by Calculated Risk on 12/02/2011 08:30:00 AM

From MarketWatch: U.S. economy adds 120,000 jobs in November

The U.S. gained 120,000 jobs in November and the unemployment rate fell to 8.6% from 9.0%, the Labor Department said Friday. The government also revised jobs data for October and September to show that 72,000 additional jobs were created. ... Hiring in October was revised up to 100,000 from 80,000 and the job gains in September were revised up to 210,00 from 158,000. In November, companies in the private sector hired 140,000 workers ... Government cut 20,000 jobs...

Click on graph for larger image.

The following graph shows the unemployment rate. The unemployment rate declined to 8.6%.

Some of the decline in in the unemployment rate was related to a decline in the number of workers in the labor force.

I'll have more on this soon (the BLS website is having a problem).

The second graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

The red line is moving slowly upwards.

This was still a weak report, and slightly below consensus. There were decent upwards revisions to the September and October reports. I'll have much more soon ...

by Calculated Risk on 12/01/2011 11:01:00 PM

From the Financial Times: Shape of last-ditch eurozone deal emerges

The deal involves bilateral fiscal agreements - and then possibly the ECB getting more involved.

From the WSJ: A Euro Crisis Deal Emerges

European Central Bank President Mario Draghi signaled the bank could ramp up its role battling the debt crisis if euro-zone governments enforce tougher deficit cutting—suggesting outlines are emerging of a deal that investors have been clamoring to see happen.

From the NY Times: French President Warns of Dire Consequences if Euro Crisis Goes Unsolved

Saying that he wanted to tell the truth to the French people, President Nicolas Sarkozy said Thursday night that Europe could be “swept away” by the euro crisis if it does not change. He said that Europe would “have to make crucial choices in the next few weeks,” and that France and Germany together were supporting a new treaty to tighten fiscal discipline and promote economic convergence in the euro zone.

The Italian 2 year yield was down sharply to 6.32%, and the 10 year yield was down to 6.65%.

The Spanish 2 year yield was down sharply to 4.78%, and the 10 year yield was down to 5.74%.

The Belgian 10 year yield was down to 4.75%, and the French 10 year yield was down to 3.1%.

Earlier:
• ISM Manufacturing index indicates slightly faster expansion in November
• LPS: Mortgages In Foreclosure Process at an All-Time High
• Construction Spending increased in October
• U.S. Light Vehicle Sales at 13.6 million SAAR in November, Highest since Aug 2009

by Calculated Risk on 12/01/2011 06:38:00 PM

Tomorrow (Friday) the BLS will release the November Employment Situation Summary at 8:30 AM ET. Bloomberg is showing the consensus is for an increase of 131,000 payroll jobs in November, and for the unemployment rate to remain unchanged at 9.0%. The consensus has been moving up all week and the "whisper" employment number is probably even higher.

Overall the economic data for November was fairly weak suggesting sluggish growth, but somewhat improved compared to recent months. So I'd expect a little better employment report - but that isn't saying much.

Here is a summary of recent data:

• The ADP employment report showed an increase of 206,000 private sector payroll jobs in November. Unfortunately ADP hasn't been very useful in predicting the BLS report. Also note that government payrolls have been shrinking by about 27,000 on average per month this year, so this suggests around 206,000 private nonfarm payroll jobs added, minus 27,000 government workers - or around 179,000 total jobs added in November.

• The ISM manufacturing employment index decreased to 51.8% from 53.5% in October. Based on a historical correlation between the ISM index and the BLS employment report for manufacturing, this reading suggests a loss of a few thousand private payroll jobs for manufacturing in October.

The ISM non-manufacturing index for November will be released next Monday.

• Initial weekly unemployment claims averaged about 396,000 in November, down from 404,000 per week in October, and down from 418,000 per week in September.

For the BLS reference week (includes the 12th of the month), initial claims were at the lowest level since March and April - and the BLS reported an average of 205,500 jobs added for those two months.

• The final November Reuters / University of Michigan consumer sentiment index increased to 64.1 from 60.9 in October. This is frequently coincident with changes in the labor market, but also strongly related to gasoline prices and other factors. In general this low level would suggest a weak labor market - but slightly better than in August, September and October (the BLS reported an average of 114,000 per month for those three months).

• And on the unemployment rate from Gallup: U.S. Unemployment Ticks Up in Mid-November

Unemployment, as measured by Gallup without seasonal adjustment, is 8.5% in mid-November -- up from 8.3% in mid-October, but down significantly from 9.2% in mid-November 2010. Gallup's mid-month unemployment measure suggests the government is likely to report no change in its seasonally adjusted unemployment rate for November 2011.

NOTE: The Gallup poll results are Not Seasonally Adjusted (NSA), so use with caution. Usually the NSA unemployment rate increases in November - so this would suggest little change in the headline seasonally adjusted unemployment rate.

There always seems to be some randomness to the employment report, but it does seem the situation has improved somewhat (lower initial weekly unemployment claims, more job openings). I'll go with the consensus forecast this month.

by Calculated Risk on 12/01/2011 03:53:00 PM

Based on an estimate from Autodata Corp, light vehicle sales were at a 13.63 million SAAR in November. That is up 11.4% from November 2010, and up 3.1% from the sales rate last month (13.22 million SAAR in Oct 2011).

This was above the consensus forecast of 13.4 million SAAR.

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for November (red, light vehicle sales of 13.63 million SAAR from Autodata Corp).

Click on graph for larger image.

This was the highest sales rate since August 2009 ("Cash-for-clunkers"), and other than August 2009, this was the highest since June 2008.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

This shows the huge collapse in sales in the 2007 recession. This also shows the impact of the tsunami and supply chain issues on sales, especially in May and June.

Note: dashed line is current estimated sales rate.

Growth in auto sales should make a strong positive contribution to Q4 GDP. Sales in Q3 averaged 12.45 million SAAR, and so far (October and November) sales have averaged 13.42 million SAAR in Q4, an increase of 7.6% over Q3.

by Calculated Risk on 12/01/2011 02:12:00 PM

Note: I'll post a graph of November auto sales around 4 PM ET.

This morning the Census Bureau reported that overall construction spending increased in October:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during October 2011 was estimated at a seasonally adjusted annual rate of $798.5 billion, 0.8 percent (±1.6%) above the revised September estimate of $792.1 billion. The October figure is 0.4 percent (±1.9%) below the October 2010 estimate of $802.0 billion.

Private construction spending increased in October:

Spending on private construction was at a seasonally adjusted annual rate of $518.6 billion, 2.3 percent (±1.1%) above the revised September estimate of $507.1 billion. Residential construction was at a seasonally adjusted annual rate of $239.0 billion in October, 3.4 percent (±1.3%) above the revised September estimate of $231.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $279.6 billion in October, 1.3 percent (±1.1%) above the revised September estimate of $275.9 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 65% below the peak in early 2006, and non-residential spending is 32% below the peak in January 2008.

Public construction spending is now 14% below the peak in March 2009.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, both private residential and non-residential construction spending have turned positive, but public spending is now falling on a year-over-year basis as the stimulus spending ends. The year-over-year improvements in private non-residential are mostly due to energy spending (power and electric).

Earlier:
• ISM Manufacturing index indicates slightly faster expansion in November
• LPS: Mortgages In Foreclosure Process at an All-Time High