Comerica Economic Weekly, November 8, 2019

Robert A. Dye, Ph.D.


Daniel Sanabria

Economic Chart with pen

U.S. economic data reported over the week was stable.

U.S. economic data reported over the week was stable. 

International data was soft. The Markit Global Manufacturing Purchasing Managers Index for October increased to a still-contractionary 49.8 in October. This was the sixth consecutive month below 50 for the index. The Markit Global Composite PMI for October slipped to 50.8, indicating weak expansion. This was the second lowest reading for the index in this expansion cycle. 

The ISM Non-Manufacturing Index, which tracks the bulk of the U.S. economy, increased in October, to a moderately positive 54.7, indicating ongoing expansion. Eight out of ten sub-indexes were positive. Backlog of new orders and imports were negative. Thirteen out of eighteen industries reported expansion. Anecdotal comments were mixed. 

The Job Openings and Labor Turnover Survey (JOLTS) for September shows an ongoing step down in the job opening rate for the U.S. It is now down to 4.4 percent from a cyclical high of 4.8 percent as late as January 2019. The hiring rate and the separations rate for September were both unchanged from August. Total job openings in September were 7.0 million. The total number of unemployed workers was 5.8 million in September. 

After two relatively strong quarters, productivity growth in Q3 went negative, down at a 0.3 percent annual rate. On a year-over-year basis, productivity growth remains in a subdued range of about 1.3 to 2.0 percent. It dipped to 1.4 percent in Q3. Low productivity growth is one of the big puzzles of the U.S. economy, coming at a time of surging adoption of high-tech business strategies. It could be that GDP accounting simply does not capture the economic benefit of many new technologies.

The U.S. international trade gap narrowed slightly in September to -$52.5 billion. Exports eased by $1.8 billion in September, while imports dropped by $4.4 billion. Trade data remains somewhat volatile in response to the U.S./China trade war. The September trade deficit was very close to the place-holder estimate used in the advance estimate of Q3 GDP. This means that there is no reason to think that trade data will cause a significant revision in the second estimate of Q3 GDP, due out the day before the Thanksgiving holiday.

The University of Michigan’s Consumer Sentiment Index was little changed in early November, at 95.7. It will be important to track consumer sentiment/confidence indexes over the next few weeks and months to see how they respond to the public impeachment hearings in Washington. The 5-10 year inflation expectation series increased slightly to 2.4 percent, but it is still down this year compared with the last three yearly averages.

Mortgage applications for purchase dipped by 2.5 percent for the week ending November 1. Refi apps gained 1.8 percent. On a four-week moving average basis, purchase apps are up 8.5 percent over the last year, while refi apps are still up about 150 percent. According to the Mortgage Bankers Association, the rate for a 30-year fixed rate mortgage eased to 3.98 percent in early November. 

Initial claims for unemployment insurance fell by 8,000 for the week ending November 2, to hit 211,000. Continuing claims gave up 3,000 for the week ending October 26, to hit 1,689,000. Both series remain well behaved, showing no signs of weakness in the labor market. 

Wholesale inventories in the U.S. fell by 0.4 percent in September. 

Nonfarm Productivity Declines in Q3 Economic Chart

For a PDF version of this publication, please click here:  Comerica Economic Weekly, November 8, 2019

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November 8, 2019
Robert A. Dye, Ph.D., Senior Vice President and Chief Economist at Comerica Bank

Robert A. Dye, Ph.D.

Senior Vice President and Chief Economist
Daniel Sanabria, Senior Economist at Comerica Bank

Daniel Sanabria

Senior Economist