Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Job growth surprised to the upside with a headline gain of 256k vs the estimate of 165k with the private sector adding 223k of this. The two prior months were revised down by a total of 8k. Also, in the household survey, after very choppy hiring trends in the prior months, 478k net saw new jobs and exceeded the rise of 243k in the labor force which is why the unemployment rate fell to 4.1% from 4.2%. Almost half of this figure came from the 16-19 yr age cohort. The all in rate fell two tenths m/o/m to 7.5% which is the lowest since June. Hours worked at 34.3 was as expected as was the 62.5% participation rate. The rate for the 25-54 key age group was 83.4%, down from 83.5% last month. Average hourly earnings gains of .3% m/o/m were too as forecasted and the y/o/y gain was 3.9%.

2)Please take the jobless claims data with a grain of salt in the last week of December and the first week of January. That said, initial claims totaled 201k vs the estimate of 215k and vs 211k last month. Continuing claims were 1.867mm, about as expected.

3)Job openings got back above 8mm in November at 8.1mm from 7.84mm in October.

4)The December ISM services index rose to 54.1 from 52.1 and just above the estimate of 53.5. That compares with 56 in October. Notwithstanding the headline lift, in part because of the rise in Business Activity and supplier deliveries, the breadth of growth softened. Of 18 industries surveyed, 9 saw growth vs 14 in November and that is the least since June while 6 said their business is contracting vs 3 last month. The bottom line from ISM, “Many industries noted that end-of-year and seasonal factors were helping drive business activity or impact inventory management. Some of the increased business activity seems to have been driven by preparation for demand in the new year, or risk management for impacts from ports strikes and potential tariffs. There was general optimism expressed across many industries, but tariff concerns elicited the most panelist comments.”

5)From Commercial Metals: "A meaningful shift in business sentiment gives us hope that we may be nearing a turning point in our markets...optimism across many sectors has improved sharply over the last two months, driven by expectations for an improved regulatory environment, tax reforms, and policies to support US manufacturing and job creation. In particular, the outlook among construction firms has improved notably as evidenced by ENR's Construction Confidence Index, which recently hit its highest reading in over two years. I would also note that our recent conversations with customers indicate similar optimism about the future. Outside of the construction industry, both large and small businesses are feeling more confident about the months and quarters ahead."

6)Base pay in Japan rose 2.7% y/o/y in November vs 2.5% in October and that is the quickest pace since November 1992.