Morning Report: Companies started shedding jobs in November

Posted on November 24, 2023 by Brent Nyitray

Vital Statistics:

Stocks are flat this morning on no real news. Bonds and MBS are down.

Markets will close early today, and liquidity should be sparse.

European Central Bank President Christine Lagarde said the ECB can take a pause and observe. “We have already done a lot,” Lagarde said. “Given the amount of ammunition we have used, we can observe very attentively the components of our lives like salaries, profits, like fiscal, like geopolitical developments and certainly the way in which our ammunition is impacting our economic life to decide how long we have to stay there and what decision we have to make”

The national mortgage delinquency rate fell 3 basis points to 3.26%, according to the Black Knight Mortgage Monitor. Active foreclosure inventory rose to 217k, which is well below pre-pandemic levels. Prepays fell to 0.43%.

More evidence that the economy is slowing: The S&P Flash PMI showed the economy barely expanding, with employment falling. US companies cut workers for the first time since June 2020.

“The US private sector remained in expansionary territory in November, as firms signalled another marginal rise in business activity. Moreover, demand conditions – largely driven by the service sector – improved as new orders returned to growth for the first time in four months. The upturn was historically subdued, however, amid challenges securing orders as customers remained
concerned about global economic uncertainty, muted demand and high interest rates. Business uncertainty was also heightened among US firms, as expectations regarding the year-ahead outlook slipped to the weakest since July.


“Businesses cut employment for the first time in almost three-and a-half years in response to concerns about the outlook. Job shedding has spread beyond the manufacturing sector, as services firms signalled a renewed drop in staff in November as cost savings were sought.


“On a more positive note, input price inflation softened again, with cost burdens rising at the slowest rate in over three years. The impact of hikes in oil prices appear to be dissipating in the manufacturing sector, where the rate of cost inflation slowed notably. Although ticking up slightly, selling price inflation remained subdued relative to the average over the last three years and was consistent with a rate of increase close to the Fed’s 2% target.”

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