Hiring, factory orders, and business activity all have been decelerating this fall. Here are the five things we learned from U.S. economic data released during the week ending December 4.
Hiring downshifted in November. In the pre-pandemic world, the seasonally adjusted 245,000 jobs added during the month would be worthy of celebration. In this case, however, the pace of job creation was well below the 610,000 added in October, with the Bureau of Labor Statistics’ nonfarm payrolls estimate remaining 9.834 million jobs below that of February. Private-sector employers added 344,000 workers (October: +877,000), with the gains split between the goods-producing and service sectors by +55,000 and +289,000, respectively. Adding the most workers were transportation/warehousing (+145,000), professionals/business services (+60,000), and health care/social assistance (+59,600). The 31,000 added leisure/hospitality jobs were well under the 270,000 gain in October, while retail payrolls fell by 34,700 after expanding by 95,100 during the prior month. Government payrolls contracted by 99,000, including 93,000 completed temporary jobs tied to the 2020 Census.
A separate household survey has the unemployment rate decreasing by 2/10ths of a percentage point to 6.7 percent, its lowest point since the start of the pandemic. The decline reflected, in part, the 400,000 people leaving the labor force, with the labor force participation rate dropping by 2/10ths of a percentage point to 61.5. The labor force participation rate for adults aged 25-54 fell by 3/10ths of a point to 80.9 (its lowest reading since April). The count of “involuntary” part-time workers was relatively stable at 6.660 million while the median length of unemployed declined by a half week to 18.8 weeks. The broadest measure of labor underutilization—the U-6 series—inched down by 1/10th of a point to 12.0 percent. While down from its pandemic peak of 22.8 percent in April, the same measure was at 6.8 percent one year ago.
A more modest factory orders increase in October. The Census Bureau reports new orders for manufactured goods increased 1.0 percent during the month to a seasonally adjusted $480.8 billion. This was slower than September’s 1.3 percent gain and left year-to-date orders 7.9 percent behind the comparable ten months in 2019. Orders for durable goods (+1.3 percent), nondurables (+0.7 percent), and civilian nonaircraft capital goods (+0.8 percent) all jumped. Shipments advanced 1.0 percent to $488.6 billion, split 1.3 percent and 0.7 for durable and nondurable goods, respectively. Unfilled orders declined 0.2 percent to $1.073 trillion, while inventories expanded 0.2 percent to $687.3 billion.
Purchasing managers report slower growth in manufacturing during November. The PMI, the headline measure from the Institute for Supply Management’s Manufacturing Report on Business, shed 1.8 points during the month to a reading of 57.5. Even with the drop, the PMI has remained above a reading of 50.0—the threshold between an expanding and contracting manufacturing sector—for six straight months. Key PMI components pointed to a slowdown, including those tied to new orders, production, employment, and inventories. Sixteen of 18 manufacturing sectors reported growing in November, led by apparel, nonmetallic mineral products, and textiles. The press release noted that manufacturing had “performed well for the sixth straight month, with demand, consumption and inputs registering growth,” albeit at a slower pace relative to October.
…And reported the same for the service sector. The Institute for Supply Management’s Services PMI fell back by 7/10ths of a point in November to a reading of 55.9. As with the PMI, the service sector measure has signaled expansion for six consecutive months. While the Services PMI’s employment component improved in November, measures linked to business activity/production and new orders both declined. Fourteen of 18 tracked service sector industries expanded during the month, led by transportation/warehousing, management of companies, and health care/social assistance. The press release characterized companies as being “cautious as they navigate operations amid the pandemic and the aftermath of the U.S. presidential election.”
Exports, imports, and the trade deficit all rose in October. Per the Census Bureau and the Bureau of Economic Analysis, exports grew 2.2 percent to $182.0 billion (-13.4 percent vs. October 2019) and imports rose 2.1 percent to $245.1 billion (-3.3 percent vs. October 2019). The resulting trade deficit of -$63.1 billion represented a 1.7 percent advance from September and a 46.7 percent surge from a year earlier. The goods deficit swelled by $0.6 billion to -$81.4 billion while the services surplus shrank by $0.4 billion to +$18.3 billion). The former reflects increased exports of industrial supplies/materials and capital goods and a surge in imports of consumer goods, capital goods, and industrial supplies/materials. The U.S. had its largest goods deficits with China, the European Union, Mexico, and Japan.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending November 28, First-Time Claims, seasonally adjusted): 712,000 (-75,000 vs. the previous week, +506,000 vs. the same week a year earlier). 4-week moving average: 739,500 (+243.2% vs. the same week a year earlier).
- Construction Spending (October 2020, Value of Construction Put in Place, seasonally adjusted annualized rate): $1.439 trillion (+1.3% vs. September 2020, +3.7% vs. October 2019).
- Pending Home Sales (October 2020, Index (2001=100), seasonally adjusted): 128.9 (-1.1% vs. September 2020, +20.2% vs. October 2019).
- Vehicle Sales (November 2020, Light Trucks and Autos, seasonally adjusted annualized rate): 15.55 million (-4.5% vs. October 2020, -7.8% vs. November 2019).
- Beige Book
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What We Learned About the U.S. Economy Last Week 