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Core business sales can't support 220,000 new jobs monthly

Staff writer ▼ | December 11, 2015
October’s core business sales fell by -0.3% from September 2015 and were up by merely 1.3% from October 2014.
Worker job
Analysis   Private-sector might do well to average 165,000 new jobs
The core business sales measure excludes identifiable energy product sales from the sales of manufacturers, retailers and wholesalers.

Even if core business sales post back-to-back monthly increases of 0.5% in November and December, the metric’s yearly increase would drop from Q4-2014’s 5.1% and Q3-2015’s 1.8% to 1.5% for 2015’s final quarter, writes John Lonski, Chief Economist, Moody’s Capital Markets Research.

The latter would be the worst such performance by core business sales since the -4.2% yearly plunge of 2009’s final quarter.

During the mature phase of the previous two economic recoveries, core business sales slowest annual rates of growth by quarter were the 3.6% of Q1-2007 and the 2.3% of Q3-1998.

Unless core business sales accelerate sufficiently, private-sector payrolls’ average monthly increase of 220,000 new jobs for the year-ended November 2015 will prove to be unsustainable. Private-sector payrolls might do well to average 165,000 new jobs per month during the year-ended November 2016.

Moreover, the well below-trend performance by core business sales warns of a notable increase in the number of high-yield downgrades that is already well underway.