Hiring in the U.S. remained sluggish in January, as payrolls expanded by a mere 113,000 jobs, well short of the bounce-back of 180,000 to 185,000 new positions that economists expected.
Employers have added just 188,000 jobs in the past two months after averaging 337,000 new jobs per month in October and November, and with other disappointing activity indicators, there are fears the U.S. economy is slowing down.
However, within the second-straight mediocre jobs report, there were some bright spots. More than two-thirds of the job additions in January came from the industrial sectors. Manufacturing added 21,000 jobs, construction payrolls grew by 48,000, and mining contributed 7,000 new positions. Compared to a year ago, there are 93,000 more people working in manufacturing.
The national unemployment rate ticked down a tenth of a percentage point to 6.6 percent. The labor participation rate, meanwhile, edged up 0.2 percent from a 30-year low in December to 63.0 percent, meaning Americans were coming back into the labor market.
The January report was better than December’s paltry data, when just 75,000 jobs were added. Economists theorized tough winter conditions affected hiring numbers at the end of last year and were hoping for a major revision to the December numbers by the Labor department. However, bad weather did not become a factor, as the agency’s final tally was just 1,000 more jobs.
“It supports the view that momentum is slowing in the first quarter, but it’s too early to draw conclusions and we should not be too pessimistic either,” Thomas Costerg, an economist at Standard Chartered Bank, said to Reuters. Julia Coronado, North America economist for BNP Paribas, echoed that view, telling the New York Times, “We’re not seeing the takeoff… but it’s not a disaster. The 113,000 figure is definitely way below trend, but we want another month or two of data before we can draw conclusions.”
That is likely the same view the Federal Reserve will take if it decides to stop pulling back its economic stimulus measures, economists said. The Fed has reduced its bond-buying program to $65 billion per month from the original monthly $85 billion, saying the economy had improved enough.
Local, state, and federal governments continued to slash jobs in January. Government employment decreased by 29,000 positions, including 8,500 cuts to the U.S. Postal Service. Another sore point was computer and electronic products manufacturing, which cut another 2,300 jobs and is operating with 18,200 fewer workers than a year ago.
Trade Gap Widens in December but Is Smallest in 4 Years
The monthly U.S. trade gap ended 2013 on a down note, as December exports of goods and services fell by $3.5 billion from November, which resulted in a 11 percent widening of the moving deficit to $38.7 billion. However, American businesses for the year sent a new all-time-high $2.27 trillion in foreign shipments, and the nation’s $471.5 billion trade deficit is the lowest since 2009.
Total exports last year surpassed 2012′s former high of $2.21 trillion. That helped shave the trade gap by 12 percent, as the U.S. also lowered its imports. Last year, the nation sent record numbers of intermediate goods, consumer goods, capital equipment, autos, and food, and it lessened demand for foreign products by $7.8 billion compared with 2012. While the U.S. imported more consumer goods, autos, capital goods, and food, consumption of industrial supplies and materials produced by other nations fell a precipitous $50 billion, and total imports ($2.74 trillion) fell for the first time since 2009.
Of no surprise, the domestic energy rebirth significantly impacted the nation’s trade of fuel products. The country exported a record $137 billion in petroleum products, a 10 percent increase over 2012, while petroleum imports fell by 11 percent to the lowest level in three years. The net result was a more than 20 percent slash to the deficit in petroleum products, bringing it to a four-year low. Crude oil imports were also down 13 percent.
“The trade deficit will continue to narrow a bit over the course of 2014, mostly thanks to a smaller petroleum trade deficit,” Ryan Wang, HSBC Securities USA economist, predicted to Bloomberg. “The reduced U.S. dependence on imported energy is quite an important factor,” added David Sloan, another economist, about the narrowing deficit.
December’s trade shortfall was worse than the $36 billion that economists forecast, and up from the revised $34.6 billion gap in November; that month’s gap was originally reported to be $34.3 billion. Imports inched up by 0.3 percent to about $230 billion, while the U.S. sent abroad $191.3 billion in exports. Shipments of industrial supplies, capital goods, vehicles, and consumer products all fell for the month. But petroleum exports reached a record-high $13.5 billion.
Trade imbalance with China in December shrunk by over 9 percent to $24.5 billion, on a 6.4 percent drop in imports. The U.S. finished off the year at a $318.4 billion shortfall with China, the deepest gap ever and 1 percent more than 2012. Meanwhile, shortfalls with the other major trading partners — Canada, Mexico, the European Union, and Japan — worsened in December.
Fuel Efficiency, Weight Reduction Benefit Auto Plastics
Recessionary conditions impacted the European market for automotive plastics last year, as car sales and production shrunk, but the region’s fuel-efficiency and environmental regulations will continue to sustain growth for materials such as polypropylene (PP), acrylonitrile butadiene-styrene (ABS), and polyurethane (PU). However, coming on their tails are composites that are targeting replacement of virgin polymeric materials in various applications.
Frost & Sullivan, the analyst firm, calculated that the European auto plastics market in 2013 was $4.22 billion. Even as the European car market slumped for the sixth straight year to a two-decade low of 11.8 million units, plastics as a materials group will maintain a steady market course because of their performance advantages. They enable lighter cars, which, in turn, means better fuel economy; Frost & Sullivan estimates a fuel savings of 5 to 7 percent for every 10 percent drop in vehicle weight.
“Regulations demanding the reduction of carbon dioxide emissions from passenger and light commercial vehicles by 2020 are compelling automotive component manufacturers and OEMs to substitute metal parts,” added Soundarya Shankar, a Frost & Sullivan research analyst. Shankar also said plastics are replacing metals because of continued improvements in heat, chemical, and impact resistance performance as well as lower part production costs.
But within the plastics segment, changes are afoot, as reinforced blends and composites, with their high strength-to-weight ratios, offer excellent benefits for durable lightweight structures and components. Save for their use in the most high-end and exotic car models, currently holding them back from mass-market, high-run applications are their high raw-material and part-making costs as well as long production cycle times.
Plastics have done a good job of replacing metals in under-the-hood (UTH) applications, as carmakers seek ever more weight reduction and design flexibility. And they have, for years, been strongholds in interior applications, from ABS and PP instrument and door panels to PU car seats. Still, these applications are maturing, and Shankar said future growth for the materials lies in UTH and exterior uses.
Indeed, PP resin makers and vehicle part makers have been working on developments that aim to replace polyamides (nylon) in intake manifolds, headlamp housings, and grille housings.
Europe’s main auto industry group foresees a 2 percent rebound in car sales this year, with market recovery in three of the five biggest markets. Auto demand in Germany, France, and Italy is expected to see upswings, following the sales growth seen in Britain and Spain last year. Capacity utilization at European car manufacturing plants was just 75 percent in 2013.
Frost & Sullivan forecasts the European auto plastics market to reach $7.26 billion by 2019.