Payroll employment rises by 245,000 in November; unemployment rate edges down to 6.7%
(…) The change in total nonfarm payroll employment for September was revised up by 39,000, from +672,000 to +711,000, and the change for October was revised down by 28,000, from +638,000 to +610,000. With these revisions, employment in September and October combined was 11,000 more than previously reported. (…)
(…) In November, 14.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic—that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic. This measure is little changed from October. Among
those who reported in November that they were unable to work because of pandemic-related closures or lost business, 13.7 percent received at least some pay from their employer for the hours not worked, up from 11.7 percent in October. (…)The average workweek for all employees on private nonfarm payrolls remained unchanged at 34.8 hours in November. In manufacturing, the workweek decreased by 0.2 hour to 40.3 hours, and overtime
decreased by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 34.2 hours. (…)
U.S. Initial Unemployment Insurance Claims Fall Sharply
Initial claims for regular state unemployment insurance declined sharply during the week ended November 28 to 712,000 from 787,000 during the prior week, revised from 778,000. The Action Economics Forecast Survey expected 768,000 initial claims. Haver Analytics has calculated methodologically-consistent seasonally adjusted data which matches the Department of Labor seasonally adjusted data since the late-August break.
Initial claims for the federal Pandemic Unemployment Assistance (PUA) program, which covers individuals such as the self-employed who are not included in regular state unemployment insurance, declined 9.5% in the week ended November 28 to 288,701, the lowest level since the third week of April.
Continuing claims for regular state unemployment insurance programs fell to 5.520 million in the week ended November 21 from 6.089 million the prior week. Not seasonally adjusted continuing claims dropped to 5.241 million. Both seasonally adjusted and not seasonally adjusted series were the lowest since the week of March 21.
Continuing PUA claims, which are lagged an additional week and not seasonally adjusted, fell in the November 14 week, to 8.870 million from 9.209 million the prior week. Pandemic Emergency Unemployment Compensation (PEUC) claims rose slightly to a new high of 4.569 million in the week ending November 14. This program covers people who were unemployed before COVID but exhausted their state benefits and are now eligible to receive an additional 13 weeks of unemployment insurance, up to a total of 39 weeks.
The seasonally adjusted insured unemployment rate fell to 3.8% in the week ending November 21 from 4.2%. These data do not include the federal pandemic assistance programs. If you include the latest data available, which are lagged one additional week, the total number of state, PUA and PEUC continuing claims rose to 20.163 million or 12.5% of the labor force.
Several economists said they see the latest decrease as a possible anomaly related to last week’s Thanksgiving holiday. The data tends to be volatile around holidays, which affect states’ ability to process claims.
Data: Department of Labor; Chart: Axios Visuals
the share of Americans who suffered a loss of pay or income rose throughout November, particularly for Americans living in higher-income households. For the week ending Nov. 28, 11.9 percent of Americans living in households with annual incomes over $100,000 lost pay or income during the prior week. (Morning Consult)
Mitch McConnell says US stimulus deal ‘within reach’ Top Senate Republican signals willingness to negotiate in hopes of breaking stalemate
US Services PMI: Sharpest increase in activity since March 2015
November PMITM data signalled a marked increase in business activity across the U.S. service sector. The upturns in output and new business accelerated substantially to the fastest since March 2015 and April 2018, respectively. As a result, firms took on extra staff at the steepest rate on record, as pressure on capacity accumulated. Business expectations also strengthened to the most buoyant since January 2014.
Meanwhile, input prices rose at the quickest pace since data collection began in October 2009, while firms also raised their output charges at the fastest rate for more than a decade in an effort to pass on steeper cost burdens to customers.
The seasonally adjusted final IHS Markit US Services PMI Business Activity Index registered 58.4 in November, up from 56.9 in October. The latest reading was higher than the earlier ‘flash’ estimate (57.7) and signalled the sharpest expansion for over five-and-a-half years. Growth of business activity was often linked to greater new order inflows and the release of pent-up demand, as clients became less hesitant to make purchases.
Contributing to the marked upturn in output was an accelerated rise in new business at service providers in November. The rate of growth was the fastest since April 2018. Anecdotal evidence commonly stated that the rise was due to greater demand from new and existing customers.
That said, new export orders increased at only a marginal pace. The latest expansion in foreign demand was the slowest since July and eased once again from August’s survey-record high. A number of panellists suggested that ongoing travel restrictions due to the coronavirus disease 2019 (COVID-19) pandemic made international business challenging.
In line with greater client demand, firms increased their workforce numbers to a greater extent in November. The expansion in employment was the sharpest since data collection began in October 2009. Some firms stated that employees previously let go due to the pandemic had been rehired.
At the same time, backlogs of work rose modestly, as COVID-19 restrictions on businesses led to an accumulation of incomplete work.
Service providers registered a substantial rise in input prices during November. Anecdotal evidence attributed the marked increase to supplier price hikes and greater costs for PPE. The rate of input price inflation was the quickest on record.
Firms sought to pass on higher input costs to clients through an accelerated increase in selling prices. The rise in output charges was the sharpest since the series began over 11 years ago.
Business expectations strengthened in November, as service providers were boosted by a faster expansion in new business and hopes of a vaccine. The degree of confidence was the highest since January 2014 and well above the long-run series average.
The IHS Markit Composite PMI Output Index* posted 58.6 in November, up from 56.3 in October, as manufacturing and service sector firms both recorded faster expansions in output. The rate of growth was the sharpest since March 2015.
The upturn in output was broadly driven by stronger client demand. Service providers and goods producers signalled the quickest expansions of new business since April and May 2018 respectively. The strong rise in total sales contrasted with only a fractional increase in new export orders, despite a renewed upturn in international sales at manufacturers.
Private sector employment rose at the fastest pace since this index began in October 2009, amid greater pressure on service sector capacity in particular during November.
Meanwhile, companies registered the steepest increases in both input prices and output charges since data collection began in October 2009. Manufacturers and service providers sought to partially pass on markedly higher costs to clients through greater selling prices.
Finally, business expectations strengthened to the highest since May 2014 amid vaccine hopes and signs of pent-up demand being released.
IHS Markit U.S. Sector PMI™
November data pointed to higher volumes of business activity across six out of seven categories monitored by the US Sector PMI survey. The only exception was a decline in consumer services activity, with the rate of contraction in this sector the fastest since August.
Healthcare was the fastest-growing sector during November, followed by consumer goods. The latter recorded its strongest rate of output expansion since the index began in October 2009.
Strong rates of business activity growth were indicated by companies in the industrials and financials sectors during November, with the former signalling the steepest upturn since June 2014.
Basic materials and technology firms also remained in recovery mode, although the latest rises in business activity were softer than seen across the US private sector as a whole. Producers of basic materials nonetheless experienced stronger growth momentum than in October, with the speed of output expansion the strongest recorded since September 2018.
Canadian bank CEOs warn of slower growth ahead
Profits at two major Canadian banks rebounded to prepandemic levels in the final quarter of a turbulent fiscal year, but their CEOs both warn that growth in revenues will be slower to pick up speed with cases of the novel coronavirus on the rise again.
Royal Bank of Canada and National Bank of Canada each reported earnings for the year ended Oct. 31 that were higher than analysts had anticipated. But the pandemic will keep cramping client demand for new loans, and lending margins will continue to be squeezed by low interest rates, so it will take time for banks to recover lost ground.
In large part, fourth-quarter earnings at RBC and National Bank improved because each lender set aside smaller amounts to cover potential loan losses than the billions of dollars in reserves they had stockpiled over the previous six months. On Tuesday, Bank of Nova Scotia and Bank of Montreal each handily beat analysts’ estimates for the same reason, and all four banks now believe they are well prepared to absorb a rise in loan defaults over the coming quarters, which is expected to be gradual rather than jarring. (..)
The numbers of customers deferring payments on loans dropped sharply at both banks by the end of October. Deferred balances at RBC fell to $10.5-billion, from $62.8-billion as of July 31, while National Bank’s deferrals for retail and business clients declined 81 per cent and 74 per cent, respectively, to a total of $1.88-billion. About 2 per cent of loans have become delinquent after deferrals expired at each bank, but the vast majority of borrowers have resumed making payments.
As governments have reimposed lockdown measures, however, some clients “will experience further difficulties with the effects of a second wave,” Mr. McKay said. But he said he expects that because consumers and businesses are better prepared, the recent surge in virus cases should be less damaging to the economy than the first wave was this spring. “I think we’ve learned a lot,” he said. “We’re not going into the same sense of lockdown.” (…)
It is likely to take “at least two quarters” before demand for new loans from small businesses starts bounces back, Mr. Vachon said, as companies are wary of taking on more debt. And although there has been a strong appetite for mortgages, customers are borrowing less for everyday spending on credit cards, driving down fees and interest. (…)
OPEC, Allies Agree to Increase Output by 500,000 Barrels a Day signaling the world’s biggest producers are betting the worst of a pandemic-inspired shock to demand is behind them.
(…) Underscoring lingering uncertainty, though, the two sides agreed to a small increase—amounting to about a half percent of pre-pandemic global demand—during an online meeting Thursday. They also hedged their bet, agreeing to a monthly reassessment to decide whether to open the taps wider, stay put or rein in production once again. The group intends to gradually increase production by two million barrels a day at some stage, said Alexander Novak, Russia’s deputy prime minister, at a virtual press conference after the meeting. (…)
Thursday’s deal represents a middle ground between that plan and a Saudi-backed proposal to extend the existing curbs, currently at 7.7 million barrels a day. (…) Thursday’s meeting represented a rare failure by Saudi Arabia, OPEC’s largest producer by far and its longtime de facto leader, to get its way. (…)
La Niña Is a Headache for Farmers Around the World Characterized by cooler-than-normal waters in the Pacific, it causes dry conditions in some parts of the globe, heavy rains in others
Past La Niñas have created significant market volatility and raised prices for many foods, and the current edition is already pushing up prices of crops such as corn and reducing supplies of pineapples and mangos. This event has the potential to last till the Northern Hemisphere spring, according to government forecasters in the U.S., Japan and Australia who monitor sea conditions. (…)
The unpredictability of the situation makes forecasting more complicated for a wide range of commodities, said Tobin Gorey, agri strategy director at Commonwealth Bank of Australia.
“La Niña is always good for farmers in some places and bad for others elsewhere, but the outcome is always uncertain because total supply is different with each episode,” he added.