Consumer borrowing enjoyed solid gains, while the job market grew more than expected, and layoffs contracted.
Job Market growth exceeded expectations, adding 228,000 non-farm jobs in November, the Bureau of Labor Statistics reported last week. This exceeded market expectations of 200,000 jobs, and kept the unemployment rate at 4.1 percent, with 6.6 million unemployed Americans. Big growth sectors for jobs were professional and business services, manufacturing, and healthcare.
Notably, the average workweek increased by 0.1 hours to 34.5 hours in November. This was the biggest increase in five months and should translate to a significant upturn in U.S. production, according to Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
“A six-minute increase in the work week does not sound like much, but given the size of the labor market, it turns out to be significant in terms of output,” Chandler told the Reuters news service.
Average hourly earnings for November notched up by 5 cents to $26.55. Over the past 12 months, hourly earnings have increased by 64 cents or 2.5 percent.
Hitting its highest point in 11 months, consumer borrowing gains 6.5 percent during October. This jumped totaled $3.802 trillion, according to last week’s report from the Federal Reserve.
The big driver for the growth was in revolving debt, such as credit cards, which grew a whopping 9.9 percent for the month to hit $1.011 trillion. This was revolving debt’s biggest monthly growth since November 2016. This news encouraged retailers because increased credit card usage should translate to continued consumer activity during the holiday season.
Non-revolving debt, such as student loans and car loans, also posted growth, increasing 5.3 percent to hit $2.79 trillion for October. The $12.2 billion increase wasn’t as strong as September’s $13.2 billion gain but still pointed to increased borrowing across the spectrum of consumer credit.
First-time claims for unemployment benefits filed by the newly unemployed during the week ending December 2 fell to 236,000. This was a decline of 2,000 claims. from the preceding week’s total of 238,000 reported by the Employment and Training Administration.
The Administration noted that disruption on the jobs report due to hurricanes is now mainly localized to the Virgin Islands, with Puerto Rico seeing improved reporting.
The four-week moving average regarded as a more reliable measure of initial jobless claims ticked down to 241,500 claims, a slight decrease of 750 claims from the prior week’s average of 242,250.
This was the 144th consecutive week in which initial claims were below the 300,000-claim level, which economists consider is an indicator of a growing job market.
This week, we can expect Tuesday — The producer price index for November from the Bureau of Economic Analysis; the November budget from the Treasury Department.
Wednesday — The consumer price index for November from the Bureau of Economic Analysis.
Thursday — Initial jobless claims for last week from the Employment and Training Administration; retail sales for November and business inventories for October from the Census Bureau; import prices for November from the Bureau of Labor Statistics.
Friday — Industrial production and capacity utilization for November from the Federal Reserve.
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