Friday, December 6, 2019

November's Jobs Report

Some strong news for the economy out today: The government reported this morning that the economy added 266,000 jobs in November. The unemployment rate ticked back down to 3.5 percent, matching a low from earlier this year that at the time was the lowest since 1969.

The U.S. economy has now added an average of 180,000 jobs each month this year, compared with an average monthly gain of 223,000 in 2018. November marked the 110th consecutive month of job gains.

The strongest industry in November was the health care and social assistance subsector (including child daycare and family services) saw a net gain of 60,200 jobs. Manufacturing technically had its best month for hiring since August 1998, although that was almost entirely thanks to General Motors workers returning from their strike.

Wednesday, December 4, 2019

Waiting for the Earnings Rebound

Two months into the fourth quarter, analysts have shaved 4 percent off their earnings estimates to $41.12 a share. That's a drop of almost 1 percent compared with a year ago, following a 1.3 percent decline last quarter.

It's common for earnings expectations to drop as a period progresses, but the current pace has been exceeded only twice since 2015. Analysts now expect earnings to rebound sometime next year, although it might be well into 2020 before profits rise meaningfully. The consensus forecast is for a 9.2 percent gain for next year.

Eight months ago, analysts projected fourth-quarter profits would jump more than 9 percent after falling in the first few months of the year. They now see contraction for this quarter and don’t expect a return to 10 percent growth until the second half of 2020.

Tuesday, December 3, 2019

Manufacturing Slump Continues

Tough news for the economy: Manufacturing activity continued to lag in November with a decline in inventories and new orders, according to the latest ISM Manufacturing reading. The November reading came in at 48.1, down slightly from the previous month’s reading of 48.3.

The number denotes the percentage of manufacturers planning to expand operations. A reading below 50 represents contraction; November was the fourth straight month below the expansion level.

Manufacturing is considered a reliable bellwether for how the rest of the economy is doing, though it accounts for only about one-fifth of GDP. Inside the ISM report, new orders slumped to 47.2, down 1.9 percentage points from October’s 49.1. Inventories, a key input for GDP, came in at 45.5, down 3.4 points from the previous month.

Monday, December 2, 2019

Good News From Black Friday

Americans spent more money Black Friday shopping in 2019 than ever before. Brick and mortar sales were up 4.2 percent over last year, according to an annual holiday spending report from Fiserv, Inc.

Electronics and appliances accounted for $214 per transaction on average, while shoppers spent $101 on sporting goods and $81 on shoes and clothing. Shoppers were willing to travel for a discount: A quarter of consumers traveled more than 25 miles to visit a physical store.

Online shopping also pulled in a record $7.2 billion on Friday, according to Salesforce. That's a 14 percent increase over last year. Even on Thanksgiving itself, digital sales in the U.S. rose 17 percent to $4.1 billion.

Thursday, November 28, 2019

Thoughts for Thanksgiving Day

"Gratitude can transform common days into thanksgivings, turn routine jobs into joy, and change ordinary opportunities into blessings." ~ William Arthur Ward

“If you made a list of all the things you could be thankful for, the list would undoubtedly be longer than your misfortunes.” ~ Catherine Pulsifer

“If a fellow isn’t thankful for what he’s got, he isn’t likely to be thankful for what he’s going to get.” ~ Frank A. Clark

Wednesday, November 27, 2019

Big Day for Retail

As we head into Black Friday and the holiday shopping season, there were some bright signs for retail stocks yesterday. Among the good news:

  • Best Buy posted quarterly earnings that beat analyst expectations, and raised its fiscal 2020 earnings forecast, sending its stock up more than 9 percent.
  • Dick’s Sporting Goods rallied more than 18 percent on better-than-expected earnings.
  • Amazon shares closed 1.3 percent higher. 
  • The SPDR S&P Retail ETF, a broad-based basket of retail stocks, climbed 0.6 percent.

Tuesday, November 26, 2019

Worrisome Numbers for the Fourth Quarter

Consumer confidence dipped for a fourth straight month in November as economic conditions weaken toward the end of 2019, according to data released this morning by the Conference Board. The Board’s consumer confidence index dipped to 125.5 this month, down from 126.1 in October.

This is just the latest piece of data pointing to weaker economic growth to end the year. The New York Federal Reserve’s Staff Nowcast, which estimates quarterly GDP growth, points to an expansion of just 0.7 percent in the fourth quarter. The Atlanta Fed’s GDPNow measure indicates growth of just 0.4 percent.

On the other hand, expectations for the holiday shopping season are strong. The National Retail Federation expects holiday sales to grow by about 4 percent from last year.