Weekly Market Commentary Update As of December 5th, 2014 The Economy - The U.S. labor market showed ongoing resilience, with growth in manufacturing and services business activities. Overseas, the U.K. also had broad-based business strength, while eurozone manufacturing activity barely expanded. SEI expects the North American and the U.K. economies to make continued improvement, while the eurozone and key emerging market economic growth remains restrained. The unemployment rate held at 5.8% in November, as nonfarm payrolls added 321,000, topping estimates with the largest gain in almost three years. Average hourly earnings also surprised, accelerating to a 0.4% monthly advance. Initial jobless claims fell to 297,000 for the week ending November 29. Ongoing unemployment claims, reflecting delayed data, increased during the week of November 22. The Institute of Supply Management (ISM) reported significant strength in manufacturing growth in November, while Markit depicted slower manufacturing growth during the month. Both reports included strong employment components, however. The growth of non-manufacturing industries accelerated in November to near-recovery highs, ISM indicated, as backlog orders increased to their highest levels in over three years. The retail and construction sectors showed the highest growth rates. Factory orders fell 0.7% in October, continuing September’s decline. Excluding the volatile transportation component, orders actually dropped 1.4%. Spending on construction projects gained 1.1% in October, surpassing expectations and reversing the previous month’s decline. Public projects led the spending increase, while private residential spending also moved higher. Nonfarm labor productivity rose at a 2.3% annual rate during the third quarter, by more than the preliminary estimate but less than the second quarter’s increase. Unit labor costs contracted at an annualized1.0%, less than during the previous quarter. U.K. manufacturing and services sector growth accelerated by more than expected in November. Construction growth remained high, although slower than the prior month and below expectations. Home prices increased slightly more than forecasted in the U.K. during November, according to Halifax. The gain offset October’s decline and was in line with a similar report released last week. Eurozone economic growth increased 0.2% during the third quarter, consistent with a preliminary estimate, and maintained a 0.8% year-over-year pace. While unimpressive, third-quarter growth was strong compared to the previous quarter. Chinese manufacturing growth slowed in November for the first time in six months. However, services sector growth accelerated, as the new-orders component had the fastest increase in over two years. Economic Calendar - December 9: Job Openings and Labor Turnover Survey December 11: Jobless Claims, Retail Sales, Business Inventories December 12: Producer Prices, Consumer Sentiment Stocks - Global equity markets fell for the week. In the U.S., sectors were mixed. Healthcare and materials led, while utilities and telecommunications lagged. Value stocks beat growth stocks and small-company stocks led large-company stocks. Bonds - Global bond markets fell for the week. Corporate bonds outperformed, followed by global government bonds. High-yield bonds lagged. U.S. Treasury yields rose this week, with the exception of short term notes, as the Federal Reserve’s Beige Book report indicated widespread employment progress. Most regions saw consumer spending growth, while price and wage inflation were restrained
Posted on: Wed, 10 Dec 2014 04:05:53 +0000