6/9/2015
By Jennifer Coombs

It’s quite apparent that the hawks of the Federal Reserve will have quite a few things to talk about based on the data from the Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics. For the month of April, the JOLTS report noted that job openings surged to 5.376 million, which was far above the consensus estimate for 5.038 million and much higher than the high-end of the consensus range at 5.05 million. This reading is the highest reading in the survey’s history, going back to 2000. This resulted in the jobs opening rate increasing to 3.7% from 3.5% in the prior month.  Additionally, this report ought to be in favor of the Fed hawks in that the slack in the labor market is evaporating, and employers will be left with the only option to raise wages in order to get positions filled. Other readings include a lower tick for the quits rate, which dropped to 1.9% and lower tick of the separations rate to 3.5% from 3.6%. Overall, it’s apparent that less people are being laid off and quitting, but this surge in openings ought to be beneficial to those who have been seeking employment for some time.

Additionally, at the wholesale level inventories relative to sales have lightened up in April with inventories up about 0.4%, but far below the massive 1.6% monthly surge in sales. This resulted in a well-needed decline in the sales-to-stock ratio which dropped to 1.29 from 1.30 in the prior month. In the auto sector, where sales have really been strong, there was a big drop in the stock-to-sales ratio, as well as declines in the ratio for farm products, furniture, computer equipment, and electrical goods. Sales among all of these categories showed not only a drop in inventories, but a big rise in sales, which led to lower stock-to-sales ratios relative to the prior month. Early indications on inventories in Q2-2015 have been favorable with the risk of overhang, which was primarily evident in Q1-2015, but is now easing. On June 11^th, we will receive a reading on business inventories which will round out this related data for April.

Lastly, the US small business optimism index came in well above expectations, at 98.3 for a very solid 1.4 point gain from April's 96.9 and compared with the consensus estimate of 97.2. The details in the report hint towards the big second-quarter rebound that many have been expecting. 

Jennifer Coombs
Wall Street Strategies

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