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02/18/2016
Market Update

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In January, U.S. unemployment fell below 5% for the first time since 2008. The Bank of England voted unanimously to maintain its benchmark rate, while eurozone unemployment dropped for the fifteenth consecutive month in December to the lowest level since 2011. Chinese manufacturing contracted for the eleventh straight month.
This Week
  • In January, U.S. unemployment fell below 5% for the first time since 2008. The Bank of England voted unanimously to maintain its benchmark rate, while eurozone unemployment dropped for the fifteenth consecutive month in December to the lowest level since 2011. Chinese manufacturing contracted for the eleventh straight month.
  • U.S. personal income rose by 0.3% in December, repeating November’s results. Personal consumption expenditures excluding energy, food, tobacco and alcohol was also in line with the previous month, expanding by 0.6% in the year-over-year.
  • Productivity tumbled by a more-than-expected annualized 3.0% in the fourth quarter, as output was flat despite a two-year peak in working hours. Compensation hit the lowest rate in 18 months.
  • U.S. jobless claims rose by 8,000 to 285,000 for the week ending January 30, pushing the four-week moving average higher. However, continuing claims (reflecting delayed data) fell by 18,000 to 2.25 million for the week ending January 23.
  • Nonfarm payrolls expanded by a disappointing 151,000 jobs in January. Unemployment narrowed to an eight-year low of 4.9%, while average hourly earnings advanced by 0.5% and the participation rate increased to 62.7%.
  • Manufacturing reached a seven-year low, according to the Institute for Supply Management (ISM), contracting for the fourth straight month. Markit reported growth, albeit slower than anticipated. Both organizations indicated a rise in new orders, increased production and steady inventory.
  • Services-sector growth decelerated by more than expected in January, according to final data from Markit. Similarly, ISM reported that eight of 18 non-manufacturing industries contracted.
  • Factory orders descended further into negative territory in December, reaching -2.9%, as fewer shipments in both durable (mining and oil field machinery) and non-durable (petroleum and coal) goods created a higher inventory-to-shipment ratio.
  • U.K. manufacturing reached a three-month peak in January, outpacing projections. Current output recorded a 19-month high to replace declining backlog orders. Employment fell for the fourth time in the last six months, while the exchange value of the pound weighed on exports.
  • Eurozone manufacturing and services activity marginally outpaced estimates in January, expanding at a slower rate than the prior month. New orders moderated, as employment advanced for the fifteenth straight month (with increased headcount in all member countries) and business confidence reached a 56-month peak.
  • China’s composite manufacturing and services activity edged into growth territory in January, as the service sector recorded the fastest pace of growth in six months. Manufacturing contracted for the eleventh straight month.

 

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