Tom Moeller

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Nonfarm payrolls grew 211,000 during November following upwardly revised
gains of 298,000 and 145,000 during the prior two months. The increase outpaced
expectations for a 200,000 gain in the Action Economics Forecast Survey. The rise
in employment was accompanied by expected stability in the unemployment rate at
5.0%. The overall unemployment rate, including marginally attached workers and
those employed part-time for economic reasons, ticked up to 9.9%. Moreover, firm
jobs readings did not accelerate improvement in hourly earnings. The 0.2% gain
matched expectations but eased from 0.4% in October.

The labor market data is contained Haver's USECON
database. Detailed figures are in the EMPL and LABOR databases.
The expectations figure is in the AS1REPNA database.

Sentiment of the FOMC: Unscripted from the Federal Reserve Bank of
Kansas City is available <a href="https://www.kansascityfed.org/~/media/files/publicat/econrev/econrevarchive/2015/4q15cannon.pdf">here</a>.

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >Employment: (SA, M/M
 Change, 000s)</th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Payroll Employment</td>
 <td >211</td>
 <td >298</td>
 <td >145</td>
 <td >1.9%</td>
 <td >1.9%</td>
 <td >1.7%</td>
 <td >1.7%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Previous</td>
 <td >--</td>
 <td >271</td>
 <td >137</td>
 <td >--</td>
 <td >--</td>
 <td >--</td>
 <td >--</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Manufacturing</td>
 <td >-1</td>
 <td >1</td>
 <td >-8</td>
 <td >0.3</td>
 <td >1.4</td>
 <td >0.8</td>
 <td >1.7</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Construction</td>
 <td >46</td>
 <td >34</td>
 <td >19</td>
 <td >4.2</td>
 <td >4.8</td>
 <td >3.7</td>
 <td >2.1</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;Private Service Producing</td>
 <td >163</td>
 <td >274</td>
 <td >169</td>
 <td >2.4</td>
 <td >2.2</td>
 <td >2.2</td>
 <td >2.2</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;Government</td>
 <td >14</td>
 <td >-6</td>
 <td >-20</td>
 <td >0.5</td>
 <td >0.0</td>
 <td >-0.3</td>
 <td >-0.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Average Weekly Hours - Private Sector</td>
 <td >34.5</td>
 <td >34.6</td>
 <td >34.5</td>
 <td >34.6 
 (Nov.'14)</td>
 <td >34.5</td>
 <td >34.5</td>
 <td >34.4</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Private Sector Average Hourly Earnings
 (%)</td>
 <td >0.2</td>
 <td >0.4</td>
 <td >0.1</td>
 <td >2.3</td>
 <td >2.1</td>
 <td >2.1</td>
 <td >1.9</td>
 </tr>
 <tr>
 <td class="firstcol" >Unemployment Rate (%)</td>
 <td >5.0</td>
 <td >5.0</td>
 <td >5.1</td>
 <td >5.8 
 (Nov.'14)</td>
 <td >6.1</td>
 <td >7.4</td>
 <td >8.1</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Nonfarm payrolls grew 211,000 during November following upwardly revised gains of 298,000 and 145,000 during the prior two months. The increase outpaced expectations for a 200,000 gain in the Action Economics Forecast Survey. The rise [...]

U.S. Payrolls Rise Moderately: Unemployment Rate Stabilizes While Earnings Gains Ease

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New orders in the manufacturing sector rebounded 1.5% during October (-5.7%
y/y) following a 0.8% September decline, revised from -1.0%. The increase
roughly matched expectations in the Action Economics Forecast Survey. It was led
by a 2.9% rebound (-1.1% y/y) in durable goods orders which were little-revised
from last week's advance report. The rise was paced by an 81.0% recovery (24.5%
y/y) in nondefense aircraft &amp; parts. Factory sector orders excluding the
transportation altogether nudged 0.2% higher (-1.6% y/y) following three
straight months of decline. Orders for nondurable goods (which equal shipments)
remained unchanged (-9.9% y/y), following three straight monthly drops. A 0.1%
easing (-35.5% y/y) in shipments from petroleum refineries followed three
consecutive sharp drops as prices fell. Also dipping by 0.1% (-0.4% y/y) were
apparel shipments. Food product shipments edged 0.1% higher (-2.2% y/y) but
basic chemical shipments fell 0.6% (-2.5% y/y). Textile mill shipments rose 0.5%
and they were up 0.4% y/y. Durable goods shipments declined 1.0% (-1.7% y/y) led
by a 1.3% decrease (-3.4% y/y) in machinery.

Unfilled orders in the manufacturing sector increased 0.3% (-2.1% y/y).
Transportation sector backlogs rose 0.4% (-2.3% y/y), led by a 0.6% rise (-1.0%
y/y) in nondefense aircraft &amp; parts. Outside of the transportation sector,
backlogs remained unchanged (-1.9% y/y). Electrical equipment backlogs fell 1.0%
(-3.2% y/y), the seventh decline in as many months. Computer &amp; electronic
product backlogs gained 0.4% (6.2% y/y).

Factory sector inventories eased 0.1% (-1.8% y/y), about as they have during
the last four months. Outside of the transportation sector, inventories were off
0.1% (-3.0% y/y). Primary metals inventories fell 0.9% (-8.3% y/y) and machinery
inventories eased 0.3% (-1.8% y/y). Electrical equipment &amp; appliance
inventories declined 0.4% (+0.3% y/y) and computer &amp; electronic product
inventories fell 0.6%; they were unchanged y/y.

The factory sector figures are available in Haver's USECON database.
The expectations figure from the Action Economics Forecast Survey is available
in AS1REPNA.

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 <thead>
 <tr>
 <th class="firstcol" scope="col" >Factory Sector- NAICS
 Classification (%)</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Aug</th>
 <th scope="col" >Y/Y</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
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 <td class="firstcol" >New Orders</td>
 <td >1.5</td>
 <td >-0.8</td>
 <td >-2.1</td>
 <td >-5.7</td>
 <td >3.5</td>
 <td >2.0</td>
 <td >4.7</td>
 </tr>
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 <td class="firstcol" >Shipments</td>
 <td >-0.5</td>
 <td >-0.3</td>
 <td >-0.9</td>
 <td >-5.9</td>
 <td >2.6</td>
 <td >1.9</td>
 <td >4.7</td>
 </tr>
 <tr>
 <td class="firstcol" >Unfilled Orders</td>
 <td >0.3</td>
 <td >-0.5</td>
 <td >-0.3</td>
 <td >-2.1</td>
 <td >11.5</td>
 <td >6.5</td>
 <td >7.8</td>
 </tr>
 <tr>
 <td class="firstcol" >Inventories</td>
 <td >-0.1</td>
 <td >-0.5</td>
 <td >-0.4</td>
 <td >-1.8</td>
 <td >2.4</td>
 <td >1.7</td>
 <td >3.8</td>
 </tr>
 </tbody>
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</body></html>

New orders in the manufacturing sector rebounded 1.5% during October (-5.7% y/y) following a 0.8% September decline, revised from -1.0%. The increase roughly matched expectations in the Action Economics Forecast Survey. It was led by [...]

U.S. Factory Sector's New and Unfilled Orders Increase

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The outplacement firm of Challenger, Gray &amp; Christmas reported that job
cut announcements during November fell to 30,953 (-13.9% y/y) following the
prior month's decline to 50,504. The latest level was nearly the lowest of the
economic recovery. Layoffs fell in the energy, food, chemical, construction,
consumer products, electronics, financial, health care, insurance, legal,
pharmaceutical, retail and telecommunications industries. Layoffs rose in
aerospace/defense, automotive, computer, education, entertainment/leisure,
government, industrial goods, media, services, transportation and utility
industries.

During the last ten years, there has been a 68% correlation between the level
of job cut announcements and the m/m change in payroll employment.

Challenger also samples firms' hiring plans. Hiring fell sharply last month
to 10,026 after the 86,107 rise in October. The aerospace/defense, computer,
construction, consumer products, entertainment/leisure, financial, health care,
pharmaceutical, retail, services, and transportation industries reduced hiring.
Hiring increased in the auto, electronics, energy, food, industrial goods,
insurance industries.

The Challenger figures are available in Haver's SURVEYS database.

<table class="centered" width="100%" border="0" cellspacing="0">
	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" >
 Challenger, Gray &amp; Christmas
 </th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Y/Y %</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >
 Announced Job Cuts
 </td>
 <td >30,953</td>
 <td >50,504</td>
 <td >58,877</td>
 <td >-13.9</td>
 <td >483,171</td>
 <td >509,051</td>
 <td >523,362</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >
 Announced Hiring Plans
 </td>
 <td >10,026</td>
 <td >86,107</td>
 <td >492,306</td>
 <td >-11.2</td>
 <td >821,506</td>
 <td >764,206</td>
 <td >630,447</td>
 </tr>
 </tbody>
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The outplacement firm of Challenger, Gray & Christmas reported that job cut announcements during November fell to 30,953 (-13.9% y/y) following the prior month's decline to 50,504. The latest level was nearly the lowest of the [...]

Challenger Job Cut Announcements Decline Sharply

Robert Brusca

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Note that the graph presented here is a two-scale plot on the level of vehicle registrations and the level of the retail sale volume index. Both retail sales and motor vehicle registrations are well off peak. MV registrations are back to about late 2008 levels, but retailing is back only to about 2011 levels of sales. Moreover, both MV registrations and retail volumes show a multi-month period of flatness.

We can inspect the recent weakness using the calculations in the table that look at recent percentage changes. Year-over-year both MV registrations and retail volumes are moving higher. And both are higher on balance over six months. But over three months both MV registrations and retail volumes are shrinking. In fact, both MV registration and retail volumes show a steady deceleration in sales from 12 months to six months to three months. These patterns are not reassuring.

On a country level, we have a batch of early reporters including three EMU members and three non-EMU members. Sweden has the strongest retail volumes with gains of 4.9% over 12 months. Austria has the weakest gains with a rise of just 0.9% over 12 months. Only Denmark has a three-month growth rate in excess of its 12-month growth rate. And only Germany and Austria have sales falling over three months.

The picture for retail sales is not good and is not particularly encouraging because of the fading momentum.


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However, the ECB rolled out its stimulus package for December today and it's announced a cut in deposit rates and greater security purchases of a broader array of assets. The program is to be in place until March 2017. ECB President Mario Draghi cited the expansion of the existing QE program because it had been so successful so far.

Underpinning Draghi's claim we see that both money and credit growth have picked up since the ECB QE program was started. Private sector loans are showing positive growth after a pronounced period of contracting. Of course, a weaker euro has also been the result of this policy although there is little showing for it in terms of stronger export growth since globally demand has been so weak. The euro is likely to be helped lower by the Fed's clear steps to hike rates even as economic data in the U.S. have deteriorated around it. The combination of more ECB easing and Fed tightening should propel the dollar higher and the euro lower.

It is still hard to say how effective more QE will be. The experiences in the U.K. and the U.S. showed that aggressive early application of QE was associated with the best results. Later additions to the program did not always seem to help as much. With interest rates already so low in the EMU area, there is less scope for QE to move rates lower. The shallowness of Europe's securities markets has also hampered the ECB in getting the stimulus in place that it has wanted. The ECB has now broadened the rules for collateral acquisition to help get around this problem. As in all securities offerings we should remember that past results are not an indicator of future performance. That goes double for added rounds of QE purchases. Nevertheless, for now, optimism runs high.

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Note that the graph presented here is a two-scale plot on the level of vehicle registrations and the level of the retail sale volume index. Both retail sales and motor vehicle registrations are well off peak. MV registrations are back [...]

Retail Sales Show Their Weak Side; ECB Offers More Stimulus

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Improvement in service sector business activity slowed substantially during
November. The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing
Sector Business fell sharply to 55.9 and reversed the unrevised October increase
to 59.1. It was the lowest level since May. Consensus expectations had been for
a lesser decline to 58.0 in the Action Economics Forecast Survey. The ISM data are
diffusion indexes where a reading above 50 indicates expansion.

Haver Analytics constructs a Composite Index using the nonmanufacturing ISM
index and the ISM factory sector measure released Tuesday. It fell sharply to
55.0, also a 6-month low. During the last ten years, there has been a 73%
correlation between the index and the q/q change in real GDP.

The decline in the nonmanufacturing index reflected shortfalls in most
component series. The business activity reading fell to 58.2, its lowest reading
since March. The employment index also declined to 55.0, a five-month low.
During the last ten years, there has been a 96% correlation between the employment
index and the m/m change in service plus construction payrolls. The new orders
index fell to 57.5, reversing most of the prior month's increase. Working the
other way, the supplier delivery series improved to 53.0 and indicated the slowest
delivery speeds since July.

The prices paid series improved slightly to a roughly break-even level of
50.3. It followed two months below 50. Nine percent (NSA) of respondents paid
higher prices while 16 percent paid less.

The export order series (NSA) declined to its lowest level since April as
imports also eased. The inventory series recovered two months of decline.

The figures are available in Haver's USECON database. The
expectations figure from Action Economics is in the AS1REPNA database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" scope="col" ><a href="http://www.haverselect.com/dlx/USECON/@EF/@EF03/@EF03.HTM">ISM
 Nonmanufacturing Survey (SA)</a></th>
 <th scope="col" >Nov</th>
 <th scope="col" >Oct</th>
 <th scope="col" >Sep</th>
 <th scope="col" >Nov'14</th>
 <th scope="col" >2014</th>
 <th scope="col" >2013</th>
 <th scope="col" >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" >Composite Diffusion Index</td>
 <td >55.9</td>
 <td >59.1</td>
 <td >56.9</td>
 <td >58.8</td>
 <td >56.3</td>
 <td >54.6</td>
 <td >54.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Business Activity</td>
 <td >58.2</td>
 <td >63.0</td>
 <td >60.2</td>
 <td >63.4</td>
 <td >59.7</td>
 <td >56.7</td>
 <td >57.6</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; New Orders</td>
 <td >57.5</td>
 <td >62.0</td>
 <td >56.7</td>
 <td >61.0</td>
 <td >58.6</td>
 <td >55.8</td>
 <td >56.5</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >&nbsp;&nbsp; Employment</td>
 <td >55.0</td>
 <td >59.2</td>
 <td >58.3</td>
 <td >56.3</td>
 <td >54.9</td>
 <td >54.3</td>
 <td >53.5</td>
 </tr>
 <tr>
 <td class="firstcol" >&nbsp;&nbsp; Supplier Deliveries (NSA)</td>
 <td >53.0</td>
 <td >52.0</td>
 <td >52.5</td>
 <td >54.5</td>
 <td >51.8</td>
 <td >51.7</td>
 <td >50.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" >Prices Index</td>
 <td >50.3</td>
 <td >49.1</td>
 <td >48.4</td>
 <td >55.0</td>
 <td >56.8</td>
 <td >55.6</td>
 <td >59.3</td>
 </tr>
 </tbody>
 </table>
 
</body></html>

Improvement in service sector business activity slowed substantially during November. The Institute for Supply Management (ISM) Composite Index of Nonmanufacturing Sector Business fell sharply to 55.9 and reversed the unrevised [...]

U.S. ISM Nonmanufacturing Index Declines to 6-Month Low

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Initial claims for unemployment insurance increased to 269,000 (-10.7% y/y) in the
week ending November 28 from an unrevised 260,000 the previous week. The Action
Economics Forecast Survey expected 267,000 filings. The four-week moving average
eased to 269,250 and remained near the 15-year low. During the last ten years,
there has been a 74% correlation between the level of initial claims and the m/m
change in payroll employment.

In the week ending November 28, continuing claims for unemployment insurance edged
higher to 2.161 million, still down 10.0% from a year earlier. The four-week moving average
eased to 2.167 million and remained near the 15-year low.

The insured rate of unemployment remained at 1.6%, its lowest reading since June 2000.

The insured rate of unemployment across states continued to vary within a
wide range. The lowest were South Dakota (0.4%), Nebraska (0.6%), North Dakota
(0.7%), Indiana (0.7%), Virginia (0.7%) and Tennessee (0.8%). At the other end of the
spectrum were Massachusetts (1.8%), Connecticut (2.1%), Pennsylvania (2.2%),
California (2.2%), New Jersey (2.5%) and Alaska (4.0%). The state data are not
seasonally adjusted and reported with a two-week lag versus the headline figure.

Data on weekly unemployment insurance are contained in Haver's WEEKLY
database and they are summarized monthly in USECON. Data for individual
states are in REGIONW. The expectations figure is from the Action
Economics survey, carried in the AS1REPNA database.

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	<colgroup><col><col><col><col><col><col><col><col></colgroup>

 <thead>
 <tr>
 <th class="firstcol" 0801 >Unemployment Insurance (000s)</th>
 <th 0801 >11/28/15</th>
 <th 0801 >11/21/15</th>
 <th 0801 >11/14/15</th>
 <th 0801 >Y/Y %</th>
 <th 0801 >2014</th>
 <th 0801 >2013</th>
 <th 0801 >2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" 0801 >Initial Claims</td>
 <td 0801 >269</td>
 <td 0801 >260</td>
 <td 0801 >272</td>
 <td 0801 >-10.7</td>
 <td 0801 >307</td>
 <td 0801 >342</td>
 <td 0801 >372</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" 0801 >Continuing Claims</td>
 <td 0801 >--</td>
 <td 0801 >2,161</td>
 <td 0801 >2,155</td>
 <td 0801 >-10.0</td>
 <td 0801 >2,607</td>
 <td 0801 >2,978</td>
 <td 0801 >3,308</td>
 </tr>
 <tr>
 <td class="firstcol" 0801 >Insured Unemployment Rate (%)</td>
 <td 0801 >--</td>
 <td 0801 >1.6</td>
 <td 0801 >1.6</td>
 <td 0801 >
 1.8 
 (Nov. 2014)
 </td>
 <td 0801 >2.0</td>
 <td 0801 >2.3</td>
 <td 0801 >2.6</td>
 </tr>
 </tbody>
 </table>
 
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Initial claims for unemployment insurance increased to 269,000 (-10.7% y/y) in the week ending November 28 from an unrevised 260,000 the previous week. The Action Economics Forecast Survey expected 267,000 filings. The four-week [...]

U.S. Initial Claims for Unemployment Insurance Rise Slightly

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The Mortgage Bankers Association reported that its total Mortgage Market
Volume Index was little-changed last week (20.0% y/y). Purchase applications
increased 7.7% (30.2% y/y) but refinancing applications declined 6.0% (+13.1%
y/y).
The effective interest rate on a 15-year mortgage eased to 3.47%, but
remained up from the October low of 3.28%. The effective rate on a 30-year fixed
rate loan held w/w at 4.27% but the rate on a Jumbo 30-year loan was steady at
4.09%. For adjustable 5-year mortgages, the effective interest rate eased to
3.27%, but remained up from last month's low of 3.07%.
The average mortgage loan size declined to $268,000 (+5.8% y/y. For
purchases, it fell to $300,300 (+6.2% y/y). For refinancings it eased to
$243,300 (+4.0% y/y).
Applications for fixed interest rate loans increased 21.4% y/y, while
adjustable rate loan applications improved 10.9% y/y.
The survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted weekly since 1990. Respondents include
mortgage bankers, commercial banks and thrifts. The base period and value for
all indexes is March 16, 1990=100. The figures for weekly mortgage applications
and interest rates are available in Haver's SURVEYW database.
Assessing Economic Conditions for Liftoff from Dennis Lockhart,
President &amp; CEO, Federal Reserve Bank of Atlanta is available here <a href="https://www.frbatlanta.org/news/speeches/2015/1202-lockhart">https://www.frbatlanta.org/news/speeches/2015/1202-lockhart</a>
<table class="centered" border="0" cellspacing="0" width="100%">
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col">MBA Mortgage Applications (SA,
 3/16/90=100)</th>
 <th scope="col">11/27/15</th>
 <th scope="col">11/20/15</th>
 <th scope="col">11/13/15</th>
 <th scope="col">Y/Y %</th>
 <th scope="col">2014</th>
 <th scope="col">2013</th>
 <th scope="col">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol">Total Market Index</td>
 <td>418.9</td>
 <td>419.9</td>
 <td>433.9</td>
 <td>20.0</td>
 <td>361.5</td>
 <td>616.6</td>
 <td>813.8</td>
 </tr>
 <tr>
 <td class="firstcol">&nbsp;Purchase</td>
 <td>228.1</td>
 <td>211.7</td>
 <td>212.8</td>
 <td>30.2</td>
 <td>172.1</td>
 <td>197.5</td>
 <td>187.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol">&nbsp;Refinancing</td>
 <td>1,516.9</td>
 <td>1,612.9</td>
 <td>1,694.8</td>
 <td>13.1</td>
 <td>1,449.8</td>
 <td>3,070.0</td>
 <td>4,505.0</td>
 </tr>
 <tr>
 <td class="firstcol">15-Year Mortgage Effective Interest Rate (%)</td>
 <td>3.47</td>
 <td>3.50</td>
 <td>3.51</td>
 <td>3.42</td>
 <td>3.54</td>
 <td>3.42</td>
 <td>3.25</td>
 </tr>
 </tbody>
</table>


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The Mortgage Bankers Association reported that its total Mortgage Market Volume Index was little-changed last week (20.0% y/y). Purchase applications increased 7.7% (30.2% y/y) but refinancing applications declined 6.0% (+13.1% y/y). [...]

U.S. Mortgage Loan Applications and Interest Rates Move Sideways

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The ADP/Moody's National Employment Report indicated that nonfarm
private sector payrolls increased 217,000 during November following a 196,000
October gain, revised from 182,000. The latest was firmer than expectations for
a 190,000 rise in the Action Economics Forecast Survey. During the last ten
years, there has been a 97% correlation between the change in the ADP figure and
the change in nonfarm private sector payrolls as measured by the Bureau of Labor
Statistics.
The ADP Research Institute survey is based on ADP's business payroll
transaction system covering 411,000 companies and nearly 24 million employees.
The data are processed by Moody's Analytics Inc., then calibrated and aligned
with the BLS establishment survey data. The ADP data cover private sector
employment, not government.
Small-businesses strengthened hiring by 81,000 workers (2.3% y/y) in November
after a 91,000 rise in the prior month.&nbsp; Large businesses doubled the
hiring rate m/m and added 74,000 (1.9% y/y) workers following a 37,000 October
rise. That gain mostly reflected a jump in hiring by companies with 500 to 999
employees. Medium-sized businesses added to payrolls by 62,000 individuals (1.9%
y/y) after a 67,000 increase.
Hiring in the goods-producing sector of the economy increased a lessened 13,000
(1.0% y/y). Hiring in the construction sector posted a 16,000 increase (4.7%
y/y), roughly half the increases during the two months. Factory sector hiring
rebounded 6,000 (0.2% y/y), after two months of decline. Service industry hiring
grew a strengthened 204,000 last month (2.3% y/y), the largest increase since
June. Payrolls in professional &amp; business services jumped 59,000 (2.4% y/y)
while hiring in trade, transportation &amp; utilities industries improved 30,000
(1.9% y/y), the smallest rise in three months. Employment in financial
activities increased 9,000 (1.9% y/y), the smallest rise since April. 
The ADP National Employment Report data are maintained in Haver's USECON
database; historical figures date back to April 2001 for the total and industry
breakdown and back to January 2005 for the business size breakout. The
expectation figure is available in Haver's AS1REPNA database. 
The Economic Outlook and Monetary Policy is the title of today's
speech by Fed Chair Janet L. Yellen and it is available here <a href="http://www.federalreserve.gov/newsevents/speech/yellen20151202a.htm">http://www.federalreserve.gov/newsevents/speech/yellen20151202a.htm</a>
<table class="centered" border="0" cellspacing="0" width="1871">
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="1071">ADP/Moody's National
 Employment Report</th>
 <th scope="col" width="113">Nov</th>
 <th scope="col" width="113">Oct</th>
 <th scope="col" width="114">Sep</th>
 <th scope="col" width="114">Nov Y/Y</th>
 <th scope="col" width="114">2014</th>
 <th scope="col" width="114">2013</th>
 <th scope="col" width="114">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr>
 <td class="firstcol" width="1071">Nonfarm Private Payroll Employment (m/m
 chg, 000s)</td>
 <td align="center" width="113">&nbsp;217</td>
 <td align="center" width="113">196</td>
 <td align="center" width="114">199</td>
 <td align="center" width="114">2.1%</td>
 <td align="center" width="114">2.3%</td>
 <td align="center" width="114">1.9%</td>
 <td align="center" width="114">2.3%</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1071">&nbsp;Small Payroll (1-49)</td>
 <td align="center" width="113">81</td>
 <td align="center" width="113">91</td>
 <td align="center" width="114">52</td>
 <td align="center" width="114">2.3</td>
 <td align="center" width="114">2.1</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="114">2.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="1071">&nbsp;Medium Payroll (50-499)</td>
 <td align="center" width="113">62</td>
 <td align="center" width="113">67</td>
 <td align="center" width="114">46</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="114">2.8</td>
 <td align="center" width="114">2.2</td>
 <td align="center" width="114">2.1</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1071">&nbsp;Large Payroll (&gt;500)</td>
 <td align="center" width="113">74</td>
 <td align="center" width="113">37</td>
 <td align="center" width="114">101</td>
 <td align="center" width="114">1.9</td>
 <td align="center" width="114">1.8</td>
 <td align="center" width="114">1.6</td>
 <td align="center" width="114">2.1</td>
 </tr>
 <tr>
 <td class="firstcol" width="1071">Goods-Producing</td>
 <td align="center" width="113">13</td>
 <td align="center" width="113">22 </td>
 <td align="center" width="114">8</td>
 <td align="center" width="114">1.0</td>
 <td align="center" width="114">2.3</td>
 <td align="center" width="114">1.7</td>
 <td align="center" width="114">2.2</td>
 </tr>
 <tr>
 <td class="firstcol" width="1071">&nbsp; Construction</td>
 <td align="center" width="113">16</td>
 <td align="center" width="113">32 </td>
 <td align="center" width="114">34</td>
 <td align="center" width="114">4.7</td>
 <td align="center" width="114">4.6</td>
 <td align="center" width="114">3.5</td>
 <td align="center" width="114">2.5</td>
 </tr>
 <tr>
 <td class="firstcol" width="1071">&nbsp; Manufacturing</td>
 <td align="center" width="113">6</td>
 <td align="center" width="113">-2</td>
 <td align="center" width="114">-17</td>
 <td align="center" width="114">0.2</td>
 <td align="center" width="114">1.2</td>
 <td align="center" width="114">0.9</td>
 <td align="center" width="114">1.6</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="1071">Service-Producing</td>
 <td align="center" width="113">204</td>
 <td align="center" width="113">174</td>
 <td align="center" width="114">191</td>
 <td align="center" width="114">2.3</td>
 <td align="center" width="114">2.3</td>
 <td align="center" width="114">2.0</td>
 <td align="center" width="114">2.3</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Productivity Growth Lifted by Revisions; Unit Labor
Costs Also Strengthened 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
2, 2015
Nonfarm productivity during Q3'15 grew 2.2% at a seasonally adjusted annual
rate, revised from 1.6%. The increase followed an unrevised 3.5% rise in Q2. The
revised Q3 increase matched expectations in the Action Economics Forecast
Survey. Real output growth of 1.8% (2.5% y/y) was revised from 1.2%. Hours
worked eased 0.3% (+1.9% y/y), revised from -0.5%. Compensation per hour grew
4.0% (3.6% y/y) which was changed from 3.0%. The Q2 increase, however, was
revised up even more sharply to 5.6% from 1.7%. As a result, unit labor cost
growth last quarter was raised to 1.8% (3.0% y/y) from 1.4%, but the Q2 increase
of 2.0% was lifted even more sharply from a 1.8% decline. A revised 1.0% rise in
Q3 costs was expected.
Manufacturing sector productivity surged a little-revised 5.1% (1.5% y/y)
during Q3, following a 2.2% increase. This remained the strongest gain in four
years. Real factory-sector output grew 3.2% (2.0% y/y) but hours worked declined
1.8% (+0.4% y/y). Compensation per hour strengthened 7.5% (3.7% y/y), revised
from 5.9%, but the 5.5% rise in Q2 was revised from no change. The Q3 rise was
the firmest rise since Q1'14. As a result, unit labor cost growth of 2.3% (2.1%
y/y) was revised from 0.8%. That followed a 3.3% Q2 gain which was revised from
-2.0%.
The productivity &amp; cost figures are available in Haver's USECON
database. The expectations figures are from the Action Economics Forecast Survey
and are found in the AS1REPNA database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="808">Productivity &amp; Costs
 (SAAR, %)</th>
 <th width="151">Q3'15</th>
 <th width="151">Q2'15</th>
 <th width="151">Q1'15</th>
 <th width="151">Q3 Y/Y</th>
 <th width="151">2014</th>
 <th width="152">2013</th>
 <th width="152">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="grey3">
 <td class="firstcol" colspan="8" width="1867">Nonfarm Business Sector</td>
 </tr>
 <tr>
 <td class="firstcol" width="808">Output per Hour (Productivity)</td>
 <td align="center" width="151">2.2</td>
 <td align="center" width="151">3.5</td>
 <td align="center" width="151">-1.1</td>
 <td align="center" width="151">0.6</td>
 <td align="center" width="151">0.7</td>
 <td align="center" width="152">0.0</td>
 <td align="center" width="152">0.9</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="808">Compensation per Hour</td>
 <td align="center" width="151">4.0</td>
 <td align="center" width="151">5.6</td>
 <td align="center" width="151">1.5</td>
 <td align="center" width="151">3.6</td>
 <td align="center" width="151">2.7</td>
 <td align="center" width="152">1.1</td>
 <td align="center" width="152">2.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="808">Unit Labor Costs</td>
 <td align="center" width="151">1.8</td>
 <td align="center" width="151">2.0</td>
 <td align="center" width="151">2.6</td>
 <td align="center" width="151">3.0</td>
 <td align="center" width="151">2.0</td>
 <td align="center" width="152">1.1</td>
 <td align="center" width="152">1.7</td>
 </tr>
 <tr class="grey3">
 <td class="firstcol" colspan="8" width="1867">Manufacturing Sector</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="808">Output per Hour (Productivity)</td>
 <td align="center" width="151">5.1</td>
 <td align="center" width="151">2.2</td>
 <td align="center" width="151">-0.6</td>
 <td align="center" width="151">1.5</td>
 <td align="center" width="151">1.3</td>
 <td align="center" width="152">0.7</td>
 <td align="center" width="152">0.7</td>
 </tr>
 <tr>
 <td class="firstcol" width="808">Compensation per Hour</td>
 <td align="center" width="151">7.5</td>
 <td align="center" width="151">5.5</td>
 <td align="center" width="151">-2.2</td>
 <td align="center" width="151">3.7</td>
 <td align="center" width="151">2.7</td>
 <td align="center" width="152">0.2</td>
 <td align="center" width="152">1.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="808">Unit Labor Costs</td>
 <td align="center" width="151">2.3</td>
 <td align="center" width="151">3.3</td>
 <td align="center" width="151">-1.6</td>
 <td align="center" width="151">2.1 </td>
 <td align="center" width="151">1.4</td>
 <td align="center" width="152">-0.5</td>
 <td align="center" width="152">1.0</td>
 </tr>
 </tbody>
</table>

&nbsp;
U.S. Mortgage Loan Applications and Interest Rates Move
Sideways 
by <a href="http://haver.com/comment/Moeller.html">Tom Moeller</a>&nbsp;&nbsp;December
2, 2015
The Mortgage Bankers Association reported that its total Mortgage Market
Volume Index was little-changed last week (20.0% y/y). Purchase applications
increased 7.7% (30.2% y/y) but refinancing applications declined 6.0% (+13.%
y/y).
The effective interest rate on a 15-year mortgage eased to 3.47%, but
remained up from the October low of 3.28%. The effective rate on a 30-year fixed
rate loan held w/w at 4.27% but the rate on a Jumbo 30-year loan was steady at
4.09%. For adjustable 5-year mortgages, the effective interest rate eased to
3.27%, but remained up from last month's low of 3.07%.
The average mortgage loan size declined to $268,000 (+5.8% y/y. For
purchases, it fell to $300,300 (+6.2% y/y). For refinancings it eased to $243,300
(+4.0% y/y).
Applications for fixed interest rate loans increased 21.4% y/y, while
adjustable rate loan applications improved 10.9% y/y.
The survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted weekly since 1990. Respondents include
mortgage bankers, commercial banks and thrifts. The base period and value for
all indexes is March 16, 1990=100. The figures for weekly mortgage applications
and interest rates are available in Haver's SURVEYW database.
<table class="centered" border="0" cellspacing="0" width="1871">
 <colgroup>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 <col>
 </colgroup>
 <thead>
 <tr>
 <th class="firstcol" scope="col" width="850">MBA Mortgage Applications
 (SA, 3/16/90=100)</th>
 <th scope="col" width="153">11/27/15</th>
 <th scope="col" width="153">11/20/15</th>
 <th scope="col" width="153">11/13/15</th>
 <th scope="col" width="153">Y/Y %</th>
 <th scope="col" width="131">2014</th>
 <th scope="col" width="131">2013</th>
 <th scope="col" width="131">2012</th>
 </tr>
 </thead>
 <tbody>
 <tr class="odd">
 <td class="firstcol" width="850">Total Market Index</td>
 <td align="center" width="153">418.9</td>
 <td align="center" width="153">419.9</td>
 <td align="center" width="153">433.9</td>
 <td align="center" width="153">20.0</td>
 <td width="131" align="center">361.5</td>
 <td width="131" align="center">616.6</td>
 <td width="131" align="center">813.8</td>
 </tr>
 <tr>
 <td class="firstcol" width="850">&nbsp;Purchase</td>
 <td align="center" width="153">228.1</td>
 <td align="center" width="153">211.7</td>
 <td align="center" width="153">212.8</td>
 <td align="center" width="153">30.2</td>
 <td width="131" align="center">172.1</td>
 <td width="131" align="center">197.5</td>
 <td width="131" align="center">187.8</td>
 </tr>
 <tr class="odd">
 <td class="firstcol" width="850">&nbsp;Refinancing</td>
 <td align="center" width="153">1,516.9</td>
 <td align="center" width="153">1,612.9</td>
 <td align="center" width="153">1,694.8</td>
 <td align="center" width="153">13.1</td>
 <td width="131" align="center">1,449.8</td>
 <td width="131" align="center">3,070.0</td>
 <td width="131" align="center">4,505.0</td>
 </tr>
 <tr>
 <td class="firstcol" width="850">15-Year Mortgage Effective Interest Rate
 (%)</td>
 <td align="center" width="153">3.47</td>
 <td align="center" width="153">3.50</td>
 <td align="center" width="153">3.51</td>
 <td align="center" width="153">3.42</td>
 <td width="131" align="center">3.54</td>
 <td width="131" align="center">3.42</td>
 <td width="131" align="center">3.25</td>
 </tr>
 </tbody>
</table>


</body>

</html>

The ADP/Moody's National Employment Report indicated that nonfarm private sector payrolls increased 217,000 during November following a 196,000 October gain, revised from 182,000. The latest was firmer than expectations for a 190,000 [...]

U.S. ADP Reports Largest Payroll Increase Since June, Paced by Small Business

US and China big leaders in adoption of AI models

Robust US demand for advanced technology products

China's export growth rotating away from the US

More pronounced upward revisions in countries more exposed to AI investment

Stable job openings and hiring rates point to cautious hiring

Global freight costs are on the rise while supply chain pressures are contained

Accelerating positive economic surprises in the G10 are boosting the global economy

Considerably more monetary ease expected from US and UK as Japan tightens

Tighter US immigration enforcement adversely impacting labor force

Economic policy uncertainty, while still elevated, is declining

Gradual disinflation and easier monetary policies across advanced economies

Largest October layoffs since 2003, led by technology

Subdued global shipping costs not yet pointing to supply chain problems

PMIs show still-elevated but slowing US inflation

AI boosting US investment in data centers

US productivity growth has been significantly faster than in other major economies

Consumers' short-term US inflation expectations still elevated while longer-term expectations of financial markets are steady

US financial markets have gotten used to elevated policy uncertainty

FOMC now expects more rate cuts going forward than in June

China gaining ASEAN exports while US exports slump

Job openings less than the number unemployed in July for first time since 2021

Reaccelerating goods price inflation along with sticky services inflation clouds the outlook

Falling oil prices aren't pulling down inflation expectations, pointing to a boost from increased tariffs

Equity market exuberance outpacing macroeconomic data

Apart from Japan, Blue Chip forecasters expect further sizable monetary easing

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Andrew Cates

**The Global Monetary Policy Consensus**
The latest Blue Chip Financial Forecasts survey points to a notably more balanced global monetary policy outlook over the coming year. In contrast to the pronounced easing bias that dominated much of the past two years, expectations are now more symmetric, with a similar number of central banks projected to raise rates as to ease policy. Japan is seen delivering further tightening, while Canada is expected to initiate an interest rate hike in coming months. In Australia’s case, this tightening guidance was reinforced this week, with the Reserve Bank lifting its policy rate by 25 basis points. Elsewhere, and in contrast, the euro area, UK and US are expected to move in the opposite direction.

260205Z1.jpg

**US manufacturing activity**
The second chart underscores the recent improvement in US economic momentum, highlighted by an unexpected surge in the January ISM manufacturing PMI. After spending much of the past year hovering below the 50 threshold consistent with stagnation, the index jumped sharply back into expansionary territory, signalling a renewed pickup in industrial activity. This rebound has coincided with a broader run of stronger-than-anticipated US economic data, as reflected in the upswing in the Citigroup Economic Surprise Index. Together, these developments point to a US economy that continues to display notable resilience, complicating expectations of monetary easing in the near term.

260205Z2.jpg

**US Bank Lending Standards and Financial Stress** 
The next chart turns to US financial conditions, highlighting the latest readings from the Senior Loan Officer Opinion Survey. The net proportion of banks tightening lending standards on corporate loans and mortgages is now more modest by historical standards, and well below the extremes seen during past episodes of financial stress. Some easing in credit headwinds has occurred alongside relatively subdued readings on the OFR Financial Stress Index, which continues to hover below its long-run average. Together, these indicators suggest that the US financial system has continued to avoid the kind of acute stress typically associated with sharp slowdowns in credit availability—helping to underpin the recent resilience in economic activity.

260205Z3.jpg

**Semiconductor Sales**
The fourth chart highlights the renewed surge in global semiconductor sales, with momentum strengthening sharply over recent months across the Americas, China and the broader Asia-Pacific region. After the cyclical downturn in 2022–23, sales have rebounded to fresh highs, reflecting a powerful revival in demand for advanced chips and related technologies. This upswing has taken place amid intense investor preoccupation with artificial intelligence, with expectations that AI adoption will drive a sustained wave of capital spending on data centres, cloud infrastructure and high-performance computing. In contrast, semiconductor sales in Europe remain comparatively subdued, reflecting the region’s smaller footprint in high-end chip manufacturing, weaker industrial demand, and the ongoing impact of slower economic growth. While semiconductors are inherently cyclical, markets have increasingly interpreted the current rebound elsewhere as structural rather than purely cyclical—underpinned by the belief that AI represents a transformative and durable source of demand growth.

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**Large-Scale AI Models**
The next chart illustrates the rapid proliferation of large-scale AI models globally, with newly updated data for 2025 pointing to a further sharp acceleration in development activity. The United States continues to lead by a wide margin, while China has also seen a steep rise in model deployment in recent years, underscoring the intensifying technological competition between the two economies. Growth in the UK and other regions has been more modest by comparison, highlighting the increasingly concentrated nature of AI innovation. Taken together with the surge in semiconductor sales, these trends help explain the market’s strong preoccupation with AI as a potential driver of future productivity and investment cycles—although the geographic concentration of activity also raises questions about the uneven distribution of any resulting economic gains.

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**An AI Bubble?** 
The final chart draws on the latest Blue Chip Financial Forecasts special questions, highlighting market participants’ perceptions of the economic gains likely to be delivered by artificial intelligence. While a sizeable share of respondents still believe that financial markets may be overestimating AI’s potential benefits, an increasing proportion now judge current expectations to be broadly accurate, with only a small minority viewing the gains as underestimated. Notably, this represents a softening in scepticism compared with the survey results from last month, when concerns about excessive market optimism were more pronounced. The shift suggests a growing acceptance that AI-related investment and innovation could translate into meaningful economic impacts—though uncertainty remains high around the scale, timing and distribution of these gains.

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Financial markets have experienced renewed gyrations in recent weeks, as shifting geopolitical risks, questions around Federal Reserve independence, renewed talk of US dollar “debasement,” and ongoing enthusiasm surrounding artificial intelligence have combined to drive volatility across asset classes. These cross-currents have also contributed to a degree of rotation away from high-flying technology stocks, as investors reassess valuations and the timing of anticipated AI-driven gains. Against this backdrop, the charts in this week’s COTW highlight several important themes. Policy rate expectations now appear more balanced globally, marking a clear shift away from the one-sided easing bias of the past two years (chart 1), even as resilient US data—underscored by the unexpected jump in the January ISM index and a run of positive economic surprises—continues to complicate the outlook for monetary easing (chart 2). At the same time, US financial conditions remain relatively benign, with limited evidence of widespread credit stress or aggressive tightening in lending standards (chart 3). Meanwhile, the sharp rebound in semiconductor sales and the accelerating rollout of large-scale AI models underscore why investors remain so focused on the AI narrative, even as Europe lags behind due to weaker industrial momentum and a smaller footprint in advanced chip production (charts 4 and 5). Finally, while some scepticism about AI’s ultimate economic impact persists, the latest survey results suggest a moderation in concerns that markets are materially overestimating its gains (chart 6). Taken together, these developments paint a picture of a US economy that remains more resilient than many had anticipated, set against a financial landscape increasingly shaped by powerful—if sometimes competing—narratives around geopolitics, policy, and technological transformation.

Charts of the Week: Balanced Policy, Resilient Data and AI Narratives

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With the December report, Germany’s production and some of the early European industrial production data reveal a good deal of chaos in terms of the embedded trends. On the month, German industrial production fell by 1.9%, with consumer goods output up by 0.5%, capital goods output falling by 5.3%, and intermediate goods output falling by 1.2%. Among the early reporters in the monetary union—France, Spain, and Portugal—only Spain showed an increase in manufacturing IP in December; however, Spanish industrial production is notoriously volatile.

**Broader IP trends in Germany and elsewhere in Europe**
As for other early industrial production reporters, both Sweden and Norway showed strong-to-solid gains in December and each of them showed two-months of gains in a row. Beyond that, sequential growth rates from 12-months to six-months to three-months show accelerating growth in German consumer goods output against decelerating growth for intermediate goods. Real manufacturing output and real sales show mixed results- no clear trends; however, real manufacturing orders in Germany are off the map strong. 

**German manufacturing/industrial Surveys**
German industrial surveys from the IFO for manufacturing shows persistent weakening as well as for IFO manufacturing expectations, and in the EU Commission industrial index in the last three months. More broadly, Germany shows some modest but ongoing step up all of these based on average levels from 12-months to six-months to three-months for IFO expectations and the EU Commission industrial readings with mixed results for other survey readings.

**IP trends in Europe**
For the early reporting EMU members France, Spain, and Portugal, who report industrial production trends, each show mixed monthly trends against ongoing decelerations for manufacturing output over the broader sequential periods (12-month, to 6-month, to 3-month). However, for other Europe, Sweden and Norway, manufacturing trends are steadily accelerating on this broader timeline.

**A feeling of ‘Deja- What?’**
These combinations of opposed trends mixed with a lack of trends leave us with this sense of confusion about what's going on in manufacturing. For Germany, the extreme strength in orders is reassuring since orders should be forward-looking rather than backward-looking or even contemporaneous. But orders can also be a fickle series and so we'll have to watch it to see if the trends for German orders hold up.

**Current quarter-What’s been happening now**
In addition, current quarter growth for Germany actually looks quite good with industrial production up 3.7% at an annual rate in the current quarter, led by output increases in manufacturing against a decline in the intermediate goods output. Real orders in the quarter are surging at a 44% growth rate, while real sales in manufacturing only had a 0.1% uptick at an annual rate. The industrial indicators for Germany in the quarter show weakness or flatness with the only exception being IFO manufacturing expectations that advanced by a small amount. The three EMU members who report industrial production data show positive growth in the just-completed quarter except for Portugal where industrial production is falling at a 2.9% rate in the fourth quarter. Sweden and Norway, European countries but not monetary union members, show a strong 22% annual rate gain in Sweden against the 3% annual rate decline in Norway.

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**Rankings**
**How growth rates stack up…**
Moving away from short-term trends, the rankings of growth rates of these various metrics using 12-month growth rates on data back to 2006, show below-median growth rates for German industrial production and all three of its major sectors. All of them have rankings below the 50% mark where the median resides. Germany’s manufacturing output growth rate is below its median as is the growth of real sales; and once again real manufacturing orders break out and show a stunning 90th percentile standing, extremely strong compared to other growth rates on this period.

**Indicator rankings are poor**
However, the survey based industrial indicators for Germany, ranked based on their index levels, are all extremely weak and much weaker than German sector or other German metrics. The strongest indicator reading is the 29th percentile standing for IFO manufacturing expectations while the current ZEW index, IFO manufacturing index, and the EU Commission industrial readings, all reside below their 15th percentile. The survey rankings suggest that industrial sentiment is in much worse shape than activity and growth.

**IP elsewhere in Europe**
However, the growth ranking of manufacturing industrial production for the reporting EMU members and other European members are all quite solid, with percentile standings ranging from the 66th up to the 93rd percentile.

**Summing up**
From these data, Germany emerges as the weak economy compared with historic norms based on industrial production growth and indicator readings. However, there's a glimpse of positivity from the growth of real orders, and at the same time, some concern about ongoing sentiment for manufacturing in Germany as distinct from actual performance.

Germany

German IP Reveals Chaotic Trends

Winnie Tapasanun

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**Total job openings** fell 5.6% m/m (-12.9% y/y) to 6.542 million in December after a downwardly revised 7.0% decline to 6.928 million in November (previously -4.1% m/m; 7.146 million), according to the Job Openings and Labor Turnover Survey. December marked the third consecutive m/m fall and the lowest level since September 2020. The job openings rate declined to 3.9% in December, the lowest since April 2020, from 4.2% in November, remaining below a record-high 7.4% in March 2022. This rate is calculated as the ratio of job openings to total nonfarm employment plus openings. Significantly, the drop in job openings also lowered the **ratio of job openings to unemployed individuals** to 0.872 in December—the lowest since March 2021—from 0.890 in November, down from 1.085 in December 2024 and a pre-pandemic 1.211 in February 2020. A reading of 0.872 implies there were about 0.87 open jobs per unemployed person—indicating fewer openings than unemployed workers. December was the fifth time in six months that this ratio remained below 1.0.

**Private sector job openings** fell 6.8% (-12.5% y/y) to 5.804 million in December after a 6.6% fall to 6.227 million in November, registering the third successive m/m decline and the lowest level since September 2020. The private sector job openings rate fell to 4.1% in December, the lowest since April 2020, from 4.4% in November. The December m/m decline in private sector openings reflected drops of 27.7% (-36.9% y/y) in financial activities, 20.2% (-25.5% y/y) in professional & business services, 14.4% (-5.1% y/y) in trade, transportation & utilities, and 5.2% (-12.4% y/y) in private educational & health services. To the upside, private sector openings in the following categories rose m/m in December: other services (21.1%; 11.0% y/y), mining & lodging (17.6%; 0.0% y/y), information (13.5%; -4.7% y/y), manufacturing (8.5%; 0.5% y/y), leisure & hospitality (7.5%; -17.2% y/y), and construction (2.8%; 42.4% y/y). Meanwhile, government job openings rose 5.3% (-15.6% y/y) in December, the first m/m rise in three months, after a 10.6% drop in November.

**Total hiring** rebounded 3.4% (-1.5% y/y) to 5.293 million in December, the first m/m increase since September, following a 4.6% decrease to 5.121 million in November. The hiring rate edged up to 3.3% in December from 3.2% in November, though it remained below pre-pandemic levels. **Private sector hiring** rose 3.1% (-0.4% y/y) to 4.978 million in December, the third m/m rise in four months, after a 4.0% decline to 4.826 million in November. The private sector hiring rate rose to 3.7% in December from 3.5% in November, the same as in October and September. The December m/m increase in private sector hiring was led by a 32.1% jump (42.3% y/y) in information, followed by gains of 24.0% (-4.6% y/y) in financial activities, 23.5% (0.0% y/y) in mining & lodging, 6.5% (-4.8% y/y) in private educational & health services, 4.2% (-4.9% y/y) in trade, transportation & utilities, 3.6% (6.1% y/y) in construction, 3.4% (7.9% y/y) in leisure & hospitality, and 1.8% (-4.3% y/y) in manufacturing. To the downside, private sector hiring in professional & business services (-5.2%; +0.5% y/y) and other services (-4.3%; -16.5% y/y) declined m/m in December. Meanwhile, government hiring rebounded 6.4% (-16.3% y/y) in December, the first m/m rise since September, following a 13.5% drop in November.

**Total separations** rose 2.1% (3.3% y/y) to 5.251 million in December after a 1.5% rise to 5.144 million in November, marking the third m/m increase in four months and the highest level since September. The total separations rate edged up to 3.3% after holding at 3.2% in November and October. Private sector separations rose 1.6% (4.2% y/y) to 4.932 million in December, the highest level since June, while government sector separations jumped 10.4% (-9.1% y/y) to 319,000 following two consecutive m/m declines. **Total quits** (voluntary separations initiated by the employee) increased 0.3% (3.5% y/y) to 3.204 million in December, the third m/m rise in four months and the highest level since June, after a 7.4% rebound in November. The quits rate (a measure of workers’ willingness or ability to leave jobs) held at 2.0% in December and November, slightly below 2.3% in February 2020. Private sector quits eased 0.2% (+4.5% y/y) following an 8.4% November rebound. **Layoffs and discharges** (involuntary separations initiated by the employer) increased 3.6% (5.6% y/y) to 1.762 million in December, up for the third time in four months, after an 8.1% drop in November. The layoffs & discharges rate remained at 1.1% in December and November, marginally below 1.3% in February 2020. Private sector layoffs grew 4.3% (7.8% y/y) following a 7.3% November decrease.

The Job Openings and Labor Turnover Survey (JOLTS) data are available in Haver’s **USECON** database.

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- Job openings down 5.6% (-12.9% y/y) to 6.542 mil., third straight m/m decline.
- Hiring up 3.4% (-1.5% y/y) to 5.293 mil., first m/m increase since September.
- Separations rise to a three-month high; quits reach a six-month high; layoffs rebound.

U.S. JOLTS: Openings Drop to Lowest Level Since Sept. ’20; Hiring Rebounds in December

Sandy Batten

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Initial claims for unemployment insurance jumped 22,000 to 231,000 in the week ended January 31 following an unrevised 209,000 in the prior week. The four-week average rose to 212,250 from 206,250. The Action Economics Forecast Survey looked for 213,000 claims to have been filed. Winter Storm Fern and the accompanying very cold temperatures could have provided a temporary boost. Historically speaking, claims remain at low levels.

The total number of unemployment insurance beneficiaries—also known as “continuing claims”—increased by 25,000 to 1.844 million in the week ending January 24, from a downwardly revised 1.819 million in the prior week (previously 1.827 million). The insured unemployment rate remained at 1.2% in the week of January 24, unchanged from the previous eight weeks.

The insured unemployment rate varied greatly across individual states and territories. In the week ending January 17, the highest unemployment rates were in Rhode Island (2.83%), New Jersey (2.77%), Massachusetts (2.67%), Washington (2.54%), and Minnesota (2.45%). The lowest rates were in Florida (0.30%), North Carolina (0.42%), Louisiana (0.43%), Alabama (0.46%), and Arkansas (0.47). Rates in other notable states include Illinois (2.15%), California, (2.08%), New York (2.02%), Pennsylvania (1.91%), and Texas (1.09%). These state data are not seasonally adjusted.

Data on weekly unemployment claims are from the Department of Labor itself, not the Bureau of Labor Statistics. They begin in 1967 and are contained in Haver’s **WEEKLY** database and summarized monthly in **USECON**. Data for individual states are in **REGIONW** back to December 1986.

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- New claims jumped 22,000 to 231,000, the highest level since December 6.
- Continuing claims rose to 1.844 million from 1.819 million.

U.S. Initial Unemployment Claims Surged in Latest Week

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German real orders in December adjusted for inflation rose strongly again, gaining 7.8% month-to-month after rising 5.7% month-to-month in November. Foreign orders were up by 5.6% in December compared to 5.2% in November. Domestic orders surged by 10.7% in December after rising 6.4% in November and 10% in October.

**Real sales**
Real sales were mixed in December with overall sales falling 1.4% month-to-month mostly on weakness in capital goods sales.

**Broad categorical acceleration**
Many flows are accelerating this month. Sequential growth rates show acceleration. Total real orders accelerate from a year ago, to the current year, to six-months, and to three-months. Sales growth rates for consumer goods, consumer nondurables, and intermediate goods all show accelerations in gear. The exceptions are foreign orders that are not as strong over six months compared to their 12-month growth. And on the sales side, consumer durables sales and capital goods sales are weak.

**Quarter-to-quarter**
Quarterly annualized growth is complete for Q4 with this report. Foreign orders are the ‘weak flow’ expanding at a 13.6% annual rate – certainly not a weak growth rate. But domestic real orders are up at an astounding 101.9% annual rate. The net impact on the total real orders growth is to lift it to a pace of 44.1%. 

**Order ranking is very strong**
The table provides two rankings: one based on the level of variables and the other based on its year-on-year growth. The rankings this month for real orders overall, foreign, and domestic orders all reside in their top 80th to 90th percentiles- extremely strong based on level or growth. Sales do not follow suit. This gives us some reason to suspect that there is some lumpiness involved in the manufacturing data as distinct from strength. That will be something to watch. Overall mining and manufacturing sales growth is essentially at its historic median at a rank of 49.8. However, capital goods, intermediate goods and manufacturing sales all have rankings at or above their medians - as high as a 61-percentile standing for capital goods.

**Industrial confidence**
Industrial confidence for Germany, France, Italy and Spain (the EU’s big-four economies) show rankings based on these survey levels that are much lower at the 11th percentile for Germany, the 42nd and 36th percentiles, for France and Italy, respectively. Spain scores better with a 61.8 percentile standing on its industrial confidence measure. 

On balance, there is now an accelerating profile that is broad in sales trends and especially strong order trends. Perhaps Europe, under the pressure to stimulate its miliary capabilities, has a core of demand to help drive output ahead more consistently. This is something to watch in the coming months.