Sorry for no note earlier this morning as I had some travel issues.
Let’s be honest, Jay Powell said nothing new and only just reaffirmed what we’ve heard from all of his colleagues over the past few weeks. I believe the reaction was more due to ‘no news is good news’ and it being the last day of the month.
Quantifying the job losses in tech, Challenger’s labor report today said the sector announced 52,771 jobs cuts in November, “for a total of 80,978 this year. This is the highest monthly total for the sector since the firm began keeping detailed industry data in 2000. It is the highest YTD total for the sector since 2002, when 128,563 Tech sector cuts were recorded through November and 131,294 for the year. This year’s tech cuts are 535% higher than the 12,761 cuts announced through the same period in 2021.”
Job cuts of note were also seen in the auto sector as well as financial technology and the real estate industry with the latter well explainable.
With respect to initial jobless claims, for the week ended November 26th they totaled 225k, 10k below expectations and after last week’s 241k print (revised up by 1k). Keep in mind that the Thanksgiving holiday likely distorted this figure. The 4 week average was 229k, near a 3 month high. Of note happening the week before and pointing to a slowing jobs market in terms of overall hiring, continuing claims are now above 1.6mm at 1.61mm, about 40k more than expected, up from 1.55mm in the week before and the most since March.
Initial Claims 4 Week Avg
Continuing Claims
The PCE October inflation deflator was up .3% m/o/m headline and .2% core, about as expected when you include the September slight upward revision (decimal points). The y/o/y gain was 6% headline and 5% core. As seen with CPI, goods prices continue to moderate in its rate of gain while services inflation keeps accelerating and it is the latter that Powell held on to in still talking tough yesterday about his fight against inflation. Again, PCE understates inflation relative to CPI because of how it over weights healthcare and underweights rents and because of how that healthcare figure is computed.
Inflation breakevens are little changed in response as the figures were about in line. The dollar though continues to weaken and is now at the lowest level since mid August and gold is back above $1,800.
October personal spending was up .8% m/o/m as expected with a pickup in spending on goods (maybe in response to discounting going on) while income was higher by .7%, 3 tenths more than forecasted. On income, transfer payments led the way. Private sector wages and salaries rose .5% m/o/m. As the spending number was as expected, we won’t see any GDP changes today of note. I did see S&P Global lower its Q4 GDP estimate yesterday to zero.
Quickly overseas, November manufacturing PMI’s in Asia that were below 50 was seen in Taiwan, South Korea, Japan, Vietnam and Malaysia. Those above were in India, Thailand, Indonesia and the Philippines. China’s private sector Caixin manufacturing index was 49.4 vs 49.2 in October.
The November Eurozone manufacturing PMI was revised slightly lower to a still weak 47.1 while the UK print was revised up to 46.5 from 46.2 but still below 50.
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.