Note: Travelling week.
US Job Openings Pick Up to 7.7 Million as Labor Demand Steadies Quits rose and layoffs eased, also showing stabilization
US job openings picked up in October while layoffs eased, suggesting demand for workers is stabilizing.
Available positions increased to 7.74 million from a revised 7.37 million reading in September, the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS, showed Tuesday. The median estimate in a Bloomberg survey of economists called for 7.52 million openings.
The advance in openings was led nearly entirely by professional and business services and accommodation and food services.
The overall uptick followed months of steep declines — including a big drop in September. The levels of layoffs decreased to the lowest since June, while quits picked up to the highest since May, indicating workers are more confident in their ability to find a new job.
While companies like Boeing Co., General Motors Co. and Cargill Inc. have either recently cut jobs or announced plans to do so, there are few signs of a broad pickup in layoffs. (…)
The number of vacancies per unemployed worker, a ratio the Fed watches closely, was little changed at 1.1, in line with pre-pandemic levels. At its peak in 2022, the ratio was 2 to 1.
Friday brings the November jobs report, the final major labor-market update before the Federal Reserve’s Dec. 17-18 meeting.
October’s job openings rose 372,000 to 7.74 million (chart). While hires fell by 269,000, layoffs decreased 169,000 and quits increased by 228,000. Bad weather, labor strikes, and uncertainty regarding the US elections probably depressed hiring in October. Still, the labor market’s broad resilience in the face of those pressures is significant. More workers quitting their jobs suggests they are confident about their ability to earn higher wages elsewhere. The animal spirits unleashed by Trump 2.0 should boost hiring during the final three months of this year and well into next year, in our opinion. (Ed Yardeni)
Indeed Job Postings stabilized during the summer but seems back on its downtrend (through Nov. 29):
CONSUMER WATCH
Santa’s got a brand-new bag, or two. U.S. consumers did what they do best over the long weekend, shelling out a record $10.8 billion on Black Friday according to Adobe Analytics, up a brisk 8.2% year-over-year. Spending on so-called Cyber Monday rose more than 13% to $13.3 billion, while total holiday season expenditures will reach $240.8 billion if Adobe’s forecasts are on point, representing an 8.4% uptick from 2023.
Largely stable household debt levels further color those impressive growth rates, with the total tab rising a modest 3.8% year-over-year in the third quarter per Moody’s, trailing the 4.9% and 4% expansions in nominal GDP and nonfarm wages, respectively, over the same period. Credit card balances rose at an 8.1% annual clip to a record $1.17 trillion, though Bloomberg notes that such borrowings as a share of income stand at 8%, in line with the pre-pandemic ratio. (Almost Daily Grant’s)
China Services Activity Gauge Signals Continued Growth, Optimism The Caixin services purchasing managers index came in at 51.5 in November, edging down from 52.0 in October
(…) Both supply and demand in the sector continued to grow, but at a marginally slower pace, according to Caixin. Business activity and total new orders followed suit, while overseas demand growth decelerated for a second straight month, the data indicated.
Employment in the services sector grew for a third consecutive month in November, but was limited despite continued increases in total new orders.
As Beijing’s more aggressive stimulus efforts start to kick in, sentiment among service providers has improved markedly, with the gauge for future expectations rising for a second month. (…)
Wednesday’s readings are in line with the official gauge released previously. China’s official nonmanufacturing PMI, which covers both service and construction activity, fell to 50.0 in November from 50.2 in October. The subindex tracking service activity stayed unchanged at 50.1, suggesting continued expansion.
Both the official and Caixin PMI readings for the manufacturing sector came in stronger in November, pointing to a solid burst of activity, which may have been aided in part by the front-loading of shipments ahead of potential U.S. tariffs. (…)
- The new business index fell to 51.8 in November (52.1 in October) and the outstanding business index edged down to 50.5 in November (50.7).
- The new export orders sub-index moderated slightly to 52.7 in November (52.9 ).
- The employment sub-index remained unchanged at 50.2 in November.
- Price indicators suggest inflationary pressures eased in November. The input prices sub-index fell to 50.1, the lowest level since July 2020 (52.1 in October).
- The output prices sub-index fell to 49.6 (50.0) on lower cost inflation and heightening competitions.
Eurozone economy slips back into contraction in November
After recovering slightly to register 50.0 in October, the seasonally adjusted HCOB Eurozone Composite PMI Output Index fell back into contraction territory during November. At 48.3, the headline index signalled a renewed downturn in private sector business activity across the eurozone. Moreover, albeit only modest, the decrease in output was the fastest for ten months.
Central to November’s drop in activity levels was the service sector, which posted its first decline in output since the beginning of the year. Factory production volumes fell for a twentieth successive month, the longest sequence of contraction in the survey history.
The eurozone’s big-three economies of Germany, France and Italy all registered contractions in business activity midway through the final quarter of 2024. The other euro area nations which have Composite PMI available – Ireland and Spain – posted expansions, with the former registering the strongest growth in output for two-and-a-half years.
Economic activity levels were stifled by a sustained reduction in demand for goods and services, latest data showed. For a sixth month running, intakes of new work shrank across the eurozone in November. Additionally, the pace of decline was the steepest in the year-to-date.
Both manufacturers and service providers reported lower volumes of new business, although factory sales fell by a considerably stronger margin. Export performance was a heavy drag on the euro area economy, with new orders from non-domestic customers falling at a faster pace than that of total sales.
With demand trending lower, the onus on backlogs as a means to sustain activity levels increased. Subsequently, outstanding order volumes decreased in November. This marked the twentieth month in succession that work-in-hand has fallen. The rate of backlog depletion was broadly level with those seen in both October and September, and therefore among the fastest in 2024 so far.
Regarding jobs, the latest HCOB survey data revealed further cutbacks by firms in the eurozone. The reduction in staffing levels was only marginal, but nevertheless the second-fastest since December 2020 (behind October). The decline in employment was driven entirely by manufacturers, as the pace of job creation ticked higher in the service sector.
When looking towards the next 12 months, eurozone companies registered positive expectations on balance. However, the degree of optimism waned to its lowest in a year and was much weaker than its long-term average.
Lastly, November saw inflationary pressures creep up across the euro area. For a second successive month, rates of increase in both input costs and output prices accelerated and were at their most marked since August. That said, price increases were seen only in the service sector, while goods producers registered cost reductions and discounts to their own prices.
The HCOB Eurozone Services PMI Business Activity Index posted below the 50.0 no-change mark for the first time since January in November. Falling to 49.5, from 51.6 in October, the index signalled the first decrease in service sector output for ten months. However, the contraction was only marginal overall.
Demand for eurozone services weakened for a third straight month in November. Furthermore, the decline was the quickest since January. New business from non-domestic sources provided a sharper drag on total orders, with the respective HCOB index at a 13-month low.
Services employment continued to rise across the eurozone, however, sustaining a run of job creation that stretches back almost four years. This was despite backlogs of work falling for a seventh straight month, suggesting service providers have spare capacity.
Meanwhile, confidence levels weakened in November. Expectations for growth were at their softest since September 2023.
Turning to prices, the latest survey data showed an uplift in pressures as both input cost and output charges increased at faster rates than in the previous month. Compared to their respective pre-pandemic trends, inflation rates were elevated in both cases.
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“Stagflation is a pretty nasty word, especially if you are a central banker, but that is what is hitting the eurozone right now. In November, the economy started shrinking while the PMI price components went up for the second month in a row. Inflation is mainly driven by services, but with the euro getting weaker, there is a risk that the prices of imported goods might start climbing too in the coming months.
“The European Central Bank (ECB) is in a tough spot. The economy is struggling and really needs some monetary support. However, inflation is stubbornly high, as highlighted by significant wage increases in the third quarter. So, the ECB is likely to avoid aggressive rate cuts and instead might carefully lower rates by 25 basis points on December 12.
“The services sector, which had been holding up the overall economy, is now shrinking for the first time since January. This is bad news for overall growth prospects, especially since this weakness is seen across the top-three euro economies. This broad-based decline might be due to consumer uncertainty, fuelled by political issues in France and Germany and the threat of trade wars linked to Donald Trump’s election in the US. Our GDP nowcast, which includes PMI data among other indicators, predicts stagnation in the final quarter of 2024.
“An early recovery in the services sector doesn’t seem likely, as new business has dropped for the third consecutive month. Although employment saw a slight uptick in November after nearly stagnating the previous month, this shouldn’t be seen as a sign of recovery. Most other indicators suggest more challenging times ahead.”