a slight decrease compared to April, but “higher than May of last year and in line with the average over the past 12 months,” according to ADP President and CEO Carlos Rodriguez.
Will tomorrow’s BLS report point to an early summer spending spree alongside renewed employer willingness to open up the checkbooks and put new requisition orders in the queue?
Consumer confidence is high
Before we can predict whether companies are ready to flash some cash, it seems sure that consumers have been. Perhaps bolstered by the upsurge in job additions through the first half of 2014, consumer confidence is rose to its second highest level since 2008 in May, according to New York research group The Conference Board.
The labor market’s improvement has had an impact on the index, which held at 83 in May, up from 81.7 in April, according to Bloomberg Businessweek. The average Conference Board index score for the recession era (ending June 2009) is 53.7.
S&P 500 breaks record
A possible indicator of sentiment as it relates to the job world, the Standard & Poors 500 index hit a record high of 1,920.03 May 29. The most recent spike comes by way of favorable bets on second-quarter economic improvement. The S&P broke a record earlier in the month with a May 23 close of 1900.53, spurred by housing market data including increased new and existing home sales for April.
This, along with the onset of summer months, bodes well for the construction industry. April privately-owned housing starts were at a rate 13.2 percent higher than that of March, and 26.4 percent higher than April 2013.
In kind, construction hiring, which was on the steady year-over-year incline until December 2013, has rebounded with a 27 percent year-over-year increase in April, according to Wanted Analytics. Though there were marginally less jobs added in this industry in April compared with March, it’s possible this industry is poised for another spike in May based on the positive April housing industry report.
Summertime, when the spending’s easy
Summer, as we all know by those rampant Out of Office messages, is vacation time for most Americans. This is proving especially true in 2014.
Mintel, a consumer market research firm, in its recent American Lifestyles 2014 report, shows that the consumer group that spends extra money on vacation has doubled over the course of 2013, marking the greatest gain in any one area of consumer spending.
It will be interesting to note how the accommodation and food services job category, which relates to the hospitality industry, fairs in tomorrow’s report. The subset industry transportation and material moving has seen a 52.4 percent increase in jobs over the past 120-day period.
Two quarters, two successes?
If the May numbers show even better gains overall and across a variety of key industries, it will provide an ample sample for 2014 and prove the grave lows of December 2013 to be a true anomaly.
With more data, time and analysis, we might finally be able to say we’ve broken free from the recession and hopefully we can all enjoy a robust economy, strong job growth and some good weather this summer!