(1) If it’s all about jobs, then the U.S. is on the right track. In September, the “official” month-to-month increase in employment was 114,000. That figure’s okay, but not outstanding. The better news in the labor market report was the decline in the unemployment rate from 8.1% to 7.8%.
(2) Labor market data is based on two surveys each month, one of payrolls and the other of households. The former has more respondents but the latter is more inclusive (e.g., covering the self-employed as well as wage earners). The “official” jobless rate comes from the household survey. The “official” employment number comes from the payroll survey. However, the household survey also yields an employment number, which in September was a huge +873,000.
(3) Also striking a strong positive note, the latest weekly initial jobless claims figure in the U.S. was the lowest in four years, dating back to September 9, 2009. October 6 2012’s number of 339,000 was a drop of 30,000 from the week before. If maintained throughout the month, it will herald a sharp increase (in the range of +175,000 to +225,000) in the net new number of jobs in October. It will be interesting to see if this has any impact on the Presidential election. The results will be announced on Friday, November 2, just days before the vote.
(4) There are two sectors that traditionally set the tone for the whole economy – housing and autos. In residential markets, almost all the indicators are trending ever so cautiously upwards. Starts, permits and prices are advancing while vacant inventory is falling. In motor vehicles, the performance of sales has been distinctly positive. A return to a 16-million-unit month, seasonally adjusted and annualized, (i.e., the “norm” before the recession) seems not too far away. September’s sales were 14.9 million units, a +13.7% advance year over year.
(5) U.S. home starts have recovered to 750,000 units seasonally adjusted and annualized, about half their “normal” level in most of the years in the 00s. In Canada, the housing sector remains remarkably strong. September’s starts level was 220,000 units which was -2.2% month to month but +4.8% year over year. In 13 of the past 15 months, ground-breakings have exceeded 200,000 units. Most analysts think the appropriate number, based on demographic factors such as family formations, should be about 180,000 units. Ottawa has introduced measures – e.g., reducing the mortgage amortization period – to cool what may be an overheating market and there are indications first-time home-buyer demand is waning.
(6) Canada’s employment gain in September surprised most everyone, +51,000. In the past two months 87,000 new jobs have been created, although July saw a decrease of 31,000. It’s also good that the new jobs in the latest month were mostly full-time. Construction employment rebounded in September, climbing by 29,000 after declining by 44,000 in August.
(7) Spain’s debt has just been downgraded by Standard & Poor’s. The nation’s bonds and notes now carry a rating only one step above “junk” status. Clearly, the Euro zone still has a tough road ahead to resolve the financing issues of its most at-risk member states.