Economic Outlook for November 2024

Purchasing Managers Index (PMI):
The ISM Manufacturing PMI for November declined to 46.5, down from 47.2 in October, marking continued contraction in the manufacturing sector. Weak new orders and production remain key challenges, highlighting persistent struggles within the industrial sector. However, the ISM Services PMI showed significant improvement, climbing to 56.0 from 54.9 in October, driven by robust demand in consumer-facing industries.

Unemployment Rate:
The unemployment rate held steady at 4.1% for November, reflecting a stable labor market. Weekly unemployment claims averaged 217K, a slight improvement from October’s levels. Despite this stability, the significant drop in non-farm payroll growth signals emerging weaknesses.

Non-Farm Payroll:
Job creation slowed dramatically in November, with only 12,000 jobs added, a sharp decline from October’s 254,000. This substantial slowdown raises concerns about hiring in manufacturing and certain service industries. Average hourly earnings maintained a 0.4% month-over-month growth, reflecting steady wage increases amid limited job growth.

Market Outlook:
Consumer confidence rose marginally, with the CB Consumer Confidence Index improving to 111.7, supported by strong service sector performance and steady inflation control. Core inflation remained at 0.3% month-over-month, with the year-over-year CPI ticking up slightly to 2.6%, showing modest inflationary pressures.

The Federal Reserve reduced the Federal Funds Rate to 4.75% in early November, signaling a shift toward supporting growth as labor market weakness and manufacturing contraction persist. The GDP growth rate was confirmed at 2.8% for Q3, showing steady overall economic activity despite sectoral challenges.

Conclusion
November 2024 presents a mixed economic outlook. While the services sector remains a bright spot, bolstering consumer confidence, manufacturing continues to face significant headwinds. The labor market showed signs of strain with a sharp drop in job creation, but steady wage growth and declining unemployment claims provide some reassurance. With inflation contained and the Federal Reserve easing monetary policy, the economy remains on a stable trajectory, though challenges in industrial activity may weigh on future growth.