Striding into November

November leads from strength. In the early going, good news came out twice as often as bad news. One must be concerned, however, that all the bad news seemed to fall on the shoulders of the economy’s workers and consumers—the continued decline in revolving credit and the still grim state of the labor market.

Our proprietary index of labor market conditions dropped 1.7 percent to 67.4 (2007=100). This marks the second straight month the index has failed to gain ground relative to its 6-month moving average. Such pauses have been the mark of recoveries that have been termed “jobless” in the past.

Total construction activity for September 2009 was 0.8 percent above August. Good news in a battered sector.

New orders for manufactured goods increased 0.9 percent in September. Good.

Sales of merchant wholesalers were up 0.7 in September. End-of-month inventories were down 0.9 percent. Good.

Productivity increased 9.5 percent in the nonfarm business sector during the third quarter of 2009, and unit labor costs fell 5.2 percent. Good, especially as a significant portion of it was an increase in output.

In October, the unemployment rate rose to 10.2 percent, the highest since April 1983, and nonfarm payroll employment continued to decline. Bad, just plain bad.

Consumer credit decreased at an annual rate of 6 percent in the third quarter of 2009 and at an annual rate of 7.2 percent in September. Bad, increasingly bad at the end.