NAM: Monday Economic Report
Manufacturing continued to expand in the latest data, even while signs of slowing persist in many markets and with activity remaining below pre-pandemic levels.
The Institute for Supply Management® said that manufacturing activity in November pulled back from October, which had recorded the fastest pace since September 2018. The index noted decelerating—but still solid—expansions for new orders and production.
Demand and output in the sector expanded for the sixth straight month, bouncing back from steep declines from COVID-19 in the spring. Yet, supply chain disruptions continued to challenge many firms.
After expanding in October at the fastest pace in two years, the Dallas Federal Reserve said that manufacturing grew at a slower rate in November, mirroring other regional surveys. Activity expanded in Texas for the fourth consecutive month, with respondents upbeat in their outlook moving forward.
New orders for manufactured goods rose 1.0% in October, increasing for the sixth straight month. Despite notable gains since the spring, the pace of new orders remains 3.2% below the pre-pandemic pace.
New orders for core capital goods—a proxy for capital spending in the U.S. economy—rose 0.8% to $70.1 billion in October, a new record. Encouragingly, core capital goods orders have risen a very robust 5.9% over the past 12 months.
Manufacturing added 27,000 workers in November, rising for the seventh straight month. Employment in the sector remains well below its pre-COVID-19 pace, down by 599,000 in November relative to the level in February. The current outlook is for 12,250,000 employees in the manufacturing sector at year’s end.
Outside of manufacturing, overall job growth eased in November. However, the unemployment rate dropped to 6.7%, as labor force participation declined once again. Overall, the labor market remains challenged with millions of Americans out of work.
The U.S. economy added 245,000 workers in November, slowing from the gain of 610,000 in October but expanding for the seventh straight month. Among other factors, November recorded fewer government and retail trade workers. There continue to be 9,834,000 fewer nonfarm payrolls today than in February.
The so-called “real unemployment rate”—a term that refers to those marginally attached to the workforce, including discouraged workers and the underemployed—declined from 12.1% to 12.0%.
The percentage of the unemployed suggesting that they lost their job permanently ticked up from 3,684,000 in October to 3,743,000 in November, just shy of September’s pace (3,756,000), which was the highest since May 2013.
While weekly initial unemployment claims were lower for the week ending Nov. 28, the data also confirm that more than 20 million Americans received some form of unemployment insurance for the week ending Nov. 14.
Construction and trade continue to reflect some weaknesses.
Private manufacturing construction spending fell 0.8% from $70.01 billion in September to $69.44 billion in October, falling for the fourth straight month to the slowest pace since November 2017.
The U.S. trade deficit rose from $62.08 billion in September to $63.12 billion in October, with growth in goods imports outpacing gains in goods exports. Volumes for goods exports and service-sector trade have both fallen significantly year to date.
U.S.-manufactured goods exports have fallen roughly 16% year to date in 2020 relative to the same 10-month period in 2019.