Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Within the BLS jobs report, there was a big rebound in the household survey of 747k after a drop of 348k in October. Combine this with a rise in the labor force of 532k after a decline of 201k last month and the unemployment rate fell to 3.7% from 3.9% which was the highest since January 2022. The all in U6 rate also dropped by 2 tenths m/o/m to 7%. The workweek was up .1 to 34.4 and has been between 34.3 and 34.4 for many months now which compares with the 5 yr average of 34.5. Hourly earnings grew by .4% m/o/m with a y/o/y gain of 4.0%, about as expected and combine this with hours worked and average weekly earnings were up by .6% m/o/m and 3.7% y/o/y. The participation rate and employment to population ratios both rose and job leavers as a % of unemployed, basically measuring quits, rose to 13.1% from 12.6%.

2)Initial claims were as expected at 220k vs 219k last week and brings the 4 week average to 221k from 220k and smooths out the Thanksgiving holiday. With respect to continuing claims, after rising to the highest level since November 2021 for the week ended 11/17, the 84k jump for that week gave back 64k of it for the week ended 11/24.

3)The December preliminary UoM consumer confidence index jumped to 69.4 from 61.3 and that was much better than the estimate of 62 and likely helped by the drop in one yr inflation expectations as the price of gasoline and other items are cheaper. Both Current Conditions and Expectations were higher m/o/m. One yr inflation expectations at 3.1% vs 4.5% in the month before is the least since March 2021. The 5-10 yr inflation guess was 2.8% vs 3.2% in November. Spending intentions were higher. With this index still 30 pts below its pre Covid level, the UoM also highlighted the cumulative impact of inflation over the past 3 years, “the share of consumer blaming high prices for eroding their living standards was little changed from last month; consumer still feel pinched by high prices.”

4)The ISM services index for November was 52.7, up from 51.8 in October and that was a touch above the estimate of 52.3 and vs 53.6 in September and 54.5 in August. The 6 month average is now 53.2. Breadth improved as 15 of 18 industries saw growth while 3 saw a contraction. That compares with 12 saw gains in October and 5 reported a contraction. The bottom line from the ISM was this, “The services sector had a slight uptick in growth in November, attributed to the increase in business activity and slight employment growth. Respondents’ comments vary by both company and industry. There is continuing concern about inflation, interest rates, and geopolitical events. Rising labor costs and labor constraints remain employment related challenges.”

5)The Manheim wholesale used car index  saw a 2.1% m/o/m drop in pricing in November though which Manheim said is a typical seasonal move. They are also expecting "less of a roller coaster in the new year" in terms of prices.