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RenMac Economic Daily: Factory Employment Takes Off

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Driving coming back in style?

Getting your driver’s license is not as popular as it used to be, but it does appear to be making a comeback. According to the latest data from the Federal Highway Administration, for 2016, the share of those 20 to 34 years of age with a driver’s license climbed to 84.9% of the total residential population of 20 to 34 year olds. This is up for the third consecutive year and the highest share since 2011. If you believe, as I do, that much of the slump is cyclical in nature (younger age groups saw the largest increases in unemployment during the last recession), there is probably room for more drivers on the road, a positive development for car sales.

Services PMI points to continued expansion

The ISM non-manufacturing index declined to 57.4 in November from a cycle high of 60.1 in October, short of the consensus estimate of 59.0. The components largely mirrored the weakness in the headline with new orders, production and employment declining over the month but all still remaining at strong levels. The ISM Composite, which combines manufacturing and services, fell to 57.5 from 59.9, still consistent with about 4.0% annualized real GDP growth.

Purchase applications point to solid demand

The MBA mortgage purchase applications index rose for the fifth straight month, rising 2.4% for the week ending December 1. The level of mortgage purchase applications hit its best level since early September. Over the last year, purchase applications have climbed about 7%, consistent with steady growth in demand. With mortgage rates low and lending standards easing, we believe purchase apps remain in an uptrend.

Solid jobs growth in November, according to ADP

According to the ADP employment report, private non-farm payroll employment rose 190,000 in November following a gain of 235,000 in October. Gains were spread across small (+50,000), medium (+99,000), and large (+41,000) firms. Goods-producing industries saw growth of 36,000 with gains in manufacturing (+40,000) offsetting a slight drop in the construction industry, which fell 4,000 following a big gain in October. Service-providing industries saw growth of 155,000 following growth of 150,000 the month prior. Taking the ADP along with the employment components of the ISM reports points to private payroll growth of 206,000 for Friday’s BLS report, in line with the consensus.

RenMac: Analyzing macro factors that impact the investment world.

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