Week 1 | January 9-15, 2023
Mr. Van Loven A. Abbu, LPT
SUMMARY
United States (USD)
The ISM Manufacturing PMI for the US slightly fell below forecasts of 48.5 to 48.4 in December of 2022.
The US ISM Manufacturing PMI dropped to 48.4 in December 2022, slightly below expectations of 48.5. This indicates that industrial activity has declined for the second consecutive month as Americans transfer their expenditure from products to services. This number was the lowest since February 2016—excluding the fall in April 2020, when the covid epidemic was at its worst. New orders (45.2 vs. 47.2), new export orders (46.2 vs. 48.4), and production moved into the negative region as new orders continued to drop (48.5 vs 51.5). On the other side, employment increased (51.4 vs. 48.4) as many businesses used a mix of hiring restrictions, employee attrition, and layoffs to manage staff. Additionally, inventories expanded more quickly (51.8 vs. 50.9) and pricing pressures subsided (39.4, the lowest since April 2020). The supplier deliveries’ month-over-month performance (45.1 vs. 47.2) was the greatest since March 2009. Only two industrial sectors—Primary Metals and Petroleum & Coal Products—reported growth in December.
The US labor market remained robust after the number of job openings only decreased slightly by 54,000 to 10.5 million in November of 2022, compared with market expectations of 10 million.
Compared to market predictions of 10 million, the number of job opportunities in the US declined somewhat by 54,000 to 10.5 million in November 2022, indicating the labor market is still robust. Since peaking at 11.9 million in March 2022, the number of job ads has gradually decreased. Over the course of the month, job opportunities decreased in the financial services and insurance sector (-75,000) and in the federal government (-44,000), but rose in the professional and business services sector (+212,000) and in the production of nondurable products (+39,000). The overall number of separations, which includes quits, layoffs, and discharges as well as other separations, increased by 114,000 to 5.9 million, while the number of hiring decreased by 56,000 to 6.1 million.
The US labor market remained robust after the number of job openings only decreased slightly by 54,000 to 10.5 million in November of 2022, compared with market expectations of 10 million.
The US ISM Manufacturing PMI dropped to 48.4 in December 2022, slightly bIn the week ending December 31st, 204 thousand Americans filed for unemployment benefits, down from the previously reported amount of 223 thousand and under the 225 thousand market estimates. It was the lowest level since late September, indicating that the labor market is still tight and might put more pressure on inflation in the biggest economy in the world. Weekly volatility is removed by the 4-week moving average, which dropped from 220.5 thousand to 213.75 thousand. The number of claims increased by 6,000 to 276 thousand on a non-seasonally adjusted basis, with the highest increases occurring in New Jersey (4.2 thousand), New York (3.4 thousand), and Michigan (3.2 thousand).elow expectations of 48.5. This indicates that industrial activity has declined for the second consecutive month as Americans transfer their expenditure from products to services. This number was the lowest since February 2016—excluding the fall in April 2020, when the covid epidemic was at its worst. New orders (45.2 vs. 47.2), new export orders (46.2 vs. 48.4), and production moved into the negative region as new orders continued to drop (48.5 vs 51.5). On the other side, employment increased (51.4 vs. 48.4) as many businesses used a mix of hiring restrictions, employee attrition, and layoffs to manage staff. Additionally, inventories expanded more quickly (51.8 vs. 50.9) and pricing pressures subsided (39.4, the lowest since April 2020). The supplier deliveries’ month-over-month performance (45.1 vs. 47.2) was the greatest since March 2009. Only two industrial sectors—Primary Metals and Petroleum & Coal Products—reported growth in December.
Compared to market predictions of 10 million, the number of job opportunities in the US declined somewhat by 54,000 to 10.5 million in November 2022, indicating the labor market is still robust. Since peaking at 11.9 million in March 2022, the number of job ads has gradually decreased. Over the course of the month, job opportunities decreased in the financial services and insurance sector (-75,000) and in the federal government (-44,000), but rose in the professional and business services sector (+212,000) and in the production of nondurable products (+39,000). The overall number of separations, which includes quits, layoffs, and discharges as well as other separations, increased by 114,000 to 5.9 million, while the number of hiring decreased by 56,000 to 6.1 million.
Private businesses in the US created 235K jobs in December of 2022, higher than an upwardly revised 182K in November.
In December 2022, private enterprises in the US added 235K jobs, above the upwardly revised 182K in November and much-exceeding market expectations of 150K. There were 213k more service providers, with leisure and hospitality accounting for 123k, professional and business services for 52k, and education and health services for 21k (42K). Construction led a 22K growth in the goods-producing sector (41K). However, there were employment losses in the following sectors: manufacturing (-12K), commerce, transportation, and utilities (-24K), natural resources and mining (-14K), and (-5K). Payroll growth will average close to 301K each month in 2022. Although the labor market is robust, it is fragmented, with hiring rates varying greatly by sector and size of the institution. According to Nela Richardson, chief economist at ADP, business categories that hired quickly in the first half of 2022 have halted recruiting and, in some cases, shed employment in the last month of the year. In contrast, yearly compensation increased by 7.3% in December compared to 7.6% in November.
The number of Americans filing for unemployment benefits dropped to 204 thousand in the week ending December 31st.
U.S. economy adds 223K jobs in December of 2022 – below market expectations
After a downwardly corrected 256K increase in November, the US economy added 223K jobs in December 2022, the fewest since December 2020, and beyond market estimates of 200K. Significant job growth was seen in leisure and hospitality (67K), health care (55K), construction (28K), and social assistance (20K), whereas manufacturing (8K), retail trade (9K), and government employment hardly changed (3K). Compared to monthly gains of 562K in 2021 and 168K in 2019, payroll employment increased by 4.5 million in 2022, or 375K on average. The data showed that hiring is slowing down even though it is still strong and that the labor market is returning to normal after the pandemic shock. According to Fed projections, the labor market is expected to remain tight in 2023, job creation will slow down even further, and the unemployment rate will increase to 4.6%. Amidst increasing interest rates, declining consumer demand, and a recession in the global economy, some large tech companies have already announced significant layoffs.
ISM Services PMI – December of 2022 – disappoints with 49.6
ISM Services PMI for the US dropped from 56.5 in November to 49.6 in December 2022, much below market expectations of 55. The estimate indicated the services sector would experience its first decline since May 2020, when the covid epidemic was at its worst. As demand dropped and stocks declined more quickly, new orders drastically decreased (45.2 vs. 56 in November) (45.1 vs. 47.9). Additionally, due to economic uncertainty and a slowdown in activities to fill unfilled jobs, employment fell (49.8 vs. 51.5). While everything was going on, the holiday season helped the economy continue to develop, albeit more slowly (54.7 vs. 64.7). Last but not least, supplier deliveries decreased (48.5 vs. 53.8), showing improved logistics and expanded capacity. Pricing pressures subsided (67.6 vs. 70).
Eurozone (EUR)
The S&P Global Eurozone Manufacturing PMI increased for the second consecutive month, with 47.8 in December 2022.
As inflationary pressures eased and supply chains continued to recover, the S&P Global Eurozone Manufacturing PMI was verified at 47.8 in December 2022, up from the previous month’s 47.1 and reflecting the sector’s weakest decline since September. Industrial sales were the smallest in four months, while manufacturing production declined at its slowest pace since June. Backlogs of work also experienced a significant decrease, and job growth dropped to a 22-month low. On the pricing front, the rate of selling charge inflation was the slowest since March 2021, while the rate of input cost inflation was still swift but weaker than in November 2020. Finally, despite persistent concerns about inflation, high energy costs, and recession threats, business confidence increased for the second consecutive month, moving farther away from its two-and-a-half-year low reached in October.
The seasonally adjusted number of unemployed people in Germany fell by 13 thousand in December 2022, below expectations of a 15 thousand addition.
In December 2022, the number of jobless individuals in Germany decreased by 13,000 from the previous month to 2.52 million, below forecasts of a 15,000 increase. German unemployment fell for the first time in a month after rising for six months.