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Economic Watch: Trucking Adds to Overall Employment, Factory Activity Mixed

December 4, 2015

By Evan Lockridge

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The U.S. economy continued adding jobs in November as trucking employment turned around from the month before, while a separate report on manufacturing was only somewhat positive for the industry.

A Labor Department report issued Friday shows 211,000 non-farm jobs were added last month following an upwardly revised 298,000 job gain in October. This kept the unemployment rate at 5%, the lowest since April 2008.

Job gains occurred in construction, the biggest improvement since January, along with those in professional/technical services and health care while mining and information lost jobs.

In for-hire trucking, 2,300 jobs were added in November, a big improvement from October’s showing that was revised to 900 jobs lost rather than the originally reported 400 job gain. The wider transportation and warehousing sector saw job additions rise by 6,400.

“A strong employment report this morning, at least against the new, lowered bar of judgment whereby anything over 200,000 is considered solid,” said Lindsey Piegza, chief economist at Stifel Fixed Income.

She said when this report is coupled with one from earlier in the week showing a larger-than-expected decline in the service sector activity and a multi-month low in service hiring, a sizable red flag mars the positive feeling of the November employment headline rise.

“Service sector activity tends to lag behind manufacturing activity, which has fallen off to the lowest level since 2009 as of November suggesting further weakness may be coming down the pipeline as we head into the new year,” Piegza said. “Accounting for more than a third of the economy, additional momentum will be needed in the service sector to maintain the current stagnant 2% growth pace, let alone result in the type of momentum Federal Reserve Chair Yellen and company are anticipating in 2016.”

In mid-December the Federal Reserve is set to meet to discuss interest rates and there is increasing speculation it will move them higher from near-zero for the first time in many years.

This report follows one the day before from the U.S. Commerce Department showing factory orders increased in October, but shipments posted the sixth drop out of the past seven months.

New orders for manufactured goods in October increased 1.5% following two straight monthly declines. Excluding transportation, factory orders rose 0.2%, a four-month high.

New orders for manufactured durable goods moved 2.9% higher, following two consecutive monthly decreases, down from the previously published 3.0% increase.

Capital goods orders excluding aircraft and defense, a proxy for business spending in the gross domestic product calculation, was unchanged at 1.3% in the final October report and up 0.4% year-over-year.

Shipments of factory orders in October fell 0.5% while shipments of manufactured durable goods, down two of the last three months, decreased 1%, unchanged from an earlier report.

Some analysts are cautioning that despite this improvement in factory orders, manufacturing remains hurt by the strong U.S. dollar and declines in the energy market and that the Fed needs to hold off on raising interest rates.

In contrast, others say the economy can withstand a hike with even some Fed officials publically saying without a hike they will be less able to do something to stimulate the economy if it heads south later on.

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