Weekly Indicators for December 8 - 12 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

While there were no significant changes in the ratings, two big stories stand out: (1) the nearly total re-normalization of the yield curve in response to Fed interest rate cuts; and (2) evidence of further deterioration in the labor market.

The problem with Fed rate cuts, of course, is if they are in response to an economy that is about to roll over into recession. Yes, they lay the groundwork for a recovery, but you have to go through the recession first!

As usual, clicking through and reading will bring you up to the virtual moment as to the state of the economy, and reward me with a penny or two for my efforts in collecting and organizing the data for you.

Three important fundamentals-based indicators of the consumer economy: are they turning?

 

 - by New Deal democrat

Today is one day of quiet before a slew of updated statistics, including the November jobs and inflation reports, are to be reported next week (it is unclear whether others originally scheduled for next week, like building permits and starts, will also be updated). There was some housing and rental inventory and pricing data for Q3 released yesterday, but I will integrate reporting on that when the next housing data comes out.

Which means that today is a good day to highlight three fundamental datapoints that have in the past been very (although not perfectly!) reliable, all of which either may have just turned or may be on the verge of turning, down.

One fundamentals-based indicator which has a very long history (as in over 70 years) that has been a very good long leading indicator is per capita real retail sales, i.e., retail sales adjusted for both population and inflation (red in the graphs below). This on average turns down about a year before a recession begins. When people begin to cut back on spending for their households, unless things change it isn’t too long before it cascades into things like employment and hours of work, triggering a recession. Like many other indicators, it misfired in 2022-23 when a tsunami of supply-sided deflation created a positive “real” shock - but there is no such deus ex machina lurking now.

A second similar indicator is real personal consumption spending on goods, which is a broader measure of spending, and uses a different deflator (gold). In the graphs below below I have also normed it by population.

Finally, as I have pointed out many times, real aggregate payrolls of nonsupervisory workers has an almost perfect record of turning in the months before a recession has begun, going back over 60 years (blue). This is fundamentals-based as well; when workers in real terms are earning less money in the aggregate, they have less to spend, and this is usually an immediate trigger for a recession.

With all of that as background, here are all three indicators normed to 100 as of last December:

Neither real retail sales nor real spending on goods per capita have ever matched that level since, although their three month moving average has continued to improve in a decelerating fashion. Meanwhile, real aggregate payrolls have increased by 1.2% since, although only 0.3% of that has been during the last six months.

Typically, the immediate recession signal is when these indicators turn negative YoY. Here’s what that metric looks like now:

All of these have decelerated, several sharply, since the March-April timeframe when consumers and producers alike were front-running tariffs. None have turned negative yet, although if their present rate of deceleration continues, that is likely to occur within 4-6 months of their last datapoint for September. Next week all of them are scheduled to be updated through November, so we will have a much more current view of whether fundamental economic conditions are stormy for the average American household.

Is Thanksgiving seasonality masking a possible longer term positive regime change in jobless claims?

 

 - by New Deal democrat

This week’s update of initial and continuing jobless claims is a demonstration of two frames of seasonality: one in the immediate term, and one longer term stretching back several years. When we parse them out together, they suggest there may have been somewhat of a regime change that began in July and is still ongoing. 

Let’s start as usual with the raw numbers. Initial claims rebounded from last week’s near 50 year low by 44,000 to 236,000. The four week moving average, which irons out most of this seasonality, rose 2,000 to 216,250. Continuing claims, which it is especially important this week to note lag one week, declined dramatically, by -99,000 to 1.838 million, the lowest since early April:

Of course, the prior week was Thanksgiving, and as I wrote last week, the seasonal adjustment “expects” a big decline, but this year’s was even bigger. I expected a rebound this week, and we got it. Next week I expect a similar rebound in continuing claims.

That’s the immediate term seasonality issue.

But this week the graph above covers not just my usual frame of two years, but three years, to show that a regime change may be afoot. That’s because in the immediate post-pandemic years of 2023 and 2024, there were apparent pandemic related unresolved seasonality issues: claims rose from January until mid-year, and then declined during the second half of the year until the next January. This year the unresolved seasonality has been much more muted, especially in the second half of this year. Claims did rise into June, but then sharply declined in July, and have generally remained in that range since.

Of course, seasonality issues should be negated in the YoY% comparisons, which as I always point out, is more important for forecasting purposes. There, initial claims were lower by -1.3% this week, the four week average by -3.2%, and continuing claims by -1.9%:

As per usual, I score this as a positive, as this is what happens during expansions. In other words, it forecasts no recession in the very near term, which is good news compared with some other data we have recently received, including the JOLTS report for September I wrote about on Tuesday.

Additionally, because jobless claims lead the unemployment rate, our usual look suggests that there is no upward pressure on that rate, and if anything there is an increased likelihood of a small decline in the unemployment rate in the next several months:

That’s good news. And that plays into the possibility of a regime change in the trend in claims since the middle of this year.

Below is a graph of the YoY change in the actual number of initial claims filed plotted both weekly (thinner, gray) and monthly (thicker, blue) in 2025:

In the first half of this year, jobless claims typically were in the +10,000 range YoY. That all changed since the end of June. In the 23 weeks since, jobless claims have averaged just under -4,000 lower YoY. While I speculated during the summer that the change was school year related, and indeed there was payback in the form of sharply higher numbers early in September, the trend of lower YoY numbers has continued, even against the comparisons of very low numbers at this time last year (remember the residual seasonality of 2023-24 meant low numbers in December into January).

This suggests to me that the post-pandemic residual seasonality has been evaporating in large part, and further it is evidence, contrary to most of the monthly data we have gotten this year - including most recently from both the regional Feds and the ISM as I have documented in the last few weeks - that have suggested that the labor market may have tipped over. Instead, initial claims may point to at least a slight recovery.

Weekly data is noisy, but it always captures trend changes first. While the official monthly government data is still stale, I will pay especially attention to the regional Feds reports on employment trends in their districts, the first of which is scheduled to be released on Monday.

Q3 employment costs: probably the “least positive” since the pandemic

 

 - by New Deal democrat

The employment cost index, which was updated this morning through Q3, typically gets much less attention than the monthly payrolls report. But in this circumstance it is entitled to more notice, since the monthly data has only been posted through September as well.

Additionally, one important advantange of the Employment Cost Index is that it is adjusted for the type of job performed, while the monthly average statistics are not. Thus, for example, since many low-paid service workers were laid off during the COVID lockdowns, the latter metric was distorted by the job mix, whereas the former measure was not.

The news from this morning’s report was mixed. On the one hand, quarterly compensation increased just under 0.8%, whether measured by wages and salaries alone (blue) or by total compensation including benefits (red). On the other hand, the quarterly increase in wages was among the lowest in four years, and for total compensation it was the lowest (note: graph subtracts this quarter’s changes from both datapoints so that they norm to 0 for easier comparison):

On a YoY% basis, median wage compensation increased 3.6%, on par with the previous two quarters, while total compensation was the lowest since the pandemic, although higher than at any point between the Great Recession and the pandemic:

Although it is somewhat noisy, the employment cost index tends to in tandem with, but inversely to, the unemployment rate:

There really is not any leading/lagging relationship here, and my reading of this graph is that both median compensation and the unemployment rate were relatively stable this year though September, as the uptick in each is within the range of noise.

Finally, since the employment cost index measures wages and other compensation normed by occupation, an interesting comparison is with the Atlanta Fed’s wage tracker, which measures wage increases between those who switch jobs (presumably for better pay and/or benefits) and job stayers (updated through August):

During most of the post-pandemic era, when the unemployment rate was especially low, employees could get substantially better wage increases by switching to a new job. This year that has ended. Job switchers are doing no better than job stayers.

In sum, this morning’s data tells us that when it comes to wage growth, workers are still doing better than they were at any point during the last long expansion before the pandemic, but although the news was still positive, it was the least positive, relatively speaking, since then. This is especially true given the increase in inflation since early this year.

October JOLTS report: red flag warning for employment sector in worst report since the pandemic

 

 - by New Deal democrat

This morning’s JOLTS report for October is now the most current official monthly indicator for the jobs sector.

And it was emphatically not good. In fact, it was red flag recessionary.

In the past year, in contrast to much other data in the jobs sector, the JOLTS reports had been very much consistent with a “soft landing” jobs scenario. Not so this month.

The survey decomposes the employment market into openings, hires, quits, and layoffs. The first of those, openings, is soft data that can be influenced by stale or false postings, and trolling for new resumes. It has been on a general uptrend ever since the inception of the series 25 years ago. In contrast, the other series are hard data representing actual actions - and all of those were bad.

Let’s begin with job openings (blue), hires (red), and quits (gold) all normed to 100 as of just before the pandemic:

The “soft” data of openings has been rangebound between 7.103 million and 8.031 million for the past 18 months, and this month came right down the middle at 7.670 million. But actual hires declined a sharp -218,000 to 5.149 million, the lowest reading since the pandemic except for June of last year and August of this year.  But quits were at their worst level of all since the pandemic, down -187,000 to 2.941 million.

And the bad news doesn’t end there. Layoffs and discharges, which while noisy lead both continued jobless claims (gold) and the unemployment rate (red) rose 73,000 to 1.854 million, except for one month a four year high:

Finally, the quits rate (left scale), which typically leads the YoY% change in average hourly wages for nonsupervisory workers (red, right scale), also declined -0.2% to a post-pandemic low of 1.8%:

This suggests that nominal wage growth, which has already been trending slightly downward, is likely to decelerate further in the next several months. Since inflation has been rising, it will put a further squeeze on ordinary working Americans, and may cause real aggregate payrolls to turn negative.

This was a bad, even recessionary, report consistent with actual job losses in October, which every other non-governmental survey has suggested as well. Unfortunately, since most other new releases are stale data from September, we will have to await better data for October and November to be more confident that we have arrived at a turning point.

While capital spending increased sharply, yet more evidence of consumer weakness

 

 - by New Deal democrat

On Friday I noted that real personal spending on goods, especially durable goods, had declined in September. If we have reached a tipping point on that metric, a recession in the near future looks much more likely, even as spending on services continues.

Late last week we also got further evidence of the bifurcation between the consumer economy and the AI-fueled production economy, in the form of durable goods orders and motor vehicle sales.

Let’s look at motor vehicle sales, updated right through November first. On a month over month basis, both light vehicle (sedans, SUVs, pickup trucks) increased, as did sales of heavy weight trucks:

That’s the good news.

The bad news is when we put this improvement in perspective by looking at the long term historical data:

Heavy truck sales carry much more, and more reliable, signal than light vehicle sales, and they always turn down sharply first. Which is exactly what they have done in the past few months. The long leading signal of housing construction turned recessionary many months ago, and now the next shoe has clearly dropped.

But the other news last week, on manufacturers’ new durable and capital goods orders, told a completely different story, as both increased to among their best readings since the pandemic:

In the case of core capital goods orders, it was the best reading since the pandemic except for one month. This is a strong uptrend that began over a year ago and really accelerated this year.

But the intersection between these two metrics is production of, and spending on, consumer durable goods. Here is headline durable goods orders (blue) vs. consumer durable goods orders (red), updated through September:

As per the above, the former was in a strong uptrend. But the latter remained flat, just as it has been for two years.

So let’s compare consumer spending on durables YoY (blue) vs. manufacturers orders for consumer durables YoY (red):

Since the latter are much noisier and more volatile than the former, I have supplied the quarterly average as well as the monthly YoY change, divided by 1.5 for scale.

In general, consumer spending on durables turns first, giving manufacturers their cue to produce more or less. This was complicated by the “China shock” beginning in 1999, where goods imports from China increased sharply, and for a generation.

Finally, here is the post-pandemic look:

Consumer spending on durables increased last autumn and winter, particularly in anticipation of T—-p’s tariffs. The YoY comparisons are still positive, but less so. As per usual, the producer response occurred afterward. 

It is especially important to reiterate than the most recent durable goods and spending data has only been released through September. The motor vehicle data, as well as other types of data such as tax withholding, have indicated a sharp slowdown since. But we’ll have to wait at least one more month to see if that has truly broadened into a contraction in consumer spending on goods.

Weekly Indicators for December 1 - 5 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

There are some minor changes, but no big turns in trends. But the recent change in trend that has been further reinforced is the sharp deceleration in growth in withholding tax payments that began in October. The bulk of the evidence suggests that this is not a result of end of year tax planning, but real signal of a slowdown in labor force and payroll growth.

As usual, clicking over and reading will bring you up to date on all of the relevant economic data, and bring me a little pocket change for my efforts.

Real income rises, but real spending on goods may be turning down

 

 - by New Deal democrat

Personal income and consumption is one of the two big monthly reports on the state of the average American, in addition to the jobs report. This month it has the added virtue of being the “least stale” monthly report, as it was issued only five weeks later than scheduled. Ever since “Liberation Day” in April, I have looked for the impact of tariffs on both personal spending and manufacturers’ sales. Additionally, there has been evidence since January that income and spending might be slowly rolling over in any event. This morning’s data for September added at that concern.

Nominally income rose 0.4% and spending 0.3%. But since the PCE inflation gauge rose 0.3%, real income only increased 0.1% and real spending was flat:

[Note: with the exception of the personal saving rate, and one YoY graph, all of the data in the below graphs is normed to 100 as of just before the pandemic.]

Since real spending on services (blue, right scale) rarely turns down, even in recessions, I focus on goods (red, left scale), and on an even more granular basis on durable goods spending. In September real spending on goods (red) declined -0.4%, and on durable goods (gold) even more, by -0.6%:

Because the monthly data can be noisy, I have been particularly looking at the three month average. For durable goods, this looks like it peaked in March through May. For goods spending as a whole, the three month average only increased 0.2% for July through September, and was only up 0.5% since March through May. This is very close to rolling over into contraction.

But if the real spending side of the coin merits a yellow flag, the real income and savings side was more sanguine. 

I follow the personal savings rate because just before and going into recessions it tends to turn up as consumers get more cautious. After revisions this was unchanged at 4.7% in September:

Additionally, one of the two coincident indicators from this report which the NBER pays close attention to in dating recessions is real income less government transfers. This increased 0.1% to a new record high (blue, right scale):

On a YoY basis (red, left scale) after decelerating for almost three years, the latest data shows stabilization since May. Hence the relatively good news on the income side of the coin.

Normally the second coincident metric looked at by the NBER, real manufacturing and trade industries sales, is also reported with a one month delay at the same time as personal income and spending, but this month that was not the case.

In summary, this was a mixed report. On the positive side, although growth has slowed, the positive trend in real income is intact, as is the neutral trend in personal saving. On the negative side, real spending on goods and in particular durable goods declined, with the latter having made at least a temporary peak back in springtime. The former must increase at least 0.1% (subject to revisions) in the next report in order for the three month average not to decline.

Jobless claims: Holiday seasonality enters in a big way

 

 - by New Deal democrat

The good news is, we are back to the normal weekly jobless claims releases. The really good news is that this week’s number, except for one week in 2022, was a new 50 year low! The bad news is that Holiday seasonality is very much in play, so take the good news with multiple grains of salt.

To give you an idea of how much seasonality, look at the decline that was seasonally “expected” vs. the actual number, per this week’s report:

“The advance number of actual initial claims under state programs, unadjusted, totaled 197,221 in the week ending November 29, a decline of 49,419 (or 20.0%) from the previous week. The seasonal factors had expected a decrease of 21,172 or -8.0% from the previous week.”

But to the numbers: seasonally adjusted initial claims declined -27,000 to 191,000 last week, and the four week moving average declined -9,500 to 214,750. With the typical one week delay, continuing claims declined -4,000 to 1,939,000:

To show you the seasonality at work, here are the last two years starting November 1 of non-seasonally adjusted claims (orange) vs. seasonally adjusted (blue):

A big decline in claims always occurs during Thanksgiving week. This year’s decline was signficantly bigger than the two prior years.

As per usual, the YoY% changes are more important for forecasting purposes. So measured, initial claims were down -15.1%, the four week average down -1.9%, and continuing claims up 3.6%:

Needless to say, this is positive. But I strongly suggest we wait for next week’s inevitable big seasonal increase, and average the numbers before popping any champagne corks.

ISM services for November generally positive and improving

 

 - by New Deal democrat

Probably the most important economic news this entire week was this morning’s ISM services report. Services are about 75% of the economy, and this report was for November, which means it is the most wide-ranging and current datapoint we have at the moment.

And the news on this front was almost all good. The headline number (blue in the graph below) improved to 52.6 from last month’s 52.4. Employment was less bad, improving to 48.9 from 48.2. Prices paid decelerated (a good thing) from 70.0 to 65.4. The only (slight) disappointment was that new orders (gray) were less positive at 52.9 vs. last month’s strong 56.2 [note: all graphs via TradingEconomics.com]:

My short term economic forecast gives 75% weight to this metric (gray) and 25% to the manufacturing survey (blue), and also averages over 3 months to cut down on noise. For the headline number, the three month economically weighted average was 51.0:

For the more leading new orders metric, the economically weighted three month average was 52.0:

Needless to say, both of these were expansionary if weakly so, but with evidence of a slightly improving near term forecast.

The retreat in the prices paid metric was particularly good news in comparison with preceding months:

But as with the manufacturing survey, the regional Fed surveys, and this morning’s ADP report, the bad news (even if “less bad”) is that employment appears to be contracting:

For the working and middle class as a whole, the question is whether payroll gains via wages more than make up for th apparent slight loss in the number of jobs. Unfortunately, for that at the moment we only have shadows on the wall.

Production weakens while private employment declines

 

 - by New Deal democrat

Although not published by the federal government itself, the Fed’s measure of industrial production relies on some federal data, and thus it was not updated during the government shutdown - which means that this morning’s update is likewise stale, being for September.

Industrial production has been much less central to the US economy since the “China shock,” but it remains important for the goods producing sector. In September, headline industrial production rose 0.1%, while manufacturing production was unchanged. The above graph normalizes both measures to April 2022. As you can see, between spring 2022 and late 2024, production generally declined before surging in the first six months of this year. Total production exceeded that level just barely in July, while manufacturing production has stalled without reaching that level:

Here is the longer term historical look since before the “China shock”:

Finally, I would be remiss without noting the poor ADP employment report for November this morning. The below graph shows industrial and manufacturing production for this year, together with the ADP employment trend and the official payrolls number, all normed to 100 as of April:

Employment has stalled since then, and production *may* have during this summer, but there have been plenty of noisy such periods before. So far consumer spending fueled by the surging stock market and the resulting “wealth effect” have more than counterbalanced that weakness.

Still flying blind

 

 - by New Deal democrat

There are no significant updated data releases today - which is disconcetering, considering how far behind we are over three weeks after the end of the government shutdown.

How far behind are we?

One area that is important for determining if the consumer economy is close to a turn is spending on big ticket items - vehicles and other durable  consumer goods.

Courtesy of Redbook, which updates retail shopping weekly, we know that last week was the best YoY comparison in almost three years, up 7.6%:

But this does not cover the expensive items which tend to turn down first. Real retail sales, which do include motor vehicles, have been updated through September (blue), but manufacturers new orders for consumer goods are only updated through August (red):

Even worse, while nominal manufacturers sales have been updated through August (blue), but real manufacturing and trade sales (red) are only available through July:

Nominal motor vehicle sales have just been updated this morning through August:

And the BEA’s last update of the number of light weight vehicles (blue) and heavy truck sales (red) is only available through August as well:

The lag is just as bad for the very important housing sector, where housing permits, sales, and units under construction are only updated through August:

And real residential fixed investment as a share of real GDP was last updated for Q2:

But the biggest laggard of all is the QCEW, the “gold standard” for growth in the jobs sector, to which the monthly reports are ultimately benchmarked, which was last updated in August for Q1:

Hence my continued focus on the regional Fed manufacturing and services reports, as well as the nationwide manufacturing and services ISM surveys, as it does not appear this situation is going to be remedied for another month at least.

November ISM manufacturing report indicates deepening stagflationary contraction

 

 - by New Deal democrat

Normally we begin each month with reports on both construction spending and manufacturing. But even though th federal shutdown has been over for more than three weeks, data releases have been both very sparse and very stale. In particular, construction spending for August was just released two weeks ago. There was no updated report this morning, and as far as I can tell no target date for the September release. 

Which means that the ISM manufacturing and services reports will continue to be of heightened importance this month and probably next month as well.

Last week I updated the regional Feds’ manufacturing reports, which showed something of a rebound, but with widespread increases in prices paid and stagnation in employment.

Today’s ISM manufacturing report was significantly weaker. There was contraction across the board, except for prices paid, which increased to 58.5 (a reminder that 50 is the dividing line between strength and weakness). New orders declined to 47.2, employment to 44.0, and the headline number to 48.2. 

For forecasting purposes, I use an economically weighted three month average of the manufacturing and non-manufacturing indexes, with a 25% and 75% weighting, respectively.

With today’s report, the three month average for the headline number is 48.7. The more significant news is that the three month average of the more leading new orders subindex declined to 48.6. Here is a look at both the total index (blue) and new orders subindex (gray) for the past three years (via Tradingeconomics.com):

Both remain slightly better than their low points in 2022-23, which is noteworthy because there was no recession then.

As I indicated above, for the economy as a whole the weighted index of manufacturing (25%) and non-manufacturing (75%) indexes is more important. In the non-manufacturing report, the averages of the last two months for the headline and new orders numbers have been 52.1 and 53.3, respectively. Pending the ISM report on services on Wednesday, the economically weighted headline number is 51.2, and the new orders average is 52.1. These containue to be expansionary if only weakly.

Last month I started to report on the prices paid and employment subindexes, as in the absence of current employment or inflation data are more important now. 

Prices paid (the ISM does not report on prices received downstream) increased from 58.0 last month to 58.5 this month, although it remains substantially lower than the 60.0+ readings from this summer, suggesting as with the regional Fed indexes that there is still widespread pricing pressure, but it is getting integrated into companies’ models. The graph below shows the last five years better to compare the current situation with the immediate post-pandemic inflation):

The low point remains employment, which sank from 46.0 last month to 44.0, among the lowest readings since the pandemic:

To sum up, unlike the regional Fed manufacturing reports, the ISM manufacturing report for November indicates a manufacturing sector sinking further into contraction on both the production and employment fronts, but facing stagflationary price pressures. Because this report is national in scope (vs. only 5 Fed districts) I would give this measure more weight. And given the pronounced weakness in the regional Fed services reports, Wednesday’s ISM services report assumes even greater importance.

Weekly Indicators for November 24 - 28 at Seeking Alpha

 

 - by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

In the aggregate, consumer spending remains robust. On the other hand, as I pointed out yesterday with my aggregation of the various regional Fed reports on manufacturing and services, the largest sector of the US economy appears to be stagnant, or even shrinking somewhat. Another big sign that there may have been another ratchet downward in the economy is the deceleration in the YoY withholding tax payments since the beginning of the fiscal year in October (also when the government shutdown started. 

Of interest is the latest update from early November from California, which is 1/8th of the entire US population. There, withholding tax payments have continued to be very strong, up almost 10% YoY in October. If tax changes from the “Big Beautiful Bill” were driving the recent deceleration, i.e., taxpayers waiting until more favorable treatment next year, I would expect tech-heavy California to have lower comparisons than the rest of the country. But the reverse is true, suggesting that it is sluggish job growth that has been driving the sharp deceleration in payments. 

In any event, as usual clicking over and reading will bring you up to the virtual moment as to the state of the economy, and reward me a little bit for my efforts collecting and collating it all for you.

Regional Fed manufacturing and services indexes for November show manufacturing rebound, continued rampant price pressures, and stagnant employment

 

 - by New Deal democrat

Although the federal government has resumed reporting economic data, it is spotty and woefully stale, from August and September. As a result, the two big sources for current data remain the regional Feds and the ISM surveys. The latter will be reported next week for November, but all five regional Feds surveys of both manufacturing and services conditions have been reported. While they certainly aren’t perfect (to begin with, they are diffusion indexes rather than absolute numbers; and do not cover all ten regions), they provide a good sketch of current conditions in both economic sectors.

Last month they showed an upward trend in both manufacturing and services production and new orders, but Prices paid were increasing broadly, with prices received also increasing, but less broad. Finally, employment was at a standstill or worse. The only significant difference between the two sectors was the perception that manufacturing conditions were positive, and services negative. This month continued those trends.

Let’s take each sector in turn.

Manuacturing

The below chart includes, in order, NY, Philadelphia, Richmond, Kansas City, and Texas. Month over month changes are in parentheses, with the absolute values for November following. The final number is the average change and absolute number for all 5 together.

Regional Fed:     NY.           PHL.           RVA.       KC.    TX.    Avg

Headline:     (+8) 18.7; (+11.1) -1.7; (-11) -15; (+2) 8; (+15.3) 20.5; (+1.2) 4.7          

New Orders (+12.2) 15.9; (-26.8) -8.6; (-16) -22; (-3) -2; (+3.1) 4.8; (-1.4) 1.6 

Prices Paid  (-3.4) 49.0; (+6.9) 56.1; (+1.0) 6.8; (-5) 36; (+1.9) 35.3; (+7.6) 36.6 

Prices Rec’d (-3.2) 24.0; (-9.1) 17.7; (+0.1) 3.1; (-6) 13; (+3.1) 7.7; (-3.0) 13.7

Wages* (n/a) n/a; (n/a) n/a; (+9) 24; (n/a) n/a; (+1.2) 14.2); (+5.1) 19.7

Employment  (+0.4) 6.6; (+1.4) 6.0; (+3) -7; (+10) 11; (-0.8) 2.0; (+2.8) 3.6

____

* only 2 of the banks report this information

On Wednesday durable goods and core capital goods orders were reported for September, showing the second highest levels for both since the pandemic:

This confirmed the upswing we already saw in the regional Feds at the time. The above chart suggests that the improvement has continued since then. FRED does cover the NY, Philly, and Texas manufacturing surveys. Here is the average of the headline number for the three:

Next, here is the Services sector:

As with the manufacturing chart above, month over month changes are in parentheses, showing momentum (the 2nd derivative), with the absolute diffusion values for November following. The final number is the average change and absolute number for all 5 together.

Regional Fed:     NY.           PHL.           RVA.       KC.      TX.       Avg

Headline:  (-2.3) -21.7; (+5.9) -16.3; (-14) -15; (-2) -7; (+7.1) -2.3; (-1.1) -12.5     

Cap Ex   (+22.9) 16.3; (-11.3) 6.2; (-4) -3; (-19) -5; (7.4) 13.2; (-0.8) 5.5

Prices Paid  (-4.5) 61.9; (-1.1) 34.7; (-0.7) 4.8; (-3) 32; (+4.6) 27.6; (-1.0) 32.2

Prices Rec’d (-6.3) 20.1; (+9.1) 22.0; (-0.7) 3.1; (-7) 14; (+0.7) 6.5; (-0.6) 13.1  

Wages (-0.5) 25.4; (+11.0) 49.3; (-5) 12; (+3) 24; (+4.0) 14.7; (+2.5) 25.1 

Employment (-3.4) -8.6; (+3.0) 2.5; (+1) 1; (-12) -16; (+8.9) 3.1; (-0.4) -3.6

The only trend that showed month over month improvement was in wages. All other measures - headline business conditions, capex, prices paid and received, and employment - softened. At the same time, only the headline business conditions sentiment and employment were negative.

When we examine both the manufacturing and services sector in full as reported by the regional Feds in November, we see expanding manufacturing and services capex, but a divergence in the headline numbers. Prices paid continue to show widespread inflation, on some of which is being recovered as pass-throughs to consumers. And while wage growth remains strong, employment averages to flat at best.