MARKET WATCH: DECEMBER 7, 2020

Stock Market Indexes

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Last Week’s Economic News

• Employment in November increased by 245,000 following monthly advances of 610,000 and 711,000 in October and September, respectively. Notable job gains occurred over the month in transportation and warehousing, professional and business services, and health care. Employment declined in government and retail trade. In November, the unemployment rate edged down to 6.7%. The rate is down by 8.0 percentage points from its recent high in April but is 3.2 percentage points higher than it was in February. The number of unemployed persons, at 10.7 million, continued to trend down in November but is 4.9 million higher than in February. The labor force participation rate edged down to 61.5% in November (61.7% in October), 1.9 percentage points below its February level. The employment-population ratio, at 57.3%, changed little over the month but is 3.8 percentage points lower than in February. In November, 21.8% of employed persons teleworked because of the coronavirus pandemic, up from 21.2% in October. Last month, 14.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic — little changed from October. The average work week remained unchanged at 34.8 hours in November. Average hourly earnings increased by $0.09 to $29.58 and are up 4.4% from a year ago.

• The pace of growth in the manufacturing sector slowed in November, according to the latest Manufacturing ISM® Report On Business®. The November manufacturing purchasing managers’ index registered 57.5%, down 1.8 percentage points from the October reading. New orders, production, employment, inventories, and importsdeclined in November. The backlog of orders, deliveries, and export orders increased last month.

• Like the manufacturing sector, services grew in November, but at a slower pace than in October. The services purchasing managers’ index registered 55.9%, 0.7 percentage point lower than the October reading. Business activity fell 3.2%, new orders dropped 1.6%, and inventories decreased 3.8%. On the positive side, employment increased 1.4% and prices advanced 2.2%.

• According to the latest information from the Census Bureau, the goods and services trade deficit was $63.1 billion in October, up 1.7% from the prior month’s total. October exports increased 2.2% to $182.0 billion. Imports in October were $245.1 billion, 2.1% ahead of September imports. Year to date, the goods and services deficit increased $46.6 billion, or 9.5%, from the same period in 2019. Exports decreased 16.4%, while imports decreased 11.5%. For the third quarter, trade surpluses (in billions of dollars) were with South and Central America ($12.2), OPEC ($7.4), Hong Kong ($5.1), Brazil ($4.9), the United Kingdom ($4.3), Singapore ($3.2), Saudi Arabia ($2.6), and Canada ($2.0). Trade deficits (in billions of dollars) were recorded with China ($74.6), Mexico ($34.2), the European Union ($31.1), Germany ($14.1), Japan ($12.8), India ($8.5), Taiwan ($7.3), Italy ($6.9), France ($5.9), and South Korea ($4.3).

• For the week ended November 28, there were 712,000 new claims for unemployment insurance, a decrease of 75,000 from the previous week’s level, which was revised up by 9,000. According to the Department of Labor, the advance rate for insured unemployment claims was 3.8% for the week ended November 21, a decrease of 0.4 percentage point from the prior week’s rate. For comparison, during the same period last year, there were 206,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended November 21 was 5,520,000, a decrease of 569,000 from the prior week’s level, which was revised up by 18,000. The highest insured unemployment rates in the week ended November 14 were in the Virgin Islands (7.9%), California (7.3%), Hawaii (7.1%), Nevada (6.7%), Alaska (6.4%), and Massachusetts (6.0%). The largest increases in initial claims for the week ended November 21 were in Illinois (+18,796), Michigan (+17,285), Washington (+13,499), Georgia (+9,462), and California (+9,361), while the largest decreases were in Louisiana (-33,573), Massachusetts (-22,572), New Jersey (-783), Idaho (-328), and the District of Columbia (-255).

Eye on the Week Ahead

The final estimate of gross domestic product for the third quarter is released this week. The second estimate projected that the economy expanded at a rate of 33.1% in the third quarter — a figure that’s not expected to change much in the final estimate. Also out this week is the latest report on the Consumer Price Index for November. The CPI was unchanged in October and has increased by a mere 1.2% for the year, as inflationary pressures remain muted.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI, Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

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