US job openings and small business activity at record high
The second-quarter economic outlook also got a boost from other data yesterday showing a solid rise in wholesale inventories in April, as stabilising oil prices helped lift sales by the most in more than a year.
The US Government’s Labour Department said job openings increased to 5.4 million in April, the highest since the series began in December 2000, from 5.1 million in March.
The economy contracted in the first quarter and growth got off to a slow start in the second quarter, in part because of the lingering effects of a strong dollar and spending cuts in the energy sector.
However, a surge in job growth and car sales — as well as gains in May factory activity — suggest the economy is strengthening.
In a separate report, the National Federation of Independent Business said its Small Business Optimism Index rose 1.4 points to 98.3 in May, the highest reading since December.
Prices for US government debt were trading lower, while US stock indices were largely unchanged. The dollar rose against several currencies.
In another report, the US Commerce Department said wholesale inventories rose 0.4% after rising 0.2% in March. Economists polled by Reuters had forecast wholesale inventories rising 0.2% in April. Inventories are a key component of GDP changes.
The component of wholesale inventories that goes into the calculation of GDP — wholesale stocks excluding cars — rose 0.2%, suggesting inventories will probably be a modest boost to growth in the second quarter.
Sales at wholesalers surged 1.6% in April, the largest rise since March of last year. Sales had been weak since last August, in part due to the negative impact of lower oil prices on the value of petroleum goods sales.
That had led to an accumulation of inventory, leaving wholesalers with little appetite to buy more merchandise. At April’s sales pace it would take 1.29 months to clear shelves, down from 1.3 months in March.
An inventory-to-sales ratio that high usually means an unwanted inventory build-up, which would require businesses to liquidate stocks. That would weigh on manufacturing and economic growth.
Some economists however, caution against reading too much into the elevated inventory-to-sales ratio, given the role that oil prices have played in depressing the value of petroleum goods sales.
Still, they expect an inventory drawdown in the quarters ahead, which is one of the reasons for less upbeat second-quarter GDP growth estimates.
