Manufacturing & Construction Spending Better. And a word on jobs reports.

ISM Manufacturing Index (December)
-December index was 53.9 vs. 52.7 for November
-Good news: 29 months of growth (table below), and December was 6 month high
-Bad news: growth is slim
-Consumers need to buy what was manufactured, otherwise the index will start back down
-For this index, 50 is dividing line between expansion and contraction
-This is a survey index of 300 manufacturing companies

Construction Spending (November 2011)
-Construction Spending, Month/Month +1.2%
– Construction Spending, Year/Year +0.5%
-Commerce Dept full report
-Gains modestly good news because they are gains from very low levels of spending
-Graph below tells sad story of what has happened to construction spending post-bubble

Jobs Report Preview
This Friday has the BLS Employment Situation Report. Consensus is about +150,000. This is a report which I don’t believe is being analyzed fully. The size of the labor force may be buoyed by the fact that more people are delaying retirement. These might be people who 5 years ago intended to retire by selling their home and living on the equity. With that equity having vanished that plan may not work and some folks delay retirement. On the other hand some people may be retiring because they lost their jobs and now live on social security. I am not reporting fundamentals here but merely talking about them. We think of the labor force as a set of people who gain and lose jobs but the situation is more complex: some people die, some people retire, young people enter the labor force, some people in the labor force lose their job and some people in the labor force get new jobs.

Totalling the labor force each month and comparing it to the previous doesn’t tell the whole story.