- Compared to the BLS report of 146k private sector gains in December, ADP said 250k jobs were created.
- The December ISM manufacturing index rose 1.5 pts m/o/m to 59.7 and that was better than the estimate of no change. It finishes 2017 as the 2nd best print vs the September one of 60.8. Of 18 industries surveyed, 16 saw growth vs 14 in November.
- Wards Automotive said 17.76mm vehicles were sold in December at a SAAR, better than the estimate of 17.5mm. Sales though ended the year down 1.8% y/o/y.
- Eurozone CPI in December rose 1.4% y/o/y as expected but down one tenth from November. The core rate held at up .9% y/o/y but that was one tenth less than expected.
- German retail sales in particular in November rose 2.3% m/o/m, well more than the estimate of up 1%.
- The final read on Eurozone services was about the same as the preliminary at 56.6 which brings the manufacturing and services composite index at 58.1 which is the highest since early 2011. On the inflation side for services, “Input price pressures increased in December, with the rate of cost inflation the highest for 6 1/2 years. Part of the rise was passed on to clients in the form of higher service charges. However, the pace of output price inflation eased for the first time in 6 months. Increases in charges were signalled in almost all of the nations covered, the exception being Italy.” Within manufacturing, “December saw rates of inflation in output prices and input costs remain elevated, despite slowing slightly since November. Part of the increase in purchase prices reflected ongoing supply chain pressures, with average vendor lead times lengthening to one of the greatest extents on record. All of the nations covered reported increases in input costs.”
- Germany reported a better than expected jobs number for December. The number of unemployed fell by 29k vs the estimate of a drop of 13k. That is the biggest one month drop since 2011 and their unemployment rate is at 5.5%, the lowest since Checkpoint Charlie fell.
- The private sector weighted Caixin services index rose 2 pts to 53.9. Price pressures continued to build: “Average input costs faced by service companies in China increased at a solid and accelerated rate in December. Furthermore, the rate of inflation was the joint quickest since February 2013. Raw materials, transportation and salaries were all cited as having gone up in price in the latest survey period.” The manufacturing Caixin PMI rose .7 pts 51.5. “Average input costs continued to rise sharply, despite the rate of inflation softening to a 4 month low. Anecdotal evidence indicated that higher costs for a variety of raw materials drove up cost burdens. Consequently, firms increased their selling prices solidly.”
- Hong Kong’s PMI rose .8 pt to 51.5. India’s services PMI got back above 50 and manufacturing rose 2.1 pts to 54.7. Taiwan’s manufacturing PMI rose to 56.6 from 56.3. Vietnam’s rose 1.1 pts to 52.5. The final read of Japan’s manufacturing PMI is at a multi year high.
- Payroll growth in December was 148k, well less than the estimate of 190k and the two prior months were revised down by 9k. The household survey added 104k similar to the 64k person increase in the size of the labor force which held the unemployment rate at 4.1%. The employment to population ratio also was unchanged at 60.1% and the participation rate remained at 62.7%. The all in U6 unemployment rate was up one tenth to 8.1%. There was a pickup in those working part time for economic reasons. Hours worked were unchanged at 34.5 and combined with the average hourly earnings gain of .3% m/o/m, average weekly earnings were up .3% too and by 2.8% y/o/y. Average hourly earnings were up by 2.5% y/o/y. The pool of available labor is just off the lowest level since November 2007. Smoothing out the impact of the storms has the 6 month job gain average at 166k vs the full year 2017 average of 171k. This compares with 187k in 2016, 226k in 2015 and 250k in 2014.
- The December ISM services index fell by 1.5 pts m/o/m to 55.9 and that was below the estimate of 57.6. This is a 4 month low and a touch below the full year 2017 average of 57. Of note, new orders fell to the lowest level since August 2016 at 54.3 while backlogs were down by 1.5 pts to exactly 50. Just 9 of 18 industries asked saw a gain in new orders. Of 18 industries surveyed, 14 saw growth vs 16 in November and with 3 seeing contraction vs just 1 in the month prior. The ISM said “There has been a 2nd consecutive month of pullback in the rate of growth. Overall, the majority of respondents’ comments indicate that they finished the year on a positive note. They also indicate optimism for business conditions and the economic outlook going forward.”
- On the inflation front in Japan, their PMI services which fell a hair from November to 51.1 said this on prices: “The service sector appeared less cautious over raising prices. Output price inflation quickened to a 29 month high amid reports of higher operating expenses. Input prices increased during December, maintaining an inflationary trend which extends back to November 2012. Firms suggested that higher labor costs had contributed to a solid rise in cost burdens.” For manufacturers, they “also raised selling prices during December in line with greater sales. Meanwhile, input price inflation remained sharp despite softening slightly.”
- Eurozone PPI accelerated to a 2.8% y/o/y rise from 2.5% and that was 3 tenths more than expected. That matches the quickest pace since May.
- Singapore’s PMI fell by 3.3 pts. South Korea’s manufacturing PMI dropped to 49.9 from 51.2. Indonesia also declined back below 50 at 49.3 from 50.4 as did Malaysia to 49.9 from 52.0.
- Individual investors have now joined in on the euphoria over the stock market as AAII reported that its bull/bear spread is the highest in 7 years. As for the ‘professional’ investors, we are in the midst of the longest trend in II’s 50 year history of Bulls over 60.