Investing Your Money

MANUFACTURING & PRODUCTION

• For the fourth straight month, economic activity in the manufacturing sector has contracted.  The Institute for Supply Management’s November survey yielded a PMI of 36.2%, representing the lowest reading since May 1982.  New orders, production, employment, and order backlogs all contracted at a faster pace for month, consistent with more pronounced recessionary conditions.  The prices paid component registered 25.5%, which is the lowest indication since May 1949.
• Industrial production declined 0.6% in November after rising 1.5% in the prior month.  The decline was predominantly due to the 1.4% drop in factory output; mining production advanced 2.5% for the month, and utilities output increased 1.6%.
• The capacity utilization rate slipped from 76.0% in October to 75.4% for November, again on a decline in the manufacturing industry.  This is 5.6 percentage points below the 1972-2007 average and remains consistent with weaker corporate profit levels.

LABOR MARKETS

• Nonfarm payroll employment declined by 533,000 in November, following revised job losses of 403,000 in September and 320,000 for October.  Payroll declines were widely disbursed in November, with the goods-producing side of the economy shedding 163,000 jobs while service-sector employment dropped 370,000 jobs for the month.  By industry, construction payrolls declined by 82,000 and manufacturing employment fell by 85,000 jobs.  Professional and business services employment plunged by 136,000 for the month; leisure and hospitality jobs fell 76,000.  Payrolls in the retail trade industry decreased by 91,300 – with more than a quarter of the jobs lost in car dealerships.  Health care remained one of the few bright spots, adding 33,800 jobs, while government payrolls increased by 7,000.
• Since the beginning of the year, a total of 1.9 million jobs have been lost.
• The unemployment rate climbed from 6.5% in October to 6.7% for November.  The average workweek has declined to 33.5 hours, the lowest level recorded in the history of the series, which began in 1964, and points to a deeper decline in fourth quarter GDP growth than previously anticipated.

SALES

• Retail sales slipped 1.8% in November, slightly less than anticipated.  Motor vehicle sales decreased 2.8%, while sales excluding the auto sector dropped 1.6% for the month.  Much of the drop can be attributed to the 14.7% plunge in gas station sales in November.   Evidence of holiday shopping appeared in the 2.8% increase in electronics & appliance store sales and in the 2.8% gain in sales at sporting goods, hobby, book & music stores for the month.

PRICES

• Wholesale prices declined for the fourth consecutive month in November.  The Producer Price Index for Finished Goods dropped 2.2% for the month, pulled down by an 11.2% fall in energy prices; food prices were unchanged.  Excluding food and energy, core PPI rose a modest 0.1% in November.
• The November Import Price Index fell 6.7%, marking the fourth monthly decline in a row.  Petroleum import prices plummeted 25.8% and prices of non-petroleum imports decreased 1.8% for the month; export prices decreased 3.2%.
• The Consumer Price Index decreased 1.7% in November.  Energy prices dropped 17.0% for the month, while food prices increased 0.2%; core CPI was unchanged from October to November.

FEDERAL RESERVE

• On December 16, 2008, the Federal Open Market Committee lowered the target federal funds rate to a range of 0 % to 0.25%.  The Fed further announced their intention to employ any and all means available to encourage a return to economic growth.