Economy in Brief

S&P composite PMIs for November worsened generally across the reporting global community. Among the 23 reporters in the table, we see in November 15 of them have PMI gauges below 50 indicating a contraction in the overall economy (since these are composite indexes) while 12 of 23 indicate that there is a slowdown in progress. Ten of the 15 PMIs below 50 are also slowing.

The November metrics are generally slightly worse than those from October and September indicating that there is some ongoing slippage occurring. In addition, if we look at the averages from 3-, 6-, and 12-months, we see the number of jurisdictions with readings below 50 swells in number from 4 to 7 to 13 while the number that are showing slowing activity rises from 3 to 16 to 18. There clearly is a broadening of the weakening and that is worrisome.

We also see a great deal of weakness among the largest market economies at the top of the table over the last three months. Looking at the United States, the European Monetary Union, Germany, France, Italy, and Spain as separate entities, these are six observations over three months giving us 18 observations and yet among those 18 only 6 of the observations showed month-to-month improvements. Looking at the same group of countries over three months, six months and 12 months, all of them are worsening on all of those horizons.

Looking a little bit more deeply at the queue standings that rank each one of these observations and their recent approximately 4 1/2 years of queue of data, we find that for the U.S., for the European Monetary Union, Germany, France, Italy, and Spain all of them have queue standings below the 25th percentile, most of them below their 20th percentile. These are all extremely weak readings.

The extent and degree of weakness The queue versus percentile standings generally shows very different results. The percentile standings position each observation in its high-low range as a percentile position for the period while the queue metric positions each observation relative to all the observations. When you look at the queue standing, you see where this observation stands in percentile terms versus all the observations that have been registered during the last 4 1/2 years. The queue gauge only gives us the relative position proportionally versus all the other observations. The percentile gauge, in contrast, uses only three observations. The difference is that the percentile numbers show us that there is very little abject weakness in the November readings. Placing each November observation between its respective highs and their lows leaves most of them above their 50th percentile that is above their mid-range observation. Only Qatar at a 39.5 percentile standing, Sweden with a 44.1 percentile spending and the U.S. with a 46.4 percentile standing are below their respective historic medians. The weak queue standings tell us that the preponderance of readings over this period have been stronger, but the relatively firm percentile standings tell us that current levels of the variables do not threaten the sort of lows we see during periods of extreme weakness such as during Covid since those readings fall in this period comparison and mark out of the lows.

Current standings: As an example, the average unweighted U.S., U.K., European Monetary Union, Japan composite PMI is at 47.8 in November; that's down from 48.8 in October and from 49.4 in September. This is clearly slipping weakness, and these are observations below 50 indicating contraction, at least in the lexicon of the PMI data; however, these are not exceptionally weak readings. The median for the entire sample of countries is at 48.9 in November, down from 49.4 in October and from 50.9 in September. There is sliding weakness considering the entire sample. And as we saw, the number of jurisdictions below 50 has been expanding and the numbers slowing have been relatively steady and in double digits. A good deal of weakness is pervasive but so far it is weakness of a more moderate variety with the overall average and median percentile standings around their 70% mark.

The unemployment rate for Canada in November fell to 5.1% in November from 5.2% in October. Canada, like the United States, has inflation problems whose profile looks quite similar to the U.S. inflation statistics. The two countries seem to be in the grip of the same cycle, which is usually the case. For now their domestic statistics are looking remarkably similar. What that means is that Canada's drop in the unemployment rate is unexpected and not what policy has been looking for. Canada's inflation rate for its core is over 5% and the headline CPI is much higher than that at nearly 7%.

Canadian job growth rose by 10,100 in November, sharply weaker than the 108,300 gain in October and weaker than the 21,100 in September. The three-month average gain of 46,500 is far ahead of the 4,300 average over six months and better than the 30,700 average over 12 months. In percentage terms, total employment rose by 1.9% over 12 months

Goods sector employment shed 9,400 jobs in November after gaining 45,100 in October and losing 24,800 in September. The sector has been erratic in current months. However, good sector job gains have been slowing steadily from an average of 11,300 over 12 months to an average of 8,700 over six months, to 3,600 over three months. The sector has gained 3.5% over 12 months

Within the goods sector, manufacturing jobs rose by 18,500 in November, rose by 23,800 in October and fell by 27,500 in September. Manufacturing sector jobs are marginally lower over 12 months. Gains average a monthly rise of 6,900 over six months and 4,900 over three months. Over 12 months manufacturing jobs are lower by 0.1%.

Service sector jobs gain 19,600 over November, slower than the 63,200 for October and the 45,900 in September. Service sector job gains average 19,500 over 12 months. The average decline is 4,300 over six months but now has averaged gains of 42,900 over three months. Sector gains in services have also been relatively volatile; the sector has gained by 1.5% year over year.

Within the service sector, accommodation and food supply workers have seen the fastest growth at 6.7% over 12 months. Professional and technical jobs have been the next strongest, rising 5.6% over 12 months. Jobs in information and culture have grown at a 4.5% pace. At the other end of the spectrum, the services sector jobs in transportation have declined by 3.8% over 12 months; jobs in trade have declined by 2.7% over 12 months while gains in healthcare and service professionals have increased by only 0.6%. There have also been very small gains in management. The number of managers employed has grown by only 0.2%.

The labor force participation rate in Canada has moved slightly lower. Its 12-month average is 65.1%. Its three-month and six-month averages both are 64.8%, which is the same as its value in November. The participation rate has been relatively stable; however, it tends to the weak side. Over 12 months the unemployment rate has fallen by 1%; its 12-month average is 5.4% that fell to 5.1% over six months and averages 5.2% over three months although in November the unemployment rate is back down to 5.1%.