The US unemployment rate edged down to 7.7% (from 7.9%; marking a four year low); the broader underutilization rate also decreased to 14.4% (from 14.6%).
• From a glass half full perspective, +146k jobs were added in November, exceeding consensus estimates of a +100k increase and quelling some fears of the Fiscal Cliff and Hurricane Sandy's impacts. However, from a glass half empty perspective, September and October job figures were collectively revised downward by -49k and the unemployment rate dip was largely driven by the 350k people who gave up their job searches.
• The total number of unemployed (12.0M) remained flat while the long-term unemployed - those out of work for 6+ months - shrank to 40.1% (4.8M).
• Looking ahead, the January jobs report should reveal more about Sandy's true impact as it will contain a more complete accounting of the storm's impact. Plus, we should (finally) gain some clarity about the Fiscal Cliff…anyone else tired of hearing about it?
Consumers continue to seek retail therapy...
• The retail (+52.6k (+33.3k in clothing stores)) and leisure & hospitality (+23k; +14.1k in arts, entertainment and recreation)) sectors continued to staff up in support of the holiday shopping season and consumers' need to satiate their appetites (literally and figuratively).
• Sizable gains were also seen in professional and business services (+43k; +18k in temp help services - long thought to be a precursor to full time hiring), health care (+20k) and information (+12k). In contrast, several sectors pared payrolls - construction (+20k) and manufacturing (-7k; -18k for non-durable goods) - with the latter attributable to the higher inventories that companies are contending with.
• The public sector remained relatively flat (-1k total loss) with gains at the state level offsetting losses at the federal and local levels.
What’s in store? Key watch items…
On the bearish side:
• EU. The European Central Bank (ECB) cut its 2013 economic forecast for the Euro Zone from +0.5% to -0.3%. This comes on the heels of a Q3 GDP reading of -0.1%…marking the fourth straight quarter of contraction. While the ECB believes that improved financial market confidence and accommodative monetary policies will enable a gradual recovery in late 2013, with growth in the range of +0.2 to 2.2% in 2014, its questionable strategy of "growth through additional belt tightening" will continue to raise doubts about the bloc's ability to do so. Note: The EU continues to be the US' biggest trade partner, accounting for $636B in trade in 2011.
• Help wanted. The US has had 3M+ job openings for over a year now…leading many to conclude that the US is suffering from a skills gap crisis. However, upon a closer look at the Jobs and Labor Turnover Survey (JOLTS), there is little data that supports this claim (e.g., manufacturing, long thought to suffer from a dearth of skilled workers, only accounted for 6% of job openings). Nonetheless, this prophecy may come to pass as industries, such as utilities and construction, increasingly contend with the retirement of skilled workers without a replacement pipeline in place.
On the bullish side:
• US = energy superpower? As technology advancements make refineries more efficient and we continue to tap into our newfound abundance of natural gas, the US is on track to be a net exporter of petroleum products in 2011 for the first time in 62 years (source: US Energy Information Administration). This is noteworthy because, aside from the US beginning to realize its energy independence ambitions, our nation is becoming a reliable, low cost center of energy outside of the Middle East. The ancillary benefits are already apparent: Apple's decision to insource assembly of some iMacs in the US. As this trend continues, we should expect to see more companies follow suit with an accompanying increase in payrolls likely.
