1) Job growth in November totaled 266k, well more than the estimate of 180k and the two prior months were revised up by 41k. The 3 month private sector job growth average is 200k. The November figure includes a rebound of 41.3k jobs in vehicles/parts which about reverses the revised decline of 42.8k in October. Education/health care and leisure and hospitality led the increase. Job growth in the household survey did slow to a pace of 83k and which combined with a modest rise of 40k in the labor force, the unemployment rate fell one tenth to 3.5%, matching the lowest since 1969 while the all in U6 rate also fell one tenth to 6.9%. The participation rate though declined by one tenth to 63.2% while the employment to population ratio held at 61%. Hours worked was as expected at 34.4. Average hourly earnings were a touch better than expected when we include the upward revision to October. Average weekly earnings grew by 3.1% y/o/y and is back to growing above 3%.
2) Initial jobless claims totaled 203k, 12k less than expected and down from 213k last week. This brings the 4 week average to 218k from 220k. Because of the holiday and this year Thanksgiving be a bit later than usual in November, the seasonal adjustments are distorted so it’s best to look at the 4 week average.
3) Auto sales in November ran at a 17.09mm SAAR vs the estimate of 16.9mm and helped by record incentives according to JD Power. They said the “Average incentive spending per unit is on pace to reach $4,538, an increase of more than 12% from last year and the first time ever above $4,500. The previous high for the industry was $4,378 set in December 2017.”
4) The preliminary UoM December consumer confidence index rose to 99.2 from 96.8 in November. That is 2.2 pts above the estimate, the best since May and was mostly due to the 3.6 pt rise in Current Conditions. The Expectations component was up by 1.6 pts m/o/m. We can thank the rise in the stock market for the increase as UoM said “Nearly all of the early December gain was among upper income households, who also reported near record gains in household wealth, largely due to increased stock prices and mainly benefiting retirement accounts.” One year inflation expectations fell one tenth to 2.4%. Business expectations improved. Spending intentions did too, in particular to the rise in those that plan on buying a vehicle but home buying plans were little changed. The fly was the 2 pt decline in those expecting Higher Income and the 10 pt drop in the Employment component (but comes after 12 pt rise last month).
5) The Markit services PMI for the Eurozone fell to 51.9 in November from 52.2 in October but that was revised from the initial print of 51.5. Markit said “Worryingly, the service sector is on course for its weakest quarterly expansion for 5 years, hinting strongly that the slowdown continues to spread…Expectations are also among the lowest since the tail end of the sovereign debt crisis in 2013, as firms worry about trade wars, Brexit and slowing economy growth both at home and globally.”
6) The November Eurozone manufacturing PMI was revised slightly higher to 46.9 from its initial print of 46.6 and is up 1 pt m/o/m. It’s still the 10th month in a row below 50. Markit equates the current level of manufacturing with a “contraction in excess of 1%” on a quarterly rate.
7) There was a slight pick up in the UK services PMI for November to 49.3 from 48.6 and better than the estimate of no change. Markit said “Service providers have attributed the recent soft patch to delayed decision making on new projects until greater clarity emerges in relation to the domestic political landscape. Sales to export markets were hard hit in November, as signaled by the steepest fall in new work from abroad for more than 5 years.”
8) The UK manufacturing PMI in November rose .6 pts to 48.9 from the initial print but down from 49.6 in October.
9) The November private sector Caixin services PMI in China rose to 53.5 from 51.1 and that was 2.3 pts better than expected. Caixin said “Companies widely commented on planned company expansions, new projects and an improvement in overall demand conditions.” This said, “business confidence remained subdued, reflecting the impact from uncertainties generated by the China-US trade conflicts. That will restrain a recovery in economic growth. The trade dispute is the major reason behind the slowing economic growth this year, and will become a key factor affecting the stabilization and recovery of China’s economy next year.”
10) The private sector focused manufacturing PMI from Caixin was little changed at 51.8 in November vs 51.7 in October. The estimate was 51.5. Caixin said “China’s manufacturing sector continued to recover in November, with both domestic and overseas demand rising and the employment subindex returning to expansionary territory for the 2nd time this year. However, business confidence remained subdued, as concerns about policies and market conditions persisted, and their willingness to replenish stocks remained limited.”
11) China’s state sector weighted November manufacturing PMI rose to 50.2 from 49.3 and that was above the forecast of 49.5. Services improved to 54.4 from 52.8 and better than the estimate of 53.1.
12) Wage data in Japan, a key missing link in their economy, saw regular base pay rise .6% y/o/y. It doesn’t sound like much but it’s the best since January and follows a pretty disappointing run since notwithstanding the tight market in labor.
13) Japan’s readying a big fiscal stimulus package. I hope it looks different than the previous 20+.
14) The Japanese services PMI in November did lift by .6 pts to 50.3 but comes after a 3.1 pt drop in October. They are dealing with the VAT hike among other things. Markit said “No notable acceleration in news business growth was also seen, suggesting that underlying demand conditions in Japan’s service sector have weakened so far in the fourth quarter.” Japan’s manufacturing index was up .5 pt to 48.9 after 3 months of declines. It’s below 50 though for 9 of the 11 months this year.
15) India’s services PMI bounced to 52.7 from 49.2.
16) Singapore’s PMI came in at 50.4 from 47.4. With Singapore, the domestic side was pretty good but offset by weakness in exports. On the latter Markit said “output volumes were once again reduced and exports plummeted.”
17) South Korea’s manufacturing PMI in November rose 1 pt but is still below 50 at 49.4. Malaysia’s figure was 49.5 vs 49.3. Indonesia’s is higher by .5 pt to 48.2. Vietnam’s was up 1 pt to 51
1) ADP said private sector job growth in November slowed to a pace of 67k, about half the estimate of 135k and October was revised down by 4k to 121k. Smoothing things out has the 3 month average pace of job growth at just 104k vs the 6 month average of 120k, the 12 month average of 159k and the 2018 average of 219k. For the 5th month in the past 7, small businesses with less than 20 employees saw jobs shed. In terms of sectors, the goods producing side saw job losses of 18k with 6k each coming out of manufacturing, construction and natural resources/mining. The services side added 85k jobs which is the slowest since May and the 2nd lowest pace of increase since September 2017. ADP said “In November, the labor market showed signs of slowing. The goods producers still struggled; whereas, the service providers remained in positive territory driven by healthcare and professional services. Job creation slowed across all company sizes; however, the pattern remained largely the same, as small companies continued to face more pressure than their larger competitors.”
2) The November ISM services index fell to 53.9 from 54.7 and that was below the estimate of 54.5. Of particular note is the Business Activity component which fell by 5.4 pts m/o/m to 51.6, matching the lowest level since July 2009. New orders did tick up by 1.9 pts to 57.1 but backlogs held below 50 at 48.5, the lowest since December 2016. In terms of breadth, 12 industries of the 18 surveyed saw growth, the least since January and down from 13 in October. Of the 18, 5 saw a contraction, the same pace as in October. Just 1 industry saw an increase in imports. The ISM said “The non manufacturing sector had a slight pullback in November. The respondents hope for a resolution on tariffs and continue to be hampered by constraints in labor resources.”
3) The November US ISM manufacturing index unexpectedly fell a touch to 48.1 from 48.3 and below the forecast of 49.2. It marks now the 4th straight month of contraction in manufacturing. In terms of breadth, it was as weak as seen in October with just 5 of 18 industries seeing growth. A total of 13 industries are now seeing a contraction vs 12 last month. ISM said “Global trade remains the most significant cross industry issue…Overall, sentiment this month is neutral regarding near term growth.”
4) Construction spending in October fell .8% vs the forecast of up .4% and September was revised down by 8 tenths. Specifically, private residential and nonresidential spending fell for a 2nd straight month m/o/m.
5) The trade deficit in October narrowed to $47.2b from $51.1b in September but for the wrong reasons as imports fell more sharply than exports which dropped too. Imports fell by 1.7% after a 1.6% decline in September at sit at the least since November 2017 with particular weakness in the imports of auto’s and consumer goods. Exports also fell for a 2nd month by .2% m/o/m to the lowest since April with declines in capital goods, auto’s and consumer goods.
6) Distorted by the holidays, the MBA said purchase applications rose .9% but fell 24% y/o/y. Refi’s dropped by 15.6% w/o/w and the y/o/y gain slowed to 61.2%.
7) The Fed’s balance sheet just keeps on inflating, up another $12.8b and now up about $300b over the past few months. “You can check out anytime you like but you can never leave.”
8) Canada said employment fell by a sharp 71.2k in November, much worse than the estimate of an increase of 10k with jobs lost for both full and part time. Their unemployment rate jumped to 5.9% from 5.5%.
9) Industrial production in Germany in October fell 1.7% m/o/m vs the estimate of up .1% and the y/o/y decline was 5.3%. That’s 14 out of the last 15 months with negative prints y/o/y. The German Economy Ministry acknowledged the weakness but expressed hopes for a bottom, “The economic weakness in industry remains. However, the latest development in new orders and business expectations indicate that a stabilizing trend could emerge in the coming months.”
10) German factory orders in October fell .4% m/o/m, worse than the estimate of up .4%. Versus last year, orders fell by 5.5%. This is now 17 straight months of y/o/y declines. The Economy Ministry said “activity in the manufacturing industry is still weak. The manufacturing outlook for the final quarter therefore remains subdued.”
11) Spain’s industrial output in October was also soft, falling 1.3% y/o/y and down by .4% m/o/m.
12) European retail sales in October fell .6% m/o/m, one tenth more than expected but off a lower than initially estimated base as September was revised down by 3 tenths.
13) Australia’s services PMI fell back below 50 at 49.7, down .4 pts m/o/m.
14) Hong Kong’s PMI, for reasons we all fully understand, fell deeper below 50 at 38.5 from 39.3 in October. It was March 2018 the last time it was above 50.
15) Quantifying the damage done to Hong Kong retailers in October, retail sales fell 24.3% y/o/y, a touch worse than the estimate of down 22.6%
16) Taiwan’s manufacturing PMI was unchanged at 49.8 and below 50 for the 13th month in the past 14. Thailand’s PMI fell to 49.3 from 50.
17) South Korean exports in November saw no stabilization, falling by 14.3% y/o/y, worse than the estimate of down 9.7%. The Economy Ministry said “We’re particularly harder hit because of heavy reliance on China by region and semiconductor by sector.” Semi exports fell 31% y/o/y in November and exports to China were down by 12.2%.
18) Do we really think that Argentina and Brazil are manipulating their currencies lower and deserve tariffs on steel and aluminum?