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NAM: Monday Economic Report

Wisconsin created the most net new manufacturing jobs in December, adding 2,900 workers. At the same time, Texas saw the greatest job gains in the sector in 2019, with manufacturing employment in the state up 18,200 since December 2018.The IHS Markit Flash U.S. Manufacturing PMI declined from 52.4 in December to 51.7 in January, beginning the new year on a bit of a disappointing note. There were hopes for some signs of stabilization in this release, but they were not forthcoming—at least not yet.Nonetheless, it is important to note that the IHS Markit data reflect expanding activity, in contrast to the competing survey from the Institute for Supply Management, and that respondents remain upbeat in their outlook for the next six months.Other data points do tend to reflect some stabilization in the sector—albeit with ongoing weaknesses—providing some cautious optimism that manufacturing activity might improve moving forward.For example, manufacturers in the Kansas City Federal Reserve Bank’s district have reported contracting activity for seven straight months, but the composite index moved to being near-neutral in January. In addition, employment increased for the first time since June.Likewise, the IHS Markit Flash Eurozone Manufacturing PMI remained challenged, but it continued to reflect some progress, declining at a slower rate and rising to its best reading in nine months. Activity in Germany, which has now contracted for 13 consecutive months, has improved since falling to a 10-year low in September.Meanwhile, surveys in the United Kingdom and France also strengthened, with the former nearing neutral territory and the latter expanding on faster sales and output growth.Existing home sales rose 3.6% from an annualized 5.35 million units in November to 5.54 million units in December, its fastest paces since February 2018. On a year-over-year basis, sales have risen by a solid 10.8% over the past 12 months. Yet inventories remain low, hurting first-time homebuyers and sending prices higher.The first estimate of real GDP for the fourth quarter of 2019 will be released this week, and it is expected to show that the U.S. economy grew around 2.2%. That would put total economic growth for the year at 2.3%, down from 2.9% in 2018.The Federal Open Market Committee will have its first meeting of 2020 on January 29-30, but the Federal Reserve is not likely to make any changes to monetary policy.



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