Rover's Weekly Market Brief - 12/02/2022

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Economy

The Conference Board’s Consumer Confidence Index® decreased in November to 100.2 (1985=100), down from October’s downwardly revised 102.2 reading. The index is now at its lowest level since July’s 95.7 reading and marks two consecutive monthly declines. The Present Situation Index, which is based on consumers’ sentiment toward current business conditions and the labor market, dropped to 137.4 from a downwardly revised 138.7 the previous month. Consumers’ assessment of current business conditions showed pessimism with 26.7%, saying business conditions were “bad,” up from 24.0%. Conversely, consumers’ assessment of the labor market was favorable with 45.8% saying jobs were “plentiful,” up from 44.8%. “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down”, said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. The expectations index, based on consumers’ six-month outlook for income, business, and labor market conditions also declined, down to 75.4 from 77.9 the previous month. A reading below 80 for the expectations index is considered recessionary. The share of consumers planning to purchase homes, automobiles, and big-ticket appliances all decreased.

The Bureau of Economic Analysis reported that personal income jumped 0.7% in October – 0.4% when adjusted for inflation. The reading is up from 0.3% and an inflation-adjusted 0% in September. Personal consumption expenditures (PCE), a measure of consumer spending, increased 0.8% and an inflation-adjusted 0.5% in October, up from the previous months’ 0.6% and inflation-adjusted 0.3% reading. October’s PCE was driven by increases in both goods and services. While new motor vehicles and gasoline and other energy goods led the way in goods, the largest contributor to services was spending on food services and accommodations. Partially offsetting the PCE reading were decreases in financial services and insurance. The (PCE) price index, which is closely followed by the Federal Reserve and influences interest rates, increased 0.3% in October, matching the previous two months. The (PCE) price index showed an annual gain of 6.0%, a moderation from September’s 6.3%. The core PCE price index, which excludes food and energy, rose 0.2% in October – up 5.0% from a year ago. The core PCE reading showed a deceleration from September’s 0.5% monthly increase and 5.2% annual gain.

The U.S. Bureau of Labor Statistics reported 263,000 jobs were added in November. October’s reading was revised (+23,000) to 284,000 and September was revised (-46,000) to 269,000 for a net of (+23,000) jobs. The unemployment rate was unchanged at 3.7%, as the number of unemployed workers was essentially unchanged at 6 million. There were 10.3 million job openings in October, about 1.7 job openings for each person looking for a job. The labor force participation rate continued to edge lower to 62.1% from 62.2%, leaving it well below the pre-pandemic level of 63.4%. Job gains were reported in leisure and hospitality (+88K), healthcare (+45K), government (+42K), construction (+20K), information (+19K), and manufacturing (+14K). Payrolls dropped in retail (-30K) and warehousing (-15K). Average hourly earnings increased by 0.6% in November. At $32.82 average hourly earnings are up 5.1% from a year ago.

Upcoming Economic Reports:

Monday December 5 – ISM Non-Manufacturing PMI (November)

Friday December 9 – PPI (MoM) (November)

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
GitLab (GTLB)	AutoZone (AZO)	Greif (GEF.B)	Costco Wholesale (COST)	Britvic (BTVCY)
Science Applications Intl (SAIC)	Casey’s General Stores (CASY)	Thor Industries (THOR)	Oracle (ORCL)	Johnson Outdoors (JOUT)