Weekly Economic Review: November Employment Report Exceeds Expectations

Posted by Laine Smith on 12/10/17 8:00 AM

Topics: Economy

In this week’s economic review, nonfarm payrolls grew more than expected and consumers are reporting high optimism in current economic conditions while spending more on revolving credit.

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Employment

Nonfarm payrolls grew more than expected with an increase of 228,000 in November. Gains were outsized in manufacturing (+30,000), construction (+24,000), and professional services (+46,000).

Though the labor market is heating up, lack of available workers is a concern with the average workweek increasing, up 1 tenth to 34.5 hours for private sector employees, and the unemployment rate, which held at a 17-year low of 4.1 percent.

Despite major demand, wage inflation remains unresponsive. While average hourly earnings increased 0.2 percent in November, October’s report was downwardly revised and the year-over-year rate stands at just +2.5 percent, a historically low reading.

Consumer Sentiment

The preliminary reading of December’s consumer sentiment index remains optimistic at 96.8. The current conditions index, which is a strong indicator for holiday spending, jumped a sharp 2.9 points from November to an expansion peak of 115.9.

The negative in the report was the expectations component, which fell 4.3 points to 84.6.

Consumer Credit

Heading into the holiday season, increasing revolving credit indicates less reluctance amongst consumers. In October, consumer credit rose $20.5 billion with $8.3 billion of that increase attributed to revolving credit. This marks the largest monthly increase for revolving credit since November 2016.

This week in the economy:

  • As of December 7th, the 30-year average fixed mortgage rate was 3.94 percent with 0.5 points, according to Freddie Mac.
  • Purchase applications rose a seasonally adjusted 2 percent in the week of December 1st. Without seasonal adjustments, the purchase index stands 8 percent higher than a year ago. Refinance applications rose 2.9 percent to a market share of 51.6 percent, the highest the refinance sector has been since September.
  • In the week of December 2nd, initial jobless claims fell by 2,000 to a lower-than-expected level of 236,000. The 4-week average is down to 241,000 but still remains about 10,000 higher than the month-ago comparison.
  • The Bloomberg Consumer Comfort Index remained very strong in the week of December 3rd, landing at a level of 52.3.

The economic calendar for the week of December 11th, 2017:

  • Monday - JOLTS
  • Tuesday – FOMC Meeting Begins
  • Wednesday – MBA Mortgage Applications, Consumer Price Index, FOMC Meeting Announcement
  • Thursday – Retail Sales, Bloomberg Consumer Comfort Index, Jobless Claims

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