Market Update
December Payrolls Growth Slowed to Two Year Low
Brian Turner
06 Jan, 2023
New York City
The U.S. economy added 223,000 jobs in December, the smallest monthly increase in two years, the U.S. Bureau of Labor Statistics reported Friday.
The widely expected monthly employment situation report showed that despite the slowing hiring trend the labor market remains healthy and employers are expanding payrolls.
In 2022, monthly payrolls increase slowed to 375,000 from 562,000 gains in 2021 and 168,000 in 2019,
In 2022, the U.S. economy added 4.5 million net new jobs.
The unemployment rate declined to 3.5% in December and drifted in a tight range between 3.5% and 3.7% since March.
Hourly Wage Gains Slow
In December, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents, or 0.3%, to $32.82 following downwardly revised 0.4% increase in the previous month.
Over the past 12 months, average hourly earnings have increased by 4.6% slowest annual pace since August 2021.
Downward Revisions
The change in total nonfarm payroll employment for October was revised down by 21,000, from the increase in 284,000 to 263,000.
The change for November was revised down by 7,000, from 263,000 to 256,000.
With these revisions, employment gains in October and November combined were 28,000 lower than previously reported.
Decelerating Job Growth and Wage Gains Power Market Rally
Barry Adams
06 Jan, 2023
New York City
Stocks opened higher after the release of jobs report and the decelerating jobs growth and wage gains powered the market rally supporting the soft-landing scenario.
The December non-farm payrolls expanded at a healthy pace indicating the labor market strength but not too fast that the Federal Reserve has to consider large-sized rate increases.
Benchmark indexes surged above 1% and tech stocks rallied on the hopes that the Fed may pivot from its hawkish stance.
The December payrolls report was the third jobs report indicating the slowing pace of payroll expansion but the U.S. economy is still adding jobs at a healthy pace.
Despite the seven rate hikes in 2022 and cooling of home sales, the job market keeps expanding and has now recovered all jobs during the pandemic and added millions more.
U.S. Payrolls Expanded In December
The U.S. economy added 223,000 jobs in December, the smallest monthly increase in two years, the U.S. Bureau of Labor Statistics reported Friday.
The widely expected monthly employment situation report showed that despite the slowing hiring trend the labor market remains healthy and employers are expanding payrolls.
In 2022, monthly payrolls increase slowed to 375,000 from 562,000 gains in 2021 and 168,000 in 2019,
In 2022, the U.S. economy added 4.5 million net new jobs.
The unemployment rate declined to 3.5% in December and drifted in a tight range between 3.5% and 3.7% since March.
In December, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents, or 0.3%, to $32.82.
Over the past 12 months, average hourly earnings have increased by 4.6%.
Service Sector Contracts First Time In Nearly 3 Years
The service sector pointed to first contraction in December since May 2020 in the depth of the covid pandemic, the latest survey from the Institute of Supply Management showed Friday.
The ISM Services Purchasing Managers' Index declined to 49.6 in December after rising to 56.5 in November.
Any reading above 50 suggests expansion and below indicates a contraction.
Indexes In Review
Benchmark indexes opened higher and after two hours of trading accelerated gains on the back of not-too-strong payrolls expansion in December.
The S&P 500 index increased 1.8% to 3,877.84 and the Nasdaq Composite index jumped 1.8% to 10,493.82.
Crude oil increased $1.08 to $74.81 a barrel and natural gas hovered near $3.73 a thermal unit.
The yield on 2-year Treasury notes edged down to 4.27%, 10-year notes declined to 3.57% and 30-year Treasury bonds traded near 3.69%.
Yen Drops Fourth Day In a Row
Market indexes in Tokyo advanced after the yen weakened for the fourth day in a row and fell from the seven-month high.
The yen continued to drift lower after real wages declined at an annual pace of 3.8% in November, the largest fall since May 2014 and investors also awaited the U.S. jobs report later in the day.
The bearish sentiment in the yen also got stronger after a report suggested that the Bank of Japan sees no reason to adjust it yield curve control policy.
The Nikkei average increased 0.59% to 25,973.85 and the broader Topix index closed 0.37% up to 1,875.76.
For the week, the Nikkei average fell 0.6%.
Shipping companies, drugmakers and tech stocks led the gainers after investors searched among beaten down sectors.
Tokyo Electron, Sony, Honda and Mitsui O.S.K. and Daiichi Sankyo closed higher between 0.5% and 2%.
Best Start In Two Decades for Hong Kong Stocks
China indexes opened higher but late afternoon selling dragged market indexes lower.
Hong Kong stocks gained the most in two decades in the first week of trading after investors increased exposure to risky assets and China promised to offer more support for first time home buyers.
The People's Bank of China said in a statement today that it will permit local authorities to lower mortgage rates for first-time home buyers if property prices fall for three months in a row.
Internet stocks led the gainers after China signaled the end of regulatory tightening.
Alibaba.com surged 17%, Baidu increased 14% and Tencent advanced 10% in the first week of trading.
The Hang Seng index ended down 0.29% or 60.53 points to close at 20,991.64 and the Shanghai Composite index increased 2.42 points to 3,157.64.
For the week, the Hang Seng advanced 6.1% nearing the increase of 6.7% in 1999 in the first week and the Shanghai Composite increased 2.2%.
Best Start for Hong Kong Stocks In Two Decades, Yen Weakness Extends to 4th Day
Arjun Pandit
06 Jan, 2023
Mumbai
Market indexes in Tokyo advanced after the yen weakened for the fourth day in a row and weakened from the seven-month high.
Investors also awaited the U.S. jobs report later in the day.
The Nikkei average increased 0.59% to 25,973.85 and the broader Topix index closed 0.37% up to 1,875.76.
For the week, the Nikkei average fell 0.6%.
Shipping companies, drugmakers and tech stocks led the gainers after investors searched among beaten down sectors.
Tokyo Electron, Sony, Honda and Mitsui O.S.K. and Daiichi Sankyo closed higher between 0.5% and 2%.
China indexes opened higher but late afternoon selling dragged market indexes lower.
Hong Kong stocks gained the most in two decades in the first week of trading after investors increased exposure to risky assets and China promised to offer more support for first time home buyers.
The People's Bank of China said in a statement today that it will permit local authorities to lower mortgage rates for first-time home buyers if property prices fall for three months in a row.
Internet stocks led the gainers after China signaled the end of regulatory tightening.
Alibaba.com surged 17%, Baidu increased 14% and Tencent advanced 10% in the first week of trading.
The Hang Seng index ended down 0.29% or 60.53 points to close at 20,991.64 and the Shanghai Composite index increased 2.42 points to 3,157.64.
For the week, the Hang Seng advanced 6.1% nearing the increase of 6.7% in 1999 in the first week and the Shanghai Composite increased 2.2%.
Japan Auto Sales Drop to 45-year Low
Auto sales in Japan declined to the lowest level in 45 years as automakers struggle with falling demand, supply chain disruptions and chip shortages.
New car sales in 2022 dropped 5.6% to 4.2 million and domestic auto sales fell for the fourth year in a row and reached the level last seen in 1977 when sales were 4.19 million.
The data were reported by the Japan Automobile Dealers Association and Japan Light Motor Vehicle and Motorcycle Association.
Sales of Toyota declined 12.4% to 1.2 million vehicles, Nissan sales declined 0.8% to 272,020 vehicles and Honda sales fell 1.9% to 269,034 units.
Sales of mini vehicles, automobiles with engines smaller than 600 cc, declined 0.9% to 1.6 million vehicles and non-mini vehicles sales fell 8.3% to 2.6 million.
However, December vehicle sales increased 2.4% to 344,365 units and extended monthly gains to the fourth month in a row.
Japan Auto Sales In 2022 Drop to 45-year Low
Brian Turner
06 Jan, 2023
New York City
Auto sales in Japan declined to the lowest level in 45 years as automakers struggle with falling demand, supply chain disruptions and chip shortages.
New car sales in 2022 dropped 5.6% to 4.2 million and domestic auto sales fell for the fourth year in a row and reached the level last seen in 1977 when sales were 4.19 million.
The data were reported by the Japan Automobile Dealers Association and Japan Light Motor Vehicle and Motorcycle Association.
Sales of Toyota declined 12.4% to 1.2 million vehicles, Nissan sales declined 0.8% to 272,020 vehicles and Honda sales fell 1.9% to 269,034 units.
Sales of mini vehicles, automobiles with engines smaller than 600 cc, declined 0.9% to 1.6 million vehicles and non-mini vehicles sales fell 8.3% to 2.6 million.
However, December vehicle sales increased 2.4% to 344,365 units and extended monthly gains to the fourth month in a row.
Focus Shifts To Friday's Jobs Report With Higher-Rate-Longer Scenario Taking Hold
Barry Adams
05 Jan, 2023
New York City
U.S. stocks traded lower after two separate reports indicated a stable and healthy labor market, raising the prospects of the Federal Reserve continuing its hawkish stance.
Private sector job additions accelerated in December and weekly jobless claims at the end of last week dropped to the low last seen three months ago.
After the release of the reports, bond yields edged slightly higher and commodities traded volatile.
Investors are awaiting December jobs report on Friday and are hoping that total payroll expansion may be smaller than in November when the economy added 263,000 jobs.
Monthly job growth in the first eleven months in 2022 averaged 392,000.
Natural gas prices plunged 10% to the low last seen about a year ago after a report from the government agency showed a smaller-than-expected decline in inventories.
Private Sector Job Additions Accelerated In December
Private sector accelerated adding new jobs in December, providing another positive signal about the health of the U.S. labor market.
U.S. private businesses added 235,000 net new jobs in December after adding 182,000 jobs in November, according to the ADP monthly survey released Thursday.
Service sector jobs expanded by 213,000 led by 135,000 jobs in leisure and hospitality, 52,000 in professional business services and 42,000 in education and health services.
Jobless Claims Drops to 3-month Low
The initial claims fell to the lowest level since September indicating tight labor market conditions and health of the U.S. economy.
The number of people filing unemployment claims declined to 204,000 in the week ending December 31 from the previous week's revised level of 223,000, the Department of Labor reported Thursday.
The 4-week moving average declined to 213,750 from 220,500 in the previous 4-week period.
U.S. Trade Deficit Drops In November
The U.S. trade deficit fell more than expected in November, according to the latest data from the U.S. Bureau of Economic Analysis.
International trade deficit of goods and services declined to $61.5 billion in November, down $16.3 billion from the revised $77.8 billion in October.
Total exports of goods and services fell 2% to $251.9 billon and imports fell 6.4% to $313.4 billion.
The deficit with China fell $5.8 billion to $20.4 billion and the shortfall with the European Union narrowed $3.6 billion to $19.5 billion.
U.S. Indexes In Review
Benchmark indexes are likely to extend recent weekly loss string to the fifth week if indexes close down on Friday.
The S&P 500 index fell 1.1% to 3,808.12 and the Nasdaq Composite index declined 1.1% 5o 10,305.24.
Natural prices dropped on the worries that the demand may be easing amid unusually warm weather across the nation.
Natural Gas Drops 10%
U.S. utilities withdrew 221 billion cubic feet of gas from storage during the week ended December 30th, according to the Energy Information Administration report released Thursday.
The decline in inventories was still significantly higher than 31 bcf fall in the similar week a year ago and higher than the five-year average of 98 bcf after colder-than-normal weather forced consumers and businesses to burn more gas.
Crude oil futures price rose $1.07 to $73.91 a barrel and natural gas futures contract dropped 10% or 39 cents to $3.78 a thermal unit.
Treasury Yields Advance
The yield on 2-year Treasury notes increased to 4.46%, 10-year Treasury notes edged up to 3.72% and 30-year Treasury bonds inched down to 3.80%.
European Markets Rest On U.S. Rate Path Worries
European markets turned weaker after three days of gains and market sentiment turned cautious after the release of the U.S. Fed policy meeting minutes.
Market indexes struggled to gain traction after investors weighed the easing of inflation in Italy and the U.S. policy makers expressed support for raising rates to restrictive levels.
Investors also were on the backfoot after two separate jobs reports highlighted tight labor market conditions in the U.S. sending signals for the Federal Reserve to continue to lift rates in 2023.
German Trade Surplus Expands In November
Germany's international trade surplus increased in November after imports fell at a faster pace than exports, the Federal Statistics Office said Thursday.
International trade surplus in November rose to a seasonally adjusted
German Trade Surplus Expands, Italy's Inflation Hovers Near 4-decade Peak
Bridgette Randall
05 Jan, 2023
Frankfurt
European markets turned weaker after three days of gains and market sentiment turned cautious after the release of the U.S. Fed policy meeting minutes.
Market indexes struggled to gain traction after investors weighed the easing of inflation in Italy and the U.S. policy makers expressed support for raising rates to restrictive levels.
Investors also were on the backfoot after two separate jobs reports highlighted tight labor market conditions in the U.S. sending signals for the Federal Reserve to continue to lift rates in 2023.
German Trade Surplus Expands In November
Germany's international trade surplus increased in November after imports fell at a faster pace than exports, the Federal Statistics Office said Thursday.
International trade surplus in November rose to a seasonally adjusted